The battle for the ownership of Mansion House brandy just took a new turn. Kishore Chhabria's Allied Blenders and Distillers (ABD) on Thursday announced that it has acquired 50 percent brand rights in the brands Mansion House and Savoy Club from Dutch liquor maker Herman Jansen Nederland BV, giving it the right to manufacture and distribute the brands in India and South East Asia.
However, the Mansion House and Savoy Club brands are under dispute since 2008. ABD's rival, Tilaknagar Industries, has been locked in a court battle with Herman Jansen for over five years, claiming to be the rightful owner of the brands in India.
The case dates back three decades. In 1983, Herman Jansen entered into a licensing agreement with Tilaknagar to produce and distribute Mansion House brandy and Savoy Club in India. Four years later, it ceded control of the brands to Tilaknagar. But in 2008, Herman Jansen reclaimed its rights over the brands, saying the agreement with Tilaknagar had expired in 2007. A court battle ensued and although the Bombay High Court ruled in Tilaknagar's favour in 2011, Herman Jensen appealed the verdict and the appeals process is still underway.
When asked about the legal tenability of the deal given that the matter is sub-judice, Roy said: "In our mind, we are the owners of the brand. Herman Jansen owns the brand globally and we own 50 percent of it in India."
Reacting to Tilaknagar's claim to the ownership of the brands, Roy said: "Let the matter come up in court. You can't just claim ownership of the brand without really owning it."
Manek Mulla, Advocate, M Mulla Associates said that Herman Jansen is the sole proprietor of the brands in India. He added that the Bombay HC interim ruling in 2011 merely allows Tilaknagar to continue using the trademarks till the high court reaches a verdict on the rightful owner of the brand. Therefore, ABD's purchase of the brand rights is legal, he claims.
However, Tilaknagar has challenged this argument. In a statement to CNBC-TV18, Amit Dahanukar, Chairman and Managing Director, Tilaknagar said: "The assignment of the trademarks (Mansion House and Savoy Club) during pendency of judicial proceedings is illegal. Neither the assignors (Herman Jansen) nor the assignee (ABD) are entitled to use the trademarks Mansion House and Savoy Club as such use would tantamount to violation of Tilaknagar's rights in the trademarks which have been upheld by the Bombay High Court."
He added that Tilaknagar will take all necessary steps to protect its interest through legal recourse.
Sources say ABD's acquisition of Mansion House Brandy is a "pressure tactic" adopted by ABD to acquire Tilaknagar.
Tilaknagar has a debt of Rs 650 crore and has been scouting for investors. But with its mainstay brand embroiled in an ownership dispute, investors are steering clear of it. ABD has made several unsuccessful attempts to acquire Tilaknagar, which is strategic to its intent to increase market share in the brandy segment and gain access to the southern market.
Brandy sales contributed about 55 percent to Tilaknagar's Rs 806-crore revenue in FY14. In FY14, Tilaknagar sold 8.8-million cases of brandy. Mansion House has a share of 35 percent in premium brandy category.
Roy said the acquisition of Mansion House will allow ABD to consolidate its position in the fast-growing brandy market, especially in the four southern states of Andhra Pradesh, Karnataka, Tamil Nadu and Kerala, which together account for 98 percent of the brandy sales in India. "India's brandy market is picking up fast and currently accounts for 25 percent of the Indian made foreign liquor (IMFL) market," he said.
But with the brands under litigation, ABD is unsure of when it will start production and distribution of Mansion house and Savoy Club brands.
Roy said: "We are yet to decide about starting manufacturing and marketing of Mansion House in India."
Roy refused to divulge the size of the deal but said it was funded through internal accruals.
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