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Business News/ Companies / News/  Allied Blenders buys 50% brand rights from Herman Jansen in Mansion House
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Allied Blenders buys 50% brand rights from Herman Jansen in Mansion House

Move marks a new turn in ABD's bid to acquire Tilaknagar Industries, which makes the popular brandy in India

A file photo of a Tilaknagar Industries distillery. Tilaknagar has been making Mansion House brandy in India since 1983 under a pact with UTO Nederland B.V., now known as Herman Jansen. Photo: ReutersPremium
A file photo of a Tilaknagar Industries distillery. Tilaknagar has been making Mansion House brandy in India since 1983 under a pact with UTO Nederland B.V., now known as Herman Jansen. Photo: Reuters

Mumbai/Bangalore: Allied Blenders and Distillers Pvt. Ltd (ABD), which makes Officer’s Choice whisky, said on Thursday it has bought 50% ownership rights in Mansion House and Savoy Club brands from Herman Jansen Beverages Nederland B.V.

The move marks a new turn in ABD’s attempts to acquire rival Tilaknagar Industries Ltd, which currently makes the popular Mansion House brandy in India. Mansion House brandy sales constitute over 60% of Tilaknagar revenues.

Tilaknagar has been making Mansion House brandy in India since 1983 under a commercial arrangement with UTO Nederland B.V., now known as Herman Jansen. The relationship between the two, however, soured. The Dutch firm sued Tilaknagar in 2008 for allegedly breaching the terms of their partnership agreement, while Tilaknagar continued to make and sell Mansion House brandy in India.

Herman claims it has the rights to the brand, but Tilaknagar executives said the erstwhile UTO had ceded ownership of the trademarks in Tilaknagar’s favour in two agreements signed by them on 23 February 1987.

ABD has previously claimed that it has been authorized by Herman Jansen to use the Mansion House brand in India, a claim rejected by Tilaknagar.

According to Tilaknagar, it has received “a categorical reply on 24th January 2014 from the lawyers of UTO that no such partnership or arrangement" with ABD or any other party has been entered into by UTO. Mint has a copy of the reply by the lawyers of UTO.

In December 2011, the Bombay high court had upheld Tilaknagar’s claim while rejecting Herman Jansen’s petition to stop using the brand name of Mansion House, prompting the firm to appeal against the order.

Thursday’s announcement of rights purchase reinforces ABD’s claim to the Mansion House brand. ABD and Herman Jansen have also signed a partnership agreement, under which ABD will produce and market Mansion House in India.

Deepak Roy, executive vice-chairman and chief executive officer at ABD, said the company will now be a co-plaintiff, along with Herman Jansen, in the case against Tilaknagar.

“In our mind, there is no dispute. We carefully studied the issue and we have taken this decision. I cannot reveal more things as the matter is sub judice," Roy said.

ABD wants to buy Tilaknagar but the latter says it wants only a stake sale. Asked if the firm had bought ownership rights in Mansion House and Savoy Club to force Tilaknagar to sell out, Roy said ABD continues to be in talks to buy Tilaknagar.

In May, Tilaknagar had said that it was the only manufacturer of Mansion House liquor in India and denied it was in negotiations with ABD to be acquired.

The Mansion House brand is crucial for Tilaknagar as it is the only successful premium brand of any meaningful scale in the company’s portfolio.

Tilaknagar and ABD are looking to raise cash to reduce debt and fund expansion, respectively.

During an analyst call early this week, Tilaknagar executives said that the company is looking at equity infusion to reduce debt. “So, with internal accruals and equity infusion, we will bring down the debt. We are already exploring it actively to raise capital. It can be a strategic or non-strategic mode of fund-raise," they said.

For ABD, acquiring Tilaknagar makes sense because it would add a popular brandy label in its portfolio that it currently lacks.

Tilaknagar’s acquisition will significantly boost ABD’s reach in the five southern states, which together account for more than half of India’s liquor sales by volume. Tilaknagar has also been increasing its presence in eastern India through acquisitions. In March, the company bought the liquor business of IFB Agro Industries Ltd for an undisclosed sum, adding brands such as Volga vodka and Blue Lagoon gin to its portfolio.

Pooja Sarkar contributed to the story.

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Published: 21 Aug 2014, 09:09 PM IST
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