The Hindu Business Line : UB in talks to buy Balaji's brewery unit

The division consists of a brewery with installed capacity of half-a-million hectolitre, which translates into monthly output of five lakh cases of beer.

The UB Group Chairman, Mr Vijay Mallya, confirmed to Business Line that he was looking at acquiring the brewing unit of Balaji Distilleries. Earlier, the top company officials told this newspaper that the promoters of Balaji group had approached UB with a sell-out proposition.

The leading domestic brewer has an ongoing contract manufacturing arrangement with the brewery, and the move to acquire the same is seen as part of a strategy to consolidate its brewing capacities across the country.

UB, which recently divested 37.5 per cent stake to Scottish & Newcastle (S&N) for Rs 940 crore, announced a fortnight ago that it was acquiring the brewing unit of Mr D.K. Adikeshavulu's Karnataka Breweries & Distilleries Ltd near Bangalore for Rs 180 crore.

The Balaji group, a traditional ally of Mr Mallya's spirits business in Tamil Nadu, ventured into the brewery business less than two years ago. It is learnt that UB already has some financial exposure to Balaji's brewing unit as it had provided last mile investments, which helped the brewery to go on stream, sources added. UB accounts for over 30 per cent of the annual beer consumption in Tamil Nadu, pegged at about 10 million cases annually.

UB had earlier staved off a potential takeover of the brewery by SABMiller, which manages and owns 50 per cent of Shaw Wallace Breweries Ltd, the second largest domestic brewer.

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