Ladies and gentlemen, good day, and welcome to the United Breweries Limited Q1 FY 'twenty six Earnings Conference Call. As a reminder, all participant lines will be in the listen only mode, and there will be an opportunity for you to ask questions after the presentation concludes. I now hand the conference over to Mr. Johan Kesten, CFO. Thank you, and over to you, sir. Thank you. Good afternoon. Good day, everyone. Thank you for joining this earnings call on the first quarter of twenty twenty six. I'm here together with Steven Gupta, our MD and CEO, and we're happy to discuss the developments of quarter one for this financial year. I'm sure there's quite a few questions that will pop so we'll keep the introductory comments relatively short. I will address a few highlights, hand over to Vivek, and then we'll open up for the q and a. Volume, q one, we increased by 11%. Note that we are lapping the impact from the elections during peak season last year, but this comes coupled with strong estimated market share gains in the quarter, predominantly coming from Bangladesh, Assam, UP and Telangana, but also partially offset by Karnataka and West Bengal, and it's something that we probably come back to later on the call as well. Premium volumes, very strong at 46% ahead of the segment in the quarter. Within the segment, we see the strongest growth coming from the Kingfisher Ultra franchise, Anglo Grande, and Heineken Silver. So across the premium portfolio, we see very strong growth. And after receiving a very overwhelming response in the initial launch in Maharashtra West Bengal and Uttar Pradesh, we're quite excited to bring our Proganda also to Karnataka, our home market and an always evolving market where consumers will be eager to try something new, which is international premium. As you know, Amso brand that was developed especially for the India market, so we're super happy that we're now also bringing this to Carnataka. Back to the quarter, net sales increased by 16%, driven by price increase in multiple states, but also a mix from premiumization and gross margin, which we wanted 42.5%, which is 50 basis points below last year. And I think we've mentioned this before as well, driven by some short term margin pressure, which we see from interstate transfers during the season, but also an unfavorable state mix on a profit level or gross profit level and the bottle infusion linked to the premiumization. As you would know, we grow in premium, but the margin extension is something that is a long term play. EBIT delivery at 269 cores, which is 10% out of last year, while we still continue to invest behind both the brands and the organization as well as in our supply chain and the quality of our beers. Now moving forward, we will remain to focus on category growth and winning across segments with the importance of our supply chain network and the quality of our beer being our guiding principle, and we'll pay a lot of attention to building a winning culture in the organization and, of course, keep an eye on profitability and capital efficiency. This will continue to guide us as we work towards a long term sustainable growth in the market and also to continue our role as a market leader in the beer category. Now before we move to the Q and A, I'll hand over to Gidec for his comments on developments. Yes. Thanks, John, and good afternoon, everyone. I think as you can hear from my voice, I think we are very excited about this quarter. And I think while John has given the overall results, but I think in the context, there are a few contexts which are very important to even add on to that. I think one important context is, you know, you I'm not talking macro about weather and some of the other factors which you see from other companies. I think in in this case, the beer industry, actually the whole market effect in divide, there were states which were declining double digit category and there were states which were growing more than double digit. And in this context, states like Karnataka, which is a highly profitable state relatively, our business declined almost 16% to 17%. Though we grew shares in Karnataka, which means category further declined. States like West Bengal, where because of the taxation, we saw double digit decline in the category. And we also saw some of our competitors did not take pricing on economy. Even in that model, brands like companies like ABI, they did not take the concrete price, which is doesn't make sense at all because on one side, the government is increasing taxation and you're not taking the prices and of course, they continue to fuel the growth, but it's their strategy. So in that competitive environment and also in the context where there were certain states where we had to or certain states where there were a lot of disruption because the supply network was not yet ready. And in between, we had this whole operations in do in the middle of ITL, which was our biggest program, where we had to relook at our investments and relook at the execution. Keeping all of this context, I'm extremely proud of the 11% growth on volume and 16% growth on net sales and also 10% EBIT growth what TV is able to deliver. I think the key points I want to mention, this growth is behind fundamentals. Our premium business grew 46%. Last earnings call, I talked about that we are preparing for the season. We are making lot of investment in warehousing and all of these investments, and you see that, that really helped us. Despite all of this, we were having massive supply issues, especially on cans and also in certain states like UP where we had limited capacity. And I would say in all of this context, we feel pretty good as a team that our strategic choices are working. Our cooler communication, we placed more coolers in India in the first six months that we did in last year. And cumulatively, we have placed more coolers what we placed in the last five years. So we are investing in cold beer, we are investing in premiumization, we are investing in localization and we are also having a good price mix. So we feel pretty good about the quarter. Can we think it would have been better on margin? Absolutely. But