The five-year old battle with Dutch liquor maker Herman Jansen over its flagship brand, Mansion House Brandy, is costing liquor-maker Tilaknagar Industries dearly. This is driving Tilaknagar to find a resolution as the scuffle is keeping investors at bay.
Tilaknagar Industries' Rs 650-crore rupee debt burden could have been easily dealt with, if an investor could be roped in. But for the last 5 years, the company has been locked in a war with Dutch liquor maker Herman Jansen over the rights to flagship brand Mansion House Brandy and despite Tilaknagar's deeply-discounted valuations, this battle has kept investors away. A pity, since investor interest has spiked since the USL-Diageo deal .
Here's the story so far: In 1983, Herman Jansen entered into a licensing agreement with Tilaknagar to produce and distribute Mansion House brandy in India. Four years later, it ceded control of the brand to Tilaknagar. But in 2008, Herman Jansen reclaimed its rights over the brand, saying the agreement with Tilaknagar had expired in 2007.
A court battle ensued and although the Bombay High Court ruled in Tilaknagar's favour in 2011, Herman Jensen appealed the verdict and the appeals process is still underway.
For Tilaknagar, the cost goes beyond reputation. Between March 2013 and March 2014, FIIs have slashed their shareholding in the company from 15 percent to 8 percent.
Experts say given the legal battle, Tilaknagar's discussions with PE players may also not bear fruit.
Deepak Ladha, ED, Ladderup Corporate Advisory says, "Even if PEs come in the overhand of ownership continues and there will always be uncertainty about who owns the brand, because 70% revenues come from these brands. So if you have an overhang, I'm not sure sure how many PEs would look at it."
The legal impasse is now pushing it to hunt for an out-of-court settlement.
Amit Dahanukar, CMD, Tilaknagar Industries says, "We are always open to mutually acceptable resolution of the dispute. We have no interest in litigation. Litigation is a compulsion and not desirable."
Tilaknagar says it has options on this front, but is not inclined towards any one. Experts say these options include making a cash payment to Herman Jensen or striking a royalty agreement with it or even selling a stake to the Herman Jansen-Allied Blender's joint venture that was formed in 2013.
Allied Blenders that has been trying to acquire Tilaknagar has reportedly bought a 50 percent stake in Mansion House Brandy, globally, from Herman Jansen.
But here's the twist. While Tilaknagar agrees it is negotiating with Allied Blenders for a stake sale, it says reports of a joint venture between Herman Jansen and Allied Blenders is speculation, as the rights to the Mansion House Brandy have not been transferred to any joint venture.
Tilaknagar Ind stock price
On April 25, 2014, Tilaknagar Industries closed at Rs 63.35, down Rs 1.95, or 2.99 percent. The 52-week high of the share was Rs 74.60 and the 52-week low was Rs 44.85.
The company's trailing 12-month (TTM) EPS was at Rs 4.76 per share as per the quarter ended December 2013. The stock's price-to-earnings (P/E) ratio was 13.31. The latest book value of the company is Rs 40.53 per share. At current value, the price-to-book value of the company is 1.56.
Anda sedang membaca artikel tentang
Here's why investors are shying away from Tilaknagar Ind
Dengan url
http://gayafashionshow.blogspot.com/2014/04/heres-why-investors-are-shying-away.html
Anda boleh menyebar luaskannya atau mengcopy paste-nya
Here's why investors are shying away from Tilaknagar Ind
namun jangan lupa untuk meletakkan link
Here's why investors are shying away from Tilaknagar Ind
sebagai sumbernya
0 komentar:
Posting Komentar