Ladies and gentlemen, good day, and welcome to the United Breweries Limited Q2 FY 2027 financial 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. Should you need assistance during the conference call, please signal an operator by pressing star and then zero on your touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Jorn Kersten, CFO. Thank you, and over to you, sir. Thank you, and good afternoon, everyone, and thank you for joining us for United Breweries' second quarter earnings call for the full year 2027. Before we get into the detail and answer your questions, we are of course, very happy with the performance in this quarter. I would like to put it into the context of the journey that we have been discussing with you over the past several quarters, as well as earlier this quarter in our Capital Markets Day. When we started this year at the end of full year 2026, we saw that the beer category was returning to double digits growth. At the same time, of course, we faced a significant external shock from the developments in the Middle East. In the previous quarter, we saw that those realities were both very visible in our results. The beer category continuing to accelerate, but our selling also growing with 13% in the previous quarter, and we deliberately reduced inventories by approximately 20% to make sure that we were focusing on delivering cash and working capital improvements. However, gross margin came under pressure from the higher input costs. Despite that, we stayed the course, and we have always said we would continue to invest in category growth and behind our brands. Now, during the event earlier in September, our Capital Markets Day, we took a bit of a longer-term perspective to bring you further on the journey, and we spoke about the structural attractiveness of the Indian beer category, the opportunity for us to accelerate premiumization, and very importantly, and to many of the questions asked, what is our ambition to translate growth into sustainably higher profitability with disciplined revenue management as well as productivity across the P&L. Now, to get through this quarter two provides for us, and hopefully as well for our stakeholders, encouraging evidence that our strategic priorities are translating into the P&L and into value creation. Our volumes grew 16% year on year, while net sales increased by 24%. Premium volumes grew by 38%, which is a significant acceleration from the previous quarter, led by Heineken Silver growing at 67%, as well as the Ultra portfolio doing well with a 44% growth. At EBITDA, we grew 108%, and our EBITDA margin increased by 480 basis points to 11.9%. Last but not least, EBIT grew 151%, with EBIT margin reaching 8.4%. Now, that represents a significant improvement from quarter one when we had volume growth of 9%, net sales of 7%, and where the external cost environment contributed to 155 basis point reduction in gross margin. So it is quite of a different story this quarter. Let me spend a moment on what I think is the most important question behind these numbers. How much of this is sustainable? I think it is important that we do not look at quarter 2 as the new quarterly run rate, but equally, we should also not view the improvement as simply the consequence of easy comparables from last year or one-off benefits. There are several elements in the quarter which we consider structural improvements. First of all, there is pricing, and we have mentioned this before. Driven also by external developments, we have taken pricing actions across 24 markets. That is a higher number than we have ever done with UBL, and the benefit from this disciplined revenue management is increasingly visible in our results as all of these pricing efforts are now visible in our P&L. Secondly, it is on premiumization, which we mentioned as one of the big levers for driving long-term profitability. The 38% growth in premium volume is not isolated for a quarter, but it is an acceleration of the portfolio transformation, and we have been continuously investing behind our brands for multiple periods, and now premium margins continue to be accretive to the total portfolio. Third, this was mentioned in the Capital Markets Day event, our geographic and portfolio choices are increasingly focusing on profitable growth rather than only going after volume or market share. Last but not least, productivity and tight cost discipline is becoming embedded more and more across the organization. Hold this together. Our estimation is that these structural interventions contribute approximately INR 100 crores to our quarterly EBIT, whilst we still continue to partially invest in a higher commercial spend. We still, of course, see, let us not forget we are not out of the woods, that our input costs are impacted by sustained input cost increases. There are volume and market effects as well, which are particularly supported in the quarter. We see continued growth in the beer category on double digits, supported by strong consumer demand, which stays high, as well as positive regulatory developments in a number of important markets. We all know the change in policy in Karnataka, which happened midway the previous quarter, and now we see a full quarter of results trickling through, as well as positive continuous development in Maharashtra and Jharkhand. These states particularly benefit from policy and into market changes, and it reinforces our confidence in the longer-term opportunity for the beer category. The magnitude that we have seen in this quarter is not automatically to be extrapolated as becoming the new standard. The low comparison versus last year, which was heavily impacted by the weather, also helped for significant growth in this quarter. But the structural impact of changes in the category is also evident. Volume grew 6.2% on a 3-year CAGR and 6% on a 2-year CAGR. So even if we include that long return, we see very positive growth and in line with our expectations for the category development. Lastly, I do not want to go without mentioning the non-recurring items. Most importantly, our reported profit in the quarter included approximately INR 36 crores of interest income relating to an income tax refund, which lands in other income. This benefits the quarter, but it is clearly not part of underlying operating trajectory. Excluding this one-off, the EBITDA margin still expands with approximately 330 basis points, and our operating profit for the quarter was approximately INR 176 crores versus last year's INR 81 crores. In other words, while the headline contains meaningful non-recurring benefits, the underlying movement really remains substantial. That is also how we want to guide the expectation of quarter two. It is not a