Sula Enterprise Valued at $100 million
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Posted: Monday, 15 November 2010 15:34
Sula Enterprise Valued at $100 million

Mumbai: Nashik Vintners Pvt. Ltd (NVPL), owner of Sula brand and majority- owned by Rajeev Samant, has touched the enterprise value of an astronomical $100 million, based on the divestiture of 15% stake in their existing stake by GEM India Advisors at $15 million to a Belgian based investment company Verlinvest SA which has €250 million under its management, according to media reports

Rajeev Samant, founder of the company which also owns Sula Vineyards as its subsidiary, reportedly confirmed on Thursday that the investment was significant by Verlinvest, adding that GEM India Advisors (GIA), who had invested in Sula in 2004 at a tenth of the existing reported price, is among the earliest investors and has sold only a part of its holding in the company to the new investor. GIA had purchased a 35% stake for $3.5m in 2004.

Samant declined to give details of the shareholding pattern, according to the report, however confirming that the Samant family continues to be the largest shareholder in Sula and did not divest any shares as part of the transaction, which is being dubbed as the third round of private equity investment by the privately held NVPL in the financial circles.

“The capital raised will primarily be used to boost sales and marketing efforts, and constructing a new ecologically friendly, state-of-the-art winery with a capacity of four million liters in Maharashtra. Sula aims to engage in sustainable agriculture in the Nashik region and to support the local rural economy,” Samant reportedly said.

DelWine tried to contact Rajeev who is presently in Goa to seek some clarifications but could not reach him. It is not clear how the company will start the new winery with the funds which are supposedly to come to the investor GIA for the sale of its stake and not to the company-unless GIA has agreed to lend the money for the expansion at a mutually agreed rate of return.

Verlinvest is also an investor in the French liquor company Rémy Cointreau with whom Sula tied up this fiscal year for exclusive marketing arrangements of their products in India, including Piper Heidsieck Champagne.  

Everstone Capital, which holds a 10% stake in the company, was reportedly the exclusive adviser to the transaction. Investors in Nashik Vintners include Everstone Capital's Indivison India Partners, Haystack Investments and ICP Holdings. Nashik Vintners was promoted by Rajeev Samant in 1999.

After overtaking Grove Vineyards in sales around 5 years ago, it displaced the long-time leading wine producer Indage Vintners a couple of years ago when the latter fell victim to the highly leveraged and mismanaged operations and almost went bankrupt. However, interacting with several producers and persons in the know of Indian wine industry at the Mumbai Wine Festival being held at the Radio Club City Pier, Indage has now picked up its production and sales and is expected to be the number two producer in Maharashtra this year. Planning to open up its markets further on a national level next year, it hopes to gain a strong position, even though there are more skeptics than believers of its plans.

Another star on the horizon seems to be Vinsura which might be able to reach an ambitious target of 100.000 cases by 2012. Zampa and Four Seasons are also sharpening their tools and with their branding ands marketing skills and may challenge the uncontested leadership in a few years. Grover Vineyards is also seeking fresh, strategically planned Capital in order to attain the next level of production

For the moment, Sula is celebrating and basking in the glory- in Nashik…and Goa!!

Subhash Arora
Mumbai, Nov 13 

Supplement

Subsequent to the publication of the article, delWine was eventually able to catch up  with Rajeev, despite the deteriorating Airtel mobile connection. Rajeev refuted the Livemint Report and clarified that around 80% of the current investment is in fact fresh equity being issued. Declining to divulge any figures on the total capital employed or the shareholding pattern, he neither confirmed nor denied that around $12 million worth of fresh equity would come to the company.

This amount would be used to build a new winery on the land available around the old Pimpane winery the company had bought from the government a few years ago. ‘We had received around 17 acres land along with the winery. We plan to build a winery with 3 million liters of steel tank capacity and 1 million liters of barrel capacity. In fact, we shall construct a brand new state-of-the-art barrel room.

Rajeev also said it was incorrect that GIA had 35% share at the present time; that was the initial shareholding that got diluted over the years. Beyond that he declined to share any further financial information including the present perceived value of the Sula enterprise.

Subhash Arora
Mumbai, Nov 14

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