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Globus Spirits

Globus Spirits is another stock that has taken a severe beating in the last 2-3 months. From a high of 194 in Nov 2010, the stock is down by half quoting at 111 (almost at IPO levels) CMP, Feb 11, 2011 after appreciating 8% from yesterdays low.

There may be merit in examining whether the stock actaully deserves this beating or represents a good opportunity.

Please take the discussion forward.

-Donald

Globus Spirits Stock Story

Main Products

GSL is engaged in the business of manufacture, marketing and sale of Industrial Alcohol comprising Rectified Spirit and Extra-Neutral Alcohol, Country Liquor, and Indian Made Foreign Liquor (IMFL). GSL has established its identity in Country Liquor and IMFL business with steady growth and production of high quality liquor.

GSL has a brand portfolio of its own in the Country Liquor segment, and caters to reputed Indian brands in the IMFL segment. GSL has already launched its own IMFL brand (Country club) in some 7 states.

GSL has two modern distilleries at the following locations:

Behror, District Alwar, Rajasthan: The facility is built on an area admeasuring 17.97 acres of land. The unit has its own captive supply of water and power.

Samalkha, District Panipat, Haryana: The facility is built on an area admeasuring 16.575 acres of land. The unit has its own captive supply of water and power.

At present both the units are capable of manufacturing alcohol from both molasses and grain. Both the Units have licensed and installed capacity of 144 lakh Bulk Litres (BL) p.a. each aggregating to 288 lakh BL. This capacity has recently been expanded to 70 mn bulk liters. It is in the process of merging another distillery ADL with a capacity of 14.4 mn. Total capacity ios slated to go up to 84.4 mn soon.

Main Customer Industries

  • The important end users are institutional (e.g. Armed Forces) and retail buyers. Company has tie-ups for bottling IMFL products for other brand owners.

Bullish Viewpoints

  • **Capacity doubled; commercial production to start soon -**GSL has increased its capacity to 70mn litres from around 28.8mn litres, and the expanded capacity was reported to be ready to start commercial production by Q4FY11. The full impact of the expansion will be seen in FY12, when the company expects full capacity utilization.
  • **Strong Balance sheet to fund future growth -**GSLâs balance sheet is one of the strongest among its peers with 1HFY11 d/e at 0.2x. With increasing cash flows expected from the business, the company is in a position to leverage its balance sheet to fund an investment-driven future growth (brand-building, distribution network, expanded capacities with newer technology) both organic as well as acquisitive.
  • **Company Branded IMFL is a key focus segment -**Branded IMFL is a key focus segment. The company launched a whisky brand Country Club, which has got good response. It plans to launch another brand in the semi premium segment in 3QFY12. The company hopes to build a pan India distribution network on the back of these brands and other such launches. This segment comprised 7% of Sales in Q1/Q2 FY11 and has gone up to 13% of Sales in Q3 FY11. IMFL segment enjoys the highest margins in GSl business (15%-16%), however brand building and setting up pan-Indian distribution network will entail significant investments and may pressurize margins in the near term.
  • **Franchisee IMFL & Bottling may see strong growth -**Franchisee IMFL and bottling accounts for 30% of the revenue mix and will see strong growth in FY12 as a result of the acquisition of Associated Distillers which will take the total capacity to 84.4 Mn from 70 Mn. ADL has a bottling tie-up with Jagatjit Industries, which will supplement GSLâs bottling tie-up with Jagatjit in another state. Together, GSL has a tie-up to bottle 1mn cases for Allied Breweries and 1.2mn cases for Jagatjit. Deepening relationships with these players itself should result in good growth for this segment for GSL. The company supplies bulk alcohol and bottles for these clientele, resulting in capturing higher overall margins.
  • **Country liquor is the bread & butter business -**Country Liquor is the bread and butter business for GSL accounting for over 40% of the revenue mix. GSL is the market leader in the North India in country liquor. Volume growth has been in double digits in FY10 and GSL has outperformed in its markets the overall CL growth. Management seemed quite confident of the country liquor remaining a strong market for the coming times. It continues to strengthen its presence in the CL market by adding new variants and flavours.

