USL to halve debt

Diageo-controlled United Spirits has set an ambitious target of halving its debt over the next  three to four years. The company is also looking at monetising assets worth Rs 2,000 crore over a period of time.

“FY17 witnessed only Rs 50 crore sales of assets, partly due to demonetisation-led delay. Over the next three to four years, management expects to sell Rs 2,000 crore worth of assets,” the USL management told analysts post its quarterly earnings according to Motilal Oswal’s Krishnan Sambamoorthy and Vishal Punmiya.

“USL expects to monetise assets worth Rs 2,000 crore versus Rs 50 crore in FY17, and plans to halve its debt over the next three to four years,” SBI Cap Securities said in a note post the management commentary.

UNSP is the leading IMFL player, with 41% market share by volume and 22 millionaire brands. It has manufacturing and bottling presence in all states, with 40 owned plants and 42 contract tie-ups.

The company had posted a standalone net loss of Rs 104.2 crore for the quarter ended March 31, 2017, compared with a profit of Rs 1.4 crore in the corresponding quarter of the last fiscal, mainly on account of higher expenses and impact of exceptional items. Net sales for the company during the quarter grew 19.16% to Rs 6,474.2 crore.

The management also stated that the liquor ban on highways as well as the introduction og GST is likely to impact the company in the next couple of quarters. “GST will create operational disruption as will the highway ban, the latter of which is expected to last for a couple of quarters. Many stores are closed due to the highway ban and have still not opened in the North and the West,” the management stated.

GST could also have a negative impact on working capital for FY18, the management stated, adding that the capital expenditure will be in the range of Rs 220-300 crore going forward compared with Rs 220 crore in FY17.

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