Ladies and gentlemen, good day and welcome to the Allied Blenders and Distillers Limited Q1 FY 2026 Results Conference Call hosted by Antique Stock Broking Limited. 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 this conference call, please signal an operator by pressing star then zero on your touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Abhijeet Kundu. Thank you, and over to you, sir. Thanks. It's our absolute pleasure to host the management of Allied Blenders and Distillers Limited for the Q1 FY 2026 Results Conference Call. Over to Mr. Mukund, Head of Investor Relations and Chief Risk Officer, for the proceeding. Thank you. Thank you, Abhijeett. Good evening, everyone, and thank you for joining our Q1 FY 2026 Results Conference Call. I hope you have received a copy of our presentation. I would like to urge you to go through this along with the disclaimer slides. Today, we have with us from the management of ABD, Mr. Alok Gupta, Managing Director, and Mr. Anil Somani, Chief Financial Officer. Now, I would like to hand over the call to our MD, Mr. Alok Gupta, who will give you the summary of the company's quarterly performance before we open up for Q&A. Over to you, Alok. Thank you, Mukund. Good afternoon, ladies and gentlemen. Thank you for all joining us today for the Q1 FY 2026 Earnings Call of Allied Blenders and Distillers Ltd. This quarter marks approximately one year since our public listing, and I'm pleased to share that ABD has entered FY 2026 with strong momentum. We have delivered our fourth consecutive quarter of profitable growth, validating our strategy of prioritizing profitable volume growth, portfolio premiumization, cost focus, and agile investment in backward integration to enhance margins. Our consolidated income from operations reached INR 930 crore in Q1 FY 2026, representing a 22.5% increase over the same period last year. EBITDA grew at 56.4% year-on-year to INR 119 crore, with EBITDA margin expanding to 12.8%, an improvement of 277 basis points on a year-on-year basis as compared to 10% in Q1 FY 2025. Profit after tax for the quarter surged five times to INR 56 crore as compared to INR 11 crore in Q1 FY 2025. In the quarter, we delivered 8.5 million cases, up by 17.2% on a year-on-year basis, accompanied by a 6.2% increase in realization per case, driven by favorable product mix and price optimization. In the mass premium category, the overall volume growth was stable, with sales volume maintained at 4.6 million cases in Q1 FY 2026 as compared to Q1 FY 2025, mainly due to controlled sales on account of continued adoption of state profit governance metrics. However, the P&A portfolio volume growth continues to outperform the industry, reflecting consistent progress in our premiumization agenda. The P&A category witnessed a strong growth of 46.9% across multiple markets. This growth resulted in increasing our overall P&A salience to 46.2% in volume terms and 55.8% of the sales volume value in Q1 FY 2026 as compared to 36.9% and 46.1% respectively in Q1 FY 2025. Overall, the growth was not only witnessed in opening up of markets such as AP and Delhi, but also certain well-established states of North India. Now, coming to our overall EBITDA performance, the year-on-year performance was driven by continued strategic focus on maintaining a profitable brand mix across key states, continuous cost benefit on behalf of rate reset, packaging efficiency, stable commodity prices, particularly on ENA distillery resulting in improved gross margin by 448 basis points to 43.2% in Q1 FY 2026 as compared to 38.7% in Q1 FY 2025. On the OpEx front, the employed costs at INR 50 crores in Q1 FY 2026, which is 5.3% of our income from operations as compared to INR 46 crores in Q1 FY 2025, which was 6.1% income from our operations, which is mainly on account of setting up of ABD Maestro in Q1 FY 2026 and our new distillery in Maharashtra, which was acquired in the third quarter of last year. The other OpEx cost of INR 238 crores in Q1 FY 2025 is higher by 37.2% as compared to INR 173 crores in Q1 FY 2025, mainly on account of higher promotion, sales and distribution of established brands, and new brands in the Super-Premium to luxury portfolio and certain increases in the statement. Overall, on a net basis, the EBITDA margin improved to 12.8% in Q1 FY 2025 as compared to 10% in Q1 FY 2025. Now, let me discuss about the performance of our key brand. ICONiQ White Whisky, the fastest growing millennial spirit brand globally for a second year in a row, continued to expand its reach across Indian markets and has now earned seven international markets. In just 30 months since launch, it has joined the ranks of the top 20 global whisky brands, resonating strongly with the younger consumer and supported by extensive retail distribution. During the quarter, the brand witnessed growth across all states in India, and we expect the strong growth momentum to continue. Our flagship brand, Officer's Choice Whisky, retained its number one position in the Indian mass premium category and continues to be India's number one exported spirit brand. It remains a critical driver of our profitability and cash flows, generating 40%+ gross margins and benefiting from scale, brand sale, and efficient training space. We remain sharply focused on sustaining high margin performance through continued operational discipline. For our regional power brands, Officer's Choice Blue, we are focusing on key markets to strengthen its presence while launching fresh and engaging campaigns to connect better with the consumer. For the fourth millennial brand, Sterling Reserve B7, we are currently focusing on driving new consumer trials and deepening engagement through sharp strategic campaigns. We recently did a campaign in Maharashtra, and based on the encouraging response, we are expanding this initiative to five other big states. This quarter also had significant progress in expanding our premium offering. We launched Golden Mist, a new prestige brandy in Karnataka, in the month of April 2025, and more recently in July 2025 in Telangana. The brand is crafted using French oak cask aging and designed to cater to the evolving premier consumption preferences. Meanwhile, ABD Maestro, our super- premium and luxury brand subsidiary, is scaling rapidly with expanding presence in key Indian cities and select international markets. Brands such as Zoya Gin, Arthaus Blended Malt Scotch Whisky, and Woodburn Whisky are gaining traction among aspiration-driven consumers and are well positioned to capture high margin growth opportunities. We also expanded into the Super-Premium and luxury vodka segment with the launch of Russian Standard Vodka through a partnership with Roust Corporation. This global brand is now available in key markets of Maharashtra, Goa, and West Bengal. On the international front, ABD's global footprint has expanded from 14 countries to 27 countries, nearly a 2x