McDowell & Company Limited, flagship of the Vijay Mallaya promoted United Breweries (UB) Group, has outlined an aggressive four-point growth strategy to take it to the new millenium.
McDowell is India's largest spirits company with a portfolio of nearly 50 brands, 26 manufacturing centres and a strong distribution network. It controls 34% of the Indian spirits market and has a major presence in all product categories viz. whisky, brandy, rum, scotch, gin etc., with strong brands in each of these categories.
The company has appointed Anderson Consulting again, to examine aspects of cost rationalisation in operations. Its four-point strategy stresses on:
Increasing market share across all segments it operates in. The company is not averse to acquisitions for this purpose.
Improve communication and control systems by implementing SAP and Internet technologies.
Investing in its millionaire brands to strengthen brand franchise.
Consolidation of the spirits business across all UB group companies to speed up decision making.
The company had earlier hired the services of Andersen Consulting, to carry out a comprehensive business process re-engineering project (review of the supply chain etc.).
The company aims to become the least cost producer in the industry and to this end has initiated a three-year capital expenditure plan for revamp and upgradation of its various distilleries. It has already invested Rs 190 m in the past year towards this plan. McDowell has earmarked Rs 350 m investment for the next two years.
During the 18 month period ending March 1998, the company recorded phenomenal volume growth in the rum segment (Celebration Rum - 40.7% and Old Cask Rum - 86%), catapulting it as the market leader in this segment. It was also able to sustain its market leadership in the Whisky and Brandy segments. McDowell also garnered market leadership in the niche White spirits segment through its Blue Riband range of gin.
The lifting of prohibition in Andhra Pradesh and Haryana also strengthened the company's volume growth. McDowell sold of its loss making polymer division (Hindustan Polymers) in line with its strategic plan to focus on core competencies.
Some analysts have rated the stock as a 'Buy', based on the management's committed restructuring moves. The company's strategy of having a common game plan for all spirits companies in the UB stable has also gone down well with the market. The stock has appreciated by over 60% in the past two months and is currently trading at Rs 105 plus levels.
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