quarterly earnings level that should be extrapolated, but it is for us evidence that the underlying economics of the business are really improving. We should also be clear, and we have been clear about this in the past as well, that this is not a linear path. What matters is the trajectory across multiple quarters, and for us is UBL to believe that our strategy is the right one and that we stay the course. In the beginning of this calendar year, like I mentioned, beer category growth returns double-digit, and our premium portfolio was at 16% growth. In the previous quarter to this one, category momentum accelerated further, and we deliberately made some choices, especially on cash and cash discipline, to make sure that we were ready to absorb whatever shock we expected from the external developments. Now, in this quarter ending in September, we demonstrated much stronger conversion of our top line growth into earnings, which is a very positive development that we really welcome. As we move into the next quarter, I would like to mention that we expect that commercial investments will normalize from a relatively low base, and we see some of the higher raw material costs will come through into the P&L. Items like sugar, we see increased pricing. In addition, preparing for peak season, we will stay with the investments behind our brand as well as our breweries to make sure that we are ready for next year's summer. As a consequence, we do expect profitability growth to moderate sequentially versus this quarter. In our view, that is not a reversal of the underlying progress we are making on pricing, premiumisation, productivity, and the portfolio of choices. In fact, we actually believe that that progression is consistent with the strategy that we presented during the Capital Markets Day. Grow the beer category, accelerate premiumisation, improve the quality of revenue, and translate growth into structurally higher profitability through productivity and investment execution still is the way to go. So we are extremely pleased with the quarter. We remain very disciplined on how we interpret it. One strong quarter does not establish a trend. It gives us a lot of confidence that several of the drivers behind the quarter are the same strategic and operational levers that we have been building over time and that now start showing results. We remain extremely focused on executing against these levers while we navigate the inevitable volatility that will always be here, whether it is commodity costs, regulations, weather, or individual state developments. With that being said, I am happy to hand over Vivek to talk a bit more in detail about the category of the brands. Before we go to the Q&A, I will pick it up because there is a few questions that we anticipate that we will dive into a bit more before we open up for questions. Vivek, let's go over to you first. Yeah. No, thanks, Jorn, and thank you for this. Thank you for giving the overall perspective. I would just highlight few things. I think some of you joined us in the Capital Markets Day. I think that this quarter results is a clear indicator that those choices are working. Few of the choices which are really working, number one, we talked about we want to be the category maker. I think it is a clear data which shows that the states which actually went through a differentiation policy on beer and better corporate affairs policy have better category growth. Karnataka is growing more than 50% on beer. Jharkhand is growing more than 40% on beer because of retail. Maharashtra continues to grow. This is extremely important because a lot of it can be seen on the weather, but it is not weather, because not every state is growing at that level, and there is a clear distinction in the states which are growing disproportionate growth versus others. The path to success of creating beer category is very clear. It is about affordability, availability, and the clear tax differentiation. Second thing is the strength of our portfolio. You guys heard me talk about our bullishness on premiumisation. This is something not new we are talking, because in the calendar year 2024, we grew our premium business more than 25%. The last year we grew at 23%, and this year we are on the similar trajectory. This quarter we grew 38%. Heineken Silver brand grew 67%. The brand is on fire. This is the most valuable beer brand in the world, and we are only in 11 states. As we are expanding state by state, the opportunity is huge, and we are just scratching the surface. We now, with Heineken Silver, found the right product in the Indian market, which can actually drive the trend on premiumization. Our Ultra brand, driven by localization of our suppliers in the brewery and the relaunch of the brand behind new packaging, also grew 44%. Our premium growth, which we always talk about, is accelerating. Since we have now made premium portfolio more margin accretive behind all the choices we made, it is also showing up in the margins. The second thing, which also gives me a lot of confidence, the discipline on revenue management, because it is not about pricing only. It is about state mix, brand mix, our own brewery mix versus the contract brewers, the mix on which states we want to play, how much state invest we do. The bold choices have led to a very strong pricing mix in this quarter. The cost discipline on the continuous invest where we want to invest, at the same time, looking hard at our waste or the things which we can take back out of the system. Overall, strong cash flow, strong inventory management, very strong growth rate, premiumization, all of this gives us an indication that we are absolutely on the right track. It gives us the indication there is a lot of potential to be had. It also gives us more confidence that our strategy is working and we are able to invest more. Going into the next quarter, which is in October, November, December, we are going to double down our investment, both commercially but also being ready for the next year. Please understand, the supply chain in India is not fully geared up for this proportionate growth on year-on-year. For us, as a large player, we need to make sure we make us ready for the next season. As we get into the next summer, we will be cycling our strong growth rates, and those investments need to happen now. We are going to make investments in this quarter. One of the things that Jorn said, I would not look at this quarter-by-quarter results and say, "Okay, let's keep delivering this top line, bottom line every quarter." I think it is the health of the business is very strong. The strategic shape of P&L is very strong, and there are enough proof points that our strategy is working, and it is only