The Rs 1,000 crore McDowell Limited is looking at getting into retailing mode for its products. The company is also stepping up its global presence. |
Speaking to the media on the sidelines of the company's Annual General Meeting, McDowell chairman Vijay Mallya said: "Liquor distribution continues to maintain its stranglehold over the industry by seeking to retain a disproportionate share of the profit chain. The trade has remained impervious to industry constraints. In order to expand profit opportunities, we are now evaluating a possibility of entering the retail end of the business. An international firm of consultants has been engaged to assist the company in this regard." |
Mallya further added that this will either be direct UB outlets or through franchisees. |
Commenting on the company's other plans to expand its presence overseas, he said: "We have been stepping up our presence overseas systematically and in Nepal we command a marketshare of nearly 65 per cent. We are now entering Sri Lanka with bottling arrangement with IDI and we are looking at significant presence in ASEAN countries by April 2005." |
The company is also looking at exporting its rum brands to UK and other EU countries. |
Detailing other aspects of the company, Mallya hoped that McDowell would be able to maintain the current profitability. |
"Cyclical impact of sugarcane production has led to the steep increase in the price of principle raw material, rectified spirit, during the current year. We have been able to partially offset this price increase through judicious build up of inventory decisions taken some months ago. We are exploring options to import rectified spirit and a case has been made to the government for reduction of import tariff in this regard." |
He noted that with these measures and the cane crushing season in Q3, McDowell will be able to maintain net profits. |
Mallya once again came down heavily on the regulated environment under which the liquor industry has to operate. |
"This industry's profitability is highly dependent on government's irrational regulations. For every Rs 100 a consumer pays at a retail outlet, Rs 60 goes to the state exchequer in the form of sales tax or levy. The distributive trade, helped by archaic regulation that limits their number, straddles a disproportionate percentage of the value chain and remains inflexible in their margins." |
The hapless consumer is then left with no choice but to go down the value chain and purchase what he can afford rather than what he would like to consume." |
Mallya insists on pact |
Vijay Mallya who has been tangled in a legal wrangle with Kishore Chabbria over control of Herbertsons, reiterated on Wednesday that he has indeed agreed on an out of court settlement with Chabbria. |
He told shareholders at McDowell's AGM: "I wish to confirm that I have agreed on an out-of-court settlement with Kishore Chabbria for buying out his stake in Herbertsons. I would not be announcing this if our respective legal counsel's weren't finalising the details of the agreement." |
Responding to questions on why Kishore Chabbria has remained silent on the issue, he said: "It is Kishore Chabbria's prerogative whether to comment or not on this issue." |