and Indage, another Indian company is planning to
buy an overseas winery. Bangalore based liquor giant,
Khodays is about to acquire a winery worth $50 million
in Australia, reports the Economic Times.
Indage acquired the Australian-based
Tandou winery for an estimated $10 million last year.
Vijay Mallya owned United Spirits' acquired the Loire
Valley bubbly producer Bouvet Ladubay this year for
€ 15 million, which has been the biggest purchase
of an overseas winery so far, making Khodays' planned
purchase the largest.
Khodays has been showing interest
in developing a wine business for the last couple
of years and has held talks with several overseas
wine producers to sell their wines but with negotiations
making no headway.
In fact, due to operational problems
within the family, business has taken a back seat.
The company has been trying to bring the liquor business,
having popular labels like Peter Scot and Red Knight,
back on tracks.
The move to buy a winery of this
size is rather surprising. Australian wine industry
has gone through a major glut and is barely recovering.
The imported wine industry in India has a future with
several challenges. With lack of experience in wine
marketing, the company lags behind the existing importers.
Sustaining a winery of this size may be rather challenging.
"We have kept aside Rs 1,000
crore ($250 million) for acquisitions and expansion
over the next two years," says Mr. L Srihari,
MD of Khodays, without giving any details.
Perhaps, the company is riding high
and is flush with funds and has a lot of confidence
with the share prices sky-rocketing from Rs. 35 last
year to Rs 262. It plans to take advantage of the
high prices and rake in Rs.620 million ($15.5 million)
from the market. Market sources also indicate that
resources will be generated internally by selling
some pieces of land and also raising some debt.
The Australian wine industry has
been grappling with the excess problems. Howling Wolves
had announced entry into India through a partner.
Burmans-owned Dabur has also forged alliance with
the Australian wineries. However, Khodays will be
treading a difficult path because of the high cost
of acquiring and the market uncertainty.
Khoday India reported the revenue
of Rs 1200 million ($30 million) in 2006-07. It hopes
to double the sales this year with a target of Rs
2500 million during 2007-08.
The company which has business interests in engineering,
construction, glass and bottle manufacture, biotechnology,
agriculture and power is also looking at leveraging
its land bank to enter the hospitality space. They
are already in talks with a few global brands to build
a luxury hotel in Bangalore.