expansion, complementing our strategy to build a strong consumer franchise across geographies. In addition to our presence in Middle East and Africa, we have secured approvals for export to Canada, South America, New Zealand, and to the European Union region. Moving to our CapEx program, our INR 525 crore CapEx program is progressing well, and we are on track. The PET manufacturing facility in Telangana is on track for commissioning in Q2 FY 2026. We expect the commercial operation to start from September 2025. The margin accretive benefits would start flowing in line with the expectation. The single malt distillery is progressing well towards a Q4 FY 2026 launch in commercial operations. We will witness margin accretive benefits to start flowing from April 2026 onward. The ENA distillery in Aurangabad acquired in December 2026, commenced operation in February 2025, and is currently operating at 100% capacity. Regulatory approval for capacity expansion is under process. As already stated, these backward integration initiatives are margin accretive and are expected to support approximately 300 basis points of EBITDA margin improvements from Q4 FY 2027 onwards. At the working capital front, strong focus on collection and inventory management has resulted in a reduction in overall net working capital. We incurred CapEx payout in line with the planned CapEx phasing. With strong profit performance, net working capital optimization, and planned CapEx-related payout, we generated free cash flow, which helped marginal reduction in our net debt to INR 754 crores as of 30 June 2025, as compared to INR 766 crores as of 31 March 2025. This led to a marginal improvement in net debt to equity to 4.7 in June 2025, as compared to 0.49x in March 2025, and net debt to EBITDA from 1.5 in June 2025, as compared to 1.7 in March 2025. We continue to maintain tight control over working capital, with strong focus on optimizing receivables. Additionally, industry-wide receivables from Telangana State are anticipated to normalize gradually, further supporting working capital stability. The external environment continues to support our strategic direction. Consumer sentiment remains upbeat, with experienced consumption expected to fuel premium category growth. The new tax regime has enhanced disposable income, further encouraging trading up behavior. Input costs, including grain, ENA, and glass, remain soft and are expected to stay stable. Most states have finalized regulatory updates, resulting in a relatively stable policy backdrop. The anticipated U.K. FTA is expected to improve margins, particularly beneficial for ABD as one of the largest importers of bulk scotch and with enhanced accessibility of our Super-Premium and luxury offerings. As we look ahead in FY 2026, APD will remain focused on driving next-new value growth, strengthening operational excellence, advancing portfolio diversification, optimizing working capital, and ensuring on-time execution of our projects. We are confident that ABD is well positioned to participate meaningfully in India's evolving premium consumption story and deliver sustainable value creation. Thank you once again for your continued interest and support. We now open the floor for questions. Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their touchtone telephone. If you wish to remove yourself from the question queue, you may press star and two. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Abneesh Roy from Nuvama. Please go ahead. Yeah, thanks and congrats on very good numbers. My first question is on Golden Mist. You have entered the prestige category, so I wanted to understand which markets you'll be focusing on, which are the key competitors here. If you could also comment on Maharashtra, I did hear your media interview, but in Maharashtra, post-tax hike, have most of the players passed it to the end customer, or in many cases, the companies are absorbing the tax hike, which could impact the margins. That is the first question. Thank you, Abneesh. Golden Mist is a brandy in the prestige segment. The two key competitors in this segment are Napoleon Brandy and Mansion House. As we know, more than 95% of brandy sales come from four southern states. We are currently available in Karnataka and in Telangana and are looking forward to launching this brand also in the state of Andhra Pradesh and other smaller territories like Pondicherry and Orissa, where we see sales of prestige brandy. That should all happen within this financial year. As regards Maharashtra, I think most of the marketers have passed on the tax incident to the customer, some reduction in the margin, and by and large, all the key competitors, the key players have tried to retain and protect their margins and minimize margin losses wherever they could. Like I said in several media interviews, I think for us to be able to give a view on the overall volume and margin impact, I think the only way to do is by having a greater clarity on the MML policy, which is yet to be announced by the government. Right. Second question is, post IPO last few quarters, we have seen a very good recovery in your margin profile in the P&A salience. If you could talk about feet on street, what is the change in the last one year? Similarly, in terms of point of sale and on-trade premises, your visibility, what has gone in terms of efforts, what has gone in terms of the investment? Next two years, as you further scale up in terms of all these niche investments, in terms of the brands and more launches, where do you see the brand spend point of sale and feet on street also? Sure. We have roughly 500 people on feet on street. That's the total workforce involved in our sales operation. We cover more than 90% of the outlets which are permitted to sell alcoholic beverages. Fundamentally, post IPO, three changes have happened. Change number one that happened immediately prior to IPO but got implemented in the IPO year is that we moved from volume target to profitable volumes for margin governance metrics, and we redefined the brand and the SKU in each state where we wanted to grow to make sure that the capital is allocated behind profitable state brand SKUs. The second change that we made was that we realigned the sales promotion incentive for our sales team from volume to value with focus on P&A. The third change that has happened starting this financial year is that we have launched a new sales incentive initiative for [Jeet], which covers pretty much 90% of the workforce. We have put it on an app where each TSC can actually see the performance that he or she may be recording during the course of the month and essentially create greater visibility and greater pull and push towards their target. We've also, instead of annual targets, moved to quarterly payouts. Essentially, these three things have happened. Focus has gone from volume to value, within that focus on P&A, and now on the back of the new