United Spirits Limited (UNITDSPR) Q1 2027 Earnings Call Transcript

Ladies and gentlemen, good day and welcome to the United Spirits Limited First Quarter Financial Year 2027 Earnings Conference Call. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during this conference, please signal an operator by pressing star, then zero on your touchstone phone. Please note that this conference is being recorded. I now hand the conference over to Ms. Shweta Arora, Head of Investor Relations at United Spirits Limited. Thank you, and over to you, ma'am.

Thank you, Dalvin. Hello, everyone. Good afternoon, and welcome to United Spirits Limited's first quarter fiscal 2027 earnings call. Before proceeding with today's call, I would like to remind the listeners that during the call, there may be some forward-looking statements. These statements are based on our views and assumptions at this point of time. However, this is not a guarantee of our future performance, and the results may materially differ from those expressed in or implied by such forward-looking statements. I request all of you to please refer to our financial and press release posted yesterday. Both are available on Stock Exchange and Companies website under the Investor section. There was some technical issue because of which press release is still not available on BSE. The teams are in touch with the stock exchange, and we regret the inconvenience cost. Moving on, today on the call, we have with us Mr. Praveen Favishwal, Managing Director and CEO, who is joined by Mr. Pradeep Jain, Executive Director and CFO. Praveen and Pradeep will take you through the financial and business performance of the quarter, followed by the Q&A session. Thank you, and over to you, Prameen.

Thanks, Shweza, and very good afternoon to everyone. Thanks for joining us today, and as always, it's wonderful to speak to all of you. What better way to begin today's call than by calling out the implementation of the UK FTA last week. It was a historic moment when the agreement was signed a year ago, and it's equally gratifying to see it come into force today. This is an exciting moment for us, and we look forward to executing our playbook and capturing the opportunities ahead. More importantly, it's a win for our consumers, as access to scotch will improve significantly, and the same will encourage further premiumization. Overall, we as a company remain committed to inclusive premiumization and will focus on growing scotch penetration and accessibility as the captain of the industry. There are several larger milestones in this quarter that are equally worth celebrating, if not more. Delighted to share that our Royal Challenge trademark has crossed 10 million cases on the trailing 12-month basis. This is a significant milestone for us, especially because we are the challenger brand in that segment. Taking it from one challenger brand to another, I'm further delighted to share that Signature, our Upper Prestige trademark, has joined the 1,000 Crore Club on a training 12-month basis. With this milestone, Signature joins McDowell's No. 1 Royal Challenge and Johnny Walker, taking the total number of our 1,000 Crore Plus NSV trademarks. We remain confident of sustaining the growth momentum on both these trademarks and further reinforcing the virtuous cycle of. The call has almost touched 250 crores NSV in the case. Thank you. It's not just in AlcoBev category, but... The category in India is under a jamun seizure, as I call it. Today, you can see jamun-flavored spirits, jamun-based cocktails gaining popularity across the market, validating the consumer appeal of this previously untapped flavor opportunity. What is even more encouraging is that the success of this innovation has created a positive halo on the core variant also, contributing further to the trademark's equity. We assure you that this is just the beginning, and we are working in the background to bring many more such exciting propositions from our innovation hub, the Goodcraft Company. Coming to our quarterly performance now, I'm sure you've all looked at our releases, so to avoid repetition, I would just touch upon a broader India growth story beyond the now often discussed policy headwind in Maharashtra. We've closed a strong quarter, delivering solid double-digit growth in our P&A above portfolio. A double-digit growth construct with five to six percent. about our P&A double-digit growth aspirations. Of course, PJ will provide more color on the other key financial metrics in his comments. Now turning to key updates on our trademarks. As we speak, McDowell's renovated bundle has been launched in UP, Rajasthan, and Haryana. The initial response on trials has been encouraging, with consumers appreciating both the quality of the product and the overall bundle. Rajasthan and Haryana were launched just about a couple of weeks back. Overall, it's very early days. Repeat budget. of the salient market. Further reinforced through a nationwide retail activation covering roughly 8,000 outlets across 70% of our salient markets, leveraging cricket and e-sports led. Turning to upper prestige, which is signature, continues to enjoy strong consumer affinity and brand equity in the upper prestige segment. The brand strengthened its purpose-led positioning. Thank you. Black & White launched its new equity campaign, anchored by a powerful FIFA World Cup 26 association, delivering an average quarterly reach of 78 million consumers. To drive deeper market penetration, we expanded our out-of-home presence across Tier 2 cities and continued to invest behind visibility. Brand has been performing competitively in the segment and is now the number one scotch and international whiskey in India by volume. Also, India is the largest Diageo market for this trademark globally. During the IPA season, Johnny Walker... Consume my engagement. Driving very strong. The competition commission of India, as you must have heard, has approved the transaction with the remaining statutory clearances. Thank you. And the AI-driven employment uncertainty are Our focus remains on delivering the right value proposition through a well-calibrated Premiumization remains a powerful long-term trend in India. We remain sensitive to the value-conscious consumer in India and will keep calibrating our offerings across the portfolio with a value-writing lens. In a market as diverse as India, it is important to navigate the dichotomy between premiumization and value-seeking behavior. We believe these trends are not mutually exclusive. This is what we would like to call inclusive premiumization, enabling consumers to access better experiences and trade-off within their means through the right path, price, of offerings. Looking ahead, while the external environment continues to evolve, our strategy remains clear and consistent. A consumer-first mindset, continuously evolving portfolio, and disciplined execution with H&M. Quick update on the financial performance for the quarters. TJ, I know I'm a lot more optimistic, but I'm sure you'll give them a bite of realism also.

