Please note that this conference is being recorded. I now hand the conference over to Mr. Vivek Gupta and Robin Achten from United Breweries. Thank you, and over to you, sir. Yeah, thank you, and good afternoon, everyone. This is Vivek here. Thanks for joining the earnings call. Just to start with, we are going through the CFO transition in UB. Jorn, who is a new CFO, will join us from August 1, and the other one has left there. So Robin will help me in this call. Just to start with the opening, I'll go straight to the highlights of Q1. I think most of you would have seen the results. I would say that, as a company, and I personally feel very strong that we are making very good progress, and our plan to build long-term value in this category is completely on track. We had a very good quarter in the context of some of the challenges we faced due to elections. I mentioned last time as well that being the largest player in the market and having significant shares in some of these states, we had disproportionate impact on elections versus some of the other players. But having said that, some of the highlights of the quarter, as you said, we grew our net sales by 9%. Our premium volume grew 44%. Our overall volume grew 5%. We made a significant margin improvement of around 247 basis points. A lot of it was driven by state-based brand-based product mix, and also very, very intentional capability building we did in terms of strategic revenue management, which started giving us early results. Our EBIT grew 29%. We continue to invest in the organization capability and the capabilities that are needed for the future. That's why you see there is an increase in our employee expense driven by the cost increase, but also the roles we have invested in, especially in the area of trade marketing, procurement, consumer insights. I also feel very, very good about the work we are doing with consumers. As I mentioned, the number one priority for us is to make this product-centric, manufacturing-centric business to a consumer-centric business. I'm very happy to say that we are seeing very, very strong results. Our Ultra and Ultra Max portfolio grew more than 50% in the season, despite all the challenges in the elections. Our Heineken Silver, where we only had two states, because as you know, in Karnataka, we were not selling Heineken this quarter because we didn't get the manufacturing permit, and it was there in the base last year. We grew double-digit nationally on Heineken Silver portfolio as well. Our innovation on Queenfisher, which we launched before the beginning, is now in four states, and we are getting very encouraging trends on that. We are also seeing significant distribution increase in our portfolio in various states. So I feel very good about the choices we are making to understand consumer and designing for consumer, and that is giving us good results. The second big choice was to increase the manufacturing footprint of premium in most states. I'm very happy to report that we finally got the approval to produce Heineken in Karnataka. And as we talk, our brew is getting the yeast in the tanks, and hopefully by in a week or so, we should be start shipping Heineken portfolio in Karnataka. Latest by mid-August, we will be there in Karnataka fully. But because of our manufacturing footprint increase, in some of these states, we have seen our premium shares actually doubling because we are able to produce locally there, and that work needs to continue to happen. In some states, we ran out of capacity because we could not do interstate transfers, which again gave me confidence that as we are working on plans for 2030 in terms of where we need capacity, where we need our footprint expansion, we need to accelerate that further, and that's a big priority work we are doing for the next year as well. The fourth one was the regulatory work. I think we have put a lot of effort in, A, launching Brewers Association of India so that we have a voice in the beer industry, but also connecting with the state governments at various levels. And we are already seeing some green shoots in the coming quarter as we talk about that. But overall, I feel that we are making very good progress. We did an estimation that if we didn't have the election impact, how much volume growth would have been. And this is all a combination of we didn't get the third-shift approval in many places, or we didn't do the interstate stock transfers because of the excise policies or some of the other things. The volume growth at the national level would have been anywhere closer to 8%-9% if we just took that impact. So keeping all of this, I think what was in our control, I think we did an extremely good job, but it is a journey, and I feel that there's more to be done, and it's a multi-quarter approach that is working. But I feel very good about the strategic choices we have taken as a company. But I'll hand over to Robin to give a little bit more color. Yeah. I think that Vivek already covered most of the financial highlights, so I think we can directly go to the outlook before we go into the Q&A. So our intention is to build further category growth while driving the share of premium in our portfolio and gain market share within the premium segments. We will be doing this by a continued focus on revenue management and cost initiatives, also to drive margin accretion with the plans to continue to invest behind our brand and our capabilities. Hence, we remain optimistic about the long-term growth potential of the beer category in India. Before we go into the Q&A, we also want to highlight you will receive an invite in the coming weeks for an investor meet on Thursday, 19 September, in Mumbai. With this, we conclude the opening remarks, and we can move towards the Q&A. You mentioned during this. So Operator, you can please go ahead. Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their touch-tone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Abneesh Roy from Nuvama. Please go ahead. Yeah, thanks. Congrats on the good set of margins coming back. My first question is on the Heineken in Karnataka. So if you could tell us in the states where you are already present, say, Maharashtra and Goa, what kind of a success or size Heineken has been able to create? Because that could be a template for Karnataka. Plus, I think there could be other competing brands or other companies already being in Karnataka. So what kind of a market size are you looking at longer term here? Plus, you said that in base, Heineken was present. So was it only because of the elections you did not bring it from Maharashtra, or because the factory was almost ready and permission was almost coming? So that's why from Maharashtra, you did not ship it to Karnataka in this quarter? Yeah. Thanks, Abneesh. I think let me answer the second question first. I think we actually had the manufacturing facility ready for the last 9 months. We had applied for the permit for the local label registration. And till the time you get the permit, you cannot actually import. So we were waiting for the permits to happen as well. So we waited to do the right thing without being very tactical to just import because we wanted the full permit on actually producing locally and selling locally, which we have now got. And we will do that. So the other thing is Heineken, we got the permit sometime in mid-June, but the brew itself takes 21-24 days. It goes through a huge amount of quality checks, including sending samples to our overseas partners. So they want to make sure the beer is absolutely consistent to do that. So that is about that part. So we did not have an option to import from any other state because of the permits, which we got later, and this was a long-drawn process. But the good part is we will be manufacturing locally, and that will be improving our margins, but also giving us the full space. Heineken, as a brand, is now the world's biggest beer brand. We launched Heineken in India with Heineken Original, but in the last couple of years, we have actually launched Heineken Silver, which is a roaring success in the other Southeast Asian market because of a different taste profile it brings in and does that. We think in our plan for 2030, Heineken will play a massive role because this portfolio will play a massive role, and it could be anywhere between 7%-8% of our total portfolio, that part of it. In Maharashtra and Goa, where we are in Heineken, our sales growth of Heineken is above 40%. And every month, we are beating share versus previous month. As you know, we launched Heineken Draught. We are gaining the distribution to do that. So I think it is not going to be a huge that from month one or year one we will hit 7-8 shares, but it will actually start giving us 100-200 basis points of share growth every quarter on a very profitable premium segment and very distinct product, which is 100% malt product. So we are feeling very, very bullish about it. The other good part is in Karnataka, the launch was very successful before we applied for local manufacturing. That's why we made a choice to do local manufacturing. So we already know that the moment we will announce in the market, there's a pipeline which will get into it, and there's already a latent customer demand. So we are feeling very, very strong about it. Sure. Good to hear on the 40% growth in Maharashtra, Goa, etc. So one follow-up question on Heineken only. So I know, Vivek, currently you have too many priorities and focus of increasing manufacturing in a few states because capacity constraint is there. But in North India, would you need a Heineken at some states? Because now Maharashtra, Karnataka, are adjacent states, big markets, but North India is also a very attractive market. Would you need there, or the tax laws are okay for importing from Maharashtra? Look, we are working with Delhi as we launch our operations to get Heineken there. That's a big part of the market. We are already doing Heineken in Rajasthan. We have a manufacturing unit which is ready to go in Rajasthan as well to produce more Heineken there. So we are working plan broadly, but what we also don't want to do is we also want to go we have a very big innovation agenda across multi-brands. And I would say over a period of next 12-18 months, we will have a very strong presence of Heineken in many other markets as well. So that's helpful. Vivek, my second question would be on what is the number one player in spirits doing? One very interesting thing was they did two acquisitions on almost the same day, one in craft spirits and one in zero alcohol. I again understand currently your plate is full on doing what is there in terms of current business because there's huge, huge headroom, huge, huge low-hanging fruits. But what will be your thought process on M&A/craft? I know you are doing some craft beer on your own, but what will be your thought process on M&A of all these niche startups? Look, I think as you already said, right now my plate is full because we have so much to do to fix the basics on this business to ensure that we have capacities to produce beer, to get the portfolio right, to get our brand priorities right. I think we are absolutely 120% focused on our current agenda and few priorities. Having said that, we have a small team who is looking at all the opportunities, and we are evaluating what to do. We have our own experience center as well and do that. But I would say right now, at least for the next six months, we just need to fix the basics on the core business. I know it's not the answer you want, but I think it's super critical that we fix it because otherwise, if we don't fix it, we will have a major problem in the next year. We'll not learn from the gaps we had this year and we'll not fix them. So last quick question, and then I'll stop. So Brewers Association of India, very good development. And my specific question here is, will there be any particular specific states where I think the work will be higher? And when I see Bengal where beer tax hike recently was much higher than spirits hike, what will be your take on that? Because it seems counterproductive, counterintuitive, at least from a Bengal perspective. So if you could answer on that. Yeah, look, I think there are going to be short-term issues. And look, each of these states, after elections, you see in India is going in a very different way because everyone is looking for revenue. So it's very volatile if you are in my seat because everyone is looking for more money, and there are negative developments happening around taxation. But I think the Brewers Association of India has a much bigger agenda because beer category is so under-penetrated in India. I've asked them to focus not on short-term gains, but really focus on macro issues, which really substantially penetrate from 9%-30%. So for example, what is the economic value beer brings to the ecosystem? Because beer is not about producing beer. There is an ecosystem of collecting bottles. There is an ecosystem of barley. There is an ecosystem of glass. What does it bring to the total economic value to the industry? So there is a better understanding of why beer is good apart from the social factor. Second, there are states like Madhya Pradesh, for example. There are laws which are the excise policy is designed in a way that it benefits the local players like Som and others because there's a franchisee fee if you produce a national brand there. So the Brewers Association of India has to take those bigger ticket items where there is a level