Mallya's fate in USL to be decided on November 24

The fate of Vijay Mallya as the chairman of United Spirits (USL) will be decided on November 24, when shareholders decide on his continuing in India's largest liquor company.

The USL board has told Diageo, which holds 54.7 per cent stake in the company through its Dutch subsidiary Relay N V, to review contractual obligations that mandated Mallya to retain association with the company he once ruled.

USL, controlled by British liquor major Diageo, has also shared the inquiry report that indicts Mallya of fund diversions from USL to the now defunct airline Kingfisher Airlines.

In April, Mallya refused to quit when asked by the board after an inquiry report by auditor PricewaterhouseCoopers (PwC) India indicted him of diverting funds from USL to other United Breweries (UB) Group firms. Storming out of the meeting, Mallya said he would not resign and "would pursue contractual obligations with Diageo".

"As Mallya has not heeded the board's request to step down as director and chairman, the board has requested Diageo to expeditiously review the position in relation to its contractual obligations," USL said in a note to shareholders in its annual report for 2014-15.

USL said it has convened the annual general meeting on November 24, after the registrar of companies rejected its request for extension of the date due to pressure on its corporate and legal team to assist government investigators.

USL has made provisions of more than Rs 2,000 crore on loans to subsidiaries, related-party transactions - to other UB Group firms and losses due to shift in focus from core business.

Independent investigations by the Serious Fraud Investigation Office, the ministry of corporate affairs and the income-tax department are underway after the PwC inquiry report in April indicted Mallya of illegal fund diversions from USL to other UB Group firms and Kingfisher Airlines.

After cleaning accounts of USL, the company claims it has reduced the number of subsidiaries to 22 from 73, improving efficiency and reducing costs, bringing down debt to Rs 4,700 crore from Rs 8,500 crore.

"Our aim is to restore profitability and become best in class with respect to costs," said Vinod Rao, head of finance in the annual report.

In 2012, Diageo signed a deal to buy stake in USL, in which it controls majority 54.7 per cent stake. After it acquired the company and looked at the books, it found discrepancies, which it followed by appointing PwC to do forensic investigation.