Wine producer and seller Sula Vineyards raises a toast to D-Street, files IPO papers with Sebi
- ByStartupStory | July 18, 2022
According to multiple industrial sources with knowledge of the situation, Sula Vineyards, India’s largest wine producer, has submitted paperwork to the market regulator Securities and Exchange Board of India (Sebi) in order to raise money through an initial public offering (IPO). If the listing plans go through, it will likely be the first IPO in India by a pure play wine company and the second filing by a firm from the alcohol & spirits sector in recent weeks. Allied Blenders & Distillers, the manufacturer of Officers Choice whiskey, just submitted their draught red herring prospectus.
Sula Vineyards, based in Nashik, Maharashtra’s grape-growing region, is preparing a pure OFS ( offer for sale). The company is supported by Verlinvest, a major shareholder and consumer-focused Belgian family office that made its initial investment more than ten years ago. The company’s MD and CEO is Rajeev Samant. “The DRHP has been electronically submitted to Sebi. Verlinvest and the promoter group are two of the largest selling shareholders in the exclusively OFS component of the IPO, according to one of the aforementioned people. The size of the offer for sale component, he continued, is up to 25,546,186 equity shares, according to the DRHP.
The source backed up the statement and claimed that Sula Vineyards was successful and essentially “created” its own category within the market. This person went on to say that recent quarters have shown a sharp increase in sales, with revenue also coming from the luxury travel sector. A third source said, “The i-banks working on the issue include Kotak Mahindra Capital, CLSA, and IIFL Capital. The legal advisers are Shardul Amarchand Mangaldas and Trilegal, he said.
Sula has a strong market position in the local wine market, thanks to a diverse array of wine brands across a range of price points and a sizable distribution system. It creates around 56 domestic labels under 13 brands that are categorised into Elite, Premium, Economy, and Popular sectors depending on their price, composition, taste, and other characteristics including alcohol content. According to a January 2022 analysis by rating agency ICRA, moving forward under the premiumisation strategy, rising contribution from the Elite and Premium categories is likely to sustain the company’s revenues and profitability over the longer term.
The company generates income from the hospitality industry in addition to producing and selling wines through its two wine resorts, Beyond Sula and the Source at Sula. To distribute imported wine and other key spirits in India, it also has dealership agreements with international brands like Le Grand Noir, Hardys, Beluga Vodka, etc. The ICRA report also stated that by offering a package of Sula wines, other foreign branded wines, and core spirits to its distributors, the company is able to increase its sales distribution network. The company operates in a highly regulated sector with state-specific rules and has seen the entry of multinational competitors. It generates more than 50% of its revenues from the wine segment in Maharashtra and Karnataka.
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