Globus Spirits Ltd

NSE:GLOBUSSPR

Earnings Call Transcript 2020-Q4

[Shekhar Swarup, Joint MD & Executive Director]

Good morning, and thank you, everyone, for joining us on this call to discuss quarter and financial year March 2020 earnings. Along with me, we have on the call Mr. Vijay Rekhi, Chairman at Unibev; Dr. Bhaskar Roy, Chief Operating Officer at Globus; and Mr. Ajay Goyal, Chief Financial Officer at Globus Spirits, along with our Investor Relations team. Firstly, I hope that everyone on the call and their families are safe. Also on behalf of the entire Globus Spirits team, we would like to take this opportunity to thank all those people who are fighting the coronavirus at the forefront for safety of citizens. This virus has affected so many lives in India and overseas, and we hope things will come back to normal soon. Let me start by sharing some of the key business and financial highlights of the year gone by, coupled with a brief outline of the steps taken by the company to ensure continuity of operations during this challenging period, along with an outlook on the business. We're experiencing a new growth phase for Globus Spirits. And in the segments the company operates, it is emerging as a very strong player. We like to call it perhaps Globus Spirits 2.0. There were several headwinds in this arduous journey, but the hard work and determination of the entire team at Globus Spirits has made it possible for us to get up to here. Some of the key focus areas for the company during the past fiscal year, were debt reduction, capacity enhancement, foray into a new country liquor segment in Rajasthan, which we will talk about in some time. CapEx and some more CapEx to improve efficiencies at our plants and make a little more ROI at each factory. We are happy to report that these efforts have borne fruit, and the management, the Board of Directors of the company has recommended a dividend of 10% on the face value of every share. And we shall endeavor to repeat this going forward. In order to create greater synergies between the businesses of Global Spirits and Unibev, and to enable Unibev to get better access to financial resources, better managerial bandwidth, the company has approved a merger between Globus Spirits and Unibev subject to applicable approvals. Post this merger, Globus Spirits will operate in all segments of alcohol beverages within one entity, IMIL and IMFL. To strengthen the balance sheet during this fiscal year, we are focused towards systematic debt reduction. Consequently, the debt equity ratio of the company has improved -- has improved from 0.73x in '17 to 0.38x in FY '20. Our debt to EBITDA has improved from 4.48x in FY '17 to just 1.26x in FY '20. Further on the back of efficient working capital management, the current ratio has improved to 0.89 in FY '20 against 0.53 in FY '19. All these measures, coupled with an improvement in profitability, has led to significant improvements in the company's return ratios. For example, the return on a significant improvement in various companies' return ratios, I'll speak just about one return on equity, which increased to 12% in FY '20, which was around 2% in FY '17, whereas return on capital employed has almost doubled to 22% in the last year from 11% in FY '17, and we hope to be able to continue these trends and show you better returns in the future. To capitalize on the changing market dynamics in terms of increasing demand of ENA and ethanol, the company enhanced its capacity in Rajasthan, which we were able to do at very limited CapEx and key bottlenecking to get some more capacity from the existing facility, to get some more alcohol from the existing facility. To further strengthen our position and market share in Rajasthan, we launched a few new brands within our country liquor business, our IMIL business and forayed into a new segment of liquor called Rajasthan Medium Liquor, which essentially sits between IMIL and IMFL in the state of Rajasthan. This was a new launch last year, and based on certain changes in pricing and policy in the current financial year in FY 2021, the company has seen significant volumes coming from this segment. Further in the wake of ongoing global pandemic, manufacturing of sanitizers is a new business opportunity that the company is capitalizing on. At 100% capacity utilization, the sanitizer industry segment is expected to have a requirement of 8 million to 10 million liters per month. ENA is a key raw material to manufacture sanitizers with Globus Spirits, being one of the largest grain-based distillers in India, is benefiting from this opportunity. We have initiated manufacturing sanitizers under our own brands as well as undertaking contract bottling for major FMCG and OTC brands in some of our facilities. We see this to be an important business going forward to add to our overall profit pie. Coming to our financial performance. We continued to deliver a good performance during the past financial year. The structural changes in the industry provided a thrust to our bulk alcohol segment by way of more offtake of alcohol for ethanol and for beverage, as a result, increasing the price basket -- price for the entire alcohol basket. Enhanced operational efficiencies and favorable input costs have also enriched operational profitability during the year. The company delivered healthy operational margin of 14% during the quarter, and noteworthy improvement in finance costs have also accelerated bottom line during the year. A short note on how the pandemic has affected our business. Our revenue in the last 10 days of the previous financial was impacted by the lockdown. We started seeing disturbances, in fact, as early as around 15th of May, but dramatic impact was seen in the last 10 days. As you're aware, because stores across the country were closed, and this led to absolutely 0 sales of liquor for all companies, which included IMIL and IMFL. This resulted in sale of ENA to beverage companies also coming to a standstill. We were, however, able to execute some of our pending orders for ethanol. And of course, like I mentioned earlier, the team did exceedingly well in capitalizing on the new business opportunity, which is sanitizer. Our growth outlook from here, while there is uncertainty on the economic recovery for the country, there's also uncertainty whether there would be continued containment areas or lockdowns of different nature and parts of the country. We expect that the bounce-back in alcohol demand to happen very quickly as we've already seen in the current quarter. This will be true for ethanol as well as cars start moving, petrol starts getting consumed, ethanol lifting has resumed as well. Excuse me. Globus Spirits, as you're aware, we have significant competencies in ENA and ethanol, which will help us drive through the rest of this year. Our brands of Rajasthan medium liquor, IMIL in Rajasthan and West Bengal will also add to volumes and profitability this year. The other trend that we are seeing during this period is an increase of taxation on brands -- COVID taxation as some states have decided to call it, which has led to an increase in volume at the lower price points as we are seeing downshifting in prices by consumers. Globus Spirits is very well poised to reap benefits of this due to our specialization at -- our strength and specialization over the last few years at the low price categories. The merger of Unibev with Globus will unleash -- uncork some synergies in terms of cost savings as well as manufacturing efficiencies, which will help Unibev not only become a little less -- will require less cash burn, but also allow the company to enter some states, which have not been able to -- which we don't have access to yet due to these manufacturing synergies that I spoke about. At this point, I request Mr. Vijay Rekhi to talk a little more about Unibev.

