United Spirits announced that Vijay Mallya resigned with effect from 25 February 2016 from his position as chairman and non-executive director of the company, and from his position as a director of Royal Challengers Sports (RCSPL) and Four Seasons Wines.
Following Mallya's resignation, the Board of Directors of the company announced that Mahendra Kumar Sharma, independent director and chairman of the audit committee, has been appointed as the chairman of the board with effect from 25 February 2016.
Mallya's resignation brings to an end the uncertainty relating to the company's governance as well the ambiguity relating to certain historical transactions that were voted down by the company's shareholders in November 2014.
In addition to confirming his agreed resignation, Mallya has agreed global non-compete (excluding United Kingdom), non-interference and standstill obligations as regards the company for a period of five years following this date.
Mallya will have the honorary title of Founder Emeritus - USL. It is agreed that this title carries no authority, responsibility, rights or benefits within the Company or its group. Further, Sidhartha Mallya, Dr Mallya's son, will be a director of RCSPL which holds the franchise for the IPL team Royal Challengers Bangalore (RCB), for a period of two years or while RCB remains part of the USL Group, whichever is earlier.
Dr Mallya will have the honorary title of Chief Mentor while Mr Sidhartha Mallya remains on the board of RCSPL. The members of the board of RCSPL will be able, if they wish, to consult with Dr Mallya.
In addition to the above, Dr Mallya has procured or agreed to procure the termination by the relevant counter parties of certain historical agreements to which the company is party and that were voted down by the shareholders in November 2014, namely, services agreement with Kingfisher Finvest India, dated 3 July 2013; Advertising agreement in respect of Force India with Watson, dated 1 October 2013 (which amended and restated the original agreement dated 3 July 2013) (the advertising agreement); Sponsorship agreement with United Racing & Bloodstock Breeders, dated 11 June 2013; Sponsorship agreement with United Mohun Bagan Football Team, dated 11 June 2013; Aircraft services agreement with UB Air, dated 11 June 2013; Properties call agreement with PE Data Centre Resources, dated 11 June 2013 (the properties call agreement); and Contribution agreement with Vittal Mallya Scientific Research Foundation, dated 11 June 2013.
These agreements were entered into prior to Diageo's acquisition of shares of the company from United Breweries (Holdings) (UBHL) on 4 July 2013. Net profit of United Spirits declined 45.20% to Rs 40.95 crore on 22.87% rise in net sales to Rs 2638.09 crore in Q3 December 2015 over Q3 December 2014. United Spirits makes alcoholic beverages. It is a subsidiary of British multinational Diageo plc.
The company's stock after a positive opening, jumped 6.4 per cent to Rs 2,835.30 on BSE. On NSE, it climbed 6.28 per cent to Rs 2,833. Mallya, who along with his group firms, who is fighting the 'wilful defaulter' tag in relation to loans taken by the long-defunct Kingfisher Airlines, said he would now "spend more time in England" closer to his children.
