Radico Khaitan Ltd

NSE:RADICO

Earnings Call Analysis

Radico Khaitan Q3 Growth Amidst Challenges

In Q3 FY '24, Radico Khaitan reported a 3.7% year-on-year increase in IMFL volumes to 7.25 million cases, with a significant 20.2% growth in its Prestige & Above (P&A) category volumes, indicating strong performance in its premium segment. Value growth in P&A was even more impressive at 29.1%. This category now makes up nearly half of the total volume, up from 42.4% the previous year. Price increases and premiumization led to a 185 basis points positive impact on IMFL earnings. Despite food grain inflation affecting gross margins by 100 basis points year-on-year, increased premium sales and price hikes in the IMFL business sustained gross margins. Net debt was reduced, and the company maintains a strong financial position and liquidity.

Market Position and Performance in Key Regions

The company has a strong market presence in Uttar Pradesh, holding approximately a 28% market share across the industry. Their flagship product, Magic Moments Vodka, stands as the largest-selling vodka in the region, bolstered by flavored varieties that are gaining popularity. In addition, other brands like 1965 and Royal Ranthambore are also performing strongly in this market.

Growth Strategy Focused on Premium Segment

There's a noticeable shift towards the premium (P&A) segment, which is consistently outpacing the regular category with a growth rate of around 20%. Over the next 3 to 5 years, the company expects P&A to constitute 50% to 60% of volume, even potentially reaching 60% under favorable conditions. This segment's growth trajectory benefits from new product launches and favorable pricing strategies, indicating a future where most revenue will derive from higher-end products.

Strong Margin Profile

The blended margin across the company's portfolio ranges from 50% to 60%. This is significant given the wide-ranging products that make up the company's offerings, from the popular segment to the premium. Their margin profile demonstrates the successful implementation of their premiumization strategy and hints at robust financial health.

Impact of Price Increases

States like Telangana, Haryana, Assam, and others have enacted price increases in the range of 180 to 185 basis points. This upward adjustment, applied to the current financial year, results in an overall weighted average impact on the company's Indian-made Foreign Liquor (IMFL) business of 185 to 190 basis points. These adjustments are keenly relevant for ensuring that revenue growth keeps pace with inflationary pressures.

Ongoing Discussions for Favorable Excise Policies

The company is actively engaging with state governments to advocate for excise policy changes that account for inflation. Although increases thus far have been nominal, there is optimism that continuing discussions will yield significant, positive impacts on price structure for the upcoming fiscal year.

Outlook and Investor Relations

The management expresses confidence in sustaining margin growth through premiumization, recent price increases, and operational efficiencies like backward integration. Investors are encouraged to communicate any queries or concerns as the company prepares for the next earnings call, signaling transparency and a commitment to shareholder communication.

Earnings Call Transcript 2024-Q3

[Operator]

Ladies and gentlemen, good day, and welcome to the Radico Khaitan Pata Q3 FY '24 Earnings Conference Call hosted by Dolat Capital. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Himanshu Shah. Thank you, and over to you, sir.

[Himanshu Shah, analyst]

Thank you, [ Vinny ]. Good afternoon, everyone. On behalf of Dolat Capital, we welcome you all to Q3 FY '24 Earnings Conference Call of Radico Khaitan. We would like to thank the management for giving us the opportunity to host the call. On the call, we have with us Mr. Abhishek Khaitan, Managing Director; Mr. Amar Sinha, Chief Operating Officer; Mr. Dilip Banthiya, Chief Financial Officer; and Mr. Sanjeev Banga, President, International Business. I will now hand over the floor to Mr. Abhishek Khaitan for his opening remarks. Thanks, and over to you, sir.

[Abhishek Khaitan, executive]

Good afternoon, ladies and gentlemen. Thank you for joining us on our Q3 FY '24 results conference call.

