USL shares down 2.5% as Mallya asked to quit board

Shares of United Spirits fell by 2.5 per cent today after Vijay Mallya was asked to quit the board over alleged fund diversion to Kingfisher and other UB Group entities — even as the liquor baron said he intends to continue as its Chairman.

The stock lost 2.44 per cent to Rs 3,330 on the BSE, while at NSE, it went down by 2.52 per cent to Rs 3,330.

Asked to quit the United Spirits’ board, Mallya struck a defiant note saying he “intends” to continue as the Chairman and refuted the charges made by the company’s board with regard to its prior-period accounts.

Mallya, who has sold controlling stake in United Spirits (USL) to the world’s largest spirits maker Diageo, also said that only “shareholders can oust a Director” and he would continue to function as USL Chairman “in the normal manner”.

Alleging fund diversion to Kingfisher and other UB Group entities, United Spirits’ board had on Saturday asked Mallya to quit the board. The company said it has “lost faith” in Mallya and would go to shareholders if he refuses to resign.

Reacting to the charges, Mallya said in a statement, “All I wish to say is that I intend to continue as Chairman of USL in the normal manner. This includes chairing monthly operating review meetings and board meetings.”

Diageo now holds a controlling stake of around 55 per cent stake in USL, which it had acquired for about $3 billion, while Mallya continues to own a small stake of 0.01 per cent in his personal capacity. Some of his UB Group firms also continue to hold stakes totalling to about 3 per cent.

The USL board asked Mallya to step down after “various improprieties and legal violations” were found in a probe into loans worth Rs 1,337 crore given by USL to UB Group firms.

Weakness was also seen in other UB Group stocks, where shares of United Breweries Ltd plunged 11.15 per cent, United Breweries (Holdings) Ltd tumbled 6.1 per cent.

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