Liquor manufacturer United Spirits Ltd on Saturday said it has acquired 41.54 per cent stake in Karnataka-based Sovereign Distilleries for an undisclosed sum.

Sovereign Distilleries produces extra neutral alcohol (ENA), a key raw material for spirits, using both molasses and grain and has a capacity to produce 180 kilolitres of alcohol per day (KLPD).

“Increasing self reliance in extra neutral alcohol, which is the core raw material for our business, is our highest priority,” UB Group Chairman Mr Vijay Mallaya said in a statement. The acquisition of equity stake in Sovereign Distilleries is a significant step forward in this direction, he added.

With this investment, the USL has attained 35 per cent self-sufficiency in its projected total liquid requirement, the company said. The company is targeting a 50 per cent self reliance in ENA by 2013, it added.

The firm had outlined an aggressive investment strategy to up its supply side security last year with a capex of Rs 1,100 crore that included acquisitions and up gradation of its own units.

Under this strategy, the company has already acquired an additional 200 KLPD of ENA capacity through its acquisitions of AP-based Tern Distilleries, Maharashtra-based Pioneer Distilleries and Sovereign Distilleries.

Maharashtra, Andhra Pradesh and Karnataka contribute 35 per cent of the total volumes of USL’s sales, the company said.

“This strategic investment augurs extremely well for our expansion plans, as well as our continuing endeavours to improve our margins,” USL President and Managing Director Mr VK Rekhi said.

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