going to create a much bigger category and much bigger profitable business for UBL in India. With this, Jorn, I'll hand over back to you. Yeah. Thanks, Vivek. There's a few things I would like to clarify, given the results, and to give a bit more breakdown of what's underlying, which is both on net sales, on the revenue, as well as on the margins. Of course, addressing the question that many of you will have, how much of this do we expect to be structural? Let me start at the top in the net sales, where we delivered 8 percentage points of price mix on net sales. Over 50% is on account of pricing due to both gross pricing as well as rationalization of the trade spend. About 300 basis points is on account of the choices in geographic mix, so the state mix, where, of course, a state like Karnataka has a positive contribution as well as premiumization. And the final part, around 50 basis points of our Q2 performance, is a better leverage of our own breweries. That is a big swing for the previous quarters, and I will get to that in a moment. On the gross pricing, we can consider that to be structural, while we see that the trade spend rationalization has a seasonal element to it, and it is also a learning curve for us. We see where we can accelerate, but we also learn in which pockets we have gone too far and have been too bold. We expect that the structural impact of the two combined is somewhere between 200 and 300 basis points. On the state mix for this quarter, it is led by Maharashtra and Karnataka, but it is also impacted by limiting our investments in states such as Telangana, where we see that we have muted profitability, and hence, the choices that we announced are also resulting impact in the P&L. We continue on this path of being choiceful, and we expect that the impact should remain there structurally for 40%-60% of the contribution on the longer term. Now to get to the point of CBU mix, and I know that triggers a lot of questions because it has an impact mostly on the revenue line item that we report. Over the last quarters, the operating model mix had a significant negative impact on our net sales, contracting the growth with a range of 400- 600 basis points. This quarter, we actually see a reverse impact with approximately 50 basis point gain because we leverage our own breweries more. In general, we expect more reliance on our CBUs, our contract breweries, before and during the season. On the other hand, we see capacity expansion with two new canning lines coming up this quarter, as well as the investment that we are doing in Greenfield in Unnao will definitely help to structurally bring more volumes to the market through our own breweries, so hence having a positive impact on the reported net revenue. Of course, all of this depends heavily on how states develop, but that is to give a bit of background on the breakdown of sales and revenue and how much of that is structural. Now, similarly, on margins, currently reporting in the quarter 44.7% gross margin versus a 41% last quarter, which then created a lot of questions whether or not we believe that was the low point for margin delivery. Structurally, we expect positive impact from pricing on the margins and trade rationalization to continue. So where that impacts positively in revenue, it will also have a positive impact on our margins. Furthermore, the improvements that we are doing with NBI new bottles will also sustain. So we see better use of return bottles in the quarter. However, we see that NBI this quarter is exceptionally low, also because after the season, there are more bottles coming back. So good for the P&L, but always a bit of seasonal impact post the summer season. On the state mix, it is very healthy, where we gain share in profitable states. Karnataka growing more than 50% in the quarter. Part of this we expect to be structural, because this is also part of the choices that we make. On the other hand, we see that the impact from the Middle East on the input cost is expected to remain, and we see significant input pricing as well on some of the commodities that we source in India, actually. Additionally, we still aim to get pricing in states where we haven't taken pricing yet, and where gross margins have actually significantly reduced this year because of the rising input cost. So it continues to be the same journey to make sure that we navigate the pressure on cost through taking the right choices and going after the right moves in the markets. All in all, there's a lot of moving parts, but we expect margins to remain along the range of 43%-45%, which I think is a good number for everyone to keep in mind. Yeah, thanks, Jorn. Just to close before we ask questions, I think there's one question which had come on brand power, because this is most critical for us, because stronger brands means stronger category and stronger future. Again, we got the brand power data last week for the quarter, July, August, September. And I'm very happy to say that Kingfisher brand has again gained scores on the brand power. Ultra has gained score on the brand power, and Heineken has also gained brand power in the geographies it compete in. So overall, the brands are getting stronger despite a significant momentum on the category, which gives us even more confidence to continue to invest behind this commercially. So with this, we hand over back to the moderator for the questions. Yeah. Thank you very much. We will now begin with the question and answer session. Anyone who wishes to ask a question may press star and then one on their touchtone phone. If you wish to remove yourself- Are you on the call? Yes. Can you hear us, sir? Ladies and gentlemen, we will now begin with the question and answer session. If you wish to ask a question, you may press star and then one on your touchtone phone. If you wish to remove yourself from the question queue, you may press star and then two. Hello? Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the questions queue assemble. Sorry, are you still there? Ladies and gentlemen, we have the issue with the management line. Please stay connected while we reconnect the line for the management. Thank you. Ladies and gentlemen, we have the management line reconnected back. We will move on to our question and answer session. We will take our first question from the line of Abneesh Roy with Nuvama. Please go ahead. Yeah, thanks, and congrats on a very, very strong set of numbers. You had highlighted a lot of insights in the Capital Markets Day, so thanks for that. My first specific question is on Karnataka and Jharkhand. So 50% plus growth, obviously industry will not grow at 50%. So my specific question is- Sorry to interrupt. Abneesh, your line is getting chipped in between. Yeah, is it better now? Yes, sir. Sorry for that. My specific question is in Karnataka and Jharkhand, if you can tell us what is the market growth rate for the alcobev industry in your estimation, and what will be the local players in the beer segment, what will be their growth rate? Then we can get some sense of the share gain either within the alcobev or from local players in beer in Karnataka and Jharkhand, given the 50% kind of growth rate in these two markets. In Karnataka, for this quarter, we have grown more than 60% on volume as UBL. I think we think that the category growth is in the range of 50% plus. Most of the category growth is contributed by UBL. We have actually gained almost 250 BPS of market share in Karnataka. So you can do your math. The interventions which we did behind the right pricing on our brands and really driving the innovation portfolio has really led to that growth. Coming to Jharkhand, I think Jharkhand again, we are still seeing the annualization impact of the privatization of the retail policy. Jharkhand growth is more in the range of 20% for us because actually, more than around 40% for us, because in Jharkhand, we are still not producing our premium portfolio locally. We actually work through our CBU and doing it, but that is going to change in the near future. We are working on more localization of our brand. So I would say that, in both the cases, and with the data we showed that everywhere where there is a disproportionate growth happening in the category, UBL is able to capture market share and drive premiumization in both the markets. So these are two good examples. Sure. You mentioned choices that we make multiple times, including the CFO's comment. Any specific example you can give for Karnataka market? I think two things are happening there. One, of course, 60% volume growth, and I think CNJs and the price mix growth of, say, 4% or say overall 8%, big part seems to be coming from Karnataka. Any specific example you can give on choices that we make? What do you mean by that? See, first of all, I do not think that choices is only about Karnataka. Karnataka, if you actually look at the volume for the thing, Karnataka is actually less than 15, it is actually 11%-12% of our business. You would appreciate, Abneesh, that Karnataka cannot swing the price mix only because we are in Karnataka. It is the series of revenue management program which the company is running, which is by state, by SKU, by mix, where to spend money in which SKUs, where to spend money on which brand, because we are a multi-brand portfolio. At the same time, the trade spend, because there is a large amount of money which goes to the trade. I think making those sharper choices across the country and driving the key business drivers and making money work harder has been a big part of the program. Even if I take Jharkhand, Karnataka, all put together, they are less than 20% of our business in those two states. It is all India-wide, big one, but we also make some real calls. For example, economy portfolio in, let us call it in Telangana. We see there are some companies who try to do lot of trade spend in Telangana when there is no margin in Telangana. We are not going to do that. We are okay to lose share in Telangana if it is a question of buying shares to show very good numbers. Those behaviors we are not doing. In the market where there is no MRP regime, like Haryana, for example, where retailers sell the product at whatever price they want. Why would we like to fund their margin just because the consumer is going to charge more? The choices of just importing brands in the state even if it is not profitable. We are making those hard calls where we are not chasing a number, but we are chasing a better quality of business. Understood. Last question. Vivek, since you have joined, a lot of initiatives on the premium has been done. The company has regained some level of market share also in the premium, but still, I think you are the number 3 player in the premium. Now when I compare on the other IPO on the beer sector, Carlsberg, a lot of questions are coming. Their margins are far superior. I understand their revenues are a fraction of yours. They also don't operate in all the states. But when as we see in the same state, for example, when we compare your revenue, your margins versus Carlsberg, could you give us some sense? Because frontline numbers do not give the full details. Yeah. See, look, I don't want to compare apples to oranges, right? You are comparing a business which is national, which is having a big mainstream brand like Kingfisher, where we're having a full portfolio with one-third the size of the business, which is not even national. I don't want to compare apple to oranges to really do that, to be very honest with you, with all due respect. I think it's a great company, and we all respect our competitors, and we do that. The opportunity of beer is not about growing shares from Carlsberg or ABI or other players. Opportunity of beer is to really expand the category. Is there profit pool in this? Yes, if we make the right choices, playing in the right state behind the policies to really bring together. The other thing which gives me confidence is the brand power data. When I say that we are growing brand power, which is actually measured by Kantar and on a consistent basis, and the brands which show higher revenue has lower brand power or declining brand power, it gives us a lot of future. The other thing is we are coming from behind in premiumization, and one of the reasons is our local footprint, which we talked, and the growth rate of 67%, 47%, or 38% gives us a lot of confidence that consumers are accepting our brand. I do think the glide path we had given on revenue and margin during the Capital Markets Day, we are working on that, to consistently drive category growth, our revenue growth, right mix, and sequentially improve our bottom line margin. I think that's where I'll be. Sure. Thank you. That's all from my side. Thank you. Thank you. Your next question comes from the line of Latika Chopra with J.P. Morgan. Please go ahead. Hey, thank you for the opportunity. Few questions from my side. The first one was related to your comments on sharper geographic choices, and you shared some examples on how much Karnataka and Jharkhand are now less than 20% of the business. Would it be possible for you to share some color on what are the top five, six states for you, and what is the revenue salience now? And the second Sorry, Latika, what was the second part of the question? Yeah, no. Let's take this question first and then let me ask you the second one. Sure. See, for us, Telangana is the biggest volume state for us. It is