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Globus Spirits Ltd
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Ladies and gentlemen, good day, and welcome to the Global Spirits Limited Q3 FY '22 Earnings Conference Call.[Operator Instructions]Please note, this conference is being recorded. Due to time constraint, this call will be for 45 minutes. I'd now like to hand the conference over to Mr. Shekhar Swarup, Joint Managing Director, Global Spirits. Thank you, and over to you, sir.
Good evening, everyone, and thank you for joining us today. Unfortunately, we are a little bit constrained on times today. As a result, we have limited this call to about 45 minutes. I hope you've been able to see the results, even though, they were published just a short while ago. And let me now take you through what has happened in the quarter gone by.Our consistent focus at the company remains to grow both arms of our two-pronged business model. In the past few quarters, as you would have seen, we've concentrated our efforts at growing our capability in our consumer business to serve as a platform for future growth while leveraging our 3 decades of operational capabilities towards the emerging alcohol deficit on the back of high procurement of ethanol for fuel blending. This two-pronged approach has helped us deliver consistent performance and is poised well for further growth in the coming years. In Q3, the Consumer segment continued to perform as per expectations, and our volumes were 37.3 lakh cases, flat Q-o-Q due to seasonal variations and 13% growth year-on-year with Value Plus segment continuing to drive growth. In a short while, Param will take you through more details of the Consumer business' performance.In our distillery segment, low capacity utilizations in Q3 has been seen with our Haryana plant being closed for nearly 40 days due to major plant overhaul in our power plant. And our Bihar plant continued to be impacted with floods in the region for 72 days in the last quarter. Put together, the company saw an opportunity loss of INR 25 crores with this in our EBITDA in the quarter gone by. Both plants are now running at full capacity since around mid-December. And Q3 also saw the completion of our West Bengal capacity expansion, which since then has been running at 100% capacity utilization. Fuel cost inflation was also a significant concern in Q3, something that affected all industries in India. We saw inflation of costs as high -- fuel costs as high as 18% at its peak in the last quarter. This rapid increase in costs could not entirely be passed on to ENA customers in Q3. However, the increase in ethanol rates from INR 51.55 per liter to nearly INR 53 per liter have helped cover up some of this cost increase.Going forward, the company has decided to increase supply of ethanol made from surplus rice, which has secure margins to a large extent, as raw material is purchased at fixed prices from the Food Corporation of India. Between 1st December 2021 and 30th November 2022, we will see 36% of total current capacity supplied to OMCs of ethanol, of which 18%, so half of the total ethanol supply will be made from surplus rice. OMCs are also evaluating a process of allowing companies to transfer quantities between the 2 types of ethanol, damaged grain and surplus rice. And we are remaining watchful of inflation in grain costs and will shift to surplus rice ethanol if costs continue to rise.As you are all aware a little bit of an update on our expansion plans now. As you're aware, The Ethanol Blending Programme is doing well with E10 being available in almost all petrol pumps in the country. The next milestone for this program is E20, which [indiscernible] have been mandated to transition to by the year 2025. To that end, Globus Spirits has plans to leverage -- further leverage its capability in the setting out low-cost plants that operate at higher than industry efficiencies. With the recently commissioned project in West Bengal, our total capacities for the ENA plus ethanol are now at INR 670 KL, which was earlier 530 KL per day.Work at the Jharkhand factory is underway and Odisha land acquisition is also underway. Today, I'm also pleased to inform you that the Board of Directors has approved the setting up of 2 new facilities of 140 KL each, one in Utter Pradesh, that is being built for ENA, ethanol and consumer business within the state, for which land acquisition is underway, and we will keep you informed with progress.The second project is another 140 KL plant, which will be a brownfield expansion at one of our existing locations. This expansion will be dedicated for ethanol. With these planned expansion projects in process, we expect Jharkhand, which is 140 KL, to be commissioned in Q1 of the coming year. A new brownfield to be commissioned in Q1 of the next year. And UP and Odisha will come up later in 2023, '24 and early 2024, '25. Thereafter, our total capacity will go up from 670 KL per day currently to 1,230 KL per day.Financing of these projects is being planned for internal accruals and some debt, which is approved under the interest subvention scheme of the Government of India, under which our net interest rate is 3.85% per year. We expect each 140 KLPD project to cost us INR 120 crores as compared to about INR 200 crores, which is the cost for most other companies. As mentioned earlier, we will continue to keep you informed of progress and capital allocation being made in the subsequent quarterly updates.I now request Param to take you through the performance of the consumer business in the quarter gone by.
