Hello Sir,

Hope you are doing well.

If you enjoy your beer, you might be interested in reading about Som Distilleries which commands the highest market share in the Beer segment in the state of Madhya Pradesh.

The company also has presence in the states of Karnataka and Orissa.

 

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Som Distilleries and Breweries - Notes from Q1 FY 23 concall

Basic details -

  • We recorded best-ever quarterly volumes, Sales, EBITDA and PAT in Q1 FY 23. Since the completion of our CAPEX plan, this was the first season quarter that we were able to operate without any restrictions.
  • In addition to the favorable demand scenario, the change in excise policy and increase in the sale points particularly in MP benefited our overall performance.
  • In the last one year, we had been successful in enhancing our market share in all key markets and we continue to gain further to drive our volume growth. Furthermore, we also intend to increase our presence in the states of Uttar Pradesh and Delhi, which are high-growth and profitable markets.
  • Q1 is supposed to be the best quarter for beer as a industry. So obviously, margin or volumes can't be sustained for the rest of the year

Q1 FY 23 performance -

  • We recorded beer volumes of 47.3 lakh cases during the quarter, resulting in total sales of Rs 256 crore
  • During the quarter, we recorded an EBITDA of INR 35.9 crores with a margin of 14%, which is in line with our historic growth averages. This margin was achieved despite the prevailing inflationary conditions
  • During the quarter, we took price hikes across all the markets. In addition, our focus on operational efficiency supported by peak utilization of our plants was the primary driver for the margin enhancement.
  • Hunter recorded a volume of 20 lakh cases, Black Fort and Power Pool recorded 7.2 and 19.4 lakh cases respectively during the quarter
  • Beer realization for the quarter was INR 506 per case compared to INR 462 in FY '22, primarily driven by higher mix of Hunter in the total volumes and the price hike which we have taken across brands
  • IMFL Volumes during the quarter was 1.9 lakh cases, an increase of over 160% compared to the same period last year. While the IMFL realization for the quarter was INR 791 compared to INR 775 in FY '22
  • Our gross debt as on 30th June 2022 stood at INR 180.3 crore compared to INR 197.3 crore as on 31st March 2022

Geographical break-up and New markets -

  • About 54% of our volume has come from MP. Close to 26% has come from Karnataka and 15% has come from Orissa. 5% would be from the remaining states like Delhi, Kerala, UP and CSG.
  • We're looking at markets like UP, Delhi and Kerala and canteen stores to drive further growth over the next two to three years.

Capacity utilization -

  • Our Karnataka plant operated at peak capacity level during the quarter on an annualized basis. Both Bhopal and Orissa plants operated at capacity utilization of around 70%
  • Utilization was 70% for Q1. But there's still enough scope for us to produce more

Why gross margins still low -

  • Gross margins continue to be under pressure because we have seen that since March there has been considerable increase in the prices of Barley, as well as glass bottles and PC boxes.
  • 30% is barley increase. Glass price from about INR 13 a bottle in March, it has risen to about 14.53 in June. Sugar has risen from about 35.14 per kg too about 37.7

Market Share -

  • If you look at FY 19-20, we were close to about 3.5% in Karnataka and currently we are at about 11.5%. We ended the year FY 22 at 6.9%.
  • If you look at Orissa, FY 19-20, we were at 8.1%, in FY 21-22 we were at 10.9%, and Q1 FY 23 at 12.7%
  • The MP market, we are the market leader. For the June quarter, we had a market share of 35%

CAPEX -

  • We do not have any CAPEX plans, but we will review the same maybe by January of next year

Guidance -

  • Our expectation would be that we should be closer to our historical margin in the next three years or so. I think I'll be more comfortable with the range of 14%-15%

Preferential allotment to Promoters -

  • The money from the preferential will be basically used for furthering the working capital requirement of the company because most of the states where we operate are currently duty-paid states. So the company has to invest in the duties, excise duty before they dispatch or out from the factory

(End)

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Best Regards,

Ekansh Mittal
Research Analyst
Web: https://www.katalystwealth.com/

 

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