To offset the pricing pressure on its thinning margins in global markets, India’s biggest wine producer, Indage Vintners (formerly Champagne Indage), is implementing a three-pronged strategy to maintain profitability in 2009.
The restructuring exercise includes global consolidation of operations like R&D and production, and Enterprise Resource Planning for banking, cash flow, inventory and assets into one centralised operation, says managing director Ranjit Chougule.
“The recession has put pressure on our margins as consumers look for value and we have been spending more to give more value (read promotion offers),” says Chougule, adding: “People who earlier would purchase six bottles at $5 are now looking at purchasing eight bottles for the same price. India has wider margins and restructuring will give us cost savings of Rs 35 crore in the next financial year.”
For the quarter ending December 2008, the company recorded 68 per cent increase in sales, at Rs 148 crore, compared with Rs 88 crore in the corresponding period the previous year. Net profit for the quarter saw a dip of 88 per cent, at Rs 2 crore, against Rs 19 crore for the corresponding period in 2007.
However, the company’s stock has seen a decline of 55 per cent, from Rs 108.35 on January 1, 2009, to Rs 48.75 on the Bombay Stock Exchange today. As of March 2008, the company had a total debt of Rs 229. 8 crore and its net sales for the year were Rs 254.5 crore.
With these measures, "we expect to maintain our profitability at the same level as last quarter (September-December 2008)", said Chougule, who, is looking at further expanding the business and raising additional funds through a combination of debt and equity.
Besides restructuring and giving consumers greater value, the third leg of the strategy involves renegotiating and rethinking its global expansion. "We are putting on hold or renegotiating our global asset acquisitions," said Chougule. According to industry reports, Indage Vintners had intended to purchase Loxton, an Aussie winery, for $60 million last year.
"The Loxton acquisition is not complete and we expect changes in the structure of this deal," says Rajesh Chalke, chief financial officer of Indage. Over the last two years, Chougule had expanded his operations globally, with the acquisition of Thachi Wines and VinCrest Winery in Australia, and Darlington Wines in the UK.
Giving consumers more value also involves expanding the portfolio to include a value-based brand. The company currently has two Indian wine brands: Chateau Indage, a “classic range of wines that draws upon history”, and Indage Vineyard, a “modern range of wines for the emerging new Indian.”
Hi
This seems to be drumming up exercise by a company which has plundered the investors with cooked up stories and false promises.
One-There is no profitability in the 3rd quarter. There is only dead stock.
Two-The global expansion is in shambles. The acquisitions have gone haywire and the sellers have taken back the companies or broken off the talks.
Three-The company's stock which reached more than 500 per share is languishing at about the 1/10 th value.
Four-The company has not paid staff, etc for a long, long time atleast for 4 months and more than half the staff has quit.
Five-The company owes plenty of money to the trade and the trade has taken the product off the shelves.
INVESTORS NEED TO BEWARE of the above before they invest.
SMART INVESTOR
Posted by: SMART
March 29 , 2009, 06:54 IST
That is totally crap in my view. The projection shown by the company sounds very promising. The company has been for a very long time in this field and it is the biggest wine producer of the country. Sure there might be some trouble due to recession but looking at the current position and the various future plan I believe that this is the best company to invest in at the moment.
Posted by: SMARTINVESTOR
March 13 , 2009, 00:29 IST
Hi, The very fact that Indage is not comming out with clarification in the past 8 days to my earlier post, shows that they are not bothered about their image or credibility. DO NOT INVEST, STAY AWAY FROM THIS COMPANY AT ALL COSTS. SMART INVESTRO
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