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Aug 06, 2013, 03.49 PM IST | Source: CNBC-TV18

Radico Khaitan rides on vodka growth; volumes grow by 18%

In an interview to CNBC-TV18, Lalit Khaitan, CMD, Radico Khaitan spoke about the first quarter performance of the company.

Liquor manufacturer Radico Khaitan high on growth in Vodka category, which reported 18 percent increase in volume during the first quarter.

“We have this brand called Magic Moments Vodka, this quarter it has a total market share of 30 percent across all segments of Vodka of in the country. For vodka from the last four years we have been growing at a compounded rate of 45 percent,” Lalit Khaitan, CMD, Radico Khaitan told CNBC-TV18.

Khaitan said that as per the Euromonitor in past four years Vodka has grown by 20 percent Compound Annual Growth Rate (CAGR).

He expects high margin or premium products which include Magic Moments Vodka, Morpheus Brandy, After Dark Whisky, to grow stronger this year. The company reported 21 percent increase in net profit for quarter ending June at Rs 30.61 crore.  While its sales rose to Rs 467 crore from Rs 421.5 crore in same quarter last year.

Below is the verbatim transcript of the interview

Q: Can you take us through your first quarter performance. You have reported a robust growth in income of about 18 percent but your margins are slightly under pressure. You have come to 14.8 versus 15.5 percent earlier. Can you take us through what is the pressure on the margin and whether it will improve going forward?

A: We have 33 bottling units allover the country producing different brands for us. Totally we have grown to Rs 467 crore in the quarter which is an increase of 10.8 percent. And our adjusted net income that is Rs 30.6 crore which is a growth of 21 percent. Another interesting point is that when we talk of the volume growth our overall volume has grown by 7.6 percent. But the high margin segment has grown by 19 percent. We have this brand called Magic Moments Vodka, this quarter it has a total market across all segments of Vodka of 30 percent in the country. As per the Euromonitor which is an international company, the Indian growth from 2010 to 2012 that is four years Vodka has actually grown by 20 percent Compound Annual Growth Rate (CAGR).

Q: Last quarter you all had suffered a fall in margins because of poor cane acreage in Maharashtra. This year given the rains you perhaps will not have that problem. Are you expecting that you will do better in terms of both volumes and margins the current year, can you give us some idea?

A: Absolutely. If you work this out our margin has increased from 12.4 percent to 13.1 percent already. And even as you said about Maharashtra and other because of the increased price of extra neutral alcohol (ENA) that has already been factored and it is after this that we have increased the profit by 21 percent compared to quarter on quarter. For vodka from the last four years we have been growing at a compounded rate of 45 percent and this quarter also we have grown by 18 percent.

Q: Can you continue with this volume run rate of 19 percent in your high margin brands, something like Prestige as well as Magic Moments, is that the run rate we can assume for the coming quarters as well?

A: Yes absolutely and I am sure that in the coming quarters also the result will commensurate what we have shown in this quarter.

Q: Any price hikes in the annual?

A: We actually did price hikes this quarter and we expect it to continue because we are expecting further price hikes in a few more important things.

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