Mumbai: Mangalore Chemicals & Fertilisers Ltd, now controlled by Zuari Group chairman Saroj Kumar Poddar, on Friday said it will seek legal advice on irregularities and mismanagement in extending advances and investment to companies promoted by UB Group chairman Vijay Mallya. The irregularities emerged as part of a forensic audit conducted by audit firm Ernst & Young LLP.

Mangalore Chemicals was originally promoted by Mallya but Poddar controlled Zuari Fertilisers and Chemicals Ltd had acquired a majority stake in UB Group firm in 2015.

In a filing to BSE, Mangalore Chemcials said that the company had engaged Ernst & Young LLP to carry out forensic investigation into a 200 crore investment in Bangalore Beverages Ltd by way of subscription to preference shares.

Ernst & Young had also carried out forensic investigation into various advances made by Mangalore Chemicals to United Breweries (Holding) ltd of which a sum of 16.68 crore is outstanding as on 31 March 2016, Mangalore Chemicals said.

“Upon completion of its investigations, Ernst & Young has made a presentation to the board of directors at its meeting held on 6 May to the effect that the aforesaid transactions may have involved irregularities and elements of mismanagement in the company," the farm input company said.

Mangalore Chemicals is taking necessary legal advice in connection with the findings of Ernst and Young, it added.

The details of advances and investments were not immediately available.

Mallya, 60, has become the public face of India’s efforts to crack down on defaulters as authorities look to clean up stressed assets in the financial system. Mallya has offered to pay banks 6000 crore but banks have rejected the offer. Mallya has been in the UK since early March. After he left India, a Mumbai court issued a non-bailable arrest warrant against him on charges that he laundered money to buy property overseas.

Separately, Mangalore Chemicals reported a net loss of 5.8 crore for the March-ended quarter, compared to a profit of 34 crore reported last year. Shares of the company closed at 45.45 apiece on Friday, down 2.68%. The benchmark BSE Sensex closed at 25,228, down 0.13%.

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