United Breweries is to gain brewing operations in the key Indian state of Tamil Nadu, via a merger deal between sister company United Spirits Ltd and local group Balaji Distilleries.

United Spirits has agreed to acquire Balaji Distilleries in Tamil Nadu for an undisclosed fee, in a deal approved by Balaji's shareholders late last year.

United Breweries said in a stock filing late last week that the deal, which is still awaiting regulatory approval, will hand the firm its first brewing operations in the state.

"The company has entered into an agreement with the promoters of Balaji Distilleries to secure the company perpetual usage of [its] brewery and for grant of first right of refusal in case of sale or disposal of the brewery," said United Breweries, which owns the Kingfisher beer brand.

Tamil Nadu accounts for around 18% of United Breweries business, said the group, which is India's largest brewer and is owned by Indian billionaire Vijay Mallya.

The group has paid an advance of INR1.55bn to Balaji, which will be recouped once the distiller's deal with United Spirits has been completed.

Tamil Nadu only allows drinks firms with bottling operations inside its borders to sell their products in the state. 

United Breweries reported late last week that net profits and sales rose by 57% and 17% respectively for its fiscal first quarter.