Fratelli Vineyards Ltd — Q3 FY26

Fratelli Vineyards Ltd Q3 FY2025-26 Earnings Conference Call https://www.youtube.com/watch?v=6hlOMkO9ypg Published: 2 months ago

0:00 Ladies and gentlemen, good day and welcome to the Q3 and 9 months FY26 earnings conference call for Fratelli 0:08 8 seconds Vineyards Limited hosted by Go India Advisers. As a reminder, all participant lines will be in the listenon mode and 0:16 16 seconds there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during this conference call, please 0:23 23 seconds signal an operator by pressing star then zero on your Touchstone phone. Please note that this conference is being recorded. I would now like to hand the 0:32 32 seconds conference over to Miss Readish Sha from Go India Advisors. Thank you and over to you ma'am. 0:39 39 seconds You good afternoon everyone and welcome to Pratelli Vineyards Limited earnings conference call to discuss quarter 3 and 0:46 46 seconds 9 month FI26 results. We have on the call Mr. Gorovi chairman and managing director, Mr. Adaty Sakri, director, Mr. 0:55 55 seconds Mr. Rajesh Gur, Chief Financial Officer and Mr. Hmed Aurora, Chief Business Officer. We must remind you that the discussion on today's call may include 1:03 1 minute, 3 seconds certain forward-looking statements and must be therefore viewed in conjunction with the risk that the company faces. 1:09 1 minute, 9 seconds May I now request Mr. Goravi to take us to the company's business outlook and the performance subsequently to which we will open the floor for Q&A. Thank you and over to you sir. 1:23 1 minute, 23 seconds Thank you. And uh good afternoon everyone. Am I audible? Okay. 1:29 1 minute, 29 seconds Uh sir, I would request you to come a little closer to the microphone. Is it better now? 1:35 1 minute, 35 seconds Yes sir, much better. Please go ahead. 1:38 1 minute, 38 seconds A warm welcome to all of you joining us for the Q3 and the 9month FI26 earnings conference call of Fatelli Vineyards. I 1:47 1 minute, 47 seconds hope you've had an opportunity to review our financial results and the investor presentation uploaded on the exchange. 1:55 1 minute, 55 seconds Let me begin by sharing some highlights from the quarter. In Q3, we recorded a 2:02 2 minutes, 2 seconds healthy growth in revenue along with an improvement in margins. This performance was supported by our evolving product 2:11 2 minutes, 11 seconds mix and continued momentum in the luxury segment which remains a very important part of our business. During Q3 FI26, 2:19 2 minutes, 19 seconds the luxury uh segment uh delivered a revenue growth of 13%. 2:26 2 minutes, 26 seconds For the 9-month period, the segment recorded a revenue growth of 20% reflecting continued strength and healthy demand in this category for our 2:35 2 minutes, 35 seconds bands. Within this segment, our flagship brand continued to perform extremely well. Janu delivered a very strong 2:43 2 minutes, 43 seconds growth reporting 34% growth during the quarter and 53% growth on year-to-ate 2:50 2 minutes, 50 seconds basis. Sete also maintained excellent progress with Q3 growth of 5% and 2:58 2 minutes, 58 seconds year-to- date growth of approximately 10%. 3:02 3 minutes, 2 seconds These brands continue to enjoy a strong consumer acceptance and remain central to our portfolio. The premium and above 3:10 3 minutes, 10 seconds uh category remains a key topline contributor for the 9 month. This segment contributed approximately 73% of 3:19 3 minutes, 19 seconds our revenue reflecting our consistent focus on high value offerings. In line with this approach, we launched Fidelli 3:28 3 minutes, 28 seconds Brute during the quarter, strengthening our presence in the super premium sparkling wine segment. This product 3:35 3 minutes, 35 seconds strongly supports our long-term premiumization strategy. With this product, we are targeting iconic Horeka 3:43 3 minutes, 43 seconds accounts as well as platinum and gold retail outlets across India. 3:48 3 minutes, 48 seconds We also mark an important milestone for set which completes 15 years to this 3:55 3 minutes, 55 seconds year. The to commemorate the occasion we introduced a limited edition collector's bottle in collaboration with Manish Malhotra one of India's top designers. 4:08 4 minutes, 8 seconds Sete has always stood for structure, depth and aging potential and this edition celebrates the journey of one of our flagship labels. 4:18 4 minutes, 18 seconds Alongside our premium and luxury initiatives, we continue to expand our offerings in the value segment. The F7 4:25 4 minutes, 25 seconds port wine launched in Maharashtra with plans for rollout in other states is also going well. Our Pino Noir 4:35 4 minutes, 35 seconds introduced in July 2025 has shown very encouraging trends uh doubling in sales 4:43 4 minutes, 43 seconds by December and now reaching close to 1,600 outlets. Our ready to drink portfolio continues to deliver good 4:52 4 minutes, 52 seconds momentum. Shotgun is seeing very good market traction with distribution now 4:58 4 minutes, 58 seconds expanding to 18 states and the pan India WD of approximately 7,000 outlets. The 5:06 5 minutes, 6 seconds brand continues to gain visibility particularly across tier 2 tier three markets. 5:12 5 minutes, 12 seconds We remain confident of reaching close to 100,000 cases by the uh year end uh uh 5:22 5 minutes, 22 seconds in on 31st March 26. The RTDs are clearly emerging as an important growth driver for us. Domestically, we also 5:31 5 minutes, 31 seconds added three new SQUs including Tilt to the C portfolio which remains to be a 5:38 5 minutes, 38 seconds very important part of our business. um uh and and Fatelli is continuing to see 5:45 5 minutes, 45 seconds very good acceptance of our wines in the CSC. On the international front, our presence has now expanded to 13 5:53 5 minutes, 53 seconds countries and more importantly the exports have doubled this year compared to previous previous years. 6:01 6 minutes, 1 second Let me briefly touch upon the harvest. 6:03 6 minutes, 3 seconds We always take pride in the fact that we are agriculturists and farmers first and wine makers second. 6:11 6 minutes, 11 seconds Harvest 2026 has been encouraging for us despite heavy rains during the season. 6:18 6 minutes, 18 seconds The vineyard performance will be strong and it has delivered good yields and more importantly very good quality grapes. 