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UB group recast to unfurl two umbrellas for beer and liquor companies

The UB group, formerly the United Breweries group, will undertake major consolidation measures during the 2000-2001 fiscal year in order to focus mainly on core areas of beer and liquor.

After chairing the board meeting of McDowell and Company Limited, a UB group firm, chairman Vijay Mallya said in Bombay today that all the UB Holdings' companies involved in spirits businesses would be amalgamated into one branded company.

Similarly, all the companies related to beer business would be merged into one beer company, reflecting the real worth of business volume. The focussed beer company is likely to be renamed as Kingfisher.

The company would approach the respective state high courts in the first week of June for the amalgamation of McDowell Company Limited, Serampur Distillery and Chemicals, Vitari Distilleries, Udaipur Distillery, Mysore Wine Products, McDowell Properties and McDowell Spirits Limited.

After getting the formal approval, the merged entity would be renamed as McDowell Limited with registered office in Bangalore. It would seek listing on all the stock exchanges where McDowell Company Limited is presently listed on.

Mallya said that the new McDowell would move its accounting standards towards the United States' General Accepted Accounting Principles or GAAPorder to enable itself for listing in US market by early next year. All these consolidation exercises would be completed by end of the year, he said.

Besides achieving the long-term objective of having one spirits company for the group, Mallya said that the whole group was working on structural clean-up process through demerger and merger of holding firms. The objective was to enhance the shareholder value and establish the brands internationally, he said.

The total investment of the UB group in holding companies is in the region of Rs 4.50 billion of which Rs 2 billion investment is in the core sector of liquor and spirits business. The group may gradually withdraw its activities from non-core business where the holding valuation is around Rs 1.50 billion.

Talking about the future growth of the UB group, Mallya said that he would prefer acquisition of brands rather than manufacturing facilities to enhance the value of the company. In this context, he said that he had bid for Shaw Wallace revival plan also.

The proposed merger of all spirits companies excluding the disputed ownership of herbersons limited, would increase the turnover of McDowell by about Rs 700 million from the current figure of Rs 11 billion. Overall, there is expected to be capacity enhancement by 2.3 million cases per annum within the company.

Mallya, however, ruled out any dilution of shareholding in the proposed scheme of amalgamation and every shareholder of McDowell and Company would receive one share in the new company, McDowell Limited, for every share held by them.

The spirits division of the UB group has recorded a signal achievement in selling 25 million cases during the year 1999-2000 with McDowells having 5 millionaire and three half millionaire brands in the portfolio.

UNI

Business