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India. United Breweries to set up two greenfield breweries

United Breweries is setting up two greenfield breweries — one in Mysore and the other in Patna — and also proposes to add capacity to several of its existing breweries . “Investments for new breweries are in the range of Rs 150 crore per brewery and the total investment for the year is around Rs 500 crore,” Mr Cedric Vaz, Executive Vice-President - Marketing, told Business Line.

UB has acquired the land in Mysore and is in the process of doing so in Patna, and the breweries will be ready for operation in 2012-13, he said. The new breweries, each with an initial capacity of 0.8-1 million cases per month, will produce all of UB's brands including Heineken, their latest addition, which is now being brewed only in their brewery near Mumbai. After the expansion, the total capacity of the breweries will go up to about 16 million cases a month from 12.6 million cases a month capacity now.

UB, which holds over 50 per cent of the market share today, sees the demand for their beer growing in line with the company's double digit growth, Mr Vaz said.

UB is also in the process of amalgamation of UB Nizam Breweries and Chennai Breweries; and also UB Ajanta Breweries, Millennium Beer Industries and United Millennium Breweries. The merger of the above units is expected to be complete in the next 12 months, industry sources say.

IDFC in a recent report has said UBL continues to grow ahead of industry and hence has increased its market share to 53 per cent. However, there are challenges in the form of taxation increases by certain State Governments, change in Andhra Pradesh procurement policy, and also the relatively tougher environment will restrict volume growth to 15 per cent compared with 30 per cent in FY11.

“Our sense is that risks for UBL would increase from hereon, and any potential weakness in the business over the next few quarters could lead to a sharper de-rating,” IDFC said in its report.

12 Sep. 2011

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