Associated Alcohols & Breweries Ltd. — Q3 FY26

Associated Alcohols & Breweries Ltd Q3 FY2025-26 Earnings Conference Call https://www.youtube.com/watch?v=VWAW937Wf_g Published: 3 months ago

0:01 1 second Ladies and gentlemen, good day and welcome to Associated Alcohols and Breweries Limited Q3 and 9 months FY26 0:09 9 seconds earnings conference call. As a reminder, all participant lines will be in the listenon only mode and there will be an opportunity for you to ask questions 0:17 17 seconds after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star then zero on 0:25 25 seconds your Rushstone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Redisha 0:33 33 seconds from Go India Advisors. Thank you and over to you ma'am. 0:39 39 seconds Thank you. Good afternoon everyone. It's my pleasure to welcome you on behalf of Associated Alcohol and Breweries Limited. Thank you for joining us today 0:48 48 seconds for quarter 3 and 9 month FI26 earnings call. This call is being hosted by Go India Advisor. We have with us Mr. Mr. 0:55 55 seconds Anumuan Khedia wholetime director and CEO Mr. Tashar Bandari wholetime director and Mr. Dilipkumar Inani chief 1:03 1 minute, 3 seconds financial officer please note that today's discussion may include certain forward-looking statements and therefore they must be viewed in conjunction with 1:11 1 minute, 11 seconds the risk that the company faces. Without wasting much time I will hand it over to the management for opening remarks. 1:18 1 minute, 18 seconds Thank you and over to you sir. 1:22 1 minute, 22 seconds Thank you and good afternoon ladies and gentlemen. Thank you for joining us on Associated Alcohols and Breweries 1:29 1 minute, 29 seconds Limited's earnings conference call. The third quarter of FI26 marks another 1:36 1 minute, 36 seconds decisive step to forward in a journey of building a stronger more premium-led and scalable Alcov company. 1:44 1 minute, 44 seconds Anchored by a resilient and efficient manufacturing backbone. 1:49 1 minute, 49 seconds Despite delivering a softer revenue for the quarter, we delivered a strong marginled performance. 1:56 1 minute, 56 seconds Our endeavors to improve oper operational efficiency and easing of key raw material prices have led to an 2:03 2 minutes, 3 seconds expansion in a beta margins to 16% this quarter compared to 12% in the corresponding period last year. 2:14 2 minutes, 14 seconds The Indian alcob industry continues to benefit from structural tailwinds including premiumization, evolving 2:21 2 minutes, 21 seconds consumer preferences and broader consumption trends. The recently concluded EU India trade agreement 2:29 2 minutes, 29 seconds represents a con constructive development for the sector. Tariff rationalization across select imported 2:36 2 minutes, 36 seconds categories is expected to enhance competitive intensity and raise quality benchmarks across the industry. 2:43 2 minutes, 43 seconds While the company expects limited direct impact, developments are being closely monitored. 2:50 2 minutes, 50 seconds At the same time, ABL remains well placed to benefit from the evolving landscape supported by its strong 2:58 2 minutes, 58 seconds domestic brand portfolio, extensive distribution reach and price points that remain structurally insulated from imported competition. 3:09 3 minutes, 9 seconds We are aligning our portfolio and go to market strategy closely with evolving industry trends by deepening our 3:15 3 minutes, 15 seconds presence in premium segments, expanding selectively into new geographies and strengthening brand equity across categories. 3:26 3 minutes, 26 seconds During the year, the company's engagement with inbrew transition from a license arrangement to a contract 3:32 3 minutes, 32 seconds manufacturing model. As a result, IMFL license revenues associated with INRU are no longer reflected in reported 3:40 3 minutes, 40 seconds revenues which has had an impact on the top line. The contract manufacturing relationship however continues to remain 3:48 3 minutes, 48 seconds stable and ongoing. Despite this transition, the company remains confident of maintaining FI26 3:56 3 minutes, 56 seconds reported revenues broadly in line with FI25. Our core growth engines remain strong. 4:03 4 minutes, 3 seconds We continue to target 30 to 35% yearon-year volume growth aided by an improve improving brand mix and 4:11 4 minutes, 11 seconds premiumization trends. With that, I would like like to now hand over the call to Mr. Tushar Bandari, our whole 4:18 4 minutes, 18 seconds time director who will take you through our brands operations and strategic initiatives. 4:28 4 minutes, 28 seconds Thank you. Building on the strategic direction Anuban has outlined, I will take you through the performance of our proprietary brands and key growth 4:37 4 minutes, 37 seconds drivers during the quarter and the progress across our portfolio. Our proprietary portfolio continues to be 4:44 4 minutes, 44 seconds the primary engine of growth. Our iconic brand Nicobar Gin launched in 24 has gained a strong momentum in our four 4:53 4 minutes, 53 seconds market. The brand has resonated well in newly entered states like Maharashtra, Uttar Pradesh, Jarken. Capturing 5:02 5 minutes, 2 seconds evolving consumer tastes and fast growing craft spirit segments in India. 5:07 5 minutes, 7 seconds Hilloot whiskey continues to strengthen our premium portfolio with its unique flavor profile and curated positioning. 5:16 5 minutes, 16 seconds The brand is gaining traction in the key market and contributes meaningfully to our high-end whiskey offering. 5:24 5 minutes, 24 seconds Central province has maintained a healthy growth trajectory during the quarter driven by strong performance in Madhya Pradesh while expanding its 5:32 5 minutes, 32 seconds footprint into the newer markets. Our long-term objective is to build Central Province into a 1 million case brand 5:41 5 minutes, 41 seconds supported by phase geographic expansion, consistent quality and strong brand positioning. Today the brands span 5:49 5 minutes, 49 seconds central province whiskey rum and recently launched vodka enabling us to cater to consumer across the price point and categories. 6:00 6 minutes We believe central province is well positioned to evolve into the scalable and enduring brand with our portfolio. 6:09 6 minutes, 9 seconds Let me now give you update on the pipeline of our products. 