program that we put in place with better incentives, faster incentives. We are hopeful that we continue to drive the growth that we are seeing in our business. As regards on-premise, I'll broadly divide on-premise into two types. One is key accounts and premium on-premise. The coverage of key accounts and premium on-premise should be done by ABD Maestro. Just as an example, now we have got listings with three of the largest national hotel chains where the luxury products should get placed in their bars and in the mini refrigerator in the rooms. The traditional on-premise will continue to be covered by the ABD state. I hope that answers your question. Yes, quite useful. Last question, India is seen largely as a whisky market. Now, your two new developments, one is Golden Mist Brandy, and similarly, Russian Standard Vodka, again, vodka. Those are smaller opportunities, and both have very strong entrenched players. Brandy, obviously, Tilaknag ar is a big player, and vodka Radico is a big player. I wanted to understand why these smaller opportunities, and within these smaller opportunities, are you targeting essentially, again, a bit more of the premium end where you would be able to really expand the market? Long-term, how do you see your own whisky contribution to sales? What is the plan in terms of the diversification? Are these more of niche opportunities, or do you think over five years, the whisky contribution will be lesser in terms of diversification? At a macro level, contribution from whisky over the last 30 years has remained about 65%. I think we continue to love and enjoy whisky as a flavor, and we do not expect significant changes in the flavor mix basket. Whisky will continue to be north of 60%. Other brown spirits, brandy and rum, will be about 30%, and 5% is white. I think pretty much that's a stable state over the last 30 or 40 years. If you were to slice the industry, of the 410 million alcobev cases last year, roughly 160 million cases were at the prestige price point, which is a price point of, let's say, between INR 700 and INR 1,000. Of this 160 million, roughly 40 million is non-whisky, which is brandy and vodka. Golden Mist operates at a prestige price point, which is roughly 60 to 80 million cases, growing high double digits, excellent margins, and by and large, it has brought a sales concentration in the southern region. Golden Mist is a brand that will operate in a high margin, high growth, prestige brandy market. In the southern region, we also have a reasonably strong distribution. It's not as large as whisky, but in 16 million cases, a double-digit market share gives us an opportunity to create yet another millennia brand. Similarly, when we were to look at prestige vodka, which is another 15 or 16 million cases, 14 or 15 million cases, again, a reasonable double-digit market share gives us an opportunity to build another million brands. I think these are smaller as compared to whisky, but each of these opportunities gives us the ability to create another millennia brand. As regards the Russian Standard, Russian Standard competes with Super- Premium and luxury vodka across the world. They sell this brand in almost 60 countries, and they compete with the global leading Super-Premium and luxury vodka. Therefore, this brand helps us on the luxury side provide consumers another exciting option, whether it is in the form of a sipping or cocktail or any other mode of consumption. The Russian Standard does not compete with Magic Moment. It competes more with the likes of Tito, Absolut, and GREY GOOSE. One quick follow-up, last question. In both these two subsegments, you mentioned double-digit market share. That will be a very good achievement, but obviously not easy. What will lead to this? This is obviously largely a media-dark industry, and obviously, current entrenched players will not let it go easy. What will lead to this double-digit share, and what is the confidence level in this? If you were to look at two trends in the alcoholic beverages industry, the first trend is premiumization. If you were to go a little bit on history, premiumization was more visible in whisky as a flavor. If you look at the last two or three years' trends, premiumization is happening across all flavors. Therefore, it's happening in rum, it's happening in brandy, it's happening in, of course, all white. If you look at the growth of flavored variants within even rum and brandy, that indicates that consumers are increasingly wanting to experiment and experience newer variants. I think the way we see the opportunity is that, yes, there is an established player there, but the consumers, especially the younger consumers, would be looking at experiencing newer experiences. Therefore, the way we are positioning, for example, Golden Mist, it's more to talk to the slightly younger consumers who have adopted brandy as their preferred choice, but it talks to them in a language that they would relate with. Yes, it's an uphill task, but we are quite committed to make progress here. As regards to the confidence level, we would not have launched this brand if the confidence level in our key consumer in style and our go-to-market strategy if we didn't believe we had a good chance of success. Yeah, thanks. That's all from my side. Thank you. Thank you, Abneesh. Thank you. The next question is from the line of Aditya Soman from CLSA. Please go ahead. Yeah, hi. Good evening. Two questions from me. Firstly, thanks for your sort of detailed presentation, which really is fairly transparent and gives out a lot of data. I wanted to just ask on you've laid out the pricing structure for P&A and mass premium and other brands and other price points. I just want to understand how the margin structures also vary as we move from sort of mass premium to prestige. If you can answer it on sort of a price per bottle or in terms of percentage margins, that would be super useful. Sure, Aditya. If you were to look at some of our listed peers, you would see that if you look at listed peers where the P&A share of sale is between 70% and 90%, the gross margins are roughly about 42% - 44%, right? Our mass premium segment, which is Officer's Choice, operates at a gross margin of north of 40%. It makes the same margin as a percentage that any other P&A whisky does. When we look at our P&A, our prestige segment in whiskies and in brandy as we speak, we are currently just a shade below 40%. A quick response to that is that some of the brands are new. As you know, the function of the margin here is in terms of market bottle utilization, some bit of LPP rationalization. Over the next few quarters, we are of the view that we should be able to cross the 50% hurdle rate on the P&A brand. As regards premium and Super-Premium is concerned, that portfolio runs at gross margin close to about 55%. Thank you. That's very clear. Just in terms of the opportunity on the Super-Premium and, let's say, Super-Premium