UB to hive off beer unit, sell Hoechst, MCF stakes

Addressing a news conference, UB group chairman Vijay Mallya said the group will now concentrate only in spirits and beer businesses — McDowells channelling the entire spirits business while UB will look after the beer business. The group is also looking at the option of a US listing.

“We are planning to take out the beer business from UB Ltd and sell stake in the new company to the foreign partner. Depending on the comfort levels of both partners, we will sell stake in UB beer firm,” Mallya said. Carlsberg of Germany is one of the suitors for a stake in UB.

While the merger of all the McDowell subsidiaries would be effective from April 1 this year, the new company will adopt US GAAP accounting system over the next two years.

The equity pattern in McDowells Ltd will remain same as every shareholder of McDowells and Co will get one share in the new company against every share held in the parent company. UB currently holds 43 per cent stake in McDowells. For the year ended March 31st 2000, McDowells has recorded a turnover of Rs 1,100 crore and the merger would add another Rs 70 crore to the bottomlines.

“We are undertaking the biggest structural clean up act ever in the balance sheets of both McDowells and UB Ltd. After the beer business is hived off, we will sell our investments at the right price,” he added. UB has investments of over Rs 450 crore in various businesses of which Mallya has identified non-core businesses worth around Rs 250 crore.

“After turning around the MCF, we will sell the shares in MCF but not at a discount,” Mallya added. The entire restructuring exercise would be over by the end of the current calender year, Mallya said.

“In order to grow, we are looking at the option of mergers and acquisitions and at the same time we would like to develop new brands,” the liquor baron said. Mallya cited the example of new brand, Celebration Rum, which has crossed the milestone of two million cases in the first year of launch itself.