Radico Khaitan Limited
, one of the largest spirits companies in India posted its net profit at Rs54.76cr, which was up 29% yoy. Its revenue stood at Rs624cr, a growth of 20.8% aided by a strong operational performance.
Gross Margin decreased by 342bps yoy to 47.2%. Margin compression was primarily due to a combination of the recent increase in raw material prices (ENA and packaging material) and the purchase of alcohol for the production of Country Liquor.
EBITDA increased by 9.3% yoy with margins of 15.9% (down 167 bps yoy). Selling & Distribution expenses have been higher during Q1 FY2020 compared to Q1FY19 as the Company has been progressively making marketing investments. Advertising & Sales Promotion expenses increased by 5.1% yoy to Rs37.70cr. Higher A&SP spend has enabled the Company to sustain the growth momentum. Due to the implementation of Ind AS 116 on operating leases, the Company has recognized interest expense on lease liabilities of Rs0.32cr and depreciation on right-of-use assets of Rs1.34cr against the lease rent of Rs1.85cr which would have been charged had Ind AS 116 not been implemented.
During the quarter, Rampur plant operated at restricted capacity as per the directives of the Central Pollution Control Board (CPCB). In their order dated August 6, 2019, CPCB has allowed the Company to restore the operating capacity of its molasses plant from 77 KLD to 200 KLD (which is our full capacity).
Dr. Lalit Khaitan, Chairman and Managing Director said, “it is heartening to note that after a strong performance in FY19, Radico Khaitan has continued to build upon the momentum in Q1 FY20 as well. Despite an overall slowdown in the economy, we delivered strong growth across all key brands and geographic regions. In the short term, we have faced raw material price pressure but that does not impact our long-term growth and margin trajectory. We remain focused on investing in our core premium brand portfolio which will enable us to deliver long-term sustainable value creation for all stakeholders.”