Indian Stock Market

The world’s largest privately-held spirits company Bacardi will shed its slow- mover tag in India and pursue acquisition opportunities in the region. Bacardi could be in the reckoning if Vijay Mallya-led United Spirits (USL) went ahead with private placement of minority stake in the company.

“We have been ‘very slow’ in growth markets like India, but that is changing now. The Bacardi family and myself as chief executive are committed to it,” Andreas Gembler, Bacardi CEO, told ET.

He said the Bermuda-based drinks giant would look at inorganic growth opportunities provided it was profitable and carried distribution muscle.

Mr Gembler indicated that Bacardi will be interested in USL’s potential move for private placement of treasury stocks with a strategic partner. “I will not exclude that. Mr Mallya is a respectable competitor who knows what he is doing,” Mr Gembler said, while replying to a query, adding he had met India’s liquor czar in international industry forums.

Bacardi’s Asia Pacific commercial operations director Harold Dyrvik, clarified that “nothing is at work with United Spirits at present”. Earlier this year, Mr Mallya had said that he received unsolicited interests from several suitors for buying a small stake in USL.

“They know that I hold treasury stocks and want to explore possibilities,” he said. In January, ET reported that UK-based spirit giant Diageo, makers of Johnnie Walker whiskies and Smirnoff vodka, has held talks with USL for buying into USL.

It is believed that USL could offload treasury stocks representing 10-12% stake in the company. The treasury stocks were generated from the overlapping capital of merging group companies, especially Shaw Wallace (SWC), into USL.

The overlapping capital is banked in a trust with each share quoting a reserve price, which could be offloaded as a de-leveraging option. Sources said USL could be open to offering shares at a price band of Rs 2,500-3,000 per share, which constitutes a significant premium to the prevailing market price.

Meanwhile, Bacardi, with annualised sales of just around one million cases in India has lagged behind global peers Diageo and Pernod Ricard. The global giant has been scouting for buyout opportunities in a market heavily dominated by Mr Mallya’s spirit empire.

It looked at some of the traditional spirits companies that have increasingly become regional players in a consolidating drinks business, but without a breakthrough till now.

Mr Gembler and Mr Dyrvik said India and China were the company’s priority growth markets. In context, it may be mentioned that Bacardi recently effected a rejig of the domestic top management bringing in Mahesh Madhavan, earlier MD of Thailand operations, to head the Indian unit.

Bacardi, which is closely identified with the leading white spirits bands like Bacardi Carta Blanca Rum and Grey Goose Vodka, is in the midst of pushing its scotch portfolio represented by Dewar’s and Aberfeldy into emerging markets.

“The message to the team is: premium, premium, premium. The thrust will be on the premium age profiles of Dewar’s scotch, and not on the standard offering (Dewar’s White Label),” Mr Gembler said.

Bacardi operating brand portfolio in India include locally bottled Carta Blanca white rum, Eristoff vodka, Bacardi Breezer RTD and imported brands like Grey Goose vodka, Bombay Sapphire gin, 42 Below vodka and Dewar’s 12 year-old scotch

Ratnagiri Gas and Power Pvt (RGPPL), the erstwhile Dabhol project, could tap the capital market by the end of this year. RGPPL is planning an IPO to raise Rs 1,000 crore.

Speaking to newspersons here, Mr R.K. Goel, Chairman, RGPPL, said: “The RGPPL board will consider converting the private limited company into a public limited company and subsequently consider an IPO.”

Currently, RGPPL’s total equity capital base is Rs 4,000 crore. Out of Rs 4,000 crore, promoters GAIL, NTPC, Maharashtra State Electricity Board and financial institutions have, so far, contributed Rs 2,985 crore and the balance is to be raised through the IPO, he said.

The company plans to use the IPO proceeds to repay the debt it has taken from Power Finance Corporation (PFC) and NTPC. The company has taken Rs 350 crore loan from PFC for completion of the power plant and LNG import terminal. NTPC had also sanctioned Rs 500 crore loan, of which Rs 150 crore has been drawn.

The board of the company is expected to consider the change in status at its meeting on March 20. He also said that post-IPO, a private placement of Rs 500 crore is possible wherein the lenders to the power plant may convert their debt into equity.

The plant will be fully operational by next month when the third generating unit is commissioned, he said. Currently, two units were generating about 1,100-MW electricity. Mr Goel said breakwater, which will make the five million tonne a year liquefied natural gas (LNG) import and re-gassification terminal operate at full capacity, would be ready by the end of 2011.

“By end-April, Dabhol would be generating 1,700 MW of electricity,” he said.

