Thank you very much. Ladies and gentlemen, we will now begin the question and answer session. Anyone who wishes to ask a question may press “*” and “1” on the touch phone telephone. If you wish to remove yourself from the question queue, you may press “*” and “2”. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for the moment while the question queue assembles. The first question is from the line of Abneesh Roy from Nuvama. Please go ahead.

Yeah, thanks, and congrats on a good set of numbers. My first question is on ARTHAUS and the two M&As you have done. So, obviously, this industry is media dark and we have seen one small listed company do a very commendable job in terms of creating a new brand, which is a rival for you. So, wanted to understand how you would build up given that constraint of media dark and in terms of the addressable market for all these three, if you could tell us what is the addressable market and in terms of product and pricing and positioning, how you would be different? Because you need to be different so that you can get here tract ion. So, if you could talk about that also?

Sure, thank you for your question. Starting with what is the total addressable market? If you look at the IWSR data of last year, of the 410 million cases that were sold, about 3% of this 410 million cases, roughly 12 million cases, is what we qualify as luxury portfolio, which also accounts for more than 20% of industry profit. So, that's the size of the market. The industry is growing at a very healthy rate, and we expect the segment to become bigge r in time to come. The way we are building our portfolio, we already have now five brands in this segment. We started with Zoya, then we added ARTHAUS, then India Partnership for Russian Standard Indian Market, and now we have Rock Paper Rum, and we also have Woodburns. So, these 4-5 brands and the newer brands that we plan to launch in this luxury segment give us a curated portfolio that will allow us to engage both the on -premise, off-premise and the consumer in a meaningful manner. So, that's our outlook and over a period of next few years if you can get to a high single digit or a double digit share of this maybe 18 to 20 million case market is the way we are looking at it. On the aspect of whether it's Woodburns or whether it is Rock Paper or whether it is ARTHAUS, I think the consumer is driven by a high sense of curiosity and is constantly seeking newer experiences which is a combination of any web search that a consumer might do, or social media connect that might happen, or recommendation, and more importantly, trying a new product on premise. So, all the brands that are coming as part of our luxury portfolio, they're essentially looking at that, how are we able to showcase our product, mostly through on premise, through participating in the right eve nt platforms where liquid trials can happen. And like I said, consumer stays very curious. So, there are many markets where, they are able to also do brilliant displays of a product that catches the customer attention. On the pricing front, ARTHAUS is priced in Mumbai at Rs. 4,800 for a 750 ml bottle. It is priced almost cross-line to the two BIO brands of Copper Dog and Monkey Shoulder. And that's really where we are positioned, a slight premium to Black Label. But as we know that malt consumption happens both from committed malt consumer and a lot of blended whiskey consumer who also enjoy malt on occasion. So, that's really where ARTHAUS is positioned. Moving on to Rock Paper Rum. Rock Paper Rum will operate at a price point in Bombay, again, between Rs. 1300 rupees and Rs. 1500. So, it makes it a premium, super premium price point. It is cross-lined to Bacardi. And as we know that in this segment, Bacardi is the only player currently, the segment is roughly 3 million cases. So, that offers us a wonderful opportunity to offer an interesting brand to the consumer which is younger, which has got multiple flavors and hopefully not only will gain market share, will also expand the segment. The third brand that we spoke about Woodburns, Woodburns is cross-lined to Royal Ranthambore. So, it is going to be the most, it's going to operate at a price point of Rs. 3,000. So, this is the price positioning. Each brand has its own distinct price positioning. It has its own competitive set and is able to offer therefore, as you rightly said, unique and distinct experience.

My last question is on Andhra market. So, you said it has doubled YOY. Now the multinational players had almost exited Andhra and now they're coming back and they have seen obviously good numbers on an almost zero base. So, my question is, when you had normal operations in Andhra, what percentage of sales was coming from there? And given multinationals are going to come back very strongly from zero base and now it is free market dynamics, how do you see eventually the market shares settle here because you already had some presence, but now multinationals have also entered Andhra?

