Tuesday, June 28, 2022

Largest Indian Owned IMFL Co, Allied Blenders And Distillers Files DRHP For Rs 2000 Crore IPO

Mumbai-based Allied Blenders and Distillers, the largest Indian-owned Indian-made foreign liquor (“IMFL”) company and the third largest IMFL company in India, in terms of annual sales volumes between Fiscal 2014 and Fiscal 2021 has filed its Draft Red Herring Prospectus (DRHP) with the markets regulator, Securities and Exchange Board of India (SEBI), to raise funds through an initial public offering (IPO).

The issue with a face value of Rs 2 per equity share consists of a fresh issue of equity shares worth up to Rs 1000 crore and an offer-for-sale (OFS) of Rs 1000 crore by Promoter and selling shareholders i.e Bina Kishore Chhabria up to Rs 500 cr, up to Rs 250 cr by Resham Chhabria and Jeetendra Hemdev and up to Rs 250 cr by Neesha Kishore Chhabria. The offer also includes a reservation for subscription by eligible employees.

The Offer is being made through the Book Building Process, wherein not more than 50% of the Offer shall be available for allocation to Qualified Institutional Buyers, not less than 15% of the Offer shall be available for allocation to Non-Institutional Bidders and not less than 35% of the Offer shall be available for allocation to Retail Individual Bidders.

The company, in consultation with the lead bankers to the issue may consider a preferential issue of equity shares or any other method aggregating up to Rs 200 crore. If such placement is completed, the fresh issue size will be reduced.

The proceeds from its fresh issuance worth Rs. 708.98 crore will be utilised for prepayment or scheduled re-payment of a portion of certain outstanding borrowings and balance for general corporate purposes.

The Mumbai-based company is one of the only four spirits companies in India with a Pan-India sales and distribution footprint, and is a leading exporter of IMFL, in terms of annual sales volumes between Fiscal 2019 to Fiscal 2021 with an estimated peak share of 20% in Fiscal 2021. It started its journey in 1988 with the launch of flagship brand, Officer’s Choice Whisky which marked their entry into the mass premium whisky segment.

From 2016 to 2019, Officer’s Choice Whisky was among the top-selling whisky brands globally in terms of annual sales volumes. Over the years, ABD has expanded and introduced products across various categories and segments and established market leadership in the alcoholic beverages market in India with a market share of 8.2% in IMFL market by sales volumes in Fiscal 2021. Its main competitors are United Spirits Limited, Pernod Ricard India Private Limited and Radico Khaitan Limited.

As of March 31, 2022, their product portfolio comprised 10 major brands of IMFL across whisky, brandy, rum, and vodka. According to a Technopak report quoted in its DRHP, ABDs brands which include Officer’s Choice Whisky, Sterling Reserve, and Officer’s Choice Blue, are ‘Millionaire Brands’ or brands that have sold over a million 9-liter cases in one year.

Apart from liquor, ABD also sells packaged drinking water under the Officer’s Choice, Officer’s Choice Blue, and Sterling Reserve brands and has exported its products to 22 countries internationally, including countries in North and South America, Africa, Asia, and Europe.

Distribution of alco-beverages is highly controlled by the state government- both at the wholesale and retail level. There is a high entry barrier for new players. ABDs sales and distribution footprint spans across 25 states and union territories. Its products are retailed across 64,000 outlets as stated in the DRHP.

Allied Blenders and Distillers’ revenue from operations stood at Rs 6378.78 crore for Fiscal 2021, and profit after tax at Rs 2.51 crore. For nine month ending December 2021, revenue from operations stood at Rs 5444.98 crore and profit after tax at Rs 3.30 crore.  

For Fiscal 2021, and in the nine months ended December 31, 2021, its revenues from export sales were ? 133.55 crore and ? 113.24 crore, respectively.

IMFL is the largest segment of the Indian alco-beverage market both in volume and value terms.  IMFL sales by value is estimated at ? 1.74 trillion in Fiscal 2022 and projected to reach ? 2.4 trillion by Fiscal 2025 and in terms of sales volume it is estimated to reach 425 cases. During the period between Fiscal 2022 and Fiscal 2025, IMFL sales value is expected to grow at a CAGR of 11.3% and sales volume at a CAGR of 6.2%.

ICICI Securities Limited, Axis Capital Limited, JM Financial Limited, Kotak Mahindra Capital Company Limited and Equirus Capital Private Limited are the book running lead managers and Link Intime India Private Limited is the registrar to the offer. The equity shares are proposed to be listed on BSE and NSE.

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