Bearish Viewpoints

  • **Establishing IMFL brand presence fraught with execution risks -**The company as of date has only 1 brand in the IMFL segment and has a limited distribution network in a few states. Planning to launch another brand by Q3 FY12 which is a year away. Distribution network cannot ride on a single brand! Establishing new brands and a strong pan India distribution network will entail significant costs, cannot be achieved overnight, and may take atleast 2 years to reach any scale. Entry of more domestic and multinational players in the IMFL industry may force the Company to reduce the prices of its products which may reduce its revenues and margins which could have a materially adverse effect on its business.
  • **Enhanced Bulk Alcohol capacity will be a drag on margins -**With the increased capacity of 70 Mn available from Q4 FY11, the share of bulk alcohol in the revenue mix will go upto over 30% from current ~14%. Bulk alcohol segment is the lowest margin segment (8-10%) and this is bound to drag down overall margins because of the larger share. The IMFL segment is incurring heavy investments for launching new whiskey brand (Country club) which may further impact margins.
  • **Constraint in the availability and volatility in prices of raw materials -**The Company is exposed to possible unpredictability in the supply of raw materials and price volatility, be it molasses or grain. Despite the companyâs claims of risk diversification by being present in all segments, margins were hit in 1HFY11 largely because of lower realization from Bulk alcohol. Lower molasses price has led to downward pressure on bulk alcohol, and has therefore hurt GSLâs realizations too. Disruption in the supply of raw material may lead to hampering of the production process flow. Uncertainty over the availability of raw materials may impact business prospects. Shortage of sugar cane and drought like conditions may result in higher prices of molasses and grains.
  • **Equity dilution on account of merger of Associated Distilleries Ltd -**The company will be issuing 3.23 million additional shares to existing shareholders of ADL for the swap to GSL. The no of shares of GSL will go up to 22.99 Mn from 19.75 mn. While earnings per share will see a marginal increase, this will result in equity dilution of ~16% for ordinary shareholders. The scheme is pending direction of the court.
  • **Alcohol industry is heavily regulated by the Government -**The business of the Company is subject to the respective State governmentâs policy on excise. Changes in the fiscal policies of the Government could have an adverse impact on the profitability of the Company. A significant change in the Government liberalization and deregulation policies could affect business and economic conditions in India and the business of the Company in particular. Adverse changes in other regulation such as the distribution norms may affect the operations of the Company. States mayindividually decide to impose prohibition on the sale of alcoholic beverages including IMFL, as has been done in the past in a couple of states.

Entry Barriers

  • The Indian alcohol market has high entry barriers largely due to government regulations. In most of the States, the distribution of alcohol is regulated by the concerned State Government. Being a state subject; within India itself, the policy on alcohol retail differs from state to state. Distribution of IMFL is also regulated in some states either through auctions or through government procurement agencies (as in Tamil Nadu and Andhra Pradesh etc.)

Indian Alcohol Industry

The Indian potable alcohol market has high entry barriers, largely due to government regulations. The policies and levies on alcohol vary from State to State. In most of the States, the distribution of alcohol is regulated by the concerned State Government. Being a state subject; within India itself, the policy on alcohol retail differs from state to state. While some states such as Maharashtra, Uttar Pradesh, and Tamil Nadu have a liberal policy, other states such as Haryana and Andhra Pradesh have had very bitter experiences intrying to make these states dry and have eventually had to withdraw the policy.

Each State levies taxation and duties on alcohol at its own decided rates. Each State also levies excise duties and also regulates distribution channels of alcohol in its own way. Liquor happens to be a major contributor to the stateâs exchequer. Some states, have, in the past, taken firm action in terms of banning the sale of alcohol within their state, but their decision had its own political fallout, and the ban had to be withdrawn.

