Financial Daily from THE HINDU group of publications
Thursday, Jul 22, 2004
Alliances & Joint Ventures
UDV all set to exit joint venture with UB
Bangalore , July 21
GUINNESS UDV is expected to exit from United Distillers India Pvt Ltd, its manufacturing joint venture with the UB group, and may shift its entire production to contract-bottling units (CBUs).
The global drinks major and UB Holdings Ltd hold 50 per cent stake each in the Nashik-based joint venture, which was floated 10 years ago, to roll out locally bottled Scotch whiskies.
UDV, part of Diageo Plc, will exit the venture leaving it entirely in the hands of the UB group, which will pay the former an undisclosed consideration for the assets owned by the plant.
The global giant is likely to shift its bottling operations to the Aurangabad-based Konkan Agro Marine Industries, a captive third party vendor, and hopes to build it into a centre of excellence in manufacturing in India, sources said.
It is learnt that the exit decision is pending necessary regulatory approvals.
When contacted, a UDV spokesperson said: "As of now, we continue to be in the joint venture. We will issue a joint statement with UB whenever there is news on that front."
UDV's locally bottled portfolio include leading premium vodka, Smirnoff, Scotch whiskies such as VAT 69 and Black & White, Gilbey's Gin and Archers Peach Schnapps.
The company, which is part of the world's largest spirits conglomerate, is also involved in the import and marketing of premium Scotch brands such as Johnnie Walker, J&B and Bailey's Irish Cream Liqueur.
The move to shift production from the joint venture to a CBU is in line with the global major's new operating strategy in the country.
UDV sold its IMFL business to its former country head, Mr Deepak Roy, some 18 months back to focus exclusively on its international portfolio.
The company has been streamlining the manufacturing operations since then, and had cited low volumes while seeking FIPB approval to carry out its entire production from CBUs, namely Konkan Agro Marine Industries of Maharashtra, Barwaha in Madhya Pradesh and Kothputli units of Associated Alcohol Breweries in Rajasthan.
However, sources said Konkan Agro Marine Industries could emerge as the most significant unit for UDV's bottling operations in India.. The company has ruled out local bottling of more international brands in the country at the moment even as it is waiting for the right time to launch Smirnoff Ice, a ready-to-drink (RTD) offering.
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