Part a Industry Profile
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Part A Industry profile Company profile Mission and Quality statement Mission Statement We constitute a large, global group based in India. We associate with world leaders in order to adopt technologies and processes that will enable a leadership position in a large spectrum of activities. We are focused on assuming leadership in all our target markets. We seek to be the most preferred employer wherever we operate. We recognize that our organization is built around people who are our most valuable asset. We will always be the partner of choice for customers, suppliers and other creators of innovative concepts. We will continually increase the long-term value of our Group for the benefit of our shareholders. We will operate as a decentralized organization and allow each business to develop within our stated values. We will be a major contributor to our National Economy and take full advantage of our strong resource base. We commit ourselves to the ongoing mission of achieving Scientific Excellence. Quality leadership is vital to the long-term success of the UB Group in an increasingly competitive marketplace. Building quality into our workplace, products and service is essential to a successful future for our customers, employees, supplier¶s communities and shareholders. The UB Group will work to provide products and services that always meet or exceed expectations Management will commit resources and create an environment in which each employee can contribute skills, talents and ideas to a never-ending process of improvement and innovation in all aspects of our business. Quality statement Quality leadership is vital to the long-term success of the UB Group in an increasingly competitive marketplace. Building quality into our workplace, products and service is essential to a successful future for our customers, employees, supplier͛s communities and shareholders. The UB Group will work to provide products and services that always meet or exceed expectations Management will commit resources and create an environment in which each employee can contribute skills, talents and ideas to a never-ending process of improvement and innovation in all aspects of our business. Growth of the company THE UB GROUP - History Success It was the late 19th century. Beer was delivered in bullock carts in casks called ͞hogsheads͞. Consumers were mostly defense personnel. Over hundred years have passed. Beer from United Breweries is now delivered all over the world, catering to the needs of consumers across generations and continents. From modest, local beginnings, the UB Group has transformed into a global conglomerate. The early days The Castle Brewery which dates back to 1857 (the year of the Indian mutiny) was set up for the European planters scattered over the Nilgiris. So was the Nilgiris Brewery Company. The British Brewing Corporation set up in Madras (1902) catered to the elite of the port town of Madras while the Bangalore Brewery Company had been supplying beer for the troops stationed at Pune and Bangalore since 1885. United Breweries Limited (UBL) was founded on March 15, 1915, in Madras by Thomas Leishman, a Scotsman, also its first Managing Director. UBL manufactured and sold only bulk beer for troops of both the world wars. It was a classic case of role reversal ʹ India being introduced to this ͚exotic͛ brew and in turn becoming its major exporter. Consolidating growth The Company͛s brewing tradition has a legacy of nearly 130 eventful years. Along its journey through the global Alcoholic Beverages landscape, UBL has consistently influenced business paradigms, beer- drinking habits and conventional mindsets. One man played a pivotal role in the Group͛s growth ʹ Vittal Mallya who was elected to the Board of Directors of UBL in 1947 at the age of 22 and a year later became its Chairman. Bangalore has been at the core of UBL͛s existence. The Registered Office of UBL was shifted to Bangalore in June 1952, into the spacious 22-acre factory of the Bangalore Brewery Company. The Bangalore Brewery buildings, dating as far back as 1885, have since given way to newer construction. The only relic that still stands is the present godown adjacent to the UB Towers building, which earlier housed the bottling cellars, pasteurizing and packing departments. The five acres of land across the road donated to the Jesuit Society now forms the campus of St Joseph͛s Indian High School. Exploring Opportunities In 1951, United Breweries Limited added liquor to its product cabinet when McDowells became its first subsidiary. Under the dynamic guidance of Vittal Mallya, the Company became the first to manufacture Indian substitutes of foreign liquor. This gave rise to a new term ʹ IMFL (Indian Made Foreign Liquor). McDowell has since then been the undisputed market leader and one of the largest and fastest moving consumer goods companies in the country. Vittal Mallya was not a man to rest on his laurels. He