for the category, and we have a very, very strong presence. We also have very strong presence in Karnataka, Andhra, Rajasthan, U.P., because we are there everywhere where the category is. For us, I think it is. What we are also seeing is that our dependence on few states is reducing. We have huge opportunity in states like Tamil Nadu, for example, where market is opened up. We are right now 30%, 35% share. We should be 55%, 60% share like in other parts of the country. States like West Bengal, where we do not have canning line, which we will have in the future, and we are operating less than 30% shares. I think there is a combination of large states where we are already market leader, and there is a large state where we have a lot of opportunity. For us, I think we are broad-based, but our revenue is now getting more fragmented because states like Jharkhand are smaller states but are contributing to the growth. There are states like Uttarakhand or states like Odisha, which are contributing to a heavy growth, above 16%. I think what we are saying is winning in all states, but more states are becoming more relevant. We have to make choices like in Telangana. While it is a large state, but we just cannot invest more on trade spends and everything if we are not going to get pricing or not making money. I think that is what we meant by Latika making more hard choices. Yeah. Maybe to add one thing in line with the Capital Markets Day, where we spoke about the three different buckets in which we look at the markets. We see that the choices also have an impact on the salience of volume contribution across these buckets. While this is a sequential movement and does not change the world overnight, we see that that is moving favorable towards the bucket of the more profitable markets and the salience of the other markets, which are less profitable, is coming down. That is a sequential movement which we continue to track, but it also has an impact on the shares. If we exclude share development, if we exclude the non-profitable markets, it is actually a very different picture, and it shows that we are making the right choices for us. Sir, this is encouraging. My second question was around margins, and one part of the margins was pricing. You talked about half of this nearly 8% pricing growth that we saw was on account of pricing plus rationalization of trade spends, right? Effectively, does it mean you had about 2%, 3% of your pricing growth in the quarter? I wanted to connect it with the comment that you made that you saw pricing actions in 24 markets. Could you elaborate? At the same time, you also said you are going to seek more. Which are some of the larger markets where you still are waiting for price hikes to come through? What does it imply for this pure pricing growth in the equation? See, almost 30% of our business, we have not taken any pricing yet. These are big markets like Telangana, Andhra, and Tamil Nadu, to give few examples. They are almost 30% of our business, where we are still working with the government to take the pricing because input costs have significantly gone up. I think that is important to know because we have been working across states. When we say pricing, it is a combination of trade spend reduction, list price increase, but it is also a combination of the SKU mix. You know the bottles have a very different mix than cans, and a big bottle has a different margin than a smaller bottle. So all of that revenue management work is being done. Yeah. I think your math is about right, Latika, on the impact of pricing and how much pricing we take. I think the encouraging part for us is that we see the ability to price. I think that is where we take a big learning on how we should continuously do that. Moving forward and moving towards the future, to Vivek's point, it is not only about pure pricing, but it is also how can we use price as well as other levers to drive this mix across packages, across brands, to make sure that we go into an era of more profitable growth. Sure. The last bit was on brand spends and brand investments. Any color you can share with us? Because you talked about setting it up in a meaningful way. So how is FY 2027 or first half of FY 2027 shaping up on these spends versus the last year? Any color, any flavor? Thank you. I think we have started this already the last quarter of last year in terms of recognizing that there is an increased intensity on competition across the market, with a lot of the players looking at India as a main source for volume growth. So we see that in the year to date, our commercial spend behind our brands is up by around 20 percentage points versus previous years. Which means that it is growing ahead of our revenue and ahead of our volume, which is exactly also what we aim to do, and that is why we continuously stress, in the narrative as well, that investing behind the brands is the longer term. You will recall that we have announced earlier this year that we want to move from push to pull. This is the big driver to create that pull from the market to make sure that we excite the consumers on the brands. As Vivek also announced, going into the next quarter, which is the first part of the preparation for next year's summer, we continue to invest because we see the positive impact from a similar exercise that we did last year at a smaller scale, that staying on air with the brands, investing behind the brands year-round, has a positive long-term impact on the brand power, which we think is the biggest driver to create that pull with consumers and move away from the push, which allows us to also pull out of the trade spends where we can, and reinvest that money behind the brands. Sure. Thank you so much, gentlemen. Wish you the best. Thank you. Thank you. Our next question comes from the line of Harit Kapoor with Investec. Please go ahead. Yeah. Hi, good afternoon, team. Just two questions from my end. The first one was on the two markets that you've mentioned in the last few minutes, which is Tamil Nadu and Telangana. If you could just give us a broad update on how the changing environment in Tamil Nadu has started to play out for you guys, as well as for the industry. Any delta change that you are seeing over the last few months, in terms of how operationally the business is being run there. You mentioned, given that your share is lower, I think, we understand why, because regional presence is very high. Just wanted some sense on Tamil Nadu. Second was, on Telangana, there have been news articles over the last few months here and there about discussions on price increases. Just wanted to know your level of engagement there and how things are panning out. Is the fact that you're reducing spend