Ladies and gentlemen, good day, and welcome to the United Spirits Limited First Quarter FY 2024 Earnings Conference Call. As a reminder, all participants will be in the listen-only mode. 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 then zero on your touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Shweta Arora, Head of Investor Relations, United Spirits Limited. Thank you, and over to you, ma'am. Good evening, everyone, welcome to United Spirits Limited First Quarter FY 2024 Earnings Call. Today on the call, we have with us our Managing Director and CEO, Ms. Hina Nagarajan, who is joined by our CFO and Executive Director, Mr. Pradeep Jain. Hina will start by providing an update on business performance during the quarter, while Pradeep will run you through the financial performance during the period. Post this, we will open the floor for questions. With this, I hand over the call to Hina for her opening remarks. Over to you, Hina. Thank you, Shweta. Good evening, ladies and gentlemen. Thank you for joining us on the Q1 FY 2024 earnings call of United Spirits Limited. Before we begin today's call, I would request all of you to join the Diageo India team in observing a one-minute silence to honor Sir Ivan Menezes, who led Diageo plc and played an instrumental role in its transformation since he took over. He was more than just a CEO. He was an inspiration and a mentor. He was a true believer of our purpose and led by example by celebrating life every day, everywhere. We thank you all for your thoughts and messages during this period to the Diageo India family. We truly appreciate it. We now request all participants on the call to observe one minute silence, please. Thank you, over to you, ma'am. Thank you. Thanks to all of you. The last 45 days indeed have been very tough for all of us at Diageo around the globe as we mourn the loss of Ivan. Having said that, we have set ourselves up exactly as Ivan would have expected us to. Before I talk business, I would like to draw your attention to our press release, where you would have observed that we have introduced our consolidated performance for the first time. This has been on our mind for a couple of reasons, and we have opted to make a clean start with this in the new fiscal year. Firstly, we have now optimized our legal entity footprint and Royal Challengers Sports Private Limited, RCSPL, as we call it effectively, is the only operating subsidiary. Second, RCSPL is now also growing in sales, especially on earnings driven by the new media rights cycle that has kicked in from the just concluded season. Therefore, it makes eminent sense to start talking about consolidated and standalone performance going forward. Let me start by giving some context on the macro environment as we are seeing it. Things largely remained steady visually the last quarter. Consumption was resilient in the April to June quarter, and India remains a bright spot in an otherwise volatile global macroeconomic environment. We don't see any major risks to this recent trend over the short to medium term, especially since the penetration for our category still remains very low. Q1 is the lowest quarter for our business, but on a relative basis, we have performed strongly in the P&A business, while the popular segment remained under pressure. That said, our trademarks are performing competitively against the popular segment as well. Recent news on duty increase in our home state is not very welcome, given the fact that duties are already on the higher side in the liquor and demand was already under pressure. Coming to the performance for the first quarter, we have delivered strong double-digit growth both in the P&A segment as well as overall net sales. This provides us confidence in our strategy and the virtuous cycle we have of productivity fueling brand investment and that fueling top-line growth is working, and it reinforces our commitment to future-backed, consumer-led approach to business. I'm also happy to inform you that with this quarter close, we have successfully write off our accumulated losses. Briefly now on the key portfolio update. On the first anniversary of Godawan in May 2023, we introduced Godawan 100, which is a bespoke 100-bottle collector's edition, handcrafted luxury single malt that pays homage to the Great Indian Bustard, popularly known as Godawan. With only 100 bottles produced, each bottle is different. It's made with utmost care. Every bottle has a unique etching of the Godawan on it, attributes that make it a collectible. We have received great response on the 100. All bottles were sold immediately, and we fetched upwards of INR 90,000 per bottle. This is really encouraging for us from a brand equity standpoint. Secondly, we have expanded Godawan reach, and it was launched in New York City and New Jersey in May 2023 through an immersive experience at an acclaimed Indian restaurant in New York. Godawan is currently available across 40+ outlets, including trend-leading outlets like Baar Baar, Junoon, GupShup in New York and New Jersey. Royal Challenge American Pride is now present in 80%+ national premium markets across the country. In the current quarter, we have expanded our reach to Odisha and Karnataka. We are engaging a lot in focused activations of the brand. Our association with the Backstreet Boys concert in May 2023 helped us bring the world of America closer to our consumers, delivering 30 million+ impressions on social media and helped connect with 22,000+ consumers at the concert itself. Our other consumer-centric activations, such as participating