Vijay Mallya-owned United Spirits is set to agree to an out-of-court settlement with Allied Blenders and Distillers (ABD) a case relating to a brand currently owned by the latter.

According to sources close to the development, Kishore Chhabria-owned ABD will pay as one-time settlement about Rs 8 crore to USL, which in turn will withdraw all cases against ABD in the Delhi and Calcutta High Courts.

The cash settlement could come in handy for the UB Group which is trying to raise resources to pay salaries to the employees of Kingfisher Airlines. It could also pave the way for USL to move one step towards striking a deal with Diageo, which is looking at buying a stake in Mallya’s liquor company.

United Spirits had filed a case in the Delhi High Court (originally filed by Shaw Wallace before it merged with United Spirits) seeking return of the “Officer’s Choice” whisky brand. Kishore Chhabria’s late brother Manu Chhabria owned Shaw Wallace before it was sold to United Spirits.

According to trade magazine International Wine & Spirits Research , the Officer's Choice whisky sold 17.10 million cases last year.

In the Calcutta High Court, USL had filed a case against ABD restraining the company from raising fresh capital. ABD’s Executive Vice- Chairman and Chief Executive Officer Deepak Roy had earlier said that the company was planning to invest about Rs 500 crore over a three-year period for expanding its business and for launching newer brands in the market. The company was planning to raise these funds either through an IPO or through private placement.

Roy, who has a five per cent stake in ABD, earlier headed the Indian operations of Diageo India before joining Kishore Chhabria company in 2007.

giriprakash.k@thehindu.co.in

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