Yeah, thanks, Praveen, and good afternoon, everyone. Thanks for joining us today on the first quarter of fiscal 2016. to connect with this cohort in this forum. As always, we'll request you to please refer to the financial and press releases posted last evening. It is noteworthy that the consolidated numbers do not include Royal Challenger Sports Private Limited anymore. This is consequent to the announcement dated March 24, 2026. It is now being reflected as discontinued operations, subject to BCCI and other regulatory approvals required to complete the transaction. Prior year numbers have also been restated accordingly. As Praveen mentioned earlier, we have delivered an overall strong quarter with double-digit P&A growth, and this is after absorbing the adverse Maharashtra impact. As mentioned last quarter as well, we do not see any sequential deterioration due to Maharashtra, while we still must cycle the base for next couple of quarters. Praveen has also deconstructed the quarter growth construct on the top line, so we will not be repeating that. Suffice to say that the momentum in the rest of India remains strong and building up for the next few quarters. Let me also briefly touch upon the popular segment. While it continues to be a small part of our business, accounting for less than 10% of revenues, it is important to provide some context for the quarter. The segment faced two policy-related impacts during the period, the continuation of the Maharashtra adverse impact and the changes in the Karnataka policy that came into play during the quarter. I would want the audience to appreciate that the Karnataka policy impact overall is very favorable to our Prestige and Above portfolio, and some part of that tailwind is also nested in the quarter P&A performance. I also want to re-emphasize that the adverse volume impact in Maharashtra mathematically is accretive on the national price mix. Therefore, the reported overall price mix stands at 9.4% for the quarter and for prestige and above at 11.4%. But when we exclude Maharashtra from the equation, overall price mix normalizes to 5.4% and P&A comes down to 8.4%. Which is what should be considered for the way forward, especially once we start lapping Maharashtra after a couple of quarters? On the cost side, as highlighted in the last quarterly call, this quarter absorbed the impact of the West Asia crisis, roughly a range of about 30 crores. Impact was across the lines of glass, energy, packaging, and logistics. ENA has largely been stable. The redeeming thing is that crude has normalized from the north of 100 levels and playing around between 80 and 90. Having said that, the situation does remain fairly dynamic, you know, on that front, right? So, therefore, we will have to wait and watch in terms of when all this will normalize over the next three to four months. The marketing reinvestment rate during the quarter was at 11.3% of net sales. While this may appear high for the quarter, but would request all of you to see this in the context of a renovation-innovation-heavy calendar and an IPL FIFA World Cup quarter, which gives our brands an opportunity to build salience and top of mind with the consumer. In addition, the top end of the portfolio continues to perform well, and that also demands higher A&P, as we have historically stated. So overall, I would say that A&P investment would remain in the range of 10.5% to 11% for the full fiscal. As a consequence of all the above, our EBITDA grew 4.1% for the quarter at 432 crores, and EBITDA margin was at 16%. Moving on to the other relevant line items, there is a dividend income of 150 crores from Royal Challenger Sports Private Limited, which is reflected in the other income. In addition, you will be able to see an exceptional charge of 81 crores for the quarter, approximately 50 crores as an account of the org restructuring measures, which Praveen alluded to earlier, and the large part of the balance pertains to the closure of a unit under the multi-year supply agility program, details of which were shared in our stock exchange disclosures last month. The reported profit after tax for the quarter was at 391 crores. Thank you.

Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and 1 on their touchstone telephone. If you wish to remove yourself from the queue, you may press star and 2. Participants have requested to please use handsets while asking a question. Ladies and gentlemen, we will now wait for a moment while the question queue assembles. Our first question comes from the line of Avnish Roy with Novama. Please go ahead.

