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UB to end venture with Carlsberg

K Giriprakash

The Vijay Mallya-owned UB group has finally decided to put an end to its proposed joint venture with international beer major Carlsberg. It has decided to wind up UB Carlsberg Ltd, a company floated for this purpose.

The group's decision to wind up the venture is based on a major restructuring aimed at projecting UB Ltd as a only-beer company and make it attractive for a foreign player to pick up stake in it. "We are now looking at several other players but we hope Carlsberg will re-introduce themselves and send in a proposal too," Nedungadi said.

Both UB and Carlsberg had earlier signed a pact and filed an application with the Foreign Investment Promotion Board for setting up a joint venture.

UB Group's president, finance, Ravi Nedungadi said that UB Carlsberg Ltd would be wound up during the current year paving the way for the company to examine proposals from other international players as well.

UB Group had last year announced plans to demerge UB Ltd and focus on its core business of beer, which would enable the company to list its shares abroad and make it attractive for foreign investors to pick up equity.

As per the agreement signed between the two partners, Carlsberg and UB were to be equal partners in the venture. The project had earlier run into a roadblock with the Centre referring the venture to the Attorney General for his comments on a Supreme Court order which stipulates that granting of liquor licences should be referred to the respective states.

The UB group has already appointed Deloitte Haskins & Sells and IL&FS for restructuring the group, while Kotak Mahindra has been appointed to search for a strategic investor in UB Ltd even as it has decided to wind up UB Carlsberg Ltd.

"Both Deloitte and IL&FS will look at the broad contours of restructuring, while Kotak will find investors for our beer-only company," Nedungadi said.

He said Kotak Mahindra has already started receiving offers from several international beer majors for tying up with UB Ltd. UB Group has already announced that it is willing to allow upto 26 per cent stake in the restructured UB Ltd for a foreign beer major.

Nedungadi said Deloitte has been asked to work out the parameters for restructuring the group. "They will look at on how to sin off the beer company, to look at liabilities and valuation of each subsidiary," he said.

Similarly, a decision will be taken on Ravi Jain's stake in Millennium Alcobev and in Inertia in which he holds around 11 per cent after UB Ltd is restructured. As per the management's decision, UB Ltd will own all beer brands, the breweries and its recent acquisitions including Associated Breweries, Inertia Industries, Mangalore Breweries, Millennium Alcobev and Nepal Breweries.

Nedungadi said San Miguel will continue to sell in India as the licence with its parent company is being renewed.

The UB Group has said that it expects to mop up around Rs 4 billion from sale of its non-core businesses including Mangalore Chemical & Fertilisers and stake in Hoechst and Aventis and hopes to wipe off debts of the group and have around Rs 1 billion in excess.

As part of the internal reorganisation, UB Ltd has spun off four of its subsidiaries into separate companies and seven of its companies into wholly owned subsidiaries.

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