Benefits of acquiring global Scotch whisky major starts to kick in.
United Spirits, the flagship spirits firm of the UB Group, has noted that the benefits of acquiring Whyte & Mackay (W&M) has started to kick in.
The company has stated that the Scotch whisky stocks held by Whyte & Mackay have appreciated by 49 per cent since its acquisition by United Spirits and are currently valued at Rs 3,190 crore.
The Rs 3,500-crore United Spirits, India’s largest spirits firm, during May 2007 had acquired 100 per cent stake in Whyte & Mackay, a globally reputed distiller of Scotch whisky, for a consideration of Rs 4,800 crore.
W&M owns brands such as The Dalmore, Isle of Jura, Glayva, Fettercairn, Vladivar vodka and Whyte & Mackay scotch. It also owns several other Scotch whisky brands such as Mackinlays, John Barr, Cluny and Claymore.
According to a spokesperson of the UB Group, the valuation of this Scotch whisky has been done by an independent valuation firm appointed by a group of bankers.
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When United Spirits acquired Whyte & Mackay, it had 116.7 million litres of alcohol and at a prevailing cost of £3.12 per litre. “Now the stock is 98.5 million litres and the value per litre is £4.65,” a spokesperson said, highlighting the growth in demand of premium scotch.
W&M’s Invergordon Distillery, near Inverness, is one of the largest scotch whisky distilleries with a capacity of producing 40 million litres per annum. The capacity of this facility can be easily increased to 80 million litres annually at an investment of only around £10 million.
This production resource will provide USL with a perennial source of Scotch whisky to meet its global requirements in the future. In addition, Invergordon will remain a key strategic provider of bulk scotch whisky to industry majors.
W&M also owns four malt whisky distilleries in Scotland and a bottling facility in Grangemouth with a capacity of 12 million cases annually.
For the nine months of FY09, Whyte & Mackay achieved a sales growth of 8 per cent and recorded a profit before tax of Rs 262 crore, which is a 145 per cent increase over the corresponding period of the previous year where the profit before tax was Rs 106 crore.
“United Spirits has achieved a 26 per cent growth in sales volume for January 2009 as against a 7 per cent growth in volume during January 2008,” a UB spokesperson said.
This data comes at a time when United Spirits’ stock has been hammered down by around 25 per cent during the past the 3 weeks and it closed at Rs 560.65 on the National Stock Exchange, down marginally from its Monday close.
The stock has been hammered after various analyst reports detailed that the promoter, Vijay Mallya, through the holding company UB Holdings, has pledged nearly 20 per cent stock to fund various group expansion including that of Kingfisher Airlines.
“In terms of financing the acquisition of W&M, USL has a large amount of treasury stock which will be sold to part finance the transaction and reduce the debt. The acquisition cost will be through non-recourse finance to USL. We have tied up a £325-million loan from ICICI Bank with a moratorium of two years and the loan carries on for nine years. We have also tied up a £210-million loan from Citibank with a moratorium of up to 30 months and thereafter for five years,” Mallya had detailed.
USL is currently leveraged nearly three times on its equity of around Rs 2,100 crore and has a total debt of Rs 7,500 crore. Industry sources also indicate that there is a possibility of bringing in an investor in Whyte & Mackay.