Uncovering the real deal

Recent experience suggests the process of conducting due diligence is not taken seriously enough in India. Nandini Lakshman reports

Differences between buyers and sellers after a deal is done are not unusual. But the recent mud-slinging between the world’s largest spirits maker, Diageo, and Vijay Mallya, the promoter of United Spirits (USL), over skeletons in the cupboard at USL, has highlighted the importance of due diligence as a critical aspect of the investing and buying process.

Diageo has owned nearly 55% of USL since July 2014. Trouble erupted at USL after an internal report revealed financial irregularities at the company when Mallya, who continues as the company’s chairman, was in control of it. The board of USL recently asked Mallya to resign as chairman and non-executive director of the company, but he has refused.