CCI okays United Spirits deal to sell Tamil Nadu distillery

Fair trade watchdog CCI has cleared Vijay Mallya-led United Spirits' proposed sale of a distillery in Tamil Nadu to Enrica Enterprises, as the deal does not raise adverse competition concerns.
The deal involves hiving off entire operations at the unit of United Spirits Ltd (USL) that manufactures Indian Made Foreign Spirits (IMFS) to Enrica "by way of slump sale on a going concern basis". The unit is located at Poonamallee, Chennai.
Post-deal, Enrica would make certain IMFS brands of United Spirits using technology and know-how and under the trademark of the Vijay Mallya firm.
In an order dated December 26, the Competition Commission of India (CCI) said "the proposed combination is not likely to have an appreciable adverse effect on competition in India and therefore, the Commission hereby approves the proposed combination under...The (Competition) Act".

According to the Commission, the manufacture and sale of IMFS in Tamil Nadu "is highly regulated by the Tamil Nadu State Marketing Corporation, which has the exclusive privilege of conducting trade in IMFS in Tamil Nadu".
"There is also the presence of a number of manufacturers of IMFS in Tamil Nadu and as already noted, EEPL (Enrica Enterprises Private Ltd) and its promoters are currently not engaged in the business of IMFS in the state of Tamil Nadu," the Commission added.

Bangalore-based USL is engaged in the manufacture and sale of IMFS, while Enrica is an unlisted firm incorporated under the laws of India and has its registered office in Chennai and is presently not carrying out any business operations.

As per the details in the order, the promoters of Enrica Enterprises -- Spurthi Holdings, Viki Investments and Properties, Sree Shyam Sayi Investments and Traders -- are planning to enter into the business of manufacturing IMFS by way of the proposed deal.
The Commission had received the notice from USL on December 6, 2013, seeking approval for the proposed deal.
On November 8, the USL board had approved the transfer of the unit to Enrica.