United Spirits Faces More Trouble
DSIJ Intelligence / 25 Aug 2014
United Spirits (USL) delayed publishing of its financial results because the audit committee of the board of United Spirits has raised a few questions regarding a few loans amounting to Rs 1350 crore which were granted to UB Group’s parent company UB holding.
United Spirits (USL) delayed publishing of its financial results because the audit committee of the board of United Spirits has raised a few questions regarding a few loans amounting to Rs 1350 crore which were granted to UB Group’s parent company UB holding. The financial results of USL will be declared as soon as the board is satisfied with the scrutiny about the loans are addressed. Till then, the financial results will not be published.
A listed company is required to declare its financial results within 45 days after a quarter has ended. In this case the deadline is 14th August 2014. But, the company has communicated to the stock exchange that due the concerns regarding the financials of the company it will not be in a position to do so. It will be intimating the financial results as soon as the concerns of the board are addressed.
Diageo is determined to set up combined USL and Diageo operations in India and wish to increase its sales in India. Diageo currently sees India as one of the biggest growth opportunity and is trying to consolidate its position in the emerging markets. The acquisition of USL is a part of an integrations programme. It is also is trying use the existing USL distribution network to push sales of it various brands and it has resulted in increase in sales by almost 20%. It will be focusing on its prestige brands. Diageo has paid Rs 18000 crore to acquire 54% stake in USL.
USL owns brands like Black Dog, White & Mackay, Antiquity etc. including 21 millionaire brands in its product portfolio whereas, Diageo has brands such as Smirnoff Vodka and Johnnie Walker whiskey. Heineken had initially acquired a 37.40% stake in United Breweries.Later, it picked up an additional 1.35% for Rs 275 crore taking the total to 38.92%.
Now 11.30% stake available with Vijay Mallya and group companies is surrounded with legal issues and cannot be transacted unless the Karnataka high court permits. 12.30% stake, of the remaining 21.3% stake available with Vijay Mallya and group companies, is pledged with few banks as collateral for the debt ridden Kingfisher airlines.
USL’s December quarter net profit stood at Rs 64.92 crore as compared to Rs 94.27 crore in Septermber’2014 quarter. This was mainly due to increase in expenditures which rose to Rs 2104.80 crore in December’2013 quarter as compared to Rs 1805.15 crore in September’2013 quarter. The net sales stood at Rs 2278.40 crore in December’2013 quarter as against Rs 2038.66 crore in September’2013 quarter.
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