Yeah, thank you. My first question is to PJ. I wanted to understand on IPL team sale, what approvals have come, what are pending, and what is the expected timeline? Is there any change versus the initial around six, seven months timeline? And second part of the question to PJ is, what happens to the balance 90% stake to Nivola? Is there a game plan to eventually acquire the majority stake in this? That is my first question.

Yeah, Abneesh, so, I mean, very clearly, as you would have seen in the press, the Competition Commission of India approval has already come in, and we are working along with the buying consortium with the BCCI, right? The BCCI approval is the core approval, and we expect that to come through in the next 60 to 90 days, right? So, very much on track for that original six to seven-month timeline for closing the transaction. So, that's one. Your second question was, look, as we've always said, we keep taking these minority strategic positions in new consumer trends that we see emerging and with a set of entrepreneurs, startup entrepreneurs, who we believe are breakthrough. Right. So that's the only way to look at it right now. Right. And then over the next three, five, seven years, if the businesses become big and scale up, et cetera, then we can take a position on the balance. Right. So that's the response to your second question.

So, my second and last question is to Praveen. So, it is on the three South Indian states. One is on Karnataka, great start for UN industry. I wanted to understand if government also gets a good benefit, because if that happens, other states could see this as a template. It is a bold, but a great reform. Second quick question on South is, in Tamil Nadu, with the new government's focus on better honesty and better regulation, would you expect that at some stage, great reforms can happen there? Third quick question on South India. Telangana, there has been news flow on the price side. Any update on that? Thank you.

That's very specific. Thanks, Abneesh. You know, overall, I think South is doing very strongly. Karnataka, as you rightly said, we've seen very healthy growth. New policy document, yes. I think even whatever little I know about it, I know that it's a win-win proposition. The government is feeling good about how they are mopping up taxes appropriately. Consumers are feeling good because they are starting to see their premium, exciting brands now a little more rightfully, affordable and rightfully priced. And we as people who are servicing this are feeling good. So I think it's a win-win proposition. It's too early to say this is exactly the playbook. I think it's going to play out, and we'll see it over a few quarters, which will give us all. Comfort that, yes, this is the right. That's what I'd say. Tamil Nadu, early to say anything, I wouldn't speculate. Early signs are exciting, but that's a long way ahead. Telangana, you know... Work together to do the right things for the industry. But we are in a right place. So overall, South of India is looking.

So, thank you, that's all for my job.

Thank you. Our next question comes from the line of Arnab Mitra with Goldman Sachs. Please go ahead.

Yeah, hi Anab.

Yeah, hi. My first question was again on the India-UK trade deal. Now that the deal has come through in terms of timelines, how much timeline do you think is there before we see an impact on growth and cost, which are the two elements where you probably have a benefit? And any change in the expectations of how you think the growth acceleration could be or the cost savings could be versus what you had shared, you know, last when the deal initially was signed?

Yeah. So, Arnav, let me take that. So, absolutely. As Praveen mentioned, you know, the treaty is up and running in terms of... On ground reality now, effective a few days ago, right? And we have actually, you know, also cleared our first shipment at the concessional duty. So I did want to provide that comfort. Now bear in mind that, you know, that's a shipment, but obviously there is a lot of inventory in the system already, right? Inventory at the corporations, inventory with the distributors, with the wholesalers already duly cleared. So we expect that, you know, that inventory to be in the range of anything between 60 to 70 days, right? So we believe the real benefit to the consumer and the reflection, right, in our statement will happen sometime around October, early October, right? So that's probably. Numbers are by and large pretty much in the same range, right? Yes, there is absolutely a benefit, you know, on the IMFL portfolio, on the COGS, et cetera. But do bear in mind, as I've always cautioned all of you, right, there are some competing factors also. Look, you know, Forex have depreciated by almost 12-13% over the last 8-9 months, etc., right? There is always a little bit of forced inflation that happens, etc., right? So those will kind of neutralize, you know. Dove benefits. But yes, net-net, it will be. It will be beneficial, too.

And those neutralization factors, if I may say so, PJ, got accentuated given the West Asia crisis. And therefore, overall...

No, no, I understood. So citrus parabens benefits are similar, but obviously the starting point can be different because of the utilizing factors that have come in now is what I understood, right? Got it. My second question was actually on the growth acceleration we have seen this quarter, XMS, Maharashtra. Would you attribute it largely to the acceleration in Smirnoff is very, very aggressive, and of course there's a McDowell's relaunch, though it seems in very early stages. Would Smirnoff be a major driver here, or you've seen across the board a pickup, and any specific reasons, because it looks like quite a significant improvement in growth compared to last quarter.

