United Spirits seeks shareholders' nod to go to BIFR as net worth erodes over 86%

United Spirits is seeking shareholders' nod to declare itself a sick company after the liquor maker saw an 86.3 per cent erosion in its net worth, as per the audited annual accounts for the fiscal year ended 31 March 2915.

"The accumulated losses of the company as at March 31, 2015 is 86 per cent of its peak net worth during the four financial years preceding the financial year ended March 31, 2015," USL said in a filing with the Bombay Stock Exchange. 

USL, which is majority owned by world's top liquor maker Diageo, will seek shareholders' nod to report sick to BIFR as its accumulated losses as of 31 March 2015, touched 86 per cent of peak net worth during the past four financial years.

Diageo blames the alleged losses on fund diversions by Vijay Mallya, chairman of the now-defunct Kingfisher Airlines and United Spirits.

As per the Sick Industrial Companies (Special Provisions) Act, 1985 (SICA), if the accumulated losses of a company, at the end of any financial year have resulted in erosion of 50 per cent or more of its peak net worth during the preceding four financial years, such firm is required to report to the BIFR.

''This EGM is being convened to consider and approve the enclosed report of the Board of Directors on such erosion and its causes, and the measures being taken as per the relevant provisions of SICA, and also to approve the reporting of such erosion to BIFR,'' USL said in a notice to the shareholders for an EGM on 22 January.

The company said its accumulated losses as of 31 March stood at Rs5,045.45 crore, which is more than 50 per cent of the peak net worth in the immediately preceding four financial years of Rs 5,849.62 crore.

USL said it has made provision of Rs2,082 crore because of losses and doubtful debts during last fiscal.

USL stock was down 2.69 per cent or Rs82.40 at Rs2,982.45 on Tuesday's closing, taking its market capitalisation to Rs43,300 crore.