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Company presentation on UB GROUP

Presented By: Arun singh

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The

UB Group was founded by Scottish gentleman Thomas Leishman in 1915.


The

group started manufacturing beer from south Indian based British breweries and elected its first Indian director, Mr. Vittal Mallya in 1947.
Kingfisher

the most visible and modest brand made its entry in 1960.

KINGFISHER-BRAND
kingfisher stands for excitement, youth and camaraderie. kingfisher, the bird is known for its keen instinct,and perfect aim. It zeros on its target with unfaltering focus

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Contd

During the 60s they added Mc dowell as a subsidiary which helped them to extend its portfolio in to wine & spirits business. Latter on Mr. Vittal Mallya acquired UB Group and after his untimely deth in 1983, Mr. Vijay Mallya became the chairman of UB Group.

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Mission & Vision

We are focused on assuming leadership in all our target markets.

We seek to be the most preferred employer wherever we operate.


We recognize that our organization is built around people who are our most valuable asset.

We will always be the partner of choice for customers, suppliers and other creators of innovative concepts.
We will operate as a decentralized organization and allow each business to develop within our stated values.

We will be a major contributor to our National Economy and take full advantage of our strong resource base.

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Corporate Strategy
The ultimate goal is GROWTH of the company Focus on primary line of business Effort to sell the same products to a new market GROWTH BY CONCENTRATION, MARKET DEVELOPMENT,MERGER AND ACQUISITION

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MERGERS - UB

Following entities being merged: McDowell & Company Limited (Listed) Herbertsons Limited (Listed) Triumph Distillers & Vintners Private Limited United Distillers India Limited Baramati Grape Industries Limited Phipson Distillery Limited United Spirits Limited Asian Opportunities & Investments Limited McDowell International Brands Limited Zelinka Limited Shaw Wallace Distilleries Limited together with its subsidiaries WHYTE & MACKAY 26% stake in Air Deccan
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Group Business

Breweries Airlines

Fertilizers
Engineering

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A Group in the process of Transformation


Petrochemic als 6% Paints 7% Others 7% Spirits 29%

UB GROUP

FY 1990
Engineering 18% Beer 8%
Fertilizers, 15% Engineerin g , 3% Airlines , 6% Beer , 17%

Pharma 25%

Spirits, 59%

FY 2006

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UB Group- One of Indias leading wealth creators


Market Cap : August 2006 Five Core listed companies have a market cap of USD 1.7 billion Market cap has grown 10 times in last 5 years Some of the large funds who have invested in McDowell and United Breweries includeMcDowell & Company Ltd Sloane Robinson LLP Goldman Sachs (Mauritius) Merril Lynch Capital Mkts DB Funds (Mauritius) FID Funds (Mauritius) Platinum Asset Mgnt United Breweries Ltd Oppenheimer Fund Inc Citigroup Global Mkts Goldman Sachs (Mauritius) FID Funds (Mauritius) Arisaig Partner (Asia) Pte HSBC Financial Services (ME The Power of Leadership

Group Holding Structure


UB (Holdings) Ltd.

Investments

Real Estate (UB City Project)


(55%)

Spirits Business
(36.54%)

Beer Business
(37.50%)

Aviation
(100%)

Others

United Breweries

Kingfisher Airlines Ltd.

United Spirits
( Erstwhile McDowell & Co Ltd) (75%)

Aventis Pharma

(10.28%)

(50%)

Millenium Alcobev

Mangalore Chemicals & (30.44%) Fertilizers UB Engineering (34.74%)

Shaw Wallace Ltd

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UB Group Unique Leadership in both Beer and Spirits


Spirits : Controls about half the domestic market 60% in first line brands 3rd largest player in the world Has 5 brands which are in the Top 50 Spirits Brands World wide list of Impact Both Beer International. and Spirits share a Beer : common 50% market share nationally distribution channel Sold in over 52 countries Indias 1st global consumer brand Kingfisher
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Grand Strategies

Expansion Strategies Diversification Cooperation (M&A, JV/Foreign Collaboration)

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Acquisition of Shaw Wallace


Shaw Wallace was the 2nd largest player in spirits in India (MS - 15%). UB Group acquired 75% stake for a consideration of USD 300 mio in July 2005

Consolidation Plan
Action initiated to merge all the spirits entities into McDowell to create United Spirits Limited.

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USL 4

Acquisition of Bouvet Ladubay

Largest producer of sparkling wine in Saumur region.

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Acquisition of Air Deccan

The choice is simple. The Power of Leadership

Indian Beer Market


Market Share Mar 06
UB SAB MM Shiv'k Fosters Other

Brand Market Share Mar 06


Kingfisher (Mild+Strong) H 5000 Knock-out Royal Challenge Zingaro Others

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UBL 2

PORTERS FIVE FORCES MODEL


Potential Entrants Barrier to entry - customer loyalty, high set-up costs.