in major food festivals and bringing the American lifestyle to life with camper vans, has also been very well received. As mentioned earlier, we are positive that this will be our quickest 1 million-case brand. Our completely renovated bottle of Antiquity has reached now close to 50% of the premium markets. We are receiving very positive reviews from retailers and consumers alike. Our renovated Royal Challenge whisky continues to expand its footprint, and we are happy with the way it has responded and enabled the overall momentum on the trademark. Johnnie Walker Blonde was our biggest ever global innovation launch in the premium portfolio. India was one of the first markets alongside Thailand and Brazil for the launch. It is now available in nine states across the country. Our immediate focus will be to enter new geographies and continue to scale up distribution and visibility in the launch markets, driving liquid on list through a differentiated serve, along with event partnerships for non-trade activations will continue to be the key levers of building this brand. Delighted also to share that the earnings from men's IPL season have stepped up significantly as we have entered a new five-year media rights deal for the period 2023 to 2027. This reinforces our confidence to reap the benefits of our investment in our Women's Premier League over the longer term. As articulated in the media release, our sports business is fully aligned to our core purpose of celebration and gaining premiums in our consolidated earnings portfolio. The multi-year supply chain agility program announced earlier in the calendar year, which aims to strengthen our end-to-end manufacturing footprint, is also on track. We are also progressing well on our ESG journey and on track to achieve Society 2030 goals that we have set for ourselves. Towards this, I'm really, really proud to share that we have not only overachieved our water replenishment target by 25% in volume terms, but we are also three years ahead from the originally set timelines. We have achieved our target in 2023 versus the target deadline of 2026. Secondly, we have committed to replenish the mangrove foundations in Odisha to restore the delicate natural balance of coastal regions for climate resiliency. In addition, we have collaborated with Angul District Forest Department to expand the forest cover by committing to plant two lakh trees in the next three months. All of this together is helping us to expand our green footprint and reduce Scope 3 emissions in line with our commitment to reduce the overall carbon footprint and Society 2030 goals. Let me give you on awards and recognitions for our brands. Black Dog redesign won a coveted gold at the DBA Design Effectiveness Awards 2023. Godawan Artisanal Single Malt received a silver for packaging design at the 2023 FAB Awards. These are only a few. Godawan has received almost seven awards in this quarter. Looking ahead, our focus is on continuing the accelerated growth momentum that we have now established, taking our renovation and innovation offerings to their fullest potential and continuing to work on the longer-term consumer foresight growth pipeline. We have significantly ramped our capabilities in areas of acceleration, maturation, innovation, and consumer insight. This, along with enhanced use of digital tools and renewed focus on effectiveness of sales and marketing, is making us future-ready. With this, I hand over the call to Pradeep for an update on the quarter financial performance. Pradeep, over to you. Thank you, Hina. A very warm welcome to all. As always, it's an absolute delight to interact with all of you. Before calling out the quarterly financial performance highlights, we'll request you all to refer to the results press release posted on our website last evening. Already mentioned by Hina, we have, for the first time, introduced consolidated financials in the presser. We haven't yet added all the details, as we are already publishing restated and reported numbers, we did not want to add to the clutter. We will start adding the necessary consolidated financial details once we have a clear base from Q3 of the current financial year. By now, all of you would be quite familiar with the terminologies used in the document. The first one is reinstated, wherein all numbers are adjusted for the Pioneer Distilleries merger, as it is effective April 2021. Therefore, for the previous periods, the numbers reflect the merged entity. Current period reported numbers are already inclusive of PDL that make strict comparisons. The second term that we have been using for the last two quarters is rebased. This is eliminating the impact of the strategically reviewed popular portfolio from the base year to make comparisons meaningful and absolutely like-for-like. This hopefully provides all of you with a better understanding of the organic business performance. We have started the new fiscal year with a robust quarterly performance, both in terms of P&A and overall NSV growth. Price mix remains strong, driven by continued premiumization focus, headline pricing, and revenue growth management initiatives. Lower prestige and popular segments remain under pressure, driven by consumer inflation impacting the lower FMCG consumers and the high headline pricing in the popular segment. Like for like, we have delivered an overall portfolio NSV growth of 17.4% during the quarter. P&A growth stands at 21.2%, with strong double-digit growth in our Scotch portfolio. Reported gross profit was INR 947 crore, with a reported gross profit margin of 