United Breweries Holdings (UBHL) on Friday communicated to the exchanges that the Securities and Exchange Board of India has asked it to restate the accounts for 2012-13 and 2013-14 to address the qualifications made by the statutory auditor. In response, the company had filed an appeal before the Securities Appellate Tribunal (SAT) and obtained a stay till the next hearing.
UBHL’s auditors noted in their report that the company had not so far estimated and provided for the losses that may arise on account of its financial exposure to Kingfisher Airlines, which are in the form of invoked corporate guarantees of Rs 8,158.89 crore, and which it continues to show as contingent liabilities. The auditors noted the company was facing eight winding-up petitions involving amounts of Rs 7,256.24 crore with the beneficiaries of the company’s corporate guarantees having sought the winding up of the company.
The auditors said they had issued a qualified report stating, among other things, non-provision for decline in the value of investments in certain subsidiaries and associates that are carried on the books at Rs 258.81 crore. An amount of Rs 847.46 crore had been shown as dues from a financial company that had sold the company’s investment and appropriated part of the sale proceeds against dues from Kingfisher Airlines.
UBHL also said United Spirits (USL) had recalled a loan of Rs 1,337.40 crore “citing default in payment of interest” which it had denied. Moreover, the company said it seeking legal advice due to restraints imposed on it by the Karnataka High Court in pending litigation with certain other creditors. USL had earlier claimed that UBHL had defaulted on interest payments of Rs 191 crore payable as of January 2015 under the loan agreement between the two companies. The former management of USL had granted unsecured loans to UBHL amounting to Rs 1,337.40 crore. This was provided under a loan agreement of eight years with a six-year moratorium and at an interest rate of 9.5% per annum, to be paid at a six-month interval, starting at the end of 18 months from the signing of the loan agreement.
UBHL reported a net profit at Rs 2.15 crore in Q1FY16 compared with a loss of 35.4 crore in Q1FY15, after adjusting for exceptionals. Revenues from the alcoholic beverages business has declined by almost half for the quarter under review and during the first quarter of last fiscal the company had reported exceptional gains of Rs 837.51 crore on the sale of shares. Total income came in at Rs 71.74 crore in the April-June quarter against Rs 115.51 crore in Q1FY15.