continued to pursue opportunities in the Alcoholic Beverages business and at the same time diversified into Polymers and Batteries in addition to Pharmaceuticals and Foods that the Company had been making till then. The Life and Times of Vittal Mallya All those who knew Vittal Mallya remember him for his simplicity. And his excellent acumen of accounting, a trait which helped the Dhaka-born Mallya invest heavily in shares of the United Breweries in the late 40s with an eye on its eventual acquisition. Old-timers fondly recall how he remembered his son's losing one paise while playing and registered the amount against his account. Youngest of the three children of an army doctor [Lt Col Bantwal Ganapathi Mallya], Mallya capped an outstanding academic career with two of India's most prestigious educational institutions (Doon School and Presidency College) and traveled abroad for over two years to gain first-hand, practical knowledge that he believed to be more valuable than formal education. Mallya initially operated out of Calcutta and married much later after he had become the chairman of United Breweries. He migrated to Bangalore with his wife, Lalitha Ramaiah and son, Vijay in 1958. Despite ill-health that followed a massive heart attack at a relatively young age of 39, Mallya slowly and steadily built the UB Empire and diversified into a host of allied businesses. His exemplary business acumen was evident when he defied all odds to acquire a host of breweries during the heady days of prohibition of the Janata Party regime of Morarji Desai. In the 80s, Mallya started handing over the mantle of control - primarily beer and spirits - of the large UB Empire to his son, Vijay, whom he had sent to the United States and England to train with some of the best global corporations. At the same time, he encouraged his son to expand the business beyond the shores of India and subsequently opened offices in New York and London. Till his death in 1983, Mallya remained the idol of millions who adored him for his tenacity in understanding people both rich and poor. The current UB headquarters is located on Vittal Mallya Road in Bangalore, fondly named after one of its illustrious leaders. The UB Group is one of India͛s largest conglomerates with annual sales of over US$ 4 billion and a market capitalization of approximately US$ 12 billion. The Group has diverse interests in brewing, distilling, real estate, engineering, fertilizers, biotechnology, information technology and aviation. It is also the largest Indian manufacturer of beverage alcohol (beer and spirits). Dr. Vijay Mallya is the Chairman of the Group. Dr. Mallya, was elected by shareholders as Chairman of UB in 1983, at the age of 28. He previously assisted his father, the former Chairman, who passed away in the same year. Prior to being entrusted with the responsibilities of a classical Indian corporate conglomerate, Dr. Mallya worked for the American Hoechst Corporation (now Sanofi-Aventis) in the USA and with Jenson & Nicholson in the U.K. Since 1980, he assisted his father, the then Chairman of The UB Group, in managing the important Brewing and Spirits Divisions and in re-launching the Kingfisher Brand of Beer. In 1983, the sales volume of the UB Spirits division was approximately 2.85 million cases and UB͛s beer business trailed behind that of Golden Eagle from Mohan Meakins. Also included in the Group were activities such as pharmaceuticals, agrochemicals, paints, petrochemicals and plastics, the manufacture of electro-mechanical batteries, the manufacture of food products and carbonated beverages, a fast-food pizza chain and several medium and small scale industrial units. Upon assuming the position of Chairman in October 1983, Dr. Mallya initiated the process of defining a corporate structure with performance accountability, inducting professional management and consolidating the unwieldy empire into individual operating divisions. In 1988, Dr. Mallya became a non-resident Indian to pursue global opportunities and to transform the UB Group into India͛s first multinational company. While, in the initial stages, overseas representative offices had been commissioned, the real break came in 1988 when Dr. Mallya, in a leveraged buyout, acquired the global Berger Paints Group with operating companies across four continents. The exit strategy for this investment was profitably executed when Dr. Mallya successfully directed five Initial Public Offerings on the London, Singapore (Main Boards), Nairobi, Jamaica and Abidjan Stock Exchanges. The paints business was divested for significant value in 1996. Dr. Mallya also founded a software company in the USA in 1993 which was subsequently listed on the NASDAQ in 1996 and which provides a considerable window of opportunity to the vast US market. He also initiated several ventures for the promotion and globalization of UB brands and, in particular, Kingfisher and McDowell. In 1990, following the Government of India͛s liberalised economic policies, Dr.