Audited financial results for the quarter and financial year ended 31 March 2022
Fourth quarter performance highlights
- Net sales increased 9.5% lapping a strong prior year comparator driven by resilient consumer demand in off trade and gradual on trade recovery.
- Prestige & Above net sales grew 15.3% benefitting from premiumisation, on-going portfolio renovation and accelerated momentum in states with route to market unlock.
- Popular net sales grew 1.1% while Priority states were broadly flat.
- Gross margin was 41.7%, down 220bps; impacted by rising inflation partly offset by favourable product mix and productivity savings.
- EBITDA was Rs. 427 Crores, up 3.6%. EBITDA margin was 17.5%, down 99 bps, driven by the gross margin decline partially offset by leverage on operating costs. Marketing reinvestment rate during the quarter was 5.4% of net sales.
- Interest cost of Rs. 13 Crores is a non-debt related expense
- Exceptional items include (a) impairment of an inter-company loan provided to Pioneer Distilleries Ltd., together with interest, (b) impairment of fixed assets in certain operationally closed manufacturing units, (c) accelerated charge pertaining to unamortized brand/ license fee
- Profit after tax was Rs. 136 Crores and PAT margin was 5.6%.
Full year performance highlights
- Reported net sales increased 18.9%. Growth was underpinned by strong consumer demand in the off trade, premiumisation, recovery in on-trade and lapping soft comparators. Underlying net sales increased 18.4%, excluding the one-off sale of bulk scotch.
- Prestige & Above net sales increased 23.6%, primarily benefiting from favourable product mix.
- Popular net sales increased 8.2%, while the priority states increased 7.1%.
- Gross margin was 43.6%, up 25bps, primarily driven by favourable product mix, productivity savings from everyday cost efficiencies and lapping a one-off inventory provision.
- Marketing investment at 7.3% of reported net sales. It was up 25.7% to support brand building activities while lapping a prior year reduction due to COVID-19.
- Reported EBITDA was Rs. 1,511 Crores, up 53%. Reported EBITDA margin was 16.1%, up 358 bps primarily driven by fixed cost operating leverage and lapping one-off costs in the prior year. Excluding the one-off items, underlying EBITDA was up 276 bps.
- Reported interest cost was Rs.65 Crores, down 60.9% driven by debt repayment, interest rate reduction and a non-debt related charge.
- Exceptional items include (a) impairment of an inter-company loan provided to Pioneer Distilleries Ltd., together with interest, (b) impairment of fixed assets in certain operationally closed manufacturing units, (c) accelerated charge pertaining to unamortized brand/ license fee, (d) a one-off provision towards an additional demand in relation to a historical customer dispute.
- Tax includes a one-off reversal of 19.2 Crores.
- Profit after tax was Rs. 770 Crores, up 148.1% and PAT margin was 8.2%.
Ms Hina Nagarajan, CEO, commenting on the results said:
"We have delivered another quarter of consistent top-line and resilient EBITDA performance. The broad-based growth in the Prestige & Above segment demonstrates resilient consumer demand, the strength of our portfolio and focused execution of the strategy by the team. Strong cash flow generation is enabling re-investment in sustainable long-term growth.
In line with our strategy of continued portfolio premiumisation, innovation and commitment to sustainability, we launched ‘Godawan’, an artisanal single malt whisky. Godawan, translates to the Great Indian Bustard, now nearing extinction and we are aiding in the conservation of the species and restoring natural water resources in Rajasthan. We also acquired a strategic minority stake in Nao Spirits & Beverages Private Limited, an emerging craft gin company in India, with award-winning brands ’Greater Than’ and ’Hapusa’. The investment provides us with an opportunity to strengthen participation in the fast-growing premium gin segment in India.
We have just concluded the strategic review of the select Popular brands and the Board has approved the sale and franchising of this portfolio to an unrelated third party. This is a significant move to enable sharpened focus on ‘Prestige & Above’ and reshape our portfolio to help deliver our growth mission.
Looking ahead, while we see macroeconomic uncertainty persisting in the near term driven by inflationary headwinds and geo-political factors, we remain confident in the medium to long-term prospects of our industry. We remain focused on driving productivity and increasing the intensity of our engagement with states on price increases while remaining disciplined in the execution of our strategic priorities, to drive sustainable profitable growth and value for all our stakeholders.”