Board, shareholders cleared USL accounts: Mallya

Vijay Mallya, chairman of the UB group, has said the accounts of United Spirits (USL), under investigation by multiple government agencies, were cleared by the company’s board, its shareholders, auditors and government bodies.

“Under my watch, USL accounts were cleanly audited and approved by the board and shareholders and accepted by all regulatory authorities. I do not see any cause for worry,” Mallya said on ongoing investigations into the company’s accounts by the ministry of corporate affairs, the income tax department and the Securities and Exchange Board of India.

The company’s accounts for the years 2010 to 2014 were investigated by Diageo after it took over the company in 2014.

The audit by PwC found Rs 2,100 crore diverted from USL to various UB group companies and the now defunct Kingfisher Airlines. USL informed the relevant government authorities about the diversion.

On Thursday, the company wrote off a Rs 995-crore loan to UB Holdings. The total loan was Rs 1,330 crore, of which Rs 330 crore was written off last year. USL also made Rs 180 crore of provisions for loans and investments, relating to Whyte & Mackay, and provided for a Rs 360-crore diminution on long-term investments in subsidiaries.

The company provided Rs 350 crore for advances to subsidiaries and took a Rs 120 crore charge for impairment of goodwill. USL made provisions of Rs 21.6 crore for interest claimed on doubtful advances written off in the previous year. It provided Rs 67.8 crore and Rs 44.5 crore booked in the standalone and consolidated accounts, respectively, for transactions with third parties that were identified in the internal audit commissioned at the start of the year. The total write-off was Rs 1,700 crore.

As a result, USL made a loss of Rs 1,956 crore in 2014-15 on a revenue of Rs 8,049 crore. The company’s board had asked Mallya to step down as chairman, but he refused.

USL’s shares fell by another 2.27 per cent on Thursday to close at Rs 3,429.

Mallya’s defence is that Diageo signed the $2.1 billion acquisition deal knowing fully well about all the loans after a six-month due diligence. Diageo, on the other hand, claims these loans and advances were not reported to it.

Mallya has also questioned the role of PwC as auditor, when for 2011-12 the accounts were signed by itself.