Mumbai: Despite adverse external environment due to regulatory issues, the country's largest spirits maker United Spirits today reported a 44 per cent growth in net profit at Rs 63 crore in the June quarter helped by an interest cost saving of Rs 70 crore even though its sales fell 13 per cent.
"Despite a 13 per cent fall in sales to Rs 1,782 crore from Rs 2,041 crore due to regulatory challenges, the bottom line was boosted by a 32 per cent savings translating into Rs 70 crore on interest cost driven by favourable rates and mix of debt.
"Accordingly our net income rose 44 per cent despite short-term regulatory challenges that arose after the Supreme Court ordered shuttering of liquor sales on national highways in March," managing director and chief executive Anand Kripalu said in a statement.
The Bengaluru-headquartered USL, owned by the London-based world's largest liquor maker Diageo, also said its board has approved raising Rs 750 crore debt by way of private placement of non-convertible debentures.
Kripalu attributed the 13 per cent decline in sales to the highway ban and the one-off impact of operating model changes.
The bottom-line improvement was also driven by an 8 per cent savings on staff cost at Rs 166 crore down from Rs 180 crore, a 3 per cent fall in marketing spend at Rs 163 crore from Rs 167 crore and another 3 per cent reduction in other overhead costs at Rs 324 crore and one-time income of Rs 31 crore and a 12 per cent decline in taxes at Rs 22 crore.
While mid segment sales fell 8 per cent, mass segment saw sharper sales decline at 20 per cent, impacted by one off changes in operating model and priority states declined 7 per cent.
"Performance in the first quarter, as expected, was impacted by the highway ban which has led to lower consumption due to a reduction in the number of retail outlets. We have also witnessed destocking by customers during the first quarter.
"Despite these challenges, the Signature continued to show positive momentum supported by the successful renovation and grew net sales 14 per cent. The re-launch of the Antiquity has started towards the end of the first quarter in select states with early signs of positive consumer and trade response", Kripalu said.
The Prestige & Above segment represents 47 per cent of the volume and 61 per cent of total sales, up 5 percentage points over last year. While McDowell's No 1. sales declined 1 per cent and Royal Challenge declined 11 per cent but Signature continued to show positive momentum supported by the successful renovation and grew net sales 14 per cent and scotch sales declined 24 per cent.