Domestic wine maker Sula Vinyards is in talks with a leading US-based private equity company for a strategic investment by the latter.
Sula, which has charted out an ambitious expansion plan in the country's fast-growing wine industry, is expected to divest 5 to 10 per cent equity to the US firm, sources said.
Chief Executive Officer Rajeev Samant confirmed the development. He said a few private equity players, including a US major, had shown interest for a strategic investment in the company.
"But so far no proposals have been shortlisted as the company's financial position is comfortable at the moment," he added.
Incidentally, Sula Vineyards, the second-largest domestic wine producer, recently acquired a large winery at Pimpane for an undisclosed amount.
It plans to restart operations at the facility within three months for the next-year crush, and this involves a huge additional investment.
The company is also considering setting up a world-class nursery for planting material at Nashik in alliance with a French company.
According to sources, Sula is keen on taping opportunities that are emerging in the fast-growing domestic wine market as well as export markets, even if it means huge investments.
Industry analysts said the company might also look at the possibility of its initial public offering, given the requirements for capital expansion.
The fund raising effort could also be part of its strategy to explore fresh growth opportunities abroad, which will enable the company to withstand the competition from major players -- local as well as foreign.
The analysts further said Sula, given the current business outlook, could eye an enterprise valuation of Rs 80-90 crore (Rs 800 to Rs 900 million).
Its winery sold 90,000 cases this year, logging a top line of Rs 25-30 crore (Rs 250 to Rs 300 million) and is expected to sell about 1.25 lakh cases in 2006-07. Hence, 10 per cent equity may be valued at around Rs 9-10 crore (Rs 90 million to Rs 100 million).
Meanwhile, Sula has embarked on setting up a third winery, with a capacity to make eight lakh litres of wine, at an investment of about Rs 7 crore (Rs 70 million).
Once this goes onstream, Sula's total capacity will touch 1.8 million litres.
There were reports that Sula was in talks with Diageo -- a global drinks major -- for a strategic investment in it. However, Samant denied the reports.
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