Sure. So, first of all, I think we compete with the multinationals across the country. Andhra is no exception. Across all markets, our brands have a certain market share. As far as Andhra is concerned, the doubling of our volume on year-on-year basis has happened from the period when multinational brands were available or are available. So, you have to see the growth. I think everybody's got an opportunity, especially the Pan -India players like ourselves and the multinationals that we have spoken about. Everybody's volume has grown and our volumes have also more than doubled. So, that's really where we are. On share of sale about between 5% and 6% of last year volume would have come from the Andhra market. And I think by the time we end this year, we will be trending more like between 8% and 10%. Between 8% and 9% of our volume will come from Andhra market.

The profit and the working capital in Andhra, is it as challenging as Telangana? Because both were part of same state earlier. And my sense is the policies are still fairly similar.

Working capital is not a challenge in Andhra. The payment cycle is very well defined and payments are made on time. So, there is no challenge on the working capital side. On the pricing front, the pricing continues what was at the start of the financial ye ar. As you know, there's a tender that is out. So, if there is any price change, we will get to know once the price negotiations are over. But as of now, it is the same price with which we started the year.

No, my question was, if we assume the same prices, Andhra margins for you, once the stability comes, will it be similar to the pan India margins, rest of the business margins for you?

Yes.

That's all from my side. Thank you.

Thank you very much for your question.

Thank you. The next question is from the line of Nikhil Kapoor from LIC Mutual Fund. Please go ahead.

Hi, am I audible?

Yes, you are.

Hi, congratulations on good set of numbers, sir. Very good performance from both gross and EBITDA margin point of view. One question to that extent, how much lever do we think we have to even expand this margin further and will that be a function of cost optimization and internal efforts? Or would that be, will that take portfolios tilting towards more of a P&A, which will drive eventually margin from 12% to 13% -14% on the EBITDA level? So, just your thoughts on going forward, how should we look at your margins?

So, there are two strong levers from EBI TDA margin expansion. The first is our CAPEX program. Most of our listed peers have finished the CAPEX cycle. We are just about starting our CAPEX cycle. We expect on back of the CAPEX program, we should see, let's say about 300 basis point odd improvement in our gross margins. And therefore, it should all flow down to EBITDA. So, that should get us to what we call an industry parity of 15%. The second pillar of driving our margin is going to be the improved salience in P&A from 43% to 50% and also strengthening of our portfolio and national rollout of our portfolio in the luxury segment. So, from the way we see the numbers, from a current level of about 12% odd EBITDA margin, 3% should come on the back of our CAPEX cycle and we should have incremental margins coming on back of the way, we are building the portfolio. Of course, focus on cost optimization will always continue.

Understood. Just one question on the popular segment. When we look at the indu stry, this segment has been in pain for the last 8-9 quarters. And of course, there's a base effect that is flowing through. But even when you look at your numbers, there has been decent 9.2% volume growth on the popular, as well as 9.5%, 9.3% growth in terms of value terms in popular segment. So, how should we think about this? Is it demand revival or is it the base effect or is it just a festive thing which should probably not play in going forward? Are you seeing on ground some demand revival in this segment per se?

Well, Q3 we did see some bit of demand coming back on the Mass Premium segment. Clearly, as part of the whole premiumization story, consumers are finding some of the more high priced brand as a point to enter the segment once they do choose. So, we believe that the growth in Mass Premium will remain single digit. I think the opportunity for us is really to leverage the strength of brand Officer’s Choice and our distribution and to continuously beat the segment growth. But we expect segment growth to be single digit at best.

Just last question on the acquisition that we did on Good Barrel and Woodburns, are there any debts associated with these acquisitions?

The acquisition will be a combination of our internal accruals and some bit from the debt.

Are there any books, are there any debt on their books already which will...

There is no debt. In case of Woodburn s, we are acquiring the brand, we are not acquiring the company. So, there is no debt. And for Good Barrel, there is a very small number of, I think, Rs. 30 lakhs or odd of some promoter debt sitting, so nothing significant.

Okay, got it. Thanks.

Thank you. The next question is from the line of Kinjal Desai from Nippon India Mutual Fund. Please go ahead.

Hi, congrats on a good set of numbers. I wanted to get a bit of clarity with respect to how is our Ad spends and reinvestments given that we would be supporting a lot of brands, and we are looking at significant growth. So, maybe some clue on how we are getting your reinvestments and in line with especially your guidance of margin expansion?