Thanks, Shekhar. Good evening, ladies and gentlemen, and I hope you and your families are keeping safe. As Shekhar explained, our consumer business has been seeing continued strong trunk of interaction with growth in volumes by 12% year-on-year, with the Value Plus segment showing a healthy 58% growth. On a 9-month basis, the volumes grew by healthy 32%, while revenues by 41% on account of higher realization and increased value cost sales. We are well on our path of our strong growth trajectory for the forthcoming quarters as well with our product mix continuing to improve with a higher share coming through the premiumization from the value segment.A quick analysis and strategy for this segment. For our Value and Value Plus segments, the key markets of Rajasthan, Haryana and West Bengal continue to show growth. In Rajasthan, our market share has increased to almost 32.5% on the back of strong performance of the Value Plus segment, where our market share has increased to almost 45% in the Q3 of the current year. This was in the range of about 30% to 35% during last year. The Black Lace Rum that has been in the works was launched in Q3, '22 and has been well received. We are on track to launch an additional whiskey brand as well. That is now being scheduled for the quarter -- first quarter of '23.We continue to expand whiskey and vodka offerings via tetra pack as well. Tetra pack, as you know, is an interesting modern offering, which is not only putting forward an efficiently transportable option to the market, but it also is the most [indiscernible] around the consumer business. It also offers significant advantages to the traveling and mobile consumer. This move also in a way establishes our ability to move forward to try and capture new modern trends, hoping that we will ride the early winds in some of these consumer behaviors.In Haryana, we have maintained the market share in the range of about 9% and have launched 2 brands in the Value Plus segment, which is called Metro Liquor earlier this year. This has seen a positive initial response from the market. The new offerings, which have been planned, will again play into the accretion of our margins as well as build our overall market share. Both offerings are in the whiskey flavor, which is the most dominant flavor in that market.In West Bengal, where there is a huge headroom for growth because our current market share is only about 2%, our upcoming expansion at the West Bengal facility gives us a huge opportunity to capture this at the front end of the business. Our reintroduction of the original Goldee brand in the market, its initial feedback has been very positive. We expect to grow our portfolio there as well through an introduction of an additional Values Plus category, which has been introduced by the [indiscernible] a quarter ago. And this should lead us to additional volumes as well as accretive margins in the months to come. We have also successfully started energizing our current portfolio across the chain by not over improving its overall delivery to the consumer, but also expanding and upgrading the range of our offerings to continue creating for evolving taste and preferences of the evolving consumer. Global Spirits will continue to participate as a meaningful business in the premium and core segment as well given the potential of the industry and the economic benefits that accrue to the players in this segment.In the IMFL business, as earlier mentioned, our philosophy of playing where we have a right to win, depending on the ease of entry, cost of doing business, better contributions and business environment, is progressing well. We are about to go in for local production of our brands' investment goal as we speak to you. This will allow us to expand quickly and efficiently in the whole state, and in the future, also pave the well -- the way for us expanding into other recent markets. Currently, we have only been servicing for Greater Kolkata area because we did not have local servicing available. Key markets of Delhi, UP and Haryana, we'll see our brands enter between Q3 of this year and Q4 of the current year through in-house sourcing, which is just around the corner and will be a very meaningful phase in our journey.In the IMFL segment, we are also working hard to increase our offerings so that we can also improve our participation in the larger spread of the markets. In semi-premium segment, we have already -- we are ready to put our offering on the table in these markets where we are entering in these quarters. We are also very confident of adding to our portfolio, other segments as soon as the runway for these markets is established. I will request Dr. Roy to now lead the conversation. Dr. Roy, please.
