United Breweries joins hands with Heineken to sell more beer

The partnership between UBL and Heineken is expected to drive growth in India, which is considered as one of the world's fastest-growing beer markets

United Breweries Holdings Ltd (UBHL) has said that its unit United Breweries Ltd (UBL) has signed a shareholding as well as distribution agreement with Heineken NV, the world's third-largest brewer by volume after Anheuser-Busch InBev and SABMiller.

In a filing to the Bombay Stock Exchange (BSE), the company said that it has also decided to withdraw the suit filed before the Bombay High Court by the promoter of UBL Group including UBHL against the Heineken Group.

As part of the agreement, Heineken will acquire Asia Pacific Breweries (APB) India—Asia Pacific Breweries (Aurangabad) and Asia Pacific Breweries-Pearl—for €25 million (around Rs174 crore). Following the completion of this transaction, which is expected to materialise in the first quarter of 2010, Heineken intends to transfer these businesses into UBL during 2010, UBHL said.

Heineken will also merge its 50% stake in Millennium Alcobev Pvt Ltd (MAPL), with its joint venture partner, UBL.

Under the distribution agreement, the UBHL-Heineken alliance will sell a portfolio of domestic and international brands, including Kingfisher and Heineken beers to customers in India. Both companies have also agreed upon the key commercial terms to produce the Heineken brand in India. UBHL will simultaneously work with Heineken to expand the international presence of the Kingfisher brand via Heineken's global reach, the release said.

UBL has also appointed Heineken nominee Guido de Boer as chief financial officer. Rene Hooft Graafland, a member of Heineken's executive board and chief financial officer and Siep Hiemstra, regional president of Heineken for Asia-Pacific, were also appointed as non-executive directors on UBL's board.

The Indian beer market is expected to grow to 14.4 million hectolitres in 2009. Beer consumption per capita is currently estimated at 1.3 litres per annum.

UBL reported volumes of 6.4 million hectolitres in 2008-09, a volume growth of 9% that accelerated to a 16% volume growth in the half year ending September 2009 against an industry growth of 8%.

Heineken and Vijay Mallya and his associates jointly hold majority interest of 75% in UBL, India's largest brewer with 48% market share. Heineken holds 37.5% interest in UBL. Mallya and associates also hold 37.5% interest in UBL, with the remaining 25% is held by institutional and common investors.

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    Organised retail to touch $13 billion by 2010

    The retail sector is growing at 5.5% not only in metros but even in Tier-2 and Tier-3 cities, according to an ASSOCHAM report.

    The Indian retail sector is expected to grow at a rate of 5.5% to $410 billion (around Rs19,03,844 crore) by 2010 from about $300 billion at present, industry body Associated Chambers of Commerce and Industry of India (ASSOCHAM) said on Monday.

    The chamber said that organised retail, which at present accounts for nearly 5% of the overall retail market, is likely to touch $13 billion (around Rs60,375 crore) by 2010 from $9.23 billion (around Rs42,000 crore) currently.

    "The size of Indian retail sector is estimated to grow by a compound annual growth rate of 5.5%, to become a $410-billion market by 2010," it said.
    India has one of the highest numbers of retail outlets in the world. The sector is witnessing exponential growth not only in major cities but even in Tier-2 and Tier-3 cities, ASSOCHAM president Swati Piramal said.

    Over 100 malls of over 30 million square feet are projected to open in India by end-2010, according to the report. DLF has declared its intentions to build around 500 luxury lifestyle stores across India within five years, while the Tata group is expanding its retail business with 100 new Croma stores within three years.

    The report also said that revenues from the retail sector may grow by 22.7% and 30.25% in the third and fourth quarter, respectively, of the current fiscal
    — Yogesh Sapkale

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    Sensex sheds 118 points, ends at 16,983

    Rise in global markets fails to cheer bourses as weak trends continue in local indices

    Indian markets remained weak as the Sensex declined 118 points from Friday’s (4 December 2009) close, ending the day at 16,983, while the Nifty declined 42 points to close at 5,067.

    During the day, Reliance Industries (RIL) fell 3% as the company’s bonus shares were admitted into trading effective today, 7 December 2009. The company had issued one fully-paid bonus equity share for every existing fully-paid equity share of Rs10 each.

    Tata Steel on Friday announced a partial closure of Corus’ Teesside Cast Product (TCP) plant in north England, after four companies stopped buying metal from it. As per reports, the company said that operations will be suspended at the end of January 2010 forcing the loss of 1,700 jobs—around 600 fewer than envisaged earlier. The stock was down 3%.

    Speciality Papers plunged 9%, after the company’s board decided to call off its stock-split plan.

    United Breweries Ltd has entered into a new Shareholders’ Agreement with Heineken NV to penetrate the Indian beer market. Heineken will be active in India solely through UB. The alliance will offer consumers a portfolio of national and international brands in India. The stock was up 5%.

    Adhunik Metaliks shot up 7% after the company received final approval from the ministry of environment & forests, Government of India, for diversion of forest land in villages Deojhar, Kulum and Mahadebnas in Keonjhar district of Orissa for mining of iron ore out of its captive mine.

    EdServ SoftSystems rose 5% on reports that the company plans to raise $25 million through a GDR/FCCB issue, which is expected to be completed by the first quarter of next year.

    During trading hours, finance minister Pranab Mukherjee said the government has not issued any directive to State-run banks on consolidation and it was up to the banks themselves to decide on mergers.

    Meanwhile the initial public offer (IPO) of JSW Energy, a part of Sajjan Jindal-led JSW Group, which will close on 9 December 2009, was oversubscribed shortly after the bidding for the IPO commenced, NSE data showed. The issue was subscribed 1.25 times. The price band for the IPO is Rs100-Rs115.

    According to C B Bhave, chairman, Securities and Exchange Board of India (SEBI), overseas fund flows into Indian stock markets are manageable and foreign portfolio investors should be allowed smooth entry and exit to boost equity investments. As per media reports, he also said the authority could only ensure the necessary regulations for such investments had been adhered to.

    Reserve Bank of India deputy governor Subir Gokarn said on Saturday that a persistent rise in food prices may raise broader inflationary expectations and the central bank is looking to strike a balance between supporting growth and taming inflationary worries. The exit from an easy monetary policy is a “graded” process and economic growth alone will not determine its pace, he said.

    During the day, Asia’s key benchmark indices in China, Japan, South Korea, Singapore and Taiwan rose by between 0.16%-1.63%. However, indices in Hong Kong and Indonesia fell by between 0.77%-1.17%.

    As per media reports, a Chinese economic policy-making group said that China will maintain a proactive fiscal policy in 2010, and will maintain a loose monetary policy.

    On Friday, 4 December 2009, the Dow Jones Industrial Average gained 23 points while the S&P 500 index rose 6 points and the Nasdaq Composite Index added 21 points. The markets ended higher after reports showed that employers cut fewer jobs than expected in the month of November 2009, showing signs of improvement in the economy.

    US employers cut only 11,000 jobs in November 2009, the smallest decline since the recession started in December 2007 whereas the November 2009 unemployment rate also declined to 10% as against 10.2% in the month of October 2009.

    However, in premarket trading, the Dow was trading 33 points lower.
    — Swapnil Suvarna

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