United Spirits posts 31% drop in net profit

Bangalore-headquartered United Spirits (USL), the flagship company of Vijay Mallya’s UB Group, today reported a 31 per cent drop in net profit at Rs 121.05 crore during the April -June quarter.

The company blamed adverse market conditions in Andhra Pradesh and debt servicing charges for the drop. Net profit was also down due to an extraordinary income of Rs 70 crore from sale of treasury shares in the first quarter of last year.

However, total income rose by 17 per cent to Rs 1,470 crore, with sound sales growth in major markets. Sales volume rose six per cent to 26.7 million cases (one case = nine litres), compared to the corresponding period last year.

According to USL, due to fresh tendering for retail licences in Andhra Pradesh, the country’s largest consumption market, industry offtake was adversely affected by 27 per cent, or nearly 2.74 million cases.

USL, under a debt of Rs 4,100 crore with a leverage of around two times, said its interest charges moved up close to three times to Rs 96.5 crore during the quarter.

Operating profit rose 25 per cent to Rs 287.9 crore due to low input cost and high volume growth during this period.

Referring to spirit cost, the company said, “Spirit costs during the quarter have come off the high of the previous financial year as a consequence of better availability in the market place.”

Prices were expected to remain at or around this level with the possibility of a downward movement, it said. According to analysts, operating margin saw 135 to 200 basis point improvement due to such lower input price and higher volume growth during the quarter.

Whyte & Mackay, an arm of USL, earned an Ebitda (earnings before interest, taxes, depreciation, and amortization) of 5.93 million pound, a rise of nine per cent over the corresponding period last year.