INDIA: United Spirits chief eyes Africa to grow export volumes - report
United Spirits' boss is hoping expansion into Africa will boost the firm's overall volumes
The boss of United Spirits says he wants exports to account for 10% of the firm's total volumes in the next three years and is looking at a joint venture in Africa, the world's "next growth economy".
Ashok Capoor, the Indian spirits group's president & MD, said the company has already started trading in Africa and some South-East Asia markets, during an interview with livemint.com, a partner to the Wall Street Journal. "We see a good potential for our premium IMFL (Indian made foreign liquor) brands to ride along with our premium Scotch portfolio in these markets," he said.
"We are looking for alignments in certain parts of Africa and we will explore a joint venture there."
Capoor, who became United Spirits' MD last year, said Africa's alcohol industry is "still evolving" and there is "huge fragmentation" in terms of spirits consumed. "Whisky and vodka are seen as international spirits and hugely aspirational," he added.
The company reported an 83% drop in net profits in Q4 to March 2012, due to higher finance costs and foreign-exchange losses. Total net debt also stood at around INR7.7bn (US$1.3bn) at the end of the March quarter.
But Capoor said the debt is not a problem and future acqusitions could not be ruled out. "Debt doesn’t have an adverse impact on our operations," he said. "We have never feared leveraging ourselves to the hilt if a situation offers an opportunity to consolidate and create value for our stakeholders."
Meanwhile, Capoor said Whyte & MacKay, which USL acquired in 2007 for GBP595m (US$1.18bn), is a "strategic asset, both from the perspective of bulk stocks as well as globally iconic brands in the portfolio".
"The focus is obviously on building these brands further, both in global and in Indian markets," he added. For example, USL will launch "value" Scotch whisky brand, John Barr, in India this financial year, Capoor said.
On general growth prospects in India, he concluded: "India has a large drinking population with 50% of the population below 25 years, and with a large amount of disposable income, I don’t see growth slowing down in the next five to seven years."
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