Questions of Indage’s viability persist as it gets a respite with additional financial support from its promoters. But through this all, the fundamental question remains – will you miss Indage if it doesn’t survive? In this commentary Shiv Singh updates you on the state of affairs at Indage and makes a case for why we need it.
In the last week, Indage Vintners has avoided bankruptcy through a cash infusion and a restructuring of its huge debt. The struggling company (India’s oldest winemaker) now has until June 15th to win the confidence of the Mumbai High Court so that the order asking it to be shut down can be rescinded.
A key part to building the court’s confidence has been the decision by promoter Ranjit Chougle and his family to invest INR 75 crore (USD $17 million) to improve the company’s finances. Most banks including ICICI and SBI are said to be in favour of the deal though a few like Sublime Agro and Kotak Mahindra Bank are not behind it according to various sources. They will however fall into line if 75% of the creditors agree to the restructuring. The total debt of the company stands at INR182 crore.
That’s the financial state of affairs. We also know that Indage has disgruntled employees who haven’t been paid consistently over the last two years. Supply of its wine has also been drying up. Whether it has the ability to survive this sad fate of affairs is questionable even though the Chougles still have a lot of goodwill in the industry.
But I believe that Indage Vintners should not be allowed to go under; the Indian wine industry needs it to survive. Firstly, Indage Vintners is the oldest wine producer in the country. It is the grandfather of the Indian wine industry and in many respects served as the inspiration for every other winery that has sprung up over the last few decades. It sends a bad message to the wine world if Indage Vintners fails.
Secondly, Indage made some near fatal mistakes in the last few years by growing too quickly but so did many other companies in different industries. It shouldn’t be driven to the ground and slammed to the point of no return because of these mistakes. Whether it be Merrill Lynch or Goldman Sachs or Satyam here in India, Indage Vintners isn’t the first by any means to overstretch and get caught in the global economic slowdown. Not only did the economic slowdown hurt Indage but so did the reduction in tourists visiting after 26/11 and the increase in taxes related to wine. Unlike Satyam, Indage Vintners didn’t suffer from an accounting scandal.
Thirdly, wine drinkers around the world have important memories of drinking Indage wine. That’s brand equity that is not only valuable to Indage but to “Brand India” as well. For example, when I was in Bordeaux in April, I met a wine writer who proudly told me that he still had a bottle of Indage’s Omar Khayyam in his cellar that he had bought fifteen years ago. There are other people like him everywhere.
Fourth, the competition that Indage Vintners provided was good for India and other winemakers. It typically entered more international competitions than anyone else building Brand India whenever it won. In fact, it produced the first Indian sparkling wine to win an international award back in 1986. Indage also served as a breeding ground for talent in the industry as many a person started out working for Indage before moving on to other wineries (The Oberoi Group has the same influence in the hospitality industry). What’s more, Indage’s wines served as an important benchmark for quality in India and could continue to do so in the future.
Fifth, we sometimes forget that in an industry that is so young, when one winemaker succeeds it leads to the success of others too who are able to bask in the halo effect. But similarly, when one winemaker fails it makes investors, distributors, business partners and even consumers nervous about the others. Indage’s failing doesn’t help the other winemakers in the long run. It hurts them.
So I believe Indage Vintners needs to survive and I will miss it if it doesn’t. Indage has done an immense amount of good for the Indian wine industry and its wines have been enjoyed by many an Indian wine enthusiast (not to mention many foreigners) over the years. Some of us still have bottles in our cellars too.
Time will tell whether the company rides out this financial crisis, but one thing is certain if it doesn’t – I, for one, will miss it. Will you?