Mumbai: After selling its 76% stake in Aurangabad Breweries Ltd, Goa-based shipping and mining organization Chowgule Group said it is exiting completely from breweries to focus on shipping, shipbuilding and mining.
The group will sell its remaining 24% stake to Singapore-based brewer Asia Pacific Breweries Ltd for an undisclosed sum.
A senior Chowgule Group executive, who did not want to be named, said that the move came in the wake of a management decision to focus on the areas in which the group is strong.
“The stake sale is as per share purchase agreement entered with Asia Pacific Breweries at the time of selling the 76% stake,” said an Aurangabad Breweries executive, who did not want to be identified.
In 2006, Asia Pacific Breweries, a venture between Fraser and Neave Ltd and Holland-based beer brewer Heineken NV, had picked up 76% of Aurangabad Breweries. Following the Indian market entry two years ago, the Singapore firm had also set up a greenfield brewery in Hyderabad in partnership with an Andhra Pradesh brewer C.K. Jaipuria.
Asia Pacific Breweries’ regional director of south Asia and director of group business development Vivek Chhabra said his company may look at raising the stake in the Maharashtra brewery, but declined further details.
“We are continuously looking at expanding capacity in India. Apart from Hyderabad and Aurangabad breweries, we are also proposing to have a third one in the northern region located in Haryana or Uttar Pradesh,” Chhabra said.
Chowgule Group has businesses in iron ore mining, sea transportation, iron ore pelletization, shipbuilding, explosives, industrial salt, industrial gases and machine fabrication. It had another small brewery at Arlem in Goa.
Asia Pacific’s decision to expand its production capacity in India is significant at a time when its 42% owner Heineken is set to have a rather stronger presence in the Indian beer market, which is currently growing at 15% to 20% a year.
Heineken, after acquiring the UK beer giant Scottish and Newcastle Plc., or S&N, in a global deal jointly with Danish beer company Carlsberg AS, would inherit S&N’s 37.5% stake in India’s United Breweries Ltd. Although the details of the company’s new India business plan is not clear, Asia Pacific’s expansion plans in India would largely depend on Heineken’s decisions on the UB relationship.
Asia Pacific has three brands in India including recently launched Tiger beer. It’s other brands in the domestic market include Baron’s Strong Brew and Canon. Although the first two brands belong to the company’s global brand portfolio, these are made in the two local breweries using the imported malt and yeast from its parent’s breweries.
“The quality and taste of Baron’s Strong and Tiger will be the same as it is in anywhere in the world, as we are trying to create a premium market for these products here,” said Chhabra.