[Vijay Kumar Rekhi, Executive Director]

Thank you, Shekhar, a very good morning, everyone, and welcome to the earnings call. Summarizing the year ended FY '20, performance of Unibev, we have expanded to 10 states as at the end of the financial year. Unibev has established its presence in Pondicherry, Karnataka, Telangana, West Bengal, Andhra Pradesh, Chhattisgarh, Orissa, Maharashtra, Goa and Assam. During FY '20, we managed to sell 31,972 cases of 9 liters each, which could have been slightly better, but was impacted on account of COVID-19 in the last 10 days of the fiscal. In the wake of COVID-19 and to ensure optimum utilization of our cash, we have been very prudent about our expenditure such as marketing and various other expenses. We are focusing on expanding our reach to newer geographies, and our target is to expand our presence in 6 new states, subject to on-ground situation emerging out of COVID-19. We could develop new products -- we continue to develop new products. However, the launch of our latest new product in the super premium whiskey category has been delayed on account of current market conditions, and other launches are cautiously being deliberated. As we are all aware, the liquor industry faced severe challenges on account of closure of liquor shops and exorbitant taxes levied by authorities. However, the pandemic has also opened new revenues like online delivery in the industry that was hitherto not widely available. We have started witnessing a gradual demand revival of liquor products post uplifting of the lockdown. At Unibev, our focus is to strengthen our roots, which we -- which will aid us to withstand the storm in the future. This is what we believe in, and we'll continue to work towards that. I now request Dr. Bhaskar Roy, to share operational performance details for Globus Spirits. Thank you once again.

