1.United Spirits Limited (USL) had approached Bank of Maharashtra (BoM) amongst other banks for loans to finance the planned capital expenditure programme of Rs 1000 crores over the next 3 years.
2. BoM sanctioned a loan of Rs 150 crores on terms and conditions comparable to loans taken by USL from other nationalised banks after due negotiations.
3. Earlier, BoM was part of a consortium of lending banks that had provided facilities to UB Engineering Limited (UBEL). However, a one-time settlement was made and implemented amongst all bankers in 2006. As part of the one-time settlement the sacrifice made by BoM was 17.34 crores. While sanctioning the facilities to USL, BoM demanded recompensation for the amount sacrificed to UBEL. Hence, in sanctioning credit facilities to USL, BoM will recover its sacrifice to UBEL.
4. USL does not follow any practice of inter company funds diversion. In particular, USL has not lent any funds whatsoever to Kingfisher Airlines.
5. USL enjoys facilities for the past 7 years from Punjab National Bank who are also members of USL’s banking consortium.
6. As regards the further borrowing plans of USL, as the company is growing at 18-20 per cent, it is only natural that working capital expansion will take place. In addition, USL has acquired 3 manufacturing units which require capital expenditure for upgradation and expansion.