Business Companies 11 Mar 2016 Kingfisher beer comp ...

Kingfisher beer company UBL retains Mallya's hold

FINANCIAL CHRONICLE
Published Mar 11, 2016, 8:44 am IST
Updated Mar 11, 2016, 8:44 am IST
Mallya, directly or indirectly, controls UBL via 32.3 per cent stake
The other Indian promoters of UBL, directly or indirectly under the control of Mallya, include McDowell Holdings, Mallya Private Ltd and Kamsco Industries.
 The other Indian promoters of UBL, directly or indirectly under the control of Mallya, include McDowell Holdings, Mallya Private Ltd and Kamsco Industries.

Even as the Supreme Court notice to Vijay Mallya creates ripples in India Inc, there is still one listed company having the Mallya connection intact.

United Breweries (UBL), the producer of Kingfisher beer, has Vijay Mallya as one of its promoters, holding an 8.1 per cent stake, as of December 31. The other promoters of UBL include United Breweries Holdings (UBHL), which holds an 11.5 per cent stake. As of December, Vijay Mallya is one of its promoters owning 7.9 per cent stake in it.

 

Almost all, or 98.1 per cent, of Mallya’s 8.1 per cent stake in UBL, which has a current market capitalisation of Rs 21,200 crore, is in pledged or encumbered form. His 7.9 per cent stake in UBHL is free from pledges, but UBHL is a small-sized company, with a current market capitalisation of just Rs 130 crore.

The other Indian promoters of UBL, directly or indirectly under the control of Mallya, include McDowell Holdings, Mallya Private Ltd and Kamsco Industries. Together, the Indian promoters, including Mallya, hold a 32.3 per cent stake in UBL.

 

The bigger chunk of promoter shareholding in UBL, however, lies with the Heineken group, which holds a 42.4 per cent stake.

So, even though the public shareholders hold just 25.3 per cent stake in UBL, they, along with the Heineken, would be keen to see UBL get freed from any adverse effects emanating from the Mallya court case.

In the case of United Spirits (USL), which is a non-beer liquor company, while the company announced the global five-year non-compete, non-interference and standstill arrangement with Mallya, the actual severance payment of $75 million was to be made by its parent company, Diageo.

 

Diageo’s move was driven by its desire to bring a closure to the concerns surrounding USL due to the Mallya connection. But Diageo could make such a move since Mallya’s stake, directly or indirectly, had fallen to negligible levels.

In UBL, however, the Heinken group is not in a strong position as the Indian promoters still have a 32.3 per cent controlling stake. The company has Vijay Mallya as its chairman.

The performance of the fundamentals of the two major domestic companies, USL and UBL, also points to the unfavourable conditions being faced by UBL shareholders.

 

Clearly, the Mallya connection, or the lack of it, appears to be affecting the fundamentals of the two companies.

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