Reason behind Vijay Mallya's Resignation?

February 26, 2016 | 02:29 PM | 2 Views
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Liquor baron Vijay Mallya on Thursday resigned as the chairman of United Spirits Ltd, controlled by Diageo Plc, in a $75-million (Rs 515 crore) deal with the UK firm.

In a statement issued late Thursday, the 60-year-old Mallya said he would be moving to England to be closer to his children and would exit the company as Founder Emeritus 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 and United Spirits Limited,” Mallya’s statement read. “I am resigning my position with immediate effect.”

In a statement to stock exchanges, Diageo said MK Sharma, an independent non-executive director and chairman of the audit committee, would be the new chairman.

Diageo, which will pay Mallya $75 million over five year, has agreed to drop all charges of alleged irregularities under his watch.

Last April, the UK liquor major alleged that its auditors found financial irregularities that dated back to the period before it bought a controlling interest in USL in 2013. The charges had led to acrimony between the two sides.

As per the agreement, Mallya signed off any right to compete, interfere or solicit in the businesses of USL. Mallya continues to hold 12,500 shares in USL, as per stock exchange fillings.

However, his son Sidharth would remain on the board of the USL group company which holds the Royal Challengers Bangalore IPL franchise and Diageo can’t “seek to remove him from that board for a period of two years”. The father will be the team’s chief mentor.

The company was very pleased with the new agreement and the outcome was very good for USL, a Diageo spokesperson said.

The resignation comes at a time when State Bank of India and Punjab National Bank have declared Mallya a willful defaulter for failing to pay dues amounting to R7,000 crore to 17 banks. The loans were taken by now-defunct Kingfisher Airlines.

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