Vijay Mallya’s Indian Premier League (IPL) cricket team Royal Challengers Bangalore and his wine company Four Seasons continued to post losses in FY13, each reporting a net loss of over Rs 7 crore during the year. The two companies are subsidiaries of United Spirits (USL), India’s largest liquor company in which Diageo recently bought a 25.02% stake.
Royal Challengers Sports, the USL subsidiary that runs the cricket team, posted a loss of R7.85 crore, marginally up from R7.07 crore in FY11, while the wine company’s losses rose to R7.18 crore, from R5.58 crore, according to USL’s latest annual report.
“Four Seasons Wines has made a reference to the Board for Industrial and Financial Reconstruction (BIFR) under Section 23 of Sick Industrial Companies (Special Provisions) Act, 1985 in view of erosion of more than 50% of its peak net worth during the immediately preceding four fiscals,” the company said in the annual report.
The liquor company, which previously held 51% stake in Four Seasons, had bought the remaining stake from other shareholders during the April-June quarter, making it a wholly-owned subsidiary. The winery, when it was started in 2007, had offered equity shares to local farmers in the Baramati region from where it sourced grapes.
Since Diageo completed the USL acquisition in July, the liquor company has seen many changes including a revamp of its directors. Former CEO of Diageo Paul Walsh and the British firm’s Asia Pacific business head Gilbert Ghostine have been appointed as additional directors.
The FY13 saw growth in the country’s spirits industry decline to single digits with rising costs on account of government policies, USL said.