Three United Spirits directors quit boardBy Amy Hopkins
As an inquiry into loans issued by Indian drinks group United Spirits gets underway, three of its independent directors have resigned.
According to The Wall Street Journal, G.N. Bajpai, Arunkumar Ramanlal Gandhi and Vikram Singh Metha have made themselves unavailable for re-election to the board of United Spirits Limited (USL), India’s largest drinks group.
USL, the majority of which was acquired by UK drinks giant Diageo in a £1.1 billion deal earlier this year, revealed a net loss of £445 million in its full-year financial results for 2013/14, prompting its Diageo-led board to launch an inquiry into loans paid out by the group.
Diageo appointed Gandhi and Metha, who were also on USL audit committee, as independent directors only last year. Until this recent spate of departures, United Spirits had 12 board members, six of which were independent.
The investigation of USL books comes after the group revealed extensive loans to parent company UB Holdings, also run by its chairman, Indian tycoon Vijay Mallya.
While Mallya remains chairman of USL despite its majority acquisition by Diageo, his seat has now been thrown into question after he was declared a “wilful defaulter” by the United Bank of India (UBI).
As well as possible financial difficulties relating to historical loans paid out to UB holdings, thought to be in aid of Mallya’s beleaguered Kingfisher Airlines, USL losses have also been attributed to a significant write down on the sale of its Whyte & Mackay Scotch whisky business, which was purchased by Emperador for £430m.
USL is scheduled to hold its annual shareholders’ meeting on 30 September.