Dive Brief:
- Board members of India's United Spirits Ltd. are demanding that the company's founder and chairman, Vijay Mallya, resign based on allegations of "improprieties and violations" in the company's books, according to a source from The Wall Street Journal.
- The source said that the main argument for his ousting was "a claim that Mr. Mallya used his position as chairman to extend loans to some of his debt-laden businesses," reported The Wall Street Journal. This includes Kingfisher Airlines, which lost its flying license in 2013 and owes millions of dollars to its employees, airports, tax authorities, and leasing companies.
- Mallya denies any such wrongdoing, saying in a statement that the allegations are "full of half-truths and twisted facts."
Dive Insight:
United Spirits, owned by Diageo, is India's largest liquor company, thus Diageo is reevaluating its position on the matter. Last year, Diageo increased its stake in United Spirits, now owning about 55% of the company, after Diageo originally acquired a 28% stake in 2012.
Since, The Wall Street Journal reported, "Diageo has faced massive write-offs since its initial takeover, and has been scrutinizing company books and tightening corporate practices in a bid to make United Spirits profitable again." United Spirits board members ordered this investigation of Mallya in September to examine how Mallya used company funds before Diageo came on board in 2012.