India and the world are passing through uncertain times following the unprecedenteddevastation caused by the COVID-19 pandemic. The impact of this pandemic has derailed theglobal economy and human life.
In the current scenario there is a premium on organisations remaining future-facingand long-term in their strategy. In this environment only the truly sustainable companieswill survive.
At AABL the COVID-19 did not impact our financials in 2019-20 but a direct effect wasperceived in the first quarter of 2020-21 even as we expect business momentum tonormalise once the pandemic impact recedes.
Our performance in 2019-20
Against this backdrop I am pleased to state that your Company delivered profitablegrowth as revenues increased 30% and crossed the benchmark of RS 500+ crore to RS 535crore; EBITDA strengthened to RS 79.9 crore and profit after tax improved to RS 49.33crore.
The performance improvement was the result of multiple initiatives by the Company inthe last couple of years. A principal performance driver was the full benefit of anincrease in ENA installed capacity from 3 crore litres per annum to 4.5 crore litres perannum through the course of the year validating the Company's capability in scalingoutput with speed and the strength of its customer relationships in being able to market asizable quantum. The increased output translated into a optimum allocation of fixed costson the one hand and enhanced revenues on the other strengthening our overall surplus.
A part of the improvement during the last financial year was derived from our terms oftrade and working capital management. Even as our revenues increased 30% our workingcapital outlay increased marginally. Every rupee of working capital deployed in ourbusiness generated 25 paise of revenues in 2019-20 compared with 20 paise in the previousfinancial year; our receivables cycle of only 26 days proved cash- accretive. This realityvalidated what we have always believed: that a combination of ENA supply and service canwiden the market and enhance our market share.
At AABL we are attractively placed to capitalise on the growing market for ENA inIndia. The Company enjoys robust longstanding relationships with some of the largestbrands across the premium and popular segments. We see our capacity increase as a triggerfor these companies to buy larger volumes from us; we see our central location in India asan excellent point from where to service customers in South and Eastern India which areENA-deficient at this point.
The Company's objective of graduating into a value-added Company was achieved with itsfranchise business (Diageo-USL) delivering projected growth proprietary brands showingbetter momentum and Kerala sales performing creditably.
The Company's outlook for the current year appears optimistic. Despite the extensivedemand destruction during the first quarter on account of the pandemic the Company isoptimistic of recovering its sales momentum in the subsequent quarters.
At AABL we are optimistic of our medium-term prospects for good reasons. During thelast few years we prudently moderated dividend pay-out and maximised the use of accrualsin business investments. The Company possessed an extensively under-utilised workingcapital limit in 2019-20 indicating adequate borrowing room within the system should theCompany need to mobilise afresh.
At AABL we represent a proxy of three businesses within India's alco-beverage sector.
We are resource providers at one level convinced that India will experience a largergrain-based demand for ENA than supply across the foreseeable future.
We are bottlers for the industry leader's prominent and prestigious brands; we are alsobottlers and marketing representatives for a number of these brands leveraging ourbottling and distribution capabilities.
At another level we are brand creators and bottlers who market proprietary brands aswell.
This unique business model - resource to brand ownership - makes it possible for oneend of the business to generate the cash flows and the other end of the business toconsume a small part of it in responsible brand creation until the latter generatesadequate resources for reinvestment.
We believe that this business model enhances our skin in each game of India'salco-beverage sector. We are optimistic that this will represent the cusp of a structuralshift in value-creation and the graduation of our Company to among the three largest inIndia's ENA space.
We are geared to address realities with agility complemented by our culture of qualitytrust and excellence.
Our best is round the corner.
|Tushar Bhandari |
|Whole Time Director |