6:14 6 minutes, 14 seconds Our RCD product culture remains on track for the launch in H2 FI226. 6:21 6 minutes, 21 seconds Within our prestige above portfolio, Takila and Brandy are planned for the launch in Q1 FI27. 6:29 6 minutes, 29 seconds This is deliberated and strategic decision by company to align with the launch with the upcoming state excise renewal cycle associated with the regulatory timelines. 6:40 6 minutes, 40 seconds As highlighted in the previous quarter, the company has received requisite license from the Mexican authorities 6:48 6 minutes, 48 seconds positioning ABL to be one of the first Indian company to bottle authentic tea. 6:55 6 minutes, 55 seconds Together, these launches are expected to further deepen our product portfolio and meaningful strengthening our premium offering across categories. 7:04 7 minutes, 4 seconds Our malt maturation process is progressing as planned. capacity will be primarily utilized for internal 7:13 7 minutes, 13 seconds requirement of our premium and mid-premium whiskey brands strengthening quality and long-term value creation. 7:21 7 minutes, 21 seconds During Q3 FI26, we incurred 6 cr towards the cast procurement and we will continue to procure cars as per the operational requirement. 7:32 7 minutes, 32 seconds Our centralized funible manufacturing facility continued to provide a strategic advantage through cost efficiency and operational flexibility. 7:42 7 minutes, 42 seconds Geographic expansion remains a key priority where we progressively expand our presence across high potential 7:50 7 minutes, 50 seconds states. During the quarter we entered Jarken market with our premium portfolio including Nicobar gin, titanium, triple 7:58 7 minutes, 58 seconds distilled vodka, hillfort and central province. 8:03 8 minutes, 3 seconds Charan repres represents a promising market for us and we believe our curated premium offerings are well placed to 8:10 8 minutes, 10 seconds resonate with the evolving consumer preference in the state. I will now hand over the call to our CFO 8:19 8 minutes, 19 seconds for a detailed review on the financial and operational performance for Q3 FI26. 8:28 8 minutes, 28 seconds Thank you Tushar and a good afternoon everybody. I will focus on the operational and the financial 8:35 8 minutes, 35 seconds performance for the quarter and 9 months FI26. 8:41 8 minutes, 41 seconds For Q3 FI26, net revenue from operations stood at INR 260 crores reflecting a sequential 8:50 8 minutes, 50 seconds growth of 3%. Now coming on to the profitability, gross margins for the 8:56 8 minutes, 56 seconds quarter improved to 46% versus 36% of the last quarter. This was driven by 9:04 9 minutes, 4 seconds softening of raw material prices and uptick in realization from byproducts. 9:10 9 minutes, 10 seconds We expect grain prices to remain broadly stable in the near term supporting margins. Further IITA for the quarter 9:20 9 minutes, 20 seconds was INRA 42 crores representing an increase of 73% quarter on quarterly with an IITA margin 9:29 9 minutes, 29 seconds of 16% improving by 700 basis points from Q to FI 26 profit after tax stood 9:38 9 minutes, 38 seconds at INR 27 crores an increase of 95% compared to the previous quarter 9:46 9 minutes, 46 seconds resulting in paid margin of 10% reflecting an improvement of 5% margin from previous quarter. Additionally, it 9:55 9 minutes, 55 seconds is worth noting that the company has recognized a provision of rupees 2 cr related to retirement benefits in 10:04 10 minutes, 4 seconds compliance of new labor codes for 9 months. FI26 net revenue stood at 10:12 10 minutes, 12 seconds INR 781 crores with IITA of INR 103 crores and a P of INR 65 crores 10:21 10 minutes, 21 seconds supported by IMFL proprietary volume expansion and improving margins. Now in 10:28 10 minutes, 28 seconds terms of segmental performance for 9 months FI26 IMFL proprietary volume stood at 1.77 10:38 10 minutes, 38 seconds million cases representing a growth of 32% on yearon-year basis. IMF licensed 10:45 10 minutes, 45 seconds volume stood at 1.02 million cases with a decline of 70 27% on yearon-year 10:53 10 minutes, 53 seconds basis. As mentioned previously, this was attributed largely due to change in the business scope. In terms of volume of 11:02 11 minutes, 2 seconds merchant DNA volume stood at 14.7 million lit and ethanol volumes were 25 millions lit for 9 months FI26. 11:13 11 minutes, 13 seconds On the revenue front, proprietary IMFL revenue was INR 127 crores growing at 11:20 11 minutes, 20 seconds 30% yearon-year basis while licensed IMFL revenue stood at INR 122 crores 11:28 11 minutes, 28 seconds down by 30% yearon-year basis. Merchant ENA revenue was INR 100 crores and 11:36 11 minutes, 36 seconds ethanol revenue for the quarter was INR 178 crores. Looking ahead as we roll out new products and expanding to new 11:45 11 minutes, 45 seconds markets and geographies, we remain steadfast in scaling our proprietary brands supported by prudent capital 11:52 11 minutes, 52 seconds allocation and plant capex and our focus continues to be on improving profitability, strengthening the balance 12:01 12 minutes, 1 second sheets and enhancing returns. With that, we can now open the floor for question and answer. Thank you. 12:10 12 minutes, 10 seconds Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their touchstone 12:18 12 minutes, 18 seconds telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a 12:26 12 minutes, 26 seconds question. Ladies and gentlemen, we will wait for a moment while the question q assembles. 12:33 12 minutes, 33 seconds The first question is from the line of Vine Raval from Choice Institutional Equity. Please go ahead. 12:42 12 minutes, 42 seconds Uh yeah. Hi. Am I audible? Yes. Yes. 12:46 12 minutes, 46 seconds Yes. Uh so so just a question that I had. Uh so we have we have I mean seen that the company uh you know is uh 12:55 12 minutes, 55 seconds saying uh over supply and ethanol. So what is the outlook in the demand supply gap that uh is currently there in ethanol model? 13:05 13 minutes, 5 seconds How how would the management see this going? 