Calls for tycoon Mallya to quit board of USL

VIJAY Mallya, the Indian entrepreneur and former owner of Whyte & Mackay, has come under intense pressure to resign as chairman of United Spirits Limited (USL), the spirits firm majority owned by Diageo.

The board of USL has declared it has lost confidence in Mr Mallya and called for him to step down as a director and chairman of the company, as well as his positions on its subsidiaries.

It comes after an enquiry by USL investigated the relationship between USL and United Beverage Holdings Limited (UNHL), the conglomerate controlled by Mr Mallya which owns Kingfisher beer and, until its demise, Kingfisher Airlines.

A statement released by USL to the Indian Stock Exchange said the enquiry focused on funds “diverted from the company and/or its subsidiaries to certain UB Group companies, including, in particular, Kingfisher Airlines Limited”, from 2010 to 2013.

USL said that Mr Mallya has indicated he has no plans to step down, noting that it will recommend his removal to shareholders if he does not resign.

The flamboyant businessman is entitled to a seat on the board of USL under a shareholder agreement with Diageo struck when the whisky giant bought its initial 25 per cent shareholding in USL in 2012. The deal is subject to UBHL holding at least 1,307950 shares in USL and Mr Mallya retaining control of UBHL, as well as the “absence of certain defaults”.

Diageo, now the majority shareholder in USL with a 54.78 per cent stake, said it is now reviewing the obligations of the shareholder agreement with Mr Mallya in light of the report.