'Mallya should not continue on United Spirits board'

The continuation of Vijay Mallya, who has been declared a 'wilful defaulter', on United Spirits board would constrain the company from raising debt in the country, according to proxy advisory firm IiAS.

The firm has advised United Spirits Ltd's shareholders to vote against the proposal to re-appoint Mallya as director on the board.

Earlier this month, United Bank of India had declared Kingfisher Airlines, its promoter Vijay Mallya and three other directors as wilful defaulter citing alleged diversion of funds.

Kingfisher Airlines and directors declared as wilful defaulters would not be able to borrow from banks in the future.

They would also lose director-level positions in companies and criminal proceeding could be initiated against them, if warranted, to recover the money.

". . . until this matter (regarding wilful defaulter) is resolved, Vijay Mallya continuing on the board will constrain USL's ability to raise debt from the Indian financial system," Institutional Investor Advisory Services said in a report.

USL is a Diageo subsidiary and can access funds support from its parent company.

However, this is not an optimum way of doing business, it added.

The annual general meeting of USL is scheduled for September 30.

Image: Vijay Mallya; Photograph: Reuters