there a function of your view that pricing may not be on the anvil in the near term. Just your comment on these two states is my first question. Yeah. Thanks, Harit. I'll comment on Telangana first. I think we are working very closely with the Telangana government and Brewers Association of India. Telangana did ask for a pricing committee, and we did make a submission sometime in August on our cost submission, which is a first process for the government to review the pricing. We are hoping that that committee which they formed, which was led by judges and all, will come to a logical conclusion. So we are very hopeful that in the coming months, the committee will take an action, because data was very clear. At the same time, till that pricing happens, it is very difficult to make more investments and also make investments which don't really drive the category expansion. Just to give you a sense, we had a flat business, and we lost bit of shares in Telangana because there were competitors who were still spending money to do that, but which is fine because our brand power is very strong. In Tamil Nadu, I think they are doing lot of changes, but they're doing in the parts. Some of the early changes are definitely helpful because the ordering system has become more transparent. We have two breweries in Tamil Nadu. We have on-the-ground presence, and we are making some capital investment to scale up those breweries, including looking at new capacity in the new form. Recently, you would have read in the press, we also got approval to launch Heineken Silver in Tamil Nadu, which I think will be a massive launch. I think combination of this, we are very optimistic on where it is, but the whole policy is still coming up in the parts. I will be able to give you full picture once we do that, but we know the state has massive potential, and we being there locally present with our breweries, have the right to expand very quickly in Tamil Nadu. That is great to hear, Vivek. The second question was on the pull-push strategy that I think Jorn also spoke about. Do we see that the financial impact of lesser promotions at a national level and more pull, which is the brand investments, is that you see margins staying similar because promotion goes into brand investments, but it improves your brand power and most likely then drives revenue growth in the medium term. Is that the outcome that you are looking to achieve when we talk about this? Yeah. There is a couple of elements, Harit. One, it is long term. It is creating much more value because we create long-term closeness to consumers, and it helps to build the category. So building stronger brands builds the category. So long term, it is the right thing to do, and even in a dark market like India, where we can, we invest behind the brands. On the short term, we see indeed that we reinvest that cutting back on trade terms. We reinvest it behind the brands, which means that it moves from our top line to our cost base. So it has an impact on gross margin expansion, but not so much on the short term on our EBITDA margin or our operating profit margin. Now, we do feel that the accelerator and the catalyst of investing behind the brands through increasing brand power is more sustainable than trade terms. I think that is the second important long-term effect of moving from push to pull, is that if you continuously invest behind the brands and behind your brand power, you create sustained demand for the brands, where trade terms will always have a large component of short-term pushing volumes. So those two elements mean that longer term, it is definitely contributing to the P&L. Shorter term, it is more of a shift between lines. Got it. Thank you. Wish you all the best. Thanks, Harit. Thank you. The next question comes from the line of Ashutosh Jain with Barclays. Please go ahead. Hello. Thank you for taking my question. Two for me, please. The first one would be, how should we think about the volume growth in the upcoming quarters? I am just thinking out loud, you have a relatively favorable comparison base. It is very low. Karnataka AIB benefits, Jharkhand retail liberalization, and other premium portfolio expansion in the states. These are the tailwinds in the upcoming quarters. Should these tailwinds support continued double-digit growth rate also, or there are some offsets which we should be mindful of? I think the critical driver of category growth is the policy changes. The policy has a life, right? The cycling of Karnataka, when we come in next May, June, it will be the same base, right? I think other than the macros, I think continuously work on the states to make beer more affordable, and more fair on taxation will be the priority to really do that. Having said that, the macros for the categories are very strong, with the 25 million youth coming to legal drinking age, with the expansion of the beer portfolio, and the more focus on experience. I definitely think the premiumization as well as the macros, but more fueled by the policy changes. The category has the potential to continue this momentum. Our outlook is still 6%-7% volume growth, if the policy movement does not happen dramatically like what has happened in this year. Okay. Fair enough. Thank you. The next question is more of a strategic one. Do you have any plans to participate in the RTD category, and how do you assess the opportunity for alcoholic RTDs in India, given United Spirits is now launching Smirnoff ICE, which is a malt-based alcoholic beverage? Do you see this as an incremental to a beer category? Because we have previous examples where, with the RTDs, they primarily tend to take share from the beer category. Do you think it could potentially cannibalize the beer consumption occasions in India, particularly at the premium end? We believe the opportunity on beer is so huge, both in terms of penetration. Out of the 10 occasions where consumers drink alcobev, beer is in 1.8 occasions. So we see a huge opportunity in beer itself. I do not want to comment on what else we want to do, but I see a huge momentum on beer itself. Okay. Fair enough. Thank you. Thank you. Our next question comes from the line of Nitin with HDFC Securities. Please go ahead. Yeah. Hi, thanks for taking my question. My first question pertains to your operating model mix. Would you be able to highlight what is the current percentage of production coming from owned brewery, contract brewery, and tie-up breweries? Our own breweries are almost 70%-75% of our production, depending on the season and the mix which Jorn has projected. But 70% to 75%, depending on the month, quarter, season, production, and rainfall, all of that factor keeping us there. Yeah. Would you be able to highlight