Mallya resigns as USL chief; to be paid Rs 515 crore

Mallya will now be the Founder Emeritus of USL

Liquor baron Vijay Mallya on Thursday quit as chairman of United Spirits -- a company set up by his family but now controlled by global liquor giant Diageo – and would shift to UK even as his group firms fight the 'wilful defaulter' tags given by lenders.

Mallya's exit from the board of United Spirits ends a long-drawn tussle between him and Diageo following allegations of irregularities on loans given to UB Group companies.

"The time has now come for me to move on and end all the publicised allegations and uncertainties about my relationship with Diageo and United Spirits Ltd. Accordingly, I am resigning my position with immediate effect," Mallya said in a statement announcing his departure from the company.

He further said: "I am pleased to have been able to agree terms with Diageo and USL. The agreement we have reached secures my family legacy."

Commenting on his future course of action, Mallya who agreed to a global, excluding United Kingdom, 5-year non-compete arrangement with Diageo, said: "Having recently turned 60, I have decided to spend more time in England, closer to my children."

The development follows three state-run banks – Punjab National Bank, United Bank and State Bank of India -- declaring him, his group holding company United Breweries Holdings Ltd and long-defunct Kingfisher Airlines as wilful defaulters.

A bank consortium led by SBI has decided to auction Kingfisher House in Mumbai on March 17 this year in a bid to recover a part of Rs 6,963 crore (Rs 69.63 billion) debt due from Kingfisher.

Last year, Diageo had asked Mallya to step down as chairman and director of USL alleging fund diversion to Kingfisher and other UB group entities, a demand he had outrightly rejected.

USL had said in a report by PWC "various improprieties and legal violations" were found in a probe into loans worth Rs 1,337 crore given to UB Group firms.

Commenting on the issue, Mallya said he has agreed "a mutual release with both Diageo and USL from claims concerning the alleged irregularities disclosed by USL in April 2015".

"I am now the Founder Emeritus of USL which recognises my contribution in building United Spirits to what it is today and evokes great emotions and a degree of extreme satisfaction having steered USL from a sales volume of just under 3 million cases to over 120 million cases when control was passed to Diageo," he said.

On the group's sports venture, Mallya said he will become "the Chief Mentor of the Royal Challengers Bangalore", which is owned by USL.

"I have been passionate about this team since inception and am determined to do whatever I can to win the IPL trophy.

I am glad that my son, Sidhartha, will remain as a Director as he is equally passionate about RCB," he added.

USL is now controlled by the world's largest spirits maker Diageo, which had acquired an additional 26 per cent shares in USL for Rs 11,448.91 crore (Rs 114.49 billion) in July with an aim to take its total stake in the Indian firm to 54.78 per cent.