13:09 13 minutes, 9 seconds See uh right now what the demand what the supply of ethanol is uh is equivalent to 25% of blending of ethanol 13:18 13 minutes, 18 seconds and government has approved only 20% of the blending of ethanol. Okay. If in future the blending percentage goes up then the ethanol requirement will go up. 13:28 13 minutes, 28 seconds Actually the supply uh as we already said supply is higher than the supply is higher than the demand and um as we've 13:36 13 minutes, 36 seconds already said in our earlier uh calls as well that our primary focus and grow driver would be only and solely uh 13:44 13 minutes, 44 seconds expansion of our own proprietary brands and that's what we are primary concentrating on. 13:50 13 minutes, 50 seconds Right. Right. Sure. Uh another question that and plus to cover plus to cover plus to cover the ethanol also we are also looking at supplying it to the private parties. 14:00 14 minutes Okay. Okay. Right. Um another question that I had was on the margin front. Uh so uh on the on the uh epida margins 14:10 14 minutes, 10 seconds most of most of the uh portion of growth seems to be coming from um uh coming from the decrease in uh uh sorry the 14:19 14 minutes, 19 seconds decrease in uh sh I mean cogs basically cost of goods sold. So I mean how do you see that the margin improvement would go 14:28 14 minutes, 28 seconds ahead ahead going forward like see AITA margin EITA margin we'll try to uh the contribution from the AITA in the 14:36 14 minutes, 36 seconds AITA margin has primary as you rightly said is come from uh the softening of the raw material prices and second is 14:43 14 minutes, 43 seconds the increase of our own uh proprietary brands. So our proprietary brands have grown by around 30%. And going forward 14:51 14 minutes, 51 seconds we will see a continuous growth in those brands. So the margin would be st uh we would be looking at stabilizing uh if 14:58 14 minutes, 58 seconds the commodity prices goes up which is unlikely because we are expecting a good monsoon this year. The crop is good. Uh 15:05 15 minutes, 5 seconds which we see unlikely. So the margins would be maintained as we in the growing phase right now and 15:12 15 minutes, 12 seconds once the launch of entire portfolio. So next year there will be complete launch of the entire portfolio and the company would be ready uh for the future with 15:21 15 minutes, 21 seconds the entire premium and semi premium and popular brand portfolio. Uh post the entire run of the year we will we might see a growth in the margin. 15:33 15 minutes, 33 seconds Okay sure that answers my questions. Thank you sir. Thank you. 15:39 15 minutes, 39 seconds The next question is from the line of Shria Chhataraj from Ageless Capital. Please go ahead. 15:44 15 minutes, 44 seconds Hello sir, thank you for taking my question. So on the IMF side, uh how is the numbers going on in Maharashtra UP? 15:52 15 minutes, 52 seconds If you can give the number of volume cases that has uh like the that has been done by till 9 month FI26. 16:00 16 minutes See this is the first year when we've launched in Maharashtra. So primary the volume in cases if I say is very very 16:07 16 minutes, 7 seconds low as compared to still uh AABL is primary the volumes are dominated in the states of Madhya Pradesh and Kerala. Uh 16:15 16 minutes, 15 seconds so out of the entire volume 80 85% volume comes from Madhya Pradesh and Kerala and rest comes from the other states. Maharashtra we are slowing uh we 16:24 16 minutes, 24 seconds are growing slowly because we have to take a cautious approach because entering Maharashtra each and every uh each and every uh district requires a 16:33 16 minutes, 33 seconds huge amount of capital in terms of entry. So we are entering one particular district and concentrating and growing. 16:39 16 minutes, 39 seconds So right now only we are available in say Bombay, Tane, Pune and Nagpur. So these are the primary regions which we 16:47 16 minutes, 47 seconds have entered and the premium portfolio offering like for example Hilford and Nicobar we've just entered in uh Bombay 16:55 16 minutes, 55 seconds and uh Nagpur. So it's just so any market you enter first one year 1 to one and a half year goes in analyzing and 17:03 17 minutes, 3 seconds creating a space and creating the brand awareness to the brand associated per se and individual brands. So we are 17:10 17 minutes, 10 seconds concentrating on that and similar is the case with UP. 17:15 17 minutes, 15 seconds Uh so so uh if I if I can understand uh the it would be less than 1% in both these markets the market share and so if 17:23 17 minutes, 23 seconds if you could both the yeah sorry both the markets would be around 2%. 17:28 17 minutes, 28 seconds Okay. The market share as of now, not market share out of my entire uh Okay. Out of the entire Yeah. Got it. 17:36 17 minutes, 36 seconds And so if you could give the volume wise uh like breakdown of the cases for uh probably Central Whiskey uh Hillport and 17:44 17 minutes, 44 seconds Nicobar for all the states combined that would be really helpful. 17:49 17 minutes, 49 seconds Uh so out of the entire portfolio out of the entire um entire sales which we've done is around 17 lakh cases. So out of 17:58 17 minutes, 58 seconds the 17 lakh cases again uh on the premium side 80 to 85% is almost on the popular popular front category and the 18:07 18 minutes, 7 seconds balance 10 to 15% in the premium front category. Uh right now we are uh as we said on the call also that we are 18:14 18 minutes, 14 seconds concentrating on growing central province central province brand as per se which include central province whiskey, vodka and rum and we are trying 18:24 18 minutes, 24 seconds to make it a 1 million case brand. So that's what we are pushing on because see it's very uh in premium brand category it's very competitive so the movement would come on a slower basis. 18:35 18 minutes, 35 seconds Got it sir. And uh any numbers you can give to the number of retail touch points that you are thinking of uh like 18:42 18 minutes, 42 seconds adding into the new markets that you are entering. 18:46 18 minutes, 46 seconds So any new market we enter so every markets has got a different strategy altogether but we have to uh we have to 18:53 18 minutes, 53 seconds work on all approach that is we have to hit the customer from all the sides. Uh so for which the pillars as you rightly 19:00 19 minutes said one of the pillar is width of distribution. So width of distribution just for an example if I'm entering in tane so I will be concentrating and entering into almost 80% shops of tane. 19:12 19 minutes, 12 seconds So that's how we uh we play around uh in terms of width of distribution and visibility 19:20 19 minutes, 20 seconds as for example in up also we are going statewise because UP is a very vast state per se. So uh district wise we are entering up as well. 19:31 19 minutes, 31 seconds So uh any possibility of giving the number of volume cases that you are currently doing in this UP and Maharashtra? 