One of my key concern is that the consumer business is yet to pick up in West Bengal. WB is a huge market. When company points at a huge access market of 100 million cases in consumer business by 2025 it is yet to make any significant market share or volume gains in West Bengal. They already have their largest capacity there. They mentioned that route to market was making sale of IMIL in particular non feasible. WB state Beverage corporation was in charge of distribution of liquor since 2017. As per newspaper reports Govt is planning to bring in private distributors again. Company seemed positive about the change in RTM in concall but not much enthusiastic.
Company has started incurring significant marketing/ launch costs for prestige and above business. For the 9 months 14 crore was spent on this and expect another 10 crore to be spend in Q4. In the short term this is definitely going to be a drag on the EBITDA margins. Marketing of the brands is particularly difficult due to their limited presence. It needs to be seen how it pans out in the long term.
On the positive side, Rajasthan has announced a price increase for consumer business from Q1 onwards. Rs 26 for value and Rs. 40 for value plus.
As far as raw materials are concerned, Marginal softening in fuel prices and slight increase in broken rice prices.
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