After Vijay Mallya's Exit, Can USL Get Its Mojo Back?.

The exit of Vijay Mallya has finally given Diageo true control over United Spirits, at a much higher cost than originally estimated. The question now is: Can USL get its mojo back?.

- Venkatesha Babu

On 9 November 2012, after nearly five years of on-off talks, Diageo, the world’s largest alcoholic beverages company, made an announcement. It had reached an agreement with UB Group Chairman Vijay Mallya for acquiring a 53.4 per cent stake in India’s largest spirits company, United Spirits, or USL, for `11,667 crore. Mallya needed the money for his now-defunct Kingfisher Airlines. 

Ivan Menezes, the then COO of Diageo, and now its CEO, could barely contain his glee. “The acquisition of shareholding in USL is a significant milestone in Diageo’s strategy to build presence in the world’s fast-growing markets.” Under the agreement, Mallya would continue as chairman, in spite of his minuscule stake. Menezes, born in Pune and an alumnus of St. Stephen’s College and Indian Institute of Management Ahmedabad, said that the personal rapport he shared with Mallya had helped in sealing the deal. Menezes had led the negotiation on behalf of Diageo.

Cut to February 25, 2016. Abanti Sankaranaryanan, USL’s Business Head of Luxury and Corporate Relations and former Diageo India head, announced that Diageo has entered into a separation agreement with Mallya — barely 10 months after the USL board called for his resignation for alleged diversion of 1,337 crore to other UB Group companies. Mallya would get $75 million, including $40 million in the first year, as a parting fee.