United Spirits shares fall as Vijay Mallya asked to quit board

The United Spirits (USL) stock closed 3.76 per cent lower after Chairman Vijay Mallya was asked to quit the board over alleged fund diversion to Kingfisher Airlines and other UB Group entities - even as the liquor baron said he intends to continue as its chief.

The stock lost 3.76 per cent to Rs 3,285 on the Bombay Stock Exchange while at National Stock Exchange, it went down by 3.38 per cent to Rs 3,300.

Weakness was also seen in other UB Group stocks, where shares of United Breweries plunged 13.66 per cent, United Breweries (Holdings) tumbled 3.76 per cent.

Alleging fund diversion to UB Group entities, USL's board had on Saturday asked Mallya to quit the board. The company said it has lost faith in Mallya and would go to shareholders if he refuses to resign.

Reacting to the charges, Mallya said in a statement: "All I wish to say is that I intend to continue as Chairman of USL in the normal manner. This includes chairing monthly operating review meetings and board meetings."

Diageo, world's largest spirits maker, now holds a controlling stake of around 55 per cent stake in USL, which it had acquired from Mallya for about $3 billion while the USL chairman continues to own a small stake of 0.01 per cent in his personal capacity.

Some of his UB Group firms also continue to hold stakes totalling to about 3 per cent.

The USL board asked Mallya to step down after various improprieties and legal violations were found in a probe into loans worth Rs 1,337 crore given by USL to UB Group firms.