Currently the industry is dominated by 3 brewers, the United Breweries, Shaw Wallace and Mohan Meakins. However, a number of international brewers are starting to become established. Joint ventures could continue to be more important as the distribution network in India is complex.

India is the largest producer of sugarcane in the world and sugar industry is the second largest agro-based industry of India, textiles industry being the largest. Production of molasses has increased from 0.4 million tonnes in 1950-51 to 8.29 million tonnes in 1995-96. The Government has already decontrolled the prices and movement of molasses. (Source: Financial Appraisal Report of SBI dated September 5, 2008)

Advertising of alcohol and alcohol-related products is officially banned and considered illegal. Major liquor manufacturers, however, spend heavily on surrogate brands under the same brand names such as glasses, mineral water, music items, fashion articles etc. Satellite and cable television however, being uplinked from outside India, have allowed liquor advertising by Indian brands.

As regards the distribution system, all outlets have to be licensed; Wholesalers, Retailers, Bars and Restaurants, and Bonded Warehouse operators. The Distribution system is still the same for Beer as for Spirits and Wine. They pay the, varying, States licence fees. These can, at present, only sell Indian-made Liquor over most States. It continues to be expected that Beer and Wine may shortly be permitted to sell in more outlets.

The liquor industry is suffering from over-taxation and over-regulation, which has impeded the profitability even in the face of continuing growth in demand for liquor products. Further widening the scope of service tax and increase in the rate of service tax has had a direct impact by way of increased expenditure on the Company.

Distribution of IMFL is also regulated in some states either through auctions or through government procurement agencies (as in Tamil Nadu and Andhra Pradesh etc.) These regulations create monopolistic environment, stifle entrepreneurship spirit and hamper growth. The present distribution system is affecting the revenue collections of the states, and the state governments are increasingly looking to liberalize the distribution system. Uttar Pradesh is a good case in point where the excise revenues witnessed a substantial jump once the distribution system was de-regulated in financial year 2001-02. Stagnating excise revenues (from liquor) are also forcing state governments to re-look at archaic systems.

Future Demand Drivers and Outlook

With rapid growth in the middle class segment, increasing consumerism, rising disposable income levels, rising standards of living, increase in number of discerning customers, and increase in the number of liquor brands and categories available to the consumer, there will invariably be an increased growth of all segments of liquor industry.

The foreign players are likely to have market grip over the super premium and premium segments and the Indian manufacturers would see a reduced market share. The domestic majors will nevertheless upgrade the large Country Liquor market into IMFL. Local players have all along dominated the Country Liquor segment wherein there are no large players or multinationals coming in to this specific segment.

Even amongst the various IMFL segments, Vodka, White Rum, and Brandy are expected to grow at above-industry growth rates albeit on a very low base.

The demand for Alcoholic Beverages has been growing at a steady pace of approximately 10% p.a. and (this growth rate) is expected to continue to grow at this rate in the future. Supply is expected to match the demand over the medium term. The overall profitability of the industry would continue to be subject to the prices of molasses and the extent of competition besides the duties levied by State Governments. (Source: Financial Appraisal Report of SBI dated September 5, 2008)

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Hi,

I think, as the sector leader is getting a bear hammering, same is going with this one.

We have prepared a set of questions for Globus Management in order to understand the company better. We are trying to interact with Globus Management to understand the company and its prospects better & the challenges ahead.

Please have a look and suggest additions, follow-up questions that you may have.

Rgds
Donald

Questions for Globus Management

1.We are very impressed by the strides made by Globus Spirits in last few years. Earnings and Sales growth have kept pace growing at 45-53% CAGR over last 5 years. Bulk Alcohol, Country Liquor, Franchisee IMFL bottling to company IMFL brands âall product segments have grown.

