USL seeks shareholders' nod to guarantee PDL's Rs 100 cr loan

Diageo-controlled United Spirits Ltd (USL) is seeking nod from its shareholders through a special resolution to provide corporate guarantee to a Rs 100-crore loan that its subsidiary Pioneer Distillers is availing from Standard Chartered Bank.
In a BSE filing, the company said its Board of Directors had on November 2, approved a decision of "providing corporate guarantee" for the financial assistance of Rs 100 crore that Pioneer Distilleries is seeking from the bank to be used for funding capacity expansion and for other capital needs.
The loan would augment the production capacity of Pioneer Distillers Ltd (PDL), which would in turn secure supply of ENA (extra neutral alcohol) and IMFL to UK-based Diageo Plc firm.

"This in turn will ensure security of supply of ENA and IMFL to USL," USL said to its shareholder.
USL holds 75 per cent shares of Hyderabad-based PDL .
USL said PDL has unique synergy with it as the latter has the infrastructure and capability to produce finest quality of ENA, which is used for the production of alcoholic beverages such as vodka, gin, whiskey, cane, etc by the Diageo group firm.

"USL has robust growth trend and require additional quantity of ENA every year. USL and its associates units are buying entire ENA produced in PDL," USL said.
Moreover, PDL is producing USL brands at its bottling facility and selling it to USL in accordance with an arrangement.

USL said it will be reporting the findings of its
additional inquiry spearheaded by its Managing Director and CEO Anand Kripalu to concerned authorities for further action.
"In light of these findings, and based on the expert advice received, including from senior counsel in India, the board directed that copies of the MD and CEO's report (including the additional inquiry report) be provided to concerned authorities," the company said.
This is being done forthwith and the board has resolved that the company would cooperate with all relevant authorities in relation to these matters, it added.
USL spokesperson said the findings of the additional inquiry relate to "historical matters before Diageo consolidated the USL business in July 2014" and ruled out any further financial burden to the company.

"Based on our understanding as of today, we believe there will be no further material financial implications to USL," the spokesperson added.
Mallya is currently wanted in India and is facing charges of money laundering. A consortium of 17 banks lead by SBI has been trying unsuccessfully to recover dues of over Rs 9,000 crore from now defunct Kingfisher Airlines, which was promoted by him.
Last month the Enforcement Directorate had attached assets worth Rs 1,411 crore belonging to Mallya and one of his companies in connection with its money laundering probe in the the alleged IDBI bank loan default case.

Mallya is currently staying in the UK after leaving India in March this year. His passport has been revoked by the Indian government. He has been indicating against any imminent return to India in the wake of various legal and regulatory troubles.