Thank you for your question. I would break the brands into broadly three categories. In the P&A segment, we are looking at further strengthening our A&P spend and therefore net of the increase in A&P spend, it will be EBITDA accretive. On Mass Premium segment, which is Officer’s Choice, we will maintain what we are doing because we have a very, very sharp gross margin and EBITDA focus coming through Officer’s Choice. We do not plan to make any major changes in our investment outlook. We just focus on profitable market and leveraging our distribution strength. As far as the new brands and the luxury portfolio is concerned, by and large our outlook is that we will manage the A&P on this brand more in line with the net contribution that these brands generate, what we call as cap neutral. And over a period of maybe two years, we should start looking at these brands to actually start contributing on the EBITDA. So, the luxury portfolio should not take away from our current EBITDA and will start adding to EBITDA within two years of the brand sort of reaching a critical mark.

Thank you.

Thank you. The next question is from the line of Kunal Shah from Jefferies. Please go ahead.

Hello, thank you for the opportunity. So, my question is on Telangana. Can you give an update on what's the receivable amount now and if there's been any progress, so what are the discussions ongoing? And what are the options that you are considering given these receivables?

Okay. So, from October onwards, Telangana we are receiving regularly our payments for the supplies that we make for the month. So, to that extent, we are out of an uncertain zone on how much money will come to us so we can plan our cash flows better. The overdue position is that we have roughly Rs. 400 odd crores of overdue. So, that's the number as far as overdue is concerned and also r eflects in our interest cost. The question on what we are doing, there is continuous proactive engagement with the decision maker through the industry body which is CIABC and in this case it's a joint exercise with ISWAI where there's a constant engagement with the policymaker on resolving the issue of overdue payment. From what we hear from Telangana is that there is a serious effort being made to resolve this issue. Once we have an update we will certainly share it with you.

Understood. And have you seen any change in competitive dynamics because of these receivables? Maybe some companies are not able to bear th e working capital load and that benefits some other players or benefits you probably. Has anything played out on those lines?

So, I think there was a phase when the payments were uncertain where a lot of players were hesitant whether we should continue supplies or not. But since from October onwards our payments are coming on a regular basis, I would say the national players have continued to support the market of Telangana while they are also engaging with the government to release the overdue payment. There can be cases of a regional player or smaller player who has vacated or not supplying. But again the key players are continuing to support on back of a dialogue that is currently going to the Telangana ground.

Understood. Thank you. The second question is on, so how should we think about pricing going into the next year? As you know, excise cycles will start kicking in the next few months. Do you have any sense of what sort of price growth can you get from the different states that you operate in?

I think it's a bit early for us to talk about it. The excise cycle has just about started. Again, the industry body, CIABC, is actively pitching to the various excise offices about our outlook on what needs to be done. So, I would say it's a little early for us to have a view on it. Historically what we have seen is that the price increase or the NSV increase could be up to about 3% on a sort of a weighted average basis, but providing specific guidance at state level is a little early.

Understood. Thank you, that's all from me.

Thank you. The next question is from the line of Avi from Macquarie. Please go ahead.

Yes. Hi, team. I just wanted to double check on the input cost. There has been a hike announced by the government in ethanol production. I wanted to make sure that that is factored in.

I'm sorry to interrupt you, Mr. Avi, but your line, your voice is breaking, sir. We cannot hear you clearly.

I'm sorry, is this better?

Yes.

Much better. Thank you.

I just wanted to check on the input cost spread, given that there has been a hike that has been announced by the government in ethanol production, is this something that you've factored in these estimates? And secondly, in glass, if you could give us a sense on the period of capacity addition now that it is behind us, is that something that worries you? Thank you.

Sorry, the question on Glass is not clear, if you don't mind repeating, please.

In glass we have seen a period benign cost for a long time now and just wanted to understand there is talk about consolidation, there's talk about capacity addition now more or less behind us. So, we'd love to hear your thoughts on how do you see this? Thank you.

