India's largest wine producer and retailer, Sula Vineyards Ltd, is looking to raise ₹960 crore from its initial public offering (IPO). The company has set the price band at 340 to 357 rupees per equity share.
Subscriptions to the IPO will begin on Monday, December 12, and end on Wednesday, December 14. Investors may place a minimum bid of 42 equity shares and any subsequent bids in multiples of 42 equity shares, the company said.
The issue will open for anchor investors on Friday, December 9. The public issue with a face value of 2 rupees per equity share is a complete offer for sale (OFS) aggregating to 26,900,530 equity shares by existing shareholders.
Kotak Mahindra Capital Company Ltd, CLSA India Pvt Ltd, and IIFL Securities Ltd are the book running lead managers. The equity shares are proposed to be listed on BSE and NSE.
In a press conference today, Rajeev Samant, founder and CEO of Sula Vineyards spoke about the company's business strategies, future growth plans, and financial metrics.
Made in India business
Over 96% of packaging material is locally sourced for the Nashik-based Sula Vineyards. The company used to import 50% of glass bottles five years ago, but today 99% of their glass bottles are bought right here in India.
"We are very proud 'make in India, made in India' business. We believe in sourcing our materials locally," said Rajeev Samant, founder and CEO of Sula Vineyards in a press conference today.
Key business strategies going forward
The company plans to focus on its own brands; continue to expand wine tourism business; focus on premiumization of portfolio; increase wine awareness and consumption and penetrate further into tier-1 & tier-2 cities in India; pursue strategic investments and acquisitions to further consolidate the Indian wine industry; effectively use digital media to increase awareness; and continue to make sustainability & climate change readiness as the heart of the company's long term strategy.
Rajeev Samant said that in the last couple of years, the company focused on its own business and that as really worked out for them, and helped take the earnings before interest, taxes, depreciation, and amortisation or EBITDA margin to a totally different level, and cemented their market shares. Hence, the company will continue to focus on that.
"At the end of the day, we are going to focus on wine, and continue to focus on India. These are the two main points," added Samant.
Further, Rajeev said that for the next couple of years the company is not going to venture out into craft spirits, etc. Wine is their business and they know it really well, and better than anyone else in the country.
"We are already the market leaders, and we want to penetrate further into the country. Also, we want to increase awareness and consumption. That is going to be our strategy, and within wine we would like to see premiumization happen, and hence, we are very much focused on premiumization," said Samant.
About three or four years ago the company did have a very big import business. One of the aspect the company decided during the pandemic was to focus on its own business. That's where, according to Rajeev, the greater value was created so the percentage of their own brand revenue has gone up to a lot over the last couple of years. Whereas the revenue of the third brand revenue has really come down, and that's some thing the company is going to continue to do in the near future.
Financials metrics
With regards to EBITDA, the team is very proud of the work that has been done over the last couple of year, Samant said.
The company saw big jump in their margin from 15%, which was generally over the last 10 years, to today it has gone into a different trajectory close to 22%-25%.
"In H1FY23 things are even better that leads to a strong profit after tax (PAT) as well. And in improved metrics across the board return on capital, return on equity, and also the debt has gone down, and today our leverage ratio is very comfortable. We just have around 200 crore rupees of debt or even less at the end of this year," informed Rajeev.
According to red herring prospectus, the company's revenue from operations increased by 40.79% from 159.15 crore rupees for six months ended September 30, 2021 to 224.07 crore rupees for the six months ended September 30, 2022.
The company's revenue surged primarily due to increase in sales of manufactured goods under its brands, increase in selling price of wine in select brands and markets, increase in revenue due to increased focus on premiumisation, favourable response its wine tourism business and increase in revenue from other operating income (government grants).
Whereas, its profit after tax during the period increased by 573.19% from 4.53 crore rupees for the six months ended September 30, 2021 to 30.51 crore rupees for the six months ended September 30, 2022.
