“The company is in consultation with its legal counsel to challenge the decision by taking appropriate legal action that may be required in this regard,” Bengaluru-based United Breweries (Holdings) said in a stock exchange filing on Tuesday.
The latest jolt for Mallya comes as banks, under pressure from regulators and the government to clean up their balance sheets, are aggressively pursuing their debtors to recover dues.
State Bank of India has already declared Mallya a wilful defaulter, after talks to get the UB Group chairman to clear debt of Rs 8,700 crore to a 17-bank consortium failed. Mallya had pledged his shares in United Breweries, United Spirits and United Breweries (Holdings) to banks, against which loans were given to Kingfisher Airlines. The UB (Holdings) stock was trading at Rs 20.20, lower by 11 per cent at 1.35 pm on the BSE.
With banks acting tough, Mallya is under pressure to salvage his pride, even as he has lost the bulk of his empire to global multinationals, Diageo and Heineken.
On Tuesday, UB (Holdings) said it planned to go to court against PNB’s decision.
Diageo and Heineken now control the majority stakes in United Spirits and United Breweries, respectively.
Both firms are aggressive in India as they tap into a young population and a growing economy.
In November, YES Bank unilaterally invoked 3.02 per cent of the shares to secure loans given to UB group companies. Last week, SBICAP Trustee Co initiated the process of selling Kingfisher House, the headquarters of the defunct airline, to recover dues.
Punjab National Bank (PNB) Managing Director Usha Ananthasubramanian on Tuesday said: “When people have the wherewithal to pay, they must pay. There are people who have money, yet they don’t want to pay.”
“Wilful defaulters also blocks your (banks as well as general public) access to finance,” Ananthasubramanian told PTI.
“We have also filed recovery suit in the DRT (debt recovery tribunal) and all the legal steps have to be taken,” she added.
“After hearing the representatives, the Committee declared them as wilful defaulters according to RBI guidelines,” she said.
According to RBI guidelines, once declared as wilful defaulters, no additional facilities will be granted to these borrowers by any bank or financial institution.
Besides, such companies and promoters) will be debarred from institutional finance for floating new ventures for a period of five years from the date of removal of their name from the list of wilful defaulters.