and luxury, could you give us some sense of where you see your in this entire space being in terms of the number of cases for ABD in particular over, let's say, a five-year period, or what your aspiration would be? The segment, the Super-Premium to luxury segment, a price point of INR 2,000 and above, is roughly 3% of the 410 million case market, about 12 million cases, right? It's growing at the highest rate in the alcobev space, high double digits. On the back of the India-U.K. FTA, some reduction in the BIO and the BII prices and some bit of margin improvement in the BII scotch prices, our view is that this segment could more than double in the next four years. Therefore, from a 12 million case, the segment could be sitting north of 20 million cases. For us, this is a year of getting our portfolio ready, building capability in terms of distribution on the on-premise and understanding social media space and mixology and cocktails. We built this whole team under ABD Maestro. I think the way we are looking at it is that of this 20 million cases, if we can get a high single-digit market share over the next two or three years, we'll be in a good space, right? I think by quarter three of this financial year, you'll have sort of a better sense on trend and timelines because we are now just about getting into distribution expansion. Understand. That's very clear. Thank you so much. Thank you, Abhijeet. Thank you. Our next question is from the line of Kunal Shah from Jefferies. Please go ahead. Hi. Thank you for the opportunity. My first question is on your volumes and the benefit that they have received from Andhra Pradesh and Delhi, which you mentioned in the opening remarks. If you can quantify it in some way, probably both on P&A and overall. Let me have somebody work on this number. Is there another question that you have? Otherwise, allow me a minute to practice on this. Absolutely. The next question is, what's the total, let's say, cost base or OpEx that ABD Maestro will incur, let's say, on a full-year basis? Let's say two, three years out, what are your revenue aspirations for this business, if you can give some directional insight on both? Yeah. I think here is an interesting data point. For every 1% volume contribution from the ABD Maestro portfolio, the value contribution is really 9%. That's the impact it has in terms of the value growth, right? This year, it's all about getting the portfolio right and building the go-to-market in terms of distribution and special services or special skills that it requires in terms of cocktail and mixology. We have five brands ready now, and we are looking at adding two or three more brands to this portfolio within this year. We believe that will give us the portfolio width that we've been wanting. It's a combination of whiskies, both scotch whisky, non-scotch whisky, Indian whiskies, gin, vodka, and one other major white that we're looking at. Like I was responding to, I think, Aditya earlier, our outlook is that how do we build a high single-digit to a double-digit, I would say high single-digit, double-digit market share over the next couple of years. The segment is currently 12 million cases and growing north of 20% year-on-year. We expect this segment to get bigger and bigger. I think by H2, we will be in a better position to provide some indication on where we stand. So far, the distribution expansion is on track. Understood. Any comment on the cost structure? I mean, let's say, operating costs that this entity would have on a quarterly basis or yearly basis? The brands that are part of the ABD Maestro, which are largely brands, we are for the next two years following a very simple thumb rule that they need to be whatever money they make at a contribution level. We will reinvest in the brand. Therefore, the only expenses that will come are towards running the organization. In year three is when the brand or the business will become a bit positive. The first two years are going to be the years of investment. Understood. The second question is on Sterling Reserve. I remember last call, you had mentioned that the brand had seen declines in FY 2025. I heard your opening remark on some initiatives you're taking, but can you give more details and by when do you see this brand turning around? On SRB7, we have put a very clear path, stabilize and grow. By end of H1, we're already in quarter two, we should see the brand stabilizing. Towards the festive season, we are hopeful with the marketing program we put behind this brand, we should start seeing the green shoots. On your earlier question of let me understand, your question is that what part of our growth will come from Delhi and Andhra Pradesh or individually, what will be the growth in these states? If I were to take these two out, what would have been the growth for the business in volume terms? That's your question. Just 30 seconds. Sorry, I think the data that came to me was what is the growth in the respective states? No worries. We can probably take it later. Yeah, no worries. Thanks. Yeah, yeah. Just one last bit on ICONiQ White. I mean, 5 million cases plus last year. Any sense you can give on where you see it this year? Do you see any initial signs of now incrementally the brand plateauing out? Anything on those lines that you can share? No, the brand continues to grow. It is on a very strong wicket. We are seeing quarter-on-quarter growth. I will just request what's that Q1 number for ICONiQ? To answer your first question, if you were to take Delhi and Andhra Pradesh out, versus the 17% volume growth, our growth would have been about 13%. That is the contribution of Delhi and Andhra Pradesh in the overall growth. In Q1, the brand has done roughly 2.3 million cases. As you would recall, last year we had done 5.7 million. In Q1, the brand has done roughly 50% of what we sold in the full year. That will give you some indication of where the brand could head this year. Understood. That's very clear. Just last one, bookkeeping, I see a very sharp reduction in excise duty in the quarter. Any specific reason? I mean, it's a seldom state but changed there recently. Yeah, yeah. This is a state of UP where the onus of excise duty has moved from the manufacturer to the wholesaler. Therefore, essentially, this is reflecting in the reduction of our gross sales value. On a like-to-like basis, if there was no change in UP, you would have seen an incremental INR 300-INR 350 crore of GST. We are happy with this change because it also means that we've been able to release some of our working capital from the state of UP. Understood. Thank you. That's all from my side. Thank you. Thank you for now. Thank you. Next question is from the line of Sanjay Manyal from DAM Capital. Please go ahead. Hello, sir. I have a few questions specifically on ICONiQ White. I believe the contribution, so just want to understand what would be the contribution from the state of