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According to a story by ET, a group of about 60 employees from Indage Vintners (the name is old wine in the new bottle) across the country jointly filed a complaint last Friday with the local police in Worli where the company is head-quartered, alleging that the company reneged on its latest promise of clearing the salaries and statutory dues by August 5. The complaint has been lodged against three senior officers of the company including the owners.
The company has been banking on arranging funds from outside through debt and/or equity to help clear some of the outstandings, but has been unfortunate to manipulate either, so far. The report says that against unaudited figure of revenues of Rs.2.67 billion last fiscal, it carries estimated liability of Rs. 3.5 billion.
Admitting that the management’s poor judgment might have accelerated the company problems which has been hit by the economic slowdown, Mr Sham Chougule concedes in a letter to the employees, his “Inability to pay salaries, wages and suppliers have seen the collapse of sales channels resulting in collections not commensurate with the cost of infrastructure created by us. The production has been seriously impacted due to non-availability of materials and other support.”
“The creditors, including bankers, ICD and other borrowings, have not been able to be serviced with desired level of proficiency. The lack of communication with stakeholders have further impaired the reputation and image of the enterprise. While at a personal level, I have incurred huge costs, I have always believed in the future,” said Mr Chougule according to the report.
Delwine has been inundated with letters from employees and distributors from Kullu to Kolkata for many months, informing that the salaries have not been paid since October and November. The company does not deny this though a few employees have also informed us that some of them have been made part payments at the rate varying from Rs. 5,000 to Rs. 15,000 a month towards the backlog. But the latest developments the employees are really riled up.
While many employees writing to delWine admit that the company has been overstaffing for inexplicable reasons, they strongly feel that the practice of dumping stocks and heavy discounting to sell at any cost to increase the top line, has been the bane of the company. In fact, several distribution channels throughout India had been choked even before the recession struck. With the cost cutting measures closing many offices outside Maharashtra, resulting in non renewal of the license in many states including Delhi means that huge stocks are stuck in the warehouses and tens of thousands of cases of wine are in the process of slowing turning into vinegar due to poor storage conditions at the distributors’ warehouses.
Of course, in hindsight, it is easy to speculate that the problems might have started with the company’s ambitious acquisition plans in Australia and the UK- a couple of the latest deals could not even be closed because of the financial constraints.
The share price of the company which was around Rs. 65 last Friday slid further to Rs. 58 this morning; this is 85% below its one year high of Rs. 485. It had pierced the Rs. 40 level in March this year. The hopes and rumours of strategic investments by some Japanese investors took the stock back up to Rs. 120 in mid June, from where it has been drifting lower. At today’s rate, the company has a valuation of Rs. 907 million.
Meanwhile, the company allotted last month 1,03,00,000 Equity Share Warrants on a preferential basis carrying an entitlement to apply for equivalent number of Equity Shares of Rs 10/- each, before the expiry of 18 months from the date of allotment of the Equity Share Warrants at a price of Rs 88/- per equity share. There seems to be no likelihood of this money rolling in soon because of the price slide.
For earlier, related articles, please visit
http://www.indianwineacademy.com/item_4_321.aspx
http://www.indianwineacademy.com/item_7_312.aspx
http://www.indianwineacademy.com/item_4_302.aspx
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