SYMBIOSIS CENTRE FOR MANAGEMENT & HUMAN RESOURCE DEVELOPMENT

Associated Distilleries Ltd. (ADL) and Globus Spirits Ltd. (GSL)
Mergers and Acquisition – Sem- IV
Assignment-1 Roll No. 2010G42 Siddhartha Pawar

such as Officer's Choice Prestige Whisky. 2010.4 million bulk litres from 70 million bulk litres and is expected to translate into a higher market share in the CL segment while further strengthening bottling ties-ups. (ADL) and Globus Spirits Ltd. In January 2009.4 LLPA and 9. Officer's Choice Classic Whisky. ADL also has a bottling tie up with ABD India in Haryana. The present installed capacity of ADL is 14. So.5 million cases a month. White Lace Vodka. They also cater to the Indian brands in the IMFL segment. Samurai Premium Whisky. marketing and sales of industrial alcohol comprising rectified spirit. they commenced their operations at Distillation Plant at Samalkha Unit. 20-20 Premium Whisky. The Company was engaged in the manufacture of potable alcohol with an installed capacity of 270 LLPA (Lakh Proof litres per annum) at Madhya Pradesh. at the rate of 35. Samurai Gold Extra Rich Blend Whisky.1% in FY2011. The company proposed to increase the production of ENA and IMFL to 86. Extra Neutral Alcohol (ENA). GSL currently operates two distilleries at Behror in Rajasthan and Samalkha in Haryana which have a combined capacity of 70 million BL per annum. Samalkha ki Saunfi. namely Hannibal Legendary Rum and 20-20 Premium Whisky. the demerged undertaking of ADL has been merged into Globus Spirits Limited (GSL) on a going concern basis with effect from April 1. Globus Spirits Limited (GSL) was incorporated in the year of 1993-94 as a public limited company as Globus Agronics Limited.5 million a month. the company said. The merger takes GSL's capacity to 84.4 million BL. the company expanded their IMFL repertoire in the state of Rajasthan by launching two new products. after GSL received Delhi High Court's approval for the merger of Associated Distillers Ltd with itself.5 lakh cases respectively. 2007. Officer's Choice No 1 Brandy and Officer's Choice XXX Rum. 2|Page . The demerged undertaking of ADL is located in Hissar. The company is also the leading supplier of country liquor to the Government of Madhya Pradesh. such as White Lace Gin. Ghoomar. it's about 2.9% in FY2010 to 21. Rajasthan No 1. The merger of the Demerged Undertaking of ADL into GSL would result in greater synergies and operational efficiencies which would translate into improved performance going forward. and in IMFL segment. (GSL) Background – ADL and GSL Associated Distilleries Limited (ADL) company was incorporated on 7th July 1989 as a public limited company at Calcutta and obtained the Certificate for Commencement of Business on 31st August 1989 and is engaged in the business of manufacturing. The name of the company was changed from Globus Agronics Ltd to Globus Spirits Ltd with effect from January 23. Haryana.000 liters per day from grains and molasses. Country Liquor. Haryana is a huge country liquor market.Name: Siddhartha Pawar Roll no. The company is in the process of installation of two Multi-Pressure Distillation Plants for the production of Extra Neutral Alcohol. such as Rana. Approximately Rs 75 crore will be the addition to GSL revenue. The Company has a brand portfolio of their own in the country liquor segment. GR 8 Times Whisky and Hannibal Legendry Rum. The merger is expected to result in a stronger footprint in the Country Liquor segment across Haryana & Delhi and also augment the contract manufacturing business of Globus Spirits Ltd. In April 2005. now the company owns and runs three distilleries of a total capacity of 86 million liter per annum and with bottling capacity of close to 1. Samalkha No 1. ADL operates in the two states of Haryana and Delhi and has a market share of 10% in Haryana and 10% in Delhi. The ADL plant has shown increased operating efficiency since its revamping in October 2009 and EBITDA margins have grown from 12. 2010G42 Mergers & Acquisition Assignment-1 Associated Distilleries Ltd. Benefits of the Merger During the year 2011-12. one at Samalkha in Haryana and the other at Behror in Rajasthan.

24 million shares which will take the post dilution equity share capital of GSL to 22. So.10 each fully paid up will be issued according to the valuation criteria suggested by E&Y based on the CCM. this is the first biggest synergy. Stock-to-stock payout.e. we would be controlling about 33% of the market. GSL has to issue additional 3. Stock Market Movement The board has approved the distribution ratio of 1:6 for the merger of the demerged undertaking of ADL into GSL i. Potential Driving Forces behind the Merger The Merger was a horizontal merger between two alcohol manufacturing company. 3|Page .99 million shares of face value Rs. 2. 6 equity shares of Rs. where as ASL stock prices percentage variation is positive after the merger. 2010G42 Mergers & Acquisition Assignment-1 Between the two distilleries. for every 1 equity share of ADL of Rs. 1. 10 each. GSL definitely got benefitted from the merger. which already was part of Globus Spirits and now there is Associated Distilleries. Capacity enhancement – expansion Market share increase in Country Liqour market (33%). Thus. Percentage change in Stock prices of GSL has witnessed downward trend. 4. Stock prices of both the companies could be seen passing through dynamic phase since there is an announcement of the merging ADL into GSL in the month of September 2011. Raw material procurement at economic rate. 3. 5.10 each fully paid up. DCF Market Price & the NAV method to value companies. Revenue gain of INR 75 Cr from the merger. one is at Samalkha.Name: Siddhartha Pawar Roll no.