Beleaguered industrialist Vijay Mallya may face losing his chairmanship of the United Spirits Ltd (USL), if he fails to clear his loan defaults soon.
Mallya, who was re-elected as the chairman of the company on Tuesday backed by majority shareholders, has received a stern warning from UK-based parent organisation Diageo over his loan default cases.
Diageo has informed global shareholders that as per the contract with Mallya, his continuation as the non-executive director and chairman of the brewery company is subject to 'the absence of certain defaults by UBHL or Mallya'.
"UBHL remains entitled under the shareholders agreement to nominate one director to the USL board subject to it continuing to hold at least 1,307,950 shares in USL and Dr Mallya continuing to control UBHL. Diageo's contractual obligations to support Dr Mallya continuing as non-executive director and chairman of USL are subject to these conditions as well as the absence of certain defaults by UBHL or Dr Mallyam," the statement by Diageo reads.
UB Holdings's present shareholdings include 43.34 lakh shares (2.98% stake) in USL, of which 18.39 lakh shares (1.27%) are pledged.
Mallya has been at the centre of a storm with several public and private sector banks after creditors filed default cases against him for failing to repay loans he had taken for the now-defunct Kingfisher Airlines. Mallya reportedly owes more than ₹8,000 crore to a consortium of 17 banks.
While, he has so far stalled banks from labelling him a wilful defaulter, the mounting default cases loom large over his future at the USL group.