Varun Beverages posts Rs 804 crore revenue in Q3 FY19

Varun Beverages, a bottling partner of PepsiCo India, has reported 83.73% increase in consolidated net profit at Rs 81.12 crore for the quarter ended September 30, 2019. The company had posted a profit of Rs 44.15 crore in the year-ago period.

Varun Beverages’ revenue from operations during the quarter stood at Rs 1,776.85 crore as compared to Rs 1,204.47 crore in July-September 2018. Its earnings before interest, tax, depreciation and amortization (EBITDA) rose by 54.2% to Rs 325.66 crore from Rs 211.24 crore.

The company is following the January-December financial year.

Ravi Jaipuria, Chairman of Varun Beverages, said, “Our India business has delivered organic volume growth of 17.5 per cent and our international territories have registered a 27 per cent growth led by exceptional performance in under-penetrated territories acquired in 2017 and early 2018.”

“Moreover, our key markets like Morocco, Zimbabwe, Nepal and Sri Lanka also reported double-digit growth in the current quarter,” he added.

The company has been associated with PepsiCo for more than 27 years, accounting for 80% of the US firm's beverage sales volume in India.

PepsiCo’s partner Varun Beverages will buy an additional 20% stake in Lunarmech Technologies Pvt Ltd for Rs 15 crore. Lunarmech makes and sells pet bottle caps and crown caps.

The deal will increase Varun Beverages’ stake in Lunarmech to 55%.

Through Angelica Technologies Pvt Ltd, Varun Beverages already owns a stake in Lunarmech. The company holds a 47.30% stake in Angelica, which owns 74% of Lunarmech.

Incorporated in May 2009, Lunarmech is headquartered in New Delhi. The firm posted a revenue of Rs 77.54 crore for the financial year ended March 2019, up from Rs 62.13 crore the year before.

Varun Beverages is one of the largest franchisees in the world of carbonated and non-carbonated beverages sold under brands owned by PepsiCo. The company produces and distributes beverages like Pepsi, Diet Pepsi, Mountain Dew, Tropicana Slice and Aquafina packaged drinking water. It further has the franchise for the Ole brand of PepsiCo products in Sri Lanka.

Varun Beverages Limited (VBL), one of the largest franchisee of PepsiCo worldwide, has reported a growth in its revenue from operations of 36.5% year-on-year to Rs 2,810 crore in the second quarter of 2019 (April to June).

The company’s profit after tax rose by 32% to Rs 405 crore in Q2 2019 from Rs 307 crore in Q2 2018, while its earnings before interest, tax, depreciation and amortisation (EBITDA) increased by 37% to Rs 788 crore from Rs 575 crore.

VBL’s total sales volumes saw a jump of 43.3% year-on-year at 195.5 million cases in Q2 CY19 as compared to 136.4 million unit cases in Q2 CY18.

Ravi Jaipuria, Chairman of Varun Beverages, said, "We have made rapid progress with the consolidation of the recently acquired territories in south and west regions, and also those acquired last year. This demonstrates our strong execution capabilities, efficiency of our operations and operating leverage."

Varun Beverages produces and distributes a wide range of carbonated soft drinks and a large selection of non-carbonated beverages like packaged drinking water sold under trademarks owned by PepsiCo.

Varun Beverages Limited (VBL), one of the largest franchisee of PepsiCo worldwide, has reported 24% increase in its revenue from operations to Rs 1,359 crore in the first quarter of 2019 (January to March). The company posted a revenue of Rs 1,095 crore in the year-on period.

VBL’s total sales volumes are up 12.3% at 9.03 crore unit cases in Q1 2019 in comparison with 8.04 crore unit cases in Q1 2018. Its EBITDA (earnings before interest, tax, depreciation and amortization) grew by 26.5% to Rs 218.4 crore from Rs 172.7 crore.

Ravi Jaipuria, Chairman of Varun Beverages Limited, said, "We have concluded the acquisition of franchise rights in south and west regions from PepsiCo for a national bottling, sales and distribution footprint in seven states and five union territories."

"This consolidates our dominant position as a key player in the beverage industry. VBL now accounts for more than 80 per cent PepsiCo India's beverage sales volumes in India from 51 per cent earlier, and has expanded its presence to 27 states and seven union territories across India," he added.

Varun Beverages (VBL), PepsiCo India's bottling partner, has launched its Rs 550 crore facility in Pathankot, Punjab. This facility will roll out products from the cola major's beverage portfolio.

