The revamped global executive committee of global spirits major Diageo will be meeting for the first time in India a year after it acquired strategic control of Vijay Mallya-led United Spirits Limited (USL). The meeting, which is expected in September this year, will be a crucial one for United Spirits as it goes through the throes of cleaning up its balance sheet according to LSE- and NYSE – listed Diageo’s strict corporate governance norms.
Diageo’s global executive committee’s decision to meet in India comes a few weeks after it elevated United Spirits managing director and CEO Anand Kripalu to its global body, which also coincided with the revamp of Diageo’s Asia operations. “The changes we have announced signal a further shift in Diageo from an organisation based on regions to one which puts accountability in the markets. In addition, they strengthen our executive team and enhance our focus on two key growth markets, China and India,” Diageo said in a statement recently.
United Spirits has been grappling for the past four months to publish its last financial year numbers as the audit committee of the board of United Spirits had raised a series of questions about certain loans provided to UB Group’s parent company UB Holdings as well as to some distributors. United Spirits had earlier forked out a loan of as much as Rs 1,350 crore to UB Holdings, which was routed further to Kingfisher Airlines, the now-grounded airline of UB Group and which is saddled with outstanding of Rs 4,000 crore. As a result of this delay in publishing its FY14 and the first quarter of FY15 numbers, United Spirits stock will be moved out of the Nifty index shortly. In a regulatory disclosure, UB Holdings has said it has made provisions of as much as Rs 1,400 crore for loans provided to Kingfisher Airlines.
“The executive committee usually spends two or three days in various geographies to evaluate its global strategies as well as to focus on the operations of that specific country in which the meeting takes place. Given that Diageo has coughed up as much as Rs 18,000 crore to acquire 54 per cent in United Spirits, there is anticipation that the apex body will have a good look at how to leverage this asset,” a senior UB Group official told Business Standard.
Diageo is betting heavily on the emerging markets to drive its global growth and is looking to derive as much as 10 per cent of its global revenues from the current two per cent in India. After acquiring strategic control of United Spirits, Diageo has been pushing its various brands including flagship Johnnie Walker Scotch whisky and Smirnoff vodka through USL network. As a result, the sales have firmed up by 22 per cent in volume.