USL to seek shareholders' nod on August 9 for 'slump sale' of business linked to 32 brands

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26 Aug, 2025 12:21

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United Spirits Ltd (USL) will seek shareholders' nod for "slump sale" of business linked to 32 brands, a regulatory filing stated on August 1.

The approval from shareholders will be sought at the ensuing annual general meeting (AGM), scheduled on August 9, 2022, the Diageo subsidiary said.

The approval is required for a transaction with Inbrew Beverages Pvt Ltd involving "(i) slump sale of the entire business undertaking associated with 32 brands in the ‘popular’ segment; and (ii) grant of franchise in relation to 11 other brands in the ‘popular’ segment to Inbrew for a period of five years", the company informed the stock exchanges.

Addressing the doubts expressed by a section of investors over the proposed transaction with Inbrew, USL said the proposal is an outcome of a "robust 18-month process".

"The company has followed a thorough process over nearly 18 months which culminated in the signing of the documents in relation to the transaction with Inbrew, an unrelated third party. The process involved the company, through its financial advisors, Morgan Stanley, inviting interested parties to submit their respective proposals for the portfolio of 'popular’ brands," it said.

Following multiple discussions with several prospects, six parties initially submitted their non-binding offers. Subsequently, the shortlisted parties submitted their final proposals before Inbrew was finally selected, USL added.

"The transaction is in line with the company’s strategy to premiumise its portfolio to deliver long term profitable growth," USL noted.

On the franchise agreement with Inbrew in relation to 11 brands, the company said it will receive a "commercially agreed royalty over a period of five years".

"The royalty paid by the franchisees, whether fixed or variable, as a percentage of the Ex-Distillery Price (EDP), generally, is in the range of 5 percent to 10 percent of the EDP, depending on the bottling economics of each geography. The royalty under the fixed term franchise agreement with Inbrew is also in the same range and is of 'revenue' nature," it further added.

The announcement by USL comes a week after the Diageo-controlled liquor maker reported a consolidated net profit to Rs 261.1 crore for the first quarter of FY23, marking an over five-fold increase as compared to the same period of last fiscal. The revenue from operations climbed by 15.6 percent on-year to Rs 7,131.3 crore.