Thank you, sir. Good evening, everyone. Let me now take you through the operational and financial performance of the company. Before we discuss our performance in the third quarter, please note that the reported financials for quarter 3 FY '22 and 9-month FY '22 include the effects of the merger of Unibev Limited with Global Spirits Limited, and accordingly the financials for previous comparative periods have also been restated to ensure like-to-like comparison. Share of consumer business increased by 500 bps year-to-year from 45% in Q3 of FY '21 to 50% in Q3 of FY '22. In the consumer segment, we have seen a volume growth of almost 12% year-to-year to 3.7 million cases and realization growth of 10% year-to-year to INR 463 per case. The manufacturing business, on the other hand, by going on a year-to-date basis was impacted in Q3 FY '22 due to shutdown of Bihar plant on account of flood situation, which was restarted on 12 December '21, and also interim stoppages majorly in October '21 in the Haryana plant on account of plant maintenance, which led to a combined contribution loss of around INR 25 crores. However, both the plants are running as per normal capacity in the current quarter from January '22 with no stoppages.Despite this, the overall capacity utilization stood at almost 87% in Q3 FY '22, which will be in full capacity in quarter 4, coupled with the fact that Bengal will be operating on the additional capacity of 140 KLPD. Within the manufacturing segment, bulk alcohol revenue came in at INR 124 crores for quarter 3 FY '22 as against INR 135 crores Q3 in FY '21, and INR 413 crores in 9-month '22 versus INR 396 crores 9-month '21, thereby representing a growth of 5% on a 9-month period.In terms of volume, the consumer segment saw sales of 3.73 million cases in quarter 3 of FY '22, a growth of 12% year-to-year and almost flat quarter-to-quarter. And the Value Plus segment sales stood at 1.20 million cases in quarter 3 FY '22, which was 0.76 million cases in quarter 3 of FY '21, a growth of 58% year-on-year. For 9-month '22, the overall consumer segment volumes stood at 10.9 million cases, growth of 32% year-to-year of which Value Plus segment sales were 3.67 million cases, growth of over 90% year-on-year. Our cash flow generation in FY '21 was strong, and we generated INR 148 crores of net cash flow from operations, whereas for 9 months ended FY '22, the cash flow generation was INR 156 crores. Our finance costs are reduced by 41% year-on-year from INR 14.7 crores in 9-month [ FY '21 ] to INR 8.7 crore in 9 months FY '22 on the back of reduced debt, as mentioned above and reduced average cost of debt to 4.7% in 9-month FY '22.Our interest cost for the last quarter is 4.7% on long-term loan as a result of improvement in the financial risk profile of the company, marked by healthy operations margins and comfortable capital structure and great coverage indicators. The credit rating of our long-term and short-term bank facility stands [ reaffirmed ], that is stable with a positive outlook. We saw our EBITDA margins improved by almost 300 bps year-on-year to 23% in 9-month FY '22 despite lower margins in quarter 3 FY '22. As mentioned earlier, the inflationary input cost scenario, coupled with unavailability of part of our capacity leading to lower absorption of fixed cost impacted our profit margin in quarter 3 FY '22. Higher contribution from consumer segment and better bulk alcohol realization did offset the inflationary process to some extent. Going forward, with both Haryana and Bihar plants back in action, an additional capacity of 140 KLPD in West Bengal, we believe that the enhanced scale of operations should be able to absorb the impact of rising input costs.Our effective tax rate, which is on the basis of cash outflow of tax paid is at 21.7% due to available [indiscernible]. Management is contemplating to shift to the new regime of competition of tax under Section 115, where the tax rate will be 25.60%.Now coming to the working capital cycle. Our overall working capital cycle has seen an improvement in 9-month FY '22. However, there is an increase in accounts receivable on account of strong growth in higher price of consumer value segment, of which, the duty page is funded by the company. The net working capital days is 15 days as of now, despite this increase in working capital. Our return ratios have significant expansion. ROE has gone off from single digit in FY 2019 to 19% in 9 months ended FY '22. We have calibrated our operations to ensure that any disruptions are not only temporary but can also resume quickly. As a result, we believe we are in a strong position. This concludes my report on the operational and financial highlights.I will now require operator to open the forum for questions. Thank you.
