We executed a merger with a edible oils group company seeing various pros and cons of the same and named it as Aarti Oils

Contact

Share

a

Franchisee Business with United Spirits Limited (USL)

RLL entered into a Franchise Agreement with United Spirits Limited (a Diageo group company) on 23.01.2017 and thereby got the opportunity to engage with one of the esteemed organisations i.e. United Spirits Limited (a Diageo group company) under such an agreement for some renowned brands (as specified in the agreement) of the above said organization for manufacturing and marketing in the state of Rajasthan. Our scope under this agreement ranges right from the manufacturing of these brands until the sale of the same to appropriate entity.

Moreover, our operations to manage these franchisee rights, includes procurement of raw material, processing of the same at a bottling units (whether owned or tie-up units), implication of all taxation including excise duty and also any other ancillary expenses are borne by RLL only and thereafter RLL gets the finished goods in IMFL cases and then selling thereof to specified authority. In this whole scenario, the role of the USL and ours (RLL) is as Franchisor and Franchisee of the brand respectively, wherein the franchisor shall get a specific and agreed amount as royalty from the franchisee. In other words, all the financial implications of the operations pertain to RLL only.

For getting the manufacturing of IMFL done under the aforesaid arrangement, RLL went ahead to enter into Job work or principal to principal agreement with various bottlers who are possessing excise license to manufacture IMFL in their premises in Rajasthan state to enable us to manufacture franchised brands under RLL’s brand ownership. RLL has entered into agreements with three bottlers so far which are named as follow:

  1. Alwar Malt and Agro Foods Manufacturers Company Limited (AMAF), Alwar Entered into agreement with AMAF in principal to principal model wherein AMAF was holding excise license to manufacture the IMFL. Being the licensee, all the rights of purchasing, manufacturing and selling of IMFL are held with AMAF only. However, all the cost implication were on the part of RLL. Sales and purchases are retained by the AMAF and profits shall be transferred to RLL on year end. However, the AMAF shall only be getting his Job work charges in the form of Bottling Charges in whole processing. AMAF continued in aforementioned model during the F.Y. 2017-18.
  2. However, with the commencement of current financial year i.e. 2018-19, RLL went into Complete Sub-Lease Agreement with AMAF wherein the excise license of AMAF got Sub-leased to RLL along with the premises of AMAF. And therefore, now onwards, AMAF is only getting fixed Lease Rent against the premises and sub-lease of license. And all the show is managed by RLL only where under all the purchases, sales, manufacturing and all the activities are in the books of RLL only.  Sub-lease agreement with AMAF executed for a period of 15 years.
    Rajawada Breweries and Bottling Private Limited (RBBPL), Kishangarh RLL, since the inception of the operations at RBBPL, was in sub-lease arrangement model wherein the whole show is managed by RLL only and where under all the purchases, sales, manufacturing and all the activities are in the books of RLL only. However, this agreement executed little late in last F.Y. Sub-lease agreement with AMAF executed for a period of 15 years.
  3. Radico Khaitan Limited (RKL), Reengus Likewise AMAF first year arrangement, RLL again entered into agreement with RLL in principal to principal model wherein RKL was holding excise license to manufacture the IMFL. Being the licensee, all the rights of purchasing, manufacturing and selling of IMFL are held with RKL only. However, all the cost implication were on the part of RLL. Sales and purchases are retained by the AMAF and profits shall be transferred to RLL on year end. However, the RKL shall only be getting his Job work charges in the form of Bottling Charges in whole processing. RKL continued in aforementioned model during the F.Y. 2017-18 and still continuing in this year as well. In such way, all the sales and purchases pertain to RLL only being the brand owner of franchised brands.