Business Today

Will USL board finally oust Vijay Mallya?

Mallya says Diageo has a contractual obligation to support him in continuing as the Chairman of the company, while the board of USL in April 2015, had asked Mallya to resign from it.

twitter-logo Venkatesha Babu        Last Updated: November 24, 2015  | 10:54 IST
Will USL board finally oust Vijay Mallya?
Mallya's continuance as Chairman can happen only if Diageo, the majority shareholder in USL backs him. (Photo: Reuters)

Venkatesha Babu, Deputy Editor, Business Today
Just days after State Bank of India declared Vijay Mallya, Chairman of the UB Group as a willful defaulter, the troubled tycoon might face yet another challenge. The United Spirits Ltd's (USL)  16th Annual General Meeting is scheduled for tomorrow (Tuesday, November 24). The AGM might see a clash between Diageo - the majority shareholder - and Mallya who continues to remain Chairman of USL.
 
Mallya says Diageo has a contractual obligation to support him in continuing as the Chairman of the company, while the board of USL in April 2015, had asked Mallya to resign from it. Citing a PwC report commissioned by the board which alleged diversion of Rs 1337 crore to other UB Group companies, the board had asked Mallya to step down.  He has however repeatedly denied charges of fund diversion and refused to step down.
 
While there have been some media reports that Mallya might be negotiating with Diageo to sell his remaining stake in USL at a valuation of around Rs 3000 crore, the company had clarified to the exchanges that it was not aware of any such negotiations. Everything is likely to depend on the stance taken by Diageo, which holds a 54.78 per cent stake in USL. Surprisingly there seems to be little clarity at what the majority shareholder is likely to do. Business Today has reached out to USL and Diageo for comment(s) and we will update the story once the company responds. Mallya's continuance as Chairman can happen only if Diageo backs him. Otherwise either a buy-out of Mallya's stake or a protracted legal battle is on the anvil.

A spokeswoman for USL said that Mallya would chair Tuesday's AGM but didn't offer any other comments.

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