United spirits surges on Diageo stake buy talks

Liquor baron Vijay Mallya confirmed that they were currently in talks with the UK-based spirit giant Diageo for a potential stake sale in the Mallya-owned United Spirits.

Speaking to media after the 13th annual general meeting (AGM) of  United Spirits Limited (USL) on Tuesday, Mallya said, “This (talks) is at discussion stage and there is no certainty that transaction will take place.” Refusing to comment further, Mallya said that he had nothing more than what was already in public domain.

Earlier United Spirits in their filing to the BSE had stated, “United Spirits and Diageo Plc confirm that the UK-based company is in discussion with it and United Breweries Holdings in respect of possible transactions to acquire an interest in the liquor firm.” 

Earlier reports indicated that the UK-based liquor maker of Johnnie Walker scotch among other big brands, Diageo were looking to pick up a 27% stake for a total amount of Rs 3,000 crore ($640 million).

Sources indicate that the money from the stake sale would include revival efforts of embattled Kingfisher Airlines (KfA). Mallya also lauded the recent decision by the government to allow 49% FDI stating that it was a good step and in the right direction.

Mallya will be facing KfA shareholders on Wednesday and will have to answer tough questions on the state of the company and plans for revival.

The recent decision on almost doubling KfA CEO Sanjay Agarwal’s salary to over Rs 4 crore while non-payment of salaries to staff for many months, would be another set of questions to be faced by Mallya as well.

The airline has been reeling under heavy losses and is reported to have a debt of over Rs 8,000 crore and operations were hit badly after pilots began protesting and reporting sick due to non-payment of salaries leading to large scale cancellations.

Meanwhile, KfA had suggested the names of Shrikant Ruparel and Lalit Bhasin to fill up the slots for the post of independent directors. Reports indicate that security clearances from the Directorate General of Civil Aviation (DGCA) has not yet been completed, leaving the company with only one independent director, Manmohan Singh Kapur. 

According to clause 49 of SEBI’s listing agreement, the board should comprise at least 50% independent directors.