# 1. Financial Performance ## A. Key Figures * **Net Revenue:** **₹276 Cr** Q1 FY'26 (+6%) * **EBITDA:** **₹37 Cr** Q1 FY'26 (+32%) · **Margin: 14%** * **PAT:** **₹24 Cr** Q1 FY'26 · **Margin: 9%** * **CapEx Guidance:** **₹100 Cr** full-year FY'26 ## B. Revenue Growth * **Strong Start to FY’26:** Robust volume and value growth in premium+ segment underpinned by rich product mix, despite softness in ENA sales limiting top-line momentum. * **Profitability Outpaces Sales:** EBITDA surged on strong operating leverage and margin expansion, signaling improved earnings quality. ## C. Profit Margins * **Cost Discipline Supports Margins:** Gross margin held at healthy levels due to stable input costs, efficient supply chain, and **tight cost control**, though QoQ decline warrants monitoring. * **Sustainable OpEx Leverage:** OPEX as % of sales down 50 bps on higher plant utilization and operational efficiencies, expected to persist long-term. * **A&P to Scale Strategically:** Marketing spend to rise from **1% to 5% of net sales**, indicating reinvestment into brand building as growth accelerates. ## D. Cash Flow & CapEx * **Ethanol Stability:** Business remains resilient with full allocations secured and margins steady, supported by integrated model synergies with beverage alcohol. * **Targeted Investment:** CapEx focused on **maturation project** and facility upgrades, aligning with long-term capacity and quality enhancement goals. --- # 2. Product & Segment Performance ## A. Key Figures * **Proprietary IMFL Revenue:** ₹41.3 Cr (+21%) · **Volume:** 5.67 Lakh Cases (+31%) * IMFL Revenue: ₹41.3 Cr (+21%) · IML Revenue: ₹73 Cr (+17%) · ENA Revenue: ₹36 Cr (5 Mn Liters) * **Ethanol Revenue:** ₹57 Cr (8 Cr Liters) · **Next Quarter Supply:** 9 Cr Liters * **EBITDA Margin:** ~14% (grain cost-sensitive) ## B. Proprietary IMFL Strategy & Growth * **Premium Portfolio Expansion:** Strategic entry into **premium brandy and tequila** to capture high-margin, high-growth segments and diversify regional appeal. * **Robust Volume Momentum:** Proprietary IMFL volumes surged **31%**, with **Hillfort whiskey** leading traction in **Uttar Pradesh** and planned rollout to **Mumbai, Pune, and Nagpur**. * **Multi-State Scaling:** Growth driven by expansion in **Uttar Pradesh and Maharashtra**, supported by strong consumer adoption; **25–30% annual volume growth** projected over next 2–3 years. * **Brand Focus Over IMIL:** Strategic prioritization of proprietary brands due to limited control over IMIL performance; **no ethanol capacity expansion** planned. ## C. IMIL & ENA Performance * **Stable IMIL Growth:** Revenue up **17%**, driven by new variants including **90 ml bottle and lower-strength option**; future growth expected to stabilize at **3–5%** under tender-based model. * **Vodka Market Penetration:** **CP Vodka** captured **5–6% market share** in Madhya Pradesh within first month; **Hipster PET variant** already holds **4–5% share**, with multi-state rollout pending economic model finalization. * **Tiered Vodka Positioning:** **Titanium Vodka** relaunched in **Magic Moment price category**, aligning with **White Mischief** to strengthen presence in prestige segment. * **Inbrew Model Shift Impact:** Transition from franchisee to **contract manufacturing** to affect top and bottom lines, though offset by **job-work and ENA sales retention**. ## D. New Product Launches * **Successful Premium Launches:** **Hillfort Blended Malt Whiskey** and **Nicobar Gin** gaining traction, with case volume rising from **10,000 in FY25 to 2,000–2,500 in Q1 FY26**, targeting **15,000–20,000 cases in FY26**. * **RTD Market Entry:** Launch of **Culture**, a new **ready-to-drink brand**, imminent in **Madhya Pradesh**, targeting **metros** and high-growth states; aims to capture share in **$72 Mn, 20%+ CAGR** Indian RTD market. * **Differentiation Strategy:** RTD success hinges on **unique flavors, premium packaging, and high-quality liquid** to compete with entrenched players. * **Brandy Launch Imminent:** **Premium brandy** set for **pre-Diwali launch**, with production and packaging ready; slight delay from initial Onam timeline. --- # 3. Volume & Pricing Trends ## A. Premium Category Growth * **Structural Shift:** Premium alcobev segment seeing robust momentum, driven by rising incomes, urbanization, and consumer preference for quality and craft-centric offerings. * **Outperformance:** Premium categories expanding at a faster rate than the broader IMFL market, unlocking significant value potential. ## B. State-Level Demand * **Regional Volume Drivers:** Strong uptake of Central Province Vodka’s premium launch in Madhya Pradesh, supported by growth in Kerala and modest gains in Uttar Pradesh. * **Policy-Linked Softness:** Maharashtra volumes flat due to delayed rollout amid uncertainty from the **unclear MML Maharashtra policy**, currently under review. * **Industry-Wide Contraction:** Licensed partnership volumes declined this quarter, reflecting an overall industry downturn and a shorter operating season. ## C. Pricing Strategy * **Competitive Assessment:** Mumbai launch delayed to evaluate competitor pricing under new MML policy; final pricing strategy set following Indore team meeting. --- # 4. Manufacturing & Capacity ## A. Key Figures * **Plant Utilization:** **Full capacity** across nearly all plants driving **lower power costs** and improved operating efficiency ## B. Malt Plant Progress * **Strategic Backward Integration:** New malt plant nearing operation, enabling greater **quality control**, **cost management**, and **innovation** in premium whiskey production as part of pan-India rollout. * **Phased Production Launch:** Operations underway at **Goa tie-up plant**, with supply to **Puducherry starting next week** and **Goa within the month**; UP plant in licensing phase with land secured. * **Self-Funded Expansion:** Project financing via **internal accruals** and **preferential share proceeds**, with setup prioritized after sales growth. ## C. Maturation Facility * **In-House Aging Capability:** Maturation facility almost commissioned, with **trials ongoing** and full operations expected **within a month**, supporting long-term brand equity. * **Revenue Timeline & Model:** Malt-derived revenue to begin in **~1.5 years** due to **1–5 year minimum maturation**, with dual monetization via **external sales** or **internal use** in premium brands like **Single Malt** and **Hillfort Whiskey**. --- # 5. Channel & Distribution ## A. Key Figures * **IMFL Demand Share:** **>10%** from Maharashtra alone ## B. Distributor Onboarding * **Strategic State Rollout:** Expansion advancing in key markets—strong early traction in Maharashtra for Hillfort whisky, with active distribution in Thane and Mumbai, and upcoming onboarding in Pune and Nagpur. * **Leadership & Execution:** Hired senior Diageo executive to lead sales and distributor onboarding in Maharashtra, targeting full in-house team transition within a year. * **Operational Resilience:** Repeat orders resumed in Thane despite 15–20-day disruption from MML policy, signaling durable demand. ## C. In-House Sales Teams * **Controlled Growth Model:** Onboarding distributors in Maharashtra and Uttar Pradesh, but long-term strategy centers on company-owned sales teams for superior control and performance. * **Proven In-House Execution:** Own sales team already operational and performing well in Uttar Pradesh. ## D. HoReCa Expansion * **Grassroots Go-to-Market:** Marketing RTD launch via bottoms-up approach—targeting **70% of consumers** in fixed bars/shops, with bar promotions, bartender education, and **bar takeovers** to build premium presence. * **Focused Resource Allocation:** No spend on mass advertising, endorsements, or team takeovers; prioritizing direct engagement at the bottom of the market pyramid. * **Scalable HoReCa Management:** One dedicated executive managing national chain accounts, with expansion contingent on demand in cities like Mumbai, Delhi, and Noida. * **Retail-First Priority:** Primary focus remains on driving retail shop-level demand over broad HoReCa expansion. --- # 6. Input Cost & Regulatory Risks ## A. Key Figures * Grain Prices: Rs. 22,000–23,000 Q1 FY26 vs. Rs. 2,400 last year average (significant YoY increase) ## B. Grain Price Volatility * **Cost Relief Underway:** Input cost pressures have eased with stabilization in rice, maize, and notable reduction in glass packaging costs, boosting cost efficiency. * **Favorable Supply Outlook:** Grain prices expected to stabilize due to strong crop yields and a **5% increase in maize acreage** in Madhya Pradesh, supported by ethanol and alcohol sector demand. * **Competitive Threats Emerging:** Increased competition anticipated from potential low-priced Scotch-labeled entries or aggressive pricing by incumbents, requiring strategic vigilance. ## C. Excise Policy Changes * **Policy Monitoring in Key Markets:** Maharashtra’s excise policy shift is under active review as the company expands in this major IMFL market, with pricing adjustments being assessed to protect growth. * **Regulatory Uncertainty Creates Opportunity:** While no clear signals on future duty hikes post-Karnataka and Maharashtra actions, the disrupted landscape may benefit Indian players through **higher distributor/retailer margins**, especially in the MML segment. * **Pricing Strategy in Flux:** Market speculation persists on whether multinationals will pass on potential duty cuts or maintain prices, and whether states may raise excise duties to compensate revenue. ## D. Import Approvals * **Tequila Launch Progressing:** Despite ongoing delays in Mexican government approvals, purchase order placed and imports expected within 2–3 months; interim strategy to sell as “agave spirit” with rebranding to “tequila” upon approval. * **RTD Launch Back on Track:** Equipment import delays resolved; equipment received and currently undergoing registration, clearing path for product rollout. * **UK FTA: Cautious Watch:** Potential India-UK Free Trade Agreement could drive premiumization but also intensify competition; timing and impact remain **unclear**, prompting measured caution. --- # 7. Guidance & Outlook ## A. Key Figures * **Market Share Target:** **15%–16%** CP Vodka in Madhya Pradesh * **Marketing Spend:** **1%** of revenue (current) → **~5%** (planned in initial expansion years) * **Geographic Target:** Presence in **10 to 12 states** with premium brands over next two years ## B. Market Expansion Plan * **Strategic Growth Pillars:** Expansion driven by **premiumization, geographic reach**, and **operational strengthening**, with a focus on **innovation and brand building** to capture India’s alcobev transformation. * **New Market Rollout:** Expansion into **Maharashtra and Uttar Pradesh** underway, leveraging the **Kerala playbook**—a proven model requiring sustained quality, innovation, and market alignment. * **Product Innovation:** Launch of **RTD products** and a **company-owned single malt brand** to deepen premium portfolio and diversify revenue streams. * **Partnership Leverage:** Exploring new business opportunities with **Inbrew**, building on a successful collaborative history. ## C. Margin Expectations * **Margin Pressure Ahead:** Near-term sustainability may be affected by **higher investments in marketing and talent** during large-state expansion. * **Revenue Model Shift:** Loss from Inbrew model change offset by **strategic pivot to proprietary premium brand promotion**, enhancing long-term margin potential.