Kindly educate us on the current revenue mix and the margin contributions from each segment. What are the focus areas for the company and why?

2.Franchisee IMFL and bottling accounts for ~30% of the revenue mix and might see strong growth in FY12 as a result of the acquisition of Associated Distillers which might take the total capacity to 84.4 Mn from 70 Mn. ADL has a bottling tie-up with Jagatjit Industries, which will supplement GSLâs bottling tie-up with Jagatjit. Together, GSL has a tie-up to bottle 1mn cases for Allied Breweries and 1.2mn cases for Jagatjit. Deepening relationships with these players itself should result in good growth for this segment for GSL. The company supplies bulk alcohol and bottles for these clientele, resulting in capturing higher overall margins.

With the ADL acquisition and the increase in bulk alcohol capacity, the IMFL Franchisee segment contribution is slated to go higher. Kindly explain the Franchisee IMFL business model, why do IMFL branded players find an advantage in outsourcing bottling to players like Globus? Is there any potential source of conflict as your company brands start getting established. And why in your opinion Globus Spirits can sustain the advantage that it currently has over other bottlers.

Are off-takes guaranteed during the contract agreement period? Any other risks?

3.GSL has increased its capacity to 70mn litres from around 28.8mn litres, and the expanded capacity was reported to be ready to start commercial production by Q4FY11.

It is our understanding that bulk of this capacity will be utilized for the bulk alcohol segment, and consequently for IMFL Franchisee segment. With this the contribution of bulk alcohol may go up to over 30% of revenue mix from the current 13% levels. Bulk alcohol being the lowest-margin segment, will this not add to net margin pressures considering that company-branded IMFL segment drive will need to incur significant overheads over the next 2 years.

4.Company owned brand play in IMFL segment is a focus area for the company. Post the first brand Country club launch, the second brand launch has been twice deferred. A strong distribution network probably needs multiple brands to support & sustain it.

Kindly explain the companyâs progress on both fronts, key factors & challenges ahead and the timeframes involved for reaching any scale in this segment.

How difficult is it to establish new brands even with strong promotional budgets.

5.Country Liquor is the bread and butter business for GSL accounting for over 40% of the revenue mix. GSL is the market leader in the North India in country liquor. Reportedly GSL secured a 15% increase in sales quotas across the northern states and governments have also allowed price revisions.

Will CL maintain the revenue mix at these levels despite the increase in franchisee IMFL and bulk alcohol segments. Given that the strong balance sheet allows room for investment-driven future growth, does it make sense for the company to expand geographically in other states by establishing or acquiring distilleries.

6.We have seen raw materials typically used in distilleries are Molasses or grain-based like bajra, broken rice & jawar. When using molasses, we have also seen pricing pressures both ways â molasses price decrease exerting downward price pressures on bulk alcohol. Ethanol pricing has its own effects.

Appreciate if you can briefly take us through the linkages, price-points and other complexity that needs to be managed. How is consistency in taste/flavouring maintained?

7.CSD Sales

What is the progress on CSD Sales? What is the significance and impact of CSD sales to Revenue contribution likely to be for a full year of operation?

What kind of brand portfolio are you pitching for CSD sales?

8.Capacity expansion from 28 mn to 70 mn

Investors had been expecting commercial production to start from 1H FY as per the companies guidance. End of Q3/start of Q4 was the guidance provided in Q2 concall. Reportedly commercial production can only start by March 2011

What have been the challenges apart from the initial rain delay?

9.The distillery business is seeing heightened activity - expansions & new players in the last few years.

How do you see the demand/supply situation poised and Globus competitiveness sustainability in view of this? Being a state-regulated business, what kind of challenges is Globus facing while trying to consolidate its position in existing geographies and expanding in other states?

10.Vision and Future Plans

Where does Globus see itself in 2015? If IMFL brand plays succeed majorly is there a gradual shift planned out of the bulk alcohol segment?

