USL shareholders want a fair deal: Experts

Gupta: You have to understand in the postal ballot it was not only one transaction, there were four transactions. It was in one resolution, one was the transaction with Diageo India, two transactions with Diageo US and Diageo UK and one was for expenses.

Menaka: But these were all non-Mallya RPTs.

Gupta: I agree but what we have objected to that the transaction was supposed to be approved for perpetuity. We had said that since these are the transactions where nothing has been tested not even the gain and loss for either party, it should be done on the basis of a two or three years.

Second they had said that it will ensure that there is minimum profit for either party and then in the next line they said the pricing will be on arms length. When you say that there will be minimum profit for either party, the transaction cannot be at arms length. So, we had objected on this issue.

Menaka: Since these transactions Diageo says are critical or important to the future of USL if they were to make amendments on the lines that you have suggested and go back and try and convince institutional shareholders to vote in favour of these transactions or all shareholders to vote in favour of these transactions you would not be opposed given that these are Diageo-USL transactions and not USL-Mallya RPTs?

Gupta: We are not opposed to anything which is fair to the company. Issue is that we do not want to disrupt the operations of the company. We want to only say proper disclosures and be fair.

Menaka: The other bit which I think is a big victory for shareholders, the fact that all these fairly suspicious related party transactions with Mallya or his group companies have all been vetoed by shareholders?

Tandon: Absolutely the shareholders have actually been a little bit aggressive. Our own view was that some of them could have gone through, two of them specifically come to mind, one is as far as the loan is concerned to United Breweries Holding. Again there is one way of looking at it, if you are not going to get the money back you might as well write it off and move on. However our sense at this moment was that it is a little bit more complicated, there is a legal agreement there, you are not going to get your money back.

Senthil: What is the second one? You said one was loan to UBL.

Tandon: Second was the sale of the property. The property has already been bought, transferred to USL. So, it is not likely that if the shareholders do not approve it that they are going to get their money back. At this stage all you can do is ensure that the property is transferred in the companies name rather than let it hang there.

Menaka: Shareholders have shown the spine that Diageo has not so far by continuing to vote for Mallya as chairman, is that one of the reason why Mallya has stepped down from MCF as well?

Tandon: You have a domestic company where Mallya has been asked to step down or has stepped down from the board but Diageo is actually supporting.

Menaka: That is because of a shareholder agreement. They had agreed to support each other and that conspiracy continues.

Tandon: Our view all along is irrespective of the agreement given the fact that he is a wilful defaulter it is going to impact him.

Sajeet: He is not a wilful defaulter yet.

Tandon: We are missing a very big point. The big point is all these transactions were entered into one month before the takeover was announced.