Suntory, Pernod Ricard in talks to buy stake in Tilaknagar Industries

Maker of world's second-best-selling brandy label may offload 15-20% to raise Rs 600 cr

Tilaknagar Industries (TI), the maker of Mansion House, the world’s second-best-selling brandy label, is in talks with global giants like Suntory Holdings and Pernod Ricard to sell a 15-20 per cent stake in the company. According to people in the know, the company will use the funds so raised, likely to be about Rs 600 crore, to de-leverage its balance sheet.

At present, Tilaknagar Industries has a debt of Rs 600 crore on its books.

Besides clearing debt, TI plans to acquire distilleries, as well as regional brands, to expand its presence in the country. A clutch of private equity investors and spirits & wine leader Beam Global are also learn to be in discussions with TI to acquire the stake. Ambit Corporate Finance is advising TI in the fund-raising process.

The promoters, including Chairman & Managing Director Amit Dahanukar and family, hold a 56 per cent stake in the company at present.

According to sources, TI, which clocked a revenue of Rs  737 crore in FY12-13, is eyeing a valuation of four times its sales — this comes to about Rs 3,000 crore. On Wednesday, the shares of the company, which has a market cap of Rs 672 crore, rose 16 per cent over their previous close on BSE to end the day at Rs 55 apiece.

Mails sent to Suntory and Pernod Ricard did not elicit any response, while Dahanukar did not wish to comment.

Tilaknagar manufactures, markets and sells over 40 brands across price points and had in 2012-13 recorded sales of 13.8 million cases — a four per cent increase from the previous year.

Of its total sales, brandy accounted for seven million cases, while the whisky and rum brands sold three million cases each.

The company already has an agreement with Pernod Ricard India (PRI) under which it will manufacture PRI’s products at its bottling facilities in Maharashtra and Andhra Pradesh.

In June, TI had also entered into an agreement with Mohan Breweries and Distilleries for rights to manufacture and sell the latter’s trademarks ‘Brigadier’s No 1 Brandy’ and ‘Vorion No 1’ Indian Brandy, for 25 years.

Suntory Holdings, the $23-billion Japanese beverage major, has been on a hunt for stake buyouts in Indian alcohol manufacturers for some time now.

Its two whisky brands — Yamazaki 12 YO single-malt whisky and Hibiki 17 YO blended whisky — are currently sold in India under an exclusive marketing tie-up with Radico Khaitan.

 

Though French major Pernod Ricard has a strong presence in the Indian premium liquor category through its popular brands Absolut Vodka and Chivas Regal Scotch whisky, more than 90 per cent of its sales volume comes from three whisky brands — Royal Stag, Blenders Pride and Imperial Blue.

Besides TI, other majors like Kishore Chhabria-owned Allied Blenders & Distillers, Bangalore-based John Distilleries are also understood to be looking for financial investors.

United Spirits, Radico Khaitan, Jagatjit Industries, Mohan Meakins and Tilaknagar Industries are the leading players in the 260-million-case-a-year Indian-made-foreign-liquor market. Liquor cabinet

• 260 mn cases: Total annual sales for Indian-made-foreign-liquor
• Major players: United Spirits, Radico Khaitan, Jagatjit Industries, Mohan Meakins, Tilaknagar Industries

Tilaknagar at a glance

• 13.8 mn cases: Total annual sales
• 6 mn cases: Annual sales of Mansion House Brandy
• 2 mn cases: Annual sales of Madiraa Rum
• Other brands: Mansion House Whisky, Senate Royale Whisky, Courrier Napolean Brandy