Allied Blenders IPO Open for Subscription: 10 Crucial Risks Investors Must Consider

The Allied Blenders and Distillers Ltd IPO has begun today (Tuesday, 25 June), and will close on Thursday, 27 June. The price band is set between ₹267 to ₹281 per share, with a face value of ₹2. Ahead of the IPO, the company raised ₹449.1 crore from anchor investors.

IPO Structure
The IPO includes fresh shares worth ₹1,000 crore and a promoter offer-for-sale (OFS) worth ₹500 crore. Promoters like Resham Chhabria, Jeetendra Hemdev, Bina Kishore Chhabria, and Neesha Kishore Chhabria will sell shares in the OFS. A part of the proceeds, around ₹720 crore, will be used for general corporate purposes and debt repayment.

Company Overview
Allied Blenders and Distillers produces, markets, and sells alcoholic beverages in India and internationally. By Fiscal 2023, the company held over 8% market share in the Indian-Made Foreign Liquor (IMFL) market by sales volume. Its product range includes well-known brands like Class 21 Vodka, Jolly Roger Rum, Officer’s Choice Whisky, and Sterling Reserve Whisky.

Key Risks Listed in the Red-Herring Prospectus (RHP):

1. Dependency on Whisky Sales
   Most of the company’s revenue comes from whisky sales, making up 97.58%, 96.90%, and 95.38% of revenue for Fiscal 2021, 2022, and 2023 respectively. A drop in whisky sales could severely impact the company’s financial health and operations.
2. Profit Fluctuations
   The company’s profit margins and after-tax profit have varied significantly in the past. There’s no guarantee they will improve or that the company will be more profitable in the future.
3. Increasing Competition
   The IMFL market is getting more competitive, which might pressure their operations, cash flow, business outlook, and financial condition.
4. Regulatory Scrutiny
   Past or ongoing actions by the Central Consumer Protection Authority or other regulatory bodies could affect their operations and financial status.
5. Dependence on Bottling Facilities
   Their business could be hurt if agreements with bottling facilities are terminated.
6. Related Party Transactions
   The company has engaged in various transactions with related parties. There’s a risk these could negatively affect their operational and financial performance.
7. Tax Changes
   Changes in tax rates or how taxes are calculated could impact the market for their products and negatively affect their business and finances.
8. Regulatory Changes
   Their operations are subject to many central and state regulations. Changes in these regulations could increase costs or restrict business operations.
9. Income Tax Investigations
   The company is under investigation by income tax authorities and does not yet know the outcome.
10. Inability to Raise Product Prices
    If the company cannot increase the prices of its products, it might negatively affect their business and financial condition.

Allied Blenders IPO Quick Facts

• Subscription Dates: 25 June – 27 June
• Price Band: ₹267 to ₹281 per share
• Funds Raised from Anchors: ₹449.1 crore
• Fresh Issue Size: ₹1,000 crore
• Offer-for-Sale Size: ₹500 crore
• Use of Funds: General corporate purposes and debt repayment
• Market Share: Over 8% in the IMFL industry (Fiscal 2023)
• Key Products: Class 21 Vodka, Jolly Roger Rum, Officer’s Choice Whisky, Sterling Reserve Whisky