Radico Khaitan Ltd
NSE:RADICO

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Radico Khaitan Ltd
NSE:RADICO
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Market Cap: 330.3B INR
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Earnings Call Transcript

Earnings Call Transcript
2023-Q1

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Operator

Good day, ladies and gentlemen, and welcome to Radico Khaitan Limited Q1 FY '23 Earnings Conference Call hosted by Dolat Capital.

As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes.

Should you need assistance during the conference call please signal an operator by pressing star then zero on your touchtone phone. Please note that this conference is being recorded.

I now hand the conference over to Mr. Himanshu Shah from Dolat Capital. Thank you, and over to you, Mr. Shah.

H
Himanshu Shah
analyst

Good afternoon, everyone. On behalf of Dolat Capital, we would like to thank everyone for joining on this call. I would like to thank the management team of Radico Khaitan or giving us the opportunity to host Q1 FY '23 post results call.

We have with us today Mr. Abhishek Khaitan, Managing Director; Mr. Dilip Banthiya, Chief Financial Officer; Mr. Amar Sinha, Chief Operating Officer; and Mr. Sanjeev Banga, President, International Business.

I shall now hand over the call to Mr. Abhishek Khaitan for his opening remarks. Over to you, sir.

A
Abhishek Khaitan
executive

Good afternoon, ladies and gentlemen. Thank you for joining us on our Q1 FY '23 results conference call. I hope you are all doing well and keeping safe.

Strong growth momentum, which was seen in Q4 of last year continued during Q1 FY '23. Our endeavor during the quarter was to drive premium growth and focus on the execution of our projects to make Radico Khaitan of future-ready organization.

[indiscernible] remains challenging, marked by unprecedented inflation. This performance gives us the confidence of our future growth trajectory. We have delivered another quarter of a strong [indiscernible] volume growth, led by [indiscernible] above categories, which decreased by 29%. Overall, our growth is [indiscernible]-based and has a healthy underlying product and price mix.

As the consumption in the out-of-home space normalizes, we are seeing solid traction across the premium portfolio. particularly in the white spirit space. While massive movement vodka volumes are growing strongly, the momentum that Jaisalmer Craft Gin seen is quite encouraging. Looking at the growing demand of Jaisalmer Indian Craft Gin, we are expanding our gin distillation capacity, which is already a part of our earlier announced CapEx plan.

At Radico Khaitan, innovation is an ongoing phenomenon. In line with our brand strategy, we launched our travel retail exclusive expression of Rampur Indian Single Malt called three gold, which will be retained at $200 per bottle. It is an amalgamation of fruit aromas and [indiscernible] with [indiscernible] coming from a balanced maturation in 3 different [indiscernible]. This is a testament to the quality of luxury brands that Radico Khaitan's product produces.

Radico Khaitan was the largest exporter of [indiscernible] from India during Q1 of FY '23. While there are near-term concerns around the inflation, the recent softening of certain commodities, a normal monsoon and the policy measures undertaken by the government are positive for the industry.

The recent price increases in the [indiscernible]business translated into a 3% positive impact on our realization. With the price increases, coupled with the favorable product mix, we are able to maintain our [indiscernible] business margins.

The impact of the cost [indiscernible] has been much heavier in the non-[indiscernible] business where we are expecting a price increase shortly. Overall, we expect the inflationary environment to gradually ease out to some extent in the second half of the year.

Both the [indiscernible] and Sitapur [indiscernible] field projects are progressing well, and the civil construction is on full swing. We expect [indiscernible] gold field plant to be operational by Q3 of FY '23.

Our premium brand growth continues to be very robust. New brands such as Royal Ranthambore and [indiscernible] are performing in line with our expectations. The luxury portfolio consisting of Rampur Indian Single Malt and Jaisalmer Indian Craft Gin are showing great momentum. This, coupled with the growth of our core brands such as Magic Moments, [indiscernible], [indiscernible] and 1965, et cetera, places us very confidently to continue delivering industry-leading growth.

I would now like to hand over the call to our CFO [indiscernible].

Operator

I'm sorry to interrupt, sir, but your voice is breaking. Could you repeat the last sentence, please?

A
Abhishek Khaitan
executive

I would now like to hand over the call to our CFO for a detailed operational and financial review. Thank you, and over to you, Dilip.

D
Dilip Banthiya
executive

Thank you, Abhishek. Thank you, everyone, for joining us on this call today. During the first quarter of FY '23, we reported a total IMFL volume of 6.82 million cases, representing an increase of 21.5% on Y-o-Y basis. This was led by Prestige and Above category volume growth of 29.1%.