playing field for multinationals and local players, which actually explodes the category growth as well. The third is the regulation around advertising of beer, the regulation around some of the other taxation as well. So there is macro agenda. There is also an ongoing micro agenda to highlight spirits versus beer gap as well. Thanks a lot. That's all from my side. Thank you. Thank you. Ladies and gentlemen, in order to ensure that the management is able to address questions from all the participants, please limit your question to two per participant. The next question is from the line of Edward Mundy from Jefferies Group. Please go ahead. Hi, Vivek. Hi, Robin. Thanks for taking the question. I've got two questions then, please. The first is around the Heineken brand. Clearly, you've got Heineken Original. You've got Heineken Silver. Could you talk about the pros and cons of potentially launching a Heineken Strong brand? And as part of that same question, how about the potential for Heineken 0.0 over the medium term? And then the second question is more around some of the investment you're making. Is it feet on the ground? Is it upskilling? What are the capabilities that you're trying to put in place at this stage? Sure. Thanks for asking the question. So let me go on. I think on Heineken, right now our focus is on really, really making sure we expand Heineken Silver in few markets because we want to go state by state and really build up these things. And because we have a very global success model, and especially in the markets Heineken Silver is launched, where both Heineken Original and Silver have a role to play. So we are going to focus on that. We keep looking at other innovations like what you talked, but right now the priority is to build a very good business on Heineken Silver and Heineken Original. On Heineken and some of the biggest markets like Karnataka, we're just relaunching it next month as we talk. We are also evaluating a couple of other markets like I answered in the previous question. On Heineken 0.0, we are importing it. We believe there is a long-term market of 0.0, but we are actually working to further strengthen our go-to-market. As you know, the go-to-market needed on 0.0 is very different than the liquor go-to-market. So we are working in a couple of states to see how high is high, which means that what is needed for consumers to really understand how 0.0 is different. And I think that's still the biggest barrier in India. It's not about the proposition, but consumers don't understand 0.0. And we are learning in a small scale. And once we track it or once we get some learning, we will expand there. On your second question, I think we are making investment in two areas. I think the number one is, as I said, we want to be very consumer-focused. We have made investment in CMI function, but more importantly, in really understanding in-depth about our product superiority. So we have now created a panel in most of these states that how is the product doing versus local competitors, our competitors, are we on track, what are consumers asking. We have made investment in our procurement function so that we are thinking ahead. We are working on backward integration like barley sourcing from the farmers, looking at where do we need malting units, where do we need to work with the glass manufacturers. So we have significantly increased capability there. We are increasing capability in better digitization of our operations. We have probably the widest network of brewery, but a lot of things happen manually. We are investing there. We are also investing a lot of resources in trade marketing because winning in store is super, super critical. We are increasing feet on street. In many states, when the policies change, there is an opportunity to actually do more at the store. So there is overall investment happening in all these areas. We have subsidized our ability in quality because when you have local brewery operations, you need to have a very high standard of quality. But as we are working on all these investments, we are also looking at areas to drive efficiency. Where there's duplication, we are going to remove duplication. Where there is redundant processes, we are going to do that. So there's a lot of work happening on organization redesign, but focus on first effectiveness, and then in parallel, we have started working on efficiency as well. Great. Thank you. Thank you. The next question is from the line of Vinamra Hirawat from JM Financial. Please go ahead. Hi, Sir. Am I audible? Yes, yes, yes. Thank you. Our first question on Heineken, I just want to know what percentage of your sales and volumes are Heineken, and are we planning on bringing it to any more states in this financial year? Look, I think, sorry, your first question was what percentage of sales is Heineken, or what was your question? Sorry, I think. Yeah. What percentage of sales and volumes are Heineken? Yeah. See, I think in percentage of sales, then this is very small on our business. But as a percentage of premium sales in the market we compete, it is significant. And we want to actually definitely take the brand to other markets, and especially when we have Karnataka as a manufacturing hub, it actually helps us to go to some of the other markets if we get the export permits. But the way we want to build this brand is we really want to double down on a few states, get to a reasonable share, and then we go to the next market and the next market. So please expect that in the next 9-12 months, we will be in at least 4 states more behind this manufacturing capacity increase, both in Rajasthan as well as in Karnataka. Got it. Got it. Next question is, I heard that they were planning on increasing capacity. Just want to know which are the states where we're at in capacity where we're planning on increasing it, and what is the planned Capex we expect in this year and next year? Look, I must tell you that this is the number one priority on which I'm personally working with our manufacturing team and our business development team. We have been to many states. There are a few states we are actually we have to actively expand our capacity. West Bengal is one state we have to expand the capacity. Telangana is another state we have to expand the capacity. We are looking at options in Rajasthan, Odisha. So right now, I have at least 10 states in my plan where we are evaluating various models to see how we can do, including improving our own brewery operations to increase the capacity because there is a lot of work we are doing on upgrading our equipment, repair, maintenance, so that at least the capacities we lost because of breakdowns or all of this, we actually can get more throughput out of our breweries as well. We are also