BackUnited Spirits swings to quarterly loss
United Spirits posted a loss of `55.56 crore, partly due to additional provision related to sale of Whyte and Mackay
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Bangalore: United Spirits Ltd, which is investigating its accounting practices, swung to a loss of ₹ 55.56 crore for the June quarter, because of continued market share losses and an additional provision related to the sale of the company’s Whyte and Mackay whisky business.
Revenue at United Spirits, which is now controlled by Diageo Plc., fell 11% to ₹ 1,923.9 crore in the June quarter.
United Spirits said on Monday that it recorded an additional provision of ₹ 42.79 crore related to the Whyte and Mackay sale.
The company has been losing out to rivals Pernod Ricard and Allied Blenders and Distillers Pvt. Ltd over the past two years, and in the past nine months, its market share losses have accelerated.
However, United Spirits shares closed up 7.45% to ₹ 2,553.20 on Monday, as the company said it would make and sell high-margin Diageo brands including Smirnoff and Johnnie Walker and sell part of its businesses in Andhra Pradesh and Kerala.
United Spirits, owner of popular whisky brands such as McDowell’s No.1 and Bagpiper, was late in reporting its first-quarter earnings as the company failed thrice to get its results for the January-March quarter cleared either by its board or by its independent auditors BSR and Co.
On 4 September, United Spirits finally published its results for the January-March quarter, reporting its biggest-ever loss of ₹ 5,380.1 crore for the quarter. The loss was primarily because of a write-down of ₹ 4,321.6 crore that the firm recorded, as the proceeds from the sale of its Whyte and Mackay unit were insufficient to repay a loan it had taken to buy the UK-based whisky business.
United Spirits also said then it was conducting a “detailed and expeditious inquiry" that, among other things, will look at the inter-company loans between United Spirits and UB Group entities that were used to prop up the now defunct Kingfisher Airlines Ltd and whether its executives had violated rules by approving those loans.
The inquiry will also cover some agreements allegedly entered into by United Spirits with a Kingfisher creditor and certain claims made by United Spirits debtors, some of whom are now refusing to repay the company.
The inquiry may have an impact on its financial statements, United Spirits’ independent auditor BSR and Co. warned in its report on the company’s first-quarter results. BSR had published similar remarks in its 4 September report.
BSR said it couldn’t comment on the accuracy of United Spirits’ accounting, partly because of the pending inquiry referred to above. BSR also brought up the possibility of fraud and said it would only be able to pass judgement on this once the inquiry is complete.
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