Maharashtra and what would be the impact of this excise hike which has happened last month? I will just give it to you. See, on Maharashtra, I deeply believe that only once we get the MML pricing, we really get to know where does IMFL sit. It is very difficult to speculate what will happen to the industry, right? ICONiQ in the state of Maharashtra was operating at a price point of quart price point of INR 680, and now it is moving to roughly INR 900. That is a change in the pricing. Relative competitors are Imperial Blue, which has also gone from INR 680- INR 880, and McDowell's Number One, which has gone from INR 640- INR 900. From a relative MRP parity, it continues to be competitively priced versus the benchmark competition. There is about a 25%- 30% increase in the MRP. We are yet to see what impact it will have on the segment. From a Maharashtra state perspective, it means ICONiQ White is a bigger brand. What kind of contribution do you have from the Maharashtra state? Maharashtra contribution is less than 10%. The number that I shared earlier of about 2.3 million, less than 10% comes from Maharashtra. Okay. Okay. Secondly, you have launched this brand. If I can adjust one point about ICONiQ specifically in Maharashtra, like I said, I will wait for the MML duty structure to be announced. I think the way I'm looking at ICONiQ specifically in Maharashtra is that it has got the high price point, has moved from INR 780- INR 1,070. I think the way we'll have to understand this cascade in Maharashtra, not just at a price point level, is what will happen to consumers who were earlier at INR 780, who are now moved to INR 1,070. Will they take something like an ICONiQ at INR 900 or spend INR 1,100? I think consumers will be faced with these choices. Our view is that, fingers crossed, ICONiQ could actually benefit a little bit from this price change because as consumers from a higher price segment start looking at what their alternatives are, ICONiQ being a newer and a fresher brand could benefit. Like I said, the jury is out. Just also keep in mind that the Royal Stag price point is moving from INR 780- INR 1,070. Royal Challenge is moving from INR 780 - INR 1,070. Movement from INR 780- INR 900 is relatively easier versus INR 780 - INR 1,070. Just keep this in the back of your mind. However, like I said, what choices consumers make, we will find out. Sure. You mentioned 2.3 million cases for the quarter. Can we say the saliency of the meets for the quarter on quarter is similar? Are we looking at anywhere between 9- 10 million cases for the year or maybe lower? I wish I had a crystal ball to answer the question. You know I've said this earlier, I'll say it again. This brand has the ability to be a market leader. If you can see the performance of the brand even in this financial year in context of where I think this brand could be, let me just answer the question. Sure. Secondly, on the overdues, what is the expectation that this overdue from Telangana, by when can we expect that the full payment, you know, we can get? It is status quo in Telangana. Regular payments are being released. Overdues, a very tiny portion was released in the month of April and May. June and July, we have not seen the release of any overdue payment. I think clarity will emerge after the Punjab elections, which are slated in the month of August, because that's when the government will be available for re-engaging on the Telangana overdues at the industry level. That is really what our understanding is at this point in time. One last question I have about the U.K. FTA. What I believe is that the custom duty reduction is very gradual over the next 10 years. Do you think it will really benefit, given the fact that over the next 10 years, this can be offset by the excise hikes by the respective states? Custom duty reduction. It’s really a very. Yeah. Custom duty reduction is from 150%- 75%, and thereafter reduction to 40% over the next 10 years. There is one big reduction now to 75%. That's immediately, you're saying? Immediately. Over the next 10 years, 75 needs to come down to 40. From our modeling perspective, we have taken the first 75 reduction. What happens thereafter? We've still not baked into or modeled into our projections. Okay. Okay. That's all from my side. Thank you. Thank you, Aditya. Thank you, Sanjay. Thank you. Our next question is from the line of Kaustubh Pawaskar from ICICI Securities. Please go ahead. Yeah. Thanks for the opportunity and congrats for a good set of numbers. Most of my questions have been answered. I just have a question on one of your initial comments of 300 basis points expansion in EBITDA margins from Q4 FY 2027. You mean to say whatever benefits which we are going to derive from backward integration will start flowing in from quarter four of FY 2027. Is it a right understanding? Because some of the facilities we are going to start from Q2 FY 2027. Initially, the view was like from Q2, some of the benefits should start flowing in, and the incremental benefits, what we are expecting, should come in from your Q4 of FY 2027. Just trying to understand on that. Absolutely right. The full benefit will come. The full benefit will accrue from Q4 FY 2027. Partial benefits from our ENA distillery in Maharashtra have already started to accrue, and the PET project will start in September 2025. That benefit will start accruing. By Q4 FY 2026, our single malt distillation will be up and running. Benefits will start accruing. We will start seeing EBITDA positive impact starting Q2 FY 2026, and it will scale up gradually. The full impact will be visible to us in Q4 FY 2027. Thank you. A follow-up question on ICONiQ. This quarter, we have seen 2.5 million cases of service volume. Is it mainly because of the fact that we are expanding into various states, or is the repeat traction with the brand quite strong? Any understanding on that? From a footprint expansion, ICONiQ was launched across all states of the country in the last financial year. A footprint expansion is largely now in the international market. We have now shipped ICONiQ to about seven new countries, and we'll expand the footprint going forward. From a domestic play perspective, we have finished our entire national rollout in the last financial year. The volume that you're seeing is just repeat consumer and newer consumer that are coming in. Right. Right. Any thought, Kaustubh, on the other launches, what you have done in the past six to seven years, which of the brands do you expect to be? I'm not saying that it will be the next ICONiQ, but closer to that, where you are seeing good traction? I think we are excited about all new brands. However, if you were to pick brands that can give us scale in terms of volume and are also high margin, then I would say Woodburn is a brand we're extremely excited about. It's an INR 3,000 MRP product. It's what I call a daily affordable luxury, which is INR 100 a day