E&Y finds violations at MCFL

In fresh troubles for embattled businessman Vijay Mallya, a forensic audit has found possible ‘irregularities and mismanagement’ in advances and investments made by Mangalore Chemicals and Fertilizers Ltd (MCFL) to his other group companies.

The Board of MCFL, which Zuari Fertilizer & Chemicals last year acquired from Dr Mallya, had appointed Ernst & Young LLP to do a forensic investigation into the Rs 200 crore investment MCFL had made in to Bangalore Beverages Ltd.

The audit was also asked to look into various advances made by MCFL to Mallya’s flagship United Breweries (Holdings) Ltd (UBHL) of which a sum of Rs 16.68 crore was outstanding as of March 31, 2016.

Upon completion of its investigations, Ernst & Young made a presentation to the board of directors of MCFL on Thursday. The audit concluded that these “transactions may have involved irregularities and elements of mismanagement in the company,” MCFL said in a stock exchange filing.

It, however, did not elaborate. Bengaluru Beverages is a step-down subsidiary of UBHL.

Dr Mallya till 2014 controlled MCFL and he had to ward off a hostile takeover by Deepak Fertilizer by joining hands with Saroj Poddarled Zuari Group.

This tie-up led to Zuari gaining complete control of MCFL with 53 per cent shareholding even though UB Group continues to hold 21.97 per cent in the fertiliser maker. MCFL did not say when the investment and the advances were made.