Will Vijay Mallya start a liquor business in the UK now?

  • Ramsurya Mamidenna, Hindustan Times, Mumbai
  • Updated: Mar 12, 2016 13:12 IST
File photo of Vijay Mallya at the ‘Kingfisher Ultra Indian Derby 2016’ party in Mumbai. Industry speculates that he may start a liquor business in the UK. (AFP File Photo)

Liquor baron Vijay Mallya’s settlement agreement with Diageo has set tongues wagging over the possibility of his starting a new venture in the UK.

Diageo has agreed to pay Mallya $75 million in return for his stepping down from United Spirits, and paid him $40 million as soon as the ink had dried on the document. The rest will be paid in five instalments beginning next year.

The settlement agreement with Diageo, the controlling shareholder of United Spirits, includes a five-year non-compete clause that does not apply to the UK.

Mallya, now believed to be in the UK, is facing charges of defaulting on loans running up to Rs 7,000 crore owed by his now-defunct Kingfisher Airlines.

According to the head of a competing liquor company, there could be some residual equity stake of Whyte & Mackay which United Spirits sold in 2014 to The Philippines’ liquor company Emperador for 430 million British pounds.

A spokesperson for Vijay Mallya declined to comment on the issue of his possible business interests in the UK.

On February 25, United Spirits said Mallya has agreed to “global non-compete (excluding United Kingdom), non-interference and standstill obligations as regards the company for a period of five years following this date.”

Typically, non-compete agreements are signed when a person is leaving a business and undertakes to not enter a similar line of business for an agreed period. The agreement entails that Mallya will not get involved in liquor business in any country other than UK.

“(So) there is case here to believe that there is a similar business in the UK which is indirectly owned by him (Mallya), either through a family member or by a group of companies,” said Ramesh Vaidyanathan, founding partner of Advaya Legal.

While Mallya still has business interests in India, including his role as chief mentor of a cricket team and as owner of property, it is learnt that he will pursue his interests outside India, which are ring-fenced from liabilities within the country.

In his declaration to the Rajya Sabha of which he is a nominated member, Mallya has been listed as chairman of the London-based Kingfisher Beer Europe, and also that of two other US entities.

“We have a five year non-compete, non-interference and non-solicitation arrangement in place with Mallya with respect to both USL (United Spirits) and Diageo that is broad in scope and includes the exclusion of any board appointments to competitor companies. We are satisfied with the geographic scope of the non-compete and non-interference agreement,” Diageo said in response to a query from HT.

The company, however, did not comment on whether Mallya has existing business interests in the UK, saying such a query should be posed to Mallya.

Amit Vyas, a founding partner with Vertices Partners, says such arrangement, if true, would allow Mallya to continue/commence a competing liquor business in the UK.”

also read

Honda focuses on global cars as India models fail to attract buyers
Show comments