Balaji Distilleries’ brewery division exempted
The efforts of United Spirits to merge its businesses other than the brewery division undertaking of Balaji Distilleries Ltd (BDL) would gain momentum with the Appellate Authority for Industrial and Financial Reconstruction (AAIFR) sanctioning the rehabilitation scheme for the process.
The board meeting of Chennai-based Balaji Distilleries would be held on December 8 to decide the future course, said G Sriraman, company secretary, BDL. Further decision would be taken in the board meeting and things will take shape only after this, he said.
The AAIFR has sanctioned the scheme containing the Scheme of Arrangements between BDL, Chennai Breweries Pvt Ltd (CBPL) and United Spirits Ltd and their respective shareholders and creditors, according to an announcement by United Spirits on BSE.
The appellate authority has sanctioned transfer of all the assets and liabilities relating to the brewery division of BDL to CBPL, a wholly owned subsidiary of BDL. The business of BDL, other than its brewery undertaking, could now be merged with USL on a going concern basis. In consideration, USL shall issue equity shares to the shareholders of BDL as per the scheme approved.
Earlier, United Spirits has announced that based on the recommendation by the independent valuation firms, the boards of both companies agreed that on a fully diluted basis, shareholders of BDL would be allotted two shares in USL for every 55 shares held in BDL. Vijay Mallya, chairman of the UB group, said the merger would de-risk the company's earnings and help it consolidate its leadership position in a large and growing market.
Since its inception in 1983, BDL has been working as a contract manufacturing unit for the UB group. The distillery has a capacity to produce 10 million cases a year while the brewery has a capacity of 9 million dozens a year expandable to about 12 million dozens.
