### **Executive Summary: A Strategic Pivot from Industrial Roots to FMCG Growth** Carnation Industries Limited is currently undergoing a profound strategic transformation following its emergence from the **Corporate Insolvency Resolution Process (CIRP)** in **June 2024**. Under the leadership of the Successful Resolution Applicant (SRA), **Mr. Vikas Garg**, the company is transitioning from a legacy industrial foundry business into a diversified enterprise with a primary focus on the high-growth **FMCG beverage sector**. The company has successfully restructured its balance sheet, cleared historical liabilities through the **NCLT** process, and is now aggressively pursuing an inorganic growth strategy to establish a footprint in the alcoholic and non-alcoholic beverage markets. --- ### **Capital Restructuring & Shareholding Post-Resolution** Following the **NCLT Kolkata Bench** order dated **June 5, 2024**, the company’s entire pre-existing equity capital was cancelled and replaced with fresh equity on **November 14, 2024**. This restructuring was designed to provide the new promoter with a clear mandate to steer the company’s turnaround. **Post-Restructuring Equity Structure:** | Stakeholder | Shareholding Percentage | Number of Shares Issued | | :--- | :--- | :--- | | **Promoter (Mr. Vikas Garg)** | **90%** | **3,110,864** | | **Public Shareholders** | **10%** | **346,296** | | **Total Paid-up Capital** | **100%** | **3,457,160** | * **Listing Status:** **BSE Limited** granted approval on **March 26, 2025**, to list the new shares. Trading remains suspended pending final procedural formalities. * **Regulatory Compliance:** The company is actively working on a roadmap to restore the **Minimum Public Shareholding (MPS) of 25%** as per SEBI mandates. --- ### **The "Two-Engine" Business Model** The company is balancing the revival of its legacy assets with a capital-intensive entry into the beverage industry. #### **1. The Beverage Division (Primary Growth Engine)** The company has expanded its constitutional objects to include the **manufacturing, brewing, distilling, and distribution** of a wide range of products. To reflect this shift, the board has approved a name change to **Ebravea Beverages Limited**. * **Product Portfolio:** Includes **IMFL (Whisky, Gin, Rum, Vodka)**, beer, wine, country liquor, and non-alcoholic segments such as **energy drinks, fruit juices, and mineral water**. * **Strategic Acquisition:** On **April 12, 2025**, the company signed a **Share Purchase Agreement (SPA)** to acquire **100%** of **Oniv Beverages Private Limited** for a consideration of up to **₹5.00 Crores** via an all-stock deal. Oniv reported a turnover of **₹16.91 Crores** in **FY 2023-24**. * **Infrastructure & Ancillary:** Plans include establishing or leasing **distilleries and bottling plants**, alongside high-margin activities like **wine tourism, tasting rooms, and bars**. #### **2. Legacy Foundry Operations (Industrial Engine)** The company owns **three grey iron foundries** and **one ductile iron foundry**. While manufacturing was halted in **December 2020**, the new management is currently: * Executing **capacity restoration** and equipment overhauls. * Resuming hiring for specialized industrial roles. * Targeting the infrastructure and sanitation sectors to align with India’s goal of manufacturing reaching **25% of GDP by 2025**. --- ### **Financial Position & Fundraising Capacity** The resolution plan has effectively "reset" the company’s financial health by writing back liabilities not admitted during the CIRP. **Key Financial Metrics (Post-Resolution):** * **9M FY25 Net Profit:** **₹1.92 Crore** (supported by other income and liability write-backs). * **Q3 FY25 Net Loss:** **₹0.27 Crore** (reflecting the "ramp-up" phase and subdued production). * **Historical Context:** Prior to CIRP, the company had **eroded 100% of its net worth**, with accumulated losses of **₹1,496.46 Lacs** as of December 2023. **Future Funding Headroom:** To fund the beverage expansion, the company has significantly increased its borrowing and capital limits: * **Authorized Share Capital:** Increased from **₹7.00 Crores** to **₹35.00 Crores**. * **Fundraising Authorization:** Up to **₹150.00 Crores** via **QIP, Rights Issue, or Preferential Allotment**. * **Borrowing Limit:** Approved up to **₹250.00 Crores**. --- ### **Operational & Administrative Overhaul** * **Relocation:** The Registered Office was moved from **West Bengal to Delhi** in **November 2024** to centralize management and improve administrative efficiency. * **Systems Integration:** Post-CIRP, the company is implementing new **ERP systems** for accounting, inventory management, and procurement to replace legacy systems that were inaccessible during insolvency. * **Human Capital:** Significant recruitment is underway for **FMCG sales, logistics, and beverage marketing** professionals. --- ### **Risk Factors & Contingencies** Investors should monitor the following challenges as the company scales: **1. Regulatory & Legal Hurdles:** * **Legacy Write-offs:** Pending approval to write off a **₹17.51 Crore** trade receivable from a foreign related party (dating to 2020-21). * **Contingent Liabilities:** Outstanding disputes include **₹73.92 Lacs** with Customs authorities and **₹100.13 Lacs** in Sales Tax demands from FY 07-08. * **SEBI Penalties:** A historical penalty of **₹5 Lacs** is currently under appeal at the **Securities Appellate Tribunal (SAT)**. **2. Execution Risks:** * **Integration:** The success of the **Oniv Beverages** acquisition is critical for H2 FY 2025-26 revenue targets. * **Market Complexity:** The alcoholic beverage industry is subject to highly fragmented, state-specific taxation and licensing regimes. * **Input Costs:** Volatility in **pig iron, scrap metal, and energy prices** remains a risk for the foundry segment. **3. Macroeconomic Environment:** * While the **RBI’s 100 bps reduction in CRR** and potential repo rate cuts to **5.50%** may improve liquidity, the company remains sensitive to **food inflation** and **commodity price volatility**. --- ### **Strategic Outlook** The company’s transformation represents a high-risk, high-reward turnaround play. By leveraging the clean slate provided by the **CIRP** and the aggressive expansion into the **premium beverage market**, Carnation Industries aims to pivot from a distressed industrial entity into a modern FMCG player. Success will depend on the timely restoration of the **25% Public Shareholding** and the seamless integration of the **Oniv Beverages** acquisition.