Radico Khaitan’s Q2 profit jumps 27% to Rs28.60 crore
Bengaluru: Radico Khaitan Ltd, India’s third largest liquor firm by sales volume, reported a 27% year-on-year jump in net profit for the July-September quarter to Rs28.60 crore. Revenue grew 0.6% to Rs448.19 crore during the same period.
Revenue from the firm’s prestige and above category of brands, which includes Magic Moments vodka and Morpheus brandy, buoyed overall sales and profitability during the quarter.
Contribution to the firm’s total Indian-made foreign liquor volumes from the prestige and above segment increased to 27.3% from 26.7%, the company said on Tuesday.
Radico Khaitan, like many in the liquor industry, has been focusing on premium brands to drive profitability. Apart from Magic Moments vodka and Morpheus brandy, its premium brands include names such as After Dark whisky, Pluton Bay rum and Rampur single malt whisky.
“During Q2 FY2018, the impact of the recent national highway liquor ban started to normalize resulting in a turnaround in volume uptake. Our overall sales volume during the quarter increased by 4.3% year-over-year and prestige and above brand volumes grew by 6.5% year-over-year. This resulted in an encouraging overall financial performance,” Abhishek Khaitan, the firm’s managing director, said in a statement.
The Supreme Court’s decision to ban the sale of alcohol near state and national highways last year hurt sales volumes at several liquor firms ranging from market leaders like United Spirits Ltd and Pernod Ricard SA to boutique brands such as Amrut Distilleries Pvt. Ltd. The impact of that ban is expected to last until the end of this year, although to a lesser extent than before, according to several industry executives.
“Over the last four quarters, industry performance was subdued due to the various regulatory changes. We continued to adapt to the changing operating environment with our unwavering focus on the core premium brands portfolio, expanding management bandwidth, optimization of cost structure and cash flow generation,” saud Lalit Khaitan, Radico Khaitan’s chairman and managing director.
The firm has recently managed to secure price increases in Andhra Pradesh and Kerala and expects to follow suit in other key states, it said on Tuesday. In most states, liquor firms cannot hike prices without approval from the state governments since liquor prices are heavily regulated.