UB Asks Mallya to Quit as Chairman Post Sebi Ban Mallya expected to challenge notice; Heineken-controlled co ready for any action
Kala Vijayraghavan & Sagar Malviya
Mumbai: Heineken-controlled United Breweries (UB) has sent a notice to Vijay Mallya, asking him step down as its chairman after the Securities and Exchange Board of India (Sebi) barred the beleaguered billionaire from the securities market. UB held a board meeting on Wednesday to discuss and pass the resolution.
“In order to comply with the Sebi order and in the absence of any stay or vacation of the said order, the board is compelled to request you to step down from the board of United Breweries with immediate effect,” said UB in a mail sent to Mallya and other board members.
The letter was filed with the Bombay Stock Exchange late on Wednesday. “The board has passed a resolution that Mr Mallya should step down and we have asked the company secretary to convey the message to Mr Mallya,” said one of the directors on the board of UB, where Heineken owns 42.4%.
“Just a few days ago, all the board members had a separate informal meeting to discuss the issue,” added the director.
A fortnight ago, Sebi banned Mallya and six former officials of United Spirits from securities market in a case related to alleged fund diversions. UB had said then that it is reviewing Sebi’s order and in the process of seeking legal advice and take appropriate action.
Sebi, in the order released also restrained Mallya and Ashok Capoor, former managing director of United Spirits from holding position as directors or key managerial persons of any listed company.
Further, the regulator had directed United Spirits to provide information on steps taken to recover ₹ 1,880.8 crore from Mallya and the companies to which funds were wrongly diverted. UK-based Diageo is the majority stakeholder in USL.
The funds were diverted during the period between 2010 and 2013. As per PwC-UK report, the diverted amount is ₹ 655.55 crore while EY report estimate was nearly double at ₹ 1,225.24 crore, according to details cited in the order.
Top legal officials indicate that Mallya is likely to challenge the board’s notice, which could to break out into a full blown war similar to his legal tussle with United Spirits. “We are prepared for any legal action taken by Mallya,” said another director on the UB board. Dutch beer maker Heineken, which has a joint venture with US has been attempting to remove Mallya as chairman from board of the company. Heineken has hiked its stake in the company from 37.5% in 2003 by purchasing shares in block trades from the stock market.
In 2016, Heineken purchased shares from Yes Bank and ECL Finance, with whom Mallya pledged shares, in block trades. On Tuesday, the Karnataka High Court ordered the winding up of United Breweries (Holdings) (UBHL), the parent company of the UB Group, for recovering dues payable by UBHL-promoted defunct Kingfisher Airlines Ltd. Mallya owns a 52.34% in UBHL.
Last fortnight, Sebi banned Mallya and six former UB officials from the securities market for alleged fund diversions