Veteran investors Rajiv Khanna and his wife Dolly Khanna’s most recent bet is one of the largest liquor manufacturers in central India.
Shares of Associated Alcohols Ltd. rallied after the Chennai-based couple picked up a 1.04 percent stake in the company, according to shareholding data available on the stock exchanges as of the quarter-ended March 2018. The investment comes at a time when India’s per capital alcohol consumption has more than doubled in the last two years.
The company, which operates a distillery at Khodigram in Madhya Pradesh, manufactures extra neutral alcohol, a key raw material required to make liquor. It has been a vendor to the London-based Diageo Plc since the late 1990s and is the single-source supplier of raw material for Smirnoff Vodka.
- It recently entered into an agreement with India’s largest liquor company United Spirits Ltd. for manufacturing and selling certain brands in select Indian states.
- The company aims to double ENA capacity in the coming years to 7 crore liters per year, it said in its annual statement.
- It is currently present in Delhi, Madhya Pradesh and Rajasthan and is looking to foray into five new states – Pondicherry, Kerala, Goa, Maharashtra and Chhattisgarh, the statement added.
- The liquor industry has seen a rise in input and raw material costs.
- Certain state governments have imposed a ban on liquor sales.
- The sector is subject to higher taxes which could disrupt demand.