Sebi seeks details on severance deal between Mallya and Diageo

The Securities and Exchange Board of India (Sebi) has issued a letter to United Spirits Ltd (USL) seeking details on the severance deal between Vijay Mallya and London-based spirits firm Diageo.

"Sebi is examining intricacies of the deal and may summon officials from USL," said a source.

Sebi also has asked USL to file a report by PricewaterhouseCoopers (PwC) on alleged financial irregularities involving Vijay Mallya. The report pertains to a probe by PwC alleging diversion of funds between 2010 and 2013 from USL and its subsidiaries to United Breweries (UB) Group firms. Sources said Sebi has asked for all the details on intra-party transactions between Mallya-linked firms. The market regulator has also sought information on pledging in USL shares.

"USL is supposed to reveal the PwC report to all shareholders, but it has not. Six months ago, USL said that, the report has already been shared with Diageo. Why only Diageo? The report is yet to be shared with other shareholders of the company," J N Gupta, founder of Stakeholder Empowerment Services, said.

Queries to USL and Sebi remained unanswered.

Sebi had initiated a probe in April last year into suspected irregularities at USL following a complaint from Diageo.

The regulator had written to USL to furnish details of its accounts for 2013 and 2014. USL had moved Securities and Appellate Tribunal (SAT) seeking a stay on the order.

Diageo is the majority shareholder of USL, with a 54.78 per cent holding, excluding the 2.38 per cent owned by the USL Benefit Trust. It took over USL in 2013 in a Rs 11,000-crore deal. Mallya personally holds only 0.01 per cent in USL as of December 2015, while his group firms own 3.99 per cent.

However, more than half of these shares are pledged with banks for various loans for group companies, primarily the airline.

Securities and Exchange Board of India ( SEBI )