kind of a thing. I think that's a brand we're really excited about. If you look at our Golden Mist Brandy that we have recently launched in a large 15 million segment, high margin, high growth, we're extremely confident that it can give us scale and the margin. We also have a hidden gem in our portfolio, a brand called Srishti, which is an Indian brand with an Indian soul. We are currently selling it in three markets of north. We are extremely happy with the early results that we have and the playbook that we have on the brand, and we'll expand it in the course of the year. The idea of picking up these three brands is largely from the fact that these three brands offer scale and high margin. The work that is happening on Zoya with its two flavor variant, which is Watermelon and Espresso, is starting to deliver good results for us. We're excited, but I think these three brands can give us scale and margin bump. One final question on Maharashtra. You said that it is very difficult to comment on the impact as of now on the excise duty hike, maybe from the customer point of view. On the HoReCa, are you seeing any kind of impact of saying like they are maintaining lower inventory, or is there any downtrending as you were talking about as an opportunity for you in institutional or HoReCa sort of business? If you look at the Super-Premium, Super-Premium, and luxury segment, the increase in MRP is marginal. It's not even, it's single digit from 3%- 5%. The excise duty is such that it is increasing. It has increased the excise duty on the mass premium and the prestige price point. It has offered MML as a category. We had more affordable MRP. In the premium, Super-Premium, and luxury, there's hardly any change in MRP. Therefore, from a HoReCa perspective, we do not expect that this policy will impact any which way the current consumption pattern. Thanks. Thanks for all the best. Thank you very much. Thank you. The next question is from the line of Harsh Shah from Bandhan AMC. Please go ahead. Yeah. Hi, Alok. Thanks for taking my questions. Firstly, if we look at your volume section of ICONiQ this quarter, there would be a volume decrease, right? A question here is that, even in the previous question, you've spoken about the brands you're excited about, right? Woodburn and Zoya and the other brands. I mean, how do we think of, let's say, brands which are already, let's say, with cross-premium cases like Officer's Choice Blue or Sterling Reserve? How do we think of those brands? Even, I mean, they are also, you know, let's say, how do we think of spending behind those brands? How do we think of getting growth back in those brands? Harsh, my earlier response was in context of the question that amongst the new brands that we are launching, which are the ones we are excited about. The response was in context of the new brands, not in the context of the portfolio. That's an important point I wanted to make, right? If you were to ask me brands that we are excited about, we're extremely excited about Officer's Choice. It's a flagship brand, largest exported brand out of the country. The margin governance framework has got our gross margin north of 40%, closer to 43%. This brand requires fairly low levels of LPP and promotional support. Net retained cash is very high. We have our guidance is single-digit growth with focus on our gross margin because this really is a cash cow. We're very, very excited. We are doing some. Wait, this is Officer's Choice or Officer's Choice Blue? This is Officer's Choice. Cover the entire. I'll cover our brand. Okay. There are different reasons for each brand. There's a different reason to be excited about. That's Officer's Choice. We are doing some very interesting work in terms of innovation on this brand, which hopefully quarter three we can talk about. As market leaders, we're thinking about how do we expand the segment, how do we bring in excitement in the segment. We're working on that. Officer's Choice Blue used to sell more than a million cases in the market of Delhi. Because there was policy uncertainty in Delhi, we had taken a back step in Delhi, and our volume was down to about 10,000 to 12,000 cases a month, which is about 150,000 cases a year. Now that the policy for Delhi has been announced for the next nine months, we are ramping up Delhi in terms of our market share. Officer's Choice Blue has always been a regional powerhouse. There are two or three states, Delhi of course is the leading state here, where we will see volume growth coming back on Officer's Choice Blue. The third brand, SRB7, we have covered, stabilize and grow. We are targeting towards H1, able to stabilize the brand, and then from H2, we'll start seeing some green shoots on the brand. Those really are our three core brands. I've covered Golden Mist and Srishti, which is a new brand in our portfolio. One more notable mention here would be that two of our premium brands, especially Chiron, where we have 25% share in the domestic market, this brand is approved in the defense vertical. This year, SRB10 and Chiron, we will focus on CSD as a channel. From the export footprint, again, the growth will come up in the entire season, India and beyond, not just India. We have grown our footprint from 17 countries in FY 2024 to 23 countries in FY 2025. We are already operating in 27 countries, and we are looking at expanding our footprint further. From 17 countries in FY 2024, by the end of the year, we're looking at at least a 2x increase, which means at least 33 to 35 countries where we start exporting. Like I said, different brands give us different opportunities. As far as ICONiQ is concerned, the market share it is getting, it is getting market shares from brands like McDowell's Number One and Imperial Blue, and needless to say, even Officer's Choice Blue. We also see the two brands together as to how Officer's Choice Blue and ICONiQ together are getting the market shares. I hope that provides you a response to the question that you were looking for. Got it. No, no, very helpful. Secondly, basically, when I look at your presentation, we are currently at 46% in terms of P&A volume share, right? You've called out an aspiration to reach 50% P&A volumes in three years, right? That is something which, given that you know your slide on your new launches, everything we are doing is in prestige, right? This 50% would, it's something which we should be there, I think, by the end of this year, right? In terms of targets, I think wouldn't the P&A volume contribution be much higher given what we are talking about doing in terms of ABD Maestro and, you know, I think that what you're seeing in ICONiQ as well over the next three years? 