we will continue to reinvest because there's so much of opportunity for category growth. The last thing before I open for Q and A, there is a lot of learning for us as we go for exclusive growth. Because as I mentioned, there were places we were declining and there were places we were growing. One big learning which I got that even the government infrastructure is not ready for this growth. So in many states, where we went for exclusive growth, the corporation market, they don't have their warehouses, they don't have their depots, the trucks are standing outside. So that also, while we have to spend a lot of money on detention of trucks outside government warehouse, that's a real expense, but it also gives us, gave us a lot of learning for next year on how to plan inventory, how to plan for growth. Because we may plan to grow from one side, but the system is not geared up for the growth. So keeping all of this aside, I think we feel very positive about the quarter we just delivered and we're already focusing on the current quarter, which we're already down twenty days. I think with this, we can open up for questions. Sure. Thank you very much. We will now begin the question and answer session. Call. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from Jayadoshi from Kotak. Please go ahead. We seem to have lost the line for Mr. Jayadoshi. We move to the next question. The next question is from Natika Chopra from JPMorgan. Please go ahead. Yeah. Hi. Thank you for the opportunity. Two questions from my side. The first one is on revenue. You know, could you share how much of the 11% volume growth would you attribute to low base impact from elections in the base quarter? And what in your view would be the normalized volume growth, which you anticipate in the remaining quarters of this fiscal? And on revenue front, sir, if you could also add your comments regarding sustenance of 5% price mix growth, which looks steady so far as we look through rest of the fiscal year? That's the first question. Yes. I think our estimates are 22.5% growth you can attribute to low base level of elections. But I also say that the low base for everyone, we had a little bit more impact. But when we look at our share, market share, I think our calculation is we have grown more than 300 basis points of market share all India level in this quarter. So we have definitely grown much faster than the category even with that context. But if you have to take a number out, it's 2% to 2.5, which is because of low base. On the price mix, I think, I would say, yes, four points is what we are planning in our own internal plan And in some of the pricing as we go in the second half, we'll be cycling some of the pricing and then do that. But yes, we think the price mix of 4% to 5% is what we are are going to stretch about. It will also depend on the premium mix as well. Sure. So so, Vivek, is it right to assume that adjusting for this base impact, you know, you would be confident of delivering a high single digit kind of a volume growth even in rest of the year? Is that the pace of growth you're seeing in the industry? I think it really depends on few things. I think the first thing is, you know, what happens in some of these states like West Bengal, Karnataka, where the category continues to tank. Right? Even this month, when I look at the data, the category further gets you know, deteriorating in in Karnataka. So I think it really depends on the policy intervention. It's no new surprises. There are some states which are due to revise their excise policies. I think we think we should get to high single digits if everything comes together. I think the second one is there is a shortage of can, which we are dealing with. And can as a segment is growing in certain states, and there is no quick fix on supplies of can. And there is a government of India rule around DIS imports and all, which is also further delivery. So that is a little bit of, I would say, headwind in the next quarter. And definitely for us, and I'm pretty sure for the industry as well. So those are the two factors which make me nervous, and I I think, you know, you know, five to 6% volume growth is still possible despite these factors. But if if if you get the tail wind on these factors, I think, yes, seven to 8% volume growth is very much possible. Sure. And the second, Vic, I had was on margins, and I heard, you know, you saying margin expansion is a long term play. But, you know, despite a 16% revenue growth, despite the price increases that we received in Telangana and sustained outperformance of premium portfolio, you know, gross and EBITDA margins have been lower. You did call out, you know, some of the assets which affected this. But just wanted to understand on a full year basis, do you think, you know, you will land at margins which are higher than the last fiscal year? Means on on a full year basis, do we still anticipate profit growth to be ahead of revenue growth? Thank you. I think I'll ask Jan to first answer and then Yeah. I think and and historically, we see that this quarter is relatively high versus the full year margins that we deliver on on EBITDA, which is historically around 200 basis points. We don't see any reason to think this is different, but this is just a ballpark adjustment between the quarter and the full year. And we do medium term still aim for double digit EBITDA margin. If we look at the margin contraction that we now report on, I think a big factor here to highlight is the development in Canada, which we estimate has roughly 50 basis points of impact on the margin that we delivered in the quarter and where we absolutely see that that's coming to come back to growth because it's one of our most profitable markets. So that's a big factor in what we reported so far. Underlying, we do see that there's, let's say, around 100 basis points of GP margin improvement versus the same period last year, where we continuously improve on the return on models. We have actually posted developments on raw materials. We get some pricing as we also saw in some of the comments. So the underlying developments, we still think are absolutely the right