6:29 6 minutes, 29 seconds The quality of wines produced will be to our uh uh uh uh to our uh uh you know uh 6:38 6 minutes, 38 seconds delight. They will they will be of of a quality and standard that we can be proud of and will deliver the best 6:47 6 minutes, 47 seconds experience possible at every price point. Let me now address an important industry aspect. the India EU free trade 6:55 6 minutes, 55 seconds agreement which has been a key topic of discussion across the domestic wine sector as outlined under the current 7:02 7 minutes, 2 seconds framework India's prevailing import duties on European wines are expected to reduce in a phased manner the initial 7:10 7 minutes, 10 seconds reduction is likely to bring duties down to around 75% with rates gradually easing over a 7:16 7 minutes, 16 seconds period of time to 20% for premium mines and 30% for mid-range change wines. 7:24 7 minutes, 24 seconds Importantly, this this adjustment is designed to unfold gradually over several years rather than creating any 7:31 7 minutes, 31 seconds immediate disruption. It is reasonable to expect that these changes could narrow the price gap between imported 7:38 7 minutes, 38 seconds European wines and local locally produced brands in certain categories. 7:43 7 minutes, 43 seconds This has naturally raised questions within the industry particularly given the aspirational appeal of the imported 7:50 7 minutes, 50 seconds wines. um you know uh that gives them a natural advantage uh over the domestically produced wines. 7:59 7 minutes, 59 seconds At the same time, it is important to recognize that the duty concessions apply only to wines imported above a minimum CF price of €2.5 per bottle. 8:11 8 minutes, 11 seconds Wines below this price band which represent a significant portion of Indian wines will continue under the 8:20 8 minutes, 20 seconds existing duty structure of 150%. In practical terms this means that a large part of the domestic market remains 8:28 8 minutes, 28 seconds insulated from the immediate tariff uh reduction within the premium categories. 8:35 8 minutes, 35 seconds Competitive intensity may increase over time. However, Indian mind makers have already been responding to evolving 8:43 8 minutes, 43 seconds consumer preferences by steadily moving up the value chain. At Fidelli, this shift is clearly visible in the growing 8:50 8 minutes, 50 seconds contribution of our premium and luxury portfolio where we continue to see encouraging demand as consumers 8:58 8 minutes, 58 seconds increasingly trade up to higher quality offerings. 9:03 9 minutes, 3 seconds While important brands may benefit from a gradually narrowing price differential, long-term competitiveness in the wine industry is rarely 9:11 9 minutes, 11 seconds determined by pricing alone. For Fatelli, product quality, brand strength, consumer trust, and innovation 9:18 9 minutes, 18 seconds remain equally decisive factors. We already have some validation of this 9:25 9 minutes, 25 seconds through our brands like Janoon and Sete which are priced at 2 and a half,000 rupees for Sete and approximately 4,000 9:33 9 minutes, 33 seconds rupees or 4,000 rupees for Jaloon which are continued to go very very strongly in the Indian market. 9:44 9 minutes, 44 seconds The full impact of the EU FDA is expected to unfold progressively over the coming years. We will continue to 9:51 9 minutes, 51 seconds monitor developments closely as market dynamics evolve. At the same time, broader category development and 9:58 9 minutes, 58 seconds increased consumer participation in wine can serve as a positive long-term driver for the industry, including for domestic producers. 10:08 10 minutes, 8 seconds One important update in the hold core level fertelli vineyards we have taken a one-time write off of 10:16 10 minutes, 16 seconds approximately 5 crores to settle a long overdue receivable by realizing 10:22 10 minutes, 22 seconds approximately 4 crores. Post this total re receivables remaining are only 10:30 10 minutes, 30 seconds approximately 50 lakhs in the old core and the same will be recovered within FI26. 10:37 10 minutes, 37 seconds To conclude, we see encouraging traction across our portfolio and remain confident of sustaining this m momentum. 10:46 10 minutes, 46 seconds Growth in FI27 will be supported by our expanding RTD business, continued strength in luxury brands and upcoming product launches. 10:58 10 minutes, 58 seconds I now pass on to Adita to please update uh regarding some operating highlights of the business. 11:07 11 minutes, 7 seconds Good afternoon everyone and thank you for joining us. Let me briefly walk you through our performance for the quarter and the 9 month period. Starting with Q3 11:15 11 minutes, 15 seconds FI26, we recorded net revenue from operations of 65 crores, reflecting an 8% growth compared to Q3 FI25. 11:24 11 minutes, 24 seconds This growth was supported by strong performance in the luxury segment and also with the artery which we've launched this year. Gross profits for 11:32 11 minutes, 32 seconds the quarter stood at 48.8 crores compared to 45 for the last year. Uh gross margins came in at 76% broadly 11:40 11 minutes, 40 seconds stable yearon year with marginal variations largely reflecting product mix dynamics. It picked up as a quarterly increased to 5.5 crores from 11:49 11 minutes, 49 seconds 1.6 crores in Q3 FI25 with margins improvement to 8.6%. 11:55 11 minutes, 55 seconds This improvement was driven by operating leverage discipline cost management and savings in electricity expenses following our solar installations. 12:02 12 minutes, 2 seconds At the profitability level, profitability level, we reported a positive PBT of u roughly 0.1 cr compared to a loss in the corresponding 12:11 12 minutes, 11 seconds period last year. Pat also turned positive reflecting stronger operating performance. For the 9 months period, revenue stood at 147 crores 12:19 12 minutes, 19 seconds approximately broadly in line with last year though marginally lower. The software performance during the first half was largely due to regulatory 12:27 12 minutes, 27 seconds disruptions in certain markets like Maharashtra, Utratan and Selena. 12:31 12 minutes, 31 seconds In selling sales are temporarily impacted by expiry of retail licenses with fresh licenses issued in December. 12:38 12 minutes, 38 seconds Normalization is underway and we expect improved momentum in Q4 FI26. 12:44 12 minutes, 44 seconds Similarly, Utakhan witnessed an impact following changes in its excise policy where sales are now restricted to imported products for those manufactured 12:51 12 minutes, 51 seconds within the state for departmental stores which contributed to a large part of our sales previously. Gross margin for the 12:58 12 minutes, 58 seconds 9month period remained healthy at 78% though slightly lower year-on-year reflecting reflecting product mix variations and EITA for the period stood at 4.7 CR. 13:09 13 minutes, 9 seconds During the quarter we remain focused on strengthening our brand through targeting targeted investments in the RTD launches rebranding initiatives and collaborations designed to enhance 13:18 13 minutes, 18 seconds long-term growth. Depreciation and finance costs were higher during the period driven by the commissioning of new assets and borings undertaken for 13:25 13 minutes, 25 seconds capacity expansion. This represents strategic investments that position the company for future scale and efficiency 13:32 13 minutes, 32 seconds gains. For 9 months FI26, we incur a total capex of approximately 10 crores primarily towards vineyard infrastructure and plant and machinery. 