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Varun Beverages increases stake in Zambia subsidiary to 90 % from 60 %
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Thursday, 02 March, 2017, 08 : 00 AM [IST]
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Our Bureau, New Delhi
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Varun Beverages Ltd, a key player in the beverage industry and one of the largest franchisee of PepsiCo in the world (outside USA), has increased its stake in its Zambia subsidiary, Varun Beverages (Zambia) Ltd, to 90% from 60%.
VBL has been successfully running the Zambia operations since its acquisition in 2016. The increase in stake reflects the company’s confidence in the future growth prospects of the subsidiary and will be an effective catalyst to drive further business growth in a fast-growing emerging market.
The company has recorded sales volumes of 10.7 million cases in 2016 in Zambia. The operations are highly profitable and reported an EBITDA of Rs 467 million in CY2016. Given the growth prospects and promising earnings potential, the acquisition comes at a very reasonable valuation with an attractive payback.
This will enable VBL to consolidate a higher share of profits from the subsidiary going forward.
Commenting on the development, Ravi Jaipuria, chairman, Varun Beverages Ltd, said, “We are happy to report the stake increase in our Zambia subsidiary and is in line with our philosophy of consolidating our presence in fast growing emerging markets beyond India. We have recorded healthy volumes in our first year of operations and are highly profitable already with strong free cash flow generation. We are confident of our ability to drive sales and profitability higher in the future.”
He added, “Zambia continues to be an under-penetrated market and offers significant upside potential. We are well-positioned to capitalise on the enormous opportunities on the back of our solid end-to-end execution capabilities, strong distribution reach, diversified portfolio and innovations.”
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