The project was originally expected to be completed during September-November 2006, but was delayed due to various reasons including non-availability of gas. The delay has also led to the project cost going up. The completion cost, which was initially estimated to be Rs 870 crore was put at Rs 1,960 crore in September 2006, and has now been further revised to Rs 2,144 crore excluding Rs 220 crore for mandatory spares.

Currently, two of the three power blocks are operational and the third is expected to begin operations. The LNG facility excluding the breakwater is expected to be completed in the later half of 2008, reports The Hindu Business Line

United Siprits (USL) is in the process of overhauling its retail strategy, which will include a shift in focus to premium offerings. USL is set to launch designer liquor stores or ‘destination outlets’ — called Spiritz & More — this week, said a company official.

These ‘experience stores’ will have a premium feel, and is a leg-up to the company’s retail strategy that currently involves 16 ‘UB World of Spirits’ outlets.
The move is in tune with the shift in consumer preferences to lifestyle brands and improved retail ambiance. USL’s roll-out of Spiritz & More comes in the wake of its two international takeovers last year including the $1.18-billion buyout of Whyte & Mackay.

The first Spiritz & More store will open in Bangalore this week and the company will add more outlets here before developing a pan-India footprint, said Anant Iyer, head of trade marketing and institutional sales, USL.

The stores will be operated as joint venture between the company and the liquor licenceholder or vendor.

Apart from providing the design for the store, the company will ensure regular management inputs and invest in the same depending on how deep a pocket the seller has. The store identity across the cities will remain the same — right from the facades to product placements. The stores will be replete with every kind of liquor and accessories. It will boast of superior design (Foley Designs have been hired to do the stores), layout, and ensure dissemination of product information.

Ever wanted to wander about and leisurely read about the origins and top notes of a Sauvignon Blanc before picking it up? Enter mood windows and video screens that will display all the information you ever wanted to know.

Not sure what the difference between a single malt and scotch is? The in-house store advisor is there to brief you on that. “We are bringing in specially trained liquor experts who will guide you to the best in the store,” says Iyer. The details of enhancing the store further with a Kingfisher Airlines kiosk, movie ticket bookings, valet parking etc is still being worked out

Textile machinery maker Lakshmi Machine Works Ltd is facing a slowdown in order flow as mills hit by muted demand defer expansion, but expects orders to pick up in 2008/09, a senior official said on Thursday.

The company, which holds more than 60 per cent of the Indian spinning machinery market, has barely managed to replenish orders in the first half of FY08 and expects a 20 per cent fall in its order book this year, Chief Financial Officer R. Rajendran said.

The order book has stayed at Rs 5300 crore since March-end but indications are new orders will not match deliveries in the second half, thus reducing the order book size, Rajendran said.

Empee IPO : Empee Distilleries IPO

Empee Distilleries IPO opens on NOV 1 2007

Diversification Plan

Empee Distilleries IPO  proceeds will be used for future development.

The company is expanding its distillation capacity at its existing unit in Tamil Nadu.
Planning to set up a 60-klpd distillery in Nellore District, Andhra Pradesh.

Empee Distilleries Ltd is planning a public issue to fund its Rs 182-crore expansion and diversification plan. The company intends to issue 48 lakh shares of Rs 10 each at a price to be decided through the book-building route.

According to an information filed by the company with the Securities and Exchange Board of India, the Chennai-based manufacturer of Indian made foreign liquor (IMFL) is expanding its distillation capacity at its existing unit in Tamil Nadu, setting up a new grain-based distillery in Andhra Pradesh and planning a residential project in Kanchipuram, Tamil Nadu.

The company plans to set up a 60 kilolitre per day (klpd) distillery that will use maize and jowar as raw material and a blending and bottling unit for Indian made foreign liquor in Nellore District, Andhra Pradesh.

Using grain-based alcohol is a novel initiative since the traditional route in the country is to use molasses as a raw material.

Alcohol production and the linked IMFL unit will cater to one of the largest markets, Andhra Pradesh.

The alcohol can also be supplied to its unit in Tamil Nadu, according to the company.

Empee Distilleries is also setting up a 7.5 MW biomass based power plant at Aranthangi, Tamil Nadu.

The company has entered into a power purchase agreement with the Tamil Nadu Electricity Board, which has permitted it to expand to 10 MW.

Residential Project

The residential project with a built up area of 2 lakh sq ft is to come up in Mevaloorkuppam is a diversification for the company.

The company owns over 20-acres land here and has earmarked nearly 17 acres for the residential project.

The company has permission from the Department of Town and Country Planning to construct over 12-lakh sq ft, which the company plans to do in four phases.

Empee Distilleries will expand the 20-klpd distillery at Mevaloorkuppam to 70 klpd. Its other distillery is in Palakkad, Kerala.

Empee Distilleries is a part of the Empee Group, which also has interests in sugar and hotels.