ones. However, it's in the quarter, it's used by Knavka. And then again, and we've mentioned this before, also in premium, because it's growing, we don't get the efficiencies on the bottom return on premium yet. And and for that to happen, we need quite a bit more growth. So as long as the premium grows disproportionately and doesn't reach the scale, that's still dilutive on margins. We're currently we we see that premium delivers roughly two thirds of the profitability from a margin perspective versus versus the rest of the portfolio. So we need to grow that enough to long term play. But underlying, we still see that the the right developments are there. Understood. Thank you so much, and I'll get back in the queue. Thank you. The next question is from Jay Doshi from Kotak. Please go ahead. Yes. Hi. My question is also, first of all, congratulations on good market share gain and consistent sort of, you know, healthy growth in premium segment. Now on margins, Vivek, about a year ago, year and a half back, you know, you had indicated that your aspiration is to get to double digit EBIT margin. And broadly, I think you were around 6%, 76.5% back then. So there was hope of about 300 to 400 basis point improvement over a two year period, right? Now, you know, we see that, you know, you've made some progress in bottle recovery. And in today morning's interview, you've given a target also for bottle recovery by end of this year. You've managed to get price increases in Telangana. On the, you know, other side, you've had some, you know, regulatory challenges in Karnataka. So when we, when you put together all these tailwinds and headwinds, are you still sort of, you know, comfortable of that, you know, reaching 11% EBIT margin in FY '27 or, you know, the external environment has changed and maybe, you know, you would like us to moderate our expectations on that front? See, if you see this quarter, our EBIT margin has been 9%, right? And look, as I said that the plan we have is also about consistently growing to expand the margin. Our goal is to hit that double digit number sooner than later. But having said that the investment required, we will continue to do that. Like what Dion said that we have last year, we grew previous premium by 34%. First quarter, we grew, I think, 24%. This quarter, we grew 46% in the season, which is a very healthy sign for both the brand and our brand power is also going up. I'm pretty sure, you know, as a and in our financial modeling, the return model is a big part, especially as the premiums are coming in, becoming the scale part of it. And I think getting our business right in states like Maharashtra, Karnataka, which are high gross margin states is also super, super critical. I think this quarter in particular, this year, so far Karnataka has been a big headwind. And I think John said there's a 50 basis points But what we're also doing is we know that this will keep happening. One down, one state up is going to happen. So we're also creating other pockets where we can actually create a sustainable business model. To give you an example, like this quarter, we had to import lot of stock to Andhra Pradesh because our beauty had only limited capacity. But we also made an announcement that we are going to actually leave the beauty. And I'm happy to say that the first case Kingfisher will be out of February by end of this month. So that localization will also help us in terms of margin. There are six locations where we have started producing our premium brands locally in our beauty in that first six months. There are four locations which are going live in the last in the next two weeks, where we'll have further localization of our production. We're also doing network design work. As you see, we have have lot of work happening So expanding margin is absolutely top of our agenda. And absolutely, we have a glide path to get there. But what we are also doing is we are not compromising on the fundamentals despite the headwinds we get because for us, it would have been very easy saying, okay, Kannasta is going to give us INR 50 crores, that is a profit or whatever, let us stop investing in IPL or let's not do some of the other stuff. That choices we are not making yet because we still are prioritizing growth, but with with responsible margin expansion. So I I really hope, you know, some of these tailwinds will will really land us somewhere what we talked before. And if I can add to that, Shneur, and to Vivek's point on the fundamentals, that's also about premiumization. If we see the speed at which the premium growth accelerates versus where we were, let's say, a year ago or eighteen months ago, We love it from the fact that we want to premiumize and we think long term that's really where we want to go and there's a lot of room for growth there and a lot of opportunity. From a margin perspective, that builds the environment slightly differently from what we anticipated before because, again, the marginal premium will take some time before they catch on. So as that growth accelerates at a higher pace from what we expected about a year ago, yes, that has a lot of focus. But on the on the short to medium term, we need to to sort of swallow that that impact on margin. And longer term, again, would be back on where what are we aiming for, which requires quite an extension in terms of basis points versus where we are today. And if we look at the the basis point increase on EBIT margins where somewhere between two hundred and three hundred basis points on the longer term, I think we can split it into a number of big pockets As mentioned, MBIs and premium where we get to a savings of premium where we get actually the synergies of the returns. Our belief is that that's roughly onethree of the gap. Onethree we will also get from just growing scale, but also optimizing, like Tidex said, network capacity. In the past quarter, a large chunk of the growth, the majority of the growth came from volume sourced from contract breweries, which we like because it allowed us to deliver the beer to consumers. But for next year and years to come, we also expect that the growth is more balanced between our own