waiting, for example, in some states, they are also going to commit or comment on evaluating on high-gravity brewing. We know that if that can happen, that can also give us some 4%-5% increase in our capacities as well. So there is a multi-state plan. I can only tell you whatever Capex we will need to increase the capacity as per the plan, we will get it. We have that alignment from the board. But I can't give you the numbers because if I say I'm going to add a brewery, it will take two and a half years to put a brewery. But there are various options. We are working with CapEx, without CapEx, through partners, through our own breweries, through brownfield expansion, through putting a can line in one of our breweries. So all of that, there is a strategic plan we are working, but there are almost 10 states on which we are working for next year. Got it, sir. Thanks. Thank you. The next question is from the line of Jay Doshi from Kotak Bank. Please go ahead. Yeah. Hi. Thanks for the opportunity. My first question is, if you could explain to us over the last 1 or 2 years, how broadly, from a broad sense of inflation in glass bottle prices, how has your mix changed in terms of recovered bottles? Where are you in that journey, and where do you think how much time do you think it will take for you to get back to, if I'm not mistaken, recovered bottles used to be about 70% of your overall bottle consumption. So where are we today? Where do you think? So some color there because we are not able to understand. One is there is inflation in glass bottles, and second is some slippage on recovery over the last 6-9 months. So that's my first question. Yes. So let me maybe answer that question on inflation, and let me make it a little bit broader and look at input cost as a whole. So what we see this year is that we definitely had a tailwind from the cost of barley and malts that came down for bottles and cans because cans are, of course, also an important material in our volumes. We see some inflation, but modest, very modest inflation. But more important, also to the point that you raised, are the bottle return rates. And as mentioned already a few quarters now, is that we're really working through improving the bottle return rates. And this quarter, despite having volume growth, we see a lower percentage of new bottle infusion, as we call it. So that means that our plants really start to work. Are they yet at the levels where they were pre-COVID? No. But we clearly see traction now in the markets that the plants are working, which is then also positively impacting our gross margins. Fantastic. Would it be possible for you to give us some ballpark numbers or quantify it? If this trend continues, by when do you think you will be at pre-COVID levels in terms of bottle returns? That's very difficult to say. It also depends on state mix impact. So let us first make sure that we deliver on this a few quarters in a row, and then we can get back to you with exact numbers. Understood. Sure. My next question is for Vivek. So Vivek, in the past 6-7 months that you've been in the organization, what is your initial sense for a company with 50% market share in this industry? What is the ideal steady state EBITDA margin or EBITDA per case that United Breweries should operate at? Of course, I'm not looking for guidance or anything initial, but over a 2-3-year period, if you get your strategy right and if the execution is as per your expected line, where do you think the margin should be for a business of this nature? Yeah. No, thanks for asking. Look, I fundamentally believe that the growth is the biggest opportunity. It's a very under we have not served the category well in terms of driving category growth, taking the leadership in the category and bursting the barriers. With an outlook of that high single-digit volume growth in the category and double-digit revenue growth we can deliver, and the amount of innovation or new bottle immersion and capex which is required here, I think our operating margin, we would definitely I don't think we'll go at a pre-COVID level, but I think definitely to a double-digit kind of a growth, operating margin would be very much achievable. Internally, we report around 6% operating margins today in India. I think we should go to at least 10%-11% in the next two to three years. There is a significant potential. And now, when you get the. When you mentioned operating margin, are you referring to EBIT margin or EBITDA margin? EBIT margin, basically. Okay. So basically, 400 basis point improvement in EBIT margin from current levels is what you think we should achieve. Just one final follow-up there. So what has changed between pre-COVID and now that sort of makes you believe that at least that you cannot get back to those margins? So is there some permanent or structural change in the business or state mix or some other aspects, if you could share? Yeah. I think, look, the question is not can you get there or not. I think the first is the investment required to accelerate the top line and the growth. And I think if you really see the category growth rate pre-COVID, and when I was looking at seven-year data up to that point, I think it was in low single digit. I think we are trying to almost double that growth rate in the category. That's a big, big change to drive that. And I think the key driver, and especially when the duties are increasing, if you really see the price of beer pre-COVID and price of beer today has increased, both state by state, because of the duty increase, the quantum of duty increase, the MRPs have gone up significantly. So beer has actually become expensive versus affordable. The only place beer was a little bit affordable where you're doing economy in Karnataka and all these places. So consumers are paying more. So let's think from a consumer angle. In that context, to drive volume growth, it will be a combination of innovation, deeper understanding, investment in BTL, and in the stores to really do that. So the second big change is I see the drivers of the category we're not invested in. A very simple one. But beer is sold when it is cold. It is basic 101. But UP, when I see today, have only 15,000-20,000 stores where we have fridges, where we sell the cold beer with our branding and everything to put together on this. And this drops significantly for the category if you go to tier two, tier three down. We plan to triple that investment in fridges in the next 12-18 months. So the depreciation of CapEx and all of these things, it will be the CapEx investment. Also, the upgrade of the breweries because competition has changed. I would say our competitors have brought very good quality beers. Let's give it to them, right? There are good quality beers out there, so we have to up