Driven by the strength of our premium brand portfolio and focused marketing strategies, Radico Khaitan delivered another quarter of resilient performance with Prestige & Above category brands growing by 20% year-on-year. All core brands continue to report strong momentum, such as Magic Moments Vodka, which recorded 1.6 million cases sales during the quarter, Morpheus Super Premium Brandy, Royal Ranthambore, After Dark [ Blue ] Whiskey, 1965 Spirit of Victory Premium Rum, et cetera.

Our core commitment to delivering value to our consumers' execution is excellent, increasing investment in brands and driving [ field migration ] remains a cornerstone of our success. Our luxury portfolio continues to attract consumers and connoisseurs across the globe. Rampur Double Cask was recently featured in the Luxury Lifestyle Award as the top 100 Premium Wine and Spirits Brand of the World. Rampur Asava won the Double Gold at Barleycorn Awards, 2023, and was named as the Best World Single Malt.

We plan to launch Asava in the domestic market in the next financial yearm FY '25. Furthermore, we continue to expand the distribution of Rampur and Jaisalmer in India. Rampur is now available in 14 states and Jaisalmer is available in 20 states.

We have further expanded our luxury offerings with the launch of Spirit of Victory 1999 Pure Malt whiskey. The launch not only recreates our premiumization strategy but is also a testiment to our innovation and brand creation capabilities. Priced atINR 5,000, this brand is targeted at a mid-priced luxury segment. Our Master Blender has traveled over the world to evaluate various single malts and has blended them meticulously together with our Indian single malt to craft this exceptional pure malt. We are confident that 1999 Pure Malt will go on to create a mark of its own as many of our previous luxury brands.

While we have seen prices of certain commodities stabilizing, the scenario remains volatile for grain, glass and ENA. We continue to cautiously monitor the industry trends. Given the steep inflation in the grain prices over the last 2 quarters, we have seen our margins getting impacted. Despite this, we have been able to sustain gross margins on a year-on-year basis due to the ongoing premiumization and the price increases in the [ high retail ] business.

The current grain scenario is volatile, and it is an industry issue. Government and industry are working together and have taken certain [Technical Difficutly] the use of alternate feedstock in the manufacture of ethanol, which should be -- also elevate the pressure on broken rice prices.

It is heartening to note that, due to our focus on financial discipline, we have been able to reduce our net debt by over INR 100 Crores on a sequential basis. We remain committed to our integrated growth strategy of a focused premium product portfolio, brand innovation and agile organization, and delivering value to our consumers and stakeholders. We will continue to deliver our value-led growth, manage business with ability, harness the strength of our extensive distribution network and manufacturing platform while consistently improving our profit margins.

I would now like to hand over the call to our CFO [Technical Difficulty] operational and financial review. Thank you, and over to you, Dilip.

[Dilip Banthiya, executive]

Thank you, Abhishek. Thank you, everyone, for joining us on this call today.

During quarter 3 of FY '24, we reported a total IMFL volume of 7.25 million case, which is a growth of 3.7% on a year-on-year basis. Prestige & Above category volume grew by 20.2%.

In value terms, in the Prestige & Above category, we saw 29.1% growth. Prestige & Above category now accounts for 49.9% of the IMFL volume compared to 42.4% in quarter 3 of FY '23. The percentage in P&A is slightly higher due to the significant [indiscernible] growth in revenue category.

Improvement in IMFL realization is due to a combination of price increase and continued premiumization. We have received price increases in Regular category in [indiscernible] division, which supported the volume in Regular segment. On a year-on-year basis, there was a 185 basis point overall impact due to price increase on our IMFL case earnings.

Gross margins were impacted both on a year-on-year basis and quarter-on-quarter basis due to the significant foodgrain inflation. Grain price inflation had a negative impact of 100 basis year-on-year and 370 basis points on a quarter-on-quarter basis on gross margins. Despite the commodity inflation in ENA and grain prices, we have been able to sustain gross margins on a year-on-year basis due to the ongoing premiumization and price increase in the IMFL business.

Although prices of certain packing materials have softened recently, we cautiously monitor the trend of grain, ENA, and glass bottles, which still remain volatile. Due to strong financial discipline and working capital management, the company has been able to reduce the net debt on quarter-on-quarter basis. Overall, we have a strong financial position and comfortable liquidity. During these times, we are managing and taking all necessary steps to sustain our financial strength, maintain a robust business model, grow consistently, competitively and profitably.

