If you hand Ulgrim Sake he will cast a portal, as always his spells are somewhat errr unstable.

Here is what he says:

You allow Ulgrim the Unpleasant to examine your Sake.
Ulgrim the Unpleasant tells you, "Ugh! I hate this stuff, but I have a friend who likes it. Maybe you should drop in on him.

At the other end of the portal you will find yourself at the madman's tower... well at the top of it falling right at the madman's head =P Ulgrim was right after all!