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UB to dilute stake in National Sorghum

Boby Kurian

BANGALORE, Sept. 18

UNITED Breweries (UB) is poised to divest a significant part of its equity holding in South Africa's National Sorghum Breweries (NSB). Mr Vijay Mallya's alcoholic beverage entity had invested $15 million to pick up 30 per cent stake in NSB.

A top UB group official told Business Line that the company has identified two routes to dilute its current level of equity holding in NSB. ``We can offload our equity to another interested party or we will go in for dilution at the time of listing on th e Johannesburg Stock Exchange,'' official said.

But there was no word on the exact quantum of disinvestment even as the official added: ``The equity dilution process will be completed within the next 18 months''.

Interestingly, UB's plans to recoup investment made in this overseas venture comes at a time when NSB has registered a turnaround in business. NSB's operations recently went through a blip forcing the company to embark on a business restructuring as pres cribed by international management consultants, Proud Foot.

UB's decision to dilute stake has further strengthened the market perception here that Mr Mallya is keen to exit from NSB when the price is good and deploy the resources towards consolidation of UB's brewing interests in India. However, the official refu ted any possibility of UB's total exit from sorghum business in South Africa ``for the time being''.

It is fairly clear now that UB's medium-term objective is to strengthen its hold on brewery business in India. It will strike alliances with the small independent local breweries and will invest in some of them to pick up ``majority or strategic'' stakes .