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Indage Plans Rights Issue, Greenfield Wineries & Wine Institute

The country's largest, and only publicly listed, wine company has unveiled an ambitious road map as it prepares to go to the market, reports Sourish Bhattacharyya

India's oldest and largest wine company, Champagne Indage, has informed the Bombay Stock Exchange that its Board of Directors, at a meeting held on July 25, has approved the issue, on a preferential basis, of 2.8 million equity share warrants.

Each warrant will carry an entitlement, for the promoters and other specified investors, to subscribe to an equivalent number of equity shares of Rs 10/- each at a price determined under the SEBI (Disclosure and Investor Protection) Guidelines, 2000.

The company also will issue Equity Shares of Rs 10/- each on a rights basis at a premium of Rs 290/- per share to its shareholders in the ratio of one equity share for every six of the company held by them on the record date. Champagne Indage, the makers of the Riviera, Chantilli and Ivy range of wines, is the country's only listed company in the wine sector. At it July 25 meeting, the board resolved to increase the company's authorised share capital from Rs 150 million to Rs 250 million.

The company, meanwhile, has announced that it intends to decide by this month the contours of a plan to invest Rs 500-800 million to ride the retail boom. Champagne Indage expects its net profit to rise by 85% to Rs 200 million and its revenue to double to about Rs 1.2-1.4 billion in the 2006-2007 fiscal year. It expects its sales to reach 4.5 million litres (6 million bottles) from 2.5 million litres in 2005-06 on the back of the rising wine consumption in the country.

Indian demand is tiny compared with the US$117-billion global wine market, but has been growing at 20% annually in the last seven years, according to a report by Rabo India, a unit of Dutch financial giant Rabobank.

Champagne Indage is setting up wineries in the states of Himachal Pradesh, West Bengal and Karnataka to both reach out to those markets and access vineyards. With these additions, it expects its total capacity to grow to 14 million litres by October 2008, compared with 2.8 million litres in March 2006, said the company's director, Arun Shah.

The company is also looking at acquiring distributors in Europe to boost exports, which were minuscule at present, Shah said. It had acquired the UK-based McKinley Vintners in February and it expects to export 2-3 million litres overseas by 2009/10.

To achieve its targets, Champagne Indage plans to set up seven greenfield wineries in all across the country over the next two years. The wineries will be developed at an initial investment of Rs 30 million each and will add 3.5 million litres to the company's production capacity.

It also intends to open the country's first privately managed institute to train wine makers, wine tasters and other technically skilled people, in addition to undertaking research in grape development. The institute has been tentatively named the Indian Institute of Wine and Vine.


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