Hi, Donald,

In their website (globus spirits)there is a investor call transcript which was done after the H1 results for this year was announced. There were specific quetions on the aquisition of associated distillers which is also promoted by Mr Ajay Swaroop. It was mentioned by the com that there are no more similar cos promoted by Mr Ajay.

But there was a com named SVP industries which was supposed to get listed in 2006. This com is also in the same line of business. The IPO prospectus is available in their website even now. The prospectus mentions that Mr Ajay Swaroop is promoter for Rajasthan Distilleries, Northern India Alcohol Sales Pvt Ltd and few other cos aswell apart from Globus and SVP! The below link is an article regarding CRISIL rating of 1/5 for that IPO.

http://www.moneycontrol.com/news/ipo-upcoming-issues/crisil-assigns-grade-15-to-svp-industries-ipo_243877.html#

There seem to be a whole lot of family members in the same industry under different com names. Not sure if this is a negative, but I do feel there could be conflict of interests.

Regards

Vinod

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Things seem to be getting on track for globus. First quarter results for fy 12 seem to be quite encouraging with enhanced capacities contributing to higher revenues. Next few quarters likely to be better.

This is one of my core holdings. Holding it for following reasons:

(1) Experienced management.

(2) Company size is small, opportunity is big.

(3) Debt is less.

(4) So far track record is good.

1 Like

I was looking over globusspirit and company has shown thebottom lineof 26Crwith top line of nearly 400Cr.

Type Audited Un-Audited Un-Audited Un-Audited Un-Audited
Period Ending 31-Mar-11 31-Dec-10 30-Sep-10 30-Jun-10 31-Mar-10
No. of Months 3 3 3 3 3
Description Amount(Rs. million)
Net Sales / Interest Earned / Operating Income 1,090.17 1,195.26 1,059.47 1,031.07 1,144.56
Other Income 1.77 0.54 1.73 1.94 5.22
Expenditure -983.50 -1,067.60 -957.99 -931.03 -1,032.06
Interest -7.30 -6.71 -4.18 -3.61 -1.51
Profit Before Depreciation and Tax 101.14 121.49 99.03 98.37 116.21
Depreciation -16.20 -13.67 -13.55 -13.32 116.68
Profit before Tax 84.94 107.82 85.48 85.05 232.88
Tax -22.59 -37.50 -23.04 -22.10 -117.12
Net Profit 62.34 70.32 62.44 62.95 115.76

Now if we look into the FY11 result its shows a top line of 520 Cr with bottom line of 39 Cr

Type Audited
Period Ending 31-Mar-11
No. of Months 12
Description Amount(Rs. million)
Net Sales / Interest Earned / Operating Income 5,267.84
Other Income 6.80
Expenditure -4,622.85
Interest -28.39
Profit Before Depreciation and Tax 623.40
Depreciation -69.43
Profit before Tax 553.97
Tax -154.66
Net Profit 399.32

Now i am not able to find out the details regarding the 120 Cr sales which increase the bottom line to 13 Cr.

please help me to clarify my doubt.

Regards,Vishal

I was reading Q4’12 transcript call and it seems to me that management is very confident about growth of 20 to 25%. Mgmt looks conservative that is good as they don’t want to take too much debt and would like increase capacity with the internal accruals. Stock price is coming down as FII are net sellers and promoter group is increasing stake. I would wait for one or two quarters so that all sell off takes place but would be interested to track this story more closely. There would be a period of consolidation for this stock.

I would love here thoughts from Donald or anyone who is tracking this closely

Regards,

Milind

can someone please explain me why number of shares keep increasing for the company every year and how long it would continue?

As no of shares keeps increasing, EPS does not go up. I tried to read order related to it but language is very hard to understand. It would be very kind if some one can explain in plain language

Thanks in advance

Milind

Number of shares increased due to the merger of a company owned by CEO Ajay, into the Globus Spirit.

