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Indage eyes multiple takeovers abroad, to raise fresh capital

Indage eyes multiple takeovers abroad, to raise fresh capital
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First Published: Tue, Nov 04 2008. 12 42 AM IST

Expanding overseas: Ranjit Chougule, managing director of Champagne Indage, says three more acquisitions are planned for the year.
Expanding overseas: Ranjit Chougule, managing director of Champagne Indage, says three more acquisitions are planned for the year.
Updated: Tue, Nov 04 2008. 12 42 AM IST
Bangalore: India’s oldest and biggest wine producer by sales, Champagne Indage Ltd, plans to acquire more overseas wineries this fiscal year, seeking bulk wine exports to the UK and the US, even as it raises fresh capital from a possible sale of foreign currency convertible bonds, or FCCBs, and other financial instruments.
Expanding overseas: Ranjit Chougule, managing director of Champagne Indage, says three more acquisitions are planned for the year.
The Pune-based company is defying tight credit markets worldwide to pursue expansion, after completing the purchase of two wine makers abroad in the past 18 months and agreeing to buy a third.
“There may be certain timeline delays, but there are another three acquisitions planned for the year,” said Ranjit S. Chougule, managing director of Champagne Indage.
Chougule admitted to uncertainty about the state of global financial markets and the cost of funds given that the company is “going through a programme of expanding both the equity base of the domestic business as well as the global business”.
He declined to elaborate on the planned acquistions and plans to fund them, but said Champagne Indage aimed to maintain growth of 40-60% in turnover, partly through acquistions overseas. The company logged consolidated revenue of Rs250 crore for the year to March 2008.
On 31 October, Champagne Indage’s board approved a proposal to raise Rs120 crore through FCCBs and other means, which will partly fund an acquisition it has committed to for this fiscal year. It agreed to buy Loxton Winery from Australian Vintage Ltd for 60 million Australian dollars (Rs204 crore), but the deal has been delayed because of Champagne Indage’s failure to to get the financing in place, Sydney Morning Herald reported on 25 October.
“We are completing various procedures required. Because of that we are delaying the completion of (the acquisition of) Loxton, nothing else,” Champagne Indage’s chief financial officer Rajesh Chalke said.
In May, Champagne Indage acquired a UK-based wine distribution firm, Darlington Wineries.
Champagne Indage shares have fallen 82% since the start of this year, compared with a 55% decline in the benchmark Sensex index of the Bombay Stock Exchange. The stock closed at Rs147 on Monday.
Champagne Indage may have to put further acquisitions on hold given that the steep decline in its share price, tighter credit markets and high borrowing costs may make fund raising difficult. “They may adopt a wait-and-watch policy,” Ranjit Kapadia, head of research at Mumbai-based brokerage Prabhudas Lilladher Pvt. Ltd, said.
Champagne Indage will introduce in India next month its first overseas wine, Broken Earth, produced by its Australian subsidiary Thachi Wines Pty Ltd, which it acquired in 2007-08 along with another Australian winery, VineCrest.
“We have a huge potential in the UK and the US,” said Tim Pearce, operations manager of Thachi Wines Pty Ltd.
Champagne Indage, whose brands include its flagship Marquise de Pompadour, Chantilli and Riviera wines, was set up in 1982 as a 100% export-oriented unit. The company, whose products include red, white and sparkling wines, exports its labels to 69 countries, according to its website.
“There is a certain amount of novelty attached to wines from India, but you have to fight on quality,” said Alok Chandra, a Bangalore-based wine consultant who runs the consultancy Gryphon Brands Inc. Wine exports from India are mostly in bottles and not in bulk, he said.
India’s exports of wine are estimated to be less than 50,000 9-litre cases a year, said Subash Arora, president of the Delhi-based Indian Wine Academy, a marketing consultant.
A September report of the Associated Chambers of Commerce and Industry of India, or Assocham, said annual domestic wine consumption would grow 25% per annum to reach 9 million litres in 2012.
Around 1.3 million 9-litre cases of wine are sold in India annually, most of it in the bigger cities.
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First Published: Tue, Nov 04 2008. 12 42 AM IST