3. No. 1 Beer in No. 1 Spirits in No. 1 Airline in
India India India
• Dr. Vijay • Organised • Completed
Mallya took Spirits merger of
over the reins business Deccan and
of the Group at under USL and Kingfisher to
a tender age of Beer business form the
28 under UBL largest pvt.
• Launched airline
Kingfisher
Airlines
1950–1982 1983–2002 2003 2005 2007 2008 2009
• Started and • Kept acquiring • Acquired • Acquired • Legal Merger of
expanded into smaller players Shaw Wallace, 100% stake in Shaw Wallace
beer and in beer and • Brought in Whyte and completed;
spirits liquor industry. Scottish New Mackay, • UBL and
business BUILT Castle in UBL worlds 4th Heineken strike
mainly through BRANDS LIKE largest scotch a deal: brings
acquisitions KINGFISHER, company APB / Heineken
BAGPIPER, brands
BLACK DOG
3
4. UB Group
• 2nd largest spirits company in the world and largest spirits
company in India with a market share in excess of 55% in first line
United Spirits Ltd.,
brands
No. 1 Spirits Company in
• Key brands are Dalmore, Jura, Whyte & Mackay, Black Dog,
India
Antiquity, Signature, Royal Challenge, McDowell's No.1,
Celebration Rum, Romanov and White Mischief
• Undisputed leader of the Indian beer industry with over 50%
United Breweries Ltd., market share
No. 1 Beer Company in India • Key brands are Kingfisher Blue, Kingfisher Strong, Kingfisher
Premium, Kingfisher Ultra, Kingfisher Draught, London Pilsner,
UB Premium Ice, Kalyani Black Label Premium and Kalyani Black
Label
• ‘Best Airline in India and Central Asia’, ‘Best Economy Class Seats’
and ‘Staff Service Excellence Award for airlines in India and
Kingfisher Airlines Ltd.,
Central Asia’ in World Airline Awards (May, 2010)
No. 1 standalone Airline in
India • India's only 5 Star airline, rated by Skytrax and 6th airline in the
world for 3rd consecutive year (May, 2010)
• Diversified presence across businesses including equity
investment in Mangalore Chemicals & Fertilizers Ltd. and UB
Diversified Business
Engineering Ltd., investment in Vittal Mallya Scientific Research
Interests
Foundation and franchisee for IPL team “Royal Challengers”
4
5. Founded by Thomas Leishman in 1915.
India’s largest brewery
140 brands in portfolio like Bagpiper
whisky, McDowell No.1, Director’s
special whisky, McDowell No.1
Brandy, Premium Ice, Kalyani Black
Label etc..
Domestic market share in excess
of 50%
For maintain leadership position they
made multifaceted strategic alliance
with Scottish and New Castle PLC
6. Increased scale – price increase from
improved negotiating power.
Increased usage of single Completely
Built Unit (CBU) to improve throughput.
Extra Neutral Alcohol (ENA)
procurement pattern and spirit
movement planning.
Rationalization of terms of trade
reduction in spends, personnel and
overheads.
The merged entity was called United
Spirits. The UB Group has paid Rs. 1,545
crore for the acquisition, which includes
Rs. 312 crore for 25 per cent shares
acquired through the open offer.
7. Founded by James Whyte and Charles
Mackay in Scotland
4th largest whisky maker in the world with
turnover of $283 mn
Major brands like Isle of Jura, Dalmore,
Vladvir Vodka and W&M Scotch.
No. of employees : 700
Working on the philosophy of ‘all good things
come to those who wait’.
8. Premiumization trend in scotch whisky segment
Global Scotch whisky market is growing at a value CAGR of
Volume (Mn. Cases)
about 7% ( 2004-09) which is significantly higher than volume 20-Yr CAGR
100
CAGR of about 2%. 80
60
13.7%
W&M’s average branded business realization for relevant 40
4.7%
20
vintage is 4 to 4.5 times that of bulk business 0 0.3%
1988 2008
Value Standard
Clear premiumization trend in Scotch with premium scotch Premium Super Premium 1.5%
segments growing at a faster pace than standard/value scotch Growth trend in emerging markets
segment. 4 Yr CAGR
(2004-08)
Volume (Mn. Cases)
Single Malt whisky segment has grown significantly higher than
20-Yr
blended scotch whisky with a volume CAGR of about 6%. CAGR
4.4
Increased preference for higher vintage scotch and single malt %
whiskies. 0.1%
Sustained growth in large emerging markets of China, India,
Russia, Brazil, and South Korea over the last decade.
* 2-Yr CAGR
9. Indian Liquor Industry divided
in two parts:
Indian Made Foreign Liquor
(IMFL) – 200mn cases per annum
and per capita consumption
around 2.1 liters per annum
Bear Segment – 91 mn cases per
annum.
In 2006 Union Budget Govt.
impose 4% Counter Veiling Duty
on liquor industry which
strengthens the position of
domestic company.
10. By Leveraged Buy Out
Debt is secured by the assets of the acquired business & the cash
flows of the acquired business will be used to service the debt
Deal was worth Rs.9484.84 Crs @ Exchange Rate of 80.38 Rs /GBP
Special purpose vehicle – “United Spirits” newly launched
company
UB paid GBP 505 Million which accounted 100% stake in Whyte &
Mackay which formed the equity component of the newly
launched company United spirits
Debt to equity ratio of newly launched company 1.336
UB stake in United spirits is limited to its equity investment of
505 Million GBP . The Assets of W&M would be transferred to the
balance sheet of united spirits which would be used to
collateralize the debt taken for Acquisition
11. Acquisition finance to USL was provided by ICICI Bank
& Citibank
Debt of £ 325 mn loan (9 yrs.) extended by ICICI
Debt of £ 210 mn (5 yrs.) extended by Citibank
Advisors to the Buyer and Seller
Buy side - United Bank of Switzerland
Sell side – Citigroup
The UB Group parted-fund the acquisition by selling a
part of 17 million shares it has deposited in a trust for
this purpose.
W&M expected operating profit of 50 Mn in 2007 and
this was expected to take care of the interest costs for
the acquisition and it actually did happen.
12. MOU with Russian Standard Company
China Initiatives
Wine business
New product initiatives
14. Whyte & Mackay
Sales climbed around 4% to £149 mn compared
with 2004. The deficit in shareholder’s funds was
reduced by more than £12 mn to £1.5mn
15. United Breweries Group
To increase the brand portfolio
USL's consolidated sales up by 75 Mn cases p.a.
Hold on Inver Gordon Distillery, near Inverness and malt
whisky distilleries in Scotland
Bottling facility in Grangemouth with a capacity of 12 million
cases annually.
Enter into the Russian and China Market
Self sufficient for Scotch requirement
Brand image of Whyte & Mackay
Import tariff avoided and brand can be sold at higher margins.
United Spirits shares closed at Rs 895.20, up 6.88 per cent.
(Currently trading at Rs 729.20)
16. The Finance Minister delivered a punch by ordering
a Excise duty hike on Packaging.
The rise of excise duty on Packaging material is by
2%.
Steep increase in cost of glass bottles off late
estimated to be around 8-9%.
Impact of around 55crores annually United Spirits
Limited.
Increase in Service tax by another 2% would result in
margins getting affected due to the service tax on
bottling.
ENA (Extra Neutral Alcohol) is also going through a
volatile pricing period.