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Below Average Fundamentals

Monday, December 06, 2010
By a Business Reporter

Ravi Kumar Distilleries Limited, a company that is planning to tap the capital market on December 8th.

The IPO will consist of 1, 15, 00,000 equity shares of Rs. 10, with a price band at Rs. 56 to Rs. 64 per share. The proceeds of the Issue will be used towards expansion by increasing its existing capacity and also for the installation of Re-distillation plant. The Company is also looking at part-financing its marketing and corporate branding expenses. The issue shall constitute 47.92 per cent of the fully diluted post issue paid up equity share capital of the Company.

The company is based in Chennai and manufacturers Indian Made Foreign Liquor (IMFL).It has an installed capacity of 14,25,000 cases per annum and 26,000 cases of Excise Bonded Warehouse

Says Badrinath S. Gandhi, Director “We have two basic business models for our products. We manufacture IMFL products under our own brand portfolio as well as under various tie-up arrangements with other companies include Capricorn, 2 Barrels, Chevalier, Konarak, Green Magic amongst others.”

In a SWOT (Strengths, Weakness, Opportunities, Threats) analysis of the company and their prospects Gandhi was very explicit. The strengths of the company include an experienced management team, cordial relationship with distributors, high quality of their products and also a good brand presence in the South.

The weakness is that they do not have a wide distribution network across the country and they do not have a nationwide presence. This in turn gives them an opportunity for expansion and the threat is the negative perception amongst some Indians about alcohol related products.

Incidentally, CARE Rating has assigned an ‘IPO Grade 2’ to the proposed IPO of Ravi Kumar Distilleries indicating below average fundamentals.

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