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United Breweries down after MD resigns but SC stay on penalty order arrests downfall

United Breweries’ stock dropped more than 1% on February 20 when the company’s senior management quit. However, the Supreme Court’s stay of the NCLAT and CCI penalty orders reduced the stock’s decline.

At 10:44 a.m., the company’s shares were trading 1.2 percent down on the BSE, at Rs 1,458.15.

United Breweries, a subsidiary of Heineken, said that Rishi Pardal, the company’s Managing Director and Chief Executive Officer, has offered his resignation effective February 16, 2023, and that his six-month notice period has commenced.

Jacco van der Linden, President – Asia Pacific, Heineken, and a member of the United Breweries Board said, “With Rishi’s leadership, UBL (United Breweries) has successfully navigated through Covid-19 challenges and has made significant steps in integrating UBL into the Heineken Group while keeping a focus on the business.”

During Rishi’s term, the firm expanded its bench of skilled executives with a healthy balance of externally recruited and Internally talented and experienced professionals, according to Jacco van der Linden.

Furthermore, on February 17, the Supreme Court allegedly delayed the ruling of the National Company Law Appellate Tribunal (NCLAT), which maintained the Competition Commission of India’s penalty of Rs 751.83 crore and recovery process against United Breweries (CCI).

The CCI found United Breweries, SABMiller India, Carlsberg India, and All India Brewers’ Association guilty of beer market cartelisation in September 2021 and issued a total penalty of Rs 862 million. United Breweries was ordered to pay a fine of Rs 751.83 crore.

In Q3 FY23, the company’s beer volume increased by 4% year on year (YoY), which was lower than Nirmal Bang Institutional Equities’ projection of 10.5 percent. In comparison to 2019, YTD increase was 3%. The premium sector increased by 13% year on year in Q3 FY23, outpacing market growth, thanks to excellent performances by Heineken and Kingfisher Ultra & Max.

According to the company’s results conference call, Kingfisher Ultra is performing well and expanded by over 20% in Q3 FY23, while Kingfisher Max also climbed by double digits.

Nirmal Bang is bullish on the medium-term volume growth opportunity that the Indian beer sector presents, particularly for United Breweries, which is a market leader in the category.

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