In value terms, the Prestige and Above category registered 37% growth. Prestige and Above category accounts for 29.5% of IMFL volume compared to 26.1% in Q1 of FY '22.

Net revenue from operation during Q1 of FY '23 was INR 757 crores, representing an increase of 27% compared to Q1 of FY '22. During this period, IFL sales value increased by 27.7%. As a percentage of total revenue, IFL sales account for [indiscernible] of net revenue compared to 78.3% in Q1 of last year.

Gross margins during the quarter was 43.6% compared to 42.7% in Q4 of FY '22 and 47.1% in Q1 FY '22. On Y-o-Y basis, continued cover inflation resulted in gross margin compression, particularly in non-IFL business. Given a favorable product mix change, impact of cost push on the gross margin of IMFL business was mitigated to a large extent.

On a sequential basis, gross margin improved due to price increase in IFL business and a favorable product mix. In near term, we expect raw material pricing situation to remain volatile. While we have seen further inflation in packing material and E&A costs in Q1 of FY '23, [indiscernible] we have seen softening trends recently. So it is very difficult to comment on that trend going forward. Company is taking all efforts to optimize cost and to mitigate any margin headwinds, which, along with the recently received price increases shall help in offsetting the inflationary pressure.

We are undertaking a company-wide brand-wide value engineering exercise, which will add value over the long term. In long term, we expect to continue our margin expansion sales given our portfolio premium migration and backward integration.

Finance costs decreased by 36% from INR 4.6 crores to INR 3 crores during Q1 of FY '23. The company's cost of borrowing is one of the lowest in the industry, due to stable profitability, strong catalyst structure and improved liquidity position. We have further titled our working capital resulting in continued strong cash flow generation.

During the quarter, company has incurred INR 95 crores on [indiscernible] feed and Sitapur [indiscernible] projects and a total of INR 165 crores helped to expand sales interaction on these projects.

We have a strong financial position, comfortable liquidity. During this time, we are taking all necessary steps to sustain our financial strength, maintain robust business model and grow consistently, competitively and profitably.

With this, we now open the line for Q&A. Thank you.

Operator

[Operator Instructions] The first question is from the line of Aditya Bagul from Tata Mutual Funds.

A
Aditya Bagul
analyst

Congratulations on a really good set of numbers. Sir, my first question is on realizations. So we've seen about 3% improvement in realizations in this quarter. Even over the longer term, we see 2% to 3% sort of a growth. So the question here is I'm trying to understand if you can help me break down this realization into some of the price hikes that we've received. And second is the impact of the premiumization journey that we are on. So just some thoughts on this would be helpful.

D
Dilip Banthiya
executive

So the realization in this quarter has also been in line with our momentum on this premium growth. So realization per case on Y-o-Y basis has improved by 6.1% on pace in above category. And realization on [indiscernible] categories improved by 800 basis points.

So as far as the premiumization is concerned the journey of premiumization is continuously moving and strengthening. This is being shown in the -- we have improved because of the price increase in certain states, there has been an overall improvement of 300-plus basis points on our gross margin.

We realized the UP

[Technical Difficulty]

Operator

Sir, your voice is breaking. We couldn’t hear you. Sir, we cannot hear you.

Ladies and gentleman, please stay connected while I reconnect the management.

We have the line of management connected now.

A
Aditya Bagul
analyst

I'm sorry, sir. We lost you, but if you can just repeat the states in which we've got a price hike.

D
Dilip Banthiya
executive

Yes, so there are certain states where we've got the prices review [indiscernible] Rajisthan, [indiscernible], Hakan, Assam. All these states are the major states where we have got prices. A couple of smaller states also.

The overall impact of these price increases is 300 basis points plus.

A
Aditya Bagul
analyst

Understood, sir. Sir, and if I heard you correctly, there was a realization positive impact of 300 basis points in D&A -- sorry, 600 basis points in D&A and a higher number in popular. But when we look at the overall realization, that is up by only 3%. So is it fair to understand that bulk prices have actually come off on a Y-o-Y basis? How do I read into that?

D
Dilip Banthiya
executive

Sir, on a [indiscernible] basis, this is the price, actually, realization, which has given you in D&A 6% and on a regular basis, 800 basis points. However, depending on state mix, sometimes -- the point is sometimes some state is more in retail than the other state on a quarter-on-quarter basis. So it can't be compared when you say at a macro level.

A
Aditya Bagul
analyst

Understood, sir. That is very helpful. Going ahead, that we have these 3% sort of price hikes in the pocket, what do you think should be the realization that we should [indiscernible] realization growth we should look forward to over the next 2 to 3 years because that is when all our premiumization initiatives will sort of come through? So just...

