Sitharaman on corporate defaults: ‘Mallya issue can’t undo good work done by corporates’

"And just that one incident cannot be reflective of all the good work, which is being done by so many good companies, which are not just in India but also carrying the flag abroad,” she told reporters in an interview.

By: ENS Economic Bureau | New Delhi | Updated: March 26, 2016 1:32 am
vijay-mallya-rcb-759 The minister was responding to a question whether Mallya episode will dent India’s image among investors.

Corporate misconduct happens all over the world and one episode of Vijay Mallya cannot undo the good work done by domestic and international companies in India, commerce minister Nirmala Sitharaman said on Friday. “All over the world, corporate misconduct happens. You have heard of so many different stories all over the world … it is not only in India. And just that one incident cannot be reflective of all the good work, which is being done by so many good companies, which are not just in India but also carrying the flag abroad,” she told reporters in an interview.

The minister was responding to a question whether Mallya episode will dent India’s image among investors. Sitharaman, however, said the nation could learn lessons and take steps to prevent recurrence of such corporate misdemeanours in future.

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“Many multinationals from India today are performing all over the world. So I don’t think it will have a bad impact although we can use that as an example where if there are lessons to be learned about how we need to have a bit more due diligence, we need to do the course correction,” he said.

Mallya, whose group company owes over Rs 9,000 crore to 17 banks, had left the country on March 4 and currently is in the UK. His financial dealings are being probed by several investigative agencies, including Central Bureau of Investigation (CBI), Enforcement Directorate and tax department.

Reserve Bank of India Governor Raghuram Rajan had recently said people like Mallya could not lead a lavish life on borrowed money and continue to remain a defaulter, after the liquor baron threw a lavish party to celebrate his 60th birthday.

On Wednesday, Mallya announced plans to exit the board of Sanofi India Limited after being the company’s chairman for the last 33 years. Mallya became first casualty of the recent decision by market regulator Sebi that wilful defaulters are barred from taking board positions in listed companies.

State Bank of India and Punjab National Bank have already declared Kingfisher Airlines promoted by Mallya as a wilful defaulter of loans. Sebi had said no issuer should make a public issue of equity securities/debt securities/non-convertible redeemable preference shares, if the issuer company or its promoter or its director is in the list of wilful defaulters.

The Enforcement Directorate has summoned Mallya who is currently out of the country, even as banks have moved the courts seeking his arrest and confiscation of his passport. Banks have also asked to stop the $75-million exit payout Mallya got from Diageo for resigning as chairman of the spirits company. However, Diageo had already paid $42 million to Mallya on the day he signed the agreement on February 25.

with PTI inputs

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