SUN Brewing (A)

Posted: 12 Nov 2007 Last revised: 21 Dec 2011

See all articles by Belen Villalonga

Belen Villalonga

New York University (NYU) - Leonard N. Stern School of Business

Raphael ('Raffi") H. Amit

The Wharton School UPENN

Date Written: November 2007


SUN Brewing is the second largest beer company in Russia, which was founded in 1992 by Shiv Khemka, his father, Nand, and his brother, Uday, as an entrepreneurial outgrowth of the Indian family's global business group. The case describes the company's unusual origins and rocky growth through a difficult and unstable business environment. The case is set in March 1999, when SUN Brewing faces a major crisis. A few months earlier, the Khemkas had been planning a $200-$400 million equity and debt offering for the company on the New York Stock Exchange, to finance major investments in the face of increased competition from international beer companies in the Russian market. However, a massive devaluation of the rouble in August 1998 has led to a 90% decline in the stock price of SUN Brewing, which is still majority-owned and managed by the Khemka family but is publicly listed on the Luxembourg stock exchange. As a result, the proposed NYSE listings have been cancelled and there is a $40 million bridge loan outstanding that now needs to be repaid.

The family is debating the merits of two main alternatives: (a) to bring in a major global beer company as a strategic partner, or (b) to stay on as controlling owners, injecting millions of dollars into the company from other parts of the family business group, and weather the storm until better terms can be expected from any outside capital provider.

The case illustrates the risks of entrepreneurship in emerging markets, and can be used to highlight the role that family business groups can play as internal capital markets, particularly in emerging economies, where external capital markets are inefficient. The case provides financial forecasts that students can use to estimate the company's funding needs, and to perform a Discounted Cash Flow (DCF) valuation of the company. The valuation can be used as an input for the decision that the Khemka family needs to make. Students also need to factor into the analysis a number of qualitative issues related to the opportunities and risks that the beer market in Russia presents for the Khemka family and for any potential partner.

The case is therefore a good fit for courses about family business, entrepreneurship, entrepreneurial finance, or international finance.

The case can be complemented with its sequel, SUN Brewing (B) (HBS 207-039), which narrates the next stage in the company's life and illustrates a very different set of issues.

Keywords: Family business, financing, growth, entrepreneurial finance, emerging markets

JEL Classification: G32, G34, G3

Suggested Citation

Villalonga, Belen and Amit, Raphael H., SUN Brewing (A) (November 2007). HBS Publishing Case No.: 207-022 Courseware No.: 207-703 Teaching Note No.: 208-074, Available at SSRN:

Belen Villalonga (Contact Author)

New York University (NYU) - Leonard N. Stern School of Business ( email )

40 West 4th Street
Suite 9-160
New York, NY NY 10012
United States

Raphael H. Amit

The Wharton School UPENN ( email )

The Wharton School
3620 Locust Walk
Philadelphia, PA 19104-6370
United States
215 898 7731 (Phone)

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