Bangalore: Riding a robust growth in the domestic market, India’s largest beer maker United Breweries Ltd (UBL) doubled its profit in the three months ended 30 September, ignoring a steep rise in costs.

Net profit rose to Rs11.71 crore from Rs5.16 crore in the same period last year and sales increased 12.6% to Rs412.25 crore.

Raising a cheer: A shop selling liquor in New Delhi. Both United Breweries and United Spirits, part of the UB Group, announced their second quarter results on Tuesday. Madhu Kapparath/Mint

Its quarterly profit was buttressed by a 42% rise in other income to Rs15.54 crore, the company said in a statement to the Bombay Stock Exchange (BSE) on Tuesday without specifying details.

UBL executives declined to comment.

The higher profits were possible despite a 46% increase in the cost of raw materials to Rs70.31 crore, which led to a 12.7% step up in the company’s total expenditure to Rs396.07 crore.

Interest charges rose 38.4% to Rs15.92 crore.

UBL said that Kiran Mazumdar-Shaw, chairman and managing director of Biocon Ltd, has joined its board as an independent director.

The quarterly results weren’t as good for the spirits arm of the UB Group.

United Spirits Ltd (USL), the world’s third largest spirits maker by volume, posted a net profit of Rs69.60 crore for the second quarter on net sales of Rs1,080.05 crore. In the second quarter of the previous year, its net profit was Rs93.89 crore on sales of Rs902.04 crore.

The company said the two quarters cannot be compared due to the amalgamation of Shaw Wallace and Co. Ltd, Primo Distributors Pvt. Ltd and Zelinka Ltd.

Traditionally, the second quarter of the fiscal year is the slowest for the industry, it added in a statement.

Costs were significantly higher for USL as well, for raw materials, manpower, advertising and sales promotion. Its expenditure on raw materials rose 26% to Rs252.46 crore; employee costs bulged 66% to Rs79.23 crore following special incentives and provisions for a long-term incentive plan; advertising and sales promotion expenses rose 70% to Rs83.46 crore with the national rollout of the Whyte and Mackay Special whisky and Romanov Red Prestige vodka.

Interest charges expanded 90% to Rs75.06 crore.

In mid-October, USL raised Rs1,615.6 crore through a placement of shares with institutions, the proceeds of which will be primarily used to pay debt incurred in acquiring Scotch whisky maker Whyte and Mackay Group Ltd in May 2007 for $1.18 billion (Rs5,522 crore today).

Nikhil Vohra, managing director at brokerage firm IDFC-SSKI Securities Ltd, said the company’s debt after the equity placement has reduced to Rs5,300 crore from Rs6,800 crore at the beginning of the year. “The level of debt is manageable now," Vohra said, adding that things will get better in the coming quarters as prices of inputs such as molasses soften and interest costs reduce.

Both the stocks fell on Tuesday. The UBL scrip closed 6.47% lower at Rs138 on BSE, and USL closed 4.67% lower at Rs999.25, on a day the exchange’s benchmark index, the Sensex, dropped 2.31% to 16,353.40 points.