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BW Businessworld

Noise Against Mallya Increases

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The continuation of Vijay Mallya, who has been declared a 'wilful defaulter', on United Spirits board would constrain the company from raising debt in the country, according to proxy advisory firm IiAS.

The firm has advised United Spirits Ltd's (USL) shareholders to vote against the proposal to re-appoint Mallya as director on the board.

Earlier this month, United Bank of India had declared Kingfisher Airlines, its promoter Vijay Mallya and three other directors as wilful defaulter citing alleged diversion of funds.

State-owned UCO Bank has also said that it was mulling options of sending wilful defaulter notice to debt-ridden Vijay Mallya-owned Kingfisher Airlines, which is now grounded.

"We are weighing the possibility of sending wilful defaulter notice to Kingfisher Airlines. The bank's exposure to the company is Rs 400 crore," CMD of UCO Bank Arun Kaul told reporters on the sidelines of CII Banking Colloquium.

United Bank of India has already declared Kingfisher a wilful defaulter while SBI, PNB and IDBI have initiated such a move.

Kingfisher Airlines and directors declared as wilful defaulters would not be able to borrow from banks in the future. They would also lose director-level positions in companies and criminal proceeding could be initiated against them, if warranted, to recover the money.

"... until this matter (regarding wilful defaulter) is resolved, Vijay Mallya continuing on the board will constrain USL's ability to raise debt from the Indian financial system," IiAS (Institutional Investor Advisory Services) said in a report.

USL is a Diageo subsidiary and can access funds support from its parent company. However, this is not an optimum way of doing business, it added.

The annual general meeting of USL is scheduled for September 3

BSE, NSE To Shift 2 UB Group Cos To Restricted Trade Segment
Meanwhile, Leading bourses BSE and NSE have taken action against Vijay Mallya-led UB group firms Kingfisher Airlines and UB Engineering for non-compliance to timely reporting of financial results for two consecutive quarters.

The exchanges will shift these companies to restricted trade category or 'Z' segment from September 24.

Under 'Z' segment, no speculative trading is allowed and delivery of shares and payment of consideration amount are mandatory.

In a similar-worded circulars, the exchanges have said that these "scrips (Kingfisher Airlines and UB Engineering) will be transferred to 'Z' group with effect from Wednesday, September 24, 2014, due to non-compliance for two consecutive quarters i.e March 2014 and June 2014 for the Clause-41 of the Listing Agreement."

Clause-41 of the Listing Agreement deals with non-compliance to timely reporting of financial results.

Apart from Kingfisher Airlines and UB Engineering, BSE will shift another 25 companies including Arihants Securities, Birla Pacific Medspa, Pretto Leather Industries and Best & Crompton Engineering to the restricted trade category.

The National Stock Exchange has also announced similar action against another four companies California Software Company, Surya Pharmaceutical, Goenka Diamond & Jewels and Varun Industries. These companies are also part of the BSE list.

(Agencies)
 


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