The Hindu Business Line : UB posts Rs 4.06-cr net profit in Q2

UNITED Breweries has reported a net profit of Rs 4.06 crore in the second quarter of the current fiscal, compared to a loss of Rs 0.5 crore in the same period last year.

The total income for the period was Rs 110.56 crore (Rs 92.92 crore). Volumes grew 24.6 per cent, outperforming the industry by 10 per cent.The Kingfisher brand has been driving the growth, with both mild and strong beers achieving growth ahead of the industry, in both the quarter and year to-date.

According to a release from the company, the acquisition of Karnataka Breweries and Distilleries Ltd (KBDL) is expected to be completed in the third quarter. Of a total consideration of Rs 186 crore, an advance of Rs 123 crore has been placed in an escrow account until such time as the transaction is completed.

The board has agreed that investments of over Rs 400 crore will be made in the next seven years to meet the volume requirements, which will include at least one new greenfield breweries in addition to the existing two new greenfield breweries in Rajasthan and Orissa. These investments will be financed partly through internal accruals and partially through borrowings.

The accounts for the year ended March 31, 2005, carry a qualification with regard to diminution in value of investments in subsidiaries amounting to Rs 87.54 crore; non-recoverability of advances to subsidiaries amounting to Rs 56.90 crore and liability towards guarantees given on behalf of subsidiaries amounting to Rs 44.65 crore, the extent of loss of which, if any, is not ascertainable. In addition, the accounts carry a qualification with regard to investments in Millennium Alcobev Private Ltd (MAPL) amounting to Rs 58.95 crore.

MAPL, a joint venture between the company and S&N (Scottish & Newcastle), has already made significant inroads into the market by achieving a 10 per cent market share within three years. The said subsidiaries and the joint venture have their manufacturing locations in critical markets and meet almost 33 per cent of the company's capacity requirement. Considering these investments are strategic and long term in nature, the management is of the view that no provision is necessary at this stage, says the release.

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