13:43 13 minutes, 43 seconds These investments are aimed at strengthening our future at NEX. Going forward, our emphasis remains on strengthening operating leverage, impro 13:50 13 minutes, 50 seconds improving efficiencies and extracting greater value from the existing infrastructure that we hold right now. 13:56 13 minutes, 56 seconds With improved scale and product mix, we expect these efforts to continue supporting operating performance. 14:02 14 minutes, 2 seconds Felli today operates with a diversified portfolio of over 50 SQS spanning all relevant wine categories of reds, 14:09 14 minutes, 9 seconds whites, roses, sparkling wines, and the RTD sector now and reaches every relevant price point. across all demographics. 14:18 14 minutes, 18 seconds These offerings combined with a pan India presence across more than 30,000 touch points now and exports to over 13 countries provide resilience in multiple 14:26 14 minutes, 26 seconds growth levers. In relation to the evolving EU FDA framework, the full impact is expected to unfold progressively over time. Management 14:34 14 minutes, 34 seconds continues to monitor the situation closely. 14:37 14 minutes, 37 seconds Portfolio strength, brand uh brand positioning, product quality and distribution reach will remain key determinants of competitiveness as the 14:44 14 minutes, 44 seconds industry landscape evolves. Despite near-term regulatory challenges, the underlying business fundamentals remain stable. Key segments continue to perform 14:53 14 minutes, 53 seconds well, cost efficiencies are improving and the operating environment is showing signs of normalization. Now, thank you and we can now open the floor for more questions. 15:03 15 minutes, 3 seconds Thank you. We will now begin the question and answer session. 15:07 15 minutes, 7 seconds Anyone who wishes to ask a question may press star and one on their touchstone telephone. If you wish to remove 15:15 15 minutes, 15 seconds yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a 15:22 15 minutes, 22 seconds question. Ladies and gentlemen, we will wait for a moment while the question Q assembles. 15:32 15 minutes, 32 seconds Our first question comes from the line of Chetan from systematics group. Please go ahead. 15:39 15 minutes, 39 seconds Yeah. Hi sir. Uh thank you for the opportunity and congratulations on the improved performance. Uh firstly I had a few questions on our uh statewise 15:48 15 minutes, 48 seconds business. So you have highlighted Telangana license expiry impacted H1. Uh how big would Telangana be for us in terms of say uh revenue or volume share? 16:02 16 minutes, 2 seconds So telling approximately is um still despite all the challenges that I've had they have been roughly about 16:11 16 minutes, 11 seconds you know can you confirm the 11% right this is 15% 15 just give us a second we'll just confirm 16:19 16 minutes, 19 seconds this please yeah yes yeah so roughly the contribution was about 15 crores for the year 16:26 16 minutes, 26 seconds okay okay and what would be uh say a revenue contribution from a top three states and which would these three 16:33 16 minutes, 33 seconds states be? So we've always given our mix regionally uh and not at the state level but um as selling has been a challenging 16:41 16 minutes, 41 seconds aspect we have mentioned that but the regional mix roughly for us is about 25% from the northern markets uh roughly about 25% from south 20% from 16:50 16 minutes, 50 seconds Maharashtra and the west block and the balance coming from east and defense okay okay got uh and sir last a couple 16:59 16 minutes, 59 seconds of questions on the India UFTA uh so do you expect some increased compet tradition from the European labels in 17:06 17 minutes, 6 seconds the say 1,500 rupees plus price bands and if you can highlight uh what portion of a portfolio will be in this price band. 17:14 17 minutes, 14 seconds Hi Goro Safi here. See uh our map shows that um a wine which is at 2 1/2 uh euro 17:23 17 minutes, 23 seconds per bottle um even with the new FDA regulations kicking in um you know it will land on Indian shelves closer to 17:32 17 minutes, 32 seconds 2,000 rupees retail. Uh that's point one. 17:36 17 minutes, 36 seconds Now we do have uh our brands like Sete and Janu which currently price uh themselves higher than this sort of 17:43 17 minutes, 43 seconds cutoff number. Um and I had mentioned in my opening remarks that we have seen excellent growth in both of them in this 17:51 17 minutes, 51 seconds financial year. So I think you know uh with European wines becoming even 17:58 17 minutes, 58 seconds slightly more competitive um will only make consumer awareness higher for for good quality wines and our wines like 18:06 18 minutes, 6 seconds Sat and Janu can compete with the best in class. um and the response and repeats and recognition those brands are 18:14 18 minutes, 14 seconds seeing. I am not overly concerned for these two brands at least. I cannot speak for you know the other competian competition. 18:24 18 minutes, 24 seconds Right. Right sir and sir we too will also get say better access now to EU markets right in terms of exports. 18:33 18 minutes, 33 seconds Yes, I believe that will benefit us as well. But the export of our wines is a very small part of our overall business 18:41 18 minutes, 41 seconds and you know for the foreseeable future I think it will remain. So so yes it will you know uh improve our ability 18:50 18 minutes, 50 seconds also to sell wines there but uh Indian wines you know will always be competing with 50 80 different countries for shell 18:58 18 minutes, 58 seconds space. So it will remain to be a small contributor not enough to to matter frankly. 19:05 19 minutes, 5 seconds Right. Got it. Got it. Yeah. Thank you sir. Thank you and all the best. Thanks. 19:12 19 minutes, 12 seconds Our next question comes from the line of Girish Kumar from Valpro. Please go ahead. Uh sir am I audible? 19:20 19 minutes, 20 seconds Yes please go ahead. 19:22 19 minutes, 22 seconds Uh sir I have few question. My first question is could you help us understand the gap between your healthy gross profit margins and the relatively lower 19:30 19 minutes, 30 seconds AIA? What are the primary factors impacting uh this uh conversion? 