Inventory value of Whyte & Mackay (W&M) rises further
Since the acquisition by United Spirits in May07, the scotch prices have risen by 10-15%. This increases the value of the value of inventory with W&M to GBp400million (earlier about GBp350million) adding Rs40/share to UNSP's value. The group is looking to expand the W&M brands in other potential markets like China, Taiwan, Korea etc and has already drawn plans to launch W&M brands in India by around Nov'07.
High debt levels – not a major concern
The company has a net debt of Rs 60.2billion (including Rs 51.4billion for W&M acquisition). The Company (and its subsidiary) has 10.8million treasury shares (attributable to United Spirits) worth Rs15.5billion which it could sell and lower the debt burden. Mr Mallya mentioned that the company could look at listing W&M on London Stock Exchange and raise capital.
Wine business to be launched soon
Currently, the wine market in India is about 500,000 cases and the market is growing at 50%. With the growing consumer preference for wine, the company is planning to set up a winery at Baramati to be commissioned by Oct'08. The company is also planning to launch various wine brands in India including Zinzi by Sep'07, Bouvet Ladubay by Sep'07 and Four Seasons premium brands by Oct'08
No major threat from competition (esp. foreign brands)
The central government has recently withdrawn Additional Custom Duty (ACD) on imported brands. The company expects state governments to levy equivalent taxes (in line with the WTO directives). Maharashtra government has already levied the taxes which have led to increase in prices of imported brands by around 20%+. Also, UB group has entered into an exclusivity arrangement with its distributors / wholesalers for handling UB products. By doing this, UB group has raised huge entry barriers for competition.
Since the acquisition by United Spirits in May07, the scotch prices have risen by 10-15%. This increases the value of the value of inventory with W&M to GBp400million (earlier about GBp350million) adding Rs40/share to UNSP's value. The group is looking to expand the W&M brands in other potential markets like China, Taiwan, Korea etc and has already drawn plans to launch W&M brands in India by around Nov'07.
High debt levels – not a major concern
The company has a net debt of Rs 60.2billion (including Rs 51.4billion for W&M acquisition). The Company (and its subsidiary) has 10.8million treasury shares (attributable to United Spirits) worth Rs15.5billion which it could sell and lower the debt burden. Mr Mallya mentioned that the company could look at listing W&M on London Stock Exchange and raise capital.
Wine business to be launched soon
Currently, the wine market in India is about 500,000 cases and the market is growing at 50%. With the growing consumer preference for wine, the company is planning to set up a winery at Baramati to be commissioned by Oct'08. The company is also planning to launch various wine brands in India including Zinzi by Sep'07, Bouvet Ladubay by Sep'07 and Four Seasons premium brands by Oct'08
No major threat from competition (esp. foreign brands)
The central government has recently withdrawn Additional Custom Duty (ACD) on imported brands. The company expects state governments to levy equivalent taxes (in line with the WTO directives). Maharashtra government has already levied the taxes which have led to increase in prices of imported brands by around 20%+. Also, UB group has entered into an exclusivity arrangement with its distributors / wholesalers for handling UB products. By doing this, UB group has raised huge entry barriers for competition.
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