India’s largest liquor maker United Spirits (USL) on Thursday announced a net profit of Rs 19.9 crore for the first quarter of the current fiscal against...
India’s largest liquor maker United Spirits (USL) on Thursday announced a net profit of Rs 19.9 crore for the first quarter of the current fiscal against a loss of Rs 61.8 crore a year earlier. The Diageo-led company has made a reasonable improvement in its balance sheet, which slipped into the red with company having to provision for unaccounted diversion of funds to other group companies.
USL has been battling margin erosions despite leading in market share with loss for the last fiscal standing at Rs 1,956.48 crore against a net loss of Rs 5,102.82 crore in FY14. The operating profit has gone up 56.6% to Rs 177 crore against Rs 113 crore a year ago.
The registered a 12 % year-on-year increase in net sales, from Rs 1,795 crore to Rs 2006 crore. Total sales in volume stood flat for the quarter at 27.3 million cases against 27.2 million cases in Q1FY15.The interest component decreased by Rs 27 crore y-o-y to Rs 128 crore, adding to the operational efficiency.
“The reduction is in part driven by the reduction of debt post the W&M divestment and the company’s focus on debt/ interest rate management. The company is in the process of revamping to drive advantageous terms on its borrowings leveraging the relationships that Diageo enjoys with global banks, and therefore, is already seeing a reduction in rates which is manifested in the lower costs,” the company said.
The company started direct sales of some Diageo brands in Q1, adding Rs 42 crore of net sales revenue, helping in higher growth, company sources said. The prestige and Diageo brands recorded a growth of 5.7 % with the category now representing 33% of the total sales.
USL exited from India’s largest beer maker United Breweries by selling its entire 3.21% stake in the company. “The sale consideration net of brokerage is R872 crore resulting in profit on this transaction.” company sources added.