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Corporate - Restructuring


Post-transfer of liquor businesses to subsidiaries — A `sombre' Shaw Wallace loses sheen

Badal Sanyal

KOLKATA, Sept. 18

SHAW Wallace & Company (SWC), as a separate corporate entity, seems to have lost its glamour as a leading liquor manufacturer with the SWC management deciding to transfer its manufacturing, marketing and distribution activities of liquor and beer to four separate subsidiaries floated by the company during the financial ended March 2002.

The transfer of business activities has been reflected in SWC's balance sheet which has stated that SWC, as a parent company of the newly created subsidiaries, could earn a profit of Rs 3.73 crore on a turnover of over Rs 205 crore during the year under review, although the turnover and profit would have been Rs 1,379 crore and Rs 35.86 crore respectively if there had been no transfer of liquor and beer businesses to these subsidiaries.

This means that SWC, as a separate corporate body, has sacrificed its income in favour of four subsidiaries by way of confining its thrust area of activity to "brand licensing" business, whereas the manufacturing and marketing operations have been left largely with the subsidiary companies to give individual businesses a focussed attention.

It may be mentioned that the company had undertaken a major restructuring exercise during the year under review and identified three core areas of business, namely brand ownership, marketing & distribution and manufacturing. Shaw Wallace Distilleries Ltd (SWDL) and Shaw Wallace Breweries Ltd (SWBL) were incorporated exclusively to undertake marketing of liquor and beer respectively. Maharashtra Distilleries Ltd (MDL) and Skol Breweries Ltd (Skol) have been given the exclusive right to manufacture liquor and beer respectively on behalf of the group. Necessary arrangements are being made to transfer the Excise Licence, Industrial Licence and other statutory documents from these manufacturing subsidiaries to MDL and Skol.

In addition to this, all the liquor manufacturing subsidiaries within the Jumbo Group - SWC's overseas parent - have been merged with MDL and the beer manufacturing subsidiaries within the group have been merged with Skol, thereby freeing SWC from any sort of manufacturing and marketing activities related to liquor and beer. In other words, the business restructuring has SWC only in non-liquor and brand licensing businesses.

It is stated in the balance sheet for the year ended March 2002 that Charminar Breweries Ltd, East Coast Breweries & Distilleries Ltd, Haryana Breweries Ltd and Sica Breweries Ltd, along with certain associated companies have merged with Skol Breweries Ltd - the beer manufacturing subsidiary of SWC, in terms of the orders received from the respective High Courts.

Similarly, Balbir Distilleries Ltd, Central Distillery & Breweries Ltd, Kanrar Investments Ltd, Kerala Distilleries & Allied Products Ltd, Manswar Investments Ltd, Mehra Breweries Ltd, Poonam Distilleries Ltd, Pampasar Distillery Ltd, Raj Breweries Ltd, Salamander Distillers Ltd, Tribtiss Investments Ltd and VRV Breweries & Bottling Industries Ltd, together with certain associate companies have been merged with MDL - the liquor manufacturing subsidiary of SWC, in terms of the orders received from the respective High Courts.

In order to further streamline and restructure the business of the company, the amalgamation/merger of 19 investment subsidiaries and associate companies of the group have been completed. Consequently, a scheme of amalgamation had been filed with the Kolkata High Court, it is stated.

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