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Ravi Viswanathan- Co-owner of Grover and Sula –Part I

Posted: Thursday, 29 May 2014 17:34

Star Interview: Ravi Viswanathan- Co-owner of Grover and Sula –Part I

May 29: The Singaporean investment banker Ravi Viswanathan who invested in Grover-Zampa two years ago and created ripples as he bought equity into Sula this year, making him and Reliance the common and significant investors in the top two wineries of India, tells Subhash Arora at an exclusive private dinner at OTW Aman that the two are more complementary than competing wineries, as he discusses the state of the Indian wine market

Click For Large ViewAt a private lunch last month with Rajeev Samant of Sula at Travertino, Oberoi, we talked about the imminent sale of 30% share by the exiting Everstone Private Equity Fund that was then in the final stages. He avoided discussing the newspaper reports except that he had the preemption rights and a say in selecting the new partner. He also confirmed there were three parties in the fray, Ravi Viswanathan and Reliance combine, L Capital-the financial arm of LVMH and Analjit Singh of Max, who had recently received some Rs. 1300 crores from the sale of his stake in Vodafone.

Within a few days, the sale to Viswanathan was announced by the company and duly reported in delWine. Ravi Viswanathan was in Delhi for a day last week and was gracious enough to accept an invitation from me for a relaxing dinner evening at OTW at Hotel Aman, near the Oberoi where Ravi was staying. During the conversation, he admitted that the process had been long and drawn out after it was started last June.

‘We had a preliminary meeting near the Mumbai airport with the merchant banker which was designated by the seller to find a suitable buyer. We decided and told them that whenever the talks started, we would be willing to consider buying the 30% stake for sale with our partners. Though the process started much later, in September, we were prepared for negotiations.’

Competing Wineries

Wasn’t there inherent conflict in accepting them as partners in Sula, I asked? ‘When we first started talking to Sula, their most senior managers were rather suspicious, but not Rajeev. I felt that the potential market was big enough for both the players to progress without much conflict. Gradually,they saw my view point.’

He says,’ the two brands are more complementary than competitive. Firstly, Sula is a Maharashtra based company-not doing much production in Karnataka whereas Grover is more in Karnataka. Then the Taste of Grover is dry and western-Sula is sweet, with higher residual sugars and more to Indian taste. Grover makes real Bordeaux blends while Sula is into varietals. In export also the two are strong in different markets-Grover is very strong in France, whereas Sula is solid in UK where Grover is practically non-existent.’

‘The Indian market perceives the two differently too. Sula is more of an Indian wine with Chenin as the key label. If they try to make dry wines they may fail’. When I told him Sula was going to come out with a Reserve Chenin Blanc that would be dry, he was quick to point out, ‘It might not sell well-just like a Grover with a sweet taste may not sell. They have an advantage and image of age-worthy wines like Chene which benefits a lot from 2-year oak cellaring-we just can’t produce enough of it.’

Click For Large View'Even demographically the two have different strengths. Sula is more for young people while the Grover is for older, more sophisticated and mature people. Even the Grape Stomp shows the difference. Women love Grover and the youth prefer Sula,’ even as he slightly contradicts himself when he says, ‘go to Sula’s wine bar in the evening. After people order and sit down you would see half of them are women. If you go to an art exhibition, the women would rather have a glass of wine in their hands as they appreciate the art while the young would rather sip from a bottle of Sula as they listen to rock music!’ He feels about half of the wine sold by Sula and Grover is consumed by women.

According to Ravi, Grover has an advantage. ‘Women would mostly drink only wine and thus there is no competition between wine and other beverages, unlike with men where wine competes with whisky, vodka and beer.’

Did he have to pay more than the other bidders for the stake, I ask Viswanathan. ‘No. There was a preemption clause which gave Sula the right to agree to the sale also. In his mind, the preference was for us even though Analjit had the financial clout and was keen to buy the stake. We were almost in the final stage when he entered negotiations-after getting the huge sums of money (apprx.Rs.1300 crores-editor)  from the sale of his shares in Vodafone and used his skills in many ways to delay our entry. But perhaps Rajeev preferred us to be in the picture and he finally prevailed.