[Bhaskar Roy, COO & Executive Director]

Thank you, Mr. Rekhi. Good morning, everyone. I will share the operational performance of the company. During this fiscal, we have implemented various measures towards enhancing our operations -- operating efficiency. The initiative towards modernizing power plant at Haryana plant at Samalkha is at final stage and we are already doing the trials and started the commitment. It was slightly delayed due to the COVID situation and lockdown situation and work got delayed. This will aid towards reducing the fuel costs. During Q4 FY '20, the utilization was at 88.8% compared to 92.3%. The utilization levels were impacted on account of halt of operations due to lockdown. IMIL volumes for the quarter stood at 2.50 million cases in quarter 4 FY '20 compared to 2.81 million cases in quarter 4 of FY '19. Average realization for the quarter stood at INR 372.9 per case against INR 354.4 per case during quarter 4 of FY '19. Franchisee bottling volumes in quarter 4 FY '20 stood at 0.91 million cases compared to quarter 4 FY '20 compared to 1.20 million cases in quarter 4 of FY '19. Bulk alcohol volumes for quarter 4 FY '20 stood at 26.2 million liters compared to 26.4 million liters in quarter 4 of FY '19. This also impacted on account of lockdown. Bulk realizations stood at INR 51.4 for quarter 4 of FY '20. The average alcohol recovery also improved compared to the previous quarter and the previous year. On account of higher ENA and higher DDGS realization, the revenue mix was higher towards manufacturing segment at 65% compared to 63% in -- compared to the quarter 4 of FY '19. With that, I will like to call upon our CFO, Mr. Ajay Goyal, to continue the discussions on the financial performance. Thank you.

[Ajay Goyal]

Yes. Thank you, Dr. Roy. Good morning, everyone. I will take you through the key financial highlights for the quarter and year ended March 31, 2020. During Q4 FY '20, the stand-alone total income net of excise duty was reported at INR 2,695 million against INR 2,709 million in Q4 FY '19, impacted amid 2019. For full year FY '20, net revenue stood at INR 11,630 million against INR 9,923 million. EBITDA stood at INR 390 million in Q4 FY '20 against INR 294 million in Q4 FY '19, a growth of 32% with EBITDA margins extended by -- at 14.4% in Q4 FY '20 against 10.8% in Q4 FY '19, part benefit of softening of raw material costs and lower fuel costs. EBITDA for our financial year '20 stood at INR 1,379 million against INR 1,022 million, a growth of 35%. And margin stood at 11.8% against 10.3% in FY '19. Profit after tax during the quarter stood at INR 216 million compared to INR 144 million in Q4 FY '19. Reduction in finance costs and overall performance enabled a robust growth of 50% year-on-year. During financial year '20, reported net profit after tax INR 593 million against INR 306 million, delivered a tender growth of 94%. During the year, the total debt long-term plus short-term plus current liability has been brought down from INR 2,371 million to INR 1,825 million as on March '20. The repayment for next year is expected at around INR 397 million, which will further strengthen the balance sheet. The cash and bank balance sheet as on March '20 was at INR 197 million against INR 25 million on March '19. This concludes my remarks on the financial highlights. I would now request the moderator to open the forum for questions. Thank you.

[Operator]

[Operator Instructions] The first question is from the line of Avi Mehta from IIFL.

[Avi Mehta]

I just wanted to understand -- dwell more on the post quarter 1Q kind of how exactly things are panning out. If you could share how the bulk prices are or ENA prices currently trending. And second, on the demand supply situation, given that this year we have seen a kind of an impact because performance was impacted because of lockdown, how should we look at good sanitizer demand be that difficult to upheld growth rates? Or how should we be easy to kind of give your thoughts on this?

[Shekhar Swarup, Joint MD & Executive Director]

Yes. Firstly, I got to say that we -- at the company level, we got a do these calls a little bit earlier so that we can keep questions regarding the quarter gone by. But since we're in June, I can understand why you're asking about quarter 1. So that's fair. So this quarter, of course, the Q1 has been complete -- sorry, April month 1 has been a complete washout. There was some sanitizer revenue and very little ethanol revenue that the company had, but we were able to make enough margin to be able to take care of our fixed costs for the month. Months 2, months 3 so far have been -- volumes have been -- have come back to a significant degree. Though I do see that they aren't back to what they should have been at the same -- as per our budget, we would have had a little bit higher volumes, but this is due to just the industry not opening up fully. Even now, there are some shops that continue to remain closed in different parts of the country. Sanitizer is interesting for us from multiple angles. It is certainly not at a level where I can say it is 10% or 15% of revenue, certainly not. But it's interesting from the following points. One is that the margins on this are higher than our country liquor margins. So as a result, it pushes up our average price for the ENA basket quite considerably. Secondly, it is a business which is not regulated by state excise. So it gives us a very good hedge on state excise policies in some states. So for those reasons -- and also, by the way, volumes for the company are growing. I do see, in time, this will become a substantial chunk, but I'm not at this position able to say how long that will take. But due to its profitable nature and hedge on excise policies, I feel this business is a strategic business for the company.

