Shaw Wallace starts second round recast

Papiya De & Sambit Datta

Mumbai, Dec 6: Manu Chabbria-controlled Shaw Wallace, the second largest alcoholic beverages company under the Jumbo group, has embarked upon a second phase of restructuring. This entails merging all the manufacturing subsidiaries of the company into two entities: Maharashtra Distilleries and SKOL Breweries.

What this exercise also entails is getting out of all non-core businesses and reducing its subsidiaries from 70 to 10. The company also plans to sell off its other non-core businesses, gelatine and agro-chemicals.

Shaw Wallace had earlier completed its first round of restructuring. In an effort to concentrate on its core businesses, the comapny roped in McKinsey for sharpening its focus on core areas of liquor and beer.
The company embarked on a first phase of restructuring by spinning-off the liquor and beer businesses as separate companies. This would not only streamline operations but also facilitate association with foreign partners. The two businesses have been consolidated into two marketing companies: Shaw Wallace Distilleries Ltd (SWDL) and Shaw Wallace Breweries Ltd (SWBL).

The company has apparently notched up sales of 7.5 million cases of beer in the first four months of the current financial year. Shaw Wallace is investing a total of Rs 100 crore to set up four greenfield breweries in Kerala, Goa, Madhya Pradesh and West Bengal, to meet the growing demand. Expanding the existing capacity of four of its breweries — SKOL in Maharashtra, SICA in Pondicherry, Charminar in Hyderabad and Harayana Breweries — are also on cards. The total expansion will increase its existing capacity by 50 per cent.

The existing breweries have a capacity of 23.3 million cases. With the addition of the greenfield projects, the capacity will increase by another 4.8 million cases a year. This would exclude capacities that will be added through acquisitions and strategic tie-ups. The company is also exploring the possibility of acquisitions or entering into bottling arrangements with two breweries in Jammu and Rajasthan.

Shaw Wallace has earmarked a part of its beer produce for export markets. The company has started exporting all its major beer brands which include Royal Challenge Premium Lager, Haywards 5000, Haywards 2000 and Kohinoor to the USA, the UK, Italy and New Zealand.