Spread over 41 acres, the integrated facility will be producing PepsiCo's Tropicana range of fruit juices, dairy-based products, carbonated soft drinks, Aquafina water, Gatorade and Lipton ice tea. The facility will also create more than 5,000 direct and indirect jobs in the state. 

Ahmed ElSheikh, President and Chief Executive Officer, PepsiCo India, said, "This new facility will act as a hub to address the growing demand for our well-loved beverage portfolio among consumers in the state and beyond." 

Ravi Jaipuria, Chairman of Varun Beverages, stated, "The facility is strategically located close to target markets which will reduce time to market and enable optimisation of freight and logistics costs, aiding margin expansion." 

RJ Corp-owned Varun Beverages, PepsiCo's long-standing franchise bottling partner, has acquired the bottling business of PepsiCo in South and West India for an undisclosed amount. This development makes VBL national bottling partner for PepsiCo.

Ahmed El Sheikh, President of PepsiCo India, said, "To unlock the full potential of PepsiCo’s operating model in India, the company has decided to franchise its company-owned bottling operations in South and West regions to Varun Beverages Limited (VBL), subject to receipt of necessary statutory approvals."

"With this agreement, VBL will acquire a national bottling, sales and distribution footprint. The move will profitably drive synergies of scale, operational productivity and efficiency across all facets of PepsiCo's beverage business," he further stated.

Ravi Jaipuria, Chairman of VBL, added, "Varun Beverages and PepsiCo India are further strengthening their close to a three-decade-long partnership. This development will help us acquire greater scale, operational productivity and efficiency leading to higher revenues and profitable growth."

वरुण बेवरेज लिमिटेड अपने कार्बोनेटेड पेय व्यवसाय के लिए दक्षिण और पश्चिम में पेप्सिको के बोतल संबंधी, बिक्री और वितरण के लिए बात कर रही है। ये कदम कंपनी को राष्ट्रव्यापी नियंत्रण देगा।

आरजे कॉर्प के स्वामित्व वाली फर्म भारत की बिक्री में इसका 51 प्रतिशत से अधिक का योगदान देने के साथ पहले ही उत्तरीय और पूर्वी क्षेत्रों में पेप्सिको के बोतलों का संचालन संभाल रही है।

कंपनी के स्वामित्व से फ्रैंचाइज़ के स्वामित्व तक के संचालन से कर्मचारियों के ट्रांज़िशन का प्रबंध करने के लिए दिसंबर 2018 में पेप्सिको ने मुख्य मानव संसाधन अधिकारी सुचित्रा राजेंद्र के अधीन एक टीम का गठन किया था।

विकास के बारे में एक कार्यकारी ने कहा, 'बॉटलिंग परिचालनों का राष्ट्रीय स्तर कंपनी की वैश्विक दिशा के अनुसार है, जो दुनिया भर के बाजारों में संपत्ति-प्रकाश व्यवसाय चलाने और फ्रैंचाइज़ी भीगादारों के माध्यम से अपने बॉटलिंग संचालन के अधिकांश संचालन के लिए है। हालांकि संभावित लेनदेन, छोटी अवधि (पूर्ण) में नहीं होगा क्योंकि इसमें संपत्तियों और कर्मचारियों के बहुत से ट्रांसफर शामिल होंगे।'

Varun Beverages Ltd (VBL) is in advanced talks to buy bottling, sales and distribution of PepsiCo in the south and west for its carbonated drinks business. This move will give it nationwide control of these functions.

RJ Corp-owned firm is already running PepsiCo's bottling operations in the north and east, contributing over 51% to its India's sales volume. 

In December 2018, Pepsi-Co had formed a team under Suchitra Rajendra, Chief Human Resources Officer, for managing the likely transition of employees from company-owned to franchisee-owned operations. 

An executive aware of the development said, "The divestment of the bottling operations nationally is in line with the company’s global direction to run asset-light businesses across world markets and operate the majority of its bottling operations through franchisee partners. The likely transaction, however, will not be (completed) in the short term since it will involve multiple and complicated transfers of assets and employees."

The bottling partner of PepsiCo, Varun Beverages has announced to install a greenfield production facility for select beverages in Punjab.

The company plans to set-up a greenfield production facility (subject to receipt of necessary approvals) to create in-house production capacity for Tropicana fruit juices, Quaker Oats milk-based Beverages, and Gatorade, the company said in a BSE filing.

Varun Beverages said this facility will be the first fully backward integrated facility in India to manufacture the complete range of above products including carbonated soft drinks (CSD) at a single location.

