Shaw Wallace has called off negotiations with SABMiller for a proposed beer joint venture following differences over valuation.

The two have been in parleys for over a year under which SABMiller was to pick up a stake in Shaw Wallace Breweries Ltd, the beer arm of the Manu Chhabria group, which has been hived off into a separate company.

A source close to the Chhabria family, which controls Shaw Wallace, said talks have collapsed following differences over valuation.

"Shaw Wallace was also displeased at the tardy pace of negotiations," the source added.

SABMiller India managing director Richard Rushton was not available for comment.

Shaw Wallace, according to the source, has now initiated talks with other global beer majors. SABMiller, which has got the Indian government's approval to invest up to Rs 600 crore in the country, had first initiated talks with the Vijay Mallya-promoted UB group for a possible joint venture.

However, the talks fell through and the UB Group tied up with Scottish & Newcastle. SABMiller had also had protracted negotiations with the Lawyer family over the acquisition of Associated Breweries.

However, Associated Breweries and its best-selling brand, London Pilsner, were finally acquired by UB. UB is the leading player in the Indian beer market, while Shaw Wallace is second with a market share of 28 per cent.

But Shaw Wallace is the leader in the fast-growing strong beer segment in India. The 15 million case Haywards 5000, Shaw Wallace's flagship brand, alone accounts for about 30 per cent of the country's strong beer market.

"In 2002-03, Shaw Wallace has grown by 21 per cent as compared with the industry's expected growth of about 15 per cent," the sources added.

Shaw Wallace has been eyeing a tie-up with an international beer major to improve its prospects in the beer business.

While such an association will provide it an opportunity to access overseas markets (in the past, the company has launched its brands like Lal Toofan and Kohinoor abroad), Shaw Wallace also hopes to benefit from the technical know-how of the partner, particularly in lager beer.