Quit No­tice to Mallya has Not Dis­rupted In­dia Ops: Heineken

The Economic Times - - Brands: Creating Desire -

Sa­gar Malviya & Kala Vi­jayragha­van

Mum­bai: United Brew­eries merely fol­lowed a reg­u­la­tory or­der in ask­ing chair­man Vi­jay Mallya to step down, Heineken NV, the In­dian brewer’s largest share­holder, said in its first com­ment on the busi­ness­man since he got em­broiled in a series of cases re­lated to over­due loans.

Heineken, the world’s sec­ond-largest brewer, said also there had not been any dis­rup­tion to its In­dian busi­ness or man­age­ment af­ter part­ner United Brew­eries sent the no­tice to Mallya.

About three weeks ago, the Se­cu­ri­ties and Ex­change Board of In­dia banned Mallya from the se­cu­ri­ties mar­ket as well as hold­ing any board or key man­age­rial po­si­tions at listed com­pa­nies. The or­der also cov­ered some for­mer ex­ec­u­tives of United Spir­its, a com­pany Mallya pre­vi­ously owned and is now con­trolled by UK’s Di­a­geo. Mallya, ac­cord­ing to le­gal ex­perts, is ex­pected to chal­lenge the Sebi or­der.

Sebi is­sued an ex­ec­u­tive or­der to Mallya and it was not the will of the share­hold­ers or board of di­rec­tors, but just a court or­der that had to be ex­e­cuted, Jean-Fran­cois van Boxmeer, Heineken’s chair­man of the ex­ec­u­tive board, said on an in­vestors call Wed­nes­day.

“It’s for Dr Mallya to re­act on that if he wants to have a stay on that po­si­tion. It is en­tirely in his hands to go with these pro­ce­dures,” he said. “And, as to the share­holder, their rap­port be­tween the two pro­mot­ers as they are called in the core share­hold­ing, that’s Heineken and the group of Dr Mallya, we still are in a joint ven­ture agree­ment.”

In a mail sent to Mallya last week, the com­pany said: “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.”

The reg­u­la­tor had also di­rected United Spir­its to pro­vide in­for­ma­tion on steps taken to re­cover ₹ 1,880.8 crore from FILE PHOTO Mallya and the com­pa­nies to which the money was di­verted. The funds were al­legedly di­verted dur­ing the pe­riod be­tween 2010 and 2013. As per a PwC-UK re­port, the amount was ₹ 655.55 crore, while an E&Y re­port es­ti­mates it at ₹ 1,225.24 crore, ac­cord­ing to de­tails cited in the or­der. Heineken has been hik­ing its stake in United Brew­eries, from 37.5% in 2003 to about 43% now by pur­chas­ing shares in block trades from the stock mar­ket. The Dutch firm, which has the first right of re­fusal to buy shares owned by Mallya in United Brew­eries, is also open to a hos­tile takeover. In 2016, Heineken purchased United Brew­eries shares from Yes Bank and ECL Fi­nance, with whom Mallya had pledged the shares. United Brew­eries, which con­trols over half the In­dian beer mar­ket with brands in­clud­ing King­fisher, posted an 8% de­cline in sales dur­ing last quar­ter. “A large part of that de­crease was due to de­mon­eti­sa­tion,” the com­pany told in­vestors.

The Dutch firm, which has the first right of re­fusal to buy shares owned by Mallya in United Brew­eries, is also open to a hos­tile takeover

Sebi has banned Mallya from hold­ing any key man­age­rial po­si­tions at listed com­pa­nies

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