So, as far as ethanol is concerned, you're also aware that the government has reduced the price of FCI rice and in ethanol production, for example, in portable alcohol only broken rice can be used, but for ethanol production, full rice can be used and there's a significant price reduction of Rs. 5.50 per kg that has been announced and the idea is to sort of make sure that there is raw material security to the ethanol industry and therefore we are hopeful that if once this price gets settled, the new FCI rice price gets settled, we are hopeful that it will take away some pressure on broken rice. So, that's our outlook when we say that our outlook is at least in the near term is soft and neutral on the ENA prices. On our grain procurement, which we are now doing both for our Maharashtra distillery and for Telangana distillery, we are seeing some softness in the grain prices. However, we need to see that it sustains itself over the quarter, but we are seeing soft-to- neutral outlook on the grain procurement. On the glass industry, I think our outlook is that, at least in the near term , we do not expect anything that will impact us materially. That is our outlook at least.

And sorry sir, when do you typically, when is the typical negotiation cycle in glass?

See the glass industry at least, we have moved to a procurement model which means it's a formula driven pricing. And until there is no significant change in an input cost, positive or negative prices remain stable. So, what we have done is we have moved away from a dynamic month-on-month prices to a agreed formula which is normally running for several quarters and that is giving us a better view on the pric es and avoiding a need to s ort of get into constant negotiations.

Perfect. So, my second question is on the marketing side. Now you have indicated a movement towards luxury portfolio. And that segment is relatively consolidated or the re are too large players, do you believe that while at the EBITDA you don't expect a hit, the ad spend intensity needs to be, your share of voice has to be much higher? Or how should I look at that segment, if you could give your thoughts, share how you see this growth? Thank you.

See, our bet is on the consumer. Consumer is sort of looking for newer experiences and therefore, as long as your proposition is unique and presented in an interesting manner, I think consumers certainly give any brand a chance and our brands therefore, we believe we will tend to gain from the experience driven consumption. On the investment side, I think like I was responding earlier to query of Nippon, the outlook we have built is that the contribution that we generate on this brand, we will deploy back on the brand. So, they may not contribute anything to EBITDA in the short term but two years down the line, they should start contributing EBITDA. That's the outlook that we currently have. I think it's about sort of interesting innovative market ing. Of course it will require A&P, but I believe the brand should be able to generate enough contribution because they're high gross margin. Another focus is that how do we accelerate the rollout of this brand, so we gain from multiple markets, and therefore the total volume that we do also generate free cash to be able to invest in the brand.

Very clear. Thank you very much sir. That's all from my side. Thank you.

Thank you.

Thank you. The next question is from the line of Sunny from MK Ventures. Please go ahead.

Yes, thanks for taking my question and congratulations on a very strong set of performance for the second consecutive quarter. My first question is related to the brand portfolio. So, we have done a couple of launches in the last 2-3 quarters, including Russian standard vodka , ARTHAUS. So, if you can give some color on how has been the initial response and if any takeaways or some perspective that you can share about the new launches that will be quite helpful.

So, ARTHAUS was launched in November early December so again a little early to talk about numbers. W e are happy with the feedback th at we have from the trade, we have from the consumer. The on-premise promotion that we do. The packaging is really appreciated, the liquid is really light. So, that's the early stage feedback that we have on the brand. So, we are expanding the footprint of ARTHAUS. On Zoya, which has been there, we have seen in Quarter 3, over quarter two about 51%, quarter-on-quarter growth on this brand. And as we are rolling out to new markets and expanding our distribution, hopefully this growth momentum will continue.

Yes, and anything on Russian standard vodka? Russian standard, we are expecting the BIO brand. We are expecting stock availability in the month of February, so it's yet to hit the market. And on ICONiQ White based on some checks, what we understand is it was launched in the last few months between Karnataka and Andhra Pradesh. So, have we started seeing benefits of that in Q3 volumes or the pick up will happen now going forward?

The pick up will happen going forward Q3 . In fact, Andhra distribution has just about started this month, is the first month of proper distribution and same is the case with Karnataka. So, we will see the real benefit of this growth coming in this quarter. Got it.

That's helpful. My second question is related to the Delhi market. So, how large was Delhi as a proportion of our volumes before the entire market disruption happened? And we hear about stability in terms of the policy in the last few months. So, has there been any benefit of that stability in terms of the volume pick up and how do we expect the Delhi market to perform in the coming quarters?