19:38 19 minutes, 38 seconds See uh uh our our most of the costs are you know in line uh with with some of 19:46 19 minutes, 46 seconds our competition to the best of our ability the ones whose records are available publicly for us to compare um 19:54 19 minutes, 54 seconds uh things like uh cost of goods etc are very much in check. We do tend to spend more in brand uh building and brand 20:03 20 minutes, 3 seconds investments versus competition. we are at around 8% of our top line. I think 20:09 20 minutes, 9 seconds that is one uh key factor. Uh also I think the some of the promotions that we 20:16 20 minutes, 16 seconds do to trade also are are a little bit on the higher side higher than where we wish to see them but that is a function 20:24 20 minutes, 24 seconds of you know as your brand builds and develops you one can control those expenses better. So we are still a very young brand. I think we are maybe 20:32 20 minutes, 32 seconds another one two years away from our ability to do that. 20:37 20 minutes, 37 seconds My second question is uh so can you share insights on the positioning of your premium brand? Uh what is uh its 20:45 20 minutes, 45 seconds its current contribution to overall revenue and what the growth trajectory do you see in the future? 20:51 20 minutes, 51 seconds So so premium and above brands contribute more than 70% of our revenue. 20:55 20 minutes, 55 seconds Uh that's been the case uh for us for quite some time and will continue to remain the same. uh the premium and the super premium segment for the 9 month 21:03 21 minutes, 3 seconds period uh for us saw a moderate decline um it was roughly approximately around 10% uh for a year and that was mainly as 21:11 21 minutes, 11 seconds I had mentioned earlier led to a lot of um regul regulatory aspects through the 9 month period however if you see for quarter 3 this has been uh normalized 21:20 21 minutes, 20 seconds and it it saw a much larger recovery uh with a 1% growth for the quarter 3 and uh sir could you break down your revenue by distribution ution channel. 21:30 21 minutes, 30 seconds We are I'm particularly interested in understanding how your hotel restaurant and cafe channel performs compared to your competitors to launch presence in this segment. 21:41 21 minutes, 41 seconds So for us it's uh roughly 65% coming in from the retail channel and 30 35% coming from the on-rade channel. This is 21:48 21 minutes, 48 seconds for our bottles business. However, with the launch of Shotgun, our retail contribution now will continue to rise uh and go north of 70% uh in the subsequent year. 21:59 21 minutes, 59 seconds And sir, my last question is uh after that I'll go back to the queue. So what percentage of your total revenue comes from the vineyard stay and hospitality experiences? 22:09 22 minutes, 9 seconds Hi Gorovi here. That's a very small part of our business because we at the moment only have a four bedroomedroom property 22:18 22 minutes, 18 seconds uh at our vineyards uh which when we are not using for our own use because you know we have our wine makers and 22:24 22 minutes, 24 seconds visitors from Italy uh quite often then we offer it into the market. Um so it's a very very small component you know it's it's only four rooms. 22:36 22 minutes, 36 seconds Okay sir I I'll go back to the queue and come back again after some time. Okay. Thank you. Thank you sir. 22:42 22 minutes, 42 seconds Thank you. The next question comes from the line of Majid Ahmed from Pinpoint X Capital. Please go ahead. 22:52 22 minutes, 52 seconds Yes. Please go ahead. 22:54 22 minutes, 54 seconds Yes sir. Uh sir my first question is how should we think about the data margins going forward and what are structural givers to support further influences? 23:05 23 minutes, 5 seconds Uh see we are uh at a business I think at an inflection point uh where you know 23:13 23 minutes, 13 seconds a business uh has reached a certain size uh whereby it will it will reach uh uh 23:20 23 minutes, 20 seconds you know a net net uh break even um uh you know within the coming year. uh uh so I 23:30 23 minutes, 30 seconds believe uh going forward you can you can expect fertelli to operate at around u 23:38 23 minutes, 38 seconds you know maybe around 12 10 to 12% margin is can 23:44 23 minutes, 44 seconds be expected in the immediate future so can we expect fi 27 23:52 23 minutes, 52 seconds yes that's right okay uh sir Then what is the go to market strategy for fetic brute and 24:00 24 minutes excellent 4 point in terms of target consumer segment and geographical focus? 24:06 24 minutes, 6 seconds Your your voice is a bit muffled. Can you please repeat? I I we are not fully getting your your question. 24:18 24 minutes, 18 seconds Well sir now you can attempt again. Sure. 24:23 24 minutes, 23 seconds Yeah. Yes sir. So what is the go-to market strategy for read and f7 portwine in terms of target customer segments and geographic focus? 24:34 24 minutes, 34 seconds So so both are completely different uh products and in completely different segments. Uh the F7 the Fideli brute was 24:42 24 minutes, 42 seconds launched uh at a 1500 rupee price point with uh state-of-the-art packaging with a clear goal to increase our presence in the super premium segment which is 24:50 24 minutes, 50 seconds between,000 and 2,000 rupees. uh given that there's still a lot of potential for us to increase our market share in that segment. The F7 which is a port 24:58 24 minutes, 58 seconds wine which was launched at approximately 280 rupees in Maharashtra has a clear uh view for us which is to increase our penetration in tier 2 and tier three 25:06 25 minutes, 6 seconds cities and grow our base there in the economy segment. 25:12 25 minutes, 12 seconds piece. Sir, are we targeting South Indian market for these wines? Are we like Picherry, Gova or Kerala any kind of yoga? 25:23 25 minutes, 23 seconds So, so, so Fatelli has a very strong presence in uh all the southern markets. 25:27 25 minutes, 27 seconds Um uh so the product that you have mentioned in the new excise for excise year that we will see right now, we will see these products getting registered there as well. 25:38 25 minutes, 38 seconds Okay sir. So finally sir, how should we think about uh and investments as a percentage of sales over the medium term? 25:46 25 minutes, 46 seconds Do we see it normalizing between 7 to 8% over the next years? That's that's the plan. Okay. Sir, uh thank you sir. Thank you. 25:56 25 minutes, 56 seconds All the very best. 25:58 25 minutes, 58 seconds Thank you. The next question comes from the line of Rajir Tanden from Ventura Securities. Please go ahead. 26:07 26 minutes, 7 seconds Uh hi sir. Uh so my questions were that uh first of all could you provide an update on the 26:15 26 minutes, 15 seconds harvest uh this year? How was the performance and what specific measures have been implemented to safeguard and 26:23 26 minutes, 23 seconds enhance the grape quality to support the premium positioning strategy? 