Mumbai, May 2: In a major bid to consolidate its spirits business, the VijayMallya-controlled UB group has decided to amalgamate six group companiesengaged in the spirits business into its flagship company, McDowell & Co.The merged entity - to be rechristened McDowell Ltd - will seek listing onall stock exchanges in which McDowell & Co is listed, after the completionof the amalgamation formalities and clearance from the high court. Themerged company will incorporate the US GAAP accounting standards and go foran overseas listing at a later stage.The amalgamation is expected to enhance McDowell & Co's sales turnover byroughly Rs 70 crore from around Rs 1,100 crore.
There will, however, be no dilution in the shareholding pattern and the UBgroup will continue to hold 43 per cent stake (as held in McDowell & Co) inthe merged entity. Every shareholder of McDowell & Co will receive one sharein the new company -McDowell Ltd - for every share held.
The effective date for the proposed amalgamation is April 1, 2000 and theapplicatons for the same will be filed next month.
The six companies are Serampore Distillery & Chemicals, Vitari Distilleries,Udaipur Distillery Company, Mysore Wine Product, McDowell Properties andMcDowell Spirits Ltd. Announcing the consolidation of business, groupChairman Vijaya Mallya said: "The consolidation of our spirits businessunder a single entity will enhance its real value. Once that is achieved,the company will undergo a structural clean up for overseas listing so thatthere are no stumbling blocks."
The merged company, Mallya said, will incorporate the US GAAP acountingnorms and the entire restructuring is expected to be completed by theyear-end. McDowell & Co has already appointed two international accountingfirms - Price Waterhouse and Delollitte - for the proposed recast.
Besides, the UB group is also planning to trifurcate its businesses intothree separate companies with McDowell managing the group's whiskyinterests. The group's breweries business will be consolidated into thesecond outfit, while the third company will hold all residuary businessesincluding investment companies and allied companies.
"The trifurcation will result in a focussed line of growth for each of thebusinesses. We may even think of separating the beer business from thebreweries at a later stage for achieving higher growth," UB president &chief financial officer Ravi Nedungadi said. McDowell & Co, officials said,is planning to go on a major acquisition drive in Rajasthan and MadhyaPradesh through group firms, Udaipur Distillery and Vitari DistillerirsMcDowell & Co has reported net profit of Rs 25.21 crore for the financialyear ended March 31, 2000, up from Rs 18.84 crore reported in thecorresponding period last year. The company's sales turnover shot up from Rs908.83 crore to Rs 1,100 crore during the period.
Copyright © 2000 Indian Express Newspapers (Bombay) Ltd.