A B Sugars' distillery division plans expansion

The distillery division of the A B Sugars Ltd (a subsidiary of the Chadha group) is now looking to expand its distribution nationally. It wants to tap the markets of the southern, western and eastern regions.

The group has tied up with Mudra Agencies for marketing support. Moreover, it is planning to venture into the beer brewing business, with a total project cost of Rs 40-50 crore, at the existing premises.

The company is running a molasses-based distillery, alongside a sugar mill at Dasuya (Hoshiarpur), in Punjab with a total capacity of 60 kilo litres per day.

The IMFL bottling capacity of the unit is 150,000 cases per month, whereas country liquor production is over 125,000 cases a month. So the total potable alcohol production is over 3.3 million cases per annum.

Talking to Business Standard, the head of the liquor division (sales and marketing), Hirdesh Chopra, said, "Although the details of the project like production capacity have not been finalised, we are venturing into beer brewing soon with a total project cost of Rs 40-50 crore."

According to experts, the domestic beer market has been growing at double-digit rates in the last two years, taking the annual consumption to 108 million cases (of 7.8 litres each) in 2005-06.

It has also entered into a technical-cum-marketing alliance with Ian Macleod Distillers Ltd, Scotland, a leading Scotch whiskey company, for the local bottling of imported Scotch whiskey and the production of admix premium whiskies, rum, gin, vodka and brandy under the "Raffles" brand.

With this operation, the group has fully integrated its liquor business. It has built an extensive network in the north. Last year the company sold one million cases in all segments and this year with new markets it is targeting two million cases.

Chopra said, "We have tied up with local bottling units in Kerala, Andhra Pradesh and Rajasthan. Within four month of launch, we are selling 40,000 cases per month in Kerala. In the coming months we are entering into collaboration with the bottling units in Kolkata and Mumbai, which will provide us backend support."

The southern zone is a huge market for liquor trade, followed by the western and northern regions, according to Chopra. In Punjab the firm has a market share of 20 per cent and the total market size in Punjab is 3 million cases per annum.

Chpora said, "This year due to liberalisation in the liquor policy, it would grow in Punjab, and reach 4 million cases per month."

"We have tied up with Mudra Agencies, which is an Anil Dhirubhai Ambani group company, to give us marketing support in repackaging the brands and help in promoting the brand," he added.

Currently, the distillery capacity is 60 kilo litres per day, comprising 30 kilo litres per day each of extra neutral alcohol (ENA) and rectified spirit. Chopra added, "Within seven-eight months, the company will convert the rectified spirit unit into ENA, to make the even economical brand ENA-based, which is of better quality.

The Chadha group is Delhi-based, with business interests in real estate, residential and commercial; construction and the operation of multiplexes; sugar manufacturing; paper manufacturing; distillery; and food processing.

The group has been involved in the distribution and screening of films. In the last financial year, the turnover of the group was Rs 1,600 crore.