The Hindu Business Line : McDowell's posts 17.5 pc rise in Q4 net profit

Spirits' major McDowell's has posted a 17.5-per-cent increase in net profit to Rs 17.72 crore during the fourth quarter of 2005-06 while net sales for the same period grew 17.88 per cent to Rs 350.38 crore.

A press statement from McDowell's said the results for the entire year (2005-06) saw the company's net profit increase nearly 92 per cent to Rs 51.32 crore, while net sales grew 19.44 per cent to Rs 1,380.12 crore.

The emphasis on mainline brands resulted in a 19 per cent increase in net sales while volumes of the lead brands grew 10 per cent to 22 million cases in 2005-06 from 19.9 million cases in 2004-05. But the overall sales volumes grew by a mere 1 per cent to 25.4 million cases.

The statement said interest costs were high on account of the borrowings to fund the acquisition of Shaw Wallace & Co. Following the repayment of these loans at the end of March, 2006, a substantial reduction in interest costs is expected in the current year. The company's issue of global depositary shares of $100 million was oversubscribed 2.4 times. Allocation was, however, limited to $130 million. The issue of foreign currency convertible bonds of $100 million was also over-subscribed 1.15 times.

The proceeds of both these issues amounting to over Rs 1,000 crore have been received by the company and been deployed primarily in the repayment of the loans taken to effect the acquisition of Shaw Wallace & Company Ltd. A pro forma combination of the results of the operating companies for the financial year 2006 indicates that United Spirits' (formed following the merger of Herbertsons Ltd, Triumph Distillers & Vintners Ltd., Shaw Wallace Distilleries Ltd., Baramati Grape Industries Ltd and United Distillers India Ltd., with McDowell & Co. Ltd) sold 59.2 million cases compared with 56.1 million cases in the comparable 12-month period of FY05.

The aggregate turnover and EBIDTA (earnings before interest, taxes, depreciation and amortisation) of the liquor business of the operating entities of USL stands at Rs 2,210 crore and Rs 280 crore respectively for fiscal 2006.

The statement said McDowell's along with its wholly owned subsidiary, Phipson Distillery Ltd (PDL), has divested 9,68,000 shares (10.17 per cent) in Herbertsons Ltd (HL), a subsidiary of the PDL and ultimately a subsidiary of the company, in terms of the Securities and Exchange Board of India (de-listing of securities) Guidelines, 2003. Consequent to the divestment, the company's holding along with PDL in Herbertsons stands at 50.84 per cent.

The statement said Highland Distilleries Ltd, Bhankerpur Simbhaoli Beverages Private Ltd, Shaw Wallace Liquor Brands Private Ltd, Shaw Wallace Beer Brands Private Ltd, Shaw Wallace Spirits Ltd and Primo Distributors Pvt Ltd ceased to be the subsidiaries of McDowell's.

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