London: Diageo Plc, which is up against legal hurdles in India regarding purchase of shares of United Spirits from United Breweries (Holdings) Ltd (UBHL), is confident that it would retain majority shareholding in the Indian firm even if the outcome of the cases were not to be in its favour.
The purchase of shares by the company, whose Indian arm Diageo India reported 12 percent volume growth in six months ended December 31, 2014, from UBHL has been under dispute following a number of winding up petitions being filed against the company promoted by Vijay Mallya.
On February 10, 2014, the Supreme Court of India had issued an order admitting the special leave petitions (SLPs) and ordering that the status quo be maintained with regard to the UBHL share sale. The SLPs are scheduled for next hearing date in the Supreme Court on April 21, 2015.
Also the Karnataka High Court had admitted further six winding-up petitions against UBHL on January 2, 2015 and the next date of hearing is scheduled for February 26, 2015.
"...Averse results for Diageo in the proceedings referred to above could, absent leave or relief in other proceedings, ultimately result in Diageo losing title to the 10,141,437 USL shares acquired from UBHL.
Diageo believes it would remain in control of USL and be able to consolidate USL as a subsidiary regardless of the outcome of this litigation," the company said in a statement.
On July 4, 2013 Diageo completed its acquisition, under a share purchase agreement with UBHL and various other sellers of 14.98 per cent stake in USL for a total consideration of Rs 3,130 crore, including 6.98 percent from UBHL. Later on, it increased its stake to a 54.78 percent through a series of further transactions, as of 2 July 2014.
It further said: "There can be no certainty as to the outcome of the existing or any further related legal proceedings or the timeframe within which they would be concluded."
In the meantime, the company reported 12 percent volume growth as "Diageo India continued to grow, driven by category growth and share gains across scotch and vodka, as the business benefited from the sales promotion agreement in place with USL since October 2013".