I was worried about its increasing debt. However after reading Q4 concall transcript, it was clear that it is again going for expansion. Management has guided to reduce the debt from internal accrual by end of current financial year.

Also there was some indication towards partnership withforeign player for premium segment launch though nothing concrete.

Anyone who is interested in this stock should go through the Q4 concall transcript available on Globus website.

Patna High Court imposed a stay on Bihar’s anti-liquor law.

In a verdict on the liquor ban, the court said that the way liquor ban policy has been implemented is not acceptable.

Is tide is turning for the liquor industry, even the USL is also trading near a year low

Net profit of Globus Spirits rose 82.42% to Rs 6.33 crore in the quarter ended June
2016 as against Rs 3.47 crore during the previous quarter ended June 2015.
Sales rose 24.23% to Rs 195.94 crore in the quarter ended June 2016 as against
Rs 157.72 crore during the previous quarter ended June 2015. Capacity utilization
improved significantly to 88% in Q1 FY17 compared to 72% in Q1 FY16 resulting in
higher
production of 20mn BL in Q1 FY17. Standalone revenue from operations
up 25% YoY to Rs.1,964 mn in Q1 FY17. Greenfield Project in Bihar was
commissioned in August 2016 (overall capacity 26 million BL) and started
production. West Bengal distillery is almost complete with the overall
capacity of 33 million BL. Bengal has more demand than overall supplies
this will benefit the company immensely.

Demand Drivers of Future Growth :

§Population growth and good monsoon.

§Rise in income levels leading to increased consumption.

§Increase in purchasing power has led to more consumption of lifestyle products like alcoholic beverages etc.

§Growing consumer preferences for high quality of alcoholic beverages

§Lowest per capita consumption

§Fuel ethanol requirement in India and abroad

§Demand for petrol expected to grow

§Net increase in population of youth

§Ethanol required at 5% blending with petrol would be required, which is likely to scale up demand

It’s safe to assume that I/relatives will have vested interest in any stock story that i discuss.

Given the scenario of Liquor industry in India this company still seems to have some value.
Following points come in favour of this Company:
1.Markets it caters to - Haryana,New Delhi, Rajasthan, West Bengal.
all these states are favouring liqour vendors by either changing highways to urban roads in order to protect liqour sales … so no harm to revenue of globus spirits.

2.Commisioning of new plant in West Bengal And Bihar too…
Although Bihar plant they will need to shut it down but still West Bengal Plant Will increase its production capacity by more than 35% adding to revenues of the company.

3.Looking For export to neighbouring countries Nepal and Bangladesh

4.Setting up of new subsidiary in UK to boost sales and act as a bottling partner for Gapumma Group LImited.

5. Such an undervalued stock trading at P/B ratio of 0.55 only so cheap compared to peers.

The only liqour company which seems to be taking precautions by diversifying its market.

1 Like

Summary of Concall

  • The net sales for Q1 FY18 grew by 34% to Rs 256.50 crore. The net profit declined by 80% to Rs 1.57 crore.

  • Robust ramp-in volumes at the recently commissioned Greenfield Distillery at West Bengal in the first quarter of full operations. One of the largest grain-based state-of-the-art distilleries in the state with a capacity of 33 million BL.

  • Healthy demand-supply scenario is enabling the Company to rapidly scale up volume.

  • Operating at near optimal capacity utilization levels in the first quarter of full operations – this would further improve in the upcoming quarters.

  • Receiving encouraging response for the maiden IMIL brand - Goldee. More launches / brand variants underway. * Investment in West Bengal playing out as expected – Grain prices are lower than North India, while ENA prices are higher thereby improving the spread between grain and ENA price

  • Update on Bihar Distillery:- Based on the decision of the High Court, the Company has applied for renewal of license with Registration, Excise and Prohibition Department, Government of Bihar, Patna on May 05, 2017. The said application is currently pending with the department and GSL is confident of recommencing the operations in the financial year 2017-18 after the license is renewed

  • Significant increase in Bulk alcohol volumes led by commissioning of the West Bengal facility resulted in healthy topline growth.

