Pernod Ricard to borrow £160m in India

Pernod Ricard is seeking to borrow Rs1,500 crore (£161 million) in order to increase its footprint in the Indian market.

Pernod Ricard is planning to challenge Diageo’s dominance in the India spirits market

According to the Economic Times, the French drinks group issued a filing to the country’s Registrar of Companies claiming it is raising its borrowing limit.

It is thought the new limit will help the group, maker of The Glenlivet Scotch whisky and Absolut vodka, challenge the dominance of Diageo-controlled United Spirits – currently the largest spirits manufacturer in India.

UK-based Diageo acquired a controlling stake in McDowell’s No.1 producer United Spirits in June last year following protracted negotiations and regulatory setbacks.

At the same time, Pernod Ricard borrowed Rs 900 crore (£96m) in India.

Of this latest round of borrowing, a spokesperson for the group’s Indian arm told the Economic Times: “A resolution was passed by the board of directors to increase the aggregate borrowing limit for ongoing business operations and working capital requirements.”

Diageo and United Spirits’ brands currently command a 36% share of the spirits market in India, while the former recently reported a 21.4% rise in its third quarter profits, predominantly attributed to the success of its prestige and above brands.

It was revealed last month that India may resume fair trade agreement (FTA) negotiations with the EU – potentially leading to lower taxes on imported liquor.

While the Indian market is widely coveted by multinational drinks groups due to its emerging middle class, many struggle against the market’s 150% tariff on imported spirits.