 "UBL looks for future high on Indian beer")
Heineken presently has a 38.92 per cent stake. There has been speculation that it is in talks with Chairman Vijay Mallya and various other entities to secure more control over the Indian brewer. The stake of Mallya and his affiliates has fallen to 35.9 per cent in UBL from the earlier 37.4 per cent equal stake he had with Heineken. The Indian liquor baron is also under pressure to generate cash to reduce his staggeringly high debt levels across various companies of his UB Group. The Indian liquor market is arguably one of the most complicated to operate in the world. Still, global entities such as Heineken are betting on the country’s potential as they grapple with flat, if not falling, sales in their other European markets.
“This year, we have had no growth, in previous years, it was in small single-digit and before that, we had two years with enormous growth,” says Henricus Van Zon, chief financial officer of UBL, named for the role by Heineken. “So, the Indian market will grow into the future - that is, I think, certain. The question of what kind of pattern it would grow is very difficult to predict.” Of the major beer consuming states in India, UBL has grown in almost all but registered a drop in the western states. “Maharashtra is down, Mumbai is down, Madhya Pradesh is also down, in Goa there is slight growth,” the company said.
While the south continues to be lucrative, with Karnataka holding fort, UBL has been facing acute problems in the key market of Tamil Nadu, with state regulations and unfavourable ordering continuing to hurt the company. "Excluding Tamil Nadu, our growth would be six per cent," the company says. Overall volume growth across the country in the third quarter was only "modest", it said, hurt by Tamil Nadu.
"We are at regular intervals meeting state governments and trying to imbibe in them that there has to be some rationale in duty increases," says UBL. "However, bureaucrats do not seem to understand because even if there is a sharp increase in duties, the overall duty collected, even after the volume drop, would be a little higher than what was previously collected. Hence, they do not need to answer internally and they get away from any audit objections because that is how the various tax departments are and the revenue departments in the state are built."
The northern markets have performed relatively well and the company says its volumes have grown in Uttar Pradesh, Rajasthan and "to some extent in Delhi". In the eastern markets, West Bengal and Odisha have registerd an increase, while Bihar has seen a drop.
"Overall, it is very clear that our premium products are doing well and so are (other) products," said UBL.
"In states where the per case revenue is high, for example in Karnataka, there has been good volume growth," says the CFO.
Its shares closed at Rs 806.05 each on Wednesday, up one per cent, on the BSE exchange.