19:38 19 minutes, 38 seconds Uh so UP and Maharashtra out of my entire 17 lakh cases I would be hardly doing around 20 to 25,000 cases. 19:46 19 minutes, 46 seconds Okay. Okay. Got it sir. Thank you. 19:50 19 minutes, 50 seconds Thank you. The next question is from the line of Aman Bahi from Incred. Please go ahead. 20:00 20 minutes Hi uh thank you for the opportunity. Am I audible? Yes sir. Yes sir. 20:06 20 minutes, 6 seconds Yeah. Hi sir. Uh so uh my first uh question was in the line of our uh margins. So we saw uh you know a big 20:16 20 minutes, 16 seconds uptake in uh margins uh due to raw material prices but we uh already have 20:23 20 minutes, 23 seconds exceeded our guidance as per say for uh uh IMFL pro uh proprietary uh margins we have done uh 21%. 20:34 20 minutes, 34 seconds So uh don't you think when the operating leverage kicks in uh we would be uh able to do 25% plus margins? 20:45 20 minutes, 45 seconds Uh ammon uh see as I said that is we are in the growing phase and uh our objective uh in uh Shri's answer also I 20:55 20 minutes, 55 seconds answered that today also our 85% portfolio is the popular brand category. 21:01 21 minutes, 1 second So as we are growing on the premium uh branding front and we have got immediately two other premium products lined up which is uh which is premium 21:10 21 minutes, 10 seconds brandy premium tequila and RTD. So there will be certain spends which would be required for the brand awareness in these in these product portfolio. We'll 21:18 21 minutes, 18 seconds have to do events. We'll have to do bar takeovers. So uh there'll be at least a certain amount of spend which will go there unless until these brands are 21:27 21 minutes, 27 seconds stabilized in next one to one and a half year. 21:31 21 minutes, 31 seconds Okay sir. And uh I mean in uh Maharashtra uh like you said the uh the 21:38 21 minutes, 38 seconds volumes are quite low right now. So uh what are the uh realizations are we doing there 21:47 21 minutes, 47 seconds compared to MP and Kerala in the premium product. 21:51 21 minutes, 51 seconds So in Maharashtra on average we would be doing a realization of around uh say 1,500 rupees a case whereas 22:00 22 minutes overall realization if you see ours is around 700 to 800 rupees a case overall portfolio because Maharashtra post the 22:08 22 minutes, 8 seconds MM post the MML policy uh we could not launch our central provin series per se. 22:14 22 minutes, 14 seconds So we've just launched our premium brand and uh in next uh in in the in next one one month we'll be launching our RTD and 22:23 22 minutes, 23 seconds other premium brands. So that will further increase our realization in Maharashtra. 22:29 22 minutes, 29 seconds Okay. And uh I mean on on MML like we uh uh discussed earlier is there uh any 22:37 22 minutes, 37 seconds plan for you know acquisition in states like Maharashtra or Kerala etc. 22:45 22 minutes, 45 seconds Uh so Ammon we are in a very growing phase and we are on a lookout of opportunities if it's there and uh 22:53 22 minutes, 53 seconds available in the market. So recently we came across an opportunity of acquiring a unit through NCLD route in Kerala 23:01 23 minutes, 1 second market which we have already applied for and that is uh that is going on. So if we get that unit so that'll be an 23:08 23 minutes, 8 seconds acquisition and apart from that we are also looking looking out uh in couple of one or two states in UP we have already 23:16 23 minutes, 16 seconds uh acquired land um we are in process of acquiring licenses and other thing. So we want to be we want to have at least 23:23 23 minutes, 23 seconds one or at least two to three more distilleries across India to if we want to go pan Indiaas because that will give 23:30 23 minutes, 30 seconds you better economics in that particular state because uh in India every state is a different country altogether every 23:38 23 minutes, 38 seconds state has got its import duty export duty and still the volume still the volume higher volume brands are on the 23:46 23 minutes, 46 seconds popular category only. So a company like us who is rapid who wants to grow rapidly and have a mix of popular a 23:54 23 minutes, 54 seconds popular portfolio which will give its top line and a premium portfolio which will strengthen its bottom line. We will have to have local presence also in few 24:02 24 minutes, 2 seconds of the states which are the mass consuming states. So we are definitely in lookout for opportunities. 24:09 24 minutes, 9 seconds Sure. And uh sir last uh uh question was on our ENA volumes. So they are uh in a 24:16 24 minutes, 16 seconds declining phase. So it's all because of our uh internal uh uh consumption or what's the reason for that? 24:25 24 minutes, 25 seconds Am as you rightly pointed out it's primary because our internal consumption has grown is uh is uh because of increase in our own volumes and as it's 24:35 24 minutes, 35 seconds expected to grow further we might also f in future look at increasing our ENA manufacturing capacity. We already have 24:43 24 minutes, 43 seconds sufficient amount of license capacity in place and necessary most of the necessary approvals in place. So we might also look at expanding our ENA 24:52 24 minutes, 52 seconds capacity looking into our requirements and market requirement. 24:57 24 minutes, 57 seconds Okay. Thank you. Thank you. That uh that was very helpful. Thank you. 25:01 25 minutes, 1 second Thank you. The next question is from the line of Anchel Pal from MNCL Mutual Fund. Please go ahead. 25:11 25 minutes, 11 seconds Yeah. Hi. Uh hi good after good evening sir. So uh my couple of question from my side. My first question is uh so just 25:19 25 minutes, 19 seconds wanted to understand how are we planning to scale up our proprietary brand going forward. 