[Avi Mehta]

And the unit pricing, Shekhar, and that part is well how exactly trending right now?

[Shekhar Swarup, Joint MD & Executive Director]

Right, right. So in our surplus states of Haryana and Bihar, we are seeing pricing about the same as Q4. But in our deficit states of Rajasthan and West Bengal, I think you understand what I mean by surplus and deficit. Haryana, Bihar have extra alcohol than is needed in the state, so we need to export. Bengal and Rajasthan have deficits, so they need to import alcohol. So local capacities are at a premium. In deficit states of Rajasthan and Bengal, we've actually seen pricing move up during this last couple of months.

[Avi Mehta]

Okay. Perfect. And if I may, on the Unibev, what you indicated with the processing merger, is this -- given the current situation, in which states kind of levying about supranormal kind of taxes, unheard of taxes is what I can say. Look how does the working capital or how would you look at this business in the near term in terms of expansion? How would you kind of allocate capital? Or how would you kind of look at capital allocation in this business now? I understand the -- your reason to support it. But in the near term, we were actually having a very aggressive rollout plan. How do we kind of look at this now? And if you could kind of give us -- that would be good.

[Shekhar Swarup, Joint MD & Executive Director]

Yes. So I want to give another point of view on the current taxation. See, the few things have been -- how do I say, it's very favorable outcomes of this increase in taxation. Of course, you understand the challenges that increased taxation has increased capital and problems at certain prices for -- even volumes reduced at certain -- for certain product categories. But as the silver lining, I would like to offer a couple of points with you. One is that the low-priced products become very much involved again with consumers. And we are seeing that volume over there has increased, as I mentioned in my opening comments. In Rajasthan, for example, which is our, as you know the most important state, volumes have gone up over March as compared to even May and June. So that's a very interesting fallout. Similarly, in Rajasthan -- in West Bengal, our company was able to get a significantly higher market share as things started opening up as compared to the previous quarters. The other interesting silver lining here is that the discussion or the murmurs around prohibition have completely been put to rest when states realized the dependence of tax collection on liquor consumption and especially the lower-priced liquor consumption being very, very important for tax collection. States across the country have recognized the importance of this as a part of their arsenal.Coming to the specific question you asked about Unibev, so we -- when we got -- we are fully aware that ad hoc tax policies, ad hoc's excise duty policies are very much excise departments and state governments MO. They have done it before. Of course, I don't think we've ever seen this kind of taxation before. But ad hoc changes in excise policies are very much powerful across in the IMFL business. So that works both ways, ad hoc negative and ad hoc positive. It does add a little bit of uncertainty and unpredictability. But we are aware of that. And the people we have in the company have weathered these storms over several cycles, and we have full faith in the team to be able to perform even in these difficult times. As far as our commitment to Unibev is concerned, we do not see any change in the long-term price that's over here. I have always maintained in all my interactions that it's very difficult to predict short-term gains, but the long-term pricing in Unibev, there is absolutely unwavering commitment on that.

[Avi Mehta]

no, but Shekhar, what I meant is that the working capital intensity would kind of probably expand in that business. And I'm not sure if it also does in the IMIL segment as well. So that is where I was coming from. So how do you kind of think on that?

[Shekhar Swarup, Joint MD & Executive Director]

Yes. But the business is small. So whereas you're right, it does increase, but business is small for absolute numbers, it doesn't impact us that much as of now.

[Operator]

[Operator Instructions] The next question is from the line of Ms. Nitin Awasthi from East India Securities.

[Nitin Awasthi, Research Analyst]

Firstly, congratulations on a good set of number. I just have 2 questions from my side. Firstly, on the ENA front, so being the complex product that this is, the market is saying that the dynamics are favoring -- sorry, not favoring the product manufacturers going ahead. Is that true? Or where do you -- like you had explained where the prices are? But where do you see the prices moving for the rest of the year?