26:30 26 minutes, 30 seconds Hi Korab Sri here. The harvest is progressing well. Uh so far the yields 26:37 26 minutes, 37 seconds and the quality looks good. This was part of my opening remarks. Um you know we have been at it now for almost 17 18 26:46 26 minutes, 46 seconds years. So there is a lot of experience in house now uh to deal with the with the variables. This year the big 26:54 26 minutes, 54 seconds variable being you know very high amount of rain so lot of extra humidity. uh but you know our our team has done an 27:02 27 minutes, 2 seconds excellent job in uh managing that and uh like I said we are in the middle of harvest and things are progressing well. 27:11 27 minutes, 11 seconds Okay. So my next question would be uh with the aspirational positioning of European wines in the Indian market and 27:18 27 minutes, 18 seconds the India EU duty uh reductions what do you think uh the volumes would be for 27:25 27 minutes, 25 seconds fertility how it will be affected the pricing strategy and the competitive positioning so we've already given some clarity on 27:34 27 minutes, 34 seconds the FDN and its impact in our opening remarks but um I'll just get into a little more detail the luxury category 27:41 27 minutes, 41 seconds which will see an impact eventually in a phased manner um is above 2 2,000 rupees um as we had mentioned u with the FDA 27:49 27 minutes, 49 seconds coming into play for us our revenue contribution from all our products in the luxury category are only roughly 7% 27:56 27 minutes, 56 seconds uh of our overall revenue so while there is a challenge in that segment and there will be more competitiveness we are also 28:04 28 minutes, 4 seconds growing the fastest in that segment since we have been the front runners in establishing very high quality products for a very long period of time. Uh so 28:13 28 minutes, 13 seconds while the market will get more competitive in that 2000 plus MRP space, we still see very very strong growth momentum and Indian consumers getting 28:20 28 minutes, 20 seconds more informed towards better quality wines coming into play. 28:25 28 minutes, 25 seconds And do you see any possibility of state governments introducing any additional duties or levies on imported vines to safeguard the domestic producer? 28:36 28 minutes, 36 seconds So I think it's been established the the plan going ahead. Of course, a lot of these things will play progressively over the next one year and then get phased out over the next 5 years. But 28:46 28 minutes, 46 seconds for the time being, what's been created is is what we are uh keeping into account as well. 28:51 28 minutes, 51 seconds Okay, thank you for your responses and best of luck going forward. Thank you. 28:59 28 minutes, 59 seconds The next question comes from the line of Harsha Maheshwari from Inved Research. Please go ahead. 29:07 29 minutes, 7 seconds Am I audible? Yes sir. 29:11 29 minutes, 11 seconds Okay. Thank you for the opportunity. So my first question is on the fine. So could you share an update on the progress of your 29:19 29 minutes, 19 seconds Sorry to interrupt Harita. Your your voice is muffled. Could you please use your phone you know on handset mode in case if you're using any handsree. 29:28 29 minutes, 28 seconds Yeah just Hello. Now it's audible. Yes. Much better. 29:33 29 minutes, 33 seconds Okay. So uh could you share an update on the progress of the wine tourism initiative and the key milestone 29:39 29 minutes, 39 seconds achieved so far and what timeline should be factored in for project completion and what kind of revenue potential or 29:48 29 minutes, 48 seconds margin profile could this segment generate once stabilized. 29:54 29 minutes, 54 seconds Hi Boro Sikri here on the hospitality front we are we have signed a term sheet with an operator. uh we are now 30:02 30 minutes, 2 seconds negotiating a definitive agreement and working on you know other plans for u you know making the funds available as 30:10 30 minutes, 10 seconds well as the design parallelly um I I think it'll be a bit premature I would prefer to wait and tell you the 30:18 30 minutes, 18 seconds timelines um you know in the next one or two quarters uh but we have signed a term sheet we are progressively working 30:26 30 minutes, 26 seconds towards uh you know towards a definitive agreement as well as the design and the and the funding. 30:35 30 minutes, 35 seconds Uh what is the revenue potential margin profile for that segment? Can you 30:42 30 minutes, 42 seconds margin profile? It will be very similar to a typical hospitality business. Uh our positioning is going to be for a uh 30:51 30 minutes, 51 seconds for a luxury resort. Uh not large. We are not looking to build beyond 40 keys. 30:58 30 minutes, 58 seconds Um so commensurate with that size of course with the added benefit of our ability to be able to uh you know do 31:07 31 minutes, 7 seconds Xeller door sales of wine uh which is an attractive part uh of this uh business beyond beyond just a typical hospitality 31:15 31 minutes, 15 seconds P&L is the opportunity we get as a wine maker to to sell wines at Salelador that 31:23 31 minutes, 23 seconds is very profitable. uh as well as u the opportunity to brand build which you know which is also very good. So those are the added benefits. 31:35 31 minutes, 35 seconds Okay, got it. Um my other question is on short girl. So within short girl what is your current market solutioning and 31:42 31 minutes, 42 seconds share in the relevant categories? Uh how much we are allocating towards advertising and promotion and what key 31:50 31 minutes, 50 seconds initiative are planned to scale the brand and further? 31:54 31 minutes, 54 seconds So shortgun uh was launched uh right towards the end of FI 24225 uh and has now progressed to being available in 32:02 32 minutes, 2 seconds approximately 18 states as I've mentioned. Uh the the monthly run rate uh and some of those statistics exactly of the progress I'd be happy to share 32:10 32 minutes, 10 seconds once the financial year has ended. But as I mentioned we're on track to hit 100,000 cases with a revenue contribution of more than 20 CR by by of 20 CR by year end. 32:23 32 minutes, 23 seconds Okay. Thank you. 32:26 32 minutes, 26 seconds Thank you. The next question comes from the line of Deepali Kumari from ACML Capital Markets. Please go ahead. 32:36 32 minutes, 36 seconds Am I audible? Uh no Deepali. Yeah. Now am I audible? Yes, please go ahead. 32:44 32 minutes, 44 seconds Okay. Thanks for the opportunity. Uh could you tell your perspective on the overall outlook for the Indian wine 32:52 32 minutes, 52 seconds industry? How has it evolved over the past few years? 32:55 32 minutes, 55 seconds Sorry to interrupt. Your voice is breaking. 32:58 32 minutes, 58 seconds Your voice is breaking. Could you please change your location? 