Mallya's India woes now troubling his US beer firm

May 22, 2016

London, May 22: Legal proceedings in India against beleaguered businessman Vijay Mallya has now come to haunt his US-based brewery firm, which is banking on USD 1 million bridge loan promised by his holding firm for survival.

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"Vijay Mallya, the company's Chairman and indirect majority shareholder, is presently subject to certain legal proceedings in India, which may impair the company's ability to obtain financing from UBHL (United Breweries Holding Ltd) and other potential funding sources," California-based Mendocino Brewing Company Inc said in a regulatory filing.

This is probably the first admission by the US-listed firm, which is struggling for funds and has been served 'default' notices by lenders in the past, about the potential impact of Mallya's legal woes in India on its own fortune.

If it fails to secure funds, Mendocino said, the lenders may take "recourse against the applicable pledged collateral which includes the company's real and personal property in the US and the UK".

In its latest quarterly filing with the US markets regulator Securities and Exchange Commission (SEC), Mendocino further said, "The board of directors of UBHL during this quarter has approved debt financing to the company in the form of USD 1,000,000 of bridge loans.

"If UBHL does not consummate such debt financing, it would have a material adverse effect on the company's financial condition and the company's ability to continue to operate."

The company disclosed that its total assets declined to USD 16 million as on March 31, 2016 -- lower than the total liabilities worth more than USD 18 million.

In the quarter ended March 31, it recorded total sales of about USD 6.9 million, but suffered a net loss of USD 637,100.

Mallya got a pay package of over Rs 1.7 crore in 2015 from this US-based company, more than half of which was paid by Mendocino to him for "promoting" the company's beer brands.

Mallya serves as Chairman of the board of directors of the company, which has an exclusive licence to brew and distribute Kingfisher Premium Lager in various countries. Besides, it produces and sells a number of craft beer brands.

United Breweries Holdings Ltd (UBHL), the holding firm of Mallya-led UB Group, is the "indirect majority shareholder" of Mendocino Brewing Company (MBC).

Mendocino's North American operations primarily consist of brewing and marketing proprietary craft beers. Its foreign operations are conducted through wholly-owned subsidiary United Breweries International UK Ltd (UBIK) and a step-down unit Kingfisher Beer Europe Ltd.

The two largest shareholders of Mendocino are United Breweries America (UBA) and Inversiones, both of which are controlled by Rigby International Corp, a company registered in the British Virgin Island.

Rigby, in turn, is a wholly-owned subsidiary of UBHL.

Mallya, who is at the centre of a major controversy for the huge loan defaults by his group in India, controls over 68 per cent shareholding held through UBHL in Mendocino.

However, MBC does not appear to be doing well financially and has requested for funds from the parent, while options being explored include merger and asset sale.

As of March 31, 2016, MBC had cash and cash equivalents of USD 52,900, an accumulated deficit of over USD 18 million, and a working capital deficit of over USD 12 million due to losses incurred, and debts.

Mallya's business empire once included companies across liquor, fertilisers and airline businesses among others. His financial troubles began to mount after erstwhile Kingfisher Airlines had to be grounded under big losses and huge debt.

While lenders in India are seeking to recover total dues worth over Rs 9,000 crore from him, Mallya recently signed a lucrative exit deal with Diageo, to whom he had earlier sold a majority stake in United Spirits, and said he intended to spend more time in England.

Interestingly, his no-compete agreement with Diageo excludes the UK market.

Global banking major RBS has also threatened to terminate a credit line and all other banking services provided to his European beer venture.

This has forced Kingfisher Beer Europe Limited to look for alternative avenues to replace the credit line and other banking facilities provided by RBS.

In its SEC filing, Mendocino said UBHL had issued a letter of comfort last year, agreeing to provide funding on an as needed basis to ensure that the company is able to meet its financial obligations as and when they fall due.

In December last year, MBC also engaged Gordian Group as an investment banker to assist it in evaluating and exploring "certain strategic and financial options and transactions" including possible debt or equity capital financing, merger, consolidation, joint venture or sale of assets.

The company intends to use these proceeds to repay the amount owed to lenders.

It also said several steps have been taken to lower the company's working capital needs through March 31, 2017, including reducing discretionary expenditures, reducing manpower, securing additional brewing contracts and pursuing export opportunities.

"The current revenue from operations is insufficient to meet the working capital needs of the company over the next 12 months," it said, while adding that UBHL has been requested to make a capital infusion.

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News Network
May 5,2024

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Maharashtra Leader of Opposition Vijay Namdevrao Wadettiwar waded into controversy after he alleged that an RSS-affiliated cop, and not terrorist Ajmal Kasab, killed former state anti-terrorism squad (ATS) chief Hemant Karkare during the 26/11 Mumbai terror attack.

In a video statement released on Saturday, the Congress leader alleged that the bullet that killed IPS officer Hemant Karkare did not come from the gun of Ajmal Kasab or any of the other nine Pakistani terrorists involved in the attacks.

Instead, he claimed it came from the weapon of a police officer allegedly "dedicated to" the Rashtriya Swayamsevak Sangh (RSS).

Wadettiwar also accused Ujjwal Nikam, the special public prosecutor in the case and a BJP Lok Sabha candidate from Mumbai North Central, of suppressing this information, labeling him a "traitor."

