Tilaknagar Industries,the makers of Mansion House brandy which recently concluded the process of debt restructuring, is now looking to approach banks and other lenders for renewal of working capital lines.

As a prerequisite, the distiller will be reaching out to rating agencies for review of its debt position and financial condition/ instruments. The company is also open to exploring funding options, the details for which are still being worked out.

Debt restructuring

Tilaknagar successfully initiated a debt restructuring by paying off banks. It also entered into a long term restructuring agreement with Edelweiss ARC wherein total loans of ₹523 crore were restructured at ₹344 crore with an interest rate of 9 per cent. Edelweiss ARC also picked up a 10 per cent minority stake.

According to Amit Dahanukar, Chairman and Managing Director, Tilaknagar Industries, as a result of the one-time settlements finance costs have reduced significantly, while operational costs have come down every quarter.

The Mumbai-based alcobev-maker reported profits in Q1FY22.

Also read: AlcoBev sector looks ripe for disruption, says Tilaknagar Industries chief

While the debt restructuring and repayment of loans led to PAT level profitability; the business also saw significant improvement in operational profitability, with EBITDA margins at 17.3 per cent aided by a favourable regional mix and improvement in realizations.

The company has a strong presence in South Indian markets. “Our Q2 results are due. The plan is to approach rating agencies, maybe Crisil or ICRA or others. Being categorized as NPA at one point hit our working capital lines with the banks. We want to get these lines renewed,” he told BusinessLine .

Working Capital Flow

Apart from cash generated through business operations, other working capital facilities available with the company at present include credit lines extended by dealers (which are interest bearing).

According to Dahanukar, Tilaknagar repaid close to ₹350 crore to the banks as a part of the restructuring. It has another ₹500 crore worth of debts that include ₹100 crore worth of options like vendor financing, deposits and so on. “We will be repaying ₹45 crore this fiscal, another ₹55 crore next fiscal. The remaining ₹200 crore with Edelweiss should see some repayments in the third year, plus there is an option of refinancing. We will take a call then depending on the situation,” he said.

“Working capital line restoration will help us get the grains distillery up and running,” Dahanukar added.

Tie-Up with Pernod Ricard

Bringing on-stream the distillery gives the company a chance to explore further tie-ups. Grain-based distilleries are used mostly for whiskey-making as well as brandy-making.

As a part of its turnaround plans, Tilaknagar has already inked a long term agreement with Pernod Ricard - India’s second largest alcobev-maker. It will manufacture the latter’s products at its bottling facilities in Maharashtra.

The agreement which came into effect from April shall remain valid for the period of 10 years and can be renewed thereafter by mutual consent. The agreement could be extended to more States in the near future. “Once operational, the distillery will allow us to access ready clients like Pernod Ricard,” he added.

Plans are also afoot to expand presence for Mansion House brandy beyond the Southern States and into the East and Northeast regions.