So, we have moved in Delhi as you rightly saying from an uncertain environment to a certain environment. Our brand volumes have moved from an average of 15,000 cases a month to this month hopefully about 100,000 cases. So, there is a 5 to 6x growth in Delhi on back of a stable policy. And if there is no major change in the policy irrespective of the election outcome, we believe that we should be able to maintain this momentum.

Right and just a related question to this like before the entire disruption happened in Delhi, how large market either from our perspective or like from an overall market potential perspective How large the market was?

For us the market was I think we did we have got a million and odd about 1.5 million cases prior to the policy disrupti on that was the size of markets roughly but 5% of our volume, 4 %-5% volume coming from Delhi. I think we have to keep one thing in mind that Delhi is also a very large premium and a luxury market. And as the policy is getting stable and we are getting access to the market, we also see upside on our luxury portfolio. We are at the last leg of getting approvals, both for Zoya and ARTHAUS and as sooner we get those approvals then we will also launch those brands there. So, we are happy with the fact that the p olicy is stable. Our mainstream brands are already selling. They have 5 or 6 SKUs versus what we were doing earlier. And now we are strengthening our premium and luxury portfolio in Delhi and on back of label approvals, we will start rolling out the brands.

Got it. That's helpful. And one last question relating to gross margin and our backward integration initiative. So, we have seen a very sharp improvement in gross margin post the IPO, especially in Q2 and Q3. So, we mentioned that we renegotiated terms with our vendors and got better sourcing contracts. So, is the benefit completely reflected in our Q3 performance or do we see some further scope based on the supplier renegotiation?

It completely reflects in our Q3 numbers.

And one related question to this, so the Maharashtra distillery that we have acquired, so that has I believe currently a capacity of approximately 1 crore litres. So, does that benefit of backward integration start reflecting immediately in the coming quarter or the production will reflect once the entire expanded capacity is ready and what would be the timeline for the full scale production from an expanded capacity?

So, we are starting our production in the month of February, so we will start seeing the benefits of this acquisition within quarter four of F Y25 itself. As regards the full expansion , we have already applied for the necessary approval, which we expect will take between 3 to 5 months. Thereafter, it will take us about 12 months to 15 months to complete the project. So, currently, we are anticipating the benefits of this to start flowing in Quarter 4, FY27 of the additional capacity that we will put in Maharashtra.

Got it. That's very helpful. Thanks for all the detailed replies and all the best for the coming quarter.

Thank you very much.

Thank you. The next question is from the line of Sanjay Satpati from Ampersand. Please go ahead.

Hi, sir. Thanks a lot. My question is that you're guided for this 300 basis point margin expansion, and it is contingent on your completion of CAPEX. Does it mean that bulk of the CAPEX, bulk of the margin expansion will come towards the end of this three -year guidance that you have given?

Thanks, Sanjay, you for your question. So, as far as our M inakshi project is concerned, like I said, it goes revenue and EBITDA accretive for next month, which is February of ‘25. As far as PET project is concerned, which is coming up in Telangana, we will go revenue and EBITDA accretive by quarter three. The more plant that is coming in Telangana should go revenue and EBITDA accretive in Q4 of FY25. So, we will start seeing benefits of the Minakshi acquisition in February, PET from August onwards, and malt unit from Q4 of FY26, last quarter, FY26. Only the 150 KL facility that we will put in the Maharashtra which I explained will happen in Q4, FY27.

And of this 300, how much of it will be because of this CAPEX and how much will be because of your premiumization and operating leverage things which you can really, which you are trying in your business?

So, just keep it simple. We are currently at about 12% EBITDA margin. We expect 300 basis points improvement in our gross margin on back of this CAPEX. That will take us to about 15%. And any improvement that will surely happen on back of premiumization will reflect over and above that number.

Understood. And the last question that I wanted to ask you is that it looks like you are getting into quite a few categories and quite a few new brands, which most of them are appearing to be very niche in the sense that is that something which will keep your costs, etc., a little bit elevated? And how the brand saliency will be achieved?

