The United Spirits scrip slipped over 8% in early morning trade on Monday before recovering to end the session 0.5% lower than Friday’s close. While most of the institutional shareholders that FE spoke to said they had not sold shares, they confirmed they had voted against several resolutions put to vote at the extra ordinary general meeting (EGM) on Friday. Of the 12 resolutions put to vote nine were not passed. Some fund managers said they voted against the resolutions as they believed these would favour Vijay Mallya and put unnecessary financial burden on the Diageo-controlled United Spirits.
The fall in stock price, dealers said, may have been the result of profit-taking.
As per disclosures on the exchanges, institutional shareholders were instrumental in deciding the fate of the resolutions at the EGM. Of the 4.04 crore shares held by the institutions — both domestic and foreign — 38.86% of votes were polled, while of the 1.93 crore shares held by non-institutional shareholders, including HNIs and retail investors, 0.62% of votes were polled.
Among the special resolutions proposed at the EGM, a property maintenance services agreement with Kingfisher Finvest was disapproved as 77.17% of the votes were against the resolution. A fund manager speaking on conditions of anonymity said, “The loan arrangements and property maintenance services arrangements with other companies don’t make sense. We feel these transactions would put unnecessary financial burden on United Spirits.”
As per the latest annual report, the company paid R14 crore to Kingfisher Finvest towards ‘property maintenance fees’ in FY14. Among other resolutions, a loan arrangement with United Breweires (Holdings) was also disapproved.
Special resolutions were proposed for sponsorship agreement with United Racing and Bloodstock Breeders (URBB) and United Mohun Bagan Football Team. Both the resolutions were shot down.
Another fund manager said that while there was some uncertainty on the stock, the company was expected to do well in the long term.
Diageo holds 54.78% in United Spirits through its wholly-owned subsidiary Relay BV after it bought an additional 26% from public shareholders for R11,488 crore in July.