- Debt-laden Vijay Mallya signs 5-year non-compete agreement
- ICICI Bank's Sharma appointed as chairman of United Spirits
Diageo Plc.’s India unit has made a deal for Vijay Mallya to resign as chairman, and will pay the embattled liquor baron $75 million not to compete or interfere with the company for five years, ending a 10-month boardroom battle to oust him.
Mallya resigned with immediate effect as chairman of United Spirits Ltd., which Diageo bought in April 2014, the Indian company said Thursday. The Bengaluru-based distiller sought his resignation after an internal inquiry found he diverted funds to other companies under his control. Mallya has denied any wrongdoing.
This agreement “will bring an end to one chapter and allow us to open another,” United Spirits head of luxury and corporate relations Abanti Sankaranarayanan said in a briefing late Thursday, speaking on behalf of London-based parent Diageo. “We are very pleased.”
Removing the 60-year-old Mallya will end a period of uncertainty that has plagued Diageo ever since it took control of India’s biggest whiskey maker in 2014. United Spirits hasn’t made an annual profit since the financial year ended March 2012, due to successive write-downs to cover bad debts and transactions that occurred before its takeover.
Shares of United Spirits, the maker of McDowell’s No. 1 whiskey and Romanov vodka, rose as much as 6.4 percent to 2,835.30 rupees in Mumbai trading. The shares had lost about 11 percent this year through Thursday, compared with a 12 percent slump in the benchmark S&P BSE Sensex.
Mahendra Kumar Sharma, an independent, non-executive director of the company, and the chairman of India’s largest private lender ICICI Bank Ltd., has been appointed chairman effective immediately, United Spirits said in its statement.
Mallya, former chairman of Indian conglomerate United Breweries Holdings Ltd., has signed a global five-year “non-compete, non interference and non solicitation” with United Spirits and will take on a ceremonial title as founder emeritus of the Diageo unit, he said in a separate statement. He also said he will be spending more time in England, closer to his children.
He took over United Breweries Holdings, known as UB Group, from his father in the 1980s. Under Mallya’s watch, Kingfisher beer and United Spirits whiskey brands came to dominate the Indian market, positions they both hold to this day. He also started Kingfisher Airlines in 2005, one of India’s leading carriers until it was grounded in 2012 amid mounting debt.