50, it's a very, I think, a low number. What are your thoughts on that? No. When we had indicated that we would like to be 50%, at that point of time, we were only 37% of P&A, right? Which is FY 2024. Of course, we ended the year with about 42%. We are at 46%. If we continue to grow the way we are growing, and especially with the addition of Golden Mist and roll-out of Srishti in many markets, we should be looking at closing down the gap between 46% and 50%. There is a massive amount of work that we are currently doing on Officer's Choice as a brand. We are hopeful that, and this is largely in the space of innovation and sort of engaging the consumer differently. We are also hopeful that we are able to stimulate growth in this price point or in this segment, which is, you know, high single digits. Honestly, if we are able to get Officer's Choice to grow high single digits, we'd be quite happy with, you know, hitting 50% because it's really a big cash generator for us. Got it. Even in terms of your margin break, right? We are currently TTM, which is we are at 13% EBITDA, and the aspiration is 15% over the next three years. Will that margin break be linear in a way that we see expansion every year, or as you previously commented that this is a year of building your ABD Maestro portfolio, which would also mean that you would want to invest more in terms of brand building this year, right? Will it be like taking one step back and then two steps ahead, or will it be a linear journey? I think let's put it this way. We are currently, let's say, at about 13% EBITDA margin. There are two big levers of margin expansion. One is FTA, which, let's say, Q4 of this financial year should come into play. That itself should add about 200 basis point margin improvement. The second is the backward integration, which we have said by Q4 FY 2027, we should realize a good 300% benefit, right? It's staged, so it's not linear in many ways. It is linked to very specific milestones. In addition, there are two areas of investment. One is on brands. Both the ABD portfolio, we are looking at improving our A&P as a percentage of NSV by 100 basis, 75- 100 basis point this year, another 75- 100 basis point next year to ensure that brands like Officer's Choice Blue Whisky and Sterling Reserve B7 and ICONiQ continue to get the A&P support. The numbers that I'm sharing with you are after providing for that investment. Also, ABD Maestro, like I said, for the first two years, is likely to lead investments. Therefore, going from 13% to north of 15% is after providing for investments in the brand. Also, people, process, and tech infrastructure, we are strengthening. We are moving from ECC to HANA, for example, this year. That's a big transition for us in terms of the tech platform. I earlier spoke about how we are putting our salesforce practices, including our sales incentive program, JIT, as part of our automation program, our risk factors. We are looking at investing in our SNOP digitization practice. The numbers, the outlook that we have given on EBITDA is after providing for investments on our core brands, investment on ABD Maestro, and also investment in people, tech, and processes. You will see over the next balanced seven quarters, you will see gradual progression on the EBITDA numbers. Okay. Go ahead. Got it. I think one data point on, I think, one previous part of it when I asked you about the operating cost structure for ABD Maestro. Can you share a number there in terms of annual basis, FY 2026, FY 2027, what would be the kind of cost structure there in terms of OpEx? I think little early days, like I said, I think on ABD Maestro, let's talk in quarter three. We'll have a better sense on ABD Maestro. Right now, the focus in H1 is the portfolio. We are building two hubs for manufacturing. One is in Aurangabad, which is Maharashtra, to service the market of west and south. The second hub is in Haryana. You know, Haryana is the largest market in north. The second hub is in north, which is Saha or unit in Haryana, which is going live this month, has gone live this month. Brands, manufacturing, the team is in place. Listing in on key accounts, we already have three large national hotel chains where we've got our listing. I think the focus right now is just about getting the fundamentals in place so that we can grow from there. I think Q3 onward, we should be able to talk a lot more about numbers there. Got it. Just one last question from my side. After this, I think, exciting newly hike in Maharashtra, what's the consumer behavior which you are picking up? The early days, the last one month? Too early. The retail still has stock of the old prices, right? I think towards the first week of August, the new MRP inventory will roll out. We are as keen as you are to understand what will happen in Maharashtra, but these are early days. Fair to say July had very less primaries? July, it's not about primaries. The distributor and the retail outlets were carrying enough and more inventory. From a consumer point of view, let's say a retailer was carrying X week of inventory and the distributor was carrying Y week of inventory. Therefore, from a consumer point of view, even now, in many markets, old MRP stocks are available. We have started to see the new MRP stocks coming on the shelves. I think by 7th and 10th of August, we'll start getting the retail audit in terms of what's happening to consumer behavior. Anything that I tell you right now will hold no good because it's a mixed situation, old MRP, new MRP. Okay. My question is more from, I mean, the primary, I mean, your sales to distributors, right? Was that impacted in July because of the, you know, talking about old MRP? Everybody is impacted. Everybody wants to understand what will happen in the market. Absolutely. Goes without saying. Got it. Thank you so much for that. Thank you. Thank you. Our next question is from the line of Akhilesh Bhatter from IKIGAI Assets. Please go ahead. Hello. Congratulations on a good set of numbers. I just want clarification regarding your guidance for working capital this year. You mentioned that Telangana receivables are, you know, again, coming at a very slow pace. How should we look at working capital this year? Will it be a big drag as similar to what it was last year? No, not at all. I think operations, the EBITDA that we generate this year should be more than sufficient to meet the entire growth capital requirement for the business. In fact, it'll leave free cash on the table. The only reason we may need to borrow is for our project that we've already discussed. From an operation point of view, the business is self-sufficient and will generate free cash. If the Telangana money was to go in, we'll see a significant reduction in our net debt as well. Thank you. Thank you. Our next question is from the line of Nikhil Kapoor from LIC Mutual Fund. Before that, a reminder to all participants, please make sure you're asking two questions per participant. Nikhil, sir, please go ahead. Hi, sir. Congratulations on a great set of numbers. Just one question. Most of my questions have been answered. Just one thing. I know it's early days, but this new