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UB to merge Millennium with S&N joint venture

Purvita Chatterjee

MUMBAI, March 12

AS part of the consolidation exercise by the UB group, Millennium Alcobev Ltd (MABL), a group company, is likely to come under the fold of the proposed joint venture company with European brewer, Scottish & New Castle (S&N).

In fact Mr Ravi Jain, who is currently the Vice- Chairman and Managing Director of MABL, has already been designated as the Managing Director for the proposed joint venture company.

But whether the brands and the capacities of MABL will be bought by or leased to the joint venture company is yet to be known.

With a capacity to produce nearly 15 million cases, MABL is expected to bring in its brands and distribution strengths along with its capacities to become part of the joint venture company.

Mr Ravi Jain, Managing Director, Millennium, said: ``All the beer brands are likely to be marketed through one outfit. There will be consolidation of our brands which will get sold by one set of distributors. Besides, all the newly-acquired breweries such as GMR are also expected to be covered by the new joint venture company.''

The new joint venture company is also expected to bring in international brands such as Kronenbourg, John Smiths, Newcastle Brown Ale, depending upon the requirements of the Indian market.

With the recent acquisition of GMR breweries in Andhra Pradesh, capacity is not an issue and the company is looking at giving competition to other international brands already in the market such as Foster's and Castle.

"Through this joint venture, we have created a war chest of brands and are currently trying to consolidate our resources to have optimum utilisation. The distribution structure set up by Millennium is already in place and so is our field force. Now, the volumes will go up to 15 million cases and that is where there will be optimisation of resources,'' stated Mr Ravi Jain.

UBL (United Breweries Ltd), the flagship company of the UB group, announced its intentions last year to demerge its beer business into a separate entity into which would be inducted a strategic international partner.

S&N, a leading European brewer, was then chosen as its strategic partner. S&N has, in principle, agreed to invest

Rs 250 crore in the demerged business. It is to have 26 per cent equity in it.

Millennium was formed as a UB group company almost two years ago with the UB group as the major stakeholder with a 62 per cent stake, while the balance is shared by Mr Jain and his team.

"I may be moving out by selling my stake back to UB, and thereby, Millennium might become a redundant company in the future. At the moment, there are numerous possibilities,'' adds Mr Jain.

Sitting on a pile of cash brought in through its strategic partner, the company claims to have a business model to emerge as leader in the business.

As Mr Jain says: "UB has found a partner which can put in more money than anybody else for buying breweries and still remained independent. Today, there is enough to buy or lease brands and breweries. We will make sure that we have a brewery in every State that matters, apart from buying more regional brands in the process. ''

Last year, Millennium picked up a 51 per cent stake in Inertia Industries, acquiring two of its brands (Sandpiper and Turbo) along with its breweries.

Positioned as UB's acquisition vehicle, Millennium was renamed as Inertia Industries and was expected to emerge as the third largest player in the domestic beer industry. Currently, with nine brands under its fold including five leased out regional brands from the UB group, the company will again get renamed as Millennium, according to company officials.

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