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

[Operator]

[Operator Instructions] We have our first question from the line of Abneesh Roy from Nuvama.

[Abneesh Roy, analyst]

Thanks and congrats on a very good set of numbers. I wanted to understand the P&A volume growth. So the market leader has been counting a slowdown the past 2 quarters. And in fact, this quarter, they saw less than mid-single-digit volume growth in P&A, which used to be much higher earlier. Your performance both in Q3 and 9 months has been pretty strong at 20%, 22%. So I wanted to understand, do you see also the industry slowing down? I understand your performance is good. So if you could tell, from last 3 to 5 years, the new products which you have launched, what is the contribution in the P&A? Is that the reason why you are able to grow much faster?

[Dilip Banthiya, executive]

First of all, our P&A category is growing across the geographies and across the brands. And P&A, the Magic Moment Vodka, which is our flagship brand, is growing by 22%, 23%. Morpheus Super Premium Brandy is growing in double digits. After that, [ Blue ] whiskey, which has been there now rolled out to around 9, 10 states, is also growing in strong double digits. 8PM Premium Black is also growing in strong double digits. Royal Ranthambore has seen a big jump that started in 2 years back is seeing -- now it's available in 19 states, and we are seeing a good traction in that brand. So luxury brand is growing very fast. It's growing also on top line and the Luxury portfolio, [indiscernible] single malt [Technical Difficulty] in India is available in 14 states now. Jaisalmer Indian Craft Gin is available in 19 states.

So we are doing well. We are growing the portfolio across. Our existing [ craft gin ] brands are growing faster, also added by the new launches, which are being rolled out and being put [ through ] distribution and all that is also taking place. We are doing well on those brands also. Do you want to add on more?

[Abhishek Khaitan, executive]

So it's like this, that if you really see the last 2 years, in fact, just last year, Magic Moment completed its 5 million cases. Morpheus did 1 million cases. 1965 Premium Run did 1 million cases. 8PM Premium Black completed 3 million cases. Now, all this put together has given Radico great strength across the retail and on-trade business over the last 2 years. And we are getting the benefit of this on the luxury portfolio also that we have got. And that's the reason why Royal Ranthambore, Jaisalmer, all of them continue to do well, and we see a similar trend moving forward.

[Abneesh Roy, analyst]

So just one follow-up, so in terms of the last 3 years or 5 years, whatever number you are comfortable to give, out of the INR 519 crores, what is the contribution of new products launched in either 3 years or 5 years? What is it?

[Abhishek Khaitan, executive]

To summarize, for 3 years or 5 years at this point in time, we were, in our volume terms, around 3 years back, around 35%. Now, today, we stand at 50% almost in volume. So it's a consistent growth in our existing flagship brand and the new brands. The new brands are still very, really nascent, like these have been launched 2, 3 years back only. And there is a lot of things to do maturing these brands in many states. So I think, both put together, it's a combination of our existing flagship brand as well as the new launches.

[Abneesh Roy, analyst]

A last follow-up question, so you said mostly the flagship brand is also growing very strongly. So any particular states where these are the stronger performance? Because why I'm asking this is, one, when I see [indiscernible] both growth rates are much slower in terms of their P&A volume growth. Second, of course, is there is a general consumption slowdown across almost every FMPG [ to feed ] USR, apparel, paint, FMPG. So, generally, everything is slowing. So against that context, your flagship brand growing so strongly is a very good performance. So if you could give more color to it in terms of, state-wise, anything there or why the market share gains are happening? Because, clearly, it seems market share gains rather than the industry growth rate being there.

[Abhishek Khaitan, executive]

So I'll say that, in general, we are finding that P&A category and premium brands, we are not seeing that slowdown, particularly in our brand portfolio. However, the regular [ mark ] brand [Technical Difficulty] and strategic [ call ] also, there is some pressure, which we have seen also in the last 3 quarters. I think coming quarter also, there will be some single-digit decline in that versus YoY basis last year. From next year onwards, when correction course is done and we get new price increases also in certain states in the popular categories, then we will be in growing in that also in the range of 3% to 5%.