breweries and the CDs, which from a percentage margin perspective would have a positive impact versus where we were this year. And lastly, and I think that's more the context, we still aim for continued price mix. So the pricing and the the top line pricing will also definitely play a part in the in the overall margin expansion, and we need to continue to have these conversations to make sure that we that we play that role of of category maker and really lead the category growth as well also in the conversations with the with the regulators. Thank you, Deriv. And I have two follow-up questions here. One is, you know, January is a seasonally strong quarter and what we have observed in the past, you know, at least past couple of years is that full year margins tend to be lower than one q margins. So will it be different this year or, you know, the same seasonality will apply this year as well? I think we can say similar seasonality will apply. However, we have that Karnataka piece, which is impacting the quarter quite heavily. So I don't see reason aside from how Karnataka develops for a different development in full year versus versus this quarter than what we have historically. Yeah. Absolutely. Of course. Sure. And one more, you know, Heineken at a global level in one of the presentations I remember had sort of highlighted that premium segment, probably some other part of the world, you know, you know, garners about three x EBITDA per case as compared to mainstream. I understand that today, you know, premium is growing much faster and you're infusing, you know, more new bottles there. But on a like for like basis, if you assume bottle recovery to be similar for premium and mainstream, what would be the margin differential in India? And I know that it will vary from state to state, but if you can give me some ballpark sense either in terms of gross margin or EBITDA per case, which helps us sort of better appreciate, you know, the improving mix. Yeah. And you're you're absolutely right that it will differ state by state. But if we would put the the bottom returns at par, we could say on a per case, it's about two x percentage margin. It will be it will be lower than that. Understood. Absolute EBITDA per case would be two x at like for like comparison. Yep. Thank you very much, and good luck for rest of the year. Thank you. You. The next question is from Abhish Roy from Nuwama. Please go ahead. Yeah. Thanks, and congrats on excellent volume growth. My first question is on Maharashtra. How big an opportunity do you see this tax hike, which has happened in spirits and has not happened in beer? Taking example from Bengal and Karnataka. So in Bengal and Karnataka, beer industry has been close to double digit decline. So where is the consumption shifting? Is it beer being cut or customer is moving towards other forms of alcohol consumption? And do you see in Maharashtra also similar development or Maharashtra will take its own course of where exactly consumer behavior will shift? Yeah. I I think we'll be very point on Maharashtra if if the policy is able to stabilize. It's very early days because, you know, the Maharashtra used to be the fourth the single largest state on the earth many years ago, and now it became fourth largest. So there is and Maharashtra is one of the unique states where there is there are a lot of beer stores also. And if you remember last time we presented, we have done a special RTM effort to actually optimize our distributor and coverage network in Maharashtra. So we are absolutely set to win in Maharashtra. I think so far, we haven't seen much uplift because there was a delay in implementation of that policy because the Spirit companies declared their prices only in the July or July. Actually, I travel to Maharashtra in the July, and two days there in different markets like Kola, Kurpune and all. So there is enough stock in the retail. So what has happened is retailers have actually stocked up a lot on spirits in anticipation of price going up. So right now, lot of inventory is fully retail on spirits. I think and they were probably hoping that this policy will get reversed or something because there was a strike also doing it. But having said all of that, if this remains stable, it is definitely going to be a very big lift for Veer because affordability is key on Veer. As I said, all the examples I gave you is linked to affordability. Where we are seeing gain is also linked to affordability. So I think it will be absolutely good for the beer category. How much is the upside? The good part is that most of the beer manufacturers have local capacity in Maharashtra. We have three beauties. We know competitors have it. So it will not be because of the lack of shortage of supply. So we expect a very solid, at least a double digit volume growth in Maharashtra if this comes. But I but for me, you know, it should be much more than that. Yeah. And we see that everywhere where the gap between spirits and beer changes, there's a shift in consumption. Overall, if the average pricing for consumption go up, it will also have an impact on the total alcohol category. But I think, usually, that's more of a temporary sort. But we see the gap and and everywhere that the gap becomes smaller, more consumers shift to beer, but we still see across many states there's disproportionate taxation on beer versus versus other alternatives. So I think and we think Maharashtra is definitely step in the right direction, but there's still many places to follow because beer is still extremely expensive for consumers. Yeah. So thanks, sir. That's useful. My second question is on the premium segment. So two years CAGR is around 46%, extremely explosive numbers. So how is the competition reacting? Because I think you are the number three player or maybe now close to the number two. Now 400 is gaining market share in the premium. How is the competition reacting? Because, obviously, they those are also good large multinational companies. Okay. If you could say, is the cost of business in the premium going up? I understand, so because even the mask end, you have also invested in the IPL. So if you could tell us how