United Spirits net jumps; shrs slip as Diageo offer fails

Moneycontrol Bureau

Vijay Mallya owned spirits major United Spirits' fourth quarter net profit jumped over five-fold year-on-year to Rs 56 crore. Net sales rose 11 percent to Rs 2,058 crore in Jan-March. The results, however, failed to impress the street and the stock was trading down near 1.5 percent in morning trade on Thursday, as the company separately revealed that global drinks giant Diageo's offer to acquire 26 percent stake from public shareholders had received poor response. The Diageo offer is a part of the nearly USD 2 billion deal to acquire a majority stake in United Spirits. Of the 3.8 crore shares on offer, United Spirits shareholders tendered only 64,169 shares and only 58,688 shares were accepted, according to a filing on the stock exchanges. Also Read: Investors cold shoulder Diageo's United Spirits open offer The key reason for the failure of the open offer is the Rs 1,440 a share price offered by Diageo, significantly lower than its Wednesday's closing price of Rs 2,304.90. The stake sale has been seen as key to reducing United Spirits' huge debt, which stood at Rs 8,219 crore at the consolidated level as of March 31. Meanwhile, its fourth quarter profit was boosted by the strong growth in the company's premium drinks portfolio. For instance, its scotch whisky volumes surged 60 percent and other premium drinks volumes nearly trebled. Premium whisky volumes were up 15 percent to 1.06 million cases. The company said its been focusing on "premiumizing" its portfolio and moving consumers up the value chain by creating new and variant brands that generate higher revenue contribution. In the regular segment, however, volumes were down 8 percent. Overall, United Spirits' volumes last quarter were up 4 percent in Jan-March to 31.37 million cases. "During the last quarter, USL was successful in obtaining revenue enhancing opportunities in Andhra Pradesh and Karnataka - these have been capitalized and successfully implemented, thereby enhancing profitability," it said. However, sales in Tamil Nadu remained weak due to regulatory issues and volumes fell 15 percent in FY2013, it added. The company also benefited from a foreign exchange gain of Rs 9 crore in Jan-March, compared with a loss of Rs 20.5 crore in the year ago quarter. Other income more than doubled to Rs 38 crore. Nachiket Kelkar
nachiket.kelkar@network18online.com