Radico Khaitan Limited
(BSE: 532497; NSE: RADICO)
Second Quarter and Half Year FY2021
Earnings Conference Call
November 3, 2021
Management Participants:
Mr. Abhishek Khaitan, Managing Director Mr. Dilip Banthiya, Chief Financial Officer
Mr. Sanjeev Banga, President - International Business
Presentation: | |
Moderator: | Ladies and gentlemen, good day and welcome to the Q2 FY2022 Results |
Conference Call of Radico Khaitan Limited hosted by Emkay Global Financial | |
Services. As a reminder, all participant lines will be in the listen-only mode and | |
there will be an opportunity for you to ask questions at the end of today's | |
presentation. Should you need assistance during the conference call, please | |
signal an operator by pressing "*" then "0" on your touchtone phone. Please | |
note that this conference is being recorded. I would now like to hand the | |
conference over to Mr. Ashit Desai from Emkay Global Financial Services. | |
Thank you and over to you, Sir! | |
Before we begin our presentation, I would like to remind you that some of the | |
statements made in today's conference call may be forward-looking in nature and | |
may involve risks and uncertainties. Kindly refer to the last slide of our earnings | |
presentation for the detailed disclaimer. | |
Ashit Desai: | Thanks Steven. Good afternoon everyone. It is a pleasure to host the |
management of Radico Khaitan for their Q2 FY2022 earnings call. From the | |
management we have with us today Mr. Abhishek Khaitan, Managing Director, | |
Mr. Dilip Banthiya, CFO, and Mr. Sanjeev Banga, President (International | |
Business). I will now hand over the call to the management for their opening | |
remarks. Over to you Sir! | |
Abhishek Khaitan: | Good afternoon ladies and gentlemen. First of all, wishing you all a very, very |
happy Diwali. Thank you for joining us on our second quarter FY2022 results | |
conference call. I hope you are doing well and keeping safe. | |
Market conditions have normalized during Q2 FY2022 and we saw a strong | |
growth momentum led by our prestige and above category brands which have | |
grown by 18% over same quarter of last year. The growth was broad based | |
across the portfolio and across states. Demand for premium brand is relatively | |
less impacted by the slowdown due to COVID-19. Consumers are looking to | |
have quality experience at home when the social gatherings and going out is | |
reduced. | |
Our longstanding strategy of focusing on value driven growth is working well. | |
It is clearly reflected in our Q2 FY2022 volume growth and is also indicative of | |
the increasing premiumization trend. It is important to note that this | |
performance is over a relatively strong base of last year when Q2 was more or | |
less normal. During the quarter, our export business has been impacted due | |
to global freight scenario and non-availability of containers. Our domestic | |
volumes have remained very strong. | |
Building upon the growth momentum in the industry and the premiumization | |
trend, we have unveiled two of our most awaited brands, that is, Royal | |
1 | Page | Q2 FY2022 Earnings Call Transcript |
Ranthambore Heritage Collection-Royal Crafted Whisky and two variants of Magic Moments Dazzle Vodka. We have been working on these brands for over two years and the launch was delayed due to COVID.
Both these brands have been developed after a comprehensive consumer research on the blend, packaging as well as positioning. These brands will create a unique positioning for themselves in a similar fashion as many of our previous premium launches.
We believe that Royal Ranthambore is the finest blend ever created in India at this premium positioning where no other Indian company have ever launched its brand. It is a unique whisky with six blended Malt Scotches, one Scotch Grain from Malted Barley and Oak Infused Grain Neutral Spirit, reserved for a specific time to assimilate the blend.
Dazzle is aimed at capturing the global trend of the premium natural, flavoured vodkas. It undergoes seven-stage filtration process and is available in two variants, gold and silver. Gold is an ultra-premium vodka whereas silver is creamy vanilla flavored which is first of its kind in India.
As of now these brands have been launched in UP and Maharashtra. In the second half of FY2022 it will be made available in other key states such as Karnataka, Telangana, Rajasthan, Delhi, Goa and Haryana. Next year we will roll these out on PAN India basis. At the moment we are focused on seeding the brands. Our focus is on placing these brands in class A and B outlets in select cities and creating visibility with consumers.
We are very proud of both these launches and the initial market feedback is also very encouraging. It gives us more confidence that we are making right progress in developing a stronger premium brand portfolio which will create Radio Khaitan a future ready organization.
During the quarter we expanded our distribution for Jaisalmer gin and now it is available across 10 states. After Delhi, Goa, Telangana, Karnataka, Maharashtra, it is now also available in UP Haryana, Rajasthan, Uttarakhand and Daman.
Over the last two quarters we have seen a steep inflationary trend across industry and our sector is no exception. We have seen a sharp increase in some of the key input materials which has impacted our profitability margin particularly in the non-IMFL segment. We strongly believe that this is a temporary phenomenon and given our focus on premiumization, margins trajectory shall improve. During this period Radico Khaitan is focused on sustainable premium volume growth which will drive profitability in the long run.
2 | Page | Q2 FY2022 Earnings Call Transcript |
As a company we have taken environmental stewardship and supporting the | |
planet in big and small ways. For example, in our Rampur distillery nearly 70% | |
of the power consumed is from renewable energy sources and around 47% of | |
the renewable power was through biogas generated through waste produced | |
during the alcohol manufacturing process. | |
We have been ramping up our usage of recycle bottles for certain large brands | |
which stands at 14% in FY2021 as compared to 4.5% in FY2019. Other | |
initiatives include water recharging and water harvesting around our factory, | |
educating farmers around water conservation. Currently we are able to | |
recharge 300% of total water we draw from the ground giving back more to | |
the ecosystem. | |
We have also undertaken a large water conservation project along with the | |
government and the Art of Living foundation. Our project will benefit over 40% | |
of total population of Rampur District of 2.3 million. | |
We believe in creating value and sustainable growth keeping in mind our | |
commitment to environmental and society. | |
I would now like to hand over the call to our CFO for a detailed operational | |
and financial review. Thank you and over to you Dilip! | |
Dilip Banthiya: | Thank you Abhishek. Thank you everyone for joining us on this call today. Wish |
you all a very happy and prosperous Diwali. | |
During the second quarter, we reported IMFL sales volume of 6.47 million | |
cases representing an increase of 7.1% on Y-o-Y basis. This volume growth was | |
led by prestige and above category volume growth of 17.7%. In value terms | |
P&A category registered a 22.1% growth. P&A category accounts for 30.8% of | |
total IMFL volume as compared to 28.0% in Q2 of FY2021. We have continued | |
a similar momentum in Q3 so far. | |
Net revenue from operations during Q2 of FY2022 was Rs. 709 Crores | |
representing an increase of 12.5% compared to Q2 FY2021. During this period, | |
IMFL sales value increased by 13.5%. As a percentage of total revenue, IMFL | |
sales accounts for 80.2% of the net revenue compared to 79.5% during the | |
same quarter last year. | |
Gross margin during the quarter was 46%. This was impacted due to | |
commodity inflation, particularly in non-IMFL segment. Over the last six | |
months, we have seen prices of PET resin and other packing material go up | |
significantly. Despite a significant increase in the prices of packing materials, | |
gross margin for IMFL business remained stable owing to a favorable product | |
mix. While there is an inflationary pressure on most of the commodities, ENA | |
price has remained stable. Due to an efficient supply chain, the Company has | |
3 | Page | Q2 FY2022 Earnings Call Transcript |
This is an excerpt of the original content. To continue reading it, access the original document here.
Attachments
- Original document
- Permalink
Disclaimer
Radico Khaitan Limited published this content on 09 November 2021 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 09 November 2021 09:32:07 UTC.