Capacity utilisation to go up in Bihar, W Bengal: Globus Spirits

It was a weak quarter for Globus Spirits with net profit down 40 percent at Rs 2.1 crore verus Rs 3.5 crore for the same quarter earlier fiscal. EBITDA too was down 12.8 percent at Rs 16.4 crore versus Rs 18.8 crore year on year (YoY). EBITDA margins came in at 7.4 percent versus 9.6 percent YoY.

Throwing more light on the third quarter performance Shekhar Swarup, ED, Globus Spirits said margins were impacted due to higher raw material prices, which is a large basket of agricultural commodities.

Giving an outlook for the future, he said with the facilities in West Bengal and Bihar getting commissioned there will be increase in capacity utilisation.Below is the verbatim transcript of Shekhar Swarup's interview to Latha Venkatesh and Anuj Singhal on CNBC-TV18. Anuj: Your topline is okay but there is quite a bit of fall in your margins EBITDA and net profit, what went wrong? A: Last quarter as far as the consumption story goes,  it has been alright for us. India made Indian liquor (IMIL) markets both in Rajasthan and Haryana has done well. Volumes in capacity utilisation is also up. So the margin differential is essentially there due to very strong raw material price. We were expecting towards the end of Q3 around November and December, the prices to correct dramatically as it is the season but this year for reasons, which are difficult to pinpoint, the correction has not happened in our raw material prices. It holds true for a large basket of agricultural commodities. Anuj: What is the outlook now because we have seen most of the companies have recovered from demonetisation impact? Going forward, what kind of revenue and profit number do you think you can report? A: Going forward, business is going to be hugely changed due to the commissioning of our new facilities in Bengal and Bihar. So the capacity utilisation over here is coming in now and this is going to be add to large part of our business this year. Latha: Can you tell us the state-wise market share that you have and as well the country liquor and the franchise bottling business split? A: Our B2C business which is our own brands of IMIL is 55 percent in the last quarter of our total revenue. This translates to about 10 million cases for a month of IMIL sales in the state of Haryana and Rajasthan. In Rajasthan we have a market share of 30 percent and in Haryana it is around 15 percent. In terms of franchise bottling where we have essentially contract manufacturers for Indian-made foreign liquor (IMFL) brands such as USL, we have an average of a million cases a month for these brand owners in the states of Rajasthan, Haryana and West Bengal. Latha: What are the margins for the two businesses? The IMILs as well as the franchising bottling business? A: The EBITDA level margin in the last quarter would have been around 5-7 percent mark and going up to 10-15 percent in case of IMIL.