Vijay Mallyas sweetheart deal: Sebi may order payout for small investors

Concerned over the 'loss' caused to United Spirits' minority shareholders due to $75-million sweetheart deal between its erstwhile promoter Vijay Mallya and new owner Diageo, regulator Sebi may soon order additional payout for small investors by way of a fresh open offer.

Sebi, which last night barred Mallya and six others from securities markets on fund diversion charges and also restrained him and Ashok Capoor (ex-MD of United Spirits) from holding directorship at any listed firm, is also probing "change in control of USL" due to a settlement pact under which the beleaguered businessman agreed to exit from boards of United Spirits Ltd (USL) group companies on payout of $75 million.

Sources said that the investigation conducted by the markets watchdog shows change in effective control of the company after this settlement agreement, resulting significant ownership gains to the new promoters in addition to the monetary benefits to the old owners, thus causing a "loss" to the minority shareholders of the company.

"Diageo and USL agreed with UBHL and Kingfisher Finvest India Limited to terminate the Shareholder's Agreement entered into between the parties on November 9, 2013. The aspect of change in control of USL is also being examined separately by Sebi," the regulator added.

It has been alleged that funds were diverted from USL to other Mallya companies between 2010 and 2013.

As per PwC-UK report, the diverted amount is Rs 655.55 crore while E&Y report estimated the money at Rs 1,225.24 crore, according to details cited in the Sebi order.

In a 32-page order, Sebi Whole Time Member S Raman said the alleged prima facie violations observed in the case are serious and have larger implications on the safety and integrity of the securities market.

"Investors might have based their investment decisions on the manipulated books of accounts prepared and presented by these persons."It would therefore not be in the interest of the securities market and the interest of investors to allow persons of such doubtful demeanour to continue to act as KMPs in the company or in other listed companies or allow them to deal in the securities market," he said.

In its order, Sebi also asked USL to provide details within three weeks about the action taken against Mallya and the six individuals.

Besides, the company has to submit information about the steps taken to recover from Mallya and the companies to which the amount was wrongly diverted.

Meanwhile, another UB group company United Breweries Ltd (UBL) on Wednesday said it is not privy to any of the loans taken by Kingfisher Airlines or investigations related to it.

"UBL is an independent listed entity engaged in beer business and is not concerned with KFA (Kingfisher Airlines) in any manner whatsoever," United Breweries Limited (UBL) said in a reply to the BSE, which had sought clarification on CBI charging Vijay Mallya with fraud and criminal conspiracy.

CBI in its charge sheet said that Mallya-led Kingfisher Airlines diverted Rs 263 crore from Rs 900 crore IDBI loan for "personal use". The chargesheet names Mallya, Kingfisher and nine others, including the then IDBI Chairman Yogesh Aggarwal who was arrested on Monday, in the 2015 loan default case.