Key highlights of the call

The net sales for Q2 FY17 were flat at Rs 161.74 crore. The net profit declined by 98% to Rs 0.03 crore,

Revenue from operations (Net) stood flat owing to high raw material prices which in turn impacted the bulk alcohol volumes.

Bulk Alcohol revenues decreased by 25% YoY and volumes declined by 31% YoY. Bulk Alcohol production was lower owing to plant shutdown at the Samalkha facility in Haryana. In the current year, maintenance was scheduled in Q1 and Q3 in a staggered fashion. However, due to sharp increase in the prices of raw material and slower demand, the Company undertook the shutdown in Q2, instead of Q3 which led to lower bulk alcohol production. As a result, production in Q3/Q4 should be higher than anticipated

Franchise Bottling volumes stood at 0.698 mn cases vs 0.660 mn in Q2 FY16. Rajasthan witnessed 22% volume growth YoY which was offset by 6% decline in Haryana due to delays/ other operational reasons at customer level

Franchise IMFL volumes improved by 22%. Others segment led by value added product DDGS reported 9% volume growth

Franchise IMFL revenues grew by 19% to Rs 19.63 crore supported by strong volume growth of 22%

Revenues from IMIL stood at Rs 90.95 crore, higher by 5% YoY. Unexpected increase in the prices of grain impacted the IMIL volumes which stood flat year-on-year. However, Haryana and Rajasthan reported robust volume growth of 36% and 16% respectively

No IMIL revenues from Bihar vis-à-vis last year impacted revenues. Contribution of Haryana in IMIL revenues increased from 19% in Q2 FY16 to 24% in Q2 FY17

Share of consumer business increased to 56% in Q2 FY17 against 54% in the same period last year. Growth in Consumer Business came in at 4% YoY

Capacity utilization improved to 83% in Q2 FY17 compared to 81% in the same period last year

By-products segment reported 26% growth in Q2 FY17 led by value-added DDGS. DDGS volumes and realizations increased by 9% & 19% respectively.

Greenfield distilleries in Bihar & West Bengal would start commercial operations from Q3 FY17 – anticipate optimal utilizations from Q4 FY17 onwards

Demonetization – on consumption side it will not have too much impact right now. Considering IMIL is low price product, so don't expect much impact. Also there will be limited impact on working capital cycle.

In West Bengal, county liquor price can be fix by the company any time. In Rajasthan and Haryana, once a year price hike takes place.

Broken rice is the main raw material. Every year in Q2, there is rise in price of raw material. This year, the company saw unprecedented rise in raw material in Q2. It was 30%. Raw material prices are expected to soften with the onset of new milling season in Q3/Q4.