United Spirits, the flagship spirits company of the UB Group, posted a healthy 70 per cent increase in net profit at Rs 80 crore for the third quarter of FY13 y-o-y.
Total income grew 12 per cent to Rs 2,202 crore. Volumes, in terms of number of nine-litre cases, grew seven per cent to 32.6 million cases during the quarter.
United Spirits, which, during early November 2012, had moved to cede control to the global spirits major, Diageo, said its continuing focus on the premium brands over the past few years was starting to make a mark. “The sharp growth of our strategic brands, whose volumes grew 29 per cent to just under eight million cases during the quarter compared with just over six million cases in the comparable period of the previous year is a key factor for the increase in revenues and the margin,” the company said.
“The premiumisation story at United Spirits is not a recent one. We have been constantly been pursuing opportunities to move up the value chain and plug gaps in the price ladder by new and premium product introduction so that consumers stay within the ambit of the USL portfolio and do not stray to competition. The financial results are an indication of these continuing efforts,” said Vijay Mallya, chairman, United Spirits.
The company which is best known for whisky brands such as Royal Challenge, McDowell, Antiquity among others sold a good 120 million during last fiscal, said that the Tamil Nadu continues to play a spoil sport. “There is artificial restrictions placed on consumer choice by TASMAC – the parastatal wholesale retail channel in Tamil Nadu. Against a capacity of one million cases per month and a demand that is much larger, USL’s monthly capacity is being artificially pegged at 0.75 million cases with an additional compulsion to supply medium/cheap brands to the extent of 40 per cent such truncated capacity – both, to benefit new and existing local players,” the company said.
Faced by this hurdle, USL was also hit by increased interest payouts and hike in spirit costs which hit its EBIDTA margins which moved up marginally by 2.3 per cent to 12.5 per cent.
Shares of United Spirits on Monday closed at Rs 1,855.75 on the BSE, down 0.53 per cent from its previous close.