Financial Daily from THE HINDU group of publications
Friday, May 24, 2002
Marketing - Brands
UDV unit head bids for brands from own stable
BANGALORE, May 23
LIQUOR industry veteran, Mr Deepak Roy, in his personal capacity has bid for the domestic whisky brands owned by UDV India Ltd. Such a bid is historic since for the first time in the domestic spirits industry an individual has bid in his own capacity. Interestingly, Mr Roy heads UDV's operations in South Asia, Russia and the Baltics.
Speaking to Business Line, Mr Roy said his bid would be financially backed by private equity investors or there could be some strategic alliance with domestic spirits players. "I have sent my bid to UDV for a management buy-out of the company's Indian whisky brands," Mr Roy said.
UDV has put on the block its entire Gilbey's range of India-specific whiskies - Green label, Old Gold, Old Club and White Label - along with the manufacturing facility in Maharashtra. UDV will allow the potential buyer to use Gilbey's brand rights in India for the next five years. DSP Merrill Lynch has been appointed as the merchant banker to identify a suitable buyer.
Meanwhile, UB group's flagship spirits company, McDowell & Co, may also put in its bid for the buyout. When contacted, UB group's spirits division President, Mr Vijay Rekhi, declined to comment citing confidentiality clauses. But UB group sources said the matter was being debated and no firm decision had been arrived at yet.
Incidentally, speculation is rife that the UB group may back Mr Roy's bid for the management buy-out. "We can't say what shape it will take if we go ahead with the bidding process. Obviously, the interests of UB group will take precedence over everything," UB sources said. It must be mentioned that Mr Roy has had a long stint with the UB group's spirits division before he joined UDV.
Shaw Wallace & Co, another leading Indian spirits company, has denied interest in the UDV brands.
Purvita Chatterjee reports from Mumbai:
Speaking to Business Line, Mr Deepak Roy said that UDV has just one manufacturing plant at Nira in Maharashtra, which it intends selling through its appointed merchant bankers. In future, local manufacturing of its international portfolio of brands would be done through a new plant. States Mr Roy, "We are making arrangements to buy another plant where we would resume domestic production of the rest of our brands."
Most of its other whisky brands like Black & White, Vat 69 and White Horse will thus continue to get locally manufactured, except Johnnie Walker, Rare J&B and Bailey's Irish Cream, which will be imported with steep duties.
Pernod Ricard, Allied Domecq in race?
Global spirits giants, Pernod Ricard and Allied Domecq, are also likely to join the race to buy out UDV's Indian whiskies.
Speaking to Business Line from Paris, Mr Richard Burrows, Joint Managing Director, Pernod Ricard, said the company was looking at inorganic growth in the Indian spirits market and would pursue all opportunities. However, he neither confirmed nor denied Pernod Ricard's interest in joining the bidding process for UDV's Indian brands.
"My company rules do not allow me to comment on this specific matter,'' he said. It must be mentioned that Pernod Ricard took over Seagram's Indian business last year as part of a worldwide deal and has since then merged its local operations with the latter.
Sources close to the bidding process said Allied Domecq was another international player likely to join the race. But Mr Srikant Illuri, Chief Executive Officer, Allied Domecq Spirits & Wines (India) Pvt Ltd, could not be reached for his comments.
But it is not clear whether bids of Pernod Ricard and Allied would pass through as both of them are not allowed to produce molasses-based whiskies in India. In fact, UDV was the only global spirits company which was allowed to use molasses for Indian whiskies.
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