By Preetika Rana
NEW DELHI--A continuing battle between India's United Spirits
Ltd., the country's largest liquor company, and its flamboyant
founder and chairman, Vijay Mallya, intensified Saturday as board
members demanded he resign over alleged irregularities in company
accounts.
Board members of United Spirits, which was acquired by U.K.'s
Diageo PLC in 2012, asked Mr. Mallya to step down as chairman over
the weekend after a PricewaterhouseCoopers inquiry into the
company's books allegedly found "improprieties and violations,"
according to a person familiar with the matter.
At the heart of the dispute is a claim that Mr. Mallya used his
position as chairman to extend loans to some of his debt-laden
businesses, including Kingfisher Airlines, whose flying license was
revoked in 2013. The airline owes millions of dollars to its
workers as well as to airports, tax authorities and leasing
companies.
Mr. Mallya denied any wrongdoing and, in a statement, described
the PwC report as "full of half-truths and twisted facts." He said
he planned to challenge the report and continue as United Spirits'
chairman.
The Diageo-controlled company, in response, said it would move a
vote among key stakeholders to oust Mr. Mallya.
Diageo has invested billions of dollars to acquire a majority
stake in United Spirits in recent years. The multi-step deal
involved Diageo raising its initial 28% holding by buying an
additional 26% stake from public shareholders last year. Diageo has
faced massive write-offs since its initial takeover in 2012, and
has been scrutinizing company books and tightening corporate
practices in a bid to make United Spirits profitable again.
In September, board members said they had ordered a probe into
whether funds had been "improperly advanced" to other businesses
run by Mr. Mallya before the Diageo deal. The PwC report came in
response to the inquiry.
United Spirits posted a loss of 44.8 billion rupees ($703
million) for the financial year ended March 31, 2014. Its shares
fell 4% to 3,414 rupees on Friday.
Write to Preetika Rana at preetika.rana@wsj.com
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