Drinks giant Diageo is unlikely to disturb the top management of United Spirits (USL) for the next 12 months even as it moves in with controlling rights over India's largest liquor company, with a well-entrenched leadership fostered by its chairman Vijay Mallya.
The Reserve Bank of India (RBI) cleared Diageo's 27.4% stake buy in USL more than a week ago following earlier clearances from Competition Commission of India and market regulator SEBI. Integrating a strong USL executive team, which manages a local business larger than Diageo's global volume, and managing a portfolio of mass brands in a regulated industry are key challenges in the $2.1-billion takeover deal.
Diageo's senior global executives met with USL brass in Goa last month to discuss management and leadership functions post the deal. Diageo conveyed that it would not rejig or change the management structure for one year, said people directly aware of the matter.
A Diageo spokesperson declined to comment on speculation, while USL president Ashok Capoor could not be reached for immediate comments.
The maker of Johnnie Walker whiskeys and Smirnoff vodka is wresting immediate management control and likely to bring significant top-level management and operational changes in the near future. But it would not straight away complicate an already heady takeover with sudden people changes.
MNCs like Diageo and SABMiller have shown a distinct preference to hire senior professionals with non-alcobev background to manage Indian operations. The results have been mixed at best with executives from other FMCG companies struggling with the trade and excise regimes, until now.
The USL top management revolves around managing director and president Capoor, joint president and CFO PA Murali, two deputy presidents Amrit Thomas and P S Gill who are in-charge of marketing and operations, respectively. It also has five chief operating officers who are in charge of daily operations divided into five regions.
London-headquartered Diageo, which has a small, 100% local subsidiary, will be setting the tone of USL's marketing and sales strategies, besides finance. The global giant held a four-month audit on USL trade practices in a business prone to heavy political interventions, and intends to spruce it up further.
Diageo will launch a mandatory open offer for an additional 26% in the company beginning next week, with an intention to take majority ownership depending on the success of the public tender.