So I say that it is not one particular state or some of the states when this presence is across India. In the P&A category, we are seeing the growth happening every year.

[Operator]

The next question is from the line of Harit Kapoor from Investec.

[Harit Kapoor, analyst]

So if you look at the 9 months in P&A, you have a 10% growth [indiscernible] [ realization ], 9.5%, 10%. I just wanted to understand how much of this would be price and how much of this would be mix, in your estimate?

[Dilip Banthiya, executive]

So in P&A, our delta between this is around 11%, 11.5%. Out of this,190 basis points is out of the price increase, and that is because of the product mix and premiumization.

[Harit Kapoor, analyst]

So you have this high single-digit kind of a mix like...

[Dilip Banthiya, executive]

It is a normalized state of affairs because, in these quarters, you see that there is a decline in the popular category, and there is a jump of 18%, 20% in the P&A category. In a normalized state of affairs, I think 6% to 8% is comfortable. It should be the delta because of the product premiumization.

[Harit Kapoor, analyst]

So I was just asking, within P&A, it's like a 10% growth. And if I assume [ 2 ]% is pricing, that's about 700, 800 basis points. Do you think the 700, 800 basis points delivery is a sustainable one, given that, the last 2, 3 years, actually all the product launches that we are doing are dramatically higher on a realization per case as compared to our average? Is that the correct way to think about it?

[Abhishek Khaitan, executive]

Yes, it's correct to think about it because now, with most of the products, [ these ] are launched in the range of 2,000 plus. So we see that traction [ of ] the delta is improving, realization per case is improved.

[Harit Kapoor, analyst]

Got it. Got it. Great. And on the popular side, just one question, do you expect the basis to start to normalize more so from the second half of next year? Or you'll start to see some of that flattening out of growth coming in from the early part of F '25 as well?

[Abhishek Khaitan, executive]

The Regular category, some of that is an industry issue and some of that is inflation related issue. So where the margins are just peeled out, there are also consciously, as a strategic decision, we also do away with certain sales. But we see that some price increases have happened, like [indiscernible] has given some price increase in the popular category. Some of the markets will further consider it. And I think, in a normalized state, 3% to 5% kind of growth in popular category from next year onwards, we can take it.

[Harit Kapoor, analyst]

And the last thing was on the Royalty brand. This Royalty portfolio now should be fairly consistent, right? Because you've seen it now in terms of a YoY basis, the volumes are fairly similar to what they were in this quarter. So these are the expected numbers going forward? I assume that, unless we have a major deflation where you want to take back some of these, until then, this should be a fairly consistent number to go, in fact?

[Abhishek Khaitan, executive]

We are -- of course, the Royalty brands will continue to be in this range of 0.8 million to 1 million cases per quarter. And since it is a fixed [ renumeration ] we get, so the mix of that, premium brands are around 50%, 55% and regular [indiscernible] brands are 40%, 45%. So this will continue to be the reach.

[Operator]

[Operator Instructions] The next question is from the line of [ Per Jan ] from [ Nivesh Investment Advisory ].

[Unknown Analyst]

Congratulations on the good set of numbers. The first question would be on the raw material inflation side. Sir, so on a year-on-year basis as well as sequential basis, can you help me with some figures to understand how the inflation has been impacting us?

[Dilip Banthiya, executive]

Yes, so inflation has been mainly on account of the broken rice, which is our key raw material for making alcohol. And the prices before the SCI discontinued the supply for ethanol used to be in the range of INR 21,000 to INR 21,500. So slowly and gradually, it has ramped from there to around INR 27,000 to INR 27,500. However, governments have been taking proactive steps to contain these prices.

