S Africa firm in talks to buy Tilaknagar brands

Tilaknagar Industries has Rs 800-cr debt and is in talks with investors for raising funds

The Distell group, one of Africa's leading producers of liquor, is in talks with Tilaknagar Industries to buy a couple of its brands. According to people, Tilaknagar Industries expects Rs 250 crore to 300 crore from the sale.

Tilaknagar Industries has Rs 800-crore debt and is in talks with investors for raising funds. Earlier, it had discussed selling a minority stake with Pernod Ricard and another, Suntory, but a deal did not materialise.

Tilaknagar Industries is fighting a legal battle with Kishore Chhabria's Allied Blenders & Distillers over marketing rights for the Mansion House brandy. Allied Blenders was last year interested in buying Tilaknagar Industries but talks fell through.

SHAKEN, NOT STIRRED

• The Indian liquor market is the third-largest in the world
   
• $35 bn Market size, growing at 4% a year
   
• 306 mn cases The Indian-made-foreign-liquor (IMFL) market size in terms of volumes in 2014. It is growing at a compound annual growth of 10%
   
• 56% share (172 mn cases) Whisky has in the IMFL market
   
• 25% Brandy at second slot
   
• 14% Rum

"We confirm our company is raising funds. This could be through a sale of non-core assets," said Amit A Dahanukar, chairman and managing director, Tilaknagar Industries.

He refused to elaborate.

An e-mail to a Distell spokesperson remained unanswered.

Distell was formed in 2000 in South Africa by a merger of Stellenbosch Farmers' Winery Group and Distillers Corporation. In 2009, the $1.5-billion group acquired Bisquit Cognac from Pernod Ricard. In 2012, it acquired the control of China-based liquor distribution company CJ Wines & Spirits. In 2013, it bought Scotch producer, Burn Stewart Distillers. In 2014, it acquired International Beverage Company, Atlanta, US.

Distell's brands include Klipdrift, Richelieu, Viceroy (brandy), Bisquit, Richelieu XO (Cognac), Bain's Cape Mountain, Knights, Harrier, Three Ships (whisky), Amarula, and Nachtmusik (liqueur).

According to experts, the acquisition of Tilaknagar Industries' brands will give Distell a strong foothold in India. The Indian liquor market, at $35 billion, is the third largest in the world and is growing at four per cent a year. The size of the Indian made foreign liquor (IMFL) market touched 306 million cases in 2014, growing at 10 per cent annually over 10 years.

Tilaknagar Industries sold 16.13 million cases in 2013-14, up 17 per cent from the previous year. The company has Mansion House, Brigadier No 1, Vorion No 1 (brandy), Madiraa, and White House (both rum). Its other brands include Senate Royale whisky and Courrier Napoleon brandy.