UBL to initiate process to recover Rs 1,337 crore

UK's Diageo group-controlled United Spirits today alleged irregularities and potential violations of law in diversion of funds by the firm's erstwhile promoter Vijay Mallaya-led UB Group and said it is initiating process to recover dues totaling to Rs 1,337 crore.
In its first quarter earnings statement, USL said certain pre-existing loans, deposits or advances exited on its books as on March 31, 2013 which were consolidated into as unsecured loan to United Breweries (Holdings) Ltd. Such dues, together with an interest of 9.5 per cent per annum, aggregated to Rs 1,337.40 crore.
After Diageo gained control of the firm, an inquiry was initiated which has found that between 2010 and July 2013 transactions showed lower exposure of the company to UBHL than what actually existed.

"Prima Facie, this indicates various improprieties and potential violations of provision" and the listing agreements signed by the company with various stock exchanges in India on which it is listed," the company said in a filing.
It further said that UBL "is in the process of evaluating its right and remedies in relation to such violations".
"The amounts owed by UBHL to the company's wholly-owned subsidiaries had been assigned by such subsidiaries to the company and recorded as loans from such subsidiaries in the books of the company.

"Such dues (together with interest) aggregating Rs 1,337.40 crore were consolidated into and recorded as an unsecured loan by way of an arrangement entered into between the company and UBHL on July 3, 2013," UBL said.

UBL's new management, in a board meeting held on April 25, 2015 decided to take immediate steps after the inquiry report suggested diversion to certain UB group companies particularly to Kingfisher Airlines.
"In connections with recovery of the funds that were diverted from the company and/or its subsidiaries, pursuant to the decision of the board as its meeting held on April 25, 2015, the company is in the process of initiating steps for recovery against the relevant parties so as to seek to expeditiously recover the company's dues from such parties to the extent possible," USL said in a BSE filing.

UBL said the company further said that the inquiry report stated that "between 2010 and 2013, funds involved in many of these transactions were diverted from the company and or its subsidiaries to certain UB group companies including in particular, Kingfisher Airlines".
The diverted amounts were included in the provisions made by the company in the financial statements for the previous financial year.
"The inquiry also indicated that the manner in which certain transactions were conducted, prima facie,indicates various improprieties and potential violation of provisions, inter alia, of the Companies Act and the listing agreement signed by the company with various stock exchanges in India on which its securities are listed," USL added.

USL further informed that it has already received notices from the Ministry of Corporate Affairs and IT Department for inspection of its book over irregularities in loans.