WB, Bihar plants to start ops in a month: Globus Spirits

Liquor manufacturer Globus Spirits is in the midst of an expansion process with new facilities coming up in Bihar and West Bengal. The company is in process of commissioning new facilities and commercial production is expected to start in a month, said Shekhar Swarup, ED of the company. New plants will push the share of bulk business production dramatically for few quarters, he added. Speaking to CNBC-TV18, Swarup said that 50 percent of its revenue comes from own liquor brands from regions like Delhi, Rajasthan and Haryana. From its franchise bottling business, revenue is in the range of 20-25 percent.Below is the verbatim transcript of Shekhar Swarup's interview to Prashant Nair and Reema Tendulkar on CNBC-TV18.Reema: When we last spoke to you, you had indicated that the company had some capacity expansion plans. Could you give us some update on that at what stage have you reached in terms of your capacity addition?A: As you are aware Globus Spirit is an alcohol beverage manufacturer. We have facilities in the north in Haryana and Rajasthan and we are in process of commissioning facilities in Bihar and in West Bengal. Both new projects Bihar and West Bengal are in final stages of commissioning and we hope to have commercial production within the month in both units.In West Bengal we also have liquor and an IMFL bottling operation, in Bihar of course since the prohibition took place the bottling operations will not be in operation, but in West Bengal IMFL bottling is already begun. We started bottling for USL brands last month and country liquor should start along with distillery as well.Prashant: What the breakup for you between bottled bulk, country and IMFL?A: Our Q2 revenue around 50 percent of our net revenue comes from our own brands of country liquor or IMIL as you like to call them. This revenue comes from states of Haryana, Delhi and Rajasthan. About 20-25 percent of revenue comes from franchise bottling operations and the balance comes from bulk sales.When the new plants are in operation, the bulk sale share will possibly increase dramatically in the first few quarters as gradually the value added business of IMIL, value added business of IMIL starts eating up into that share.Reema: Could you tell us what the margin picture is for all these three, what are the kind of margins you enjoy for your own brands country liquor, how much for the bottling franchisee and the margins you enjoyed for the bulk business?A: The bulk business is really the lowest value added business, where we enjoy around 12 percent earnings before interest, taxes, depreciation and amortization (EBITDA) kind of margin, these includes the margin from by-products by the way -- when we talked about the bulk business it includes extra neutral alcohol (ENA) as well as by-products mainly animal feed, which is the high protein feed that goes to animal feed industry.The next stop is the franchise bottling where we enjoy that entire margin on the ENA of the bulk business plus an additional service fee that we get for our operations. Lastly, IMIL which is really the most interesting part our business we would enjoy depending on which date anywhere between 15-20 percent EBITDA margins.