Ravi Kumar Distilleries Ltd (RKDL) is planning to acquire 100 per cent stake of Hyderabad-based Liquors India Ltd, for Rs 28 crore. The company would buy the entire stake in two tranches, starting with 49 per cent shares.
According to a company announcement to National Stock Exchange (NSE), its board of directors has approved the acquisition of Liquors India Ltd by 100 per cent share purchase agreement from the shareholders of the latter.
The acquisition cost is Rs 28 crore, which will be funded mainly through internal accruals and partially debt. The company is also looking at loan from banks to assist the buy out, said a company official seeking anonymity. On a conservative basis, the company sees the valuation of assets of Liquor India Ltd at around Rs 40-50 crore.
Liquors India has two plants, a bottling plant with current production capacity of 130,000 cases of liquor a month and a rectified spirit manufacturing facility, which is currently not fully operational. While the bottling plant is up and running, the company expects to restart operations of the spirit manufacturing facility after completion of acquisition.
At present, RKDL has a bottling plant in Puducherry with a capacity of 75,000 cases a month. The company plans to optimise capacity in the Liquors India plant in Hyderabad to 195,000 cases a month after acquisition and additional lines for this is already in the facility, the official said. The company expects the acquisition to generate an income of Rs 20 lakh per month.
Besides, the company is also looking at leveraging a recent contract between Liquor India and Tilaknagar Industries Ltd. Under a five-year term contract, bottling of Tilaknagar Industries' Indian Made Foreign Liquor (IMFL) would be carried out by Liquor India.
Also Read
RKDL, on April 11 this year announced acquisition of 51 per cent stake in Karnataka-based SV Distilleries Pvt Ltd for a total project cost of Rs 86 crore including funds for expansion of acquired facilities, as part of its expansion plan.
The company posted an increase of 4.64 per cent in net profit at Rs 61 lakh during the first three months of current fiscal ended June 30, 2011, compared to Rs 59 lakh recorded during the same period of previous fiscal. Total income for the first quarter of 2011-12 stood at Rs 14.95 crore as against Rs 13.23 crore posted during the same period of last fiscal.