United Spirits announced Monday the board of directors asked Dr. Vijay Mallya to resign from position of director and chairman of the company. The company said the board has lost confidence in Dr. Mallya after the internal inquiry found various improprieties and legal violations in certain transactions diverting funds from the company to UB Group companies.

Inquiry conducted by the company's chief executive officer and managing director revealed that funds involved in many of certain transactions were diverted from the company and its subsidiaries to certain UB Group companies, including in particular, Kingfisher Airlines between 2010 and 2013.

"All of the dues owing to the company and its subsidiaries from UBHL aggregating Rs 13.37 billion on Jul. 3, 2013, were consolidated into a single loan agreement dated Jul. 3, 2013 entered into between the company and UBHL to the standalone financial statements and to the consolidated financial statements for the year ended Mar. 31, 2014," the company said.

ln the event Dr Mallya declines to step down, the board also resolved that it would recommend to the shareholders of the company, the removal of Dr. Mallya as a director and as the chairman of the board, the company said.

Further the company said the board is not in a position to make any final determinations with regard to the roles of any individuals involved. The board has therefore directed that the company report such transactions to the authorities as required under applicable law, it added.

Shares of the company declined Rs 40.4, or 1.18%, to trade at Rs 3,373. The total volume of shares traded was 37,912 at the BSE (11.44 a.m., Monday).