United Spirits reports four-fold rise in June quarter profit to Rs44 crore
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Bengaluru/Mumbai: United Spirits Ltd, India’s largest liquor maker, said fiscal first-quarter profit surged almost four-fold as it sold more high-margin, premium brands.
Net profit of USL, controlled by world’s largest liquor company Diageo Plc, rose to Rs.43.80 crore in the quarter ended 30 June from Rs.11.61 crore in the year-ago period. Net sales rose 9.66% to Rs.2,027.33 crore.
“The overall performance demonstrates that we have the right strategy in place, focusing on premiumization coupled with selective participation in popular (categories),” said Anand Kripalu, chief executive at USL.
The company’s “Prestige & Above” segment reported a 21% increase in net sales.
The relaunch of the core variant of McDowell’s No.1 whisky and Royal Challenge helped both brands grow net sales by 20% and 46%, respectively in the quarter. Its Signature brand has returned to growth. “This segment now represents 57% of the overall business, and the portfolio is well placed to outpace the category,” Kripalu added.
On Tuesday, USL’s stock rose 0.18% to close at Rs.2,460.50, while the benchmark Sensex lost 0.42% to close at 27,976.52 points.
The news comes as the debt-ridden company looks to emerge out of the shadow of serious financial irregularities tied to the earlier management headed by its former chairman Vijay Mallya. As of 31 March 2016, the USL group had outstanding debt of Rs.4,250 crore.
Early this month, USL said its additional probe on Mallya and his associate firms has revealed instances of actual fund diversions worth Rs.1,225.30 crore.
The USL board, which met on 9 July, said that while only a court or regulatory authority could determine their actual culpability, additional probe prima facie revealed further instances of actual or potential fund diversions amounting to Rs.913.50 crore and other potentially improper transactions involving USL and its overseas arms amounting to Rs.311.80 crore.
Soon after USL reported its thrice-delayed Q4 earnings in September 2013, the new management initiated an inquiry into its accounting practices as several cases of suspected financial impropriety surfaced.
In April 2015, USL said that the preliminary inquiry revealed that the company may have understated the amount it was owed by Mallya’s UB Group. At the time of these transactions, USL was controlled by Mallya. Several regional challenges that USL faced last year are also now behind it, the firm said Tuesday.
“Uttar Pradesh has rebounded strongly post excise duty reduction. Haywards in Karnataka has stabilized and delivered 1% volume growth in the quarter. Additionally, the price increase in Karnataka will benefit the next quarter,” Kripalu said.
“These results and the actions that are driving this growth give me confidence that USL can deliver strong and sustained performance in the coming years.”