Diageo in USL driver's seat from today

Its Anand Kripalu becomes CEO, marking year of transition from Mallya-led team; 3-yr schedule ready for spiking forward

Diageo, the London-headquartered world’s largest global spirits group, is set on Thursday to take over the reins of United Spirits (USL) from the Vijay Mallya-led management team.

Diageo nominee Anand Kripalu (pictured below), a veteran in the fast moving consumer goods sector, having earlier steered Cadbury India & South Asia, will be taking charge as chief executive officer (CEO) of India’s largest spirits company by a long margin. Ashok Capoor, the current managing director, a veteran of Mallya’s UB Group, will be stepping down; he will continue as president, strategy, USL, for a  year.

Kripalu taking charge marks  a key step in the transition of the management to Diageo’s, started in July 2013 when the global major completed a 25.03 per cent stake buy in USL.

Diageo subsequently raised its stake to just under 29 per cent. It has announced it plans to take this to around 54 per cent through an open offer, scheduled to begin in June. The open offer for the additional 26 per cent, if fully subscribed, will cost Diageo Rs 11,500 crore. It had paid around Rs 6,500 crore earlier for the 29 per cent stake.

In a joint statement on Wednesday, Mallya and Gilbert Ghostine, president, Asia-Pacific, Diageo, said: “Since October when Anand was appointed as CEO-designate at USL, he has quickly immersed himself in the business. For over 30 years, Anand has built and expanded businesses in the sector and is now sharing with USL his invaluable strategic insights about how the best companies operate in emerging markets.”

Kripalu said, “The last seven months with USL have been a very enriching and enlightening experience — meeting colleagues, trade partners, customers and consumers, and understanding the mechanics of our business and the industry. USL has great brands, strong business fundamentals, excellent relations with trade partners and deep connections with consumers. I’ve also spent a lot of time meeting very talented and dedicated people at USL and am inspired by their passion for this business.”

Right from early July 2013, Diageo has been actively working to overhaul operational aspects of USL across compliance, legal, human resources, finance & control and the supply chain, among others. It is understood that 40 key members of Diageo’s global team across these operations have been working with USL over these nine months, to align the latter to the former’s systems.

In addition, it is understood that around 125 sales people from Diageo India have been transitioned into USL.   

Diageo, during October 2013, put in place a sales agreement contract with USL through which the Indian company would sell the former’s brands — Johnnie Walker scotch, Smirnoff vodka and VAT69 whisky, among others. As a result of the strong network penetration USL has across India, sales of Diageo brands grew 35 per cent during October-March 2013-14.

It is further understood that the top management of Diageo India have been working closely with USL and almost finalised a three-year schedule  to take the combination forward.

DISTILLING CHANGE

• Anand Kripalu takes charge as CEO of United Spirits from Thursday
• Marks transition of Vijay Mallya-led management team to Diageo’s, which has close to 29% stake in USL and is targeting 54%  in the fourth quarter of 2013
• Diageo has deputed 40 global executives to work on USL’s operations across divisions, to bring these in sync with its systems