United Spirits Ltd has bought 19.99 per cent stake in Hyderabad-based Sovereign Distilleries Ltd for an undisclosed amount, and now holds 61.53 per cent stake in the target company.

Established in 2005, Sovereign Distilleries is engaged in manufacturing of extra neutral alcohol (ENA) and Indian made foreign liquor (IMFL). Its products include whisky, rum, brandy and white spirits. It is also pursuing backward integration in sugar and power.

Just few months ago, United Spirits had acquired 41.54 per cent stake in Sovereign Distilleries that has the capacity to produce 180 kilo litre per day (KLPD).

United Spirits Ltd is the Rs 7,500 crore spirits arm of the UB Group and has a portfolio of more than 140 brands. The company owns 84 manufacturing and bottling units across the country.

According to Vijay Mallya, chairman of the UB Group, United Spirits is poised to take the next quantum leap with volumes targeted at 200 million cases in the next five years. Increasing self-reliance in extra neutral alcohol (ENA), which is the core raw material for the business, is the company’s highest priority. 

Also earlier in a press note Mallya mentioned  that the acquisition is a significant step forward in this direction and the company is  targeting 50 per cent self-reliance in ENA by 2013.

There had been deals of similar nature in the last couple of months. For instance, Molson Coors acquired controlling stake in New-Delhi based Cobra Indian Beer Pvt Ltd for a total consideration of $35 million from Cobra Beer and Brahma Investments.

In another significant deal, Carlsberg Breweries AS had entered into a definitive agreement to acquire 45 per cent stake in Gurgaon based Carlsberg India Pvt. Ltd. for a total consideration of $20 million from its joint venture partner Lion Brewery Ceylon Plc.

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