A
Amar Sinha
executive

So this is Amar Sinha. It's like this that if you see the history of performance, the growth in Radico is largely driven so far by P&A brands. And this P&A brand comprises of 2 clear segments. One is the luxury portfolio and one is the super-premium portfolio.

Now as we see the market today, there is complete buoyancy for our brands. There is consumer demand for our brands, and that's what is pushing the growth. Now these are brands like in the premium segment, brands like 8PM Premium Black, the newly launched Royal [indiscernible], the super-premium vodka, which is Magic Moments Dazzle. We are still in the expansion mode in different states of the country.

Rampur Single Malt and Jaisalmer are showing great traction, they are also in the expansion mode. So yes, what I could only respond by saying is that the next 3 years are going to see phenomenal growth in these brands because they would be full grow. And over and above that, there are a lot -- there is a lot of work happening on the premiumization part in terms of certain new innovative products that is also there to come.

A
Aditya Bagul
analyst

Understood, sir. Very helpful. Sir, my second question is around the inflation in our RM basket. So can you just talk a little in terms of inflation in [indiscernible], E&A, glass, et cetera, and some of the other inputs? And when do you see gross margins going back to the high forties level that we saw most of last year?

A
Amar Sinha
executive

As we have said that the IFRL segment, because of the price increase in product mix, we have mitigated more -- mitigated almost as the inflation on the community side.

On the non-IRFL segment, as we have explained that the price increase, which is in offing is going to mitigate that. At the same time, in the Q1, some of the commodities have softened -- have had softening and some of the commodities have seen the inflationary trend. Grain prices have increased over Q4.

Likewise, the rise in prices; the packing material price. We have seen the fuel price has increased, while in packing material, aluminum prices and the [indiscernible] prices have remained almost stable. So I think it's an overall mix of that.

A
Aditya Bagul
analyst

Understood, sir. Sir, but would it be safe to assume that towards the second half of the year, we should go back to [indiscernible] gross margin level?

A
Amar Sinha
executive

Yes. So as [indiscernible], there are so many factors which will improve our gross margin as well as EBITDA margin. One, the backward integration of our Rampur [indiscernible] plant will come into operation. So the backward integration profitability will be there. Delivery brand which is doing very well, like Jaisalmer and all that. That will -- and Rampur Indian Single Malt is still on allocation. So we have already spoken about it but next year onward, they are going to give a big [indiscernible] operating margin and gross margin.

Price increases which we have received will also be having an impact for the full year. So -- and the product mix with a launch of these products. As Amar has just explained that Royal Ranthambore [indiscernible] which are being taken to now pan-India rollout, I think this will bring the margin to the historical levels.

And above all this, a lot of work is happening in terms of value engineering to the packaging material of all premium brands. So this is going to result in a cumulative effect of margin expansion.

A
Aditya Bagul
analyst

Understood, sir. This is very helpful. Those are my questions. Thank you, and wish you all the best for the best for the quarters to come.

Operator

The next question is from the line of Pritesh Chheda from Lucky Investment Managers Private Limited.

P
Pritesh Chheda
analyst

Sir, after this 6% [indiscernible] in IM, by what percentage are you training in terms of the gross margin, the price increase required for gross margin? That's my first question.

And then [indiscernible], what kind of price increases do you need for the company level in gross margins to be restored?

D
Dilip Banthiya
executive

So your first question, can you repeat it again?

P
Pritesh Chheda
analyst

The first question is by how much percent of price increase is further required in IMFL [indiscernible] back to normal. That was my first question [indiscernible].

D
Dilip Banthiya
executive

So while we actually budgeted, we also don't look at that, how much price increase will be able to make it the product mix like we have grown in this quarter, also 29% on our Prestige and Above category. And the kind of brands which are being rolled out, we will be able to have the IRFL in gross margins on our [indiscernible] level from Q3, Q4 onwards. And next year, this will be on expansion trajectory in IMFL. And on [indiscernible], I can't say the exact price increase, but of course, that will mitigate most of our cost cuts.

P
Pritesh Chheda
analyst

In [indiscernible] we are not making any money on EBITDA, considering the price increases required or we are making some money on the EBITDA?

D
Dilip Banthiya
executive

At this point of time, no. After price increase, we will come back to you. But definitely, we will make -- another feature is that [indiscernible] segment is completely changing, right? For the first time, a grain base [indiscernible] has been introduced, which is 25% of the industry of almost 25 million, 30 million cases.

And another is expected. So the UPML is actually graduating the whole [indiscernible] business to the [indiscernible] in or economy [indiscernible] been done in south. So I think that segment from H2 onwards will also start generating the backward integration and the price increase.