33:07 33 minutes, 7 seconds No, no, you're you're not audible. Yeah. Am I audible? Yes, please go ahead. 33:16 33 minutes, 16 seconds Yeah. Okay. Okay. So I have a few questions like could you share your perspective on the overall outlook for the Indian wine 33:24 33 minutes, 24 seconds and your voice is still not audible. Uh Deepali I would request you to fall back 33:32 33 minutes, 32 seconds into the queue uh you know move to the next part. 33:35 33 minutes, 35 seconds Thank you. We take the next question from Nitan from MK Global Financial Services. Please go ahead. 33:44 33 minutes, 44 seconds Hi thanks for taking my question. My first question pertains to UT market where last week the budget got in place 33:52 33 minutes, 52 seconds and seems like there is some sort of a DP reduction. So I just want to check how material uh is the market for us and 33:59 33 minutes, 59 seconds how do you think that uh uh DP reduction will going to help uh overall industry wine industry. 34:07 34 minutes, 7 seconds UP has been uh one of the fastest growing markets for the Indian wine industry for the last uh 3 years uh especially postco um and it contributes 34:15 34 minutes, 15 seconds approximately 6% of our overall revenue um at the moment uh the policy for us u the way it comes into play we'll get a 34:23 34 minutes, 23 seconds better idea in the next 15 to 20 days uh as we get towards the start of the next year but currently all the industry 34:30 34 minutes, 30 seconds momentum and um and and the work done in UT looks very promising Sure. 34:40 34 minutes, 40 seconds Thank you. Uh my next question question pertains to your uh how do you see the uh European FDA impacting like a wine 34:47 34 minutes, 47 seconds category. So just want to check upon like what is the salience of our revenue above 2,000 rupees and I guess the luxury segment you have highlighted 7%. 34:58 34 minutes, 58 seconds And could you also help us understand the size of the imported wine market in India right now and of that what is the salience of European wine? 35:08 35 minutes, 8 seconds So for us as I mentioned already the luxury segment contributes roughly 7% of our overall revenue that comes into any of our products above 2,000 rupees MRP. 35:18 35 minutes, 18 seconds uh the FBA which will get uh which will get uh implemented uh eventually will impact Indian wines above an MRP of 35:27 35 minutes, 27 seconds 2,000 rupees. However, that will be done in a phase wise approach. As I've already mentioned that since the luxury segment has been a very very dominant 35:36 35 minutes, 36 seconds part of our portfolio and we hold more than 55% market share in that segment um and is growing at more than 20% y I 35:44 35 minutes, 44 seconds don't see any challenges for us uh in the near or short-term future for that segment. 35:51 35 minutes, 51 seconds Sure this is helpful and uh like if can you help us understand like uh I guess Indian domestic mine is sized at around 1,000 crores. I just wanted to check 36:00 36 minutes like what is the size of the imported wines in India and how much of the uh share is with the European wines. 36:09 36 minutes, 9 seconds Yeah. So it'll be hard to give a exact number on the share of European wines at the moment but the imported wine industry is roughly 600 odd crores. 36:19 36 minutes, 19 seconds Okay. So like around 1,600 K is the overall tan for the wine and our RTD is 36:25 36 minutes, 25 seconds 500. So around 2,100 cr is a tan. Would that be a good uh assessment? 36:32 36 minutes, 32 seconds Yes, that's correct. 36:34 36 minutes, 34 seconds Sure. Thank you. And my last question pertains to like in terms of overall wine as a category like any sense you can provide 36:43 36 minutes, 43 seconds in terms of like uh the growth has been slow uh despite like aggressive promotions uh brand activity. So like 36:51 36 minutes, 51 seconds what according to you are would be the factors or like driving factor ahead. Is it like we will continuously have to uh 36:58 36 minutes, 58 seconds look into the trade and influence consumer or do you think that uh state uh actions are also important in terms of developing the low alcoholic beverages category like wine? 37:09 37 minutes, 9 seconds So I think growth in India still uh is or should be prevalent across all our categories in which we sell. Uh since wine in India is still roughly at only 37:18 37 minutes, 18 seconds 1% of overall consumption. So we see room to grow in almost every category at the moment. Uh however the RTD category 37:25 37 minutes, 25 seconds for the last roughly two years is growing at a speed of almost 30% quarteron quarter. Um and therefore we 37:32 37 minutes, 32 seconds see a higher growth uh potential in that segment uh over the next 2 years at least. U but domestic demand still still 37:41 37 minutes, 41 seconds seems good. The premium uh segment which is 700 to,000 rupees has been extremely competitive for the last two years and 37:49 37 minutes, 49 seconds has been affected due to a lot of regulatory factors that have come into play. However, Q3 was a very very good 37:56 37 minutes, 56 seconds sign that things have begun to normalize in that segment as well. Sure. Thank you and all the very best. 38:06 38 minutes, 6 seconds Thank you. 38:08 38 minutes, 8 seconds The next question comes from the line of Kiresh Kumar from Valpro. Please go ahead. 38:14 38 minutes, 14 seconds Uh sir, my next question is what is the current state of capex in hospitality project? Uh 38:22 38 minutes, 22 seconds hi Gorav Shikri here. At the moment we have uh we have done very minimal capex only in some u you know consultant 38:30 38 minutes, 30 seconds related fee. Uh otherwise the actual capex has not begun. We have not broken ground. I hope that clarifies the current situation to you. 38:40 38 minutes, 40 seconds Okay. Thanks sir. My last question is also what is the current trend of wine consumption currently in tier 1, tier two and tier three cities? Are there any signs of uptick? 38:53 38 minutes, 53 seconds So I think just before you there was a question uh kind of related to that and and you know we we had uh presented sort 39:01 39 minutes, 1 second of our view on wine as a category. Um I think what I can add to that is that wine is an aspirational product. When 39:10 39 minutes, 10 seconds people come of legal drinking age, when they start drinking alcohol, uh if you see uh you know the the choice for that 39:19 39 minutes, 19 seconds young consumer with who's also very conscious of how much money he or she can spend, you know, the options so far 39:25 39 minutes, 25 seconds have always been products either beer or some you know cheaper spirits etc. Uh I think what RTD will do and the wine 39:34 39 minutes, 34 seconds based RTDs is a relatively new trend. It will introduce consumers to the taste and the experience of wine and as they 39:43 39 minutes, 43 seconds progress you know in in in in their life in their careers have slightly more money available to them then they are already 39:52 39 minutes, 52 seconds prepared to experiment and you know experience wine. So I believe we will 39:57 39 minutes, 57 seconds see uh very strong u uh adoption of wine as a lifestyle product uh across India. 