The country’s leading liquor company United Spirit’s net profit rose 86 per cent to ₹153.1 crore, while total income grew 3.2 per cent to ₹6,245.1 crore during the second quarter because of lower interest costs and exceptional items.
Interest cost was ₹66 crore which was lower by 26 per cent driven by favourable rates and mix of debt.
Highway banThe company expects sales to increase as more retail outlets reopen following the recent Supreme Court clarification on the highway ban.
“We expect the impact of the highway ban to continue to decrease and the business to normalise by end of the third quarter. Based on our current expectations, through our continued focus on productivity initiatives coupled with price increases in select States, we expect the net adverse impact of GST on our margins to be moderate in this financial year,” Anand Kripalu, Managing Director and CEO, said in a statement. The net sales declined 4 per cent impacted by the highway ban and the one-off impact of operating model changes. Underlying net sales were up 4 per cent excluding the one-off impact.
Prestige & Above segment which represents 48 per cent of total volumes and 63 per cent of total net sales, reported 10 per cent increase in net sales. Underlying net sales was up 12 per cent excluding the one-off impact.
The Popular segment, which represents 52 per cent of total volumes and 35 per cent of total net sales, reported 22 per cent decline in net sales impacted by the one-off impact of operating model changes.
Underlying net sales declined 9 per cent, excluding the one-off impact. Gross margin grew 47.6 per cent which was up 559 basis points driven mainly by price increases, productivity initiatives and operating model changes. “In the second quarter, we have delivered strong underlying net sales growth of 4 per cent driven by 12 per cent growth in the Prestige & Above segment, despite the impact of the highway ban.
“Additionally, we have delivered expanded margins, despite the impact of GST. Strong growth of the Prestige & Above segment was fuelled by our renovation and premiumisation strategy,” Kripalu said.
The company also said its brand renovations, including McDowell’s No.1 whisky, Royal Challenge and Signature, delivered double-digit net sales growth in the second quarter.
“Despite the implementation of GST which has resulted in stranded taxes, I am pleased that we have been able to deliver a robust underlying gross margin improvement in both the second quarter and first half, enabled by our accelerated productivity initiatives, price increases in select States, and our continued focus on premiumisation,” Kripalu said.