Financial Daily from THE HINDU group of publications
Thursday, May 06, 2004
Balrampur Chini puts the cork on IMFL business
Kolkata , May 5
SUGAR major Balrampur Chini Mills Ltd has pulled out of the IMFL (Indian Made Foreign Liquor) business.
The company, which entered the IMFL sector as a forward integration in the last quarter of 2002, recently came out of it, as the management felt that the company was not cut out for this sort of a brand-oriented business.
According to Mr K.N. Ranasaria, Chief Executive of Balrampur Chini, the decision was taken about a month or two back. "The liquor business did not suit us. We are not accustomed with the nitty-gritty of this business. As we failed to make much headway in this sector we decided to get out of it," Mr Ranasaria told Business Line.
It may be noted that in October-November 2002, Balrampur Chini launched two brands of whisky and one for rum. Investments worth Rs 5-10 crore were made and plans for new gin and vodka brands were lined up too.
The whisky brands were 4U and Blue Line and the rum brand was Black Punch. Bottles of 750 ml and 375 ml were introduced but the marketing was restricted only within Uttar Pradesh. It even introduced a beverage with low alcohol content with the Xotica brandname. That too was pulled out of the market.
Despite exiting the IMFL sector, Balrampur Chini, which is India's largest sugar producing company with an annual capacity of 29,000 tonnes crushed per day, will carry on with its bulk alcohol business. It will continue to sell rectified spirit and ENA (extra neutral alcohol) to established liquor companies.
The company has two distilleries, one each at Bhabnan and Balrampur in Uttar Pradesh. The total capacity is 150 kilolitres per day. It will also carry on with its ethanol business.
A senior analyst of the sugar industry said Balrampur Chini failed to establish a mark in a sector dominated by brands. According to him, the company was most comfortable operating in a commodity sort of a market.
"IMFL is a fiercely competitive sector. There are several segments and in each segment there are numerous brands, which constantly fight among themselves to increase market share. To succeed in this sector, one would have to establish a brand, which takes time and enormous amount of investment", the analyst said.
Balrampur Chini is the only sugar company in recent times to venture into IMFL. About a decade back, Nababgunj Sugar Mill, which then belonged to Mr. D.R. Narang made a similar foray in IMFL. However, the mill was taken over by the Uttar Pradesh government and Narang Distillery continued to produce IMFL.
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