Sula Vineyards Q3 results: Net profit falls 68% to Rs 9.1 crore on weak demand, higher costs

Sula Vineyards Q3 Results

Sula Vineyards, India's largest winemaker by market share, reported a 68% fall in quarterly profit on Friday, as subdued demand in a key market and higher expenses weighed on its bottom line.

The company reported a consolidated net profit of 91 million rupees ($1 million) for the quarter ended December 31, compared with 280.6 million rupees a year earlier, according to a filing to exchanges.

Revenue fell about 10% to 1.96 billion rupees, hurt by subdued demand in the southern Indian state of Karnataka, its second-largest market, the company said.

Younger consumers globally are increasingly shunning alcoholic and sugary drinks in favour of healthier juices, prompting many liquor makers to launch zero-alcohol beer variants.

Higher costs during the quarter, including a one-time charge of 17 million rupees linked to the implementation of India's new labour codes, weighed on margins for Sula.

The country's new labour codes, the biggest overhaul of worker laws in decades, were implemented last November and have dented Indian corporate earnings across sectors.

Sula's wine tourism revenue rose 34% year-on-year, partly offsetting weakness in its core own-brands business, which accounts for about 90% of total sales.

While demand for premium wines held up in some urban markets, it was not enough to offset cost pressures and regional weakness during the quarter, the company said.

Sula Vineyards shares closed nearly 1% higher at Rs 187.99 apiece on Friday.