our game. So I think it's a combination of all of it. Fourth is I don't think the pricing regime with the government is getting simpler. It is not that I can price for it with the commodity change and fluctuation. If you see there is becoming more and more regulated here, of course, the BAI has to do work. Keeping all these factors, I'm sharing this because if you say that few of the wins we can get in corporate affairs, yes, we make; Heineken company makes 15%-17% margins. We are operating much lower. You'll see if you go to any Southeast Asian country, the margins are much higher. But I think it will need some regulatory unlock, which we are working very hard, but I am not giving that in the outlook. Sure. Very, very clear. Thank you so much. We look forward to hearing more in September. Thanks a lot. Yeah. Thanks. Thank you. A reminder to all the participants that you may press star and one to ask a question. The next question is from the line of Tejas Shah from Avendus Spark Institutional Equities. Please go ahead. Hi. Thanks for the opportunity. My question, Nahdi, pertains to the point that you made on how government, especially state governments, taxes have increased pre-COVID versus now. Just referring to the recent change, which is post-fourth June, it seems that the political mood is drifting towards more aggressive populism in state government budgets also versus, let's say, what was expected to be more pragmatic, let's say, a year back. So just when you guide or when you make business plan, how much of this volatility you have already factored in or you are taking as it comes, and there is no way you can kind of accommodate that in your planning? Look, I think I will tell you that we are doing a lot of work. The reason we say is because we are in very active conversations with most of the government. I can mention that our team, including myself, we would have met almost every single state government twice in the last two months to just stay closer and understand what's going on to do that. I can tell you what you mentioned is absolutely true. That post-election, we are seeing a trend where governments are looking for more revenues, and the duties are going only northwards. There's not an example which is going down on this, and we continuously actively engage. Look, some of it is also we are able to understand and factor in the plan, but some of it is very difficult to factor in the plan as well. So some of it is we stay very close and see what is going to happen. The good part is we are also able to bring to some of the governments that, look, if it is going to be one side, it will impact the sustainability and viability of the industry, and it will not bring investments in their particular states. And we are also able to show the map, and especially as a UB, when we are in an investment mode where we want to grow category, we want to invest in CapEx, we want to do that, we're very transparent with our plans to really do that. And I think I would say it is a journey, but I am seeing much more engagement with the government than ever before. And I am feeling quite buoyant about this, actually, that in some of the cases, they've listened to us and understood, and we are seeing some progress. And we'll report that progress in the next quarter results. I don't want to give away too much things, but there were some big bottlenecks in certain states which were impacting us. We think we are making progress there. Thanks for an honest reply. Just one follow-up. In the last quarter, you had highlighted some collection issues in one of the state governments. Any update on the same? Sorry, which issue you said? Collection issue. Look, it's an industry issue. It was in Telangana. I think it is still impacting the cash flow and working capital. I would say that we, as an association, as an industry, we've around 10 CEOs, both of spirits and beer companies. We all went and met Chief Minister with Brewers Association of India ISWAI, everyone, and they assured us that there will be a follow-up on plan on that, where they will start getting payments. So I would say the situation is still red, but we have got the issue assurance. I'm hopeful that some of those commitments will come through in a few weeks' time. But we decided to continue to supply to them because given a bit of assurance. Sorry, what do you think? No. And have we provided for that already, or we'll have to provide at some point in future? No, we don't need to provide for it because it's a government operation, but it is impacting our working capital. And we have got an assurance that we will start getting back money. We got some money back. It's very minuscule. We still have an outstanding more than six months of use, but I think the state government has committed us, as an association, as an industry, that they will give a repayment plan, and I think we'll know more in a week's time about that. Sure. Can you quantify the outstanding? That's the last one. For us, it's close to INR 900 crores. Okay. Okay. For industry, more than INR 5,000 crore. It's in the same proportion. Okay. That's all from my side. Thanks a lot, the best. Thank you. The next question is from the line of Vishal Punmiya from YES SECURITIES. Please go ahead. Yeah. Thank you for the opportunity. My question is on the glass bottles. You did mention an aggressive plan on Heineken expansion over the next few quarters. Does this impact your plans for improving your own bottle mix? Yeah. I think if your question is if we have a plan, aggressive plan on new bottles in Heineken, does it reduce the mix on return bottles? Yeah. Yes. Yeah. I think this is, again, this is my first season I have done it. My learning is we expect better return bottles to come in post-season. More people drink, and the return percentage will actually improve outside the season. But I think as we put more bottles, in any case, our major plan on Heineken bottle in the beginning is a single-use bottle. So when we bring the Heineken bottle in the innovation, we've got the plan that using the bottles will not come back. So that is built in our financial, and this will not materially impact our return bottle ratio, I would say. Okay. Understood. Secondly, you made a comment on market share being at around 48-49% in a media interview. This seems to be slightly lower than the 50% market share we have been hovering around over the last few years. Is there any state that you want to highlight in terms of where could this market share loss be? No, no. We lost the market share. Let me be very honest with all of you. Because of this capacity and election thing, there were three states we lost double-digit market share, and for only reason we could not supply in those states or manufacture in those states. So we