A
Amar Sinha
executive

See, there's one point which needs to be understood. One is that country liquor is an important segment, but it does not greatly support our margin expansion trajectory. What is going to support us is actually the buoyancy of premium brands, which is already doing too pretty well. And there are a couple of things that are happening. We are working on the improvement of the product mix, selling more of premium brands. Premiumization is on the cards, which is still happening. It's not over yet.

We are working on price increases and much -- in quite a few states. The government has responded well in the last 2 years, and we hope that the outlook is positive in the times to come. We are working on cost optimization and value engineering, which will give us good results, and of course, backward integration with Rampur dual plant coming in and thereafter Sitapur plant.

So if you really look at the sequence of things, our margin expansion trajectory is being supported by so many other factors, which are going to result in a positive incline upwards.

P
Pritesh Chheda
analyst

One clarification, the new P&L, will you [indiscernible]a completely new category in itself.

A
Amar Sinha
executive

See, new PML is a good policy that has evolved in UP. It is actually moving the country liquor segment upwards towards the [indiscernible]. So it is moving towards the IMFL category.

So with UPML becoming stronger, actually, the IMFL space stands to gain and the biggest advantage comes to us in the form of using our captive spirit because the plant that we are setting up in UP, which is Sitapur. So we are secured actually with this space in the UPML segment.

P
Pritesh Chheda
analyst

So the contributors will shrink, right?

A
Amar Sinha
executive

Yes. It will graduate to the economy [indiscernible] which will have a higher margin compared to country liquor.

P
Pritesh Chheda
analyst

Okay, sir. Lastly, sir, at least on the volume growth numbers for IMSL as a whole for quarter 1.

A
Amar Sinha
executive

So the overall volume growth in this quarter has been 1.5%. And as we have already guided also that we will continue to have a double-digit growth on our volumes for the next 3, 4 years.

P
Pritesh Chheda
analyst

And premium grew 26% right?

A
Amar Sinha
executive

Premium grew by 29%.

Operator

The next question is from the line of Sonaal from Bowhead Investment Advisors.

S
Sonaal Kohli
analyst

I had 2 questions. Firstly, your ramp or stock inventories for making more of Rampur, [indiscernible] Q3 or Q4, it's available as of now in how many states? And what is the plan for end of this year and end of next year in terms of distribution?

A
Amar Sinha
executive

See, Rampur right now is purely on allocation basis. So as far as the Indian market goes, we are present in only 6 states, but there also we cannot supply because the demand is much more even the export demand, we are not able to service of Rampur.

But now with the new maturation facility, which we are coming in in Sitapur in a couple of years [indiscernible]. And the thing what we invested about 5, 6 years back, that production will start coming from FY '24. That is next year, the production will come.

And from this year's current production, it will be significantly higher. It should be at least about 3x.

S
Sonaal Kohli
analyst

Sir, are you saying from this year, it will be 3x or from 2024?

A
Amar Sinha
executive

From Rapur it will be next year.

S
Sonaal Kohli
analyst

It will be 3x. And would it increase further beyond that going forward?

A
Amar Sinha
executive

Yes. Yes, yes. It will keep increasing because as the spread gets matured, it will keep increasing. So as of now, the demand is so much that, that also looks less as of now.

S
Sonaal Kohli
analyst

And sir, are we able to fully manufacture whatever demand for [indiscernible] or there is a restriction there as well because of lack of ability of...

A
Amar Sinha
executive

Yes, and there also, we have received the exceptional demand and the product is doing very well, and it is the most expensive gin. It is priced at about INR 4,800 a bottle. And there also, we have tripled our production. And hopefully, by January, the plant should be operational, which was already taken into CapEx, but it happened sooner than what we expected.

S
Sonaal Kohli
analyst

And sir, as far as 18 Black is concerned and the Royal [indiscernible] is concerned, currently it's sold in how many states and where do you plan to take it by end of this year? And maybe if you can even talk if it's possible, by end of FY '24, where would you see your distribution for these [indiscernible].

A
Amar Sinha
executive

So the 18 Premium Black is in 19 states. And Royal Ranthambore , we have just started expanding our width of distribution. We are in 6 states. And the brand has shown -- see, as far as Black is concerned, it has shown in just a span of 2 years, it has multiplied manyfold.

And -- and we have -- last year, we did 2 million cases. This year, we are expecting a good growth. As far as Royal Ranthambore is concerned, the product priced at a higher point compared to foreign brands is performing exceptionally well, very good response. We see this as a major profit contributor in the future. And this year, we plan to expand the width of distribution.

