Cheers!

Mumbai, Oct. 17: The UB Group has finally won all approvals for the creation of United Spirits — the entity that will house all its disparate spirits businesses currently spread across 10 companies.

The plan has been hanging fire for over a year.

“We have finally received the approval to change the name of McDowell and Company to United Spirits Limited,” said Ravi Nedungadi, president and chief financial officer of the UB Group.

McDowell and Company Ltd had decided to amalgamate Shaw Wallace Distilleries Limited, Herbertsons Limited and six other group companies with itself and demerge its investment business into McDowell India Spirits Limited.

The six other operating companies include Phipson Distillery Limited, United Spirits Limited, Triumph Distilleries and Vintners Private Limited, Baramati Grape Industries Limited, United Distillers India Limited and McDowell International Brands Limited. The company has also received the approval to change the name of McDowell India Spirits Limited to McDowell Holdings Ltd.

However, the company had decided not to merge its investment companies, Asian Opportunities and Investments Limited in Mauritius and Zelinka Limited in Cyprus. These companies would be utilised for overseas acquisitions and because of their places of incorporation enjoy significant tax advantages.

The group plans to use Shaw Wallace — the company it acquired last year — as the entity that will become a lender and loan guarantor for the entire spirits business.

The company plans to seek shareholders’ approval to fork out Rs 250 crore loans to all its existing businesses and stump up loan guarantees worth Rs 5,000 crore to its existing businesses, including overseas outfits that the group could acquire in future.

Calcutta-based Shaw Wallace is virtually debt-free today and does not have any loans to overseas subsidiaries on its books yet.

“We are in the process of merging Shaw Wallace with United Spirits but, due to several pending tax litigations, it is going to take a while. However, we are hopeful that the process would be completed within the next 12 months,' said Nedungadi.