Look at our portfolio, Arnab. We'll get our... The whole bundle is now looking excitingly different and excitingly new and... But it will take a few months as it's... If we get that act right, I genuinely believe. And as we speak, Got it.

Thanks. That's it for my side. Very helpful.

Thank you. Our next question comes from the line of Percy Pantaki with IIFL Capital Services Limited. Please go ahead.

Hi, everyone. My first question is on the gross margins going ahead. So we have, as you mentioned earlier, two competing factors, which is one is the COGS benefit from the UK FTA or any other cost-saving programs that you might be running on packaging material and raw material. On the other hand, we have this inflation in crude, which will affect both glass as well as PET prices. So, under a scenario where crude sort of is sort of remaining at around 95 to 100 to the dollar, do you think that you would be able to, I mean, these two competing forces will nullify and you will be able to maintain the gross margins on a YOY basis? Or do you think at a 95 to 100 crude, we see a gross margin compression on a YOY basis for FY27 as a whole?

Yeah, so Percy, look, I mean, if you're saying that in the full year, crude will be in the 9500 range, we are going to be then lapping a crude of 6570 in the base, right? So obviously, there will be inflation. But again, our effort will be to get our multiple interventions into play. There is a little bit of multi-year supply agility program still in the play. Our ongoing continuous productivity is also into play. So we will get everything into play, right, and our, you know, our premiumization mix into the play to ensure that as an overall blended business, we continue to aspire to grow our profit a little ahead of our revenue growth. Right. That's what would be our, you know, our intent, you know, in terms of the overall P&L. Right. Growth margin could move a little bit here and there, depending on exactly some of the factors that you've got.

Just to press a little bit on this point, I mean, can you take me through the math here? See, about 25% to 30% of your sales would be packaging material affected by crude in one way or the other. And at the current crude prices, the inflation in packaging material costs could be anywhere between 30% to 50%. So, if I do the math, the inflation actually works out, I mean, 0.25 into 0.4, it works out to about 10% of your sales, which is a really huge number, and we can't really get this quantum of price increases in one year. So, I mean, I know that, first of all, you need to assign a probability to this event itself that crude maintains at such a high level throughout the year, which might not be a very large probability. But in case that event does pan out, do you think that the margins can be really disastrous in that event?

But Percy, you know, that's a bit of an alarmist picture that we are thinking on. I don't think we should go on those lines, right? First of all, the numbers are not as high as you are calling out, right? Then if you look at the other big item in our portfolio, which is neutral alcohol spirit, that is fairly stable right now. In fact, it's been deflationary for the last four quarters, right? And then the FDA benefits are continuous productivity, machinery, etc. So we believe that we should be able to neutralize, right? Now, if obviously the truth remains at 110, 120 throughout and, you know, numbers hit the roof, but then we will have some kind of mitigation plan at that point of time, right? Then we will come proactively to you and talk about it, right? Just to add to what PJ said, that's the power of the portfolio. That's the power of the portfolio, right? So I won't worry too much. You know, state governments would become more amenable, hopefully, to provide some pricing, right, though with the lag, as we've always maintained. So I won't worry too much on that right now.

Got it. Understood. Second question on understanding gross margins for this quarter. So, there is a one-off in the base. If I adjust the base for that one-off, your raw material cost as a percentage of sales is about 54.5%. And in this quarter, you mentioned that the cost inflation impact is about 30 crores. So if I basically remove that 30 crore cost inflation, then your COGS comes to 52.8% in this quarter. So on a YOY, there is then an expansion of 170 basis points, and this is attributable to the mix. Now, my question here is that if your overall realization per kilo has gone up by close to 10%, Then isn't a 170 BIPs expansion rather small for such a big realization? Just to make it clear, I am looking at this 170 BIPs points after removing all other effects apart from what could be attributable to the mix. And of course, there would be any other cost-saving initiatives, etc., which I won't be able to remove. But I have removed the cost inflation impact this quarter, and I have removed the one-off in the base last quarter. And that's how I'm getting 170 basis points expansion.

Yeah, so maybe I'm not following the math, right? But I think the larger point is that as we get the mixed benefit, the COGS also goes up, right? So as the higher end of the portfolio sells, that COGS is also much higher, right? So therefore, what you see as a benefit is the net benefit, which is a combination of the entire mixed benefit, right? But your overall numbers seem to be correct, which is, yes, on an underlying basis, we have expanded growth margin in exactly the range that you've spoken of. I didn't get the rest of the math, and maybe we could take that separately offline.

Understood. That's all from me. Thank you and all the rest.

Thank you. Thanks, Persia.

Thank you. Our next question is from the line of Harit Kapoor with Investec. Please go ahead.

Yeah. Hi. Good evening. Can you hear me?

Yeah, we can hear it a little louder, I guess.

