UB board asks Vijay Mallya to step down after SEBI order

The Dollar Business Bureau

After the release of a SEBI order that bars Vijay Mallya from holding the position of directorship in any listed enterprise, he was asked to resign from non-executive chairmanship of United Breweries (UB) by the board of directors. The board unanimously asked the controversial business magnate to step down on February 8, 2017.

The board's request was conveyed to Vijay Mallya via email, stating that in the absence of a stay or vacation of the SEBI order, he would have to step down with immediate effect.

Also, until a stay of the order is obtained by Mallya, the board has decided not to share with him any privileged information such as the agenda of board meetings.

On counts of misappropriation of funds, violation of listing agreement and fraud, six other former United Spirits executives were barred from accessing the securities exchange along with Mallya by SEBI. Meanwhile, detailed enquiry into the change of company control and role of auditors is being conducted.

A combination of factors like increased excise duty, rising raw material costs and demonetisation have hit the earnings of United Breweries, as revealed in its quarterly results on February 8, 2017. The fall in profits was about 31.9%.

On February 7 2017, the Karnataka High Court ordered dissolution of United Breweries Holding Ltd (UBHL), the holding company of UB, in which Vijay Mallya has a stake of about 52%. The winding up of UBHL is meant to pay off the Rs. 9000 crore debt, which Mallya defaulted on, following bankruptcy of Kingfisher Airlines. Since UBHL was the guarantor of the loan extended by a consortium of 17 banks, the courts have held the company as a willful defaulter.

The 'king of good times', so named for his opulent lifestyle, fled the country in March 2016 and has repeatedly missed official and judicial hearings he was summoned for. In January 2017, the court gave a go-ahead to banks seeking repayment of Vijay Mallya's loans, to start the process of recovery of debt.