[Operator Instructions]We have a first question from the line of Prithvi Raj with Unifi Capital.
Sir, the first question on your ENA sales. Given that -- I mean the Bihar plant is fully operating and Haryana is back to operations and you have [indiscernible] CapEx. So what kind of volume run rate can we look at, say, from Q4 onwards in the ENA sales?
So it's difficult for me to talk only about ENA sales or -- I will, however, attempt to answer that from a production of ENA plus ethanol point of view. We are now running at 670 KL per day of capacity, which is our installed capacity, we're running at 100%. So on a 90-day kind of basis, one should assume over 95% of our installed capacity as our capacity utilization.
Shekhar, sir, my question is how much of this will be used internally and how much is for external sales?
So internally will be around -- I'll have to do the numbers and get back to you, but around 40% will be internal is an approximate figure that I can give you right now.
Right. Second, coming to your margins. You've got few price hikes in Rajasthan. But given that the inflation still exist, how much of the cost increase you have passed on to the customers? And how do we see margins going forward?
As you are aware, Prithvi, ethanol is a fixed price business. Our consumer business is also a fixed price business for the year. ENA is where we have some room to change our prices from time to time. As mentioned in my opening remarks, the inflation we saw in Q3 was very, very quick. And the increase in selling prices was gradual. A lot of that increase has now happened. There's also been increase in ethanol rates starting 1st of December. So all of that put together, our targeted EBITDA margins, which I have always said, should be around Q4 of last year, we are in line with that.
Okay. So from Q4 of this year, you will be at 24% to 25% of EBITDA margin, am I correct?
I think Q4 of last year, I don't know what that number was, but Q4 of last year is what we expect as our sustainable EBITDA margin.
So just 1 final question from my side. You announced again 2 more CapEx in UP and 1 brownfield expansion. So what is the driving you? Because you already have Odisha, Jharkhand in line, and now another 2 new CapEx. What kind of opportunities are you looking in the industry? What is driving you to announce such a huge CapEx?
well, what drives me is growth. So we see opportunity for profitable growth, and that is what is driving us, plus the company is generating free cash, and we would like to deploy that free cash into our consumer business as well as our manufacturing business. Our consumer business currently does not require the kind of cash that is available. And as a result, the balance is being put to use in the manufacturing business.
I'm sorry to interrupt. Would you like to come back in the question queue, please, Mr. Raj.[Operator Instructions]We have next question from the line of Kaustubh Pawaskar from Sharekhan by BNP Paribas.
Sir, I just have 1 question. Because of this closure of Bihar plant and the Haryana plant during the quarter, what was the revenue and volume loss for your bulk alcohol business?
I don't have a calculation on the revenue, and we've given the number of days of loss, Bihar was 72 and Haryana was about 40. And Haryana, our capacity is about 150 KL per day. And in Bihar, our capacity is around 85 KL per day. So the loss can be computed quite easily.
Right. And with now West Bengal facility coming up. So as you said that this -- from Q4, you will see a normalization in terms of EBITDA margin. But your contribution from ethanol is expected to increase in the coming years. So considering that, will this margin trajectory would improve on a year-on-year basis? Or do you expect it to remain at around a 24% to 25%?
Yes. So I've always maintained this, it is a commodity-dependent business and inflation can play a significant role. One hedge that we have on that is increasing our allocation of ethanol that we make from surplus rice that we get from FCI, that's obviously at a fixed price. We're also working on linkages with coal companies in India for captive power plant projects like [indiscernible]. Hopefully, later this year that will come through, and we'll be able to save some fuel costs there. But Q4 of last year is something that I expect will sustain for the short to medium term for our industry. I think it is also very encouraging to see price increase from the OMCs for the current ethanol supplier acknowledging the fact that there has been cost pushes in the industry.
Right, right. And 1 last one, if I can. Just wanted to understand whether is there any constraint to our sourcing of inputs, for example, the broken rice or food grains for manufacturing of our...