Yeah, sure. So, just on the India UK FTA bit, just another follow-up here. So, you know, we've spoken about, you know, the… The benefit on the productivity and the margins, as well as on, you know, the international portfolio being at, you know, probably at lower price point. If you could just sort of highlight as to what incremental opportunities from a wide space, new product launch, et cetera, that, you know, this event, you know, kind of brings, you know, brings upon us. And how do we kind of, you know, what is our kind of thought process on that from the next, say, 6 to 12 months perspective? What more can we do in this opportunity that has been presented to us? That's my first question.

So, Harit, thanks for the question. Now, first, you know, absolutely, I think you will, when I say Scotch, you will become more accessible. It will take some time to play out. Captain, you will see us play out over the next few months. A few things. We're going to open up news. When you see a competitive activity, it unlocks further growth. So I think you'll see a virtuous cycle play out, but too early to say.

Fantastic. And the second, you know, question was on brand investments. So if you see the last two years, you know, we've seen continuous step up. And probably one of the reasons why, you know, P&A is also, growths have been strong is that, you know, your brand investments have continued to step up. And while it may be too early in the year to ask, but is there a kind of range that now we are looking at for brand investments? Last year was a 10, 10 and a half. We were at the upward end almost of that range. What should we kind of assume from a full year basis now? You know, what range are we kind of looking at now, given that all these opportunities exist in terms of, you know, investing as well as the McDowell number one relaunch?

Yeah, yeah. So, Harit, I called that in my opening comments, and I think I've been saying that for the last, you know, couple of quarters now. The range should be seen as 10.5% to 11% for the full fiscal year F-27, right? This is the broad range that we would want to follow, obviously subject to a little bit, you know, opportunistic here and there, but broadly the range that we'll guide is 10.5% to 11%.

And just a small additional question here was that, Padhi, while you did mention that October is the right time to kind of talk about this, would October be also the right time for you to get a fair assessment of, you know, how, you know, McDowell number one has landed, given that it will be done in 85% of the country?

Yeah, so Harit, what I would say is early days. Even then, because some of those markets would have come in September. I got with this. Good time to have a chat around. No, no, absolutely.

Of the early market launch, we will have...

All right. Those are my questions. Wish you all the best. Thank you.

Thanks, Adam.

Thank you. Our next question comes from the line of Jitu Punjabi with EM Investco Capital Advisors Private Limited. Please go ahead.

Hi. Thanks for the presentation. I have one pointed question. I joined a little late, so I'm not sure if I missed it, but is there clarity on when the RCB transaction closes and when we could expect the money in our books in United Spirits?

Yeah, so Jitu, you know, as we've always said, we made the announcement in the last week of March, and six to seven months is what we've always said. Like we again said earlier in the call, the Competition Commission of India approval has already been received. You would have read that in the press. And right now, we are working with the buyers and the consortium on the approval from BCCI, right? Right. BCCI is taking a little bit of time because first they were busy with the tournament and then two deals have happened. So they are going through that. But yes, we expect it to complete by September, October.

Okay. Thank you very much. Really appreciate that. Thank you.

Thank you. Our next question comes from the line of Aditya Soman with CLSA. Please go ahead.

Hi, good evening. So two questions. Firstly, when you talk about this 10.5% to 11% sort of marketing spend, can I get a sense of where this is getting spent? So would it be largely sort of digital, or is it a point of sale, or are we seeing any shift in any of these channels? And second, just a follow-up from the one before, so we've got this sort of 150 crore dividend from RCB. I'm assuming this will be the last one, right, or would we still get some sort of a pro-rated dividend for FY27 as well, given that the transaction closes halfway through the year?

Yeah. So, Aditya, let me take your second question first, right? So, yeah, I mean, we would also want to believe this is the last one, right? Hopefully, we'll close the transaction successfully, right? So, this will pretty much be the last one in terms of dividend, right? So, that's one. On your first one, which is, look, obviously, as I said earlier also, I don't want to give any exact breakdowns, etc., but clearly, if you compare the A&P mix of this category versus that of a normal CPG category, I guess digital is slightly higher in quotient versus the traditional TV media, etc., so that is one. And a large part of it, right, the point of sale, point of purchase salience is also significantly higher than the rest of the CPC, right? So those would be my two or three call-outs, Praveen, in case you have to add anything to that.

Absolutely. Consistent to that, I think... It's a 360 spend, you know, to reach the consumers. You reach out at the point of sale, and that activation, I assume in this category, not assume, I am sure in this category is ahead of other categories. Our overall communication on digital is a little more than what the traditional SMCGs would do.

I understand. And then, for example, when we saw this sort of black and white activation during the World Cup, this would now largely be classified as digital or still it's a mix of digital and TV?

