ABD to sell 12% stake to TPG, Carlyle; keen on Tilaknagar deal

Written by PTI | Mumbai | Updated: May 22 2014, 03:26am hrs
OABD has achieved landmark sale of 25 mn cases in FY14 clipping at a 24 pct growth over the previous fiscal.
Allied Blenders & Distillers (ABD), which owns the largest selling mass-whisky Officer's Choice, will divest up to 12 per cent of its stake to two overseas PE players -- TPG and Carlyle Capital -- for about USD 250 million to fund its expansion and growth through buyouts.

The company, promoted by Kishore Chhabria of the Shaw Wallace fame, has also reiterated its intention to pursue its talks with Tilaknagar Industries, despite the fact talks are stuck on valuations.

"We have signed two term sheets with Carlyle and TPG already. We are looking at raising USD 200-275 million in part equity and debt and are ready to divest up to 10-12 per cent to them," Vice-Chairman and Chief Executive Officer Deepak Roy told PTI in an interaction here today.

The money will be used for expansion and capacity addition, which also includes buyout, he said, adding the company has lined up Rs 450-500 crore capex this fiscal, which will be used to acquisition and bottling capacity expansion.

Roy further said, the company is "keen to buy Tilaknagar Industries, the makers of the Mansion House brandy, but they are demanding an exorbitant amount, which we are not ready to accept.

"We don't want end up sick ourselves by stretching our balancesheet too thin. Having said that I want to reiterate that we are still keen on the takeover and not a minority stake in that company."

After the management of the UB group changed hands, practically and recently became majority foreign-owned, ABD with 25 million cases in sales last fiscal has become the largest domestic player now.

Roy also said, ABD is not interested in any other buyout as there is great synergies between Tilaknagar and his company in which he owns 5 per cent stake.

"They are strong in the South with the Mansion House brandy brand, while we are strong only in the Andhara market down South where we are keen to increase our footprint."

It can be noted that Tilaknagar's Mansion House is equally owned ABD and the Dutch liquor maker Herman Jansen. Tilaknagar bought 50 per cent local sales rights from the Dutch owner last October.

On capex plans, Roy said, "We are both looking at acquisitions of domestic spirits companies and also capacity expansion of the distilling and bottling units, as we feel that since we have grown to become the largest domestic liquor player, its time we stopped outsourcing our bottling jobs."

"We are looking at our own bottling facilities in Andhra, Rajasthan and Punjab as wee are short of distilling and bottling capacity. We need to correct that," he said, adding by next March we will have our first plant at Ambala in Haryana with an investment of Rs 25 crore."

Earlier this year, ABD had entered the semi-premium whisky segment with the launch of Officer's Choice Black. "This is the last brand extension of OC. Next, we will launch a premium whisky under a different brand within six months time," Roy said.

The company has achieved landmark sale of 25 million cases in FY14 clipping at a 24 percent growth over the previous fsical. The robust growth was led by the flagship Officer's Choice Whisky which grew 14 percent in FY14 taking its market share to 32 percent of the regular whisky segment.

ABD said while it grew at 24 percent in FY14 in volume terms, the industry grew at a paltry by 2 percent. The company has been recording a CAGR of 20 percent over the past five years, it said in a statement.

It took just six years for ABD to reach 25 million cases from 5 million cases. Its semi-premium whisky brand Officer's Choice Blue, crossed sales of 3.5 million cases last year since its launch two years ago, growing at 156 percent and wants to make it 5 million case this year.

ABD is present in most categories within the spirits industry--whisky, rum, vodka and brandy with the portfolio of brands like Jolly Roger Rum, Lord & Master Brandy, Class 21 Vodka and Wodka Gorbatschow.