Companies & Sectors
United Spirits board to probe all loans given to UB Group companies
Diageo controlled United Spirits made provisions of Rs1,012 crore due to doubtful loans given to UB group companies, leading to the company reporting a full year net loss of Rs4,488.8 crore 
 
The board of United Spirits Ltd (USL), now controlled by Diageo, has ordered a probe into the loans given by the company to Vijay Mallya-led UB Group companies. These directions came as USL posted a widened net loss of Rs4,488.77 crore for the FY2014, mainly on higher provision due to the loans.
 
The company had reported a net loss of Rs105.03 crore in the fiscal ended March 2013.
 
USL made provisions of Rs1,012.75 crore for FY2014, due to ‘doubtful loans’ and exceptional items of Rs3,235.73 crore on the sale 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 2013, have been taken into consideration in the consolidated annual accounts of the company drawn up as of that date.”
 
Pursuant to a previous resolution passed by the board on 11 October 2012, such dues (together with interest) aggregating to Rs1,337.40 crore were consolidated and recorded as an unsecured loan by way of an agreement between the company and UBHL,” the company said.
 
For the quarter ended March 2014, United Spirits reported standalone net sales of Rs1,916.95 as against Rs1,866.18 crore in the corresponding period a year ago. During the quarter to end-March, USL’s standalone net loss widened to Rs5,380.10 crore as against a net profit of Rs56.02 crore, same period last year.
 
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.
 
The world’s largest spirits maker Diageo announced on 9 November 2012, that it will acquire 53.4% stake in United Spirits for Rs11,166.5 crore in a multi-structured deal. 

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COMMENTS

Sunil Pratap

2 years ago

End of the King of Good Times!!!!??

Merger deadline with BSNL pushes up MTNL share price
A note for the Cabinet's consideration will be drafted by April 2015 and the final merger is to be completed by July 2015
 
Mahanagar Telephone Nigam Ltd (MTNL) shares rallied on Friday to close 2.5% higher at Rs34.65, following the news about Department of Telecom (DoT) fixing 31 July 2015 as the deadline for the much awaited merger between state-run Bharat Sanchar Nigam Ltd (BSNL) and MTNL. However, this is still lower than its three month closing high of Rs38.20, which it hit on the 25 June 2014.
 
There have been long standing objections from employees of both companies to such a merger. The HR departments of both the companies will hold consulatations with the unions of BSNL and MTNL by March 31, 2015. 
 
A note for the Cabinet's consideration will be drafted by April 2015 and the final merger is to be completed by July 2015. MTNL for its part provides telecom services in Delhi and Mumbai, while BSNL offers services in the rest of the country. BSNL also owns over 60,000 mobile towers, the second largest tower-portfolio in India. Both state-run companies have been suffering losses due to increased competition from private players. 
 
MTNL closed Friday 2.5% up at Rs34.65 on the BSE, while the 30-share Sensex ended the day marginally down at 27,026. 

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Nifty, Sensex may give up some gains – Weekly closing report
If Nifty goes down next week, support lies between 8,000 and 7,950 
 
The S&P BSE Sensex closed the week that ended on 5th September at 27,027 (up 389 points or 1.46%), while the NSE's CNX Nifty ended at 8,086.85 (up 133 points or 1.67%). Previous week, we had mentioned that the Nifty, Sensex is showing no signs of fatigue. The week began with indices continuing to close at its new all-time high on each of the first three days of the week.
 
Nifty closed at 8,028 (up 73 points or 0.92%) on Monday. The move on the bourse was on the back of the news of Japan to invest $33.5 billion in infra projects in India, over a period of five years to build smart cities and infra projects. Seasonally adjusted HSBC India Purchasing Managers' Index (PMI) dipped slightly from July's 17-month high of 53 to 52.4 in August. The latest PMI data highlighted a tenth consecutive monthly improvement in operating conditions in August.
 
The index continued to rise higher on Tuesday and closed almost close to the day’s high. Nifty closed at 8,083 (up 55 points or 0.69%). Oil Minister Dharmendra Pradhan has said there were good signals from the international market and his ministry will take appropriate steps to bring deregulation of diesel prices.
 
Eight core industries output has increased 2.7% in July 2014, showing moderation in growth from 7.3% increase in June 2014. The preliminary data on India's balance of payments also showed that foreign direct investment in India rising to $8.2 billion in the quarter ending June 2014, from $6.5 billion in the quarter ending June 2013. India's current account deficit narrowed sharply to $7.8 billion or 1.7% of GDP in the quarter ended June 2014, from $21.8 billion or 4.8% of GDP in the June 2013 quarter.
 
Positive economic data from the US and China further boosted the ongoing upmove. Nifty closed at 8,115 (up 32 points or 0.39%). The latest survey released by Markit Economics showed that growth in India's service sector activity slowed in August 2014. Adjusted for seasonal influences, the headline HSBC India Services Business Activity Index posted 50.6 in August, down from 52.2 in July.
 
The Institute for Supply Management said its US manufacturing activity index rose to 59 in August, the strongest since March 2011. July construction spending was at its highest level in over 5-1/2 years. The HSBC China services Purchasing Managers' Index (PMI) rose to a 17-month high of 54.1 in August from 50 in July. 
 
Five days of upmove on the Nifty came to pause on Thursday as Nifty closed lower. Nifty closed at 8,096 (down 19 points or 0.23%). Ratings agency Standard & Poor’s (S&P) has expressed “cautious optimism” for India’s sovereign rating. S&P might scale up the outlook on its India rating from negative to stable instead of effecting an upgrade.
 
The weakness on the bourse continued on Friday, as the Nifty continued to move with a declining trend. Nifty closed at 8,087 (down 9 points or 0.11%).
 
For the week, among the other indices on the NSE, the top two performers were Nifty Midcap 50 (4%) and Midcap (4%) while the only worst performer was FMCG (1%).
 
Among the Nifty stocks, the top five stocks for the week were N M D C (10%); Bharti Airtel (8%); Cipla  (8%); Hero MotoCorp (6%) and Larsen & Toubro (6%) while the top five losers were BHEL (8%); United Spirits (5%); Tata Motors (4%); HDFC (2%) and Hindalco (1%).
 
 Of the 1,461 companies on the NSE, 943 companies closed in the green, 490 companies closed in the red while 28 companies closed flat.
 
Out of the 27 main sectors tracked by Moneylife, top five and the bottom five sectors for this week were:
 

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