Varun Beverages, the foremost bottler for PepsiCo in India, is embarking on a significant initiative to raise ₹7,500 crore from the market via the Qualified Institutional Placement (QIP) method, aimed at supporting its ambitious growth objectives. The company’s board convened on Wednesday to approve the plan for generating funds through the issuance of equity shares, targeting an aggregate sum not exceeding ₹7,500 crore, as disclosed in a regulatory filing.
The capital will be procured in “one or more tranches” and is contingent upon the approval of the equity shareholders via a postal ballot. The funds raised will be allocated to various strategic initiatives, including investments in subsidiaries, joint ventures, or associates. Additionally, the capital will facilitate the expansion of existing businesses, allowing for the enhancement of the product portfolio, exploration of new markets, and pursuit of strategic acquisitions.
This fundraising endeavor will also aid in the “pre-payment or repayment” of debts, alongside general corporate activities, as outlined by Varun Beverages Ltd (VBL) in its regulatory communication. The company holds a dominant position in the Indian beverage sector, accounting for an impressive 90 percent of PepsiCo’s sales volume in the country.
In the financial year ending 2023, VBL reported robust net revenues amounting to ₹16,042.58 crore, marking a significant increase of 21.8 percent. The company experienced a noteworthy 28.3 percent growth in revenue during the June quarter, reaching ₹7,196.86 crore, with a corresponding profit surge of 25.5 percent to ₹1,261.83 crore. VBL has also implemented a share split in a ratio of 1:5 to enhance liquidity.
With a longstanding partnership with PepsiCo spanning over three decades, VBL continues to expand its operational territories. The company is actively increasing the number of licensed territories and sub-territories, facilitating its business growth. In a strategic move last December, VBL announced the acquisition of the South Africa-based beverage firm, Bevco, along with its wholly-owned subsidiaries, at an enterprise value of ₹1,320 crore.
This acquisition is expected to bolster VBL’s presence in the African market, where Bevco holds franchise rights for PepsiCo products in South Africa, Lesotho, and Eswatini. At present, VBL’s operations extend across six nations in the Indian subcontinent and Africa, collectively catering to over 1.4 billion consumers. Notably, a substantial 79 percent of its revenue is derived from its operations in India, underscoring the critical importance of this market to the company’s overall success.
Varun Beverages Ltd is a leading manufacturer and bottler of beverages in India and operates as a franchisee for PepsiCo. Established in 1995, VBL has rapidly grown to become one of the largest bottlers for PepsiCo globally, producing a variety of soft drinks, water, and other beverages. The company is dedicated to quality and innovation, continuously expanding its product range while maintaining strong ties with local communities and fostering sustainable business practices.
