The Hindu Business Line : Treasury stocks sale boosts United Spirits' Q4 net

Bangalore April 30 Sale of 3.8 per cent of treasury stocks, which fetched around Rs 265.7 crore, has boosted United Spirits' net profit by 1,084.5 per cent to Rs 497.49 crore during 2006-07.

In a statement, United Spirits said its net sales grew 33.58 per cent to Rs 2,764.97 crore during the same period. The statement pointed out that as the fourth quarter results of 2005-06 are those of the standalone McDowell & Company before the merger of eight companies into its fold, these figures cannot be compared with the fourth quarter results of 2006-07. Under a scheme of arrangement sanctioned by the High Courts of Karnataka and Bombay, eight companies were merged into McDowell & Company and its investment business was demerged into McDowell Holdings as of October 5, 2006. The name of McDowell & Company was also changed to United Spirits Ltd.

As a result of the debt restructuring exercise undertaken from the proceeds of the GDR issue made by McDowell in March 2006, finance charges are down 38 per cent to Rs 103 crore compared with the previous fiscal. The company believes that the rates of spirit in the forthcoming quarters will be stable and marginally lower than 2006-07.

The statement said sales of key profitable brands at 61.5 million cases registered a growth of 19 per cent. It pointed out that as United Spirits had decided on a deliberate strategy to emphasise value rather than volume, the share of the main line brands in the total portfolio has grown 6 per cent to 93 per cent.

Overall volumes at 66.4 million cases represent a 12 per cent growth over the last fiscal. Bagpiper Whisky has posted a sale of 13.7 million cases making it the single largest brand in the domestic liquor market. The McDowell's No.1 umbrella brand, which includes whisky, brandy & rums, has registered a 32 per cent growth in sales to 22.8 million cases during 2006-07.

The statement said the company has retro-fitted the molasses plant at one of its distilleries to accept grain as feedstock, thereby achieving a drop in prices of ENA (extra neutral alcohol). Such measures, coupled with the downturn in market prices of furnace oil and molasses in the post-crushing season, has seen a softening in prices of the company's primary raw material, molasses/rectified spirit.

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