United Spirits’ director & CFO quits amid investigation over financial irregularities
Photo Credit: P A Murali

P A Murali, chief financial officer and a director on the board of Diageo-controlled United Spirits Ltd, has quit the firm amid an ongoing investigation over possible financial and accounting irregularities at the top liquor maker in the country.

United Spirits said on Thursday that Murali has resigned as executive director and CFO and from the board of directors of all subsidiaries of the company on which he was a director.

While there are rumours that Murali's departure could be linked to the probe initiated by UK's Diageo over possible irregularities in the transactions involving the company and UB Group companies, the United Spirits' spokesperson declined to comment on that aspect.

"The investigation headed by USL MD Anand Kripalu is ongoing and the report is expected shortly," the spokesperson added.

United Spirits said that no decision has been take on the replacement for Murali. Last year, four independent board members of the firm had quit, including three en-masse last September, after the company delayed publishing its fiscal 2013-14 earnings by almost four months. One of them—HDFC's Renu Karnad—had quit earlier over a possible conflict of interest given the loans to the UB Group by the lender.

Murali has been a long-timer with Vijay Mallya's UB Group and was nominated to the board of United Spirits after Diageo took management control of the company. He was among the key people responsible for structuring the $3 billion transaction which resulted in Diageo acquiring 53 per cent stake in India's largest spirits company.

He was also a key member of the team who structured the transaction when Scottish & Newcastle acquired stake in another group firm United Breweries. Scottish & Newcastle was later acquired by Heineken.

Diageo had initiated a thorough investigation after completing a revised open offer to gain control of United Spirits last July. This covered the company's financial dealings with various UB Group companies including a loan of Rs 1,300 crore to United Breweries (Holdings), which may have been further lent to Kingfisher Airlines, a defunct aviation venture of UB Group. United Breweries (Holdings) is a public listed group holding firm of the group.

United Spirits was forced to make a provision of Rs 330 crore for FY14 on this eight-year loan.

The ongoing investigation also covers a loan of Rs 600 crore to various business associates of United Spirits, including third-party bottlers.

United Spirits scrip was trading at Rs 3,550 a share on BSE, up 0.73 per cent in a weak Mumbai market at 2PM on Thursday.

(Edited by Joby Puthuparampil Johnson)

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