Varun Beverages assures manageable debt amid South African acquisition, capex plans

As of December 31, 2023, the bottling company’s net debt amounted to Rs. 4,734 crore, compared to Rs. 3,409 crore in the year ago period.

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26 Aug, 2025 12:21

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Varun Beverages management on Febraury 5 said the company’s debt levels are manageable with the cost of acquisition of The Beverage Company (Proprietary) Limited South Africa being equivalent to a few months' cash profit once the peak season starts.

Varun Beverages Ltd (VBL), PepsiCo's largest franchise bottler, on December 19 announced its decision to acquire the entire business conducted by The Beverage Company Ltd, South Africa, and its wholly-owned subsidiaries, collectively known as 'Bevco' for Rs 1,320 crores.

The company, in a post earnings call, noted that when considering the debt level, it's important to consider the debt to equity ratio which stands at 0.67.

“Despite ongoing capital expenditures, our debt equity and debt to EBITDA have been improving in recent years. This improvement, coupled with strong cash flows and a robust balance sheet, provides confidence in managing the debt effectively,” the company said.

As of December 31, 2023, the bottling company’s net debt amounted to Rs 4,734 crore, compared to Rs 3,409 crore in the year ago period.

Talking about their capital work in progress (CWIP), the company said about Rs 900 crore out of the total Rs 1200 crore capital expenditure would be used for setting up a plant in Maharashtra. It added that the plan for the entire year includes a total capital expenditure of Rs 3,600 crores, with 3,000 crores earmarked for India and 600 crores internationally.

The franchise bottler of PepsiCo said capacity expansions in categories such as Juices, Gatorade, and dairy-based products have contributed to growth. The production capacity has increased by 200 percent in calendar year 2023, with the primary sources of growth expected to come from the energy and carbonated soft drinks (CSD) portfolio, it added. The company said that it is aiming to improve its capacity utilisation by 45 percent in the coming year.

Varun Beverages reported a consolidated net profit of Rs 132 crore in the December quarter of FY24, marking a 77 percent increase from the year-ago period. The total revenue for the quarter stood at Rs 2,731 crore, reflecting a 21 percent growth compared to the same period last year.