Allied Blenders & Distillers (ABD), the country’s third largest spirits company, intends on spending Rs 250 crore on expansion projects over the next three years, which will be partly funded through a stake sale to private equity (PE) firms.
“We will part with a maximum of 10 per cent equity to raise about Rs 50 crore from PE firms. This is part of the Rs 250 crore that is required for our growth plans. We are in talks with a number of PE firms, including international ones, and expect to complete the deal in the next 3-4 months,” ABD executive vice-chairman and CEO Deepak Roy said.
As part of its growth plans, the company will look to increase capacity by building two distillation plants, in Andhra Pradesh and West Bengal each, apart from investing in a handful of new bottling plants nationwide. “We will start one new bottling plant in south India in the next 12-18 months,” Roy said.
In West Bengal, he said, the company had approached the state government for a licence about nine months ago, which is yet to come through.
The state government, however, has issued an expression of interest to provide 50 acres to the spirits major at Haldia to establish a new facility.
“The distillation plant in West Bengal will have a capacity of 100 kilolitre a day, and should cost about Rs 120 crore,” Roy added.
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Overall, ABD expects its business to expand by 25-30 per cent annually, with a launch of at least one new brand every year.
“We are looking across the whole category, now that we have a strong balance sheet and can raise capital easily. It takes about Rs 25 crore to launch a new brand, so adequate capital is important,” Roy said.