Sula plans to tap capital markets
Domestic wine maker Sula Vineyards has charted out a fund raising programme to fund its aggressive growth plans.
By Sutanuka Ghosal, TNN |
KOLKATA: Domestic wine maker Sula Vineyards has charted out a fund raising programme to fund its aggressive growth plans.
The plan, which will be implemented over the next couple of years, will involve a combination of fresh capital infusion by promoters, private placements and an initial public offer (IPO).
Sula Vineyard CEO Rajeev Samant said: “The wine market in India has been growing at 30% for the last three years. Our growth has been higher at nearly 50% compared to the industry average. To maintain the pace of growth, we have planned Rs 30-crore capital expenditure.”
To part-finance the Rs 30-crore expansion, the promoters have infused Rs 5 crore a fortnight ago. The Samant family holds 55% in the closely-held company. Gem India, a Mauritius-based private equity fund, controls another 30% in Sula, while the rest is held by friends and associates of the Samant family.
“We also plan to divest 5%-10% equity of Sula shortly. We do not rule out a similar fund raising programme in the near term,” said Mr Samant. “We have plans to come up with an IPO sometime in ’08. Before entering the capital markets, we want to further strengthen our position in the country’s wine market,” he said.
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As part of its growth plan, the company recently bought over a 15-year-old refinery at Pimpane in Nashik. The unit, which will be Sula’s fourth winery, will start functioning by April ’07. Along with this, the company is also increasing its wine grape production.The company is in talks with the Punjab government to set up a greenfield winery. “We hope to close a deal soon and start commercial production next May,” he added. The company, which produces 1.5m bottles per annum, hopes to jack it up substantially in the next fiscal.
“We now grow grapes in 700 acres in Nashik. We are adding another 500 acres. However, since grapes need at least three years to grow, we will be able to use them only in ’09,” Mr Samant said.
Meanwhile, Sula has decided to set up wine clubs across the country to encourage consumption. It has set up wine clubs in Mumbai. “We are opening one in Kolkata as well,” he said.
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