25:28 25 minutes, 28 seconds Achel what we doing is that uh uh we are working on a strategy in each and every state in a different manner. So one is 25:36 25 minutes, 36 seconds to increase your proprietary brand because now consumer is also quite very much aware and he's also looking for a quality product. So one what we are 25:45 25 minutes, 45 seconds doing is that we are giving value for money to the customers whichever brand we design or liquid we do is the price point is off the price point look and 25:54 25 minutes, 54 seconds feel above at what we are offering that's what we are looking into. Second is we are we are being consistent in our 26:01 26 minutes, 1 second quality. We are looking for right partners, right distributors. 26:06 26 minutes, 6 seconds And fourth and fifth most important thing is that the company is also looking at taking the right talent from the industry because this our alcob 26:15 26 minutes, 15 seconds industry is a very personalized or very relationship based industry because in most of the states the retail owners, 26:22 26 minutes, 22 seconds retail shop owners are owners who own the retail shop since couple of years. 26:27 26 minutes, 27 seconds So person who experienced so like uh our all India sales head is from who spent almost 30 to 40 years in u perno and 26:36 26 minutes, 36 seconds USL. So we are looking at good acquiring good talents and then we are uh fourth thing what we are looking at is bottoms 26:44 26 minutes, 44 seconds up approach for a popular brand and fifth what we are doing is for premiumization brand awareness where uh a customer can at least say my liquid. 26:54 26 minutes, 54 seconds So these are a couple of strategies which we are adapting on the popular front and the premium front separately. 27:01 27 minutes, 1 second Okay, understood sir. And also sir, how are our uh proprietary and partner brands performed in the newly entered 27:09 27 minutes, 9 seconds regions? And also are there any difference in customer acceptance and margins versus mature regions? 27:19 27 minutes, 19 seconds Uh see uh in certain states which we enter we get a immediate response like for example we've just entered this 27:26 27 minutes, 26 seconds quarter jarant we got a immediate very good response like in the first month we sold we sold almost 50 70 cases of our 27:34 27 minutes, 34 seconds nicobar premium ch which is considered to be very good and so we became number in the first month itself we are number 27:42 27 minutes, 42 seconds three there but obviously this is the first month itself we have to wait and watch so in certain states you get init initial good response in certain states 27:50 27 minutes, 50 seconds you it takes time for you uh to get a right kind of response and uh as India is a diverse market with different 27:57 27 minutes, 57 seconds cultures different backgrounds so same way the preferences in different states is totally different so just for example 28:04 28 minutes, 4 seconds if I take about Madhya Pradesh brandy market is hardly 1% whereas u I'm just comparing the two biggest states which 28:11 28 minutes, 11 seconds we hold and both the states are equally opposite consumer packages so mad Pradesh holds only 1% brandy market 28:20 28 minutes, 20 seconds whereas uh Kerala holds almost 70% brandy market and only 1% whiskey market. So you have to have a local 28:27 28 minutes, 27 seconds strategy in place uh in whichever market you enter. 28:33 28 minutes, 33 seconds Okay, understood. Uh and what about the margin in uh on the margin front uh like mature market versus the new regions we have entered? 28:44 28 minutes, 44 seconds So margin does not u vary much per se uh because see uh you are uh as we are in 28:52 28 minutes, 52 seconds the growing phase as I told you so initial investments more will go in developing and stabilizing a particular 28:59 28 minutes, 59 seconds brand so that's why uh it does not vary much in certain but there are certain states wherein you have to work on a 29:06 29 minutes, 6 seconds very thin margin in certain states where the initial cost of entry is substantial like for Maharashtra Maharashtra retail association is there. So you have to 29:15 29 minutes, 15 seconds give a substantial amount of discount first to enter and be available in the retail store. So every search has got different strategy altogether in Canada. 29:23 29 minutes, 23 seconds It's completely owned by the government. 29:25 29 minutes, 25 seconds So government does government has got fixed formula on which it'll be lifting. 29:30 29 minutes, 30 seconds So initial stages if you don't have volume you'll be paying higher uh higher amount to the government. So every state we have to work differently. 29:39 29 minutes, 39 seconds Okay. So understood. Thank you. Thank you. Thank you. 29:45 29 minutes, 45 seconds The next question is from the line of Tushi K Sha from Alchemy Capital. Please go ahead. Yeah. Hi. Am I audible? 29:54 29 minutes, 54 seconds Yes. Yes sir. 29:56 29 minutes, 56 seconds Yeah. Uh sir, my first question was on IMFL pro uh licensed. So you talked about Inbrew giving us a contract 30:03 30 minutes, 3 seconds manufacturing instead of us having different kind of contracts. So my first question is what is the underlying grow 30:12 30 minutes, 12 seconds that business? So excluding Inbrew how much have we grown in volume terms and revenue terms. 30:20 30 minutes, 20 seconds So see excluding Inbrew if I talk about we have got other brand which is from uh Diagio which is the brand uh Macdonald 30:29 30 minutes, 29 seconds number one u celebration rum and DSP. So these are the two brands which we are doing doing it. So the volume has grown 30:37 30 minutes, 37 seconds by around 3 to 4% in this particular product and now our concentration is to grow only our uh product portfolio. So 30:46 30 minutes, 46 seconds that's what we are working on aggressively and this is a licensing plan is only for the state of multiple 30:52 30 minutes, 52 seconds right. So sir if we can talk about this 3 to 4% growth is year on year 31:00 31 minutes uh most probably it'll be in in the same range because uh this is the leader brand in that particular category right 31:07 31 minutes, 7 seconds um yeah and then what does this quarterly if you look we have 72% growth in volume so 31:14 31 minutes, 14 seconds what would be the reason for that 72% growth in the volumes yeah so it was two 2 lakh 41,000 going 31:24 31 minutes, 24 seconds to 4 lakh 13,000 cases right no no I think uh you're talking about 31:32 31 minutes, 32 seconds IMFL IMFL licensed one second so IMF licensed in last uh Q3 31:41 31 minutes, 41 seconds we had six lakh cases which has gone down to four lakh cases four lakh but if you look at so there's a decline in 33% 31:49 31 minutes, 49 seconds right that I understood if if you look at Q2 FI By 26 the number of cases were 2 lakh 41. Okay. 31:57 31 minutes, 57 seconds Last quarter. So that has gone to 4 lakh 13. So what is the increase? Where are we getting this data from? 32:04 32 minutes, 4 seconds No no no. So prim primary primary quarter is different. Q2 is more skewed towards the whiskey and Q3 is more 32:10 32 minutes, 10 seconds primary skewed towards the rum. So the rum sale in the entire year 50% of the rum sale 50 to 60% comes in the Q3. 