There is plenty of raw material available in India. It's -- but of course, it's an agri commodities. So every year, it is dependent on the crop cycle. There is plenty of raw material available with FCI. There's plenty of raw material available in the open market between maze, millets, broken rice. And that's another reason why the company believes in setting up small to midsized capacities in multiple states rather than have a very large capacity in a few areas. We had a good hedge in terms of geographical spread and availability of raw material as well.
Because why I was coming to this question is because a lot of distilleries are now trying to become a fungible kind of distilleries where they can shift to grain-based manufacturing as well. So over this period of time, this would be some kind of a risk for us I was just trying to understand from that side.
I think you're talking about a very long period of time. And up to 30% ethanol, I don't see this to be a major issue. We have to see if there are plans to go to E30, E40 or E50, then perhaps these things will also come into consideration.
[Operator Instructions]We have next question from the line of [ Vivek Gautam ] from [ GS Investments ].
Sir, this quarter, to be honest, has been bit of a dampener. So in terms of margins and the losses. So can you just throw some light on what was the tax expenses, which led to this and this is one-off sort of a thing or a structural downward trend of business?
There are 2 types of events that have taken place in the quarter. One is unavailability of our capacities in Haryana and Bihar, which led to an EBITDA loss of INR 25 crores. The other is increase in costs, especially in Haryana due to our entire consumer business in Q3 in Haryana for about 50% of the time had to shift to purchase ENA, and that impacted margins dramatically, obviously. And third is an increase in fuel costs, which is, I think, known to everybody that took place in Q3 due to huge fuel shortages in India in the month of, I think it was October, November, and continued until early December. So these are the factors that affected our performance in Q3. Fundamentally speaking, these are not changing our business fundamentals. They are obviously a blip in -- we have demonstrated several quarters of unveiled trajectory. -- it's obviously a blip in that trajectory, but it does not impact our business fundamentals.
So how is the situation now? It's much better?
The increase in costs on fuel has stopped. The fuel costs have sustained at a certain level. We've received price increases in ethanol, which has compensated for that. Packaging costs, there was some inflation, but that has been arrested. There's no further inflation. So I believe all of these inflations has been factored into our business where price increases could happen, they have. And I maintained that Q4 of last financial year level of profitability is sustainable, and we have been sustaining it for all of this year, except obviously Q3 for the reasons mentioned before.
My second question is about the -- our CapEx plan. So our company has suffered in the past due to the aggressive CapEx plan, if you remember, and having learned the lessons from this, are we going in a measured manner and our ROC would still remain at a respectable number?
So most to according to our conservative projections, which is below the levels that I have said to you. Our paybacks on these projects is around 3 years. And considering that we have debt available at the rates we do, the return on equity is very, very attractive. So plus the offtake of our product is assured from the OMCs, we have long-term purchase contracts in some states that the OMCs have given us, 10 years, I think it's 8 or a 10-year long-term purchase contracts. So risk is -- risk -- reward is very much on our side.
UP, the land has been finalized for the CapEx plan and...
We've identified the land and we are working on land acquisition. We've identified land, and we are working on acquisition.
Near to Muzaffarnagar area only.
No, in Central U.P.
We have next question from the line of Anshul Vadia with Edelweiss Wealth Research.
Just a couple of it. First, your PPT says that we have been taking a price hike. The government is giving a price like on AML and RML. So lastly, if I do a rough math, it would be INR 4 per liter and INR 2 per liter on the Value Plus segment. So how do you see this contributing to margins next year? Because this is -- on the face looks a big number, then your realization probably trade INR 40 and INR 4 price like you are seeing. So will it be a...
So INR 40 is the rice increase per case for Value Plus and INR 30 -- INR 39 and INR 19, INR 19 is for the Value segment. There is -- there are 4 liters of alcohol that go into a case of Value Plus, that's INR 10 a liter. And in case of Value, there are 3 liters of alcohol, so that's about a shy of INR 7 a liter.
Yes, Yes. That's helpful. So that -- my follow-up is that so this price hike would be more than enough to offset the raw material cost inflation and the fuel cost?
