United Spirits' audit committee is led by Arunkumar Ramanlal Gandhi, a highly respected professional with 44 years of experience.
United Spirits was not able to explain a loan of Rs 1,350 crore to UB Holdings, UB Group's principal holding company, when Vijay Mallya was running the show. UB Holdings is presumed to have spent this money on the grounded Kingfisher Airlines, which cannot repay the sum.
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MESSY AFFAIR |
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United Spirits said the audit committee had sought clarifications on the financial results, and in their absence could not complete the review. "As the clarifications sought by the audit committee would require some time, the board decided to adjourn the meeting to a later date. As soon as a fresh date is finalised the company shall promptly intimate the same," United Spirits said in a regulatory disclosure.
United Spirits had earlier said it was waiting for information from UB Holdings before classifying a loan of Rs 1,350 crore in its accounts. The company had also said it was making enquiries on Rs 600 crore of loans to trade debtors.
Industry analysts said there were risks of write-offs after United Spirits became a Diageo subsidiary. "We believe a large proportion of loans and advances - approximately 20 per cent sales, or 80 days of working capital - are stuck as non-core advances and realisation could take five years or even longer," Deutsche Bank said in a recent report. Deutsche Bank has cut United Spirits' earnings per share (EPS) estimate for 2014-15 by 27 per cent and for 2015-16 by 25 per cent.
These risks compound the pain at United Spirits weeks after the company said it would be forced to provide Rs 4,200 crore for another loan to buy Whyte & Mackay, whose sale proceeds will not be enough to meet the money lent in 2007 to acquire it.
As a result, United Spirits had said, its net worth would be reduced by Rs 3,500 crore.
MESSY AFFAIR
| United Spirits was not able to explain a loan of Rs 1,350 crore to UB Holdings, UB Group's principal holding company, when Vijay Mallya was running the show
| UB Holdings is presumed to have spent this money on the grounded Kingfisher Airlines, which cannot repay the sum