40:06 40 minutes, 6 seconds It's not just tier 1, tier 2, tier three. Of course, in tier 2, tier three cities, the potential is even greater. 40:13 40 minutes, 13 seconds Um um and and that is how we see the market. 40:18 40 minutes, 18 seconds Um I think to that the only other thing uh to further give you clarity is that you know in the last 3 four years we've 40:26 40 minutes, 26 seconds seen cities like Kpur, cities like Vijayara uh which have shown very encouraging trends in consumption of wine and 40:35 40 minutes, 35 seconds India's many countries within a country you only need a few pockets like this you know which can completely change the uh growth dynamic. 40:45 40 minutes, 45 seconds Okay fair. Thank you. Thank you very much. Thank you. 40:50 40 minutes, 50 seconds Thank you. A reminder to all participants, you may press star and one to ask a question. 41:00 41 minutes The next question comes from the line of Dipali Kumari from ACML Capital Markets. Please go ahead. 41:08 41 minutes, 8 seconds Uh am I audible now? Uh yes, please go ahead. 41:14 41 minutes, 14 seconds Okay. So I have just few question. Have be markets here during the year either over or in specific segment. 41:24 41 minutes, 24 seconds Sorry Dali we we we are your voice is still muffled. 41:30 41 minutes, 30 seconds Yeah. Uh so like have we gained market share during this year either or overall in a specific segment? 41:39 41 minutes, 39 seconds I think your question is have we gained market share? Right. Yeah. Right. Right. 41:46 41 minutes, 46 seconds Yeah. So Nepali your market share in the domestic wine market for the year still remains at roughly 31% for the 9 months period. 41:56 41 minutes, 56 seconds Okay. Um so like could you provide some guidance on revenue growth and margin for the near to mediumterm? 42:06 42 minutes, 6 seconds Is that an outlook you you're asking for? Yeah. 42:12 42 minutes, 12 seconds Yeah. So the outlook for the year will will be to end at roughly 7% revenue growth uh and and with a far better Q4 42:20 42 minutes, 20 seconds um and for next year we'll be g be giving you a better idea in the next quarter's uh earning goal. 42:27 42 minutes, 27 seconds Okay. And on the margin side on the margin side we have already given that information we will be targeting about 10% a bit for next financial year. 42:39 42 minutes, 39 seconds Okay that's it from my side. Thank you. 42:43 42 minutes, 43 seconds Thank you. The next question comes from the line of Maruti Nandan Sarda, an individual investor. Please go ahead. 42:51 42 minutes, 51 seconds Uh thank you for the opportunity and uh congratulations for a good set of numbers. My question is on the long-term 42:58 42 minutes, 58 seconds vision of the company like uh by 2030 you have mentioned in you know previous presentations that we are targeting a 500 cr revenue. 43:08 43 minutes, 8 seconds So are we still on to that number or we are we are going to increase that and what is the long-term margins we are targeting like next year you have given 43:17 43 minutes, 17 seconds a uh that you know 10 to 12% will be achievable next year but in long term can we can we target like 17 18 20% 43:25 43 minutes, 25 seconds margin hi Gorovri here so firstly uh I fully 43:32 43 minutes, 32 seconds believe that you know uh in a in a B2C alcoare business margins ebida margins 43:40 43 minutes, 40 seconds of between 15 to 20% even in wine business are very much possible 43:47 43 minutes, 47 seconds it's a it's a issue of scale and getting to a certain uh point so that one can 43:54 43 minutes, 54 seconds spread your costs better uh I believe that is possible uh in the coming financial year we we do believe we can 44:03 44 minutes, 3 seconds get to uh approximately 10 to 12% % uh ITA margin and and we would first like 44:10 44 minutes, 10 seconds to get there and then kind of you know uh give you guidance uh further. U I hope this sort of helps you get a sense of the direction we heading. 44:20 44 minutes, 20 seconds Yeah. Got it. Got it. Secondly uh my question is on uh it's bit hypothetical but you may choose not to answer it 44:28 44 minutes, 28 seconds also. Currently Sula and Fatelli these are the you know two big boys in the wine industry. So do we have any any 44:36 44 minutes, 36 seconds kind of plants you know like Inox and PVR they did the merger and they became a big giant. So do we have any such plans of you know JV or something of that sort? 44:48 44 minutes, 48 seconds I no thank you for the question. Um you know it it is uh uh impossible to you 44:54 44 minutes, 54 seconds know comment on this. Um uh uh so so uh at this point I think we you know we can't give you any guidance on this. 45:05 45 minutes, 5 seconds Thank you. Thank you and all the best. 45:08 45 minutes, 8 seconds Thank you. The next question comes from the line of Kav Pande from Business Money Solution. Please go ahead. 45:23 45 minutes, 23 seconds Please go ahead with your question. Hello. Yes, Koso, please go ahead. 45:31 45 minutes, 31 seconds Yeah. Yeah. So, uh, so my name is Costa Bumna from BMS. I'm not I don't know where you got that name from, but 45:38 45 minutes, 38 seconds anyways, uh, thanks for taking my question. Uh, so in your presentation, you classify that 73% of your revenues 45:45 45 minutes, 45 seconds come from premium and above, and you're saying that only 7% of your revenues is 2,000 rupees plus. So could you just 45:53 45 minutes, 53 seconds help me break up what what at what pricing is premium, super premium and luxury in your portfolio? Uh first D. 46:04 46 minutes, 4 seconds Absolutely. So we've done that in the in the previous earnings calls but happy to do that again. So our premium segment starts at roughly 550 rupees. Uh the 46:13 46 minutes, 13 seconds premium goes from 550 to,000 uh,50 uh super premium is,50 to 2,000 rupees and then luxury is 2,000 plus onwards. 46:23 46 minutes, 23 seconds Don't you think that there's also a possibility for this super premium 46:29 46 minutes, 29 seconds segment to shift to uh European wines when they become cheaper just because of 46:37 46 minutes, 37 seconds the aspirational thought in people's minds? 46:43 46 minutes, 43 seconds No, I think it will make the market above 2,000 rupees more competitive. 