Vijay Rekhi steps down as MD of USL

Vijay Rekhi on Tuesday stepped down as managing director (MD) of United Spirits Ltd (USL), and is likely to be replaced from within by Deputy President Ashok Capoor.

According to company sources, Capoor will be the MD of India’s largest spirits company, while Chief Financial Officer P A Murali is likely step into the role of joint president.

“I will continue to be a director of the company,” Rekhi told Business Standard, without divulging details.

Rekhi, who obtained his Masters in Business Administration from the Indian Institute of Management, Ahmedabad, in 1967, became the MD of the United Breweries Group’s flagship alcohol beverage company in 2001. In the last 10 years, he steered USL to be the world’s second-largest spirits company, next to Diageo, in volume terms.

According to industry observers, USL is expected to go past Diageo in 2011-12 to be the world’s largest spirits company in volume terms. USL, which sold more than 100 million cases (one case is equivalent to 12 x 750 ml bottles) in 2009-10, is likely to post a 30 per cent rise in volumes for 2010-11.

Industry experts said Rekhi’s most significant achievement during his over three-decade stint at USL was the acquisition of Scottish company Whyte & Mackay (W&M) in mid-2007 for Rs 4,783 crore in a highly leveraged deal. The company has been working on the enormous scotch reserves of W&M and is expected to build on its brands in the near future.

The company under Rekhi has shown an annual growth rate of 20 per cent in revenue in recent years, with strong performance in the domestic market.

With net debt of Rs 5,500 crore as on December 2010, USL is also working towards protecting its margin from variable raw material cost.

Recently, the company acquired a 41.54 per cent stake in Karnataka-based Sovereign Distilleries. It also acquired Tern Distilleries in Andhra Pradesh and Pioneer Distilleries in Maharashtra. These acquisitions have enabled the company to achieve 35 per cent projected extra neutral alcohol from captive sources.

“Rekhi’s initiatives have put USL in a leadership position in India. It is to be seen if the new management can turn around the W&M deal, along with the concerns relating to debt positions in the future,” another industry expert said.

USL registered a 34 per cent rise in net profit at Rs 130 crore in the December quarter on the back of higher sales of its flagship brands. Total revenue rose 45 per cent to Rs 1,969.40 crore.