Just a month ago there was speculation that Japan's Suntory would take an ownership stake in it. In the past two years, at least seven new wine makers and importers have entered the local market, which is expected to grow at an annual pace of 27-30%. The global economic recession has resulted in a wine glut even in India with domestic producers having to slash forecasts for the year. United Breweries is in discussions with Diageo about an ownership stake too. New investors coming in and diluting the promoters ownership stake is not new for the Indian wine industry with Sula Vineyards giving GEM India Advisors (GIA) a stake back in 2005.

This usually means that the winemakers are seeing a greater need for capital and are seeking investors to raise money to invest in their wineries, distribution networks and maybe to buy more land or wineries too. It can also mean in that the promoters are looking to diversify their own personal portfolios as the wine market gets more competitive. It is difficult to say why exactly Indage Vintners is diluting its stake down other than an interest in retiring some of its debt (currently at roughly Rs. 300 crore). Indage Vintners may have stretched itself with two purchases last year - Darlington Wines in the United Kingdom and VineCrest in Australia last year both of which appear to be money losing operations at the moment.

In fact, back in March the company announced a restructuring exercise that included global consolidation of operations like R&D and production and an enterprise resource planning solution for banking, cash flow, inventory and assets into one system. In addition to the restructuring the company announced that it would put on hold its global expansion and introduce a value brand.

The stock price is currently traded at Rs. 94 and is off its 52 week high by 80%.