Shaw Wallace to provide Rs5,000 crore guarantees to McDowell

Mumbai: Shaw Wallace and Company would provide guarantees and securities worth up to Rs5,000 crore to domestic and overseas subsidiaries of McDowell and Company Ltd (now renamed as United Spirits Ltd), Shaw Wallace said in a filing with the Bombay Stock Exchange (BSE). The company will also provide loan up to Rs250 crore to the subsidiaries, it added.

"Members of the company, by way of postal ballot, have passed the special resolutions under section 372A of the Companies Act, 1956 relating to giving of loan up to Indian Rs250 crore to certain domestic and overseas subsidiaries of McDowell & Company Ltd (now renamed as United Spirits Ltd), the ultimate holding company, and also to provide guarantee(s) and/or securities on behalf of them for an amount equivalent to not exceeding Rs5,000 crore, with requisite majority, "Shaw Wallace said.

United Spirits Ltd, the world's third-largest spirit marketer and a part of Vijay Mallya's UB group, is looking to foray into Russia and China after having consolidated in the domestic market and reached the US and Europe.

We are setting up our representative office in China next month. After that, it will take three to six months to come up with the final strategy for the market to grow our business there, said Mallya.

United Spirits has been taking the inorganic route for growth in both domestic and overseas market. A couple of months back, it acquired France-based wine manufacturing company Bouvet Ladubay, which gave it a strong distribution network to sell its products in the European and the US markets while helping tap the rapidly growing market for wines in India.

The company has a 55-per cent share in the Indian made foreign liquor category after acquiring old rival Shaw Wallace & Co. It is now putting more stress on the overseas market.

The shares of Shaw Wallace were trading at Rs165.50, down 0.78 per cent on the BSE.