 "Shareholders raise concerns over USL's financial health")
The company had sought approval for reporting the erosion in peak net worth to the Board for Industrial and Financial Reconstruction.
About 130 shareholders attended the EGM. Some raised concerns over the erosion of peak net worth to the extent of 52 per cent and asked how the company would clean the balance sheet. Questions were also raised on how long the clean-up act would continue.
Also Read
Among other concerns, shareholders asked if there was an impact of grounded Kingfisher Airlines on the USL.
The management representatives present replied the company was making all efforts to clean its books and come out with healthy balance sheet in a year or two.
“Diageo, after taking controlling stake in the company, has been making several efforts to soon bring the company out from its present position of ‘potentially sick’ company,” the management representatives told shareholders.
“The EGM is a technical matter; how many shareholders will really understand the resolutions? Most of them were silent spectators and were happy to attend for the sake of snacks and tea served at the meeting. Who will bother to read the notice that runs into 22 pages?” said Manjunath, a shareholder who actively participated in EGM.
He said he was happy the company was now in the safe hands of Diageo and hoped it would come out of the financial stress in the coming year.
Those who took part in the proceedings actively were visibly worried about the absence of dividend for the current year. The company has not declared any dividend for 2013-14.
“The dividend payment had been falling over the past few years and this year we have no dividend,” said D Prabhu, another shareholder.
When asked by shareholders about the non-payment of dividend, the management replied the company was not in a position to pay any dividend this year. They were also worried about the accumulated losses for the year ended March 2014 at Rs 3,080 crore, which is 52 per cent of its peak net worth (Rs 5,840 crore) during the past four years.
USL has cited many reasons for the erosion of its peak net worth. These include the write-off of a part of a certain intra-group loan on account of sale of the entire issued share capital of Whyte and Mackay Group Limited, an erstwhile indirect wholly-owned subsidiary of the company, to a third party. Due to certain provisions made by it towards doubtful receivables, advances and deposits, impairment of the company's investment in its wholly-owned subsidiary, USL Holdings Limited in British Virgin Islands, was also cited as a reason.
In all, there were 11 special resolutions and one ordinary resolution. The company conducted voting through a secret ballot. It also held e-voting between November 22 and 24. The results of the EGM would be announced within two days, a company official said.
The USL scrip closed 2.27 per cent higher at Rs 2,732.90 a share on the BSE on Friday.