It's a mix of digital and TV. So you're so right. You happen to see TV, I assume, but it was very much digital also in a big way.

I understand. Very clear. Thank you.

Thank you. Thank you. I hope you like the campaign, Aditya.

Yes, it was good.

Thank you. The next question is from J.A. Doshi with Kota. Please go ahead.

Hi, Rishan. Thanks for the opportunity. A couple of questions. One is, you know, if you could elaborate, what is the extent of, you know, end consumer price reduction you expect in BIO portfolio, BII portfolio, post-UKFTA implementation, given that rupee has depreciated quite a bit in the last few months? And, you know, besides that, what else gives you confidence that this is a game changer in terms of driving premiumization? You know, if pricing change is not likely to be meaningful. So that's the first question, and I'll wait for the answer and then ask the next one.

Yeah. So, Jay, let me take the, you know, the price reduction on a blended basis, right, on the BIO portfolio would be in the range of 7% to 9%, right? So, yeah, I mean, that is consistent. I don't think that number will change on a national weighted average basis. Some states, it could be a little higher.

So, currency depreciation doesn't affect that number, which was the same, you know, even…

Absolutely. It doesn't. At this point of time, it doesn't. Over a period of time, we'll have to see how it goes. But yes, as of now, it doesn't. And what was your second question? I've forgotten that.

Is there anything else that, you know, your optimism or your, you know, tone was quite exciting. So are you expecting to launch many new products which you couldn't launch for some other reasons earlier, post-UKFT implementation, and that gives you a lot of confidence?

So, Jeff, what I would say is, you know, just wait for some time and you'll see it roll out in the market. Yes, there are opportunities. There are spaces which we think can be unlocked. And that's what we are all working on in terms of making sure that how do we unlock growth through those spaces in using the FTA and therefore primarily in Scott. As we walk over the next few quarters, and that is why I believe the accessibility of Scotch will significantly improve.

Our second question is on MML and Maharashtra. Now that almost a year has passed since the change in regulation, What has been the excise collection and impact, if any, on, you know, Maharashtra State's excise collection because of this policy change in terms of quarterly tax run rate for them? And second is, how has MML tread over the past few months? Is there a scale-up that you see of MML on month-on-month? Where do you think it has settled or where do you expect it to settle in terms of either absolute volumes or percentage share, market share in Malastro?

So, you know, Jay, PJ, feel free to add on. MML and Maharashtra, as you know, it's subjudice. We are fighting in the courts around non-permissibility to play in a certain space through the association. That's one part of it. The second part of it is, how has it impacted the collection, overall exercise? I think the overall MML has... That's settled down to a certain stable number on a consistent basis over the last few months. You're seeing stability, and with that stability, I don't think they are seeing declines anymore, which they saw in the first quarter or the first few quarters. I think it's more or less now seeing, but they're not seeing explosive growth at all, but they're not seeing declines anymore, if I may say so.

There was a third question. No, no, just a build from Wi-Fi, Jay. Look, you know, in the shorter term, you know, as Praveen mentioned, I think the exchequer revenues are reasonable, and they'll probably be feeling pretty happy, right, with the overall MML intervention. But as we have seen, you know, these interventions cannot be judged on a one-year basis, right? What we used to do, we believe, we used to sustainably grow the category. I'm not too sure whether the MML players will have that capability, right? So that's the only thing, you know, I would call out, and let's see.

So just, you know, if you give us some sense of what's the market share or absolute volumes of MML in Maharashtra on a monthly basis, I believe XI's department has not uploaded the numbers, recent numbers, but I'm assuming you would have good intelligence on where they are.

So it is the last four or five months have been pretty stable. It's been consistent. It's, you know, if I remember, and I'm just talking out of memory. So that's why I'm just, you know, it's a million cases roughly every month is what I see 800,000 to 850,000 cases of what I remember. And it's been stable at that level over the last three, four, five months.

Perfect. Very helpful. Thank you so much.

Thank you. Thank you, Jay.

The next question is from the line of Karan Taurani with Ilara Capital. Please go ahead.

Hi, thanks for taking my question. My first question is on the low prestige segment. So, you know, McDowell's number one, you're talking about renovation and maybe potential market share gains. After this, I mean, in fact, it's behind us on a pioneer basis. But what do you make of Imperial Blue, you know, on ground? The recent acquisition by Tilak Nagar, then you've got Iconic White, not exactly a competitor, but yeah, in a similar segment of low prestige. What do you make of the compromise in the low pressure segment and how will that impact your growth rates for McDowards going ahead?

Look. But if you look at the consumer end, they move between. So I look at that holistically.

