Sucheta Dalal :Court’s decision to wind up Indage leaves producers disappointed
Sucheta Dalal

Click here for FREE MEMBERSHIP to Moneylife Foundation which entitles you to:
• Access to information on investment issues

• Invitations to attend free workshops on financial literacy
• Grievance redressal


You are here: Home » What's New » Court’s decision to wind up Indage leaves producers disappointed
                       Previous           Next

Court’s decision to wind up Indage leaves producers disappointed  

March 23, 2010

On 19th March, India’s oldest wine producer, Indage Vinters, was ordered to shut shop by the Bombay High Court following a winding-up petition filed by its creditors.  


Considering that it was the remarkable guts and perseverance of Shyamrao Chougule, the founder, who brought international quality wine and champagne to India in the 1980s, the nascent wine industry in the country is saddened over this development.


However, given the efforts the company put in to fund its acquisitions in Australia and South Africa, it was a matter of sheer luck whether Mr Chougule’s gamble would pay off or lead to his company’s ruin.


The global financial crisis sealed the fate of the company—the international market did not perform to expectations and its plans to sell exotic Indian wines in overseas markets did not materialise. Domestic demand for international wine also fell far short of the hype created by the industry itself.


“This is a very sad chapter for the Indian wine industry as Indage Vinters were the pioneers in this sector,” said Violet D’souza, director and owner of Indus Wines. She added that the decision was expected as employees and vendors were facing problems with the company. Sula Wines’ vice president, Pradeep Panchpatel, echoed the same views.


This is not the first time the Chogules and Champagne India have been in such trouble. However, this time the situation looks too bad for them to bounce back.


An official from Nasik Valley Grape Promotion Association said that Indage’s travails will impact nearly 50% of the wine industry. Indage had tie-ups with around 15 small wineries like Flamingo, Century and Pratamesh to purchase wine in bulk and the decision of the High Court will probably spell the end of the road for these units, unless they can persuade other wine majors such as Sula, Grover or the UB Group to buy their stock.


But again, the entire industry is already saddled with large quantities of unsold wine from last year.


“Grape framers and other vendors will suffer from the fallout of the Indage collapse,” the official said. As of now, nobody expects Indage to be bought out in a hurry.


A former investor in the company attributed Indage’s downfall to the large gamble that it took in acquiring wineries in Australia and South Africa. “It was a big gamble and they couldn’t handle it. The writing on the wall was clear, they were overleveraged and we didn’t think their plans, which looked perfect on paper, would materialise,” he said.  


On the desperation of the group to grow rapidly, the investor said, “It was the race to remain number one. Those days, Vijay Mallya of the UB Group was planning a big presence in the wine industry and Ranjit Chougule—who was in charge of Indage—was worried about losing market leadership. What we did not expect is that it would unravel so fast—in just six months.”

Indage Vinters has said that it will challenge the order. “It is the company's contention that notwithstanding the order passed by the Honourable Court, it is not expedient to wind up the business at this stage and therefore the Board of Directors in its meeting held on 19 March 2010, has decided to challenge the said order by filing an appeal in the competent court,” Indage Vinters said in a statement to the Bombay Stock Exchange.


An email sent to the company remains unanswered, while managing director Ranjit Chogule and Vikrant Chogule refused to respond to messages.


It must be noted that Indage was pursuing a corporate debt restructuring (CDR) package for nearly Rs400 crore. This was led by ICICI Bank while the other lenders were IndusInd Bank, Allahabad Bank, UCO Bank, IDBI Bank and Bank of Rajasthan.


During the hearing on 19th March, Indage said that it had told the High Court that it plans to present a proposal with the support of some secured and unsecured CDR lenders in the next hearing. Indage said it was also ready and willing for a scheme of arrangement under Sections (391) to (394) of the Companies Act, to restructure its outstanding liabilities.


However, there might be some light at the end of the tunnel. On 23rd March, Indage Vintners Ltd has now informed BSE that the High Court has granted a stay of 15 days while considering the petition of winding up filed by the company’s creditors. The company’s statement says: “This is pursuant to the submission by the Company that the plans underway will find an amicable solution to meet with all obligations of the Company.” — Aaron Rodrigues

-- Sucheta Dalal