Right, so going back to one big number, about 12 million cases are in the luxury segment, of which about 4.5 million cases Non-Scotch for the segment is meaningful. Gross margins are extremely attractive, growth is extremely attractive, per case contribution is very high. So, from a volume perspective, it may not move the needle significantly, but from impact on NSV and two years down the li ne, once the brands are getting buil d out, then the impact on EBITDA should be positive. So, I think we have to think about our luxury portfolio from a maybe a 2-3 year horizon and not an immediate horizon. And like I have clarified; the way we are going to manage this portfolio is to make sure that it does not take away from the current operating EBITDA. So, that's the bit of a tightrope walking that we are going to do.

Thank you so much.

Thank you. The next question is from the line of Rohan Patel from Turtle Capital. Please go ahead.

I have questions. I'll divide the question into two parts. One is for Prestige and Above and one is for Premium to Luxury So, we have seen that ICONiQ White whiskey is one of the world's fastest growing whisky which comes from Allied Blenders So, what has really worked well that we have been growing this whisky at the fastest pace if you can explain us?

You know they say magician never reveals his secret, but I will do that for you. See, the segment is 120 million cases. The brands that are operating in this segment are very successful, very well respected, but they've been around for more than 25 years. And like in any other category, a segment that is as big as 120 million cases, with millions and millions of consumers consuming it over a period of time, that is what we call a customer segmentation. So, the larger part of our success is in terms of understanding the customer segment within the 120 million cases and to identify a set of consumers who are looking for a newer, younger offering. So, if you look at ICONiQ White, typically the whisky codes are dark color, gold for stamping. If you look at ICONiQ White, it does not follow any of those codes. It's actually quite a code break up if you look at the label is white in color, it's bronze on the top. So, the reason of the success of the brand ICONiQ is sort of deep rooted in a key customer insight that the younger consumers are looking for something that sort of they can connect with, and in ICONiQ they find a brand that is sort of talking their language.

Understand. And now we have seen that you have added a lot of your brands in premium to luxury segment. And what we have seen that a lot of incumbent players are also adding a lot of expressions and brands in this segment. A lot of new companies are also coming into this segment, backed by celebrities and a lot of players are showing up into this s egment. So, how does a player like Allied Blenders have an advantage over some new company which has just started and wants to tap into this market, considering that you are having 2 to 3 millionaire brands with you. So, how does this help us? And what advantages do we have over others that creates a certain competitive advantage for us?

I think I start with some very basic facts. We build a distribution , manufacturing and sales infrastructure over the last 35 years. So, we do not need to build anything new from a manufacturing point of view, distribution point of view. And from a sales and revenue point of view, what we need to build is capability, which is around on-premise, through Liquid on Lips understanding, the whole mixology and the cocktail culture and that's what we have built over the last few quarters. So, we have a natural spring board if I may speak to be able to tide over the complexity of distribution. Second is , I think at the heart of any alcoholic beverage other than the fact that packaging must be unique, a great consumer story is really the liquid. I think that's one thing that we understand extremely well. We have a CQCL Center which is our innovation center out in Aurangabad and that's something that gives us the comfort that we create the right blend. So, that is really what we call as right to play thing that we have the distribution behind us, we have manufacturing behind us, we understand blend, we understand packaging. And we have built the infrastructure that is required for key accounts and for on-premise. And as you would recall, we have created a new entity which is ABD Maestro along with Ranveer which will focus on the on the luxury brand portfolio. So, the attention that some of these luxury brands need in terms of our route-to-market, how do we take it, the social media, the whole idea is that this new entity will focus on the entire luxury portfolio along with sort of the phenomenal reach a celebrity like Ranveer brings on th e table. So, apart from the fact that we have distribution manufacturing and sales infrastructure, and we build the on-premise infrastructure, it also will be taken to the market through ABD Maestro with sort of reach of a superstar like Ranveer.

Got it. So, if we have to boil it down into crux so it means that the existing distribution channel that you have and experience over this 3.5 decade plus the brands you have built up the addition for premium and luxury was that you have to get the right liquid, right packaging a story and has to distribute it to the right places to make it a success for you in this segment?

