MUMBAI: Having completed the financial closure of acquisition of Shaw Wallace and becoming the second largest distilled spirits company in the world, UB Group chairman Dr Vijay Mallya is already eyeing the top slot.
Before getting there, he has to fill in the gap of 25 million cases which Diageo (the leading beverage alcohol major with brands like Smirnoff, Johnnie Walker, Guinness, Baileys, J&B) sells extra. "There is strong organic growth. If we are able to make certain strategic acquisitions, then the leadership position is well within reach in five years," he says.
Mallya's acquisition plan could include some brands of Allied Domecq (the global spirits and wine player operating in 50 markets), which is currently in talks to sell off to Pernod Ricard (one of the world's three leading wine and spirits operators). "If the takeover takes place, they will rationalise certain brands within the portfolio. We may find them interesting to pick up," says Mallya.
He is also looking at Chinese listed companies, which are enjoying high valuation at this stage. "Why only West? I am looking at the eastern region as well," he says.
The spirits market, in any case, is growing faster in India than in the matured economies. "We have been seeing sustainable double digit growth in India over the last 10 years. We see this trend continuing. Matured western markets, in contrast, have been witnessing single digit growth," he says.
Mallya expects to sell 60 million cases this fiscal, benefiting from the acquisition of Shaw Wallace, which will push 20 million cases. He puts the retail sales value of this at around Rs 140 billion. Besides, 100 million new consuming class is going to be added by 2010, he adds.
But isn't the gap between the market leader and UB still too wide to bridge? "We have increased seven million cases last year," he tells Indiantelevision.com.
When queried whether he would be rationalising the brands, Mallya says the finalisation will take place after the integration plan is set in place within two months. "I will announce the integration plan leading to the formation of United Spirits, the legal process of which has already begun." UB is being rechristened as United Spirits Ltd.
The integration process will involve adoption of human resource policies best to the breed. "We have to learn a lot from the brand personalities of Shaw Wallace. We will come out with a plan that is to provide equal opportunities to both the teams. We will be fair and equitable," he assured the Shaw Wallace employees.
The recasted board of Shaw Wallace now comprises Mallya, SR Gupte (EVP, UB Group), Ravi Nedungadi (president & CFO UB Group), SD Lalla (appointed MD Shaw Wallace), CL Jain, Shrikant Ruparel and Mani Narayanswamy.
The UB Group has paid Rs 15.45 billion for the acquisition of Shaw Wallace, which includes Rs 3.12 billion for 25 per cent shares through the open offer. "We have paid for extremely valuable brands. We look forward to further invest and grow these brands," says Mallya.
