Vijay Mallya finds 75 million reasons to resign as USL chairman
Vijay Mallya, chairman of Bengaluru-based UB Group, has resigned from the chairmanship of group company United Spirits Ltd, and said he plans to move to England to be closer to his children.business Updated: Feb 26, 2016 09:42 IST
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.
VIJAY MALLYA’S FULL STATEMENT:
“Having recently turned 60, I have decided to spend more time in England, closer to my children.
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. Accordingly, I am resigning my position with immediate effect.
I am pleased to have been able to agree terms with Diageo and United Spirits Limited. The agreement we have reached secures my family legacy.
I have agreed a mutual release with both Diageo and United Spirits from claims concerning the alleged irregularities disclosed by USL in April 2015. I am now the Founder Emeritus of United Spirits which recognises my contribution in building United Spirits to what it is today and evokes great emotions and a degree of extreme satisfaction having steered United Spirits from a sales volume of just under 3 million cases to over 120 million cases when control was passed to Diageo.
I fondly remember, as a young boy, launching McDowell’s, which is the largest selling brand in the industry. I also recall the challenges and personal sacrifices in the tumultuous acquisition of Shaw Wallace and the Royal Challenge brand. I feel both happy and satisfied that I helped create United Spirits as a clear market leader in the industry which contributed immensely to the local state economies.
On the sporting front, I will now be the Chief Mentor of the Royal Challengers Bangalore. I have been passionate about this team since inception and am determined to do whatever I can to win the IPL trophy. I am glad that my son, Sidhartha, will remain as a Director as he is equally passionate about RCB.
I have also agreed to a global (excluding United Kingdom) 5 year non-compete arrangement.”