32:22 32 minutes, 22 seconds Okay, understood. So my second question was on mold plant. What is the capex we are doing for the mold plant? 32:29 32 minutes, 29 seconds So on a overall fund we will be doing a capeex of around about 100 crores out of which uh out of which around 60 60 65 32:38 32 minutes, 38 seconds crores we've already invested. uh and the balance which would be done would be in cast in by purchase of maturation of 32:46 32 minutes, 46 seconds cast. So uh this is uh our maturation has already started. It's been almost 2 months our maturation has already 32:53 32 minutes, 53 seconds started. Uh so probably within a year year and a half our first single malt super premium product would be available in the market. 33:03 33 minutes, 3 seconds Yeah. In one in one and a half year. 33:06 33 minutes, 6 seconds Okay. And how big do you think is this opportunity for us? 33:12 33 minutes, 12 seconds So this is a very big opportunity because uh as uh as you all are aware that uh Indian single MOS is getting 33:19 33 minutes, 19 seconds world over recognition and are doing really good and are being compared to any of the good scotches in the world. 33:28 33 minutes, 28 seconds So there's a big opportunity uh as there was uh as there was a similar case which has happened in terms of Japanese 33:35 33 minutes, 35 seconds whiskey and they proved their metal uh in terms of quality. Same is right now the phase with the Indian single moss. 33:43 33 minutes, 43 seconds So there's a huge opportunity plus it will also give us uh it will give us more more economics because right now 33:51 33 minutes, 51 seconds whatever malt we are using we are purchasing it from outside. Okay. and outside we are purchasing at a very high 33:59 33 minutes, 59 seconds cost and plus consistency is not sure of because I'm buying it from the third party in future in future in my own 34:07 34 minutes, 7 seconds brands also I will require mold as my brand grows so that will give me a better margins as well and give me a 34:15 34 minutes, 15 seconds consistency in quality which is very important right and so my third question is regarding one of the earlier participant 34:24 34 minutes, 24 seconds asked whether we'll be increasing ENA capacity right so you told that we may be increasing our capacity but I think 34:33 34 minutes, 33 seconds earlier you had me mentioned that ethanol plant can be is funible and can be used for ENA as well 34:42 34 minutes, 42 seconds yes it's required it can be done right so instead of increasing the capacity don't you think it would be better to move into a better margin 34:50 34 minutes, 50 seconds better economics business and reduce ethanol any it will be But apart from that it's not all is totally separate right now. 34:59 34 minutes, 59 seconds So we are also looking at as I said that we are also looking at acquisitions in other states as well because we need to be present in couple of states. So it 35:08 35 minutes, 8 seconds might be here or it might be somewhere else as well. 35:11 35 minutes, 11 seconds Okay understood. Thanks. Thanks a lot sir. Thank you. 35:16 35 minutes, 16 seconds Thank you. The next question is from the line of Du Shaap. Please go ahead. 35:24 35 minutes, 24 seconds Uh hi team. Thank you for the opportunity. I have three questions. 35:27 35 minutes, 27 seconds Anuban uh did I hear it right that you said that we will end the year with flattish growth on the whole year basis in your opening? 35:39 35 minutes, 39 seconds Hello. Hello. Can you hear me? Yeah. 35:41 35 minutes, 41 seconds Yeah. Hi D. Can you can you just repeat your question? 35:44 35 minutes, 44 seconds No. Uh in your opening statement, did I hear it correctly that you said that we will end the year with flattish revenue for the whole year? 35:53 35 minutes, 53 seconds Yes. Yes. compared to the last year. 35:56 35 minutes, 56 seconds Right? So that means Q4 are we saying that we will grow the revenue by more than 25%. 36:03 36 minutes, 3 seconds If I just do a rough Yeah. Yeah. Because uh we are generally Q4 is the best uh 36:12 36 minutes, 12 seconds quarter for us. So we are expecting that to okay to yeah okay understood. Uh Tusha G my next 36:21 36 minutes, 21 seconds question is on previous participant question that uh can we see some margin improvement from coming from the malt 36:28 36 minutes, 28 seconds itself uh towards the end of the next year because we will be one year into maturization and then we can use some of the mold for our own whiskey products 36:38 36 minutes, 38 seconds definitely it'll come towards the end of the next year. So right now right now uh we are using in our primary uh one of 36:46 36 minutes, 46 seconds the whiskey central province we are using one one and a half year molds. So depending on the quality if it's equivalent so we'll start using it uh in 36:55 36 minutes, 55 seconds Q4 next year in our own products and plus the single mold which we launch would be slightly would come in Q4 next year or Q1 after that. 37:06 37 minutes, 6 seconds Okay, understood. Uh and uh my last question is on ethanol. Why aren't we seeing any 37:13 37 minutes, 13 seconds benefit of the uh lower raw material prices on the ethanol side of the business? Because ethanol we are still 37:20 37 minutes, 20 seconds making only 2% a bit. So uh why aren't we seeing any raw material benefits passing on to the ethanol side? 37:29 37 minutes, 29 seconds Uh see ethanol ea ethanol ieta would be somewhere around right now should be around 6% not 2%. I was talking about 37:38 37 minutes, 38 seconds EIT. So I was just subtracting the depreciation also in that. 37:41 37 minutes, 41 seconds Okay. Eit you're talking about. Okay. So uh the thing is that obviously because the fixed cost is already there. That is the primary reason we've not seen the 37:50 37 minutes, 50 seconds major and the ethnol volume has gone down. Okay. Understood. Yeah. 37:57 37 minutes, 57 seconds Uh and Tusha G just coming back on my first question about this 25% growth on Q4. uh that will be primarily driven by 38:04 38 minutes, 4 seconds our uh RTD launch and IMF proprietary right because we still have improved base in the Q4 last year right? 