ICRA reaffirms AA-plus rating on United Spirits' financial instruments

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ICRA has reaffirmed AA-plus rating with a stable outlook on United Spirits Ltd's (USL's) Rs 3,425 crore long-term, short-term and non-fund based financial instruments.

It also reaffirmed A1-plus rating on USL's commercial paper and has withdrawn the rating on Rs 750 crore non-convertible debentures at the company's request as there was no outstanding against the facility.

ICRA said the ratings continue to factor in USL's strong operational and financial flexibility besides robust corporate governance and compliance practices by virtue of being a 55.94 per cent subsidiary of Diageo Plc.

USL continues to benefit from the business synergies through the implementation of Diageo's global best practices across business functions which have complemented its large scale of operations.

ICRA said the ratings also consider USL's strong market position in the domestic spirits industry supported by its large distribution network, wide product portfolio and presence across price points, flavours and segments.

USL manufactures, sells and distributes a portfolio of premium brands like Johnnie Walker, Black Dog, Black & White, VAT 69, Antiquity, Signature, Royal Challenge, McDowell's No.1, Smirnoff and Captain Morgan.

With sales volumes of 79.7 million cases during FY2020, the company is the largest player in the domestic spirits industry. Headquartered in Bengaluru, the company's footprint is supported by 50-plus manufacturing facilities across states and union territories.

In FY20, it had operating income of Rs 9,325 crore and profit after tax of Rs 624 crore.