The troubled Indian brewer of craft beer Bira 91 succeeds in raising US$10.2 million through a heavily discounted rights issue
New Delhi-headquartered B9 Beverages, the maker of Bira 91 beer, has raised INR850 million (US$9.95 million) through an ongoing rights issue as the company implements stringent cost-cutting measures and a shift in its manufacturing strategy. According to the issue document lodged with India’s Securities and Exchange Board of India, the proceeds will be used for working capital and general corporate purposes.
The company originally launched an INR1 billion rights issue in May, offering 3.1 million equity shares at INR325 each, a 55% discount to the INR718 paid by Japan’s Kirin Holdings in a previous funding round. Existing shareholders were eligible to subscribe to one share for every seven held. The remaining INR150 million of the issue is expected to be sold by mid-July. More than 300 investors have so far participated in the offer, including a large family office investing in the company for the first time, according to local financial media reports. B9 Beverages currently has about 6,500 private investors.
The company is under financial pressure and has already seen a workforce reduction from about 975 to 500 employees. The rights issue comes at a time when the company is alleged to have delayed salary payments and struggled with meeting its tax liabilities across several states and funding its operational restructuring.
As part of its restructuring, B9 is shifting from in-house manufacturing to a distribution-led model, relying on contract production at four breweries. Only its Gwalior and Nagpur facilities remain under direct operation. The company has also reduced its manufacturing capacity from about 25 million to 15 million cases.
B9 said the changes it is introducing are projected to reduce its factory overheads by nearly 50% and will generate annual savings of up to INR6 billion. It is also expecting its fixed costs to decline by about INR 20 billion this financial year compared to the previous year.