what is the sort of a mix we have from tie-up units, which eventually will come to either the own production or contract brewery? Sorry, can you repeat that question? We missed the first part. No, I am asking in terms of this tie-up units, where we see the tactical opportunity or our own production on breweries are going through the CapEx cycle. So, what is the quantum of tie-up units which eventually will come to our P&L in terms of our overall volume? I think that's not a number that is carved in stone. I think given the fact that the growth in India we expect will be minimum at this number where we are today, we continuously look at what is our footprint, and we cherish the agility of having a mixed operating model. So it's a conversation that every now and then we have with some of our contract brewers. What is the future of this tie-up and whether or not it should evolve into something which involves ownership. I can tell you that's currently not anything which is happening as we speak, but how this footprint will evolve is something that we track on a continuous basis to make sure that we're set up the right way, and that we're also able to anticipate growth on a state-by-state level. Making sure that in places where the growth accelerates, that we are sufficient in terms of capacity. I think that's the first thing, that we make sure that we are present with production in the state, whether that's through investing in our own breweries, whether it's through a greenfield, like in U.P., or whether it's through new tie-ups. I think since Vivek onboarded, I think we onboarded eight additional CBUs to really make sure that we are present through our operating model mix there where the volume is also accelerating. And once that partnership continues- We can discuss how it evolves, but it's not something which is a standard view that we have on the contract model. Sure. Thanks a lot. Second question pertains to Heineken. Would you be able to help me two things? One is that how many of our breweries have this horizontal brewing capacity? Second, what is the reused bottle percentage for the premium portfolio? Thank you. Heineken, we produce in four breweries locally with us, and we plan to expand with the U.P. expansion, which is coming in locally in U.P., and we are looking at one more very soon. For return bottle, that percentage is improving because a lot of it is to do with the localization, which also is having a good impact on the gross margins on premium portfolio. We won't be able to give you specific brand-wise numbers, but we are seeing a significant improvement in the portfolio. On Heineken, we are having one-way bottles. We don't recycle the Heineken bottles yet. Yeah. Cool. Thanks a lot. Thank you. Thank you. A reminder to all the participants, if you wish to ask a question, you may press star and one now. Your next question comes from the line of Karan Kamdar with Choice Institutional Equities. Please go ahead. Yeah. Thank you for the opportunity. What I wanted to know is how are you faring in terms of volume growth, how much of it is sustainable? And how much of it is just purely price-led, and we may see increased competition just take that volume growth away from us? Well, I think, to be very fair, a lot of the volume growth is price-led one way or another. And we see affordability in India as a big driver of the category, and that is why we are always advocating for equitable taxation versus spirits. And we see that wherever that happens, there is a hike in demand from consumers. So fair pricing versus spirits is one of the number one outcomes of policy and regulatory improvements that we see that is driving the category. So from that point of view, we can argue that pricing is a big driver. We see that the current pricing that we have across 24 markets, I will not say that there is very limited elasticity, but we see that with that pricing, we still remain, as an average, the MRP remains below inflation. So the affordability of beer, despite the pricing that we take, still remains improving, which is a big driver of the category growth, and which is also something that we actively go after, where we offer premiumization to our consumers. But for the rest of the portfolio, we also make sure that affordability is there. Got it. Second question is on increased competition, given that a lot of brands are moving towards an IPO. Do we see any threats from there, and what is our strategy to manage premium segment, given that competition will increase specifically in the premium segment rather than on the lower tier where we have dominance? Yeah. We welcome competition, first of all. We think it's very good for the category. We see that competition intensifies across different segments. It depends on the state, it depends on the availability of capacity in the state. We see different movements. Our focus is on our own portfolio and on the strategy behind our brands. We believe that, and we know that we have the biggest portfolio in the capital market today. I also commented on the fact that we're the only player in the country that is able to onboard consumers at an affordable price point, and then stay with them through their journey of premiumization with local premium in the local portfolio, and then moving on to international premium like Heineken. We believe very strongly that we have the right portfolio to win, whether the competition intensifies in the premium segment, in the mainstream segment, or in the economy segment. But overall, again, we believe that it's very good for the category as a whole. And we believe that we are set to win across India, and where we have an advantage already, being a national player with the network availability that we have across all states. Okay. Thank you. All the best. Thank you. Our next question comes from the line of Jay Doshi with Kotak. Please go ahead. Hi, team. Thanks for the opportunity. I have got a couple of questions. The first one is for Vivek. You mentioned about a committee being set up by Telangana to review pricing. Is this something very different and new versus how it used to work earlier? Are you expecting a major course correction in the way pricing sort of works in Telangana or unit economics for the industry? Or will it be just another round of price increase, somewhat like you got one maybe a couple of years ago? Yeah. I think this process is not new. I think what we are able to do through the associations is to bring this committee early, because the last committee which was set up on beer was multi years ago, right? Before we got the pricing to do that. I think we see it as a positive step where government was able to set up the committee when we talked a lot about MRP