A couple of weeks back, there was a need which has been allowed with the increased testing for the ethanol. So some of the production capacities are going to be shifted from the broken rice to the grain at need-based facilities. And another thing, government has come out again to distribute the rice to the consumers by [ Barrett Rice Scheme ]. So I think there will be -- and export has also been contained. I see that the market forces will play and the grain broken rice prices should correct from here. So, we could see both kind of correction by March end, but those actions definitely should bring something for [indiscernible] softening the prices.

[Unknown Analyst]

So you think we should see the prices topping out around the quarter 1 of FY '25? Is that a fair assumption?

[Dilip Banthiya, executive]

Topping out in Q4, I think.

[Unknown Analyst]

Q4 [indiscernible] [ financial days ].

[Dilip Banthiya, executive]

Yes.

[Unknown Analyst]

[indiscernible]

[Dilip Banthiya, executive]

Because while [indiscernible] speaking, I was also having these things that [ RBN ] has reported also, said that the last 3 months consecutively, the rice is leading at double-digit inflation in their [ CCI ] also. So these are cause of concern for government also.

[Unknown Analyst]

Right , right , right. Okay, sir. I think that helps. So, my second question would be on the industry's broader outlook. Like, we see the regular segment kind of facing a slowdown. I mean, how do you view that going forward? And how is that going to play out? I mean, will this Luxury segment -- the Prestige & Above segment will continue to give higher growth while the Regular segment will start to kind of get matured and slow down? And how -- what is your broader outlook on the industry?

[Dilip Banthiya, executive]

So first of all, for us, you see, in the last 15, 16 years, whatever, we have actually launched the product [indiscernible] almost all the products have been launched in the P&A and above cagegory. So our focus is that.

Secondly, looking into the inflation and other things, for me, as a national player, I have a lot of choices to serve the consumer. But there are regional players, there are players which are regionally placed in 1 or 2 states. They are also because they don't have the P&A and above category. So they are focused there. And when we have the price increases, we'll again come back on only those states when there is a comfortable margin.

So, for us, I think this is not the capital allocation and all that is based also on the amount we make. Otherwise, we see certain rural and other where we also hear from other FMPG industries that there are some pressures. In the [ Marked ] brands, every industry, every FMPG industry [indiscernible] that.

But for us, the main model business model is Premium & Above.

[Operator]

The next question is from the line of Dhiraj Mistry from Antique Stock Broking Limited.

[Dhiraj Mistry, analyst]

Congrats on a very good set of numbers. So my question is on IMFL business, that we have seen significant jump. What kind of annual quarterly run rate we can expect from this business? And also, you can throw some light on what kind of gross margin and EBITDA margin you will be making on non-IMFL business?

[Dilip Banthiya, executive]

So our non-IMFL business, because we have this facility of Sitapur, which is up and running, and from this quarter, like Q3, it has been running almost at full capacity. Because of that, we had the -- and alcohol [ scale ] has been there. Also, our [ facilitator ] volume has increased by 31% in this quarter on a YoY basis. So a combination of the alcohol [ scale ] as well as the [ conciliatory ] [indiscernible] this has made a non-IMFL [indiscernible] and a couple of the [ gin ] byproducts which we sell out of the distillery, that is also forming part of that.

But to the run rate, it will remain in the range of INR 430 crores to INR 450 crores quarterly basis. But in due course of time, as we have our branded business growth at 15% to 20% in P&A and others also growing in single digits, we will continue to consume the grain spread [ captively ]. As we said earlier also that we will have in 3, 4 years' time the conjunction of the grain [indiscernible]. So, in the time, it is a filler that we sell or export the ENA or the alcohol in the domestic market.

[Dhiraj Mistry, analyst]

And sir, on margin profile, can you comment what kind of margin you will [indiscernible]?

[Dilip Banthiya, executive]

[indiscernible] actually margin has squeezed before earlier when this was in INR 9 to INR 10 per liter. But because of the grain prices going up, the margins would have been up [indiscernible] liter. In percentage terms, the gross margin is in the range of 7.5% to 8%, and EBITDA margin is around 5.5% on a blended basis on the non-IMFL business.

