United Spirits writes off Rs566 cr dues from UB Group entities
27 May 2016
United Spirits Ltd (USL) claims to have written off Rs566 crore of irrecoverable dues in connection with funds "diverted" from the company and its subsidiaries to Vijay Mallya-led UB Group firms, including defunct Kingfisher Airlines.
USL, now owned by British multinational Diageo plc, had in 2013-14 said "certain parties had claimed that they had advanced certain amounts to certain alleged UB Group entities and that the dues owed by such parties to the company would be paid / refunded by them to the company only on receipt of their dues from such alleged UB Group entities".
These dues to the company were on account of advances made by the company "in earlier years under agreements for enhancing capacity, obtaining exclusivity and lease deposits in relations to tie-up manufacturing units agreements for specific projects or dues owing to the company from customers."
USL had initiated a management inquiry into the alleged fund diversion.
It was found, "between 2010 and 2013 many of these transactions were diverted from the company and or its subsidiaries to certain UB Group, including Kingfisher Airlines."
"In connection with the recovery of funds that were diverted from the company and / or its subsidiaries, pursuant to the decision of the board at its meeting held on 25 April 2015 the company initiated steps for recovery against the relevant parties so as to seek to expeditiously recover the company's dues from such parties, to the extent possible," USL said in a regulatory filing.
USL said it has been successful in arriving at a settlement in a few cases. During the quarter ended 30 September 2015 the company reached a settlement with one of the parties, after which the party had withdrawn claims aggregating to Rs27.86 crore and, accordingly, the amount has been written back.
USL said it has also signed settlement agreement with "three other parties" thereby reversing a provision with respect to interest claimed amounting to Rs26.46 crore.
"Settlements with other parties have not been reached as yet and management is continuing discussions in this regard. During the year ended 31 March 2016, based on its assessment of recoverability, the management has written off Rs566 crore out of the amounts provided for with respect to the aforesaid counterparties," the company said.
Earlier, based on the preliminary findings of the internal inquiry, USL management had provided Rs649.55 crore in the financial statements for the financial year ended 31 March 2014 as recoverable amount.
USL also reported a narrower quarterly loss compared to last year as it recorded lower one time charges. Net loss for the fourth quarter ended 31 March 2016 fell to Rs8.99 crore, from Rs1,799.28 crore a year earlier.
On a standalone basis, the company recorded a onetime loss of Rs21.08 crore during the fourth quarter.
Exceptional items included a profit on sale of United Breweries Ltd (UBL) shares of Rs853.6 crore, provision of loans and advances to an investment in subsidiaries of Rs140.1 crore and a write back of provisions for doubtful advances of Rs22.75 crore.
This was the first quarterly results of the company since former liquor baron Vijay Mallya stepped down as the chairman in February.
Net sales rose 13 per cent to Rs2,283 crore helped by higher revenue from its Premium and Above segment, which includes Smirnoff, VAT69 and Johnnie Walker. The segment contributed about 37 per cent of sales volumes and 51 per cent of net sales, USL said.