Sebi bars Vijay Mallya from securities market for 3 years

02 Jun 2018


Market regulator Securities and Exchange Board of India (Sebi) has barred fugitive businessman Vijay Mallya from the securities market for another three years and also restrained him from holding directorship in listed companies for five years over alleged illegal diversion of funds from United Spirits Ltd.

The market regulator also imposed one-year ban on two former company officials — Ashok Capoor and P A Murali.
"In the context of diversion of funds perpetrated in a listed company by way of dubious and concealed financial statements / projections or false books of accounts, it is inevitable that Sebi should step in and take appropriate action..," Sebi whole time member G Mahalingam said in the order.
Through an interim order in January 2017, the regulator had barred Mallya and six former officials of United Spirits, including Capoor and Murali, from the securities markets in the case related to illegal fund diversions.
Mallya had also been barred from "holding position as director or key managerial person of a listed company for a period of five years"
Sebi had sent notices to all former directors of United Spirits, including Vijay Mallya, Ashok Capoor, Sowmiyanarayanan, SN Prasad, PA Murali, Paramjit Singh Gill and Ainapur SR, for alleged fund diversions and/or improper transactions in United SpiritsLimited.
Sebi, through its interim order dated 25 January 2017, interalia restrained them from accessing  the  securities  market and  were  further  prohibited  from  buying,  selling  or otherwise dealing in securities in any manner whatsoever, either directly or indirectly. They were also restrained from holding position as directors or key managerial persons of any listed company.
On 4 July 2013, Relay B V, a wholly-owned subsidiary of Diageo Plc, a public limited company incorporated in England & Wales, along with persons acting in concert, viz, Diageo; Diageo Finance Plc, Diageo Capital Plc and Tanqueray Gordan and Company Limited, acquired 25.02 per cent equity of USL. Subsequently, through further acquisitions, Relay BV’s shareholding in USL increased to 58.77 per cent as of 31 December 2015.
During  the  intervening  period,  in the  audit  report  for  the  financial  year  2013–14, BSR & Co LLP (Statutory Auditor of USL) cited certain qualified transactions by USL.
The company created provisions of Rs649.55 crore as reported in the annual report for financial year 2013–14, giving explanation for the provisioning in its notes to accounts.
These dues of such parties to the company are on account  of  advances  by  the  company  in  the  earlier  years  under agreements  for  enhancing  capacity,  obtaining  exclusivity  and  lease  deposits  in  relation  to  tie-up manufacturing units (TMUs); agreements for specific projects; or dues owing to the company from customers. These dues were duly confirmed by such parties as payable to the company in such earlier years. However, such parties have since disputed such amounts as mentioned above.
USL then appointed  PriceWaterhouse  Coopers,  United Kingdom (PWC–UK) to examine such transactions. PWC–UK submitted its report on 24 March 2015, which  indicated  diversion  of  funds  from  USL at  the  behest  of  Vijay  Mallya.

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