is the competition reacting given such a explosive growth, you are seeing 46% in terms of the premium portfolio. Look, I think, first of all, I think credit to our competitors who actually created a very good premium segment here and did a very good job. You know, Budweiser did a very good job, did a very good beer, even Carlsberg, Even Diras brought some innovation and favors the market. I think, first of all, a lot of respect for competitors. No doubt about it. And I think and they've done it. I think a lot of it was lagging. We were lagging behind. We know we are doing we are catching up. As I mentioned to you, it was because we didn't have local sourcing, lack of focus being very fundamental. So I would say even with 40% growth, I was happy because it's we have so much of fundamental work to be done and to really do that. On how competition is reacting, I'm actually quite surprised because what we are seeing is in, you know, in certain markets, you know, the only competitors like they are actually seeing an economy gain. Like we see lot of investments by ADI leaving in on RC brand in Karnataka, which is an entry level economy or Hebert brand in West because it is an economy, which is a bit confusing because it is just buying volume. Then it is not building category or the category profit, it's category, the country where the profit pool is so low. So I think probably there, you know, maybe I don't know if, you know, it's a strategy of the company. But I do think if everyone keeps investing behind premium, there is a huge opportunity for premium growth because we are just tapping the surface based on what we've learned in China, in Mexico, in Brazil to really do that. So that's one part of it. And I think the second part is I do think there is good innovation coming from competition as well. And we have a strong pipeline. Our Ampul Gandy is doing extremely well. We are expanding state by state, handsome, now we have local production in Kanata. We see the growth coming to behind it. But having said that, I'm little bit we are actually a little bit confused when the market is offering opportunity of premiumization and all, why there's so much of focus on actually value disruption around economy and all. So that's what we are observing, but let's see. But maybe there's a volume pressure everywhere. So thanks, sir. One quick follow-up, and that's my last question. So on the cans, if you could elaborate the shortage, is this a cost implication for you so the cost goes up? Or is it a stop out also? So your growth could have been faster if the can availability was better. And is it impacting other forms of consumption pay, the coffee cans, the carbonated drink cans? Is it impacting everywhere? And when do you see this fully normalizing in terms of supply Look, our assessment in this may be completely you be internal assessment. We our assessment is there is a fixed supply of cans in the market, whether it is for beer industry or for some of the other industries. Within beer industry, we have our fixed quota or whatever we have negotiated and our demand is more than that. So we are definitely having stock outs because we are not able to supply cans or we are not able to get cans. Second is importing cans, also the standards have changed. I think you would have heard about BIS tender and some approvals which permit of India introduced from April 1. And multiple associations, including Bureau's Association of India working on that to get some exemptions, but that also will take time. So once you get the exemption, it will take time to do that. So these are, I call it, challenges of growth. So if we start growing double digit and we have started accelerating growth, the backward integration in beer industry needs lot of work, whether it is bottles, whether it is cans, whether it is long term. And we are actually actively working with lot of international suppliers and local suppliers for long term on that. But today, I would say we are actually heading out of stock. We would have at least lost, I would say, one to two points of growth because of lack of cans over a six month period. So there is a out of stock as well. In terms of cost, because we don't have much option to import yet, so we are looking at some options, it has less impact on cost, but more on the availability definitely an So thanks, sir. That's all for my side. Thank you. Thank you. The next question is from Krishnan Sambamurthy from Nirmal Bank Institution Equities. Please go ahead. Hi, Vivek. One follow-up on the cans portfolio. How significant is cans as a vis a vis bottles as a proportion of your overall VSS? Yes, cans is around 20% of our business. And in some of the states like UP, it is 75%, 80% of the business. So the problem happens is at a state by state level, right? So in certain states like Madhya Pradesh and UP, the CAM is a big part of the business. And it's also growing as a category is also growing in certain parts. So it is 2022% of our business. Understood. A few questions regarding Telangana. The quarter, the performance in Telangana was actually good. I remember you were expressing some concerns that there could be some impact on volumes after the price increases that were granted by the state, maybe that has not panned out. Or is because of a lower base like Telenor did well on a Y o Y basis, could you just clarify? It's lower base. So when I talk about 2% impact could be lower grade, most of it was Telenana because remember, we did get the third shift in Telenana last year and we had the biggest volume there. There is definitely a 5% to 6% category decline if I on a basis because of the price reduction there in the. It varies by month, but five to 6% cumulative category decline we are looking at. Okay. And secondly, you were also anticipating a second round of price increases from the state government? Has that come through yet? No, there's no discussion on that yet. We have consistently asked for two days, but I think the both the issues are still open issues. One is getting the payments on time and second is the pricing. Okay. Yes, that is going to be my last question. Receivables were also a major issue in