Other Photo Credit: Reuters

United Spirits seeks shareholders’ nod to report sick to BIFR

By PTI
30 December, 2015

Diageo-owned United Spirits is seeking approval from its shareholders to report sick to BIFR as its accumulated losses as on March 31, touched 86 per cent of peak net worth during the past four fiscal years.

As per the Sick Industrial Companies (Special Provisions) Act, 1985 (SICA), if the accumulated losses of a company, at the end of any financial year have resulted in erosion of 50 per cent or more of its peak net worth during the preceding four financial years, such firm is required to report to the Board for Industrial and Financial Reconstruction (BIFR).

In a notice to the shareholders for an EGM on January 22, United Spirits today said, as per the audited annual accounts for the fiscal ended March 31, “the accumulated losses of the company as at March 31, 2015 is 86 per cent of its peak net worth during the four financial years preceding the financial year ended March 31, 2015”.

“Accordingly, this extraordinary general meeting (EGM) is being convened to consider and approve the enclosed report of the Board of Directors on such erosion and its causes, and the measures being taken as per the relevant provisions of SICA, and also to approve the reporting of such erosion to BIFR in terms of Section 23 of SICA,” it added.

The company said its accumulated losses as on March 31, at Rs 5,045.45 crore is greater than 50 per cent of the peak net worth in the immediately preceding four financial years at Rs 5,849.62 crore.

The two main reasons for the losses are “diminution in the value of long-term investments in subsidiaries and loans and advances to subsidiaries due to low capacity utilisation, negative margins, or strategic shift in business (Rs 716.16 crore)” and “provision on advances to United Breweries (Holdings) Ltd (Rs 995.45 crore)”, it said.

Others reasons are diminution in the value of investments and advances in overseas subsidiaries (Rs 184.85 crore), loss on sale of shares in subsidiaries (Rs 10.84 crore), profit on sale of manufacturing unit (Loss of 35.65 crore), provision for doubtful debts, advances and deposits (Rs 113.40 crore) and provision for sales and other taxes (Rs 97.32 crore).

USL said it has generated cash profits during six months ended September 30, and it is taking steps including entering into certain arrangements with certain overseas subsidiary companies of Diageo Plc for manufacture and sale of certain key brands, to improve its financial health.

In April last year alleging fund diversion to Kingfisher and other UB Group entities, USL had asked its erstwhile Promoter and Chairman Vijay Mallya to quit the board, even as the liquor baron rejected the demand and the charge.

The board of USL, in which Diageo had bought a controlling 55 per cent stake for about USD 3 billion, alleged “various improprieties and legal violations” were found in a probe into loans worth Rs 1,337 crore given by USL to various UB Group firms.

USL said it has generated cash profits during six months ended September 30, 2015, and it is taking steps, including entering into certain agreements and/or arrangements with certain overseas subsidiary companies of Diageo Plc for manufacture and sale of certain key brands, to improve its financial health.

“These agreements/arrangements allow the company to gain a diverse, global product portfolio, additional sales revenue and improve the company’s standing in the market. The benefits have been evidenced by our improved profitability declared in the previous two quarters ended June 30, 2015 and September 30, 2015,” it added.

In April last year alleging fund diversion to Kingfisher and other UB group entities, Diageo-owned United Spirits had asked its erstwhile promoter and current chairman Vijay Mallya to quit the board, even as the liquor baron outright rejected the demand and the charge.

The board of United Spirits Limited (USL), in which Diageo has bought a controlling 55 per cent stake for about USD 3 billion, 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.


Leave Your Comment
United Spirits to sell two units in Andhra Pradesh & Kerala

United Spirits to sell two units in Andhra Pradesh & Kerala

Bhawna Gupta 1 year ago
India’s largest distiller United Spirits (USL), controlled by the world’s biggest spirits maker by revenues Diageo Plc, has decided to hive off its Malkajgiri unit...
M&M puts in over $60M to raise stake in Mahindra Two Wheelers to 93%

M&M puts in over $60M to raise stake in Mahindra Two Wheelers to 93%

Diksha Dutta 4 years ago
Mahindra & Mahindra Ltd (M&M) has injected Rs 340 crore more to raise its stake in the two-wheeler venture Mahindra Two Wheelers Ltd – a...
Diageo to pay over $640M to UB Group for United Spirits

Diageo to pay over $640M to UB Group for United Spirits

Pooja Sarkar 5 years ago
Diageo, the world’s largest spirits company by revenue, is looking to close the deal to buy almost the entire stake held by the UB Group...
No Comments

United Spirits seeks shareholders’ nod to report sick to BIFR

Powered by WordPress.com VIP