UB Asks Mallya to Quit as Chair­man Post Sebi Ban Mallya ex­pected to chal­lenge no­tice; Heineken-con­trolled co ready for any ac­tion

The Economic Times - - Companies: Pursuit Of Profit -

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


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