[Shekhar Swarup, Joint MD & Executive Director]

Well, if you ask a net buyer of alcohol, they will, of course, hope for prices to come down. You ask a net seller, they will hope for prices to go up. That's just the type of dynamic we have in the industry. So I'm very much in the seller camp. And I will say to you the prices will go up. And the reasons are as follows: there is a shortage of capacity in the country. There is an increased demand for alcohol in the country, especially now, there is a significant amount of sanitizer production that is happening in India and all over the world, which is creating a significant demand for alcohol. Whereas earlier I mentioned that Globus' own sanitizer business is small, but there is a considerable amount of alcohol that Globus Spirits is selling to sanitizer manufacturers in the countries. So I don't see these prices come off, really. On the other hand, raw material prices are going to be weak this year. And so for that reason, we do see margins to remain fairly consistent for this year.

[Nitin Awasthi, Research Analyst]

Okay. Sir, got it. On the second question would be, sir, there has been a very good performance in the last entry that you've made in the state of Kolkata in country liquor, your performance has been phenomenal. And if I look at the segment of Kolkata country liquor, it was already dominated by a very few strong players within the state. Now this market share gain, is the market itself growing so phenomenally in Kolkata? Or are you being able to take share from the big boys?

[Shekhar Swarup, Joint MD & Executive Director]

Yes. So whereas the performance in West Bengal has been very good, we are still short of our targets over there. The country liquor business needs to perform better. Volume growth has to be better over there, and we are working on various avenues on that, and I would request Dr. Roy to help you with that just in a bit. But in West Bengal, the market dynamics are that there are about 25 to 30 bottlers of country liquor in West Bengal. We have 3 -- 4 major players. Between them, they control maybe 75% of the market share. We are trying to become the fifth player. That is our current objective. We see no reason for there to be so many bottlers. It's very, very unorganized. Their costs are found to be higher than ours, and that's why we want to sort of consolidate the market over there. Dr. Roy, can you maybe talk about what our plans are for this year to increase market share?

[Bhaskar Roy, COO & Executive Director]

Actually, as rightly said, we -- our target is to be -- we were around out of the 22, 26 players -- 24 players, we were ranking around 12, 13 in the previous year. So we were wanting that to go up to at least come to 5th or 6th level during the current position. And as per the records in the month of May when it started, we reached to that position. Basically, now the demand of our product, which is holding up in the market, is being repeatedly duplications coming from the process and people are wanting it in the Kolkata region also and in around Kolkata region also. We are also wanting to open up new places in the North Bengal, which is near to the factories, and we can cater within 24 hours or maximum 36 hours. We are also trying to serve this market and open up these markets so that we can reach there and the volume can increase.

[Operator]

The next question is from the line of Vijay Ramchandani from Pragya Equities.

[Vijay Ramchandani]

A good set of numbers. I just have 2 questions. The first one is on the line item of changes in inventory, which is significantly higher this quarter at around INR 18 crores and almost 6.5% of our EBITDA margins. So can you explain why the nature of this and whether the margins are sustainable?

[Shekhar Swarup, Joint MD & Executive Director]

CFO, may I request you to take this, please?

[Ajay Goyal]

Yes. See, in terms of inventory, basically during the lockdown period, basically dispatches all of a sudden halted, and there are certain supplies which are under pipeline. Raw material came as per the schedule, but there was no dispatch of our bulk alcohol and our country liquor. All line have basically held up at various stages. That's why the inventory as on March has gone up drastically.

[Vijay Ramchandani]

Okay. So this is expected to come down next quarter once we sell the inventory. So what should be the sustainable margins because at this quarter is around 14.4%?

[Ajay Goyal]

Sustainable margins, basically, we are trying to maintain the same margin levels. It all depends basically on the capacity utilization and the prices of the raw material.

[Shekhar Swarup, Joint MD & Executive Director]

So let me take this, Ajay, please. So margins -- we earn margins from 2 activities chiefly. One is the bulk alcohol business and the other is the bottled product or the country liquor business. On the country liquor business, there is a fair amount of certainty of margin for, say, 1-year or maybe up to 2 years. The movement in packing material cost is usually not that drastic. And over a period of time, it averages out. But in terms of bulk alcohol, there is uncertainty of raw material prices. We buy broken rice, which is an agricultural product. Agricultural products, broken rice like any other agricultural product, is dependent on sowing pattern, monsoon and things like that. We do have options of other raw materials. So in case there are times where -- when broken rice becomes very expensive, we can change. We do have visibility of this year as being a good -- a decent year for raw material prices. Prices should remain soft. So but this year, I think these margins should be all right. That's what I can say right now.

