This conglomerate magnate comes from India, and it runs its operations from the head office in the Karnataka State in UB City. United Breweries Holdings Limited (UB Group) is yet another company that is almost omnipresent in every field or business. It started out as a British brewery subsidiary only to become a market leader on the global scene. It also contributes significantly to the Indian economy with its different undertakings with million and billion worth turnovers.
UB Group is known for several brands like Kingfisher, but it also markets other beverage products, especially alcoholic drinks and spirits. The big corporation covers for over 50% of beer production in India, making it the biggest producer in the big country. More than 40% of market share are credited to the UB Group. Still, the company had also negative experiences like witnessing its recently launched airlines being closed down due to different problems in 2014.
The company owns 79 distilleries and bottling plant units, and it also owns the majority shares of its rival company called the Shaw Wallace, when it acquired the company in 2005, but only its spirits units, whereas the beer business was bought out by someone else. Also, if you have ever heard of the Mendocino Brewing Company in the USA, you should know that it is owned by the UB Group.
The History Overview
The beginnings of the company go way back to the 19th century when the British expanded their business to Asia and found it convenient to open a production line in South India. The company was not founded by an Indian, but by a British brewery company that was based in India in 1857. The founder was Scotsman Leishman. That is where the Indians familiarized with beer and beverage production. It was only 90 years later that an Indian became the CEO of the company. That CEO was only 22 years old. The young Vittal Mallaya did not lose time and he let R G N Price go to replace them with Rangarajan to provide services in consultancy, audit, taxes, and other financial matters.
Before the company drifted apart from British supervision, it mostly produced beer for the Royal or British Army.In the 1950s and 60s, the company started to buy out other breweries, and one of them was Kingfisher, which proved to be the most lucrative one. The acquisition of McDowell opened the door to wines and spirits. It did not take too long for the company to make international connections, so they also entered the pharmaceutical business when they connected with a German brand Hoechst AG and created Aventis Pharma under the management of Mallaya. Aventis Pharma is not a subsidiary of AG Group, but the congelmorate played a significant role in tis establishment process. Also, the young CEO was almost unstoppable in spreading the business further to agricultural production with the acquisition of Kissan. The company produces jam, squash, and ketchup which represent high-quality branded products. When the brand started out, it produced canned fruit and vegetables. In fact, it became the country’s leader in fruit and vegetable production. The brand has been around in India since 1935 and was aimed to produce supplies for British settlers. It is no longer a part of the UB Group since it was sold in the early 1990s to Hindustan Unilever Limited.
Legal Troubles and Debts
The big corporation, just like many others, has also struggled with loan repayment to Indian Banks. Only last year, the UB Group chairman had to flee India to avoid prosecution because the debts reach over $1 billion. Vijay Mallya is his name, and he was not able to repay 17 banks which lend him the money to acquire one business after another across the whole wide world. The businessman and politican is currently residing in the UK while The Indian Government and the Ministry of Finance are trying to bring him before the court. A number of Indian investigating agencies are also looking into the case. Money laundering via offshore accounts facilitated the Indian to escape and to keep creditors waiting. Evidence is piling up and many have already submitted their complaints and petitions to the court.
When we look at the debt of over $1 billion in loans and interest, it is highly possible that some of the companies under UB Group are going to be overtaken by someone else in order to repay creditors. Still, it is up to the Indian courts and police enforcement agencies to track down the person in command, and some might even wonder why it hasn’t been resolved by now. If we add the financial crisis which had already hit creditors hard in 2008, then, we believe that the Indian government will step up this time to pursue the responsible politician and businessman.