Anand Kripalu, who joined United Spirits as the CEO and MD in September, 2014, has seen the company go through some of its toughest times while the industry itself, according to him, has witnessed a tectonic shift. In an interview with BusinessLine , Kripalu, 57, shares the road ahead for USL, and the future of IPL team, Royal Challengers, Bangalore.

What are the steps the company is taking to reduce costs and how much do you plan to mop up through monetisation of core and non-core assets?

United Spirits didn’t have a cost culture earlier. Initially, I thought we were working only for the banks since our interest cost equalled our EBITDA every year. We have worked on this aspect and since then, debt has been reduced by half to about ₹3,800 crore from ₹8,200 crore two and half years ago. Our interest rate has also gone down to less than 8 per cent from 12 per cent. Our ratings for long-term debt is seven notches up with a double A rating. We have leveraged Diageo’s bank network as well.

Over the next couple of years, we expect to mop up about ₹1,000-2,000 crore by monetising our assets. There are some assets currently pledged with IDBI Bank which we are working hard to release.

What has been the progress as far as streamlining of operations is concerned?

We have reduced the subsidiaries from 73 to 22. Lots of tectonic shifts are happening in the industry but our growth has been decent; our margin improvement has been good.

Our prestige segment is growing by 15-16 per cent which means the market is upgrading.

We have already restructured our organisation making it leaner and more efficient.

How has the franchisee model panned out for USL?

First of all, we started reducing the number of factories we had. Now, it has come down to about 74 from 94 earlier.

We are franchising the popular segment brands in some States while we are retaining the popular brands in the States where it is more profitable.

The way we are looking at the franchising model is that the gross profit we make from the popular brands post franchising will be in the same ballpark we used to make ourselves and there will be an increasing gross profit profile in the future. We are not selling these popular brands. It is a fill it, shut it and forget it model. We follow the eyes-on, hands-off model. The model allows the franchisees to source, make and sell the brands. But they give the company a fixed royalty.

What is the exact status on the open offer issue? SEBI had also asked you to clarify on the $75-million payout to former chairman Vijay Mallya.

Honestly, this is between Diageo and SEBI to work it out. I have no direct knowledge of the matter. We have replied to SEBI on the notice they sent to us. It is the SEBI’s choice to make those documents public. It is not up to us to make the probe reports by the PwC and E&Y public. It is up to SEBI to make the reports public.

Are there any plans to sell of your IPL team, RCB? Do Mallya and his son, Siddharth, still play an active role in the management of the team?

RCB is one of the better performing teams in IPL and they are a profitable.

We are really investing behind it. Our chief marketing officer, Amrit Thomas is also the Chairman of RCB and we will ensure that we will maximise the value of the team and the brand. We are also leveraging our team asset such as Virat Kohli and Chris Gayle to promote our responsible drinking and never-drink-and-drive campaign. The team is not a trophy for us but a valuable part of USL’s business agenda.

Mallya continues as the chief mentor of the RCB team and his son, Siddharth, is on the board for two years.

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