United Spirits Q4 loss narrows to Rs8.99 crore

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New Delhi: Liquor major United Spirits Ltd standalone net loss narrowed to Rs.8.99 crore for the fourth quarter ended March 2016, on account of exceptional items.

The company had reported a net loss of Rs.1,799.28 crore for the January-March quarter a year-ago, United Spirits said in a BSE filing.

Net sales of the company on a standalone basis was up 13.03% to Rs.2,283.64 crore during the quarter under review as againstRs.2,020.37 crore during the same period, a yea-ago.

“Exceptional items for the year ended 31 March 2016 include a profit on sale of UBL (United Breweries Ltd) shares amounting to Rs.853.60 crore and provision of loans and advances to an investment in subsidiaries amounting Rs.140.1 crore and write back of provision for doubtful advances amounting Rs.22.75 crore,” said USL.

During the year, USL’s wholly owned subsidiary Asian Opportunities and Investments had sold its entire interest on Bouvet Ladubay SA, it further added.

The company posted a net profit of Rs.981 crore for the year ended 31 March, against a net loss of Rs.1,956 crore a year ago on higher sales. Net sales during the year grew 13% to Rs.9,092 crore from Rs.8,049 crore a year ago.

“We have successfully completed the integration of Diageo brand portfolio this year and we now have an outstanding portfolio of brands across each key category and price point,” said Anand Kripalu, chief executive of USL, in a BSE filing.

Net debt fell by Rs.737 crore on divestment of non-core assets, mainly shares of United Breweries and its Bouvet Ladubay subsidiary. These divestments together with renegotiation of borrowings terms reduced the total interest cost, the company said.

The company’s turnaround comes months after USL’s former chairman Vijay Mallya stepped down from his post on 26 February after a bitter board room battle seeking his ouster after allegations of irregularities and alleged fund diversions to UB Group companies surfaced after an internal probe led by Diageo Plc.

But Mallya stepped down only after a $75 million deal from Diageo and the latter agreeing to drop all charges against him. The UK-based spirit maker which now owns 54.7% of USL had paid $40 million to Mallya soon after his stepping down.

USL writes off Rs566 crore

USL on Thursday said it has written off Rs.566 crore in connection with recovery of funds that were “diverted” from the company and its subsidiaries to UB Group firms, including the defunct Kingfisher Airlines.

USL said in 2013-14 “certain parties had claimed that they had advanced certain amounts to certain alleged UB Group entities and that the dues owed by such parties to the company would be paid/refunded by them to the company only on receipt of their dues from such alleged UB Group entities”.

These dues of such parties to the company were on account of advances by the company “in earlier years under agreements for enhancing capacity, obtaining exclusivity and lease deposits in relations to tie-up manufacturing units agreements for specific projects or dues owing to the company from customers”.

USL, which initiated a management inquiry into the alleged fund diversion, said “between 2010 and 2013 many of these transactions were diverted from the company and or its subsidiaries to certain UB Group firms, including Kingfisher Airlines”.

“In connection with the recovery of funds that were diverted from the company and/or its subsidiaries, pursuant to the decision of the board at its meeting held on 25 April 2015 the company initiated steps for recovery against the relevant parties so as to seek to expeditiously recover the company’s dues from such parties, to the extent possible,” USL said in a regulatory filing.

During the quarter ended 30 September 2015 the company reached a settlement with one of the parties, after which the party had withdrawn claims aggregating to Rs.27.86 crore and accordingly the amount has been written back.

USL said it has also signed settlement agreements with “three other parties” and based on the said settlements, it has reversed a provision with respect to interest claimed amounting to Rs.26.46 crore.

“Settlements with other parties have not been reached as yet and management is continuing discussions in this regard. During the year ended 31 March 2016 based on its assessment of recoverability, the management has written off Rs.566 crore out of the amount provided for with respect to the aforesaid counterparties,” USL said.

The management has determined that in light of these provisions no additional material adjustments to the financial results are required on this account, it added.

Earlier, based on the preliminary findings of an internal inquiry, the USL management had provided Rs.649.55 crore in the financial statements for the fiscal ended 31 March 2014 as recoverable amount.

Shares of United Spirits on Thursday settled 0.32% lower atRs.2,485.25 on BSE.