Financial Daily from THE HINDU group of publications
Saturday, Nov 23, 2002
Corporate - Corporate Disputes
Fresh offer on Herbertsons dispute Mallya may give BDA back to Kishore
Mr Vijay Mallya
BANGALORE, Nov 22
THE UB group Chairman, Mr Vijay Mallya, is making a fresh bid to settle the long-running dispute with Mr Kishore Chhabria for control over Herbertsons Ltd.
For the first time, Mr Mallya has expressed his willingness to offer an exit option to Mr Chhabria giving him back BDA Ltd, a wholly-owned subsidiary of Herbertsons, which owns the popular Officers' Choice brand.
This is part of the latest peace initiative - - still in early stages - - in which Mr Mallya has reiterated his stance to buy out Mr Chhabria's stake in Herbertsons.
Speaking to Business Line, Mr Mallya said he had a new offer for Mr Chhabria and hoped that a settlement might be in the offing. Replying to a query, Mr Mallya said he was open to the option of Mr Chhabria exiting his company with BDA Ltd. "This is a problem area, but I am ready to discuss this option with him," he added.
It is learnt that UB group has already negotiated and roped in a bank to finance a possible settlement which would entail buying out the stake currently held by the Chhabria camp. However, Mr Mallya refused to divulge details of the price he would offer to buy the stake.
Mr Kishore Chhabria joined hands with Mr Mallya when he came out of Shaw Wallace & Co (SWC) following a spat with his elder brother, Manu Chhabria. Mr Mallya took him into Herbertsons and offered 26 per cent stake in return for BDA Ltd, which Mr Chhabria carried with him from SWC.
BDA is today a hundred per cent subsidiary of Herbertsons. The relationship between the two soured soon as Mr Chhabria, along with people in concert, allegedly acquired shares in violation of the Securities and Exchange Board of India norms, raised his stake to 51 per cent and staked claim for management control of the company.
Mr Mallya indicated that the merger of Herbertsons into UB group's spirits flagship, McDowell & Co, was on the cards once the dispute with the Chhabria camp was resolved. This is seen as part of his strategy to unlock value by offering a strategic minority stake in spirits business to a foreign partner. "The moment the dispute with him (Kishore) is settled, I would initiate steps to unlock the value," he said.
Mr Mallya added that he had received expressions of interests from a few global spirits players who were keen on an equity partnership with the UB group.
Incidentally, the latest development comes at a time when Mr Kishore Chhabria is seen making efforts to break the ice with the family of Manu Chhabria. Even as it comes up with the latest truce offer, the Mallya camp said the time was fast running out for Mr Kishore Chhabria to take a call on the issue. "We are not in a hurry, but time is not on his side in a fast-changing liquor industry," they said. The UB group has been buoyed by the initial round of legal victories in the Mumbai High Court. The wrangling between the two has now gone to the Supreme Court.
`Not interested in SWC squabbles'
MR Vijay Mallya says he will stay away from the family squabbles plaguing the UB group's main spirits and beer competitor, Shaw Wallace & Co.
This assumes significance in the wake of the industry speculation that Mr Mallya may play a role in the ongoing dispute between Manu Chhabria's daughters over the division of assets. "I am not interested. It is their family matter," he said. When queried on the turbulent history of his relationship with the Manu Chhabria family, he added: "It was they who interfered in my affairs."
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