That’s right. And if I may add one point, is that, in this segment it's about constantly providing newer experiences and as you would see with Zoya, we launched in January of 2024 and we have already launched the first Watermelon Gin and Espresso Coffee Gin. So, in this segment it's also about consistently offering newer exci ting offerings. So, it's not about this liquid at a point of time, but it's consistently doing the new stuff. So, that's another capability that we believe we have to be able to consistently offer new exciting variants to the consumer.

I got it. Thanks for answering all of this question in deep and explaining it. Thanks and best of luck for the future.

Thank you very much. Appreciate it.

Thank you. The next question is from the line of Rucheeta Kadge from Iwealth PMS. Please go ahead.

Hello, sir. Very good evening. So, my first question was on the CAPEX side. So, what is the kind of CAPEX we are envisaging for this year and remainder of this year and the next year?

So, the total capital that we have already announced is Rs. 527 crores. Of this roughly 25% will need to be invested in FY25, about 60% in FY26 and the balance figure will be in FY27. So, this Rs. 527 crores would need to be invested over a period of 3 financial years.

Okay and sir if I may ask you another question. On the working capital cycle, I understand right now you are facing some issues in Telangana, but where do you think your working capital days will settle at going ahead?

Telangana, if payment was to be resolved, the payment cycle would be between 45 days, give or take.

Okay. And so one more thing was on the PET and the malt. So, a participant did ask you about this, had a follow up on that. So, when you say it will also be revenue accretive, so you will also be selling it outside?

No, PET bottle, we produce roughly 600 million bottles on an annualized basis and the entire 600 million bottles will be consumed, will be used by us, but it will be EBITDA accretive. The EBITDA will start coming in from quarter three in next financial year on PET

Well, it's a one-time change on back off restating asset life for some of the leased assets in this quarter.

Okay. So, we should see a similar trend or it's just a one off?

This is a one-off. So, we see no major changes in our depreciation other than the depreciation that may come on back of the new CAPEX.

Got it. So, that's it from my side. Thank you so much.

Thank you. The next question is from the line of Pranav Shrimal from PINC Wealth Advisory. Please go ahead.

Congrats on a great set of numbers. O ne of my questions has been answered. I just had one question. Just wanted to understand the EBITDA profitability of each of our segments?

Sorry, EBITDA?

EBITDA margin on each of our segment. That is Mass Premium, P&A and Luxury, if you could just share out the numbers?

We do not track EBITDA margins on the segment, we track gross margins. If that is helpful.

If you could just help me with the gross numbers that would also work.

So, like I think we have already covered that if you look at our portfolio, that was a big important point of catch up. Last year our gross margins were about 37% at a portfolio level. Peer parity is between 40 to 44 and we are at 43. So, the gross margin on our portfolio is now at about 43%. And we are again spending time saying that this margin should expand once our capital cycle is fully done.

So, where I was coming from, sir, I'm trying to understand that our luxury portfolio will only increase from now on, correct?

Sorry, luxury portfolio?

Luxury portfolio contribution will only increase from now on. Your other new brand expanding to new regions, correct?

Contribution in terms of volume?

Volume, yes. In terms of value and volume both.

So, I would just like to understand as you said that luxury portfolio will take around 2-3 years to come to have an impact on the EBITDA level.

Yes, that would be correct, that the EBITDA impact we should see over the next 2 or 3 years.

For the next two or three years. I just want to tell you some of the reasons why is there a gap? Is it because of the CAPEX or is it some other reason?

No, it has nothing to do with CAPEX. First is that the brand volume will grow over a period of time. And even though they are high gross margin brands, but as volumes grow, we will start getting contributions from this brand, which we intend to invest back in the brand. So, we believe that for the first two years at le ast, the money that we made from the brand , we will need to invest that money back in the brand. And therefore, these brands may not contribute to the EBITDA in the next two years. So, there is no CAPEX related to our luxury portfolio or impact of CAPEX on its profitability.

Okay, so the amount that we reinvest back into the brand, that is why it is taking time for competitive level. Otherwise, they would be competitive at the level, correct?

These brands will be extremely profit able at a gross margin level and that money we will be getting is redeployed back. So, as we build the brand and scale them up, they will also start contributing towards the EBITDA.

