Beleaguered liquor baron Vijay Mallya on Thursday resigned from the position of chairman of United Spirits, and will now be the Founder Emeritus of USL.
Mallya’s exit from the board of United Spirits ends a long-drawn tussle between him and Diageo following charges of irregularities on loans given to UB Group companies.
Last year, Diageo had asked Mallya to step down as Chairman and Director of USL alleging fund diversion to Kingfisher and other UB group entities, a demand he had outrightly rejected.
Mallya and Diageo struck a deal, in which the firm agreed to drop all charges of alleged irregularities under his watch, and paid him $75 million over five years in return for getting him to quit his position.
Under the agreement, Mallya confirms his agreed resignation and provides non-compete, non-interference, non-solicitation and standstill undertakings directly to USL. Mallya and USL have also agreed a mutual release in relation to matters arising out of the USL inquiry.
“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. Accordingly, I am resigning my position with immediate effect,” Mallya said in a statement, adding, that he will spend more time in England, closer to his children.
Mallya has been contending with a lot of issues, especially with several banks declaring him ‘wilful defaulter’.
Recently, Punjab National Bank had declared Mallya a wilful defaulter for defaults on Kingfisher Airlines loans. A consortium of 11 banks, led by SBI, has an overall exposure of Rs 6,203 crore in KFA. In November last year, SBI had also declared Mallya as a wilful defaulter.
Meanwhile, United Spirits has announced in a statement that M K Sharma — currently an independent, non-executive director, and Chairman of the Audit Committee, has taken over as its new Chairman with immediate effect.
On the sporting front, Mallya will now be the Chief Mentor of the Royal Challengers Bangalore, while his son Sidhartha will remain as a director. Sidhartha Mallya will remain on the board of the USL group company, which holds the Royal Challengers Bangalore IPL franchise.
Diageo may not seek to remove him from that board for a period of two years, subject to agreed exceptions.
It must be noted that USL is now controlled by world’s largest spirits maker Diageo, which had acquired an additional 26 per cent shares in USL for Rs 11,420 crore in July with an aim to take its total stake in the Indian firm to 54.78 per cent.
DH News Service