lost almost 10 points of market share in Telangana because we did not get the third-shift approval during election code of conduct. And we are the biggest player, and we could not produce and couldn't supply, and we lost that market share all in one month in April and May during that election period. In June, we are back on track on the market share, and July, we are actually ahead on this. But again, the second state we lost market share was Rajasthan, where again, both our breweries are running on capacity, and we could not import from other states because of the election restriction. Odisha was the other state where we had 70% market share. We lost the category group 50% in May. Because of the election restrictions, again, we did not get permission from Andhra Pradesh or some of our other breweries to export there. So we did lose almost 200 basis points of market share, but it was very isolated to the states where we could not supply because of election restrictions, either in local manufacturing or getting these stocks. So that was the major reason. There were some minor share losses, which was planned transition we had in Delhi, which we are now back on track from last week. Majorly, it was given by that. Other than that, I would say in premium portfolio, we actually gained market share nationally because that was more local, and we anyway were not relying on interstate transfers for that. Understood. Thank you for a very detailed and candid answer. Best of luck for the coming few quarters. Thank you. Thank you. The next question is from the line of Abhishek Puttelia from Narnolia Financial Advisories Limited. Please go ahead. Mr. Onodwe. Yes. I was just wanting to know what's the delta between percentage expense in your premium segment and the normal segment, and can you expect it to widen in future years, future quarters? Sorry, your voice was breaking. You asked delta between delta on what? Sorry? The percentage expense on your premium segment and the normal segment. I think if your question is, do we make more money on premium segment versus the other segment? Yes. Yes. As I said, if we produce locally in a state and we sell, we make more money on premium segment broadly. During this election restriction, you saw that our premium segment went 44% up, and most of the growth is where we started producing locally. We are increasing our footprint of local production. For example, in Odisha, our premium segment grew 34% while my total volume was high because of the supply constraints I mentioned. That was because I started producing Ultra Max locally in my brewery. Where I produce locally, it is there, and our plan is to have more local production of premium as we go with it. But having said that, you're right. We spend more above the line to build awareness on premium and on the return bottles initially fusion. Overall, I would say as we continue to drive premium, it should add to it. It should be margin accretive based on our current plans. Okay. Just to follow up, what does the economic outlook look like on what's your future benchmark in terms of EBIT returns, assuming the long-term premium percentage target is achieved? Look, as I answered in the previous question, we aspire to grow our EBIT margin by 300-400 basis points over the next few years because we have to invest a lot. The plan is all the elements of plan have to come together, which includes the premium part. Look, premium is only we are only 18 share in premium, and premium is less than high single-digit savings of our business today. Our aspiration is to get to 25 share of premium at least in the next 2-3 years and grow the category to a reasonable level. Today, premium as a category is only 7-8%. We want to get it to around 15%-18% and double it. I think it is going to take a lot of it. India is a long-term game because you take two steps forward, you take one step backward with all the duty revisions and all of these things, sometimes it slows down your category growth. I will stick to what I shared in the previous question. Thank you so much. Thank you. The next question is from the line of Ajay Thakur from Anand Rathi Securities. Please go ahead. Hello, sir. Thanks for taking my question. Sir, I just wanted to get an understanding on the growth. You were mentioning about the volume growth could have been like 8%-9%, but it was slightly lower at 5.8% for the quarter. You enumerated some points. If you can just repeat that briefly, that could be pretty helpful. Yeah. No, as I mentioned, see, because we are a national business and a national brand, usually we actually move almost 15% of our volume from one state to another. So there was a significant reduction of that because the states did not issue export permits because of election code of conduct guidelines. So I'll give you a very simple example. We moved our stocks from Goa to Pondicherry, and the Election Commission said, "No, we will not give you the exports to move with the trucks." And so there was a restriction. There was a restriction, for example, in giving us third-shift permits in Telangana, for example. Because if you remember, at this time, the Election Commission of India said there are some states which are alcohol has more, some states where other things are more, and they had more restrictions around that. In some cases, it got impacted because of higher number of dry days or restrictions when the election is happening in phases. You close the dispatches 2 days before on the election day, and when you are the largest player, it impacts you more. So combination of all of this, our internal assessment is we had 3-4 points of volume growth impacted because of these restrictions without any other factors. Okay. Understood. Thanks for that. Sir, second question was more on the market share losses that you attributed. So in July month, are we seeing drawback to the normative kind of market share, or how is it exactly currently? And can you also elaborate how is the trend in terms of the mass segment, in terms of the market share? Yeah. I would say on your answer, of course, very early into July, but yes, we are absolutely back. And I think we are back with a bang also. So we are feeling pretty good about the market share part. However, only one thing I would like to caution, and which we say internally, the rains this time. Unfortunately, a lot of states are facing flooding issues. Assam had massive issue in floods. Kerala had issues. A part of some of the other states, Mumbai, I'm sure many of you are there, there's a red alert and all. So it is difficult to fully assess how much is the impact because of the floods and all this as well. But I would say on your question, yes, we are back, which again gave me confidence that there was no fundamental issue of the business