Thed erstwhile French government started the Distillery in 1916 itself, near Villianur for the preparation and supply of pure and quality Arrack to the local people in this region. Later it was shifted to Cour Chabrole (present Goubert Avenue). This Distillery run under the Distillery Department since 1916 was taken over by an incorporated Government Company in the name and style “PONDICHERRY DISTILLERIES LIMITED” from 1971-72, with the initial authorised and paid up capital of `25 lakhs wholly subscribed by the Government of Puducherry. It had its Registered office at No 1, Goubert Avenue, Puducherry.

Before the inception of this Company the Government Distillery was producing 3,000 BL (bulk litres) of Arrack per day. After the inception of the Company the capacity had been raised to 6,000 litres of Rectified Spirit per day which has further been raised to 12,000 litres of Rectified Spirit per day in 1986 after the commissioning of a Co-operative Sugar Mill at Lingareddipalayam. The Company was the only Distillery in the Union Territory of Puducherry, Producing Rectified Spirit from cane molasses through the process of Fermentation and Distillation.

Since its inception in 1971-72, this Company was consistently making operating profits and regularly paying dividends to the Government from 1985-86.

The shares of the Company are wholly subscribed by the Government of Puducherry.The Authorized Share Capital as on date is `900 lakhs and the paid-up Share Capital is `845 lakhs.
On a Public Litigation Petition 186/1996 filed by the local public on the grounds of pollution ( effluents discharged by this Distillery into the sea and the gas released from the treatment plant ), the Hon’ble Supreme Court directed the Company to close the Distillery operations there. Hence, the Company’s Distillery on the Beach road at Kuruchukuppam site in the Pondicherry town has been closed in obedience of the Hon’ble Supreme Court’s Order w.e.f. 01-05-1997. To provide continued employment to the laid-off employees of PDL numbering about 140, some steps were taken since 1996-97 to relocate this Distillery which had gone waste and unfruitful in view of stiff resistance from the general public of the areas identified at Odiampet, Narambai, Lingareddipalayam etc.

Still, after a site was identified at Ariyapalayam at RS No 144 & 145 in Villianur Commune, the Government has decided that PDL may dispense with the process of distillation and may be permitted to take up a simpler process of Blending and Bottling of Arrack in this site abandoned by M/s. ANGLO-FRENCH TEXTILES (now Pondicherry Textiles Corporation). Accordingly on request, the Government has released `300 lakhs and another `250 lakhs to establish this project. All the 140 workers and staff of the old Distillery have been redeployed in this new unit from 1997-98.

The requisite major raw material Rectified Spirit (RS), has been procured from outside Pondicherry by following the usual Excise formalities and through open Tender. The commercial production and sale of bottled and loose Arrack was effected from July 1998 from this Ariyapalayam unit. Since then the sale of Arrack in PDL is smoothly going on well. In accordance with the GO issued by the Government of Puducherry, the Company’s name has been changed from ‘Pondicherry Distilleries Limited.’ to Puducherry Distilleries Limited.