[Dhiraj Mistry, analyst]

Okay. And second, I'm assuming when there would be a fall in the price hike which we had seen last year for the overall portfolio, then it would be [ annualized ] in coming quarters?

[Dilip Banthiya, executive]

The price increases are a natural course and a continuous phenomena in our IMFL business. We continue to present all the states with the cost push we have seen. And I think the new policies which are coming from Feb-March, we are also optimistic and hopefully some price increase will materialize in some of the states.

[Dhiraj Mistry, analyst]

Okay. Okay. And sir, last question, when do you expect that the company would become a debt-free company? Like, in this quarter, we already [ see ] INR 800 crores of debt. What's your internal target to become a debt-free company?

[Dilip Banthiya, executive]

So we are managing our working capital and the CapEx very well. Almost most of the big CapEx has been done now. And I think, in 2 years' time, we will be almost on negligible debt with the kind of [ free-debt ] program [indiscernible].

[Operator]

The next question is from the line of Karan Taurani from Elara Capital.

[Karan Taurani, analyst]

Congrats on a good quarter. The question was around the regular segment. You mentioned that, from next year onwards, you will see growth come back in certain markets because of the potential price hike. But as of now, we haven't seen any markets specifically giving any kind of price hike. So, what is the confidence behind this come back in the regular volume growth?

[Dilip Banthiya, executive]

So it's like this, that if you look at the way prices have gone up, in the last 1 year, you've almost got 12 to 13 states which have been very receptive on price increase. And we also find that the states today are more effective on the inflation that has happened in this business over the last [ 2 ] years.

So, I think we see that our efforts on getting a price increase will pay back like it has been in the last 1 year in the near future as well. And the next 1 year should see softening of most prices and regular should come out better in terms of margins.

Secondly, currently, we believe the [ prices ] has already played out in this year. So base effect is also because of, every quarter, there has been some negative decline in [ this thing ]. So next year, with the price increase and the base is now coming on the [ national ] level.

Secondly, [indiscernible] price increase, we started supplying there. So we will see that 3% to 5% kind of growth is achievable.

[Karan Taurani, analyst]

And how much of regular volumes would come from U.P. state, any broader numbers there?

[Dilip Banthiya, executive]

Let me look. [indiscernible] State to state, I think -- you are talking only about regular in U.P.?

[Karan Taurani, analyst]

Yes, [indiscernible].

[Dilip Banthiya, executive]

I can give you a broad understanding of what's the U.P. market for us. We have around 28% market share across the industry, right? So, we are present everywhere. We are present in regular. We are present in premium. Our Magic Moments Vodka is the largest-selling vodka in U.P. We [indiscernible] vodka and the flavors are gaining momentum. So, 1965, which is also a very strong brand in U.P., I'd say that Royal Ranthambore [indiscernible I think it's a mix of that. But to have a 28% market share [indiscernible] that we are present everywhere and [ going on ].

[Karan Taurani, analyst]

Right. And as a focus or a vision statement, from the company standpoint, do you believe that you can potentially reach towards 2/3 volume contribution as far as P&A is concerned, given the kind of growth difference we are seeing in terms of P&A versus regular? And is that a focus area right now? Or you believe that regular, also there is still a lot of demand and, in the future, there could be a come back? Or you believe that P&A will continue to outperform and probably it would be more than 60% of volume contribution going ahead?

[Dilip Banthiya, executive]

The P&A volume growth actually is systematically and consistently growing. This period, we have seen an increase because of the skew that popular will be growing and P&A is growing 20%. However, in a normalized state, if we see the 15% to 20% growth in our P&A and 4% to -- 3% to 5% growth in our regular category, we consistently on a base -- on this current [ basis ], we can see that we will be -- we are -- I think [ 60 ]% is [ acute ], but [ 50%, 55%, 65% ] should be [indiscernible] in 3 to 5 years, it can be 60% even in volume terms.

But the point is I can't comment 3 to 5 years like that because how the regular category with this, again, grain prices, ENA prices and all that, correct, and we get price increases, we can also have the strong single-digit growth in that. But still [ 55% to 60% ] you can assume and are -- in 3 to 5 years' time, we will be achieving from the P&A business.