that we lost share. It is there. Now, having said that, we still need to work on supply constraints where we have. Some will normalize because we'll come out of the season, but we still need to work on making sure for the next year's season, those supplies, we have a plan to supply the product, otherwise we'll not solve that problem. Understood. Thanks for that. Thank you, sir. Thank you. The next question is from the line of Krishnan Sambamoorthy from Nirmal Bang Institutional Equities. Please go ahead. Hi, Vivek. You mentioned state, brand, and product mix, apart from strategic revenue management, as contributors to margin expansion. Now, I understand that the state mix can be volatile, but do the other three, will they still contribute to margin expansion for subsequent quarters? Yes. Because when we say product mix, it's a combination of cans versus bottles. It is also a combination of small sizes versus large sizes, and we do that. I think they will continue to do that. On the brand mix, as I said, our focus is on growing premium, bringing new innovations in that segment. I talked about Heineken. We have plans for a couple of other innovations which are going to be very strong. We'll talk next time. Hopefully, when we are there on 19th in the brewery, we will showcase our innovation, which we think will be a significant part of our plan as well. I think the brand mix and product mix will play a significant role. Apart from the state mix, as you said, state mix will be up and down, and we have to manage to a portfolio plan across states on that. But those two will be a big part of the plan as well. That's clear. Thank you. Thank you. The next question is from the line of Shirish Pardeshi from Centrum Broking. Please go ahead. Yeah. Hi, good evening, Vivek. Thanks for the opportunity. Just two questions. Sorry to interrupt you, sir. May I request you to please use your handset? I'm using handset. Am I audible now? Can you come nearer to the mic and speak, please? Yeah. Is it loud and clear? Yes, sir. Yeah, absolutely. Yeah. Hi, Vivek. Good evening. Thanks for the opportunity. Just two questions. On slide four, you have given the state growth. I was more curious that if you are saying that your premium segment is single-digit. But then equally, I'm also seeing that the volume growth is different. So I'm more curious, and the third lens which I'm looking is the can versus bottle. So if you think the bottle inflation and there are issues around, will the can be the going next forward strategy where you're saying availability and feet on street and in terms of distribution? That's my first part of question. So in terms of priority, what is the management thinking around whether the can volume should grow up faster than bottles? And second. Yeah. Sorry, go ahead. Sorry, go ahead. Yeah. Okay. You go on, then I'll ask next question. No, no, no, no. Why don't you finish your question? Okay. And the second question is that same top 10 metros, if there is a demand for cans, which is going up, and I would believe that the trade is saying that the cans are moving faster, obviously the quantity matters to the one on the go. So in that sense, if the premium is growing faster at 44%, would you talk about top four metros how the growth is happening? And maybe to follow up on that, what is the distribution against the universe? Fantastic. Thanks. A lot of questions. So let me go one by one very quickly. Not in the order because whatever the top four metros, if I have asked a follow-up question, who would you include in all four metros? I'm assuming Mumbai, Bangalore, Hyderabad, and Delhi? Yes. Yeah. Okay. For us, I would say let me I would call it Calcutta or maybe Hyderabad, Bangalore, and Mumbai because Delhi, we did not do much business in this summer, in this quarter, if you see the numbers as well because we went through a transition with a partner, and we are now fully ready to ship in Delhi as well, which is going to be, I think, strengthen our plan. So I can give you the example of Bangalore, Mumbai, and Calcutta and Hyderabad. Let me give you the example. In all these three places, I would say we actually grew double digits in volume growth on total business, and our premium business would have grown almost ahead of our total 44% growth in all these things. So definitely, we did extremely well in these three metros. We've played in Calcutta. We don't have a big premium business because we made a choice not to import from other states because of these restrictions as well. So most of our business in Calcutta is Kingfisher Strong and Kingfisher Premium. So that's why it's a bit convoluted. But wherever we had plans, we did extremely well in these metros. By next year, we should be fine in both Calcutta and Delhi. I can also share with you on that. On the second question, cans versus bottles, look, we have to be very consumer-centric on this. So if I'm in UP, absolutely, I want to drive more cans because 70%-75% is can. And a lot of can is when we went back to consumers, it was actually driven by more of convenience, easy for me to carry. When I went to Rajasthan, it is driven by what they call a car-o-bar. People say we take the cans and drink in the car, but don't drive. They also add to that. But we have to be very consumer-focused on this because bottles bring a very different value to the brand and the experience on the beer market. So we decided that we will be consumer-focused where the cans are growing, where there is a demand of cans. We will invest in the can lines. We'll also expand our capacity on the cans, but we will not look at it from only profit angle, that it is easier to sell cans because long-term, it actually erodes your brand equity because the bottles bring a different experience. It also has a different set of it. So that is where we are. But if I have to be very honest about it, in the next 12-18 months, there is significant expansion plan on can capacity. Having said that, so hopefully that answers your question. I think the third question you said, by state, it differs. Can you give me an example of what you meant by that, and then I can help answer that? I'm saying if I look back and what the channel partners are saying, the mix between can and bottle would be different in Maharashtra versus UP. That's what you've touched upon. This trend is giving you more confidence that can is the future? So it is not giving me more confidence that can is the future. I think it is giving me that there is a big demand for cans and there is an unsolved consumer need. So for example, and we need to work on that. So yes, there is a growth on can because of convenience and number of stores are not one of the reasons cans are growing is the number of stores of beer are not increasing. So we are