UB Group chairman Vijay Mallya has stepped down as non-executive chairman of United Spirits Ltd (USL), controlled by Diageo Plc after striking a sweetheart deal with the UK firm which agreed to drop all charges of alleged irregularities under his watch, and pay him $75 million over five years in return for getting him to go. Diageo and one-time billionaire Mallya have been sparring for some time over his exit.
“Having recently turned 60, I have decided to spend more time in England, closer to my children,” Mallya said in a statement. Diageo said in a statement that the United Spirits board will appoint Mahendra Kumar Sharma, currently independent non-executive director and chairman of the audit committee of United Spirits, as chairman of United Spirits. “The time has now come for me to move on and end all the publicised allegations and uncertainties about my relationship with Diageo Plc and United Spirits. Accordingly, I am resigning my position with immediate effect,” Mallya said in a surprise statement issued late on Thursday evening.
Mallya said he has also agreed a global (excluding United Kingdom) five year non-compete arrangement with Diageo. The ongoing tussle over Mallya’s chairmanship in United Spirits has been brewing for some time. Diageo Plc completed the purchase of a majority stake (54.7%) in USL in July 2014 and has been pushing for Mallya’s removal from chairmanship since then. Mallya, however, has refused to step down. In April, the board of directors at USL asked Mallya, who holds 4% stake in USL, to resign from the board after an internal probe allegedly found financial irregularities at India’s largest liquor company.
Mallya’s resignation comes at a time when State Bank of India and Punjab National Bank have declared him a wilful defaulter because of his inability to pay dues to many as 17 banks, amounting to Rs.7,000 crore. The loans were taken by Kingfisher Airlines. “I fondly remember, as a young boy, launching McDowell’s, which is the largest selling brand in the industry. I also recall the challenges and personal sacrifices in the tumultuous acquisition of Shaw Wallace and the Royal Challenge brand. I feel both happy and satisfied that I helped create United Spirits as a clear market leader in the industry which contributed immensely to the local state economies,” Mallya said
Mallya said “on the sporting front, I will now be the Chief Mentor of the Royal Challengers Bangalore” IPL cricket team. “I have been passionate about this team since inception and am determined to do whatever I can to win the IPL trophy. I am glad that my son, Sidhartha, will remain as a director (of Royal Challengers Bangalore) as he is equally passionate about RCB,” Mallya said.
Bengaluru: Moving to Britain, says Mallya
Bengaluru, Feb 25 (IANS) Liquor baron Vijay Mallya said that he is moving to Britain to be closer to his children following his dramatic resignation as chairman of United Spirits Ltd and becoming its founder emeritus on Thursday.
“Having recently turned 60, I have decided to spend more time in England (Britain), closer to my children,” Mallya said in a statement here after he entered into a $75 million deal with USL’s majority stakeholder British liquor major Diageo plc.
Observing that time had come for him to move on and end all the publicised allegations and uncertainties over his relationship with Diageo and USL, the flamboyant tycoon said the agreement he had reached with both the firms would secure his family legacy.
“I have agreed a mutual release with both Diageo and United Spirits from claims concerning the alleged irregularities disclosed by USL in April 2015,” Mallya said.
Diageo appointed global audit firm PricewaterhouseCoopers (PwC) India to do forensic investigation of USL accounts, following discrepancies, including financial irregularities, which included writing off Rs.7,200 crore from books.
Expressing satisfaction on steering the country’s largest liquor firm to 120 million cases per annum from three million cases over three decades ago, Mallya, who is an independent MP in the Rajya Sabha, said his new position as founder emeritus recognised his contribution in building the company and evoked great emotions.
“I fondly remember, as a young boy, launching McDowell’s, the largest brand in the industry. I also recall challenges and sacrifices in the tumultuous acquisition of Shaw Wallace and Royal Challenge brand,” he said.
On the sporting front, Mallya would be the chief mentor of Royal Challengers Bangalore (RCB), which plays in the Indian Premier League T20 tournament.
“I have been passionate about this team since inception and am determined to do whatever I can to win the IPL trophy. I am glad that my son, Sidhartha, will remain as a director as he is equally passionate about RCB,” he added.