Can Diageo shake off Mallya’s legacy at USL?
The question hangs in the air as the British multinational faces off with Pernod Ricard for a bigger slice of the premium end of the Indian liquor market.
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Editor's note: Diageo Plc would like to believe it has done a good job of ridding United Spirits Ltd of Vijay Mallya’s tainted legacy. Now, the flamboyant entrepreneur-turned-fugitive may have turned USL into a 120-million-case-a-year liquor giant by the time the British multinational took over in 2014, but he did leave behind many a skeleton when he exited. Among the biggest to tumble out of the cupboard was a $140 million loan from Standard Chartered Bank that Mallya’s private company had raised, pledging his shares. The private company defaulted on the loan and Diageo had to pick up the tab. Diageo later sued Mallya and won the case. The drain on its finances continued and this included a $75 million payout to coax Mallya to vacate the chairman’s chair and take the exit door out of the company. Eventually, Diageo ended up paying nearly twice as much as the initial Rs 11,000 crore it coughed up for a 53.4% stake in USL in 2014. Operationally too, the liquor company was a giant that didn’t have the measure of its limbs. USL had …
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