Bangalore: The UB Group’s flagship liquor business United Spirits Ltd (USL) on Wednesday reported an 83% drop in net profit for the quarter ended 31 March because of increased foreign exchange losses, besides high interest and input costs.
Net profit fell to Rs 10 crore from Rs 59 crore a year earlier. Net sales rose 17% to Rs 1,863 crore.
The foreign exchange loss widened to Rs 20.52 crore in the quarter versus a loss of Rs 27 lakh in the fourth quarter of the previous fiscal. Interest costs rose to Rs 166.2 crore from Rs 115.5 crore. For the full year, interest rate costs rose to Rs 594 crore from Rs 445 crore.
Vijay Mallya, chairman, United Spirits.
Analysts said USL’s escalating debt levels continue to be a big concern. Consolidated gross debt stood at Rs 8,400 crore on 31 December.
“USL’s existing resources will only service interest payments, they need either a strategic investor or a stake sale to pay off instalments,” said Manoj Menon, an analyst at Kotak Institutional Equities.
The company aims to raise as much as $225 million (around Rs 1,238 crore) through the sale of foreign currency convertible bonds (FCCBs) to reduce its high-cost loans.
UB Group company Kingfisher Airlines Ltd, struggling with debt, has cut flights drastically as it has come under pressure on payments, including wages.
Earlier in 2011, United Spirits recast debt of £370 million as a new seven-year loan. The new loan has a three-year moratorium with a balloon payment over the next four years. The total hedged cost of this new loan is 45 basis points lower than the previous one. One basis point is 0.01%.
For the full year ended 31 March, net profit fell 11% to Rs 342.80 crore. Revenue for the year rose 20% to Rs 7,763 crore.
Shares of the company dropped 6.07% to Rs 612.05 on BSE. The benchmark Sensex fell 0.77% to 16,312 points.