pricing, impact of MRP cost increase because of the MRP crisis. I think it is the part of their process where they put a committee of judges or led by a judge, and the committee asks for the suppliers to submit their cost part. Now, outcome of the committee is anyone's guess, whether they will We expect them to materially change because the data is very compelling, and we really hope that they make the right call, but we don't know till they actually decide. Understood. Very helpful. Second question is on profitability now for you all. See, last quarter, you had called out INR 4 billion-INR 5 billion of cost inflation over two to three quarters, and it translated into 500 basis points of sales. Now this quarter, your profitability has improved by 200 basis point gross margins versus last year. If you could walk us through the bridge. I know you did partly answer this question in the opening remarks. If you could walk us through the bridge in terms of the actual cost inflation that you witnessed during this quarter, September quarter, how much of that was offset by, let's say, efficiencies on better recovery of bottles? How much of that was offset by better state mix, and how much of it was offset by trade rationalization? And then, I know you did comment that gross margin will be in 43%-45% range. Should we assume that as for the coming two quarters, and then should we expect next year to be better as cost inflation or cost pressure ease? Yeah. Thanks for that question. Let me start with the end. With all of you, we sincerely hope that the cost pressure will ease. To the rest of your question, we did call out indeed that impact that we expected on the full year, where we have seen that through some of the mitigation efforts, we see that the gross impact is coming down slightly versus the initial indication that we gave, which is, I think, in May. We now expect for the full year 2027 to be the gross impact to be in the range of INR 350 crores-INR 400 crores, so slightly lower than we initially thought. Secondly, we believe that the mitigation plan is also moving along very well and structurally improving, which means that overall, we expect that the impact is within that range of 43%-45% for the next couple of quarters, because we do see that increased cost pressure remaining, also in the next quarter and the quarter after. We don't expect that to ease very quickly. I think the one thing I would like to highlight is that the changes that we have made are structurally improving the business. So what we've refrained from is knee-jerk responses as, for instance, moving away from investing behind the brands or investing in the breweries. We are really mitigating this through sustained structural productivity, sustained pricing, taking the right choices on state mix to really structurally long-term improve the business. And of course, it helps to offset the impact of short-term cost pressure, and it will help to accelerate margins when cost pressure eases off. And when also means if in this case, because if I'm honest, my expectation is that even if we will hopefully find an end to this war, we won't go back to pre-war pricing if we see that infrastructure in the Middle East has also been heavily impacted. So I don't think that that will happen. It does mean that structurally, the health and the quality of our business is improving, which I think is a good thing, and long term, will definitely have a positive impact on margin development. Sure. Thank you so much. One last question for Vivek, if I may. Yeah, sure. Yeah, go ahead. Sure. So, it appears that your decision to lower the prices for Kingfisher Ultra in Karnataka may have significantly helped drive premiumization and volume growth in that market. Do you think that there is possibility to revisit the pricing for some of your premium brands in other states as well, based on the success you are seeing in Karnataka? Or is it largely successful in Karnataka because of the policy change, and without policy change by any tweaks in pricing, you may not see the same level of success? So that is one. And second is, now that you have launched Heineken Silver in quite a few states, where do you think, what is the potential for Heineken Silver in terms of, as per your best guesstimate, what market share it can have in India in the next 3 years or 4 years? Or, what could be its contribution to your overall sales, based on the traction that you are seeing for that brand? Yeah. I would start with the end in mind. I do not know three years, five years, 10 years, 15 years, but I think we are very confident Heineken would be the biggest premium brand in India beer market. This is a brand which is underserved in India. This is a brand which is the most valuable brand globally. With the Heineken Silver now, the growth rate which is happening in Vietnam, China, Brazil, some of the other countries, we are very confident on the recipe of success. You will see that we are investing behind the manufacturing capacity, getting the right distribution, getting the right execution. So I see the future is very bright, and the 67% growth on Heineken Silver, in my view, is not aberration. This will continue on Heineken Silver. I think for us to do any pricing action, policy intervention is must, because the gross margins are so low in this business, and you need to invest in brand building, awareness. The taxation is a key must. We were able to do it in Karnataka because there was a positive step from the government of reducing taxation on low alcohol beer, and we wanted to make sure that consumers can get the best choice of beer. So I think taking price reduction without a policy change is not wise. Having said that, selectively where we are off pricing strategy. We will continue to do the right thing, but that irrespective we should do anyway due to rather good business. Thank you. That is it from my side, and great execution. Thank you. Thank you. Thank you. Ladies and gentlemen, as there are no further questions, I now hand the conference back to the management for closing comments. Good. Thanks everyone for engaging with us for the past 60 minutes, and for all your questions. Again, we are very confident that we're on the right track, very proud of the results that we and the entire team delivered in the quarter two, and confident that moving into the next quarter, we continue to remain on track with the strategy and go with excellent execution to continue on this path. We'll talk again in the next quarter, and have a great day, everyone. Thank you for joining. Thank you. Ladies and gentlemen, on behalf of United Breweries Limited, that concludes this conference. Thank you everyone for joining us, and you may now disconnect your lines