Key highlights of the call

• The net sales grew by 27% to Rs 72.78 crore along with net profit by 21% to Rs 6.24 crore for Q2.

• For H1, the net sales grew by 22% to Rs 146.43 crore along with net profit by 13% to Rs 13.49 crore.

• For Q2, 14.63 lakh cases of country liquor, 1.97 lakh cases of franchisee IMFL and 1.12 lakh cases of own IMFL brand sold. Industrial alcohol sales stood at 47.39 lakh BL.

• For H1, 30.8 lakh cases of country liquor, 5.47 lakh cases of franchisee IMFL and 2.4 lakh cases of own IMFL brand sold. Industrial alcohol sales stood at 95.25 lakh BL.

• Industrial alcohol increased by 60%, owned IMFL by 60% and franchisee IMFL by 52% in Q2.

• Cost of ENA was Rs 28 to Rs 30 per litre and has remained nearly flat on Y-o-Y basis. Q3 will see cost of ENA easing by around 10%.

• The launch of County Club has given a major thrust to the branded IMFL business and will play a major role in driving up the volumes. 50000 cases of Country Club cases has been sold between July to October. It plans to extend County Club to newer states keeping in sync with the strategy of a pan India rollout.

• The capacity expansion program to more than double the existing capacity to 70 million BL is in the last leg and the new capacity will come on stream at the start of Q4 FY2011. The new capacity is expected to drive up the volumes in the bulk alcohol & franchise IMFL businesses significantly going forward.

• The total debt stood at Rs 35.64 crore

• The company proposed to demerge the demerged undertaking of Associated Distilleries Limited (ADL) into GSL on a going concern basis with effect from April 1, 2010. ADL is an unlisted company and is engaged in the business of manufacture, marketing and sales of industrial alcohol comprising rectified spirit, extra neutral alcohol, Country Liquor. The net sales and profit after tax of ADL were Rs 67.9 crore and Rs 6.4 crore respectively for the year ended March 31, 2010.

• The board has approved the distribution ratio of 1:6 for the demerger of the demerged undertaking of ADL into GSL GSL will issue additional 3.24 million shares which will take the post dilution equity share capital of GSL to 22.8177 million shares of face value Rs. 10 each.

• The demerged Undertaking of ADL is located in Hissar, Haryana. The present installed capacity of ADL is 14.4 million BL. ADL operates in the two states of Haryana and Delhi and has a market share of 10% in Haryana and 8.9% in Delhi. ADL also has a bottling tie up with Allied Breweries and Distilleries (ABD) India in Haryana.

• The ADL plant has shown increased operating efficiency since its revamping in October 2009 and EBITDA margins have grown from 8.7% to 16% in FY2010.

• The demerger of the Demerged Undertaking of ADL into GSL would result in greater synergies and operational efficiencies which would translate into improved performance going forward.

• Ajay Swarup is one of the promoters of ADC. After acquisition, his stake will increase to 65% from 60% in GSL.

• Q4 will see launch of Rum by the company.

• The management expects 10% growth in country liquor for FY11.