Noise against Vijay Mallya increases: Firm advises United Spirits to get him off the board

Institutional Investor Advisory Services (IIAS) has now urged United Spirits not to re-elect Vijay Mallya to the board at the annual general meeting on September 30. 

Vijay Mallya has been facing problems with Kingfisher Airlines, and United Bank of India has already declared Mallya and three other directors wilful defaulters. Being declared a wilful defaulter means having trouble to access funds in future or getting the post of a director in a company. This is crucial as United Bank is a part of a consortium of 17 banks who have their money stuck in Kingfisher Airlines and have had to write it off as bad loan.

Following this even the State Bank of India has sent a wilful defaulter notice to the bank, and the time given to Kingfisher to respond is still on.

IIAS has cautioned the shareholders of United Spirits as keeping Mallya as the director would mean facing impediment to access funds for themselves. Mallya is definitely not the best person to have on a company's board with 22 cases against him at present.

Media reports show that IIAS, in a report, has said, "According to an RBI circular, banks must not extend loans to companies where a director is considered a wilful defaulter. IIAS recognises that USL is a Diageo subsidiary, and can access funds from its parent company. However, this is not an optimum way of doing business. Until this matter is resolved, Mallya continuing on the board will constrain USL’s ability to raise debt from the Indian financial system,” it said in a report. IIAS also understands that Kingfisher and Mallya are both contesting the decision of declaring them as wilful defaulter.

IIAS has also spoken up against the revision of remuneration of OCO PA Murali. It has said that Murali is yet to answer on some intra firm transactions carried out by him, Business Standard reported. USL proposes to revise PA Murali's remuneration from Rs 4.2 crore annually to Rs 12.8 crore which includes Rs 5 crore paid in fiscal year 2015 as one-time bonus. So the remuneration paid over nine months from 4 July 2013 stands at Rs 4.78 crore. "The proposed remuneration is not commensurate with the performance of the company, and is significantly higher than industry peers. Moreover, given that IIAS believes that PA Murali should step down from the board, a discussion on his remuneration is moot," the report said.