The seven-decade-old Delhi-based liquor company, Jagatjit Industries, has gone in for a major makeover rationalising its workforce, consolidating its operations and is in advanced talks to buy another liquor maker for over ₹100 crore.

Jagatjit Industries, which last year raised about ₹200 crore from the investment firm KKR, is making several key changes to its organisation. Roshini Sanah Jaiswal, promoter and chief restructuring officer of Jagatjit Industries, told BusinessLine that the company recently let go about 180 employees, out of about 700, as part of the modernisation drive. Jaiswal, who holds the franchise for Hard Rock Cafe in India, said when she took over the reins of the company two years ago, it was going through a difficult phase bogged down by legacy issues, huge workforce and outdated systems. “We started examining each and every part of the organisation and began the restructuring exercise to make it leaner and fitter,” said Jaiswal.

Industry size The total size of the Indian liquor industry is about 350 million cases per year with over half the market share controlled by foreign players, United Spirits and Pernod Ricard who own most of the premium brands in the country. Smaller players like Jagatjit Industries have a large share in the mass market segment but has about 5 per cent of the total market share. The company received a huge endorsement when investment firm, KKR, last year pumped in about ₹200 crore into Jagatjit. “The money we have raised is all debt. During the initial years, the interest cost will be much lesser so that it allows us time to increase the cash flow,” Jaiswal pointed out. The total debt of the company now stands at about ₹380 crore. The new funding has gone into the restructuring of the company.

As part of the restructuring process, the company recently closed down its factory in Hyderabad because of high production costs, reduced its inventory levels and now has just two factories of its own in Punjab and Rajasthan. It also withdrew key brands in Kerala as the State has nor increased the liquor prices for some time now and hence was losing a substantial amount of money even though the sales had gone up.

Market share Jagatjit promoters believe that this year is critical for the company. Its sales have grown in most of its major markets including Andhra Pradesh, Telangana, Tamil Nadu, Delhi and Rajasthan. It has, however, lost market share in Orissa, Haryana and Chandigarh and expects to focus on them to regain share there. It remains absent in two of the largest markets in the country, Karnataka and Maharashtra, but hopes to launch its products there only after consolidating in its major markets.

The company is also in advanced talks with a liquor maker for acquisition and is expected to close the deal soon.

The acquisition is expected to boost the whisky portfolio of the company. She said the company is EBITDA neutral as of now even though its net losses have increased during the third quarter. “We would have been EBITDA positive but for the demonetisation and liquor ban on highways. On a PAT basis, we would be close to profitability next year,” Jaiswal said.

Jaiswal said she expects the introduction of GST to affect the company negatively as it won’t get input credit and the cost is expected to go up by 7-9 per cent.

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