  • Growth in Rajasthan revenues further aided the topline performance – Strong revenue growth achieved despite uncertainty around GST implementation

  • Overall profitability was impacted due to lower IMIL volumes in Haryana as well as lower realization in the DDGS segment.

  • Revenues from manufacturing business stood at Rs 153.8 crore in Q1 FY18, higher by 61% Y-o-Y. Share of manufacturing business stood higher at 60% in Q1 FY18 supported by production commencement at the West Bengal facility

  • Share of consumer business stood at 40% in Q1 FY18 against 51% in the same period last year. Consumer Business reported a growth of 2% during the quarter.

  • Bulk alcohol volumes increased by 98% owing to healthy contribution from the recently commissioned West Bengal facility. This was supported by 27% volume growth in IMIL in Rajasthan

  • IMIL Revenues stood at Rs. 102.7 crore, higher by 2% Y-o-Y. Healthy growth in Rajasthan (+29%) partially negated the impact of volume de-growth in Haryana

  • IMIL volumes in Haryana declined owing to:- Delay in awarding retail licenses due to shops shifting from the highways (Supreme Court order), Reduced dealer & distributor discounts impacted volumes – to enhance profitability from the state going forward.

  • Franchise Bottling volumes stood at 0.734 mn cases vs. 0.788 mn cases in Q1 FY17. West Bengal positively contributed to the overall Franchise IMFL volumes which was cascaded by de-growth in Rajasthan and Haryana attributable to lower focus on regular segment by large IMFL companies

  • Revenues from Others Segment led by DDGS stood at Rs. 216.4 mn, down by 3% year-on-year
    Investment in West Bengal playing out as expected – Grain prices are lower than North India, while ENA prices are higher thereby improving the spread between grain and ENA price

  • IMFL brand will be launch in Karnataka and Pondicherry. It will be niche brand and will be available at few retail outlets.

  • Outstanding debt is Rs 252 crore

  • ENA and glass cost increase – The Company’s ENA is grain based which is GST tax free. Little impact due to GST on ENA and will pass on to buyers.

  • Country liquor in Rajasthan - discussion with government for price hike.

  • West Bengal – received price hike due to GST

  • Haryana – price is too high in Haryana. Retailers have good margin, so now margin will be rolled back.

  • Impact of GST on the company – not meaning full impact on EBITDA as long as Rajasthan price hike comes.

  • In UP – most of ENA producer wanted price hike due to increase in molasses prices.

  • Bihar plant is completely shut down at this time. The company is incurring fixed cost. It’s not a meaningful number.

  • West Bengal - largely producing bulk alcohol.

  • IMIL launch in WB in Q1. Coming Q2 and Q3 good volume expected from IMIL. Margin in West Bengal will increase due to plant running at good capacity, bulk alcohol margin will expand in Q2 and Q3, and afterward it will stabilized.

  • Margin for industrial alcohol – depends on grain prices.

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Govt. of Bihar allows the company to restart manufacture of ENA – to be exported / sold outside the state; the company is in the process of restarting distillery operations. In the last concall, management had indicated an additional 100 – 125 Cr. revenue from Bihar, assuming 90% capacity utilization, once the distillery became operational. Bihar capacity: 26 mil. Bulk Litres.

3 Likes

After Bihar plant starts Globus will have 150 mil capacity grain based. One of the largest plants around.

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Bihar distillery has resumed operations; it has recommenced commercial production of ENA on Oct. 9.

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Anyone from Karnataka who can check how the IMFL brands (Oakton, Laffaire, Governor’s Reserve) are doing. these were launched in Karnataka and WB - the management has been quite bullish about Unibev

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The results are promising. But not much top line growth with the Bihar plant starting

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