Telangana. What's the latest update there? The situation is better than what it was in the last quarter. Some old deals have definitely come down, but the new deals have more credit days. So definitely, the money is coming back, but the old outstanding is still there. I think they made progress on that versus last quarter, but more to be done. Okay. Thanks. Thank you. Before we take the next question, a reminder to participants that you have pressed star and one to join the question queue. The next question is from Vishal Punmir from Yext Securities. Please go ahead. Yeah. Thank you. Firstly, just a clarification on the volume growth. So there seems to be a change in calculation for for the volume growth that we are reporting. So just wanted to understand if if the calculation was done as per the earlier way, what would have been the volume growth for this quarter? Would it be 910%. So if we have it would have been 10%, but it would have but we have moved to hectoliter, which is the right measure because of can still be growing. That's a real beer volume. So it is 11%, but if you go by just cases, it will be 10%. Understood. Thank you. And secondly, in terms of market share gains, congrats on a very strong gain this quarter. But if you could give some idea in terms of which player would have lost market share during the quarter, any any views on that? Sorry. I didn't get the last part of the question. The voice was weak on the market share. Which player would have lost market share? Would it be media or any other the bigger players would have lost? Look, you know, I again, as I said, I think it's really state by state in a from a proper mix because many players don't have a presence in many states to do that. But we know that major players have lost market share. At least one out of the two major players have definitely lost market share. And we also know in certain markets, local players have lost market share. Andhra is a good example where we have gained market share and our local players have lost market share significantly. But we also know on an all India basis because the premium is growing 46%, we also do see a 28 basis point of share growth. We definitely know at least one of the two major players have lost market share. Understood. And lastly, any views on Carlsbad with the change in control of the business going to the parent entirely now, is there any intensity that you have seen in terms of investments in sales and marketing or even in terms of key types? Any views on that? Look, we are so busy in our own land and execution. And I think, see, for me, there is such a huge opportunity in India. You know, if you can simply if if most of the companies have seen line, you know, the number one is the viewer's association of interest, we continue to pursue the agenda of tech rationalization, affordability of beer and that's where there's a lot of upside. We talk about how it tends to work in beer category. Again, the government is going to happen, the country will need a lot of infrastructure, both in terms of backward integration of cans, bottles, maltings, all of these areas and I think players investing here will be good. Third is even with the government infrastructure because 65%, 70% of the business goes to corporation market. If they don't have infrastructure for their depots to stock up TDRs and they're sourced to have coolers and also, I think the more players are welcome. On your specific question, I think we have quite been busy on managing our own program and all we haven't gone that deeper if there's something different they're doing. But definitely, I think they're great companies with good brand. I'm pretty sure, you know, that you know, what you hear in media is what you also read. Understood. Thank you, and best of luck to the team. Thank you. The next question is from from Sundaram Mutual Fund. Please go ahead. Hey. Hi, team. Am I audible? Yes. Thank you for taking my question firstly. So just one clarification. You mentioned gaining scale is an especially in the premium segment is going to be a major swing factor for our margin. Currently, what's the savings of premium across our portfolio? 10%. 10%. And at what savings level would the real impact start flowing in on a company level margin? Yeah. We think we need we have well, I think we we grow to 15%, then we get closer. But, again, here, this is a state by state and localization because we need to have sufficient savings within the vicinity of a production location in terms of consumption to get the the upside on returns. But we think we need to to grow at least 50% before we start being able in some places to see this this translate into better margins because the book of returns reach that sort of tipping point where it really picks off the growth. And then again, even if we reach the scale, but the growth in that the dislocation continues to be disproportionate, then it still requires a lot of new bottles. So it's a it's a combined development that that releases the margin. Right. Got it. And just another follow-up. So your comments on taking the EBIT margins from 9% to double digit trajectory, any ballpark timing you have in your, you know, trajectory on this? Or it's just a direction where do you want to see the I understand. Ballpark? Yeah. I think the answer is going to be that it's that it's directional, but we missed your question. Ballpark, and then you dropped off. Sorry. I'll just repeat myself. So on the 9% EBIT margin to double digit, so what's the time line for this? So after company or anybody will say yesterday, but I think as I said, look, we are consistently working on it. And of course, in the glide path, we have to have sequential improvement. So you can do the math. You know, I think you should be we have a timeline on this, and you should be able to get there, keeping all the other context in in mind. You'll be able to sequentially, dynamically. Sure. Thank thank you for answering my question. Yeah. Those were the questions from my side. Thank you. Participants who wish to ask questions, please press star and one at this time. The next question is from Natika Chopra from JPMorgan. Please go