United Spirits (UNITDSPR) Q4 00/01 earnings summary

Executive summary

• FY2000-01 was a transition year following the amalgamation of six businesses, effective April 1, 2000; reported figures include the amalgamating businesses and are not comparable with the prior year.

• Spirits volumes were 19.02 million cases, down 4%; national market share was 26% in a market that contracted.

• Leadership described performance as commendable despite market disruption and the temporary withdrawal from Andhra Pradesh; supplies resumed after a favorable High Court decision.

Financial highlights

• Gross turnover rose 7.3% to Rs.10,834 million, primarily due to the amalgamation; net turnover was Rs.8,206 million and brand-franchise fees were Rs.493 million.

• Profit before tax fell 10% to Rs.358 million from Rs.408 million; profit after tax was Rs.224 million.

• Reported net turnover plus sales through franchise and associate distilleries would total Rs.12,033 million on a consolidated-sales basis.

• The Andhra Pradesh supply suspension and related marketing spending contributed to lower profit and EBITDA margin.

Outlook and guidance

• Management expected to regain Andhra Pradesh market share and profitability after supplies resumed; prospects were described as more than satisfactory barring unforeseen circumstances.

• Cost and growth priorities included supply-chain improvements, more efficient manufacturing, working-capital control, brand investment, and expansion into cheaper liquor segments and new channels.

• Merger benefits, including lower bottling fees in Rajasthan and Madhya Pradesh, and Udaipur distillery capital projects were expected to flow through from FY2001-02.