38:12 38 minutes, 12 seconds Yes RTD launch proprietary and apart from that uh we might look at these two major products. Yes. 38:20 38 minutes, 20 seconds Okay perfect. Thank you so much and all the best. Thank you. Yeah. 38:24 38 minutes, 24 seconds Thank you. The next question is from the line of H from NV Alpha. Please go ahead. 38:32 38 minutes, 32 seconds Hello. Yeah. Yes sir. Please. Am I audible? Yes sir. 38:39 38 minutes, 39 seconds Yes sir. Sir uh just a small question. Uh start of the call you said that our focus is on 38:46 38 minutes, 46 seconds growing the central pro uh province which is a popular segment because there is lot of competition in the prestige. 38:56 38 minutes, 56 seconds So sir, our strategy, vision and conviction on uh uh when you say a malt 39:04 39 minutes, 4 seconds when whenever it is ready which is uh premium, how are we going to grow or 39:11 39 minutes, 11 seconds outgrow the market uh if we are not able to or uh maybe focusing less on the prestige and above as of now? 39:22 39 minutes, 22 seconds We are not focusing less on prestige and above. So it has to be a combination as I said that for a company who which is 39:29 39 minutes, 29 seconds at a growing stage would definitely need a combination of both a popular brand and a prestige and above premium brand. 39:38 39 minutes, 38 seconds So there has to be a mix of both uh because a company needs both topline and the margin contribution as well. Um our 39:47 39 minutes, 47 seconds lowhanging fruit which is there right now and which is doing really fairly well is central province entire series. 39:54 39 minutes, 54 seconds Uh central province vodka orange we launched 3 months back and has already gained a 15 to 20% market share in 40:02 40 minutes, 2 seconds Madhya Pradesh. So there has to be a volumedriven brand. There has to be one or two brands which will be a million case brand. So that's what we expect 40:10 40 minutes, 10 seconds coming out from central province and the premium premium segment which will include our our tequila our uh nicobar 40:19 40 minutes, 19 seconds gin and our premium single mod would be strategy would be totally different on the premiumization front and the expend 40:27 40 minutes, 27 seconds and and the spends also would be higher in that particular category. 40:33 40 minutes, 33 seconds Got it. So um one followup uh after one year when our these uh products are up 40:41 40 minutes, 41 seconds and running uh you you mentioned our marketing costs will go up. We'll able to maintain the same margins. I actually 40:50 40 minutes, 50 seconds you did mention about this but I missed this point. 40:54 40 minutes, 54 seconds Yeah, we'll be able to maintain the same margin. We'll be able to maintain uh we'll be able to m try and maintain the same margin uh because uh premium 41:03 41 minutes, 3 seconds products uh would not attract that much in the bottom line direct impact because in premium products initial one one and 41:11 41 minutes, 11 seconds a half year you will need a equal amount of uh spend to have that kind of visibility and awareness of the brand. 41:21 41 minutes, 21 seconds Sure. Got it there. Thank you. 41:24 41 minutes, 24 seconds Thank you. A reminder to all participants. You have pressed star and one to ask a question. 41:31 41 minutes, 31 seconds The next question is from the line of Manoj Kumar from Adinat Financial Services. Please go ahead. 41:39 41 minutes, 39 seconds Good afternoon, Prasad. 41:41 41 minutes, 41 seconds My first question was regarding My first question was regarding raw material prices. 41:48 41 minutes, 48 seconds uh what has been the average prices last quarter and what is the current price? 41:56 41 minutes, 56 seconds Uh I think in RNG you would like to highlight on the same uh last quarter our prices was around 42:03 42 minutes, 3 seconds 23,000 uh and this quarter it is around 20,000 plus. 42:10 42 minutes, 10 seconds Yes. It means this quarter we will be selling a lot of raw metal prices. 42:15 42 minutes, 15 seconds Yes. uh for this Q Q4 the prices will be stable as and regarding this regarding this trade 42:22 42 minutes, 22 seconds deal with US uh they are insisting on corn imports. Uh do you think it will have a the 42:31 42 minutes, 31 seconds effect on the corn prices in India going forward and it will be act as a sterilizer of corn prices. 42:39 42 minutes, 39 seconds uh gen see the thing is yeah please the thing is that genetically modified corn is being restricted by the Indian government per 42:48 42 minutes, 48 seconds se as of now uh because that will have a great impact the main purpose for one of the main purpose of driving the ethanol 42:56 42 minutes, 56 seconds policy or blend of ethanol was to generate income in the farmer's hand okay if genetically modified uh corn 43:04 43 minutes, 4 seconds comes into India so that will impact a lot for a company it'll be nice because probably the corn prices will go down 43:12 43 minutes, 12 seconds substantially but we'll have to wait and watch because I don't think so there's any uh clear picture on that front 43:20 43 minutes, 20 seconds regarding this EU deal what effect it will have on our company 43:27 43 minutes, 27 seconds uh see primarily talking about the EU deal if we talk about uh EU deal would not have substantial effect on a company 43:35 43 minutes, 35 seconds like us which is still primary in the popular category But obviously it'll have an impact in the premium category per se. Uh but most 43:44 43 minutes, 44 seconds of the states will compensate it probably in one way or the other and plus apart from that uh as Anuan uh said 43:52 43 minutes, 52 seconds in its opening remark that it will also increase a healthy competition and will increase will help in increasing the benchmark standards. 44:03 44 minutes, 3 seconds So everybody will have to give that kind of quality and plus apart from that we are well prepared uh uh for this uh 44:12 44 minutes, 12 seconds entire UD uh with the help of uh coming into a premium portfolio category and setting up our own mold plant. 