Audited financial results for the quarter and financial year ended 31 March 2021
Continued sequential momentum, good sales mix and steady margin and cash generation
Fourth quarter performance highlights:
- Reported net sales increased 11.6% driven by continued off-trade momentum and weaker comparatives, offset by contraction of owned business in Andhra Pradesh (AP) and softer footfalls in on-trade channel. Underlying net sales, excluding the prior year one-off sale of bulk Scotch, increased 16.1%.
- Prestige & Above segment net sales grew 25.8% benefitting from a strong scotch demand and weak comparatives.
- Popular segment net sales declined 3.1%, led by a decline of 4.3% in priority states. West Bengal sales saw a steep decline due to high taxes
- Gross margin was 9%, up 178bps versus last year, driven by benign commodities, superior mix, and continued management focus on productivity.
- Reported EBITDA was Rs. 412 Crores, up 51.8%. Reported EBITDA margin was 18.5%, up 491bps, driven by gross margin enhancement; lower advertising and promotional spends during the quarter and on-going cost optimisation
- Interest cost was Rs. 28 Crores, down 42.7% driven by continued debt reduction and lower interest
- Exceptional item includes impairment of part inter-company loan provided to Pioneer Distilleries Ltd and investment made in Hip Bar.
- Profit after tax was 167 Crores and PAT margin was 7.5%. PAT was 601.5% higher than same quarter in the prior year lapping an exceptional tax charge in the prior year.
Full year performance highlights:
- Reported net sales were down 13.2%, Prestige & Above segment net sales declined 7.2%. Popular segment net sales declined 17.7% within which the priority states contracted 15.9%. This was driven by organic decline due to a debilitating impact of Covid-19 pandemic led lockdowns in Q-1 of the Financial Year and the high Covid-led taxes impacting consumption in select geographies. Underlying net sales, excluding the prior year one-off sale of bulk Scotch, declined 8%. After a tough Q-1, the business has delivered sequential improvement quarter on quarter in net sales performance demonstrating resilience and excluding AP our underlying growth was 6% in this period.
- Reported gross margin was 4%, down 140bps, driven primarily by contraction of owned and franchise business in AP, resultant impact on South franchise business and associated cost provisions. Full year gross margin was further impacted due to lower net sales driven by the Covid-19 led lockdowns.
- Reported EBITDA was 988 Crores, down 34.4%; reported EBITDA margin was 12.5%, down 405bps primarily due to negative impact of fixed cost de-leverage. After adjusting for the one-off impact of bulk Scotch sale and restructuring costs, underlying EBITDA declined 29.7%.
- Interest costs were 166 Crores, 13.1% lower than last year, mainly due to lower debt and lower interest rates.
- Exceptional item includes Raising the bar initiative, impairment of inter-company loans and HipBar investment.
- Profit after tax was Rs. 310 Crores and PAT margin was 3.9%.
Anand Kripalu, CEO, commenting on the quarter and for year ended 31 March 2021 said:
"Top line growth momentum returned, and our in-quarter performance was strong on both top-line and EBITDA aided by the weak comparatives. While overall net sales grew 11.6%, strong Scotch performance contributed to the double- digit growth of 25.8% in Prestige & Above segment. Taxation led price hikes continued to adversely impact demand in the price conscious Popular segment. Net revenue management, stable commodity prices, efficiencies from our productivity programme enabled us to deliver healthy EBITDA margin of 18.5% in fourth quarter.
Despite a challenging start to FY21 in Q-1, our business withstood the disruption and showed progressive improvement thereafter with every passing quarter. We demonstrated agility and resilience in our performance across the value chain. Our two core brands were renovated and rolled out nationally during the year. While our underlying net sales this fiscal declined 10.8% and EBITDA margin contracted to 12.5% with a PAT of Rs. 310 Crores, we enter the new financial year with sequential momentum.
We continue to deliver consistently solid cash flow with net cash from operating activities at Rs. 1,728 Crores. Debt at the end of this fiscal stood reduced to Rs. 556 Crores, a reduction of Rs. 1517 Crores from last fiscal end.
Our recently announced strategic review of selected Popular brands is progressing well and on track.
Over the past year, India has been in the midst of a severe Covid crisis. Through these challenging times we have acted quickly to protect our people and our business, while supporting our customers, partners, and communities. With the onset of the deadly second wave, there is ongoing uncertainty in the environment. We would not be immune from this volatility. We, however, remain focused on building the long-term health of our brands, supported by data-led insights and a culture of everyday efficiency. The medium and long-term growth drivers and opportunities for our business remain intact. We will continue to drive profitable growth and focus on strengthening the core brands. With the consumer at the heart of business and with greater agility and discipline, I am confident of our strategy, the resilience of our business and our ability to emerge stronger.”