Mallya’s UB Group loses another company

With Mangalore Chemicals & Fertilisers (MCF) becoming a wholly-owned subsidiary of Saroj Poddar’s Zuari Agro Chemicals, another listed company has slipped out of the hands of UB Group chairman Vijay Mallya.

Poddar is expected to meet Mallya towards the end of May to take a call on management restructuring, which is most likely to see more representation for Zuari on the board.

Among the listed entities, Mallya now owns only UB Engineering while UB Holdings and McDowell Holdings as the names suggest are holding companies.

The crown jewel, United Spirits, is owned by London-based Diageo Plc, while Dutch company Heineken owns more stake than UB Holdings in beer maker United Breweries.

Infrastructure company UB Engineering does not have a fully functional board nor has it declared quarterly results for the last one year and trading on its stocks has been suspended.

However, in all these companies, Mallya continues to be the chairman.

In the case of MCF, Mallya was forced to resign from the board in December last. This followed a directive from the lender consortium led by State Bank of India, which informed the company that it will no longer be able to extend any loans as Mallya had been declared a “wilful defaulter”. His reign as the chairman of United Spirits is also in doubt with the board asking him to resign.

Unlike United Spirits and United Breweries, which were bequeathed to Mallya by his father, Vittal Mallya, MCF was bought by Mallya after the Karnataka government put it on the block. It was also Mallya’s first move to diversify into sectors unrelated to the liquor business.

Soon after the UB Group took over the company in 1991, it was hit by labour issues and was later declared a sick company and underwent financial restructuring under the Board of Industrial & Financial Reconstruction (BIFR). Darius Mehta, a trusted lieutenant of Mallya, took over as the head of the company around the same time it was declared sick and nursed it back to health.

However, Mallya was later forced to pledge MCF shares to raise funds for the ailing Kingfisher Airlines and this was the beginning of the end of his control over the Mangalore-based fertiliser company. As he was unable to return money to the lenders, his pledged shares were put up for sale and Saroj Poddar stepped in to mop up these shares in the open market.

Till recently, Pune-based Deepak Fertilisers had planned to take over the company but withdrew at the last minute because of funding issues which left Zuari Agro the only company in the field to take over MCF.

Earlier this week, Zuari Agro Chemicals announced that its wholly owned subsidiary, Zuari Fertilisers and Chemicals, had acquired an additional 36.56 per cent stake, which took its holdings in MCF to 53.03 per cent.

The only other company of any importance in the UB Group, United Breweries, is still being run by Mallya’s managers where he is also the chairman. But with most of his UB shares pledged with the lenders, it remains to be seen for how long his reign will continue.

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