CCI okays sale of United Spirits' Chennai unit to Enrica

The Competition Commission of India has cleared the proposed sale of a United Spirits distillery in Tamil Nadu to Enrica Enterprises, saying the deal does not raise adverse competition concerns.

The deal involves selling off the entire operations of the Poonamallee unit near Chennai of United Spirits Ltd, part of Vijay Mallya's UB Group, to Enrica "by way of slump sale on a going concern basis". The unit makes Indian Made Foreign Spirits (IMFS).

After taking over the unit, Enrica would make certain IMFS brands of United Spirits using the existing technology and brand-names.

In an order issued on Thursday, the fair competition watchdog said, "The proposed combination is not likely to have an appreciable adverse effect on competition in India, and therefore the Commission hereby approves the proposed combination.''

Negating any suspicion of cartelisation, the CCI said, ''The manufacture and sale of IMFS in Tamil Nadu is highly regulated by the Tamil Nadu State Marketing Corporation, which has the exclusive privilege of conducting trade in IMFS in Tamil Nadu. There is also the presence of a number of manufacturers of IMFS in [the state] Tamil Nadu and as already noted, EEPL (Enrica Enterprises Private Ltd) and its promoters are currently not engaged in the business of IMFS in the state of Tamil Nadu." 

Enrica is an unlisted company with its registered office in Chennai, but is currently not carrying out any business operations.

As per the details in the order, the promoters of Enrica Enterprises -- Spurthi Holdings, Viki Investments and Properties, Sree Shyam Sayi Investments and Traders -- are planning to enter into the business of manufacturing IMFS by way of the proposed deal.

The CCI had received the notice from USL on 6 December seeking approval for the proposed deal, after the USL board approved the transfer of the unit to Enrica on 8 November.