Diageo-controlled United Spirits on Friday said it will continue to pursue recovery of loans worth Rs 1,337 crore from its erstwhile promoter group firm United Breweries Holdings (UB Holdings) through “dialogue or other legal means”.
This move comes a day after embattled liquor baron and United Spirits’s chairman Vijay Mallya resigned from the post and Diageo agreeing that Mallya will have no “personal liability” to the UK-based company in relation to the findings of alleged financial irregularities at the company that had triggered an acrimonious fight between them.
“We will continue to pursue all possible routes, dialogues or other legal means, to recover our dues. Through this agreement, it has been decided that the company will not go after Mallya personally but will do it with legal entities,” United Spirits (USL) MD and CEO Anand Kripalu told analysts in a conference call.
Diageo on Friday said that it has “agreed to pay $75 million (nearly Rs 515.48 crore) to Mallya in consideration for his resignation and termination of his appointment and governance rights and his relinquishing of the rights and benefits attached to his position as Chairman and Non-executive Director, among other factors”.
When asked about the $75 million (nearly Rs 515.48 crore) ‘sweetheart deal’, Kripalu denied to comment but added that the agreement is in the best interest of both USL and Diageo.
“Diageo is very clear that the agreement is in the best interest of both USL and Diageo. India is one the most exciting markets for Diageo,” he said.
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Mallya’s exit from the board of United Spirits ended a long-drawn tussle between him and the majority owner, UK’s Diageo, following allegations of irregularities on loans given to UB Group companies.
Mallya’s resignation came after three state-owned banks — Punjab National Bank, United Bank of India and SBI — declaring him, his group holding company United Breweries Holdings and the long-defunct Kingfisher Airlines as ‘wilful defaulters’.
A bank consortium led by the State Bank of India (SBI) has decided to auction Kingfisher House in Mumbai on March 17 this year to recover a part of the Rs 6,963 crore dues from Kingfisher.
Last year, Diageo had asked Mallya to step down as the chairman and director of USL, alleging funds diversion to Kingfisher and other UB group entities, a demand he had rejected outright.
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USL had said in a report by PwC that “various improprieties and legal violations” were found in a probe into loans worth Rs 1,337 crore given to UB Group firms.
In July last year, the UK’s Diageo-controlled USL alleged irregularities and potential violations of law in the diversion of funds by the firm’s erstwhile promoter Mallaya-led UB Group and said it is initiating process to recover dues totaling to Rs 1,337 crore.
Diageo said that the agreement will end to uncertainties regarding historically related party transactions and its management will be able to devote more time to ‘productive’ issues.
USL is now controlled by the world’s largest spirits maker Diageo, which had acquired an additional 26% stake in USL for Rs 11,448.91 crore in July to take its total share in the Indian firm to 54.78%.