[Karan Taurani, analyst]

And in that case, possibly 80% of your revenues would come from P&A, given the high realization in that segment. Is that a fair assumption?

[Dilip Banthiya, executive]

The value growth will be much higher because basically the brands which are coming and growing faster, including the new launches, are in much higher categories.

[Karan Taurani, analyst]

Just one last thing on the whiskey category, again, right, so again, there's this big gap between 8PM Black and Rampur that you have. Obviously, the Royal Ranthambore is there. But any plan to launch something in that mid and upper [ whiskey ] segment which would probably compete with the blenders side or [indiscernible] side category?

[Dilip Banthiya, executive]

So let me say that Royal Ranthambore has really done well. This year, we will do 3x the volume we did last year. We've just launched 1999 Spirit of Victory whiskey, which is at a INR 5,000 a bottle price. Above that, we have Rampur Single Malt. All of them put together are doing extremely well, and we hope the same response coming for Spirits of Victory 1999.

However, to specifically answer to your question, we are looking at filling all the available opportunities in different segments of premium whiskeys in the times ahead. And so, obviously, that answers the question, yes.

[Operator]

[Operator Instructions] The next question is from the line of Himanshu Shah from Dolat Capital.

[Himanshu Shah, analyst]

Just a couple of questions. Sir, can you provide some color on what would be our current margin range on Popular segment versus the P&A segment, some ballpark color within the IMFL space?

[Dilip Banthiya, executive]

Himanshu, actually, our margin profile, basically on the P&A, which includes luxury also, is very different [ from listing ] because it has a very wide range. So, I can say the blended margin in [ our ] business is between [ 50% and up to 60% ].

[Himanshu Shah, analyst]

So the wide range then would be 800,000 basis point difference or it would be [indiscernible]?

[Dilip Banthiya, executive]

It is 50 to 100 [indiscernible].

[Himanshu Shah, analyst]

Sorry?

[Dilip Banthiya, executive]

[indiscernible] much higher, because a lot of things are common in nature. So the point is allocation of these expenditures can't be done on the popular category and this thing. The manpower and so many administrative costs are common in nature, so we can't allocate that. But as I said that we have a fairly good margin in our IMFL business, which are negative.

[Himanshu Shah, analyst]

And secondly, sir, can you update? A few of the states have come up with the policy. So what kind of price increases those states have given, if any? And what kind of tax increases we have seen in some of the states? A few of the major states that have come out with the policy, if you can help us?

[Dilip Banthiya, executive]

So the states which have given the price increases are, weighted average basis, in the range of 180 basis points to 185 basis points. The states include Telangana, Haryana, Assam, [ Maharashtra ], Rajasthan, Delhi, Karnataka, [indiscernible] [ Pradesh ], all these big states.

[Himanshu Shah, analyst]

This 185 basis point price increase, this is for the next financial year [indiscernible]?

[Dilip Banthiya, executive]

No, this is for this financial year. The impact on a weighted average basis on my IMFL business is 185 to 190.

[Himanshu Shah, analyst]

And sir, policies for next financial year, I believe U.P., Rajasthan, those are the states that have come up with their policies. So what kind of price increases we have got on those states, if any?

[Dilip Banthiya, executive]

So, the excise policies are in the process of being decided and published. Right now, Rajasthan has given a very nominal increase. But as we mentioned earlier, the Association is in discussion with the state governments considering the inflation that exists. And the government are taking a very pragmatic and receptive view of the thing. We have done it in the last 1 year, and we hope that the new year, new fiscal year, will also be fruitful as far as our efforts on price increase is concerned.

[Operator]

Thank you. That was the last question for today. I would now like to hand the conference over to the management for closing comments. Over to you, sir.

[Dilip Banthiya, executive]

So, thanks for joining us. We are confident of maintaining our long-term margin expansion given the premiumization of our portfolio. Recently received price increases, both in IMFL and non-IFL, and backward integration will help us further in that.

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 feel free to write to us. Thanks a lot.

[Operator]

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