Raw material prices, advertising spend drags United Spirits Q1 profits

Anil Urs Updated - April 12, 2019 at 05:37 PM.

United Spirits Ltd (USL) profits are down 18.50 per cent at Rs 118.13 crore for the first quarter (Q1) of this financial year (FY) 2013-14 as compared with Rs 144.95 crore recorded in the last financial year (2012-13).

The company’s total income from operations was higher by 6.47 per cent at Rs 2,207.10 crore as compared with Rs 2,072.86 crore in the same period last year. EPS stood at Rs 8.13 as compared to Rs 11.08 recorded last year.

The company said Q1 results were impacted by a sharp increase in the cost of its primary raw material – extra neutral alcohol (ENA) - over the comparative period of the previous fiscal.

An increase of nearly Rs 20 per case translates to an adverse impact of over Rs 61 crore in the cost of goods which flows down to the operating profit line.

The evident cartelisation by vendors when quoting for the ethonol supply tender of the oil marketing companies is a pointer to further increases in the price of this key ingredient.

Similarly, higher expenditure on IPL 6 that took place during Q1 has also led to a 150-basis points increase in advertising and sales promotion expenditure.

During the first quarter of fiscal 2014, the strategic brands of the company grew 20 per cent and added 1.34 million cases. These brands now represent over 26 per cent of the overall volumes of USL compared to 22 per cent for the comparable quarter and 23 per cent for fiscal 2013.

>anil.u@thehindu.co.in

Published on August 1, 2013 08:51