United Spirits Q1FY13 Earnings Conference Call - July ... - UB Group

United SpiritsJuly 31, 2012for working capital also with the rate increases by lenders as directed by the RBI from time totime. The activities of the emerging market divisions which is conducted through a whollyownedsubsidiary Singapore subsidiary of Whyte & Mackay and we have in country wide plansin place and we are taking baby steps to enter Asia and Africa, this has already started in themonth of April and we hope over a period of time this will become a significant portion of ourbusiness Just given you a brief summary of some of the points relating to the USL performanceand I will now hand it over to Mr. P.A. Murali our CFO and Joint President to give you adetailed break down on various financial parameters. Thank you.P. A. Murali: Thank you Ashok. I will try not to repeat myself. As very sufficiently explained by Mr.Nedungadi and Ashok on the business side. Let me touch upon aspects of volume, value, cost,debt, Whyte & Mackay and probably sort of our focus into the rest of the year in terms ofwhere we expect the cost to be especially ENA and glass so that everybody gets an overallpicture and then we can take questions.As already explained to you backed by a 2% volume growth we have registered a 7% valuegrowth primarily driven by premiumization strategy where Prestige and above brands grew at avery healthy pace of about 17% has already been explained in Tamil Nadu and West Bengalwhich dampened the volume growth. If I were to remove Tamil Nadu and West Bengal, thevolume growth goes up to almost around 6.5-7% and the Prestige and above brands have grownby close to 20% in the last quarter. There have been other markets which probably denied usgrowth levels close to about 10% without Tamil Nadu and West Bengal that is Orissa and UPwhere we found that in UP the difference between country liquor and IMFL widened becauseof the price increases that we have taken and that really had a short term impact on the volumesin the first quarter which we expect to recover through the year. We, on an overall basis on thevolume we are still confident that we should by the year end catch up to about 8-9% comparedto just about 2% at this point in time, but our focus has been on Prestige and above brands andit will continue to be for the rest of the year with irrespective to whatever volume that wewould achieve but the immediate focus has been if you see last two quarter we have beenreturning a margin of just about 10.2 and 10.4% EBITDA margin to NSR and our concentrationhas been as to how to get back to mid teen in terms of margins, so that the expectations of theinvestors or back on even keel in terms of our past performance.Having said that, on the cost front we did find higher cost in terms of raw material last quarterif you had seen the web upload you would realize that on a corresponding basis compared tothe same quarter last year the price has gone up by almost Rs. 5 a case which impacted almostabout 15 crores in terms of cost and compared to the immediate preceding two quarters wherethe average price of ENA is almost about Rs. 163, it has come down by almost about Rs.12which aided in fact partly on the expansion of margins that we have seen.On the other cost front, I mean staff cost A&SP remained at traditional levels of 5.3% and 8%respectively but the most heartening on the riding on the back of premiumization strategy isPage 4 of 20