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UB Group conducted the analyst meet for the discussing the performance of its various companies for the quarter ended June 2010. Mr. Vijay Mallay, Chairman of the group addressed the meet.
Highlights of the meet
United Spirits
The net sales for Q1 FY11 has increased by 18% to Rs 1470.61 crore. The volume grew by 6% to 26.7 million cases. Andhra Pradesh (AP) state witnessed de-stocking on account of a fresh tendering process for retail licenses, which affected the industry offtake by 27%.
Leaving, AP state, the volume has grown by 15%
The profit before tax before EO has increased by 12% to Rs 182.30 crore due to rise in margin.
Scotch category grew by 39%, Signature brand grew by 21%, Antiquity grew by 20%, Director Special grew by 41%, McDowell no. 1 whisky by 29%, McDowell No. 1 rum by 19% and Green Label by 20% for Q1.
It hold 55% market share in volume terms.
It has 20 millionaire brands.
For FY10, McDowell No. 1 Family has sold over 35 million cases. Celebration rum is the 3rd largest rum with 12 million cases sold last year while Bagpiper Whisky has the largest selling whisky in world with 16 million cases sold last year.
With 12% per annum growth rate, it expect to become No.1 spirit company this fiscal year.
ENA cost was at Rs 143 per cases for Q1, which is expected to remain at that level for Q2 also and then is expected to come down with fresh supplies.
Glass prices are expected to go up by 7% from August 2010.
The total net debt stands at Rs 5213 crore, while cash & bank balance at Rs 469 crore while Whyte & Mackay (W&M) acquisition loan at Rs 2231 crore.
The value of 8.4 million treasury stock at present stood approximately at Rs 1150 crore.
Going Forward
It will focus on value growth with volume growth. Focus will be there on premiumization. There will be also price hike to offset any cost push.
The capital expenditure of Rs 1100 crore for next 3 years is to build additional distillery, increase bottling capacity and malt spirit production facility which will help in increasing EBIDTA margin. Also capital expenditure is for reducing dependence on molasses spirits towards grain spirit.
The company will introduce more brands in premium segment with focus on bring some of W&M scotch brands to India which are premium category one and increase presence in scotch category across various price points.
Whyte & Mackay
Whyte & Mackay earned an EBIDTA of GBP of 5.93 million, an increase of 9% for Q1.
It produces 8% of global scotch whisky.
Post acquisition, it has ramped up its import and distribution in US. It has established new imported and distribution tie up in China, Taiwan, South Korea, Middle East & South Africa. It has also increased its presence in duty free shops from 5 to 30 key location. It has also increased distribution of scotch brand in India by 40%.
W&M's average branded business realization for relevant vintage is 4 to 4.5 times that of bulk business
Single Malt whisky segment has grown significantly higher than blended scotch whisky with a volume CAGR of about 6%.
For FY10, EBIDTA stood at GBP 58 million.
It has improved its branded business from 44% to 50% of sales. Out of total branded sales, 80% of contribution comes from 17 brands. It has more than 100 brands which are very old.
Going forward
The scotch market in India is growing at 20% for last 4 to 5 years. W&M wants to capture 20% marketshare with 275000 cases sales over next 2 years.
It wants to reduce its UK share of business from 45% to less than 30% over next 3 years and focus on growing region like China, India and Russia.
It also wants to build its presence in key markets of West Europe like Germany and Spain.
It has target of 25% growth in single malts over next 3 years through Dalmore and Jura
The management has given guidance of having sales of GBP 110 million for FY11. The EBITDA for FY11 would be about GBP 33 million. This level and trend of EBITDA would be adequate to meet debt servicing and capex until May 2012
The fundamental shift in strategy, which creates long term value accretion to shareholders and a sustainable business model will generate an annual EBITDA of GBP 60 Mio in 5 years time.
United Breweries (UBL)
It has sold 101 million cases in FY10. It is market leader with market share of more than 50%.
Heineken holds 37.5% stake in UBL and has a shareholder's agreement with UBL based on which Heineken will be active in India solely through UBL
Heineken will be produced in India by UBL. UBL will now have an access to Heineken's distribution and manufacturing facilities in the international markets, which UBL is currently catering through exports
The net sales has grown by 37% to Rs 776 crore while net profit has grown by 114% to Rs 76 crore for Q1. Volume grew by 32% with 36% strong beer growth.
With an industry growth of 30%, UBL continues to strengthen its relative market share of more than 200 bps
Benefiting from economic growth and favourable weather, all regions except the North showed growth rates of 25% and above. In absolute terms, Andhra Pradesh, Karnataka and Maharashtra were the main contributors to our growth.
EBITDA margin up from 15.9% to 20% due to strong topline growth combined with contained fixed costs
Going Forward
The industry is projected to grow 10% to 15% volumes in the near term.
UBL plans to continue investing in capacity and capability to meet growing consumer demand .
UBL intends to focus on the emerging premium segment through offerings such as Kingfisher Ultra and Heineken.
Kingfisher Airlines (KFA)
It has network spread across 61 Indian cities and 8 foreign cities with a fleet size of 66 aircraft
The total operating revenues for Q1 was up by 29% to Rs 1640 crore. Domestic revenue was up by 11% despite 14% reduction in capacity to Rs 1324 crore while international revenue stood at Rs 316 crore, up by 290%. International revenue growth was disproportionate to capacity increase. It carried 3.1 million passengers.
It has cut capacity by 20% in domestic & 6% in international routes. Number of aircrafts reduced by 20% (80 vs. 64) in the same period.
Aircraft utilization has been increased by 11% in FY10 to approximately 12 hrs for Airbus and 10.3 hrs for ATR's.
Overall there was an EBITDA profit of Rs 127 crore of which domestic operations EBITDA profit was at Rs 177 crore, a growth of 133%. Domestic EBITDA margin improved from 6% to 13%
. However, International operations EBITDA Loss stood at Rs 51 crore.
Load factor for the quarter stood at 85%.
Going Forward
It had received membership with One World Alliance to drive passenger growth in domestic and international markets.
It will launch code share operations with British Airways.
It is planning for infusion of equity amounting to Rs 350 crore in FY11. It will also raise around USD 200 million by issue of GDRs in FY11
SBI Caps has been mandated with the task of financial restructuring which has proposal of 9 year repayment of all loans with a 2 year moratorium on principal repayments.
UB Holding (UBHL)
UB Global's turnover for Q1 was about Rs 34 crore
.UB city has annual rental revenue from commercial space Rs 25 crore and from retail space Rs 9 crore. It has obtained planning permit for construction of additional 500,000 square feet by way of super premium residential space in UB City. 55% accrues to UBHL.
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