United Spirits buys 41.54% in Karnataka distiller

United Spirits has acquired 41.54% stake in the unlisted Sovereign Distilleries Ltd that manufacturers and sells extra neutral alcohol and Indian made foreign liquor.The Karnataka-based distiller makes ENA using both molasses and grain, and has a distilling capacity of 180 kilolitre of alcohol per day.“With this investment, United Spirits moves to a 35% self-sufficiency of its total projected liquid requirements,” the Vijay Mallya-owned company said.The acquisition will also bring an arbitrage in purchase rates, which will directly bolster earnings before interest, tax, depreciation and amortisation, said the maker of liquor brands such as McDowell’s No. 1, Black Dog, Signature and Royal Challenge.The UB Group company said it is targeting sales of 200 million cases in the next five years to maintain leadership.Increasing its self reliance in ENA, its core raw material, is the company’s “highest priority”. It is aiming for 50% self reliance in ENA by 2013. The acquisition of Sovereign Distilleries is in line with its strategy outlined last year, to acquire multi-substrate distilleries with a view to hedge its risks from cyclical availability and prices of molasses.It had outlined a capital expenditure plan of Rs1,100 crore, which included investment in upgradation of existing units and for acquisitions.Since then, the company has acquired Tern Distilleries in Andhra Pradesh and Pioneer Distilleries in Maharashtra. With the addition of Sovereign Distilleries in Karnataka, the three states contribute 35% of United Spirits’ total volume sales, the company said in the release.  NewsWire18