He questioned the BJP's decision to nominate Nikam for the Lok Sabha polls, accusing the party of protecting traitors.

“During the probe, key information was out. However, it was suppressed by Ujjwal Nikam, who is a traitor. My question is, why is BJP protecting a traitor and nominating such a person for Lok Sabha polls? By doing this, BJP is protecting traitors," Wadettiwar alleged, Times of India reported.

These allegations drew strong responses from Nikam and Deputy Chief Minister Devendra Fadnavis.

Nikam condemned Wadettiwar's statement as "baseless and irresponsible," expressing pain at the doubts raised over his integrity.

He emphasized the legal steps taken to convict Kasab, calling Wadettiwar's remarks an insult to the victims of the 26/11 attacks.

“What a reckless statement is being made. I am pained by such baseless allegations, raising doubts over my integrity. It clearly reflects the level of electoral politics. I never thought politicians will stoop to such low levels. For political gain? He (Wadettiwar) is insulting not me, but the 166 departed souls and all persons injured in the 26/11 attacks," Nikam said.

He added, “They (Congress) hold Kasab as innocent. Even Pakistan had accepted that Kasab was involved in the conspiracy and in the terror attack on India and was guilty".

He said Indians very well know the legal steps he had taken to ensure Kasab’s conviction.

Nikam said citizens of the nation would on 4 June, the day of results for Lok Sabha polls, give their reply to such allegations, adding he wished not to dignify the “desperate disinformation” with a further response.

Meanwhile, BJP leader and Deputy CM Fadnavis said, “Our alliance is with Nikam, while Congress has joined hands with Kasab".

Shiv Sena spokesperson Kiran Pawaskar said NIA should arrest Wadettiwar and ask him why he was defending Kasab.

Pawaskar criticized the Congress for allegedly supporting terrorists and expressed surprise at the silence of Shiv Sena chief Uddhav Thackeray on the matter.

“From Wadettiwar’s statement, it appears Congress is supporting terrorists who attacked Mumbai. More shocking is the fact that Sena (UBT) chief Uddhav Thackeray has maintained silence over the episode,” he said.

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News Network
May 10,2024

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The Supreme Court Friday granted interim bail to Delhi Chief Minister Arvind Kejriwal till June 1 in the excise policy case.

The top court, however, stated that it will be passing a detailed order over the matter soon.

On Thursday, the Enforcement Directorate had opposed the move to grant interim bail to Kejriwal saying that “any special concession” to him will “amount to anathema to the rule of law and equality… thereby creating two separate classes in the country viz. ordinary people, who are bound by the rule of law as well as the laws of the country, and politicians who can seek exemption from the laws”.

The ED had arrested Kejriwal on March 21 in the excise policy case.

“The right to campaign for an election is neither a fundamental right nor a constitutional right and not even a legal right,” the ED said, maintaining that to its knowledge, “no political leader has been granted interim bail for campaigning even though he is not the contesting candidate”.

After the ED filed its affidavit, the AAP, in a press release, said, “The legal team of Delhi Chief Minister and AAP National Convenor, Shri Arvind Kejriwal, has raised strong objection to the affidavit filed by the Enforcement Directorate opposing interim bail in the Supreme Court.”

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News Network
May 4,2024

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Canadian Police said they have arrested three Indians they suspect were part of the alleged hit squad that had killed Hardeep Singh Nijjar, a Sikh separatist leader involved with the Khalistan movement, which calls for an independent Sikh state.

Nijjar's killing had become the epicentre of a diplomatic row between India and Canada last year after Prime Minister Justin Trudeau alleged the role of "Indian agents" in the murder. India had rejected the charge as "absurd" and "motivated".

The three arrested Indians - Karan Brar, 22, Kamalpreet Singh, 22, Karanpreet Singh, 28 - were living as non-permanent residents in Alberta for three to five years, said Superintendent Mandeep Mooker, who leads the Integrated Homicide Investigation Team. The police have also released their photos.

They have been charged with first-degree murder and conspiracy to commit murder, showed court documents.

Police said that none of the suspects were known to them earlier and they were investigating their possible ties to the Indian government.

The murder remains "very much under active investigation," Royal Canadian Mounted Police (RCMP) Assistant Commissioner David Teboul told a press conference on Friday.

"There are separate and distinct investigations ongoing into these matters, certainly not limited to the involvement of the people arrested today, and these efforts include investigating connections to the government of India," CTV News quoted him as saying.

Nijjar, a Canadian citizen who was wanted in India on various terror charges, was shot dead outside a gurdwara in Surrey on June 18, 2023. Trudeau's charge against India sparked a massive row later that year with both countries expelling diplomats of the other country.

A fresh row erupted earlier this week after separatist slogans on 'Khalistan' were raised at an event addressed by Trudeau, prompting New Delhi to summon their Deputy High Commissioner and lodge a strong protest.

On the sidelines of the event, Trudeau told reporters that Nijjar's killing had created a "problem" that he could not have ignored.

India rejected his comment and said it once again showed Canada provides political space given to separatism, extremism, and violence. "This not only impacts India-Canada relations but also encourages a climate of violence and criminality in Canada to the detriment of its own citizens," foreign ministry spokesperson Randhir Jaiswal said.

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