The Hindu Business Line : UB Group plans to buy UK-based spirits company

In and out
A decade ago, UB acquired a majority stake in South Africa's United National Breweries; but exited by selling its stake to the existing management a few months ago.
Has been eyeing several EU companies including a French distiller for sometime now.

Bangalore , April 11

The UB Group's move to buy out a UK-based spirits company will allow the Indian liquor giant to overcome the European Union's (EU) curb on import of Indian made foreign liquor and also help it to gain a foothold in a highly competitive market.

Confirming the move, the UB Group Chairman, Mr Vijay Mallya, told Business Line that the deal to take over the spirits' distiller should happen later this year. "We are set to buy one of the distillers," he said. "But I can't reveal more details as of now," he said.

Last month, the UB Group had ruled itself out to buy Whyte & Mackay's Invergordon Distillers, which makes Scotch whisky for the UK market.

Overseas acquisition

The UB Group has been extremely careful in making overseas acquisitions. In one of its first such deals, nearly a decade ago, it acquired a majority stake in South Africa's United National Breweries, which makes Sorghum beer.

But a few months ago, the group exited the company by selling its stake to the existing management.

Sources close to the UB Group claim that the Indian liquor giant has been eyeing several European companies including a French distiller for sometime now to make an entry into the market.

Analysts view the latest move from UB as extremely interesting development.

"While on the one front it (UB Group) has been fighting the European lobby including the UK-based Scotch Whisky Association for keeping out Indian companies because it does not recognise whisky made by molasses, on the other hand it (UB Group) is trying to buy an European distiller," an analyst said.

The analyst said if the UB Group succeeds in buying out one of the European distillers, it would have far reaching ramifications for the market there.

Robust results

On the domestic front, the group's spirits' company, McDowell & Co has been posting robust results. Its latest results (third quarter of 2005-06) show that it posted a 106.03 per cent increase in net profit to Rs 17.08 crore while its net sales grew 24.09 per cent to Rs 399.17 crore for the quarter compared with the same quarter last fiscal.

Its lead brands gained 13 per cent resulting in an increase from 14.68 million cases to 16.54 million cases during April-December of 2005-06.

In value terms, the net sales of the main line brands grew 19 per cent to Rs 1,029.7 crore compared with Rs 862.9 crore in the same period last year.

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