A company may choose to go public for one of three reasons: to raise money to fund its growth, to allow its existing investors to cash out, or to do both. There's nothing wrong with any of these, per se. But when a company that created an industry still very nascent and seemingly, has a lot of room for growth opts for the second kind of share sale, you wonder why. The company in question is Sula Vineyards, which is set to list this week after a Rs 960 crore ($116 million) flotation. And wine sales volumes are expected to rise 85% in the next five years. But this growth comes with asterisks. For one, it hinges on fickle government policies. For instance, Maharashtra, where the 23-year-old company is based, pulled the plug on a lucrative sop for wineries during the pandemic. And for all their efforts, wine producers have been unsuccessful in convincing drinkers beyond the big cities to take to wine. And the drink will continue to be a distant third, behind spirits and beer, in alcoholic beverages. Its share is a measly 1%. So, what do investors make of a company that controls half the wine market but whose IPO doesn't quite signal breakout growth?
