Carlsberg to own 90% of its India unit as Carson plans exit

Monday, 6 June 2011 00:00 -     - {{hitsCtrl.values.hits}}

BANGALORE: Danish brewer Carlsberg will own 90% of its India operations after it buys out its partner, Sri Lanka’s Lion Brewery Ceylon, which is exiting to focus on the home market.

Carlsberg’s shareholding in the Indian unit will now double and IFU, a Danish investment fund for developing countries, will continue to hold the rest 10%.

“We will not look at new investors and do not plan to buy the remaining 10%,” Carlsberg India MD Soren Lauridsen said, adding that the 90% stake will be held by Carlsberg South Asia.

Lion Brewery, in a filing to the Colombo Stock Exchange last week, said it has decided to sell its shareholding at its book value of $20 million.

Lion, the marketer of Carlsberg brands in Sri Lanka , said in the filing that it was selling stake because the India investment requirement was high at $200 million over the next few years and it wanted to maintain its current market position in the home market. The share sale, subject to regulatory approval, was also an attempt to free Lion Brewery of debt, it said.

An email sent to Lion on reasons for bowing out of the rapidly growing India beer market did not elicit a response.

Carlsberg, which claims 6.2% market share (excluding Tamil Nadu) as of April, has been expanding manufacturing presence in India.

It invested. 128 crore to open its fifth brewery in Andhra Pradesh, the largest beer guzzling state in the country last year. Its Tuborg Strong variant had exceeded sales of 1 million cases in seven months of launch.

The Indian beer market is estimated at 17 million hectolitres (1 hectolitre = 100litre), growing at over 10% yearly. It is dominated by Vijay Mallyaled United Breweries, which holds more that half the market share here. South African brewer SABMiller, which makes Fosters and Royal Challenge beer, follows in the second spot while other global giants, including Anheuser-Busch InBev, maker of Budweiser and Tennets, too have been betting on this market. Lion has invested in the Indian unit since 2006, a year before Carlsberg began operations.  (Economic Times)