actually working with the regulators. In places like Maharashtra, they can actually have beer and wine stores. And actually, when that happens, that will also help on this. But yes, there is a trend because of lack of stores that cans are easier to carry and also easier to store. We are also careful that we are not orchestrating that too much because if we do that, there is an experience of beer in a bottle with a certain branding and certain experience. We don't want to lose that also. Especially, for example, if you go to an on-site channel, let's say you go to a bar, very rarely you will actually get people serving you beer in a can, right? It will either be a draught or in a bottle. That's the experience of socializing, which is attached to beer, which we also don't want to fully leave. Okay. That's helpful. My last question on the competition. We've been hearing, and obviously, the trade is also saying likes of strong beer on the lower end, Power is seeing the growth. Now, I just wanted to understand from the consumer behavior lens, is the market ripe because you have been saying Strong is one of the big opportunities? Is there enough market? And maybe you can touch upon how the competition is moving the needle? Yeah. Yeah. I think there are two things on this. First of all, I think from a consumer lens, the number one barrier for this category is affordability. The reason Power, Bullet and all are growing is not because they are Strong Beer only. They are actually growing because they are affordable price points. And the price index versus the choice number one or the lowest whiskey is comparable. It is a big issue of affordability of beer, and that's why the economy beers like these are growing more than anything else. And that's the narrative we are going with the government and saying, "Make beer more affordable and to really do that." And consumers benchmark the price versus the whiskeys which are available at INR 85, INR 100. And for them, cash outlay matters versus just the percentage on those ones. I think having said that, the Strong Beer segment in India continues to grow. Whether it's Kingfisher Strong, whether it's Budweiser Magnum, whether it is, you see, Carlsberg Elephant, and all these beers are consistently growing. And a lot of people, even in premium segment, it is Strong which is growing. And because still, they want to make sure that when they are actually indulging, they actually have a bit of kick. Now, it is unfortunate because we want people to drink, not to get drunk, but to actually enjoy it, but they want a little bit of more alcohol content in India to do that. So we are actually designing an innovation to ensure that we are actually playing in the premium Strong segment. And we'll talk more about it in the coming weeks. At the same time, I think we are also continuously working with the government to ensure they actually encourage more moderate taxation. So at least affordability gives that advantage so people actually move from stronger beer to milder beer, and it becomes more sustainable. So that's the long answer to your short question. I understand. Just one quick follow-up. Which state do you see this local competition is giving a tough competition to national players like us? Yeah. I think if you see state, the number one state where there is a big issue is Tamil Nadu. You see 70% of it is local players. In Karnataka, you see the growth came because of the Power and all because of the economy, but we actually launched our beer as well, and our London Pilsner is doing extremely well as well. MP is another state where the local players, but this is again linked to regulatory piece of it. So I think I have seen that where regulatory is a little bit more skewed or capacities are more skewed, they are able to do more because they are able to launch those price points. Because in MP is a critical case, there is a franchise fee that if a national brand goes there and manufactures, they will put a franchise fee versus a local brand, which automatically gives us INR 30-INR 40 pricing advantage versus anything else. So the real issue is affordability and regulation versus local players and national players. Do you think M&A is the right way to look at and become a sizable player? I think it is state by state on what value they bring. If you say that in some and I don't see any issues with the M&A as long as we are very clear on the value that acquisition will bring to the category. From a UB perspective, I think for us, we have a very strong plan, but there could be areas of opportunities where they add either an innovation in the product or a strength in terms of a regional footprint. We really need to be very clear on what they bring. My focus is more on looking at more backward integration opportunities so we have a better sustainable cost structure, because I don't want to see beer only as producing beer, but I also want to see what glasses, malting, barley farming, packaging, all of these things as an ecosystem and where we have opportunities for M&As, not only in the beer part. Wonderful. Thanks for your time and thanks for this explanation, and all the best to you. Thank you. As there are no further questions, I would now like to hand the conference over to Mr. Vivek Gupta for closing comments. Yeah. No, thank you for the questions and sorry for the long answers. But look, as I said, it's 10 months in the job here, and as a team, I think we feel very positive on the work we are doing. It's not going to be an easy journey. As I mentioned that while we talk a lot, but the reality is that this is a state-by-state, highly regulated business. A lot of it depends on the external factors. But having said that, there is a lot in our control to be consumer-focused, to be efficient, to be planned on the value chain, to execute with excellence, which gives us confidence that we can bring there. I really look forward to some of you joining in the brewery visit, which we plan in Mumbai on 19th of September, where you will get a, probably you'll taste some beer and fresh beer, special beer in the brewery, but also understand how the work happens. Then hopefully, you will also see one of our, as I said, game-changing innovation, which we'll be bringing as well and our total strategic plan as well. So look forward to seeing you, and I think Robin and team will share the more details in the next couple of weeks. Unfortunately, we will not be able to have too many people from the same company at the time because we will respect that we want to maintain a high level of hygiene standard in the brewery, but all those details will be there. But thanks for engaging. On behalf of United Breweries, we conclude this conference. Thank you for joining us, and you may now disconnect your line.