"Juice market in India is expected to show strong double-digit growth. The setting-up of this production facility is in-line with our endeavour to strengthen our presence in fast-growing categories," said Varun Beverages Chairman Ravi Jaipuria.

"The addition of these product categories to our portfolio will result in better asset usage as the seasonality in these categories is relatively lower and will augment our return ratios and profitability metrics going forward," he added.

Punjab Chief Minister Captain Amarinder Singh has been invited to lay the foundation stone for this new production facility is being laid by at Pathankot.

Shares of Varun Beverages were trading 1.11 per cent higher at Rs 644 apiece on BSE.

Varun Beverages is confirmed to have acquired PepsiCo India's previously franchised sub-territory in Jharkhand along with a manufacturing facility.

In a BSE filing, it said, "The company has concluded the acquisition of PepsiCo India's previously franchised sub-territory in Jharkhand along with one manufacturing unit at Jamshedpur.”

PepsiCo India's bottling partner Varun Beverages is now a franchisee for PepsiCo products across 21 states and 2 Union Territories.

Shares of Varun Beverages were trading 0.68 per cent lower at Rs 605 a piece on BSE.

Shares of Varun Beverages advanced as much as 4.66 per cent in early trade after CLSA initiated coverage on the stock with 'Buy' rating and set a target price of Rs 540, citing low beverage penetration in key markets will provide headroom for growth. The scrip was trading 0.65 per cent up at Rs 377.

Shares of the company opened at Rs 385 and touched a high and low of Rs 392 and Rs 372, respectively, in trade. Benchmark BSE Sensex was trading 63.72 points, or 0.22 per cent, down at 29,455.02.

On BSE, 24,000 shares were traded on the counter so far as against the average daily volumes of 6,682 shares in the past two weeks.

Shares of the company hit their fresh 52-week high of Rs 471 on November 8, 2016 and 52-week low of Rs 341.25 on March 14, 2017.

For the quarter ended December 31, 2016, the company reported net sales of Rs 420.06 crore, up 9.30 per cent, against Rs 384.30 crore in the corresponding quarter last year.

A case of misbranding was registered against Varun Beverages, Noida, the bottler of soft drinks company PepsiCo, in the court of the ADM (Finance) at Haridwar.

The case was registered by the designated officer of food safety, Haridwar district who found that the samples of the company’s aerated orange drink Mirinda contained sugar content different from the levels mentioned on the label.

Mahima Nand Joshi, Food safety officer, Haridwar, said, "The label on the bottle mentions 13.1% sugar in the beverage but the actual percentage was found to be 11%. That is why, a case has been registered under section 52 of the Food Safety and Standards Act, 2006 for misbranding."

Joshi also added, "The sample reports came around two months ago. We gave the vendor a month’s time to appeal to the food safety office in case they wished to get the samples retested in a central laboratory but we didn't receive any reply, and hence a case was registered today."

Sources said that the beverage samples of a few other brands had also failed safety tests and notices may be sent to them shortly.

PepsiCo India spokesperson, said, "We have not received a copy of the said notice. Having said that, we would like to emphatically reiterate that PepsiCo complies with labelling and other regulations issued by the Food Safety and Standards Authority of India. All products, including Mirinda comply with the food regulations."

RI Bureau

Varun Beverages, the bottling arm of Ravi Jaipuria led PepsiCo India has raised Rs 600 crore from AION Capital Partners, a joint venture between private equity firms Apollo Global Management and ICICI Venture.

"AION now becomes the largest external investor in the company. The investment will enable VBL to further accelerate its growth plans," said Ravi K Jaipuria, chairman of Varun Beverages (VBL), South Asia's largest bottlers for PepsiCo.

AION'S primary investment of Rs 300 crore is in the form of non-convertible debentures. VBL will use the proceeds to refinance its existing debt.

“AION is extremely pleased to partner with the R.J. Corp. group, which has over four decades of experience in the Indian consumer industry,” said Parth Gandhi, managing director at AION.

VBL comprises diversified business interests including beverages, fast food restaurants, ice creams & dairy products, education, health care and hospitality.

VBL contributes over half of the entire group's turnover.

Varun Beverages holds bottling and distribution franchise rights from PepsiCo for a number of territories across India, Nepal, Sri Lanka and Africa.

It manages nine PepsiCo bottling plants across India Haryana, Western UP, Rajasthan, the North East, Goa and Delhi-NCRand three bottling plants overseas Nepal, Sri Lanka and Morocco.

RJ Corp's existing investors include ICICI Ventures among others. Standard Chartered PE and Singapore-based Temasek Holdings.