Bangalore, Sep 12: A good monsoon augurs well even for sale of beer this fiscal (2013-14) as a buoyant economy would increase demand for hard liquor during the next two quarters, United Breweries Ltd (UB) chairman Vijay Mallya said Thursday.
Though the southwest monsoon, which has been exceptionally good across the country, has dampened beer sales in second quarter (July-September), Mallya said demand for spirits would pick up as growth would return and purchasing power increased during the second half of this fiscal.
“It is only in Tamil Nadu market, we continue to have problems because of the ordering patterns followed by its state-run beverages firm Tasmac (Tamil Nadu State Marketing Corporation). We are working with the agency to address the issue,” Mallya told reporters on the margins of the company’s 14th annual general meeting (AGM) here.
The company has, however, grown strongly in other states, as evident from 1.5 percent volume growth in first quarter (April-June) of this fiscal, resulting in 13 percent year-on-year (YoY) increase in net sales to Rs.1,208 crore and 23 percent increase YoY in net profit to Rs.121 crore, with Ebitda (earnings before income tax, depreciation and amortisation) up 24 percent to Rs.203 crore.
The company posted double digit volume growth in Delhi, Orissa, Punjab, Rajasthan and Uttar Pradesh and gained market share by 80 basis points, while it continued to lead in Andhra Pradesh and Karnataka markets over competitors.
“Our volumes in Tamil Nadu are affected by the unfavourable ordering pattern of Tasmac, resulting in a national volume growth of 1.5 percent against an industry growth of three percent,” Mallya noted.
Admitting that cost pressures would continue during this fiscal with modest industry growth, Mallya said the company’s brown-field expansion at Aurangabad in Maharashtra had been completed.
“We have also completed land acquisition for our greenfield project in Bihar,” he added.
Earlier, the liquor baron told the company’s shareholders that the brewing industry was constrained by volatility in taxation and regulatory regimes.
“The historic clubbing of beers, wines and spirits under single regulatory category is the prime cause for the low level of penetration of beer in India. As a result, the per capita consumption across the country is less than two liters per annum, which reflects the high cost of beer due to heavy taxation,” Mallya said.