It will lead to profit growth. That is what we are expecting.
And Your thoughts on animal feed, we see that these prices are normalized and they directly impact our manufacturing margins. So is it possible to tell us what was the average realization in this quarter on DDGS?
Sure, I can. So in the last quarter update, I had mentioned that AFS prices have gone up dramatically in the quarter. And I had said that the levels were not sustainable. And as per expectations this quarter, they have cooled off a bit. So currently, the prices are around INR 30 to INR 32 a kilo versus about INR 45, which was the average for Q2. This level is in my view, very sustainable going forward.
That's helpful. Sir, just last question from my side. The volumes were a little -- were flat in this quarter if we compare the last quarter. So in your initial remarks, you said there are some seasonal trends. So could you elaborate on that? And also in Rajasthan, we are largely -- we have garnered a large chunk of the market. So from where the consumer segment will see the growth in the coming years?
Param, can I ask you to take that, please?
Yes, Yes. So first thing is, as we have said, we are expecting the value segment to open up in Haryana, to open up in West Bengal. Both these markets are going to add to the growth from our point of view. In addition, obviously, as we are also expecting our IMFL business to start kicking in from February. And while initially, it will be significantly small in terms of bringing in revenue growth, but it is the basis on which acceleration will happen. So from that point of view, we are as of now, fairly comfortable that we can continue on for growth trajectory as we keep going forward.
We have next question from the line of Nitin Awasthi from InCred Equities.
The first question would be on UP expansion. You always have stated that the way you select states to expand into, is you look at the right to win. But this state seems very, very crowded. It has all the sugar mills who are [indiscernible] the Indian-made Indian liquor segment. So hence, just could you elaborate why UP?
UP is according to -- so UP according to us is going to be undergoing a significant shift in the consumer business? There we believe that in a few years, the entire industry of UP, both Value, Value Plus and IMFL, all 3 segments rather, are going to move from molasses-based ENA to grain-based ENA. As the sugar mills are reducing their availability of molasses -- are converting their -- sorry, are converting their sugar into ethanol, molasses availability in the market is reducing dramatically. As a result, standalone distilleries no longer -- will no longer have raw material available. Therefore, the entire state is going to move towards grain-based alcohol for consumer business.You're also right that sugar mills are moving into consumer business, but frankly, they do not have -- they have not had much success on this. Our brands do have some recall in UP, whereas we are not operating in UP, we are operating in border areas of UP. So we believe we can create a good consumer business in the states. Moreover, UP is the largest state for the consumer business in India, if you look at all 3 segments put together.And for Globus, it is imperative to find a way to succeed in this state. And for that reason, setting up the capacity at a strategically good location such as Central UP, which has grain, it has availability of sugarcane, whereas we don't have any plans for sugarcane as of now. But it's -- it will form a very solid foundation for the company to create growth in the times to come.
Noted and understood, sir. The second question would simply be, what would be the ENA prices prevailing roughly in the state of West Bengal as of now?
West Bengal, ENA prices are prevailing around INR 53 to INR 54.
We have next question from the line of Sunil Jain from Nirmal Bang.
Sir, my question relate to more of the rice, which you procure, waste rice and broken rice. So you had commented a bit in your opening remark. So how is the availability, is there any change in that availability or there is some inflation, which is going on?
No, there is inflation going on. And as of now, we have the increases in costs and -- sorry, the increases in prices that we have received from OMCs as well as what we've been able to sort of offset in the ENA market have taken care of the cost process. As mentioned, in Q3, the increases happened in costs were very quick, and we could not pass them through entirely. But now, to a large extent, they have been passed through. However, we remain watchful of inflation. And if required, we will shift more of our capacity to surplus rise from damaged rice in order to create a hedge on this inflation in damaged rice.
So the surplus rights you may be procuring from food corporation. So there the economics or profitability or whatever your EBITDA margin will be similar or it can vary?
No, that depends on the damaged grain prices, right? So currently, it is slightly more profitable to make ethanol from damaged grains. But if this increases further, the -- if the inflation continues, then that will get wiped out. So it really depends on inflation. And that's why there is a hedge.
