Financial Daily from THE HINDU group of publications
Wednesday, Mar 23, 2005
Corporate - Mergers & Acquisitions
Restructuring to be over in 6 months: Mallya
P.T. Jyothi Datta
Mr Vijay Mallya, Chairman, UB group, aboard Indian Princess on Tuesday. - Shashi Ashiwal
Mumbai , March 22
THE clincher was the strategy of the open offer. It eliminated other competition for Shah Wallace. And then the SEBI timings in terms of compliance with open offer requirements helped in putting a sense of urgency, which ultimately got it done," said a relieved Mr Vijay Mallya, Chairman of the UB group, after having sealed a Rs 1,300-crore deal on Monday to gain controlling stake in Shah Wallace & Company Ltd (SWC).
The actual signing on the dotted line by the two erstwhile competitors came at 2.30 p.m. Dubai time, he recalled. The existing open offer has been converted into a triggered open offer.
But with the deal now sealed and done, the amalgamation and restructuring process has been kicked into motion and will be completed in about six months, said Mr Mallya.
And that would mean rationalisation of people, assets and brands, a new board of directors... ? "The whole nine yards," he told Business Line during an interview aboard his famed yacht, Indian Princess, anchored at a 10-minute boat-ride away from the Mumbai coastline.
Having become the second biggest global player in the spirits business, he outlined his international vision for the UB group.
"I have not done the math (of UB's consolidated revenues). But our company will pay Rs 15,000 crore a year in excise and other revenues to the Government. Very clearly, now I have SWC, McDowells, TDV (Triumph Distillers & Vintners) and Herbertsons. The liquor businesses of all these companies would get combined into United Spirits Ltd (USL). I have people already working on it ... Also, I have to merge and consolidate the companies with a spirit of urgency because one of the key return on investment parameters is in the synergies that I am expecting in combining the two."
UB Holding will hold the controlling stake, he added.
"Financial closure should take place within 60 days. In another 60 days we should have our scheme ready for the amalgamation. We are talking about, within four to six months," he said.
"Unfortunately, any such combination results in restructuring, some jobs will go. But we will make a conscious attempt to retain the best people. And I would like to make one thing very clear: just because UB bought SWC, doesn't mean that all SWC people will go. In the restructuring, we will pick the best from among both."
Commenting on reports that UB is looking to take on board a foreign partner, he said: "I don't need a foreign partner. I dare say, many foreign companies may need me now. I am not actively scouting for any foreign partner. But I want to give this business a global dimension. A fair slice of revenues will come from outside India. So that will be my next focus, but once I have completed my restructuring."
The funds for the acquisition came from UB, and banks, including ICICI Bank as the lead bank.
The deal comes with SWC's Rs 400-crore liability, "but all that has been taken care of in our calculations."
Besides, all the non-spirits businesses will be taken care of before financial closure.
Further, he added: "There is no outstanding litigation between SWC and UB ... Now we are friends."
Dressed casually in green shirt, shorts and a Kingfisher cap, and sipping away at his drink, Mr Mallya recalled the events of the previous day. "For me it was a sense of relief. The atmosphere in the Jumbo boardroom was very friendly. The advisors on both sides who battled vigorously ... had smiles on their faces ... My mom called me from London, said, you had been at it for 20 years, it is destined to happen."
Liquor baron, Richard Branson of India or flamboyant Member of Parliament - who is the real Mr Mallya? "I am myself. Call me by any name you want, but I am still Vijay Mallya, right?"
And as the sun set on the Arabian Sea, Mr Mallya indicated that tomorrow will be another day, when he puts his political hat on and attends Parliament.
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