S
Sonaal Kohli
analyst

This is currently to how many states [indiscernible]?

A
Amar Sinha
executive

Royal Ranthambore is just in about 6 states, right now .

Operator

[Operator Instructions] The next question is from the line of [ Manish Gupta ], individual investor.

U
Unknown Attendee

Is my voice audible to you?

Operator

Yes, Mr. [ Gupta ].

U
Unknown Attendee

Okay. Sir, congratulations for the great set of numbers, sir. My question is on, sir, volume and realization.

Operator

Mr. [ Gupta ]?

U
Unknown Attendee

Yes.

Operator

Are you saying something? We were not able to hear you.

As there was no response from Mr. [ Gupta's ] line we'll take the next question, which is from the line of Pankaj Kumar from Kotak Securities.

P
Pankaj Kumar
analyst

Congrats on really good volume growth. Sir, my question is to the royalty brands which you have given -- I mean, I just want to know, like a little bit what is included with category earlier? And what it is all about?

A
Amar Sinha
executive

See, Royalty brand is not a part of our strategy -- our business strategy. Actually, we give brands on royalty when we see that the margins are compressed and it is still calling for a huge inventory capital block -- the working capital flow. So these are some brands that we have put in some states where brands have been given on royalty, and it's not a significant part of our strategy.

P
Pankaj Kumar
analyst

And these are normally the regular brands?

A
Amar Sinha
executive

These are more or less regular brands.

P
Pankaj Kumar
analyst

Okay. And sir, on this 18 -- 18 Premium Black, we've seen very strong volume growth. So I mean, it's, of course, in the prestige and above category. Have we seen any compression in the volumes on the 18 brand? Because, I mean, it's -- we can say 18 [indiscernible] premium category, but the brand name [indiscernible], so that is driving the volume growth in 18 Premium Black?

A
Amar Sinha
executive

See, what we have done is like the 18 Premium Black, we are seeing a very, very strong traction. As I said, last year, we did 2 million cases. And [indiscernible] also the brand is absolutely galloping. And as far [indiscernible], we are concentrating only in those states where our recoveries are high. We are not entering into those states, which we have done in the last 5 years, where the contribution is not high.

And whichever state we are in [indiscernible], that has shown great momentum. I think both the brands coupled together is showing a good traction. And [indiscernible] as a family is about 10 million cases.

P
Pankaj Kumar
analyst

Okay. And sir, in terms of new brands, are we planning for any new brands in the next 1 year or something?

A
Amar Sinha
executive

So I'll tell you what. If you recall the last few interactions, we had said that Radico was working in the premiumization space with 2 whiskeys, One has already been launched, which is Royal Ranthambore, which is showing exceptionally good response in the market. There is another one on the cards, but we are waiting for the market and economy to pick up and normalize. So over the next 1 year, we are very hopeful that we should be able to do something on this.

Operator

There is a follow-up question, which is from the line of Sonaal from Bowhead Investment Advisors.

S
Sonaal Kohli
analyst

My question was pertaining to [indiscernible] first question, like what kind of growth would you expect? Is it still very high? Or is it [indiscernible]?

A
Amar Sinha
executive

See, 18 Black is growing at a very high double-digit growth rate. And we hope the brand to maintain the similar momentum in the times ahead. See it grew very quickly from 1 million to 2 million, and the brand is extremely buoyant.

The growth is attributed to its quality of the blend, the packaging and the brand positioning backed by Tiger shop who is the brand ambassador. So all put together, this brand is very buoyant. It has a great feel.

S
Sonaal Kohli
analyst

And sir, but when you say high, it could be anything. It could mean 50, it could mean 20. it could mean -- all these are high numbers. So let me ask you the question in a different wat. When do you expect it to become a premium plus brand?

A
Amar Sinha
executive

Very soon, very soon.

S
Sonaal Kohli
analyst

Great. My second question was your royalty has increased, but you may have implemented part of it mid of the quarter. So what is the steady state kind of number one could expect going forward in this basket?

And maybe if it's possible for you...

A
Amar Sinha
executive

Can you please repeat your question? Can you please repeat your question?

S
Sonaal Kohli
analyst

Sure. Sir, your royalty has increased Q-on-Q and Y-on-Y. And sometimes, while you're saying we implemented certain brands in this basket, but it's work in progress always for any business. So it's possible that you may not implemented all the changes at one go or it's also possible that you may have limited some of the changes in mid-quarter.

Therefore, what I was trying to understand from you is on a steady-state basis, if I look at next 2, 3 quarters, what kind of number one could expect from this royalty line item in the premium in terms of volumes or in terms of sales? Whatever is possible for you to explain.