46:47 46 minutes, 47 seconds That's for sure. But it will al also expose the Indian consumers to a lot better wines which will be which will be available across. Um so I think again 46:55 46 minutes, 55 seconds when they compare um an Indian wine with extremely high quality um to some good European wines coming in, it will just 47:03 47 minutes, 3 seconds improve um the consumer dynamic at an overall level. uh but yes it will become more competitive but we're confident that we'll be able to hold our advantage 47:11 47 minutes, 11 seconds as you're already north of 55% market share in that segment. 47:15 47 minutes, 15 seconds Are you are you domestic producers uh getting together to do some sort of representation to the government because of this? Is that even possible? 47:27 47 minutes, 27 seconds Are you all thinking about it because of this? 47:31 47 minutes, 31 seconds This is Gorov. We do have a very effective association and via that association we are in constant dialogue 47:39 47 minutes, 39 seconds with the government and we did get a chance to present our case to ministry of commerce but uh you know as you know that there are uh uh many many 47:48 47 minutes, 48 seconds priorities that the government has uh we made our side of the story amply clear and and we uh we like I said we have an 47:57 47 minutes, 57 seconds effective association which is uh which has a seat on the table. So it is not like this decision was taken without us being heard. 48:06 48 minutes, 6 seconds Okay. Okay. And uh in the last n in 9 months FI26 versus 9 months FI25 48:13 48 minutes, 13 seconds your revenue has basically been flat. Uh so why is this happening? Could you could you explain why have we been flat on a 9 month basis? 48:24 48 minutes, 24 seconds So, so a lot of those uh factors were pertaining to the halfearly challenges which we faced in the premium segment 48:30 48 minutes, 30 seconds which is 5502,000 rupees as a whole. So at a 9 month level the whole premium category has been down about 13 to 14% 48:39 48 minutes, 39 seconds roughly for us and this was primarily driven by uh the regulatory factors which were present up to H1. However, in Q3 as I mentioned this scenario has normalized. 48:51 48 minutes, 51 seconds Okay fine. I'm just I'll just close my I'll just close off by just posing a question to you. Feel free to answer if you want to. You know, regulatory 48:58 48 minutes, 58 seconds challenges have been coming up. We haven't really grown much even without uh European wines being cheaper. 49:05 49 minutes, 5 seconds Everyone knows that European wines are some of the most preferred wines in the world. Uh I'm just trying to 49:13 49 minutes, 13 seconds understand how will you grow with this challenge coming ahead. I just finding it really tough to see you know and how will you grow in this challenge coming ahead. 49:23 49 minutes, 23 seconds No fair enough. I think your concern is is uh uh is uh you know we we respect 49:29 49 minutes, 29 seconds that uh see for a firstly where are we today and how we perform today I think 49:36 49 minutes, 36 seconds let's put it in perspective uh we have grown um while we have not grown 9 month 49:42 49 minutes, 42 seconds basis our Q3 performance this year versus Q3 performance last year we have started seeing the green shoots of 49:49 49 minutes, 49 seconds growth again so I would like to think that this trend will continue. That's point number one. I think in terms of 49:56 49 minutes, 56 seconds growth levers uh uh consider this uh our luxury business has grown uh very 50:05 50 minutes, 5 seconds handsomely in this financial year. Our top selling wine uh or not top selling but the most expensive wine from our portfolio Janu has grown almost 50% 50. 50:17 50 minutes, 17 seconds Now of course the base is small but clearly there is a consumer preference and a discerning consumer which is happy to pay that price and you know you can 50:26 50 minutes, 26 seconds you know it is to be expected that the margin profile on such products is far better versus me selling a wine which is at 500 rupees. 50:35 50 minutes, 35 seconds So we are seeing positive trends there. 50:37 50 minutes, 37 seconds That's one. Second is the RTD business shotgun which is year one we are 50:44 50 minutes, 44 seconds approaching almost a 100,000k sale. Now that shows the potential of the Indian 50:50 50 minutes, 50 seconds market our ability to judge the consumer preference and deliver a product and at a price point which is seeing some 50:59 50 minutes, 59 seconds consumer love. Um I think this gives us very good platforms to grow here on um 51:07 51 minutes, 7 seconds so I remain very conf confident very optimistic uh and I hope uh the business that we will be able to show quarter on 51:15 51 minutes, 15 seconds quarter in FI27 will be reflective of this. Okay. Great. Great. Thank you so much. 51:23 51 minutes, 23 seconds Thank you. Thanks. Thank you. 51:29 51 minutes, 29 seconds A reminder to all participants, you may press T one to ask a question. 51:41 51 minutes, 41 seconds The next question comes from the line of Sankal Patil, an individual investor. Please go ahead. Yes sir. Am I audible? 51:49 51 minutes, 49 seconds Yes. Yes, sir. Please go ahead. 51:52 51 minutes, 52 seconds Yeah, sir. I want to ask question uh regarding uh your product mix. Uh our competitor is having a product which is 52:01 52 minutes, 1 second growing very well at price range of 1,500 to 1200. So are there any plans to bring products in this range? 52:12 52 minutes, 12 seconds So I don't uh you know would I cannot comment on on our competitor. What I can tell you is that we have a fantastic 52:19 52 minutes, 19 seconds product offering in this range under the brand range master selection um which we 52:26 52 minutes, 26 seconds have only about a year ago uh rebranded it and upgraded the appearance, label, bottle even the liquid um and that is uh 52:36 52 minutes, 36 seconds seeing excellent traction. Uh we are looking to expand that range and yes it is a very interesting price point. I 52:43 52 minutes, 43 seconds think Indian consumers are generally very happy with this price point. Um, so this is a focus area for us as well. 52:52 52 minutes, 52 seconds Okay, that answers my question. Thank you. 52:55 52 minutes, 55 seconds Thank you ladies and gentlemen. That was the last question for today. I would now like to hand the conference over to the management for their closing remarks. 53:07 53 minutes, 7 seconds Uh this is Gorov Sri again on behalf of Fatelli team. To everyone who joined the call today, I would like to express my 53:14 53 minutes, 14 seconds thanks. Uh we greatly appreciate your interest in our company and you sparing your valuable time to be with us today. 53:21 53 minutes, 21 seconds Uh have a lovely uh afternoon and look forward to speaking to you again soon. Thank you. 53:29 53 minutes, 29 seconds Thank you sir. Ladies and gentlemen, on behalf of Go India Advisers that concludes this conference call. Thank you for joining us. And you may now disconnect your lines.