Great. Thank you, sir. That's it from my side.

Thank you. The next question is from the line of Dh iraj Mistry from Antique Stock Broking. Please go ahead.

Hi, sir and congratulations on very good set of numbers. So, just a couple of questions. One is basic, like if I look at this quarter, P&A realization per case, which we have seen drop on a YOY basis. Can you explain the reason for that?

Yes. Thank you for asking that question. We were able to get ENA ex port permissions in Telangana. So, last year, we were producing ENA, consuming and selling it to third parties. This year, we were able to get ENA export permission. So, we have used this ENA, sorry, maybe I think my team is telling me I got the question wrong. Is it about P&A NSV?

Yes, net realization per case.

Sorry, I got the question completely wrong. I think the way I will encourage you to look at the data is quarter -on-quarter. So, if you look at the P &A NSV improvement over last quarter is 4.2% and the P&A improvement of Mass Premium is at about 5% and total weighted average is about 3.8%. So, we have constantly said that we are now focused on making sure that our market shares grow in more profitable markets and essentially there's a state brand mixed change versus last year. But quarter -on-quarter, if you will see the number that's part of the deck, our NSV improvement is 3.8% in which P&A is 4.2 and Mass Premium is 5%.

Got it. And sir second question is regarding gross margin improvement, the measures which we have taken off when the rationalization in terms of payment terms, also mono carton discontinuation and other things which we have already done. Is it like large part of that benefit is already being come through? Because if I look at on a sequential basis, your gross margin is more or less stable. Is there some part of benefit that is still due in coming quarters?

So, there are three parts to this benefit. The first part of this benefit is cost rationalization like Mono carton you spoke about. Second part of this benefit is in terms of resetting the procurement rate on back off timely payment and third part is in terms of a better state brand mix. So, as far as the first one is concerned, we have finished the entire packaging substitution cycle. So, all the numbers are now baked in . So, no further margin contribution coming by rationalizing packaging. As far as the procurement price reset has happened, that benefit will continue because now we are procuring at new rates. So, we see this benefit come in. But again, it will not have an impact on the gross margin because it reflects in our Q3 number. How would the third part, which is the state brand mix as the P&A portfolio improves from current level of 42 to 50, and we continue to focus on more profitable market, that will have an impact on the gross margin.

Got it. And sir, one last strategic question. Like we have a very strong history of successfully and very fast ramping up of new product launches, be it Sterling Reserve B7 and also ICONiQ White. What is the rationale behind purchasing the brands which we have done in this quarter versus developing in-house brand?

So, I think the entire approach is, if I can put on a banner of how to make it asset light, we have seen that there is a clear demonstrated success of startup brand, especially in gin as a category and therefore we believe that some of these newer startups are working with a ver y different consumer insight, they're working with a very different go -to-market social media approach. And therefore we want to benefit from it and that really led to Rock Paper Rum. Very interesting, Rum already has five variants competing against a larg e multinational brand. So, it makes absolute sense for us to invest in these brands because they require very different marketing, not just a product. Woodburns of course, we are very excited about its acquisition. It is regarded as one of the finest scotch whiskey in India and we believe that again from a speed -to-market a product like this which has already proved its mettle over the last two years in the market, they just give us, will give us speed in terms of moving out this product across market as you know the segment is already at 150,000 cases growing at a very very fast pace in India and plus it's also opening up door in the international market, so it's just about a fast catch up.

Got it. Thank you very much.

It takes 18 months to 2 years to develop and launch a brand and therefore we just sort of fast forward the cycle exactly what we are doing in Minakshi that we already have a plant there and it's only top-up permission. So, it just helps us do an accelerate d rollout of our strategic initiatives.

Great. That explains a lot. Thank you very much, sir.

Thank you very much.

Thank you. Ladies and gentlemen, this was the last question for today. I would now like to hand the conference over to the management for closing comments.

Well, once again, thank you so much for taking the time out this evening, and thank you for all the questions and being patient listeners, and wishing the very best for the year ahead.

Thank you. On behalf of Anique Stock Broking Limited that concludes this conference. Thank you for joining us and you may now disconnect your lines.