So that was my question, like, if suppose you have to shift to, say, surplus rice, and how much impact from your Q4, which you are adding, EBITDA margin can come?
Like I mentioned, Q4 of last year is what we expect will sustain regardless of which raw material we use. Because inflation in grain also means inflation in animal feed supplements, DDGS or animal food supplement.
Okay, okay. And the second question relates to, again, the availability of raw materials. See, a lot of capacities are being announced. So from here, say, maybe 3 years after all the capacity will be in place. So at that time, we have so much surplus rice or whatever?
I don't see any issue in availability of raw material in India. We are continuing to export a lot of raw material. There's also very, very large amounts of stock of FCI, plus we have the ability to make ethanol from corn or from millet. All of these plants are multigrain plants. So I don't see any issue in the next 3, 4 years with this.
We have next question from the line of [ Agastya Dave ] from [ CAO Capital ].
Shekhar, you've answered most of the questions in quite a bit detail. Sir, I have just 2 questions. On the non-grain inflation part. So on the fuel and power costs, you mentioned that you may be going for a captive power plant in the future. So can you just take us through the inflation trend?
No, We actually do have captive power plants in all of our proprieties. We'll be going in -- we are evaluating going in for linkages with coal companies to procure coal, which will sort of insulate us from fluctuations in fuel cost.
Sir, as of what you are seeing? How much have you seen Y-o-Y inflation in your fuel -- power and fuel costs?
So last quarter, the inflation was as high. It went up to close to 20%. I think 18% is what I said in the opening remarks. It didn't sustain at that level, but 15% or so is the sustained level even today?
Right. So is that the reason why we see a spike in our other expenses? Or are there any one-off items there? So the other expenses...
So it's not one-off items, there are 2 or 3 reasons for that. One is, of course, this is a very large chunk of that. The second is our franchise bottling business saw significant growth last quarter. And there are some expenses related to that business, which gets classified in other expenses. And third, our -- for our Haryana business, we were short on extra neutral alcohol because our facility was closed. So for our brands, we needed to purchase extra neutral alcohol, which resulted in erosion of margins and increase in other expenses.
So that's not really included in the INR 25 crore EBITDA level hit you are taking, right?
That's not there. No.
Sir, my second question is on this current base of 670 KLPD, and then subsequently, when you expand to the full 1,230 KLPD, what would be the depreciation rates for the new plants. So currently, you guys are doing INR 10 crores a quarter, so how will that ...?
In interest of time, is it possible for us to get back to you on this?
Sure, sir, I'll take it later.
Operator, maybe we can have a last question, please.
We have last question from the line Riken Gopani from Capri Global.
I just have 1 question, which is, if you could elaborate more on the RML segment and how it is evolving in other markets and in terms of regulations? Or what do you see as opportunity in the next year?
Param, could you please?
So as you are noticing, state after state, they are seeing an opportunity to increase their revenue alongside an opportunity to offer the consumer a much more evolved and a better brand in terms of liquid and delivery. So earlier, obviously, excise and various states have been struggling how to increase their revenue on the Value segment. So this is offering a pathway, and we are seeing a lot of positivity from states to start exploring this.State like Rajasthan has obviously done the trick and they are already in a stable state. And states like Haryana, UP and West Bengal are on the early journey. And I see this process only accelerating because the base of the pyramid, which is the Value segment, is still huge multiples of the volume with the Value Plus segment is [indiscernible]. So I see a lot of positivity in terms of opportunity as well as the states intend to accelerate this journey because it is good for the consumer as well as beneficial for the state.
Thank you, everybody, for joining us today. And again, I apologize for being very quick and hurried today, it's due to other engagements of the management team. If there are further questions that we've not taken on, please do reach out to us on our investor -- Investor Relations team as well as our Investor Relations agency Stellar, and we'd be happy to give you the answers. Thank you again, and wish you a good weekend.
Thank you very much, sir. Ladies and gentlemen, on behalf of Global Spirits Limited, that concludes this conference call. Thank you for joining with us, and you may now disconnect your lines.