[Vijay Ramchandani]

Okay. Okay. So coming to capacity utilization, can you tell me at what level our plans are operating on in the month of May or maybe as on today?

[Shekhar Swarup, Joint MD & Executive Director]

We -- I can say that as of today, all plants are operating at 100%. But average for the month will -- average for the quarter will be lower than the same quarter last year, obviously, because April was completely closed, and we only started operations in May. But let's wait and watch and see how the rest of the quarter unfolds, please.

[Vijay Ramchandani]

Okay. And we're not facing any challenges with respect to the supply chain or something and because of lockdown, everything as is basically?

[Shekhar Swarup, Joint MD & Executive Director]

Well. There are a lot of challenges I must admit. It is not easy to operate in this environment. But full credit to the operations team led by Bhaskar Roy and by our CFO, who are able to achieve the current levels of operations.

[Vijay Ramchandani]

Okay. Okay. And a couple of questions on Unibev. Firstly, I want to know if -- what was our EBITDA loss in Unibev for FY '20?

[Shekhar Swarup, Joint MD & Executive Director]

CFO, could you please take up the numbers?

[Ajay Goyal]

EBITDA level of?

[Vijay Ramchandani]

Loss in Unibev for FY '20.

[Ajay Goyal]

That loss was somewhere around INR 7 crore to INR 8 crore in Unibev, FY '20.

[Vijay Ramchandani]

Okay. Okay. Coming back to our strategy, you mentioned that you have seen some downshifting of products by consumers because of various taxes, particularly, COVID tax. So has there been any change in our strategy for Unibev because of this, because that is into super premium category? Can you throw some light, if there be any change in strategy?

[Shekhar Swarup, Joint MD & Executive Director]

Mr. Rekhi, could you pick up that question, strategic nature, please. Mr. Rekhi, are you on the call? I think there's a problem in his line. I'll take that up.

[Vijay Kumar Rekhi, Executive Director]

No, no. Shekhar, my phone was on mute, so I'll take it up.

[Shekhar Swarup, Joint MD & Executive Director]

Okay. okay.

[Vijay Kumar Rekhi, Executive Director]

This is a good question. And we have anticipated during the COVID lockdown that there would be pressure on premium products as the taxes are being imposed by various states on an ad hoc basis. And like Shekhar said, some states even prefer to call it ad hoc taxation, particularly Delhi. Now we have analyzed the market, and we already have some brands lined up to selectively introduce in states, which make a lot of economic sense, but use the same distribution and manufacturing infrastructure. So apart from the premium products, which we'll see some turbulence, we are about to posture to launch products, which will be contribution positive and use the same infrastructure and at a lower price point than the existing super premium products.

[Operator]

[Operator Instructions] The next question is from the line of from Krati Rathi from Perpetuity.

[Krati Rathi, Assistant Portfolio Manager]

The tax reduction has been quite encouraging. So could you please highlight the debt reduction plan for the current year? And also, if we can see any further reduction in the interest cost for the year.

[Shekhar Swarup, Joint MD & Executive Director]

Yes. CFO?

[Ajay Goyal]

Yes. Debt reduction has been as per plan, whatever amount was payable during the last financial year, it has been repaid on time. And for the current financial year FY 2021, total repayment would be in the range of INR 40 crore, which will be repaid as per the schedule. And regarding the interest costs, yes, there are changes in the MCLR. And basically, we are taking up the banks. And definitely, we will try to further improve on the interest cost in the financial year.

[Operator]

The next question is from the line of [ Shoumik ], an investor.

[Unknown Attendee]

Good set of numbers. I had a slightly different question on the industry. So I mean for most of the part, the prices for ethanol, I think, have been bolstered by the fact that there has been blending from the government, and the government has continued to pursue this. But given the COVID situation and the fact that most of our vehicles are at home and there is an overall reduction in demand for petroleum products, do you see ethanol demand for blending going down in the near future? And how will that impact prices?