ahead. Yeah. Hi. Thanks again. A few follow ups. One was on Karnataka. You know, if you could talk about, you know, implemented things here. I believe there was some change in, you know, pricing or taxation for entry level there. If you could walk us through, you know, what are you observing in this state, and how do you are you sensing any improvement in in in volume of state progressively? The second question was around your CapEx plans for this fiscal year and the next year. And if you could, you know, split it across, you know, investments in greenfield capacity, brownfield and investments in schoolers? Look, I think the data I have as of yesterday is month to date, the strong economy where the price rollback happened is down 50% versus a year ago. I'm talking the category data, right? So which means the total category is down 22% still. So I think while there has been some change in that, I think probably we have missed the bus a little bit due to the season as academy. Also, were lot of issues around licensing and licensing with the retailers to really bring together. So there problem is there still, and we know that when it is a comparison versus going straight, so maybe we have to wait in March because there's a lot of issues and stability in retail there, but the initial need is still not made in commercial. So we continue to see a decline in the high this is high double digit even in the decline. And the are you sorry? I missed the second question. Yeah. I can I can move to the second question on on CapEx? You recall that we come from low single digit CapEx as a percentage of revenue, and we've expressed in previous calls that we want to move that to mid to high single digit as a percentage of revenue. You we announced the the greenfield in Uttar Pradesh, which we expect to deliver the first case of beer in the first quarter of twenty twenty seven. So that obviously, from an extension point of view, our main focus in terms of CapEx. And then Dietrich mentioned we do the network planning. So we continue to do that, which in some cases will require smaller investments to make sure that we extend in a smart way. And in an environment the way we are and we in these calls, we speak a lot about the volatility and and also how regulations and policy updates sometimes are set forward and sometimes are set back or set sideways. So we want to caution the CapEx investments absolutely. And that's what we see in UP. We see that there's a progressive policy. It leads to doubling the number of stores for consumers. So the availability of beer, which we see as a big driver for category growth, is doubling in UP. And therefore, that's for us the right place to really invest big on capacity. So when we see the opportunity, we will. But we also want to make sure that we expect the assets that we have because, obviously, new CapEx will lead to depreciation. So we want to do it in a smart way. And next to capacity extension, also make sure that we have sufficient firepower to continue the the growth of our commercial asset base. And what we had mentioned in the beginning of the call that over the past couple of periods, we more than doubled the the number of coolers in the market. Yeah. And we've actually only got started. This is a continuous project where we really want to make coolers to standard in every store. Alright. Thank you so much for detailed responses. Thank you. The next question is from Ashutosh Jain from Barclays. Please go ahead. Hello, Jan. I'm Vivek. Thanks for taking my question. Two for me, please. If my understanding is correct, the recent personal income tax benefits of no income tax of $2.10 lakhs of income is broadly aimed at your core consumer segment. Given that these effects came, you know, was it more effective from April 1, Could you share your best estimate of how much of the recent volume growth, if any, can be attributed to this? I don't know. It's very difficult. It's a difficult question for me to answer. But definitely, I think, as I said, it's a combination of still affordability and effector because just take an example where the taxation of beer didn't go up and there was not a significant price increase, like a TAM, for example, we actually saw very healthy 35%, 40% growth and even more on our business. And in UP, where the fundamentals were increased, like number of stores increased, but not much taxation increase on beer. We also saw significant 25%, 30% category growth. So but there was taxation increase despite this income tax issue, we saw a double digit category decline. So I don't know how much of this sensitivity is to the income tax, but I'm pretty sure, especially with the core consumers who are buying Kingfisher song and mainstream brand, it would have helped. But there are a lot of other things out there. So it's an interesting question. We haven't looked into that, but we haven't seen any correlation also because it's a state by state business, and we see much more impact because of the duties and other factors versus this. Something we will ask is our consumer insights team to pick it up. I have noted the question on that. Yep. I think it's a good question. But indeed, for every consumer, it will be a mixed bag of basically what's affordable income versus what's happening on the actual beer pricing on the shelf, which is, of course, much more visible. And that's a state by state thing. But, again, I think it's an interesting question. Yep. Not just for our category. Yep. You know. Yep. Yep. Cool. Thank you so much. And, you know, it would be good, you know, if we can always have a follow back on this. I was, you know, also very surprised, you know, because we haven't heard many commentaries from the company. I guess, Unilever was only one of the few, apart from my greatest job, to mention this. So, you know, just passing thought, like, is it because the impact of the consumption is not that meaningful, which I guess, you you will still figure it out? Or is it just, like, you know, companies like you are just being cautious to avoid feeling overly optimistic expectations on the stage? Yeah. I think it's also for the sanitation of the category because it's it's not a