United Breweries, United Spirits grow in value as Vijay Mallya's extradition trial enters last leg

The minor promoter stakes in these two liquor manufacturing companies that are still in the name of Vijay Mallya and his companies are valued at Rs 4,526 crore, according to the Monday share prices

At a time when London High Court is going to begin the final hearing in the Vijay Mallya extradition case, values of the liquor companies that he founded - United Breweries (UBL) and United Spirits (USL) - are ticking up. These two companies jointly held a market value of over Rs 84,000 crore between them on Monday. The minor promoter stakes in the liquor manufacturing companies that are still in the name of Mallya and his companies - these shares were attached by the Enforcement Directorate (ED) along with his other assets - are valued at Rs 4,526 crore, according to the Monday share prices.

The share price of USL has soared 19.4 per cent in the last two weeks, while UBL rose 6.9 per cent between January 30 and February 6, before it fell by 3.9 per cent in the Friday and Monday trading.

Mallya, who fled India on March 2, 2016, had sought political asylum in the UK. Indian government's extradition plea was submitted on Feb 9, 2017, by the British court and Mallya was arrested on April 18, 2017. He has since been out on bail. The London High Court will hear his appeal against extradition to India from Tuesday. According to media reports, no effective appeal lies beyond this court's decision. If Mallya fails in his case, he will be brought back to India within 28 days. The bankrupt business tycoon had taken Rs 9,000 crore from 13 banks to run the now-defunct Kingfisher Airlines.

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Mallya and his firms hold 11.04 per cent stake in UBL, according to the December shareholding structure. Of which, 95.21 per cent of the holding has been pledged with the banks. As on February 10, the stake of Mallya and his firms in UBL has been valued at Rs 3,766 crore on Bombay Stock Exchange (BSE), considering the company's market capitalisation (m-cap) of Rs 34,108 crore.

When Mallya escaped from India, the share price of UBL was at Rs 805. It climbed to Rs 1,290 on Monday. Mallya was holding 30.71 per cent stake in the beer manufacturing company. Nearly half of his holding (47.39 per cent) was pledged to the banks at that time. The joint promoter, the Scottish beer major Heineken held 43.18 per cent stake. Heineken bought the stake from Diageo and increased it through equity infusion in the company. At present, Heineken holds 46.69 per cent stake in UBL.

In the financial year 2015/16, UBL had posted a consolidated net profit of Rs 295.45 crore, on a revenue of Rs 5,075.81 crore. The company continued its profit streak over the next three financial years - aggregate profit of Rs 1,188 crore between April 2016 and March 2019 - without Mallya at the helm. In first nine months of this financial year, its profit comes to Rs 387 crore.

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The m-cap of USL stood at Rs 50,007 crore on February 10. The share price went up 41.28 per cent to Rs 687 since the day Mallya escaped from India. It went down to the lowest of Rs 370 and rose to a peak of Rs 790 during these years.

At present, Mallya and his investment companies hold just 1.52 per cent stake in UBL and it is valued at Rs 760 crore, according to the latest m-cap. However, over 90 per cent of the shares have been pledged. The British liquor giant Diageo, through its wholly-owned subsidiary Relay BV, owns 55.24 per cent stake in USL.

In 2015/16, USL had posted a consolidated net profit of Rs 968.94 crore, on a revenue of Rs 9,379.29 crore. The profit was lower at Rs 93 crore in the next year, but it recovered to Rs 651.9 crore and Rs 683.6 crore in the following financial years. The revenue stood at Rs 28,872.5 crore in the last financial year. In first three quarters of this financial year, the aggregate profit of USL comes to Rs 571 crore. Until 2013, Mallya and Diageo had been holding equal stakes in USL. With the rise in debt, Mallya diluted stake in the company, ceding the control to Diageo.

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