McDowell and Company, the Rs 1,900 crore spirits arm of the UB group which is being getting consolidated into United Spirits, has received expressions of interest (EoIs) from international investors and agencies for investments ranging from $100 to $200 million at an attractive valuation, said Vijay Mallya, chairman, the UB Group.
"There has been a lot of interest from strategic and financial investors and these proposals will be considered by the board at an appropriate time," Mallya said at McDowell's annual general meeting in Bangalore on Friday.
He said the consolidated spirits firm will have a majority market share of 52 per cent and will be the second largest spirits company in the world after Diageo. The combined entity will have sales of Rs 3,000 crore (Rs 30 billion) in FY06 and the consolidated EBIDTA for the year is expected to be around Rs 275 crore (Rs 2.75 billion).
About the business benefits of this consolidation, Mallya said this will yield significant upsides in top line and bottom line owing to increased bargaining power with monopolistic customers, government and private, who account for 65 per cent and 16 per cent of the market respectively.
"Significant savings will be realised through realignment of value chain, thereby, reducing the disproportionate share of industry profit currently retained by distribution. This move will also give increased bargaining power with supplier of key inputs," Mallya said. The process of operational integration, he said, is well underway and is being facilitated by Accenture.
The company also obtained shareholders' approval to raise debt of up to Rs 5,000 crore (Rs 50 billion) and also to raise the FII stake limit to 49 per cent from the current 26 per cent.