staple category. It's not everyday consumption category where people do it, you know, while the people. So I think it is also a factor of that and those people who do everyday consumption are anyway, they hit, I'm assuming they don't worry about the vaccine anyway on that one. But it is just the penetration is so low of the category, but it's an interesting question we need to check. Maybe in Telenavana, if if this would not have happened, maybe the drop would have been much higher, but, you know, so that's why we're not building this impact into our plan yet. Cool. Thank you so much. Thank you. Next question is from Sanjay Maniar from DAN Capital. Please go ahead. Hi, sir. I have a few questions. One is if you can give some color on major commodity pricing, specifically, barley and glass, and what is the outlook in the in the rest of the year? Yeah. Sure. We can. I think for the for the rest of the year, we have a pretty good coverage with our key partners there. So we expect that to be relatively stable and definitely not ahead of any inflationary impact. And I think going into 2026, our current view is is relatively the same, but we think it's stable. Of course, we'll see some impact on general cost increase on some of the conversions in the molting, etcetera, but nothing out of the ordinary. So for those commodities, we think we've reached a relatively stable state, thanks to also building really on the relationship with our suppliers across different categories. Right. Right. And and one well, specifically, when you mentioned that some of the states like UP where the policy has been a lot favorable. So if you can give what kind of a salience you have in the states like UP or Assam where where, you know, the policy is favorable and where you expect probably you can double your revenues or you can double your volumes in in these states? No, no, I would say, know, see, I wouldn't say policy is favorable or there's a good policy. It can be more to be done. I would say that the growth in these states can be 20%, 25%. And these states, I would say a quarter of our business can have a 30% plus growth. A quarter of our business can have double digit growth and the rest would be, again, declining double digit and quarter in the mid single digits. It's very completely state by state. For example, Dharshan is coming with a new private retail policy. If they really implement, there should be an impact to the category growth, which should be much higher than what we saw. In Andhra, when the policy changes actually, the category has doubled. So it it really depends. Right. Right. And if is it possible to give saliency of, say, UP specifically? I mean, because that's probably one of the states where Less than 10% for us. Less than 10% for us. Okay. Okay. Thank you. Thank you very much. Thank you. The next question is from Prithmet Nayak from Coastal Park Advisors. Please go ahead. Thank you. Sir, if I recall, post q four zero five twenty five, we were hopefully improving our gross margin by around thirty days for a full year of our commitment. Do we still maintain that post q one? Oh, yeah. Sorry. Could you repeat the question? It's about margins. What was the exact question? Sure. Sure. What I recall is post q four, the management commentary was that for the full year FY '26, we are hopeful of improving our gross margin by around 40 bps for the full year FY 'twenty six. Are we still on track for that? Do we still think we can achieve them? I don't think we gave such a specific guidance on margin for the full year. So so I can't comment to that. Sure. A Y o Y basis and then for this quarter, what would be the improvement in the cycle and what is it? Is it so your voice is actually quite breaking. Are you on the speaker phone? Moment. Is it better now? Yeah. Definitely better. Yeah. Yeah. So so on Y o Y basis, what would be the improvement in what recycled bottle rate for this quarter? So this quarter, we improved 70 basis points versus the same quarter last year and 300 basis points versus the previous quarter, which is seasonality. So stocking up inventory in the in the previous quarter and now with the high turnover in the peak season, we also seasonal seasonally get better returns on the on the models. Understood. And one last understanding is if you can give us a sense of relative margin of all the floor geographies and now please rest West South. If you have to arrange it on our descending order of March, how would that look like? Sorry. It's I am trouble hearing you. What is the question? Can you repeat one more? Four the the four geographies that we report growth, Northeast, West, and South. If you can arrange it if if you can give us a sense of how they are placed when it comes to gross margin, like, which one is higher, lower in that order? I think it's a state by state. So it's not a region thing. And as you know, Karnataka and Maharashtra, those are the high margin states that really stand out. On the other states, it's a bit of a mixed bag. I think states like Karnataka are more on the bottom side. Everything else is in between. Thank you. Thank you very much. We'll take that as the last question. I would now like to hand the conference over to Mr. Vivek Gupta, MD and CEO, for closing comments. No, thank you for the great questions. We've also made up things and thank you for joining us. As I said, we have a strategic plan. We have been putting new plans. This was almost seventh or eighth quarter of consecutive profitable growth for us. Our premium strategy is working. We are making CapEx investment in India. We are looking at lot of backward integration opportunities as well. And we are learning about challenges of growing beer categories here. So I think this is going to be a good ride where we will have to continuously do a lot more hard work, continue growing the category and also expand the margin, but we feel pretty confident of the strategic plan we have and the delivery of that plan. So thanks everyone for joining. Thank you very much. On behalf of United Breweries Limited, that concludes the conference. Thank you for joining us. Ladies and gentlemen, you may now disconnect your lines.