USL in legal dispute with IDBI

Bengaluru-based alcoholic beverage firm United Spirits (USL) is involved in a legal dispute with government-owned IDBI over the repayment of a Rs 621.7 crore loan.

“We have a business practice of not naming the party involved in dispute, but there is no reason to hide. The name of the bank is IDBI. We had taken a loan.
We prepaid the loan but they still didn’t refund our security. The matter is in court. Since the matter is subjudice, I will not elaborate,” said Mahendra Kumar Sharma, Chairman, USL, in reply to a shareholder at the company’s annual general meeting.

The shareholder had raised a doubt concerning the Note 25 of the company’s Annual Report 2015-16.

“During the year ended March 31, 2014, the company decided to prepay credit facilities availed in the earlier years from a bank, amounting to Rs 6,216.6 million (Rs 621.66 crore), secured by assets of the Company and pledge of shares of the Company held by the USL Benefit Trust. The company deposited a sum of Rs 6,280 million (Rs 628 crore), including prepayment penalty of Rs 40 million (Rs 4 crore), with the bank and instructed the bank to debit the amount from the cash credit account towards settlement of the loan and release the assets / shares pledged by the Company,” the note read.

“On March 31, 2015, the bank demanded an amount of Rs 474 million (Rs 47.4 crore) towards principal and interest on the said loan, which the company contested in the High Court of Karnataka,” added the note, saying that the bank had disputed the prepayment.

“We are ourselves concerned about the loss making subsidiaries. We would examine them, and the need for retaining those subsidiaries. We will surely ensure that we will rationalise the corporate structure,” Sharma said in response to a query. The company reported 11 loss making subsidiaries last fiscal.