Right. And as far as the other brands are concerned within the portfolio, especially RC signature, there has been some market share gains as far as volume is concerned. So what is happening differently over there? And what is the potential for growth? Because this will try to kind of focus the overall P&A volume growth in the near to medium term because we all know that in the score segment growth rates are healthy. But on the RC and the signature brand side, what is the kind of growth that one can expect? Will they also beat in terms of, you know, gain market share from here on?

Well, we've done well over the last few years. There is no reason why that should change. Some of these are challenger brands, and therefore, we, you know, we have to consistently gain share. Playbook suggests that it's working. And therefore, I wouldn't worry too much about it. I just continue to execute and focus on executing the playbook to build on it. I come back to, you know, that's the power of the portfolio. You know, if we start adding up each of these parts, sometimes you may come to an obnoxious number. So I just be careful as you. Start building out a portfolio. There will be years when there will be explosive growth in a certain space and in some other years in another space. We just need to make sure overall portfolio of P&A starts delivering on double digits. Got it.

Thank you. That's all my thing. Thanks, sir. Thank you, sir.

The next question is from the line of Dheeraj Mistry with Jeffries. Please go ahead.

My, again, question is on MacDowell. It's quite encouraging to see that there is early signs for MacDowell has been quite good. But given that MacDowell has higher saliency in the overall P&A branch volume, the success of relaunch would materially change your guidance of 5% to 6% volume growth over the medium term?

Too early for me to say, you know, I would say in Hindi, is that the right thing to say? Yes. But, you know, too early for me to say, you know, as I say, the overall portfolio, I still think five to six volume and... Another five to six to seven percent of mix. That's what our guidance is. And that's what it is. But, you know, we'll see how it builds up over the next few quarters between all the other propositions and McDowell's. It will give us a lot more confidence on how it is starting to trend and build.

But overall, absolutely. Just to add to what Praveen is saying, you're absolutely right. We've played our cards on McDowell's now. And therefore, we are confident. We are confident of what we have put in the market. Absolutely. The jury is not yet out. So, the next four to six months will play out on that. So, absolutely. It's wait and watch in that space.

So, hopefully, we'll see the upper division for the volume growth momentum over, let's say, two to three quarters down the line. And second question is for price hike taken or announced in any of the states to mitigate ongoing inflation?

Not really if I know prices. If there's seen a price increase. Look, with the FTA happening, you know, I would assume there will be some level of muted response on price hikes. But we have seen some price hikes, but it's not significant, if I may assume.

We've had three good years, as I keep saying. And as I've always consistently said, prices in this category come in peaks and drops. So the peak three years even have probably played out. So we just need to brace up for a little bit of moderation on that. But as I always also say that we keep making attempts. It's not that we don't make attempts and some of them convert, some of them don't convert. So let's see how that plays out.

Got it. And the last question is on Karnataka state policy. Now, given that the price decline in mid-prestige and upper-prestige segment has already been implemented, what kind of volume growth or let's say from when we can see that there will be volume up it can happen in Karnataka?

Well, you know, you're already seeing a little bit of June starting to cycle in. July is... So, you'll see that consistently. June was, you know, Karnataka in full bloom. May was when the transition happened. June was Karnataka in full bloom. You'll see the full quarter impact as we go on.

Thank you. I love the message.

Thanks, Dheeraj.

Ladies and gentlemen, in the interest of time, we request that you please restrict yourselves to two questions only. Our next question comes from the line of Mihir Shah with Nomira. Please go ahead.

Hi, thank you for taking my question. First question is on Karnataka again, and would appreciate whatever you can share. If you can help us understand the saliency on volume value, and what is the price changes both on P&N Popular, and the kind of volume that one can expect both these price changes in the portfolio. So that's question number one.

Yeah, I think we've shared it earlier. Karnataka is roughly about 6% to 7% of our national P&A salience in value terms, right? So that's one number. Prices, again, broadly, I'm just talking of the anchor brand. McDowell's used to be probably $235 or $240 for the 180 ml pack. Today, it's at $200 or $205, right? So that's broadly. And yeah, it will pretty much be exactly in the same range percentages, right, across the portfolio, right? Popular has gone up. So therefore, it's kind of, you know, a two-way impact on popular. And that's why my comments, what I said in the opening comments, right, popular will get squeaked, and prestige and above will benefit. So, that's broadly the Karnataka impact.

Understood. So, the price cut is broadly close to what, 10 or 10, 11?

10 to 15. 10 to 15 percent.

And one can hope for more than like 10-15% volumes to compensate for that? How should one think about that?

Absolutely, absolutely, absolutely.

