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United Spirits gets MCA, I-T Dept notices to inspect books

Source: PTI
May 27, 2015 15:15 IST
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Vijay MallyaUnited Spirits has received notices from the Ministry of Corporate Affairs and the I-T Department for inspection of its book subsequent to a probe ordered by its new management over alleged irregularities in loans given by it to various companies of Vijay Mallya-led United Breweries Group.

USL said its Board has asked managing director and chief executive officer Anand Kripalu to further probe ‘possible existence of any other transaction of a similar nature’ with certain ‘additional parties’, in which the probe had raised concerns.

"The company has received a notice from the Ministry of Corporate Affairs for an inspection. . . of the books of accounts and other books of the company," USL said in a filing to Bombay Stock Exchange.

It further said: "A notice under Section 131 of the Income Tax Act, 1961, has also been received.

“The company is fully cooperating with the authorities in relation to the same."

On its move for a further probe, the company said its inquiry had identified certain ‘additional matters’ raising concerns ‘as to the propriety of the underlying transactions’ with ‘additional parties’ without specifying details.

"The board also believes that it is necessary to assess whether additional matters or the transactions with the additional parties were improper.

“The board has therefore directed the MD and CEO to expeditiously review the additional matters and transactions with the additional parties during the period covered by the inquiry and report to the board. . ." USL said.

In September last year, the board of USL, in which Diageo bought a controlling 55 per cent stake for about $3 billion, had ordered a ‘detailed and expeditious inquiry’ into ‘role of individuals involved and potential non-compliance’ of the Companies Act, 1956.

Subsequently, in April this year, the new management under Diageo had asked Vijay Mallya to step down from the chairmanship of USL alleging funds diversion to Kingfisher and other UB group entities.

It had alleged that ‘various improprieties and legal violations’ were found in a probe into loans worth Rs 1,337 crore (Rs 13.37 billion) given by USL to United Breweries (Holdings).

"The inquiry reported stated that, prima facie, between 2010 and 2013, certain transactions appear to have been undertaken and certain accounting entries appear to have been made to show a lower exposure of the company and its subsidiaries to UBHL than the exposure that actually existed at that time," the company said.

The probe had revealed that between 2010 and 2013, funds were diverted from USL and/or its subsidiaries to certain UB Group companies, including Kingfisher Airlines.

Mallya had, however, refused to step down stating ‘Diageo has contractual obligation to support’ him as chairman and director on the USL Board and insisted he would discuss the issue bilaterally with the world's largest spirits maker.

Image: Vijay Mallya; Photograph: Reuters

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