Toast to expansion

New Delhi, Aug. 24: Radico Khaitan, the second largest liquor maker in the country, is establishing a base in Dubai to handle its exports to Africa and Southeast Asian markets.

Radico Global ? the wholly-owned subsidiary ? will be set up in Dubai?s free trade zone to take advantage of the tax breaks. Companies established in any of Dubai?s free trade zones do not have to pay corporate and income taxes.

?We have firmed up plans to set up a 100 per cent subsidiary in Dubai in the next two months. We want to make it our export hub,? Abhishek Khaitan, managing director of Radico Khaitan, told The Telegraph.

The plan was cleared at the company?s board meeting held last Saturday.

Exports of Radico Khaitan account for 5 to 7 per cent of the sales turnover which was placed at Rs 995 crore in 2004-05. Khaitan is hoping to more than double exports from the Dubai hub.

Radico Global will also make investments in joint venture companies abroad. At present, the company exports to nearly 30 countries. These largely include the Gulf countries, African and Southeast Asian destinations.

According to Khaitan, RKL will follow a two-pronged strategy in the near future. First, it will work to increase its domestic market share and, second, it will concentrate on the export business.

?The idea behind coming up with a subsidiary is to ease the operations and consolidate our exports,? he said.

To start with, Radico Global will have an authorised capital of $1 million. ?This will be increased depending upon future opportunities,? said Khaitan.

RKL, which has earmarked an investment outlay of Rs 85 crore over the next two years, is also planning to set up five to six bottling units in India. These will primarily be in the southern and western parts of the country.

At present, the company has 20 contract manufacturing bottling units and another five which are company owned.

There are two company-owned bottling units in Uttar Pradesh, and one each in the states of Uttaranchal, Rajasthan and Andhra Pradesh. Khaitan said RKL is also planning to set up a bottling plant overseas. ?However, nothing is finalised yet,? he added.

Meanwhile, the company will also launch its brand of vodka in the domestic market over the next three months. This will complete RKL?s expansion across all brand categories. At present, it has brands in the rum, whisky, beer and brandy segments.

RKL is targeting a 25 per cent topline growth this financial year. The company registered a profit of Rs 36 crore last fiscal and hopes to increase it by 30 per cent this year.