It is an unhappy situation for the ‘King of Good Times’: The wilful defaulter label slapped on Vijay Mallya on Monday comes even as the UB Group chairman is set to chair the annual shareholder meetings of two of his companies this week. The move will potentially put more pressure on Mallya, in addition to the web of litigation that has crippled his group’s parent company in the past year.
United Bank of India’s move might threaten Mallya’s position on the board of the group companies as it might impact their ability to raise funds from banks. The step is probably the first such instance since the RBI’s circular on wilful default a year ago, said Shriram Subramanian, founder and MD of InGovern Research Services, an independent proxy advisory and corporate governance research firm. “It’s a question of how much pressure banks want to apply. All along, the banks have been very mild,” he told FE.
Mallya is the chairman of liquor company United Spirits (USL) and brewer United Breweries (UBL), though he isn’t a majority shareholder in either. While British drinks firm Diageo controls 54.78% of USL, Dutch brewer Heineken has marginally increased its stake in UBL by buying Mallya’s pledged shares sold by lenders. Diageo refused to comment when asked if it perceived any negative impact to the operations of USL with Vijay Mallya being declared a wilful defaulter.
Meanwhile, A K Ravi Nedungadi and Subash Gupte — who were also named as wilful defaulters along with Mallya — are seeking re-appointment as directors in the annual general meetings of UBL and Mangalore Chemicals and Fertilisers (MCF) slated for Thursday.
Kingfisher Airline’s troubles had seen Mallya appear before a magistrate court in Bangalore in July seeking bail in three criminal cases filed by the income-tax department on the carrier’s alleged failure to remit tax deducted at source (TDS). While Mallya’s primary investment arm, United Breweries Holdings (UBHL) has seen its stake in group companies dwindling with lenders selling pledged shares, the company faces a virtual freeze on its assets because of the nine winding-up petitions it is contesting in the Karnataka High Court. With an embargo in place, the company has not been able to sell the luxury apartments it is building in Bangalore and also lease out its commercial office space.