United Spirits (USL) chairman Vijay Mallya and other full-time directors stayed away from Friday’s extraordinary general meeting (EGM). The meeting was called to seek shareholders’ approval to approach BIFR over the erosion of the company’s peak net worth.
USL’s net worth stood at Rs 846 crore as of March 2015 after taking into consideration its accumulated losses of Rs 5,045 crore for the financial year ended March 2015. The company had sought approval for reporting the erosion in peak net worth to the Board for Industrial and Financial Reconstruction (BIFR) as required under Section 23 of the Sick Industrial Companies (Special Provisions) Act, 1985.
Replying to shareholders’ queries, Sanjeev Churiwala, CFO said USL had not turned into a sick company and was making profits. The company, he said had positive net worth of Rs 845 crore as on March 2015 which had increased to Rs 1,667 crore after taking into consideration the profits in the first half of this year. “It is just a reporting requirement we are fulfilling by reporting the erosion in net worth to BIFR.There is no reason for shareholders to worry about the health of the company,” Churiwala said.
About 130 shareholders attended the EGM on Friday and cast their votes via the physical ballot. The company had also permitted electronic voting, which ended on January 21. The results of both electronic voting and physical ballot will be published within 48 hours, D Sivanandan, non-executive independent director, who chaired the EGM, said.
Some of the shareholders took serious objection for holding the EGM in the absence of chairman Vijay Mallya and other full-time directors of the board. Questions were also raised on the company turning sick and depletion of reserves and surplus of the company. “When the company was completely managed by the old board under Vijay Mallya, the company never faced this kind of situation.
The new board under the control of Diageo has completely failed to manage the company and made it sick. People responsible for this should be identified and fixed for erosion in net worth of the company,” a shareholder said at the EGM.
Another shareholder demanded the company to lay out a clear roadmap to recover the accumulated losses of the company and also asked the company to explain how it intends to restore the net worth.