A
Amar Sinha
executive

See, right now, in the royalty, we have [indiscernible] management and that is not our focus area. And right now, the situation is so volatile and the reason why we delineate on royalties because, first of all, we don't want pressure on our working capital and the margin, and this is not that great. So our concentration is more on the prestige and above side.

S
Sonaal Kohli
analyst

Oh, I see. So we cannot say anything about where this number would be and you may even change the strategy going forward on this one depending on the margins and the business outlook? Is that what you are saying?

A
Amar Sinha
executive

See, depending on margins, we would be flexible. As long as it benefits our bottom line, we can relook at it.

S
Sonaal Kohli
analyst

Understood. And if I were to do a like-to-like comparison, would it be fair to say on Y-on-Y would have grown by additional INR 30 crores kind of revenues? Have you not changed this? Or what would have been the built-in revenues because when we look at overall revenue numbers, obviously, this comes in your royalty line item, while in terms of -- at the overall revenue level, if you would have done it internally, the number would have been obviously much bigger than multiplier of this number you reported. So if you could give us some context of that, that would help us understand what was like-to-like revenue growth for Radico.

A
Amar Sinha
executive

So the revenue, as you know, is the royalty model, the revenue is not being accounted for and is the royalty only. It depends on the realization per case for that. Basically, we have gone on royalty model we have worked out on the royalty numbers rather than on the top line numbers.

S
Sonaal Kohli
analyst

But what do you have [indiscernible] re-estimate like would your revenues have increased [indiscernible].

A
Amar Sinha
executive

I can't guess like that.

Operator

The next question is from the line of Sanjay Dam from Old Bridge Capital.

S
Sanjay Dam
analyst

My question is [indiscernible] fully commissioned and say, FY '25 will be a full year of operation. So once that happens, either in FY '25 or 26, what is the kind of -- by that time, what are we expecting on the P&A volume, the regular volume and finally, the ENA sales so far as from a volume point of view? Value you would obviously not know how it would pan out.

I presume that with so much of thrust on P&A, that would obviously be attributed to both top line and profits. But broadly on the -- from where we stood, FY '22, for example, we did 18 million cases of regular and about slightly short of 8 million cases on P&A. So a sense of that.

D
Dilip Banthiya
executive

See, if I look at the 25, 26 levels, one is PNA one is given the luxury segment. The kind of growth we are experiencing in the luxury segment is very, very encouraging for us.

And especially in 25, 26 Rampur, we should have in a decent quantity Still, I think the demand would be much more. And Jaisalmer, the way it is going, whether it is exports, whether it is domestic, everywhere. I think that is going to contribute largely to our volume mix.

But to answer, I think I think in terms of value, we should be at least 50% plus by the premium portfolio itself. If you -- I will further add to it, as you've seen that for last 6 consecutive year, we have out beaten the industry growth. And we will maintain that trajectory that we -- actually, in P&A category, we will be better off than the industry growth. And with the launch of various brands, which we have already explained to you. The growth in regular and P&A category, both will be in double digits.

For regular category, I won't say that double-digit, high single-digit, but [indiscernible] it could be strong double digits, based on the results.

A
Amar Sinha
executive

See, the most positive, positive aspect of all our investments is, one, that UP last year, we've grown by 22%. The market is buoyant. The excise policy is very progressive. So in the next 3 years, this market is going to boost first.

Secondly, we have a 30% market share of this state. So any growth that comes will come in this space. So all our investments are going to yield results.

And we have, in principle, taken a decision that all our super premium brands will be sourced out of UP. And our investments are in Rampur and going to be in Sitapur. So we are very safe as far as the investments are concerned. As far as our markets are concerned, it is buoyant and therefore, we see a proper capacity utilization of our investments.

S
Sanjay Dam
analyst

Yes. So in your premium and super premium, like prestige and above and above that in 3, 4 years, you should actually kind of close to -- I mean, I don't think you will be happy if you don't move closer to doubling of -- from where you are. Regular of course, is a different story.

On the raw material part, [ Certares Pariba ] has things timed now. Once you have a normal year of full production of the greenfield, what would be the kind of cost savings or margin expansion, everything remaining constant, if your product mix or other things were to remain constant as it is between how you source your raw material and your backward integration? If you could give us some sense in whichever way you want to put it some sense of what do we expect.

D
Dilip Banthiya
executive

So Sanjay, as far as the formal prices are concerned, nobody can predict it. First of all, it is very volatile. So as you said that given this current environment when the inflationary pressure we see then there is the tailwind towards that side, definitely, it's going to have a positive impact on our margins.

