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Vijay Mallya steps down; will receive Rs 515 cr from Diageo

Vijay Mallya, Chairman of United Spirits Ltd will receive $75 million (Rs 515 crore) from Diageo as part of an "agreement" for his departure from the company. The company was established by his family and now run by the global liquor giant.

In addition, Diageo has agreed that Mallya holds no "personal liability" to the UK-based company in relation to the results of the alleged financial irregularities at the company that had started a bitter fight between them.

Mallya's son Siddharth Mallya will continue to be a part of the board of the USL group company which has the Royal Challengers Bangalore IPL franchise and Diageo cannot "seek to remove him from that board for a period of two years". Father will get honorary title of the team's Chief Mentor. Mahendra Kumar Sharma, an independent director, will become the new chairman of United Spirits.

Diageo also said it has prolonged Smirnoff's sponsorship of the Force India Formula 1 team. Mallya is the team principal and part-owner for the next five seasons. The price tag of this sponsorship continues to be $15 million per season.

Talking about the agreement with Mallya, Diageo's CEO Ivan Menezes said, "India is an exciting growth opportunity, and USL has the management team, strategy and capability to deliver on that opportunity. The agreement announced on Thursday is in the best interests of both Diageo and USL and allows USL to build on its strong platform in one of the biggest spirits markets in the world."

Not considering whether UBHL (UB Holdings Ltd.) gets court leave for expiration of the Shareholders Agreement, Diageo said it believes that UBHL and Kingfisher Finvest's board appointment and other governance rights under the Shareholders Agreement have already ended on account of earlier breaches of the pact.