Thursday, June 1, 2017

UNITED SPIRITS net sales were up by 4%

·         For FY17, net sales were up by 4% while underlying sales grew by 8% YoY excluding one off impact of primarily Bihar prohibition and operating model changes.
·         Prestige & Above segment net sales up 13% YoY led by Company’s renovation and premiumisation strategy
·         Popular segment net sales declined by 9% YoY led by Company’s approach to selectively participate in the popular segment. Priority states volume (Karnataka, Maharashtra and West Bengal – contributes ~60-65% of total popular sales)) was flat and net sales grew 1% YoY in FY17 driven by Hayward’s, Bagpiper and Director’s Special. The Company has entered into franchise agreement for its Popular brands in several more state.
·         The Company has entered into agreements to franchise selected, mainly Popular segment brands in Andhra Pradesh, Goa and has moved to a complete franchise agreement for all USL brands in Kerala effective 1st Jan’17. Volume and net sales for these franchised brands in Andhra Pradesh, Goa and Kerala accounted for 3.3mn cases and ~Rs. 1.8bn net sales in 9MFY17.
·         During the year the Company saw raw material price inflation of ~3-4% YoY which was mitigated by cost efficiency measures.
·         To mitigate the impact of cost inflation in its raw material due to higher rates in GST, the Company is working with state government to get adequate price increases.
·         In next 3-4 years, the Company will able to sell non-core assets worth Rs 20bn which will aid in reducing the debt to half.
·         In terms of Capex, Management believes most of large capex spends have been done and expect to do a capex of Rs 2-3bn in FY18.

Q4FY17 Result Snapshot

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