Vijay Mallya re-elected as United Spirits chairman
Vijay Mallya has been re-elected as chairman of United Spirits despite previous recommendations of shareholder advisory firms.
UK drinks group Diageo – which acquired a 55% controlling stake in United Spirits, India’s largest liquor group, earlier this year – announced a number of re-appointments today.
Vijay Mallya’s re-appointment goes against the advice of proxy shareholder advisory firms in India, which raised alarm over the United Bank of India’s declaration that Mallya was a “willful defaulter”.
The bank claimed that Mallya had purposefully not paid an emergency overdraft lent to him to support his grounded Kingfisher Airlines despite having the means to, meaning he is now prohibited from accessing banks and capital markets for funding needs
Advisory firm InGovern Research Services told the Times of India that a “willful defaulter” tag won’t attract automatic disqualification unless there is a criminal conviction, but that “shareholders and creditors can demand the removal citing the negative business impact it carries”.
Also, according to the Reserve Bank of India’s (RBI) guidelines, companies which are seeking to borrow money from banks should “expeditious and effective steps” to oust directors who are willful defaulters from their boards.
However, last week the Calcutta High Court temporarily suspended legal the “willful defaulter” tag imposed on Mallya by UBI.
A statement from Diageo read: “Dr Mallya remains United Brewery’s nominated director and therefore, in accordance with the terms of the Shareholders Agreement, Diageo voted in favour of the resolution at the USL AGM to re-appoint Dr Mallya as a director of USL.”
The statement added that since the reduction in its shareholding, United Spirits’ parent company UB Holdings was no longer entitled to recommend an independent director.
Anand Kripalu was also re-appointed CEO of the drinks group while Sudhakar Rao, D. Sivanandhan and Indu Shahani were all re-appointed as independent, non-executive directors
Paul Walsh, the former CEO of Diageo, Ravi Rajagopal and P.A. Murali were not subject to appointment or re-appointment, but will continue on the USL board.
United Spirits revealed a net loss of £445 million in its full-year financial results for 2013/14 due to a large writedown on the sale of its Whyte & Mackay Scotch whisky business.
However, the group’s Diageo-led board ordered an inquiry into loans paid out by the company to UB Holdings, believed to be for its beleaguered Kingfisher Airlines.