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Friday, June 3, 2011

LION mulls on Indian exit money

Plans to introduce Mexican brand ‘Corona’

By Indika Sakalasooriya

The money raised through the disposition Indian investment and joint venture with Carlsberg South Asia Pte Ltd, will be either returned to company shareholders or spent on capacity expansions, Lion Brewery (Ceylon) Plc (LION) annual report for 2010/11 revealed.

In 2009, LION raised Rs.1.2 billion through a rights issue, to fund this investment. “Your board and I are aware that in 2009 a right issue was made to raise Rs 1.2bn to part fund the investment in India. As a result of the sale described above, these funds will now be available with the Company. Broadly, your Company has two options to deal with these funds. It can return the relevant component of the funds to shareholders or retain it for use in capacity expansions that are due during the ongoing year & the next,” LION Chairman L.C.R de C Wijetunga said in the annual report.

According to him, the investment to enhance capacity in 2011/12 is estimated to exceed Rs.700 million.

“Your Board is currently evaluating the available options & will make a recommendation to shareholders at an EGM, which will be called shortly for the purpose,” Wijetunga remarked.

He further said that in order to retain the company’s dominant position in the market, it is critical for the company to expand its brewing and packaging capacity in Sri Lanka ahead of demand, driven by expected economic growth of the country.

“Initial estimates envisage that the Sri Lankan business will require substantial investments” Wijetunga pointed out.

Meanwhile Suresh Shah, Chief Executive of the company said, Corona- the iconic beer from Groupo Modelo, Mexico will be added to the company’s portfolio shortly.

Corona, exclusively brewed in Mexico and commonly served with a wedge of lime, is one of the top selling beers in the world.

“Lion, Carlsberg & Corona are a brilliant combination & caters to all segments of the market” Shah said.
The company plans to exit the Indian investment at its book value. In the company’s balance sheet for the March quarter financials, a long term investment of Rs.2.1 billion has been mentioned.

source - www.dailymirror.lk