I'm not sure. That's nice. Secondly, PJ, just if you can, you know, requesting a comment on 2Q gross margins like you gave for 1Q in the previous call, you know, what is the sequential impact that one can expect? You had earlier highlighted it could be double of what we see in 1Q, but you will let us know your updated view later on. So just asking on that one.

So, look, we don't give quarter on quarter, right? I mean, because the war was an exigency, right? So, you know, we felt it appropriate to prompt. Reality is that the impact is not a full quarter impact, what we've experienced in April, June, because we had some forward covers, right? So, sequentially, it's more or less in the same range, I would say, right? I don't see anything dramatically improving, right? And then we have to wait out for the factors to play out, right? That's the way I will look at it.

Understood, understood. And lastly, you know, I think after 2Q, I know quarter on quarter is a bit difficult, but just understanding and appreciating the impacts. After 2Q, the realization gains that we see in Maharashtra can fade away, but, you know, but from Karnataka's side, there will be some kicker that will come in. And so I wanted to understand if they net off each other and how should one think what happens in the second half. And if I could just throw in the hat of UKFTA benefits also. So because of all these changing mixes, we'll appreciate if you can highlight how should one think about the volumes and realizations in the second half of the year.

Yeah, I mean, I can talk about volume, definitely. I think we said that in the last quarter also. Second half will definitely be higher than the first half, right? Because Maharashtra will fall off and the tailwinds of Karnataka, etc. will continue, right? So, maybe we should just leave it at that, right? Yes, second half will definitely be better than first half. Praveen, in case you have a build on that.

Thank you. Thanks. Thank you.

The next question is from the line of Abhijit Kundu with Antique Stock Broking. Please go ahead.

Hi, sir. Thanks for the opportunity. A lot of, you know, comments have been made on whiskey segment as it is the largest segment

within the largest category within IMF.

You know, but, you know, you have been doing well in terms of, in case of small-off. But is there any thought process on, in front of being in the upper prestige and slightly luxury segment, is there any thought process behind the lower prestige and not maybe the lower prestige, the mid-prestige, vodka or gin, you know, when someone travels to geographies like Goa? I understand that those are the higher price, James and all. But, you know, you being the largest in the industry, you could be a pioneer and, you know, introduce vodkas of the world or jeans of the world in the lower prestige and mid-prestige segment. Mid-prestige is something which is a very sweet place where, you know, your competitor has done really well. So, and now, one of us has really rejuvenated and done well. So, any thoughts on that? I mean. Any efforts on that? Because everyone is focusing on, you know, the lower prestige and the mid-prestige, whiskey, and you have really done a great job in mid-prestige and upper prestige, which was lagging for a very long time. And I believe you would do very well in McDevils, but any thoughts on the white spirit market? Sorry to interrupt, Abhichit.

Abhijit, we request you to please ask all your questions together at once. Thank you.

Yeah, so just one question. Any thoughts on any, you know, working on the white spirits in the lower prestige and the mid prestige side?

Abhijit, good. Thanks for the question. You know, it's an exciting thought. Look, first, consumers don't think low, mid. Consumers think in terms of occasions, and therefore, what are the offerings? The lower, mid, and upper prestige is a manufacturing out point of view. So I just anchor that thought importantly. So we will look at, you know, working at propositions for our consumers, which solves and delights them in various occasions. Okay. What we have realized as we have done Smirnoff and the work around Smirnoff and as Jaman and Mango have played out, that they have upgraded a whole set of consumers who were, as you said, lower prestige or at the popular space. of McDowell's was to start exploring that space. As we go on, we already have something, but we'll certainly build on that. But absolutely, we'll think about it in terms of how do we solve for consumer occasions and build that up.

And maybe, Praveen, just to add to that, the acquisition of Now Spirits was also towards exactly that intent, right? That whole laddering bit. That whole laddering, right, of the wide portfolio. Absolutely.

So we are always looking at these opportunities. Does that answer your question, Abhiji?

Yeah, it was... I see segment of vodka, they did really well. I mean, that was your history behind the question, that's it.

Absolutely, completely agree and really appreciate what they have done. But I think what Smirnoff has shown is we just need to anchor to what... The seed.

Thank you. Ladies and Chairman, we will take that as our last question for today. I would now like to hand the conference over to Ms. Shweta Arora for closing comments. Over to you, man.

Thank you, Darwin. Thanks, everyone, for joining in. Quick note before we close the call, our fiscal year 25-26 integrated annual report is now out. As always, I look forward to your feedback. Please feel free to reach out to me, should you have any further questions on the results or seek any further clarification. Thank you. Have a good evening.

Thank you. Thank you, all. Thank you, everyone.

Thank you. On behalf of United Spirits Limited, that concludes this conference. Thank you all for joining us. You may now disconnect your lines.