Bangalore, June 29
THE UB Group expects to mop up in excess of $50 million by divesting a part of its Indian Made Foreign Liquor (IMFL) brand portfolio, according to a top company official. However, UB would be cautious in not letting the brands slip into the hands of "discounters" who could spoil the former's synergy gains following its recent takeover of Shaw Wallace & Co (SWC), the second largest domestic spirits company.
"We can unlock well over $50 million by way of sale of some of our brands. We have had several offers from interested parties. We will go through a formal process when we get ready for the sale," a top UB official told Business Line.
UB had earlier stated that it would sell some of its tail brands and prune the portfolio. The recent $300-million takeover of SWC has swelled UB spirits portfolio to over 130 brands selling about 56 million cases in an overall IMFL market estimated at 112 million cases annually.
UB officials said there was no formal decision on the brands to be axed though speculation in the market place suggests a list that includes some of the group's heritage brands such as Diplomat Whisky, Blue Riband Gin, Gold Riband Whisky, and second-line SWC brands such as Old Tavern Whisky.
"We have not yet carved up the brands for sale," the company official said even though it is learnt that none of the 12 millionaire brands that UB-SWC combine possess will be put on the block. But the industry observers said UB might have to axe brands with reasonable clout in the market to unlock $50 million by way of sale.
The Ramesh Vangal-promoted Mason & Summers, the Kishore Chhabria-owned BDA Ltd and the Lalit Khaitan-managed Radico Khaitan Ltd have expressed early interests in bidding for some of the UB brands. However, their interests hinge on the list of brands that UB would put on the block even though the latter is keen on splitting the sale between a few players in order to maximise the value realisation.
UB debt financed the takeover of SWC and wants to improve profitability of its operations in an industry notorious for low margins. With 50 per cent of the IMFL market under control, it hopes to leverage on the level of consolidation achieved to drive up the profitability and remains wary of the smaller players' propensity to discount and grab market share.