I write to you at an important moment in our Company's history our transition into the next phase of our growth trajectory underpinned byperformance momentum despite a subdued industry environment.
Two policy developments during the year demonetisation and thejudicial ban on the sale of alcohol along national and state highways adding to theintroduction of prohibition in the State of Bihar created a volatile and toughenvironment for alcobev companies including ours but I believe we haveoutperformed competition in this challenging environment. We have also performedfavourably compared to most other fast-moving consumer goods (FMCG) peer companies. Wewill continue to build on this momentum.
For the year while overall net sales grew by a modest 4% you will behappy to note that our Company improved gross margins by 156 bps to 42.9% and profit aftertax grew 39% both aided by improved productivity and operational efficiencies. The abovecoupled with stringent corporate governance and compliance norms your Company has adoptedand adhered to have led to a further upgradation of our long-term credit rating to AAwhich will enable it to access more economical sources of debt. It will be our endeavourto deleverage the balance sheet and reduce the level of overall debt including throughthe disposal of non-core assets to further improve financial performance by optimising ontotal debt and financing costs.
In the last three years since Diageo took a controlling interest inUnited Spirits we have been on a journey to transform the Company into a world-classorganisation that is known and recognised for its performance compliance culture ethicalvalues and transparency thereby gaining the trust and respect of all stakeholders andsociety at large. We have made fair progress in the pursuit and achievement of that visionleading to being accepted and acknowledged as a valuable and integral part of the Diageogroup. On our part over the last few years we have aligned and strengthened our businessstrategy brand portfolio and investments compliance standards governance and financial/operational control mechanisms talent development environmental footprint andsustainability efforts and much more to those of Diageo's standards globally topursue greater integration with the parent in true spirit of inter-dependence. We nowidentify and adhere to the Diageo ethos more closely than ever before even while we buildon the positive aspects of our legacy including our understanding of the Indian marketconsumer franchise of our brands and well-established distribution network.
I thank you all for your continued faith and support which has in nosmall measure enabled the Company to adapt and face the challenges in a bold anddetermined manner.
Mahendra Kumar Sharma