Opera On The Bourses

After a spate of sell-offs, the Vijay Mallya owned UB group is

now consolidating itself by hiking its stake in group companies

to comfortable levels.

Through the holding company, United Breweires Ltd, the group is

ploughing in Rs 47.95 crore to hike its stake in McDowell & Co

Ltd and UB Engineering. In McDowell, the flagship company, UB Ltd

is hiking its stake from 42 to 51 per cent by infusing Rs 37.95

crore, while in UB Engineering, the stake is set to rise to 47

per cent from 29 per cent.

Subhash Gupte, executive vice-chairman of the UB group sigd the

 

group is conunitted to the core businesses of spirits and that

the stake hike is a way of assuring shareholders of its

continued interest in its main businesses.

In McDowell, the hike would increase equity by Rs 6.9 crore

and infuse a total of Rs 31.05 crore in its share premium.

Total equity would rise from Rs 44.87 crore to Rs 51.77 crore.

Gupte said McDowell had allotted 6.9 million warrants to

promoters two years back to converted into one equity share each

at a price of Rs 55 per share. The last date for exercising the

conversion is to expire today. "Despite the market price being

Rs 20, we are exercising the conversion at Rs55 per share," he

added.

The UB group is the largest liquor and beer company in the

country with several popular brands like Kingfisher and KWyani

Black Label beer and Bagpiper, McDowell No 1, Vintage,

Signature, in liquor. 40 per cent in each beer 40 per cent 25

per cent Kingfisher.

Some years back, the group was well diversified with interests

in pharmaceuticals, engineering, petrochemicals, engineering,

petrochemicals and processed food. Beginning with the sell-off of

Kissan brand in 1993 to Unilever, the group has been disposing of

its none-core, loss making business. Last year, it agreed to sell

its polystyrene business to the LG group of S Korea for Rs 90

crore. Called Hindustan Polymers, it was a part of McDowell

and had suffered due to high styrene prices in the previous

year.Ibe group is also finalising the sale of its 36 per cent

stake in Best & Crompton to the Polysindo group of Indonesia.

Best & Crompton had been making losses.

However, UB Engineering will continue to be a part of the group.

Plans have been formalised for hudng UB's stake in the company

from 29 to 47 per cent through preferential allotment The total

investment will be Rs 10 crore and the shares will be priced at

Rs 21. From 47 per cent, the group further proposes to raise its

stake to 51 per cent

The infusion of fresh equity in McDowell is expected to help the

company tide over its financial problem. Loss of sales due to

prohibition in Andhra Pradesh and Haryana and losses of the

polystyrene division led to low net profit of Rs 2.91 crore for

18 months ended September 1996.