44:22 44 minutes, 22 seconds So we are well prepared for the times to come ahead. 44:27 44 minutes, 27 seconds Mr. My next question was regarding uh can you sense any opportunity of exporting ENA to EU? 44:36 44 minutes, 36 seconds So we have already done that and we are also in process of doing it. Uh we have we've been known in the country for last 44:43 44 minutes, 43 seconds four decades uh for the quality of ENA which we manufacture. Uh so DIAO during the COVID and postcoid times have 44:51 44 minutes, 51 seconds purchased ENA from us to make sir vodka and the other products in the European markets. That speaks about the quality 44:59 44 minutes, 59 seconds and the standards of ours what we have but right now our focus is primarily on uh utilizing the ENA capacity in our own 45:08 45 minutes, 8 seconds value added product. Yes, if opportunity is there and if I get good value I'll export it which I've already been doing it earlier. 45:18 45 minutes, 18 seconds regarding SDF industries. When do you think it can be closed? The matter will be closed. Uh so the matter is still with the NCT. 45:28 45 minutes, 28 seconds So uh as soon as the NCT gives the nod uh we have submitted our bid, we've not got an approval. So as soon as we get 45:36 45 minutes, 36 seconds the approval, uh we will uh we will get it. Uh it depends on 45:43 45 minutes, 43 seconds pardon me sir. or any hearing date has been fixed for that? 45:49 45 minutes, 49 seconds No sir, not right now. I think probably in about 1 month, two months, 3 months. You know how the NCT code works. 45:57 45 minutes, 57 seconds Yeah. Thank you. Thank Thank you so much. Pleasure. Thank you. 46:02 46 minutes, 2 seconds Thank you. The next question is from the line of Anik from CR Kotari Sons and Stock Broking. Please go ahead. 46:11 46 minutes, 11 seconds I hope I'm audible sir. Yes sir. Yes Mr. Nik. Yes. 46:16 46 minutes, 16 seconds So my question is regarding to the quarter 326 revenue as compared to the previous year quarter it has dropped. Uh 46:25 46 minutes, 25 seconds and I think quarter 3 is uh quite strong for the company and quarter four as well. So can I know the reason behind the drop? 46:36 46 minutes, 36 seconds Uh Mr. Nani would like to I will throw a light on this. 46:39 46 minutes, 39 seconds Uh can you repeat again the question please? Uh so my question is regarding to the Q3 revenue which uh which is 46:47 46 minutes, 47 seconds dropped as compared to the previous year quarter and my understanding is Q3 and Q4 are both are very good quarters for the company. So I would like to know the reason behind the drop. 46:59 46 minutes, 59 seconds uh basically my one minute just follow my Q3 uh last quarter and uh Q3 current 47:07 47 minutes, 7 seconds quarter the revenues dropped mainly due to the franchisee business converted into the job manufacturing business. So 47:14 47 minutes, 14 seconds around uh the total revenue down is 56 crores from uh uh yearon-year basis and 47:21 47 minutes, 21 seconds out of that 52 cr is due to the franchising business uh of in shift to contract manufacturing business. 47:29 47 minutes, 29 seconds Okay. 47:32 47 minutes, 32 seconds And uh same question regarding to the margins. The margins went up uh but the 47:40 47 minutes, 40 seconds revenue went down. But I would like to know what uh what product drove the margins up 47:47 47 minutes, 47 seconds specifically if you can mention like two specifically. 47:50 47 minutes, 50 seconds Yes. Yes. Basically IMF proprietary band is the highest contributory uh segment 47:56 47 minutes, 56 seconds which is giving a 21% AITA margin and second is our uh IML business and then third one is a franchisee business. 48:07 48 minutes, 7 seconds These are the key drivers. First is IMF for proprietary business. 48:12 48 minutes, 12 seconds Okay. And plus apart from that the softening of commodity prices. So these have all contributed to the and we expect the same to go into the 48:20 48 minutes, 20 seconds next quarter as softening commodity prices. I think it will remain stable. 48:26 48 minutes, 26 seconds Okay. Understood. Thank you for touching on to that. My final question would be regarding working capital. you I I I 48:34 48 minutes, 34 seconds remember you mentioned uh the potential increase in the working capital for UP and Maharashtra markets. Can you 48:41 48 minutes, 41 seconds quantify the expected impact going forward FY26 FY 27 on working capital? 48:49 48 minutes, 49 seconds So we don't have any yeah right now or in the near terms uh we don't have any foresee working capital uh the uh 48:59 48 minutes, 59 seconds requirement much based on the growth we will uh deploy the working capital since we have a surplus uh fund invested in 49:08 49 minutes, 8 seconds the uh um some securities which will be converted into the working capital whenever required. 49:16 49 minutes, 16 seconds Okay. So uh can we expect to the working capital uh days to further tighten down or it will remain same to the current level? 49:26 49 minutes, 26 seconds See it will say remain remain same or slightly go up uh because as it'll completely depend on the sale in the 49:34 49 minutes, 34 seconds primary regions and the bigger regions which is Maharashtra and UP. up the payment cycle is slightly higher and 49:42 49 minutes, 42 seconds plus working capital also requires apart from our cost of product would also require the excise duty and plus uh 49:50 49 minutes, 50 seconds similar thing is the working capital might go slightly higher if the sale goes higher okay understood thank you for clarifying 49:59 49 minutes, 59 seconds the thank you thank you as there are no further 50:07 50 minutes, 7 seconds questions from the participants I Now hand the conference over to the management for closing comments. Over to you sir. 50:16 50 minutes, 16 seconds I would like to thank everyone for taking time out and joining this conference call. Uh if you have any further questions you may feel free to 50:25 50 minutes, 25 seconds get in touch with our IR agency which is Go India. Thank you for sparing your time. 50:32 50 minutes, 32 seconds Thank you. On behalf of Go India advisers that concludes this conference. 50:37 50 minutes, 37 seconds Thank you for joining us and you may now disconnect your lines. Thank you.