Distillery bought by mantri in soup

Licence cut short due to mislabelling

The city-based Rhizome Distilleries, which was recently purchased by revenue minister N. Raghuveera Reddy in a multi-crore deal, has run into trouble.

The excise department renewed the license of the distillery only for three months against one year, after certain discrepancies were found in the use of excise adhesive labels.

Official sources told this newspaper that the audit conducted in the distillery revealed that there had been shortfall in excise labels issued by the department when compared to the number of bottles manufactured by the company.

“As the firm is yet to address the audit remarks, the department issued conditional renewal only for three months,” sources said.

Meanwhile, Mr Raghuveera Reddy’s wife Sunita Raghuveer recently joined Rhizome Distilleries as a director. As per the Registrar of Companies record, the term of a new director will be up to October 2, 2014. Interestingly, Ms Sunita provided her residential address as Quarter No. 15, Ministers’ Quarters, Banjara Hills.

Sources said that the minister’s family and the original owners of Rhizome — the Rupani family — entered into a Memorandum of Understanding on sale of the company. Along with Rhizome, the minister is said to have purchased another distillery, Milano Spirits India Pvt Ltd, owned by the same group in East Godavari district.

Besides plant and machinery, Rhizome has a strong asset base including land in the industrial estate at Medchal, near the international airport in Shamshabad and East Godavari.

Though the actual amount of sale proceedings is not known, records with the Ministry of Corporate Affairs showed that the firm owned high value assets that are mortgaged to financial institutions to raise loans.