[Shekhar Swarup, Joint MD & Executive Director]

Yes, that's a very good question. So let me answer that in 2 ways. One is I also want to address the issue of ethanol being linked to crude prices, which is also sort of linked to this issue. So in India, there are 2 main raw materials which are used for ethanol production. One is sugarcane-based products. So that the sugarcane juice, be heavy molasses or see heavy molasses. And the other is broken rice. Both of these products are grown in abundance in India. Of course, broken rice has not grown. It's a byproduct. But sugarcane and paddy are grown in very large quantities in India, and there is a very significant dependence that the Indian population has to the purchase prices of these products. As a result, the government of India and various states, the trend has been over the last several years to try to increase the prices of these products, increase the price paid to farmers for these products in order to increase disposable income in the hands of the farmer. Now as a result, the Indian price of cane and the Indian price of paddy is completely out of whack from a global context. We are not -- our paddy and sugarcane are not competitive in the global context. As a result, the paddy and sugarcane cultivation keeps going up because farmers get more and more income. They have surety of that, but the country doesn't know what to do with so much of this product. And that is where the government is using ethanol to plug this in and to allow farmers to get an offtake for the final product as well. Because if there's no offtake, then the FRP or the support price has absolutely no meaning. As a result, I believe that the ethanol price is not linked to the price of crude. Ethanol is a way of giving more money to farmers and ethanol is a way to reduce our dependence on imports. So it is a strategic venture by the Government of India. The next issue on how this is affecting -- how offtakes are affected in the current times, yes, April and most of May, there was hardly any offtake. So a lot of the orders had to be completely canceled for that period. But in the month of June, for our -- Globus Spirits has commitments to supply ethanol. You are seeing volumes return now in the month of June. In fact, I think June dispatches will be equal to our committed quantity. And the reason is that the government of India has -- sorry, the OMCs have capacity to blend up to 10% ethanol, but they're only sourcing about 3% or 4%. So even if we are at 33% of petrol consumption, we'll be meeting our targets of blending. Only at 33% consumption of petrol, we will be meeting our targets of blending. So as a result, a little bit of reduction in petrol consumption doesn't impact ethanol volumes.

[Unknown Attendee]

That's very well explained. May I take the liberty of asking 1 more question?

[Shekhar Swarup, Joint MD & Executive Director]

Sure, please.

[Unknown Attendee]

So I had a question on Unibev. Given the fact that as has been explained, even in your opening remarks and now, because of the COVID-related disruptions, alcohol consumption patterns, I think, have changed. And with the huge migrant population moving back home and unlikely to have a lot of money, what do you see -- how do you see country liquor? And for Unibev, how do you see premium liquor? We've heard that you put some of your product launches on hold and you're doing it in a calibrated manner. So we're just wondering what is your view on that. And do you see that demand returning in this fiscal or maybe the next?

[Shekhar Swarup, Joint MD & Executive Director]

So I'll quickly take that up, we've discussed it at length earlier today. Some other questions were asked on this issue. So in the states where we have country liquor operational, Rajasthan, Haryana and West Bengal, we have seen a significant increase in volumes. West Bengal industry hasn't grown as much as our market share has in Haryana and Rajasthan. In both states, there has been a significant increase in industry. On the matter of premium products, yes, because of COVID tax implications, some -- there is a pause to the country's premiumization story. What in the last 2 or 3 years was very clear that consumers are going to premiumize, I don't see any change in that in the long term, but there is certainly a pause because jobs are affected during this period. So disposable income is affected and these premium products have become even more premium. So there's a double impact of the virus. So there is a pause, and Mr. Rekhi mentioned that we are recalibrating our plans for the short run. I mentioned earlier that, in the long run, the company is completely committed. There is no change in our long-term price. But yes, there are headwinds in the short term for premium products.

[Operator]

[Operator Instructions] The next question is from the line of [ Dhwani Mehta ] from [ Sanghvi Investments. ]

[Dhwani Mehta]

Sir, I wanted to know what is the visibility of sanitizer market? Do you believe that this market to sustain its demand and growth after COVID-19 settles?