43.6%. Excluding the one-off benefits, core growth margin was at 43%, reflecting the continued sequential improvement. Our marketing reinvestment rate during this quarter was 6.8% of net sales. A&P is an extremely critical component of our virtuous growth cycle, and we will continue to invest in A&P to drive sustainable profitable growth, ramp up equity of our brands, and overall build brands that are aspirational and iconic. EBITDA for the quarter stands at INR 385 crore, and reported EBITDA margin is at 17.7%. Excluding the one-off benefit of INR 13 crore, core EBITDA margin was at 17.1%. There is an exceptional charge of INR 17 crore on account of the ongoing supply agility program. Overall, our reported PAT for the quarter is at INR 238 crore, with a PAT margin of 11%. We can now open the floor for questions. Thank you. We will now begin the question and answer session. Anyone who wishes to ask a question may press star one on their touchtone telephone. If you wish to remove yourself from the question queue, you may press star two. Participants are requested to use answers while asking a question. Ladies and gentlemen, we will wait for a moment while the questions queue assembles. Our first question is from the line of Jaykumar Doshi from Kotak. Please go ahead. Hi, good afternoon, thanks for the opportunity and congratulations on the traffic numbers. I have a couple of questions. The first one is, now this is the second consecutive quarter of double-digit volume growth in P&A, much higher than your guidance of 4%-6%. I'd like to know what is driving this and whether this is sustainable for a few more quarters? Hi, Jay. Thanks for the question. I would say, yeah, there's... It is robust this quarter, and there are a couple of factors. I think the 100% normalization of BIO, as you know, we were out of the market, country market for a while, and we were normalized since the previous quarter. The 100% normalization has happened in this quarter, and I would say the other reason is really the ramp up of our innovation and renovations, right? We've done quite a few. As I mentioned, now, you know, Royal Challenge, Signature, these are all now in the growing market. That ramp up has also given us some volume benefit over the previous quarter. We expect this to now normalize in line with our guidance going forward. You know, a few one-offs in this quarter, driving that. Thank you. Likewise, on profitability, I, you know, we had the cyber numbers for promotion offline item transparency, so lower than the normalized one and due to seasonality. Does this quarter give you confidence of surpassing 15% this year, or you think it should be about 15% from now? Yeah. I would say, I think, basically, look, if you look at it, you know, A&P, as you rightly pointed out, is lower, right? I think if you sort of normalize, you know, the underlying is at 17.1, and if you know, normalize the A&P spending to what our guidance is, 9%-10%, that would mean another two and a half off. I mean, our real, the way to look at it is we are probably at about 13.5%, 13%, 14.5% division. Like we said, our first target is to sustainably reach 15% and, you know, keep it at that, right. just one final quick question or, what is your impact of recent, tax increase in Karnataka? If you could explain us, because, you know, media articles are quite confusing when it comes to taxation. Like I mentioned there, I think, this was not a welcome tax increase, right? I mean, the tax rates in Karnataka are already much higher. What's, you know, what we had is a 20% tax increase, which in effect means that MRPs of our brands will likely go up in the range of 13%-17%, become even more expensive in the state than, you know, they were already. It's too early, I would say, to call out the impact on demand, but again, our experience suggests that there is generally a, you know, a negative impact when prices go up so much. I mean, the divestment of our popular business, the saliency of the space for our popular portfolio has reduced extensively. you know, popular was already under pressure, you know, because of the consumer's wallet and the pressure with inflation. It's difficult for me to call out consumer impact, but it's definitely an area for us to watch. If I tell you 14% increase in MRP without any increase in net realization, and it is just across all price points? Yeah. Pradeep? Yeah, by and large. By and large, yes. That's what, right? No realization improvement for the manufacturer and the brand owner. It is effectively the government just taking the revenue. Understood. Thank you so much, and wish you the very best for the coming quarter. Yes, yes. Thank you. Our next question is from the line of Percy Panthaki from IIFL. Please go ahead. Hi, team. Congrats on a good set of numbers. My first question is on the employee cost. I think earlier the expectation was that it would be in the range of about INR 140 crore-INR 160 crore per quarter. Now this is the second quarter in which it is in the INR 120 crore-INR 125 crore kind of band. Is it that you have really done some work in terms of reducing the cost by cost post the popular portfolio sale? Now INR 125 crore seems to be a more sort of reliable figure on a quarterly run rate basis. Yes, sir. Yeah. Yeah. Percy, absolutely fair question. Look, we will maintain our original stance of look at the four-quarter averages, right? I think that will give you a reasonable sense of the numbers, right? There will always be quarterly variances, right? On account of, you know, actuarial valuations, retireals, et cetera, et cetera, right? We