Varun Beverages (VBL), a key player in the beverage industry, has increased its stake in its Zambia subsidiary, Varun Beverages (Zambia), 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 46.7 crore 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.