category of Maharashtra-made liquor, which was talked about in the excise policy, would we be able to quantify if any benefits should flow to us under this category? The answer is yes. What this category will need is capacities, and we are geared up and ramped up our capacities in MML. We definitely see an upside on the volumes. Got it. Difficult to quantify it, too early days. Policy is not out. The reason is that policy is off. So far, only the duty structure is announced, which is INR 370 price. Until we don't get to see contours of the policy, it's very difficult to understand. Understood. Thanks. That's all from my side. Thank you. Thank you. Our next question is from the line of Dhiraj Mistry from ICICI Securities. Please go ahead. Yeah. Yeah. Hi, Alok. Hi, Mukund. Sorry, I joined a bit late. I would like to know what is the growth rate excluding, let's say, Andhra Pradesh market and Delhi market, which was kind of a one-off and that market has reopened? Sorry if you have answered that question. Not at all. Happy to answer the question again. Our Q1 growth is 17%. Without Andhra Pradesh and Delhi, this growth would have been about 30% to 40%. Got it. Got it. More from this, like new product launches, we have definitely increased our recreation in terms of product launches in the luxury and premium segment. Now that the incremental many players have been coming in this segment and this space is in a way getting more crowded, what is the growth trajectory, let's say, going ahead you expect from this? How the saliency of this or, let's say, the profitability of this segment would move in a three to four years period of time, especially when we are into the investment phase in this segment? Your question is related to the Super-Premium luxury segment? Yes. Yes. Like I said, of the 4 and 10 million cases, the volume sale is about 3%, translating to about 12 million cases. It accounts for 20% of industry profit. A typical case, NSV is about 8 to 10x versus brands that operate in the prestige segment. Gross margin profile is about north of 55%. Our outlook is over the next two years, whatever money we make on the brands, we will reinvest in the brands. Therefore, we do not expect these brands to contribute to our EBITDA. There'll be some costs associated with the organization and manpower, but the brand will take care of it themselves from a marketing A&P point of view. In year three, we are targeting the EBITDA for it to start contributing to EBITDA. From just a unit economics comparison, NSV is about 8x of the prestige segment. Margins for us are, let's say, 40-odd% on our ABD portfolio where margins are about north of 55%, but that too on a much higher NSV. If over the next three or four years, we can get to a single-digit market share of a 15, 20 million case segment, that's about a million cases. It should make a significant difference both in terms of top line and bottom line. Got it. Got it. For the next three years basis, it would be. A margin dilute you from the portfolio level point of view or let's say on an aggregate basis level? For the first two years. For the first two years. Got it. Got it. Okay. Lastly, on this backward integration, the benefit of this, let's say the PET bottle, which should be finished in, let's say, a couple of months of time, what kind of saving are we expecting on an annualized basis from this project? The PET project alone should be analyzed, addition should be north of INR 30 crore. Okay. Thank you. Thank you. That's it from my side. Once again, congratulations on good sets of numbers. Thank you very much. Thank you. Our next question is from the line of Nikhil Gupta from Yu Capital. Please go ahead. Hi. My first question is, I think, related to Rock Paper Rum. I think it's quite some time we have approved the investment. What's happening on that front? Can you please elaborate? Thank you for this question. It's just been getting the quarter one on track and growing, nothing else. It's just a matter of finding time. Hopefully, we'll announce soon. Okay. The investment has been already made? No. Is it still in the signing phase? No, we've not made any investment in the business so far. Yeah, that's what I was trying to ask. I mean, I think we approved in the quarter four. Like I said, I think we just got busy with our quarter one operations. Therefore, we felt that let's just try to not put all our energy behind getting the quarter one off on a good start, and depending on closure and the investment thereof, we'll focus in quarter two now. Okay. How are we? What's our target? How many cities do we want to expand that? What's the dream? What's the target step, if you call that? This brand operates in a sort of premium, Super-Premium rum segment. The size of the segment is roughly 3 million cases. It has one notable competitor. The idea would be over the next couple of years to target a double digit or a higher market share. The relevant market, in terms of numbers, would be about 10 to 12. The brand is already registered and operating in 7 of those 12 markets. The balance 5 we will need to open up over the next few quarters. We have distribution in place. Once we get this brand up and running, we should see quick results coming out. Understood. Thank you very much. Thank you. Thank you. Our next question is from the line of Naitik from NV Alpha Fund. Please go ahead. Hi, sir. Thanks for taking my question. My first question is, when I actually look at your numbers and I compare, fewer revenues are sort of similar, but our expenses have increased. I just wanted to know if you could quantify where we have spent the extra amount, that would be really helpful. We've had a slightly higher expense on people, creation of the ABDM team, also our Menakshi distillery, also announcing increments for FY 2026. There has been an increase in our people cost. The second big element is the higher investment in the A&P behind the brands. The two big ticket items where a bunch of the investments have gone. Sir, just wanted one clarification. You mentioned that due to the U.K. FTA, the import duty coming down, the benefits would be closer to 400 basis points. Is that correct? 200 basis points. 200. Right. Got it. That's it from us. Thank you. All right. Thank you. Thank you. Ladies and gentlemen, as there are no further questions, I now hand the conference over to the management for closing comments. Please go ahead. Thank you and over to you, sir. Thank you once again for taking the time out. I hope, you know, we've been able to provide you data queries and clarifications to the extent possible. However, if there is anything that remained unanswered or you need a follow-up, please reach out to Mukund. We'll be happy to, you know, provide the data. Thank you once again for taking the time out. Thank you. On behalf of Antique Stock Broking Ltd, that concludes this conference. Thank you for joining us, and you may now disconnect your line.