But I can say that the investment which Amar has explained, will be utilized as our P&A category where we are using almost our alcohol, grain-based alcohol. So we'll be utilizing the capacity for our branded business for the grain-based alcohol, which we are doing in Rampur and Sitapur and 3 years' time, with the kind of growth we are envisaging, this will be actively utilized for our brands for full year. So that much I can say.

S
Sanjay Dam
analyst

Perfect, perfect. So basically, the project should pay for itself in about 4 years' time?

A
Amar Sinha
executive

Absolutely. Absolutely.

Operator

The next question is from the line of Himanshu Shah from Dolat Capital.

H
Himanshu Shah
analyst

Just a couple of questions. Sir, you highlighted that there has been a price in case [indiscernible] pressure in ENA and grain prices sequentially. Can you just call out what this inflationary pressure would be in quantitative terms for ENA and the grain cycle?

D
Dilip Banthiya
executive

In ENA, on a Q-on-Q basis, this is approximately 4%.

H
Himanshu Shah
analyst

Okay. And Y-o-Y basis?

D
Dilip Banthiya
executive

Y-o-Y basis, it is 12%.

H
Himanshu Shah
analyst

Okay. On grain?

D
Dilip Banthiya
executive

On grain prices, this Q-on-Q basis around 7% to 8%. And on a Y-o-Y basis, it is around 35%.

H
Himanshu Shah
analyst

Okay. And sir, has an increase in fuel costs, et cetera, also -- so does that impact our power cost also?

D
Dilip Banthiya
executive

So basically, we have our boiler and steam generated cogenerated power plants. However, because of the fuel cost increasing, the cost of conversion is also increasing. So that is in line with what -- and the fuel prices in this has also gone up by 25% in the Q2.

H
Himanshu Shah
analyst

Okay. And sir, can you just provide some more color on bottle prices, both on a [indiscernible] and Y-on-Y basis?

D
Dilip Banthiya
executive

So the glass bottle prices have been increased from end April, and it is cross industry, some 5,000 rupees per tonne has got increased. And I think this has been taken care of.

And what we are doing is that we are taking [indiscernible] and mitigating exercises like light wing of the glass bottle, recycled bottle in the regular category. So partly at least be mitigated, but definitely, that will have an impact on the cost.

H
Himanshu Shah
analyst

Okay, okay. So full impact of this, we should see some more in Q2 FY '23, sir?

D
Dilip Banthiya
executive

Yes. Partly, it has been in this quarter, in fact, in the coming quarters, it will be full impact, but there are pluses as we said, in H2.

H
Himanshu Shah
analyst

And sir, just one -- one more question related to costs. One sir, carful plant becomes operational, fully operational. What would be the fact fixed operating cost for factory or either -- on a monthly or on an annualized basis, if can get provide some further?

D
Dilip Banthiya
executive

I don't understand Himan your question.

H
Himanshu Shah
analyst

Once the power plant will become operational, what would be the additional fixed cost for that particular plant or for manpower as well as administration, et cetera, on an additional cost that would come below the gross profit level for [indiscernible]?

D
Dilip Banthiya
executive

So this is actually a quantification of this at this point of time, we have gone on what it would result into giving the -- based on production per liter listing and rest fixed cost will be taken care of because the whole contribution that have been done based on that, that it will generate. And we are not -- we have to also see that we add to our -- we are booking a large bottling has been pickup of the IMFL as well as of the P&L, et cetera, and [indiscernible].

So I think it will be -- bottom line side, it will be very positive. So fixed cost is not that significant that it will have a significant impact on that. This is manpower cost and the other process is in line with what we are having in Ramco.

H
Himanshu Shah
analyst

Okay. Sure, sir. Two more questions. You've had a very, very healthy volume growth in [indiscernible] on a Y-o-Y basis. But I'm presuming last year was slightly impacted by second wave of COVID. And if I compare with Q1 FY '20, we had then approx. 2 million cases of PMA. So volumes are marginally down versus Q1 FY '20. So anything specific over years, like probably some disruption in [indiscernible] ? Or what could be the reasons for the [indiscernible]?

D
Dilip Banthiya
executive

See the he previous years actually is not comparable because since then, there have been a lot of RTM changes, move to market changes and market plans have changed. But as far as P&A growth is concerned, I think we are growing very healthy at the current context, and that growth rate will continue to be maintained. But there's no point comparing it with the past when the market composition was different. The [indiscernible] markets have changed there.

H
Himanshu Shah
analyst

Perfect. No issues. And in past quarters, we have guided that P&A should continue to register as the double-digit growth and overall volume growth should be in the reentry of 13% to 15%. Is that at -- is my understanding correct on that guidance at a [indiscernible]level?

