The Board of United Spirits Ltd, now controlled by Diageo, has ordered a probe into the loans given by United Spirits to UB Group companies as it posted a whopping net loss of Rs 4,488.77 crore for the financial year ended March 31, 2014.
The company had reported net loss of Rs 105.03 crore in the fiscal ended March 31, 2013.
USL made provisions of Rs 1,012.75 crore in year ended March 31, 2014 on the account of 'doubtful loans' and exceptional item of Rs 3,235.73 crore on sales of Scottish subsidiary, Whyte and Mackay.
While ordering the probe for a "detailed and expeditious enquiry on doubtful loans", the company said: "The Board has directed the Managing Director to engage independent advisors and specialists as required for the enquiry.
"Certain pre-existing loans/deposits/advances due to the company and its wholly owned subsidiaries from United Breweries (Holdings) Ltd which were in existence as on March 31, 2013, has been taken into consider atom in the consolidated annual accounts of the company drawn up as of that date."
Pursuant to a previous resolution passed by the Board on October 11, 2012, such dues (together with interest) aggregating to Rs 1337.40 crore were consolidated into, and recorded as, an unsecured loan by way of an agreement between the company and UBHL," the company said.
For the quarter ended March 31, 2014, the company reported standalone net sales of Rs 1,916.95 as against Rs 1,866.18 crore in the corresponding period a year ago.
For the quarter ended March 31, 2014, USL's standalone net loss stood at Rs 5380.10 crore as against net profit of Rs 56.02 crore.
The probe comes after UB group chairman Vijay Mallya was declared a wilful defaulter by state-owned United Bank of India.
However, Mallya disagreed with the action of the lender and said he would pursue legal action.
"We were not given a hearing, we have not appeared before them, we disagree with their action and we shall pursue legal action," Mallya told reporters after the annual general meeting of United Breweries yesterday.
World's largest spirits maker Diageo Plc announced on November 9, 2012 that it will acquire 53.4 per cent stake in United Spirits for Rs 11,166.5 crore in a multi-structured deal.