Boby Kurian

Bangalore , March 23

THE UB Group may consider sale of some of its spirits brands as the acquisition of Shaw Wallace & Co (SWC) has boosted its Indian Made Foreign Liquor (IMFL) portfolio to 130 brands.

"We have already been approached by a few interested players who want to takeover some of our `tail' brands (which are non-core, non-tactical brands). These are players who are looking at a deal size of about Rs 100-150 crore," UB officials told Business Line.

While not rejecting the possibility of a deal, which could see some its fighter brands being cast away, these officials, however, said, such a move could take awhile. "Our priority right now is the significant management challenges in front of us (following SWC deal). There is a great deal of work to be done integrating and streamlining our spirits operations," the officials said. "We need to map out our core brands, and also those brands which can be used tactically at the regional level," the officials added.

UB's existing spirits business boasts of nine millionaire brands (with annual depletions of over a million cases) that include Bagpiper Whisky, McDowell No.1 Whisky, Celebration Rum and Honey Bee Brandy, while SWC portfolio brings with it six million cases brands, including whiskies such as Royal Challenge and Directors' Special. UB's spirits operations will close the current financial year with nearly 40 million cases, while SWC is expected to report sales of 15 million cases.

Following the SWC deal, Mr Mallya's spirits empire will have access to 75 distilleries and bottling units - of which 27 are owned — across the country. SWC through its Pampasar and Aurangabad units will also augment UB's critical primary distillation capacity. However, it is clear that the manufacturing and bottling foot-print will undergo significant restructuring as the group's spirits operations get streamlined.

Mr Mallya has announced plans to merge his four spirits companies - McDowell & Co, Herbertsons, Triumph Distillers & Vintners, and the just acquired SWC - under the banner of United Spirits Ltd. Mr Mallya told Business Line on Tuesday that would unlock value in the merged entity mostly through the induction of a strategic foreign partner within 18-24 months.

Meanwhile, ICICI Bank, which is debt financing the takeover of SWC, has allowed a two-year holiday on repayments, and, in the context, Mr Mallya's move to unlock value through equity dilution is seen as significant. The acquisition of SWC would help Mr Mallya's spirits empire with synergistic cost savings of over Rs 100 crore from the second financial year.

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