United Spirits to sell French winery by November
United Spirits will sell French winery Bouvet Ladubay S.A. to an undisclosed buyer as a part of its debt reduction measures
Mumbai: Diageo Plc-controlled United Spirits Ltd, India’s biggest liquor maker, will sell French winery Bouvet Ladubay S.A. to an undisclosed buyer to pare its debt.
While announcing its September quarter earnings on Monday, United Spirits said its subsidiary Asian Opportunities and Investments Ltd (AOIL) has signed an agreement to sell its entire interest in Bouvet Ladubay and its wholly-owned subsidiary Chapin Landais SAS.
The sale is likely to be completes in early November after “satisfaction of certain conditions precedent", United Spirits said.
“Based on the above agreement to sell, the company has re-assessed the value of its investments in and advances to AOIL and trued up the provisions to ₹ 8.86 crore during the quarter," the company said.
United Spirits, under Vijay Mallya in 2006, had bought the French winery, located in Loire Valle, for €15 million to market premium wines in India.
The company was importing wines from Bouvet Ladubay till then.
In a note dated 3 November, international brokerage Nomura Securities International, Inc. wrote that United Spirits will continue to monetise all or most of the non-core assets.
In its earnings analysis note, Nomura said United Spirits is aiming at reduce the current net debt of ₹ 4,000 crore by another ₹ 1,000 crore in the next 12-18 months.
United Spirits turned to a net profit of ₹ 929.3 crore in the September quarter from a loss of ₹ 26 crore in the year-ago period on a one-time gain from the sale of its stake in United Breweries Ltd (UB).
Sales grew by just 5.7% to ₹ 2,145 crore in the quarter, reflecting weak demand and United Spirits’ inability to increase prices in some states.
Over the past two years, liquor companies have reported weak sales as rising taxes and slowing economic growth hit demand.
United Spirits has been the worst hit by the slowdown in liquor demand and has lost market share to rivals such as Pernod Ricard SA and Allied Blenders and Distillers Pvt. Ltd.
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