Aristocrat maker plans to raise ₹300 cr for new single malt, brandy and more

The company will enter the brandy category with the launch of Royal Medallion in January. It will also introduce a craft white spirit and a single malt whisky by July. White spirits in the liquor market refer to clear spirits such as vodka, gin, and tequila.

To fund the expansion, Jagatjit Industries is working on raising ₹300 crore through private equity by the end of 2024. The funds will also be used to repay debt and repurchase underperforming franchises.

Speaking exclusively to Mint, promoter and chief restructuring officer Roshini Sanah Jaiswal said the company earns royalties from its franchises in various states, but some have been underperforming.

"We would like to regain control of these markets," Jaiswal said, adding that Assam, Delhi, and Andhra Pradesh have been strong performers, and she expects 30-40% growth in these states over the next two years with additional sales and marketing efforts.

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The company is also preparing to re-enter Uttar Pradesh, Kerala and West Bengal.

"We exited UP 18 years ago, but it’s a key market and we will restart business there in the next two months. The other two states will follow shortly," Jaiswal added. A re-entry into Maharashtra is also under consideration.

Other businesses

The Indian alcohol market operates under state regulation, which governs product pricing. In recent years, companies have focussed more on premium brands while reducing their dependence on entry-level products.

The business, which began operations in 1944, produces brandy, vodka, and whisky brands such as AC SEKC and Binnie’s. In 2018, the company adopted a franchise model, and despite a 30% industry decline during the pandemic, it saw 62% growth.

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For FY24, the company reported revenue of ₹708 crore, a significant increase from ₹582 crore in FY23, and a profit after tax of ₹7.5 crore. It sells around 5 million cases annually, with IMFL (Indian made foreign liquor) cases growing 20-22% since 2020.

In addition, Jagatjit Industries has a malted milk foods division, which produces 30,000 metric tonnes per annum.

"The malted milk business has provided strong bottom-line support," Jaiswal explained. "However, we’re looking to premiumise to strengthen our margins."

The company’s bottom line has been under pressure, prompting the focus on higher-end products. Three-quarters of its FY24 revenue came from beverages, with the rest from food and other businesses.

The company plans to launch an ethanol plant by December, having secured a ₹180 crore loan from the Indian Renewable Energy Development Agency Ltd to set up a 200 kilolitre per day grain-based ethanol distillery in Kapurthala, Punjab.

Jaiswal expects this new business to generate ₹500 crore in revenue in its first year, pushing EBITDA margins to 15%. Extra Neutral Alcohol (ENA), produced at the plant, has applications in spirits, pharmaceuticals, and industries like paints and varnishes.

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Jaiswal emphasised the need for a balance between premium and entry-level brands.

"The strategy was always to have a stepping-stone brand, but we lacked funding in 2020 when we first considered this direction. While our focus is on premium brands now, we won’t abandon entry-level offerings," she said.

The company’s key revenue drivers remain ACP and AC Black whisky, while its Royal Pride brand has gained traction in Chhattisgarh and Delhi.

India’s $32-billion liquor industry is expected to grow by $7 billion by 2028, driven by rising whisky volumes and a youthful population—33% of Indians, or 460 million people, are of legal drinking age, according to London-based consultancy IWSR.

Jagatjit Industries shares closed at ₹292 on 24 September, off a high of ₹305 on 15 September.