D
Dilip Banthiya
executive

Yes. On the broader level, this understanding is absolutely bang on.

H
Himanshu Shah
analyst

Sure. And just the last question. What would be the share of our new products like Magic Moments [indiscernible] in our overall revenue mix?

A
Amar Sinha
executive

The products that we have launched in last couple of years -- last 3 to 4 years -- what would be their share in our revenue Mr. [indiscernible]?

As far as the [indiscernible] and all that is concerned, we will, I think, be talking about this in 23, 24 because these brands are emerging, right, and being rolled out.

But as far as the APM Premium Black is concerned with a 26 million cases, which we did last year, 2.2 million roughly around 8%. So the 8% of the overall [indiscernible]. It's about 10% actually. Now it's 10%.

Operator

The next question is from the line of [ Sofmil Rejni ], an individual investor.

U
Unknown Attendee

I want to ask a question. So when I was just checking the receivables for the last 5 years towards the sales, I can see that our receivables is around 25% to 30% for Y-o-Y.

Now as for the last in 2021 annual report, it was mentioned on the audit side that this is basically a risk that we see. So I wanted to understand that what is the segment-wise breakup of this receivables? Is this IMFL non-IFML?

And also, basically, the realization of this receivable depends on the selling price per state government. So if you can throw some light?

A
Amar Sinha
executive

So first of all, I must tell you that we have worked continuously for the last 5, 6 years on our working capital. The working capital number of days have come down from 61 days to 30 days, which is because of our credit control systems.

And at the same time, on the state government in the open market, our credit system -- credit limits are very, very stringent.

You must have also seen that in our base -- in our businesses, as many companies have shown the write-offs and all that. But in Radico, because of our business model, we have not gone on loose credit policy.

So I will say we are a very conscious company on credit, and we continue to monitor our working capital and the credit risk in the market consciously and continuously.

Further, we have a risk free -- we are insured against any kind of receivable risk because we don't sell enough in states where we find there is a potential risk to receivables.

U
Unknown Attendee

I have another question. So in terms of our geographical expansion, I think so we have launched ta gin, right, in the U.S. market, if I'm not mistaken. So what is our general strategy before we launch in new geography, especially in the international markets?

Like do we run some surveys? How do we arrive with a decision that this is our product that we need to launch in this geography? And also from our U.S. markets, what is the revenue target?

A
Abhishek Khaitan
executive

Well, in terms of launching any brand in any new market, obviously, we see what's happening in the market. In fact, when we were selling our or launching our Indian Single Malt Rampur, that's when we discovered that whether it is U.S. or Europe, there is a huge demand growing and interest growing in gin, and that's when we decided to do our Jaisalmer gin.

One needs to be clearly abreast with what's happening in the international market, both in terms of consumer preferences and the trends. basis that we are exploring a couple of other new product developments, which we see potential in the coming years in these all developed markets.

In terms of revenue from U.S., I'm afraid we don't share region-specific revenue breakups. But let me assure you, both our Rampur and Jaisalmer some are doing exceedingly well in the U.S. market.

U
Unknown Attendee

All right. So I have a follow-up question on this geographical expansion that we are doing.

So I understand in India, we have a regulatory challenge that we cannot advertise our spirits outright. What about in international markets? Are we doing advertisement spend there?

And are there any regulatory challenges do we face there? Or we can do our advertisement as we would like to do?

A
Abhishek Khaitan
executive

No. As a principle, and especially post the pandemic, our focus is far more on digital media than on, say, billboards or TV commercials or anything. So we don't do the traditional marketing or advertising in any of the international markets. Our focus is far more on social and digital media.

Operator

Ladies and gentlemen, that was the last question for today. I would now like to hand over the conference to the management for closing comments.

A
Amar Sinha
executive

Thanks, everybody, for joining us today.

As we continue to deliver upon our premiumization strategy, which is reflected in the strong P&A volume growth during the quarter and all our core premium brands are resisting strong growth -- the attraction of luxury brands Rampur Indian Single Malt, which is strictly on our location at this point of time, and Jaisalmer Indian Craft Gin is above expectation.

Next year onwards, Rapur [indiscernible] will increase as we are expanding. And also we are expanding the gin distillation premises to cater for growing demand.

There has been near-term margin pressure due to the commodity inflation, but we are confident of maintaining our long-term margin expansion, given the premiumization of our portfolio and backward integration.

We look forward to interacting with you on our next earnings call. In the meanwhile, if you have any query or follow-up questions, please free to write to us.

Stay safe and healthy. Thank you.

Operator

Thank you. On behalf of Dolat Capital, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.

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