CHENNAI: Crisis-hit United Spirits Ltd (USL) has sought shareholder's nod to knock on the doors of BIFR.
The move will help USL to restructure loans with lenders and financial institutions and comes amid an ongoing probe into diversion of funds worth Rs 1,337 crore given by the former to UB Group firms led by Vijaya Mallya.
Its networth eroded by more than 50 per cent of its peak owing to provisions on advances to its erstwhile promoter group firm UB (Holdings) Ltd, besides others. As per the Sick Industrial Companies (Special Provisions) Act, 1985 (SICA), if accumulated losses at the end of any fiscal eroded 50 per cent or more of its peak networth during the preceding four financial years, such firm is required to report to the Board for Industrial and Financial Reconstruction (BIFR).
In a notice to the shareholders for an EGM on January 22, USL Tuesday said, as per the audited annual accounts for the fiscal ended March 31, "The accumulated losses of the company as at March 31, 2015 is 86 per cent of its peak net worth during the four financial years preceding the financial year ended March 31, 2015".
It added that the EGM was convened to consider and approve the report of the Board of Directors on such erosion and its causes, measures being taken and to approve the reporting of such erosion to BIFR in terms of Section 23 of SICA.
In April, 2014 alleging fund diversion to Kingfisher and other UB Group entities, USL asked Mallya to quit the board, even as the liquor baron rejected the demand and the charge.
Bleeding Finances
■ Accumulated losses as on March, 2015 Rs 5,045.45 cr
■ Over 50% of peak networth in immediately preceding four financial years at Rs 5,849.62 cr
■ Networth erosion due to diminution in long-term investments Rs 716.16 cr
■ Provision on advances to UB (Holdings) Ltd Rs 995.45 cr
■ Fall in value of investments/advances in overseas arms Rs 184.85 cr
■ Loss on sale of shares in subsidiaries Rs 10.84 cr
■ Loss on sale of manufacturing unit Rs 35.65 cr
■ Provision for doubtful debts, advances, deposits Rs 113.40 cr
■ Provision for sales and other taxes Rs 97.32 cr