• SEPTEMBER 15, 1999

McDowell's new mantra -'improved valuations'

McDowell & Company Limited is planning an international listing of its shares in order to improve valuations.

McDowell is the flagship of the Vijay Mallaya promoted United Breweries (UB) Group. It is India's largest and the world's fourth 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.

The company's latest plan comes in the wake of the announcement of a restructuring and growth strategy aimed at becoming the least cost producer in the industry. It 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 also earmarked Rs 350 m investment for the next two years.

Whether the listing of the company's stock on international bourses will improve valuations, is yet to be seen. It will however, benefit the shareholders, as the listing will entail adhering to strict accounting and reporting standards, bringing in its wake greater transparency on the management's part. The move will also open international avenues for McDowell in raising capital, should the need arise.

Market view:
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 company's plan of international listing might generate more interest in the stock, in the hope that valuations will improve.

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