Suppliers Global economies of scale keep suppliers prices low.

Industry Competitors Strong image, Brand Loyalty, and Innovative R&D.

Buyers Retailers power increasing.

Substitutes Railways for airlines. Source: Porter, 1978

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PRODUCT MARKET PORTFOLIO


Airlines MARKET GROWTH (%) 18%

15% 10%

Breweries

1.5

1.0 RMS

0.6 The Power of Leadership

External Analysis

PEST Analysis
Opportunities &Threats Competitive advantage

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PEST

Political

Regulatory hurdles constitute an entry barrier to the industry.

The alcohol distribution structure is 65% State government controlled. Deregulation is now starting to happen which will benefit the industry in

general & USL in particular-

Policy Change - De-cartelization in 2001 - State Govt has taken over the wholesale trade - Changes in the Annual tender policy

Benefits - Industry has doubled - Net Realization has doubled


- Price increase

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PEST
Economical:

With 8% + GDP growth expected over the next few years the Industry have a bright future.
High Disposable Income. Domestic Air Traffic grew by 23% to 21.82 million passengers in 2005, over 17.70 million passengers in 2004.

The buoyancy in the corporate sector with the economic boom, business and leisure travel is expected to far exceed first time travel.
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PEST
Social:

Demographics, Higher disposable income & change in spending patterns favour growth of more profitable products Changing Lifestyles Attitudes of work & Leisure Rapid urbanization - middle class already exceed 300 million

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PEST
Technological:

New packaging initiatives to reduce costs and curtail counterfeiting.

New product developments Diet Whisky


Innovative CRM Techniques

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Opportunities & Threat


Opportunity

Market conditions very attractive for growth especially booming real estate and aviation. Create credible alternatives in the premium and high end segment. Facilitate entry into new segments, such as wines, Aviation etc. Provide access to non traditional global markets, particularly Russia and China. Incorporate B2C e-commerce portal.

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THREAT

Government regulations

Stiff competition to products


Alternative drinks and health conscious customer.

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The UB Groups competitive advantage


Professionally managed Seasoned professionals with significant industry experience

Strongest brands Significant upgradation


Branding
Value Chain ownership

Management Team SegmentMarket Presence Local Sourcing Manufacturing Technology

Least vulnerable to policy volatility due to large spread

Beverage Business

Initiatives planned for integration into retailing

Optimal, as almost completely locally sourced

Largest manufacturing base The Power of Leadership Maximum capacity utilisation

Core Competencies

Focus on Brand Imagery


Since Beer is a category with little product differentiation, consumers

brand choice is largely on imagery With multiple brands in each segment of beer, UB has successfully positioned different brands on different platforms relevant to different consumers, different need states Kingfisher has appropriated some of the category values including `refreshment

Brand Association
With Fashion, through Kingfisher Fashion Awards and the Kingfisher

Swimsuit Calendar With high visibility events like the Mumbai Marathon, the Delhi Half Marathon, the International Film Festival of India With events important to the ethos and culture of people in key regions like the Goa Carnival, the Bangalore Habba

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Core Competencies

Focus on Value to Consumer. Develop Synergies Through Mergers and Acquisitions. Dominance at point of purchase / consumption through

Visibility Innovation
In product In packaging

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New Product Initiatives


To achieve the national roll out of McDowells Diet Mate whisky (using a proprietary and US patented technology from the Group Research Foundation VMSRF)

Launching of unique Diet Vodka (using another US patented technology from VMSRF)

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USL 15

New Marketing Initiatives


- To pursue the launch of existing products in innovative packaging variants (tetra packs, pre-formed sachets, etc) and there by reduce the packaging cost as well as the price point to consumers in addition to the convenience of the pack itself .

180ml Tetra Pack

Pre-formed Sachets

Saving of Rs.30/per Cs.


USL 17

Saving of Rs.12/per Cs.

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UB Group in transition
From o Primarily volume focus To o Primarily top-line and profitability focus

Growth driven by market share across segments

Growth driven by increased premium-ness of the portfolio

Spirits player

Spirits, wine, Aviation , Pharma, Infrastructure & Fertilizers player

Focus on India

Global ambitions pragmatically calibrated through M&As The Power of Leadership

CONCLUSION

Based on the the PEST analysis we feel:


The group should keep on investing in the

Breweries division as the portfolio offers promising future. Aviation is in growth phase so needs focused growth strategies. It can divest from the Pharma business and concentrate on the Infra division specially.
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Thank you..!

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