<p>Diageo Plc, the holding company of the United Spirits Limited (USL) which re-elected Vijay Mallya as its chairman, is not happy with developments at its Indian subsidiary.<br /><br /></p>.<p>In a statement issued from its headquarters in London, Diageo said on Thursday that its contractual obligations to support Mallya continuing as non-executive director and chairman of USL are subject to United Breweries Holdings Ltd (UBHL) holding at least 1.3 million shares as well as “the absence of certain defaults by UBHL or Mallya”.<br /><br />The UK-based company put this out at its website a day after the USL annual general meeting (AGM), where Mallya, UBHL's nominated director, got re-elected.<br /><br />Diageo is bound by the US Foreign Corrupt Practices Act (FCPA) and the UK Bribery Act and is known to adhere to high governance standards across the world, hence the company is concerned about any fall out that may occur if Mallya is declared a willful defaulter or any other legal proceedings against him.<br /><br />UBHL is stuck with debt of close to Rs 4,000 crore and has written off Rs 2,500 crore loan to now grounded Kingfisher Airlines.<br /><br />USL recently made provisions of almost Rs 5,335 crores which includes a provision of Rs 4,322 crores on account of Whyte & Mackay. <br /><br />USL has been forced to provide (on its balance sheet) for another Rs 350 crore towards a Rs 1,450 crore loan provided to UB Holdings to which Diageo has constituted an inquiry.According to Diageo sources, the inquiry commission's report will be submitted within two months.<br /><br />USL's AGM held in Bangalore on Tuesday approved appointments of CEO Anand Kripalu as a director and Sudhakar Rao, D Sivanandhan and Indu Shahani as independent non-executive directors apart from Mallya’s reappointment.<br /><br />Other members of USL board including Paul Walsh (non-executive director nominated by Diageo), Ravi Rajagopal (non-executive director nominated by Diageo) and P A Murali (CFO and Diageo-nominated director) will continue in their respective positions.<br /><br />Diageo, which holds majority stake of 54.78 per cent in USL and continues to be entitled under the shareholder agreement to appoint its nominees to the roles of CEO and CFO of USL, didn't re-elect anybody to replace UBH nominee B N Bajpai.<br /><br />Diageo's growing discontent with UBHL has been evident after Diageo's decision to scrap the former's right to supply global market USL products.<br /><br />As per recent reports, USL's emerging markets division has been consolidating its marketing strategy and is progressing with its foray into four markets in Asia and Africa which include Vietnam, Myanmar, Nigeria and Angola.</p>
<p>Diageo Plc, the holding company of the United Spirits Limited (USL) which re-elected Vijay Mallya as its chairman, is not happy with developments at its Indian subsidiary.<br /><br /></p>.<p>In a statement issued from its headquarters in London, Diageo said on Thursday that its contractual obligations to support Mallya continuing as non-executive director and chairman of USL are subject to United Breweries Holdings Ltd (UBHL) holding at least 1.3 million shares as well as “the absence of certain defaults by UBHL or Mallya”.<br /><br />The UK-based company put this out at its website a day after the USL annual general meeting (AGM), where Mallya, UBHL's nominated director, got re-elected.<br /><br />Diageo is bound by the US Foreign Corrupt Practices Act (FCPA) and the UK Bribery Act and is known to adhere to high governance standards across the world, hence the company is concerned about any fall out that may occur if Mallya is declared a willful defaulter or any other legal proceedings against him.<br /><br />UBHL is stuck with debt of close to Rs 4,000 crore and has written off Rs 2,500 crore loan to now grounded Kingfisher Airlines.<br /><br />USL recently made provisions of almost Rs 5,335 crores which includes a provision of Rs 4,322 crores on account of Whyte & Mackay. <br /><br />USL has been forced to provide (on its balance sheet) for another Rs 350 crore towards a Rs 1,450 crore loan provided to UB Holdings to which Diageo has constituted an inquiry.According to Diageo sources, the inquiry commission's report will be submitted within two months.<br /><br />USL's AGM held in Bangalore on Tuesday approved appointments of CEO Anand Kripalu as a director and Sudhakar Rao, D Sivanandhan and Indu Shahani as independent non-executive directors apart from Mallya’s reappointment.<br /><br />Other members of USL board including Paul Walsh (non-executive director nominated by Diageo), Ravi Rajagopal (non-executive director nominated by Diageo) and P A Murali (CFO and Diageo-nominated director) will continue in their respective positions.<br /><br />Diageo, which holds majority stake of 54.78 per cent in USL and continues to be entitled under the shareholder agreement to appoint its nominees to the roles of CEO and CFO of USL, didn't re-elect anybody to replace UBH nominee B N Bajpai.<br /><br />Diageo's growing discontent with UBHL has been evident after Diageo's decision to scrap the former's right to supply global market USL products.<br /><br />As per recent reports, USL's emerging markets division has been consolidating its marketing strategy and is progressing with its foray into four markets in Asia and Africa which include Vietnam, Myanmar, Nigeria and Angola.</p>
