Key highlights of the call

The net sales for Q1 FY17 inclined by 25% to Rs 196.4 crore driven by healthy growth in Bulk Alcohol and IMIL segments. This was further aided by strong traction in DDGS. EBIDTA grew by 22% to Rs 19.3 crore with EBIDTA margin 9.8%. The net profit stood at Rs 6.3 crore, grew by 82%.

Revenues from manufacturing business stood at Rs 95.5 crore in Q1 FY17, higher by 32%.

This was possible due to 35% gains in Bulk Alcohol segment to Rs 45.8 crore as well as 45% growth in DDGS. DDGS volumes and realizations improved by 24% and 18% respectively

Franchise IMFL reported expansion of 17% in revenues. Franchise Bottling volumes stood at 0.78 mn cases. Rajasthan witnessed 24% volume growth YoY which was offset by decline in Haryana due to delays/ other operational reasons at customer level

Share of consumer business stood at 51% in Q1 FY17 owing to higher traction in the IMIL business. Growth in Consumer Business came in at 18%

IMIL revenues increased by 19% to Rs 100.9 crore driven by solid growth of 95% reported in Haryana; this momentum is expected to continue throughout the year as a result of several initiatives undertaken by the Company in the past. IMIL growth in Rajasthan stood at 21%. Both Haryana & Rajasthan reported volume growth of 95% to 1.11 mn cases and 20% to 1.98 mn cases respectively. Total IMIL volume was at 3.25 mn cases.

In Rajasthan, revenue grew 21% to Rs 64.9 crore.

In Haryana, revenue grew by 95% at Rs 31.8 crore.

In Delhi, revenue de-grew 6% to Rs 4.4 crore

IMIL - some amount of down trading seen in industry.

Capacity utilization improved significantly to 88% in Q1 FY17 compared to 72% in Q1 FY16 resulting in higher production of 20 mn BL in Q1 FY17

Greenfield Project in Bihar was commissioned in August 2016; Commercial production to start by the end of the current month. This would result in significantly higher financial and operational performance in FY17. Overall capacity at Bihar would be ~26 million BL. Alcohol ban in Bihar is expected to have limited impact on the performance as the alcohol manufactured in Bihar distillery will be exported to the neighboring alcohol deficit states and countries. Profitability will be driven by number of locational advantages like lower raw material costs and other logistical benefits.

Bihar – the company is in production of ENA. Raw material cost here is slightly lower vs North India. Also cost of conversion lower due to better technology. Within 300-400 kms radius towards eastern part of country there is huge shortage of ENA, so no problem in selling alcohol. Capacity utilization – to operate at 80% will take place

Construction work on West Bengal Distillery almost complete; to commence operations soon. Overall capacity at West Bengal would be ~33 million BL. West Bengal continues to be an alcohol deficit state with demand surpassing overall supplies. Facility to have similar locational advantages as Bihar along with the huge opportunity to launch branded IMIL products over the next few years

Haryana now has become spirit surplus state. Bottling of IMIL is focus from Haryana unit.

GST – IMIL and IMFL be outside of GST ambit. Input side specially packaging material will have GST impact.

Rs 177 crore is long term debt and Rs 56 crore is short term debt.

Tax rate – the company is at MAT.

IMIL growth rate – In Rajasthan its growing at CAGR of 15%. Harayana has seen de-growth for last 2 years. West Bengal market is rgowing at CAGR of 30% for last 3 years.