Mumbai-based Allied Blenders and Distillers (ABD), the largest Indian-owned Indian-made foreign liquor (IMFL) company, has filed its draft red herring prospectus (DRHP) with the Securities and Exchange Board of India (Sebi) to raise about Rs 2,000 crore through an initial public offering (IPO). The issue, with a face value of Rs 2 per equity share, will consist of both a fresh issue and an offer-for-sale (OFS).
Allied Blenders and Distillers is the third-largest IMFL company in India in terms of annual sales volumes between financial year 2013-14 and 2020-21.
The issue will consist of a fresh issue of equity shares worth up to Rs 1,000 crore and an offer-for-sale (OFS) of Rs 1,000 crore by promoter and selling shareholders — Bina Kishore Chhabria up to Rs 500 crore, up to Rs 250 crore by Resham Chhabria and Jeetendra Hemdev and up to Rs 250 crore 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 per cent of the offer will be available for allocation to qualified institutional buyers, not less than 15 per cent of the offer will be available for allocation to non-institutional bidders and not less than 35 per cent of the offer will 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 per cent in fiscal 2021.
It started its journey in 1988 with the launch of flagship brand, Officer’s Choice Whisky, marking its 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 per cent in IMFL market by sales volumes in Fiscal 2021.
Its main competitors are United Spirits Ltd, 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 Technopak report quoted in its DRHP, ABDs brands which includes Officer’s Choice Whisky, Sterling Reserve, and Officer’s Choice Blue, are ‘Millionaire Brands’ or brands 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 alcobeverages is highly controlled by the state government — both at the wholesale and retail levels. There is a high entry barrier for new players. ABDs’ sales and distribution footprint span across 25 states and Union territories. Its products are retailed across 64,000 outlets as stated in the DRHP.
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.
Allied Blenders and Distillers’ Financials
ABD’s revenue from operations stood at Rs 6,378.78 crore for the financial year 2020-21, and profit after tax at Rs 2.51 crore. For the nine months ending December 2021, revenue from operations stood at Rs 5,444.98 crore and profit after tax at Rs 3.30 crore.
For the financial year 2020-21, and in the nine months ended December 31, 2021, its revenues from export sales were Rs 133.55 crore and Rs 113.24 crore, respectively. IMFL is the largest segment of Indian alco-beverage market both in volume and value terms. IMFL’s total sales by value are estimated at Rs 1.74 lakh crore in the financial year 2021-22 and projected to reach Rs 2.4 lakh crore by the financial year 2024-25.
In terms of sales volume, the company is estimated to reach 425 cases. During the period between 2021-22 and 2024-25, IMFL’s sales value is expected to grow at a CAGR (compound annual growth rate) of 11.3 per cent and sales volume at a CAGR of 6.2 per cent.
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