So how does that leave the shareholding of Sula? 'Rajeev and his family owns 35%-including a number of shares in different names. But many people not related to the family, like Oberoi, a wine collector from USA, own a small quantity. Belgians (Verlinvest) have 23% . Reliance and Visvires own 30%.  In practice we three are the decision makers in Sula--others have small holdings.’ Not willing to divulge the 19-11 breakup of Reliance and his Private Equity Fund Visvires, he said ‘we both own one seat each on the board and Reliance would generally agree with us (implying that there is an understanding to take decisions on their behalf-more of which in Part II).

Ravi Viswanathan is known to the outside world because of the oldest Champagne he bought at an auction 3 years ago for his Russian wife as a 10th anniversary present and showcases at his Russian Restaurant Buyan Russian Haute Cuisine & Caviar Bar run by his wife, which is known more for its wine list than the food, he concedes. Although he maintains his personal cellar in Burgundy which he loves (not a Bordeaux fan, he says matter-of-factly, ‘I don’t care much for Mr. Robert Parker’), he transferred most of his stocks of Bordeaux fine wines to Singapore and cellared them at his restaurant. ‘I rarely buy wine at the auctions though-maximum of 20-30 bottles so far,’ he says).

Viswanathan is originally from Pondicherry-which is only for the records. When he was one month old he left with his mother on a boat to France where he grew up studying and getting higher education after doing his engineering, before moving to Singapore 15 years ago. Most of his life he has worked as a banker. Two years ago, after he had bought a stake in Grover Zampa in his personal capacity, he formed a private Equity Fund and now through this fund has been investing in anything that may be of interest to the middle class which he believes will yield high returns. Wine, naturally, falls in this category. ‘I don’t intend to buy any more wine companies except whatever these two companies do to expand,’ he says.

He may have decided to buy shares into the wine industry now but he has been watching the Indian wine market since the 90s when Indage used to be the kings. ‘They were the kings, spent like kings but didn’t have the revenues and that brought them down,’ he says even as he adds, ‘there are rumours that they may stage a comeback through a politician of Maharashtra (name withheld for proprietary reasons and not relating evidence).

Click For Large ViewDuring the long and relaxed evening-he had come earlier that day from Singapore with one of his colleagues and had gone straight to the meetings and next day was travelling to Chandigarh for shopping- (possibly for a company), we discussed the entire wine industry in India. It was impressive to learn how knowledgeable and up to date he was on the others like Four Seasons, Fratelli, Alpine and even the new kid on the block, Charosa.

VisVires is a Private Equity Fund partly owned but managed by Viswanathan and has about 10 members.  ‘We are the managers of the fund and have a lot of our own money in it too. VisVires has invested in a few ultra luxury brands as well. In Europe we have invested in media, the movie industry and telecom-but not in Asia. The fund was started this year but Grover was with our own money. We plan to transfer the shares to the Fund by next month.’

A new chapter has been added to the Indian wine industry. There is no prize for predicting that Ravi Viswanathan would be in big news during the coming months, years and decades. Just remember that this Man from Singapore is originally from Pondicherry, who loves his wine and speaks with a French-South Indian accent and might be willing to invest if you can convince him that your business relates to the Indian middle class.

Subhash Arora

Part II of the Interview- a Must Read- will be carried out in another edition. Sula has announced that it plans to release some information about the deal and the shareholding. It will be added as Comments when it is announced. We do not change the contents in any way after publication-editor

Tags: Ravi Viswanathan, Grover-Zampa, Rajeev Samant, Sula, Grover, Reliance, Visvires, Buyan Russian Haute Cuisine & Caviar Bar

Comments:

 

Chetan Shah Says:

Mr.Editor, I liked reading this article.Its good to know & be informed about the stake holdings of our Indian wineries. Regards, Chetan Shah.

Posted @ June 02, 2014 10:57

 
 
       

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