[Shekhar Swarup, Joint MD & Executive Director]

Yes. Thanks for the question. So this is something I often say to our teams in the company that is on 1st of Jan 2020, sanitizer demand was x. And on 1st of June 2020, it is, I don't know, say it is 1,000x. I don't know what that number is, but let's just say it's 1,000 x for a second. Then on 1st of June 2021, it will be somewhere between x and 1,000x. So I don't expect the current level of demand to sustain after there is a vaccine for coronavirus and all of this is behind us. But I do see that once all of this is behind us -- once all of this is behind us, the demand for alcohol for sanitizers and the demand for sanitizers will be higher than before all of this started.And for that reason, we believe that for Globus Spirits, this is a strategic segment because volumes are good. But more importantly, it is a segment that gives us a hedge from excise policies. We are not controlled by state excise departments. And thirdly, the EBITDA or the contribution from this business is higher than that of our country liquor business today. So it is a good fit to our 360-degree model that we talk about from timing again.

[Dhwani Mehta]

Also, sir, just a follow-up on that. How do we plan to expand this going forward?

[Shekhar Swarup, Joint MD & Executive Director]

That opens up the need for a very detailed discussion, which we're happy to have. But suffice it to say, currently, there is tailwind in volumes. So we are enjoying the tailwinds very bluntly. We are being opportunistic, and I don't see the harm in that. Once things start settling down a bit, then one can figure out what the strategy for -- not figure out that's around phase, then we can get into more details of exactly how we are differentiating ourselves in the market and planning to grow.

[Operator]

The next question is from the line of [ Shruti Sharma, ] an individual Investor.

[Shruti Sharma]

Sir, I have actually 2 small questions. First, I wanted to know if I can get -- can you a little elaborate on the country liquor segment at Rajasthan? With the current scenario, how things are panning out over there?

[Shekhar Swarup, Joint MD & Executive Director]

Country liquor, Rajasthan, the market size over there is about 27 -- 25 lakh, 26 lakh cases a month. We have about 30% market share, which is up from the previous quarter by a few percentage points. There is a new segment there, which is called Rajasthan Medium Liquor, which comes in between country liquor and IMFL. And essentially, the product at RML is an IMFL product, but at a subsidized duty rate to be sold in country liquor shops. So whereas, at one point, we were concerned that this might cannibalize the country liquor business, but in the current time, what we're seeing is that it's added to the revenue as the country liquor shop and, therefore, to our volumes as well. Currently, the RML market is about 1 lakh in quarter cases a month, but it's growing very, very fast. I don't know where it's going to stabilize, and we have about a 40% market share in RML.

[Shruti Sharma]

Okay. So any percentage you can give us, like at what rate it is growing?

[Shekhar Swarup, Joint MD & Executive Director]

Well, infinite right now because it's brand new. All of this is only about 1.5 months old. Taking volume from IMFL, so IMFL volumes at IMFL shops are shifting to country liquor shops, which is really very good news for us because that's where we excel in those country liquor shops.

[Shruti Sharma]

Okay. Sir, second question, I wanted to know is that is there a possibility of downtrading in liquor segment? And do you think the country liquor will be the beneficiary of this?

[Shekhar Swarup, Joint MD & Executive Director]

Well, in the current situation, as I've said earlier a few times, and there is downtrading taking place and country liquor is being able to benefit from that. So yes, I mean, I've already said that it's happening.

[Shruti Sharma]

Sir, will it be sustainable, like going forward or how do you see it?

[Shekhar Swarup, Joint MD & Executive Director]

This government policy is a major determinator of that issue. So we have to see how policy pans out. This year is very clear. It will be pretty strong, the growth in low price points. I've also mentioned earlier that the government is a very important stakeholder. They have understood the importance of low-priced alcohol, and it required a virus to make them realize the importance of this for the tax collection. And I do believe that -- I do strongly hope and believe that favorable policies for our segment will now continue to happen.

[Operator]

[Operator Instructions] As there are no further questions, I now hand the conference over to Mr. Shekhar Swarup for his closing comments.

[Shekhar Swarup, Joint MD & Executive Director]

And thank you, everyone, for joining us today, and we hope to speak to you again very soon with our Q1 numbers. If you have any further questions or things you want to discuss, please do reach out to us directly or through our IR agency. Thank you again, and wish you all the best.