maintain the number, the true number to be, just look at the four-quarter trailing average. I think that will be the right number. Okay. The four-quarter trailing average is about 140 approximately. Okay, thanks. Second question, you know, cycles where, you know, the annual increment cycle comes around September, October, et cetera, that's what we start kicking in broadly. Understood. Understood. Second question I want to ask you is that, is there now, compared to pre-COVID period, is there now a permanent change in the phasing of the primary sales across the four quarters? The reason I'm asking this is that, I mean pre-COVID, Q1 used to be about 23% of the annual sales, and now it has come down materially to around 20%-21% of the annual sales last year. Q2 has sort of increased its variance now versus what it used to be pre-COVID. Is this sort of a permanent kind of a change in the phasing of the primaries, or is this just some sort of vague results? See, the reason why I'm asking is that if basically I take a normal YOY growth in Q2 this year, then the sequential growth will be significantly ahead of what it used to be pre-COVID. The question is in light of that data. Let me take a shot at that. Let me take that, and I'll add if necessary. Then you can add, right? Again, pardon all of us. Both of us are on different locations, so pardon us for that. Percy, look, I think you've hit a very, very important point, right? Our perspective on this is there is a little bit of a shift. As the salience of the top-end brands increases in the overall portfolio, there is a little more nuanced seasonality to that part of the business, right? What do I mean by that, right? Honestly, we've not looked at it so much from a quarter-on-quarter basis, but I think for us, the July to December and then the Jan to June, those are two very, very relevant distinct halves, right? In one, you know, in July to December, you are selling into the season and into the festive season, right? Therefore, that's a very, very distinct half, right? Then at Jan to June, you are kind of drawing down, et cetera, your inventory levels. You are right, I think pre-COVID, the seasonality between these two halves used to be, if I remember, 51/49, right? I have some broad numbers in my head. Post-COVID, right, as the salience of the top-end portfolio has increased, this number has moved more towards 54/46, right? 54 in July, December, and 46 in Jan to June, right? I hope that answers, right? The simple reason is, the top end of the portfolio is more driven by festive season, et cetera, et cetera, so it's a lot more skewed towards the October, November, December quarter and a little bit in January. Very, very helpful, Pradeep. My last question, if I may, is on the other expenses. Again, I ask this because post-hiring of the popular portfolio, we are still grappling in terms of what is the sustainable number here. In Q3, Q4, you had a number of about INR 325 crore-INR 350 crore. In Q1 again, it has dropped materially to INR 290 crore. Is there sort of any one-off saving in Q1, or is it that your plan of cost saving in terms of reducing manufacturing locations, et cetera, et cetera, is playing out well? If that is the case, then probably this lower number is something which would be sustainable in future as well. I mean, this is the entire other expenses. Look, okay, it's a combination of variable and fixed, right? Very top line, 60% of that base is variable expenditure, so that should go in pretty much in line with volume, right? Obviously, net of whatever productivity, I mean, inflation and productivity that we drive. There is a fair amount that fits in that chain, so therefore there is inflation also and we drive productivity also, right? The balance 40% is largely fixed corporate overhead, et cetera, on which we do derive operational efficiency, right? So therefore, I think that's the broad sentiment that I can provide. Yeah, hopefully the numbers will kind of, you know, fall into a reasonable logic based on this. Right. Right. That's all for me. Thanks and all the best. Thank you. Thank you. Ladies and gentlemen, in order to ensure that the management is able to address questions from all participants in the conference, please limit your questions to one or two per participant. Should you have a follow-up question, we would request you to rejoin the queue. Thank you. Our next question is from the line of Jeetu Panjabi from EM Capital Advisors. Please go ahead. Thanks. Thanks. Hina, Pradeep, I thought the numbers were really good. Congratulations! Two questions. Just from the sense you're getting from what you've achieved this quarter, as well as what you're sensing in the market in general, do you kind of feel that this year-end, this season would be a very, very good season for you guys, just based on the plan that you're working towards? Hi, Jeetu. I think great question. Jeetu, we have seen robust sort of, you know, the premiumization consumption continues in the, you know, mid to upper and, you know, the higher ends of the market. I think if you look at on-trade socialization, if you look at the revival of global travel, all indicators are that the season will be good. The pressure, if any, is only at the lower end, right? Popular and, you know, the bottom end of prestige, where I think consumers are feeling the pressure on the wallet, and that has been slow for a few consecutive quarters. Our hotels and our banks are performing competitively. No reason to believe we won't have a good season. I think we will have a good season as we go into the festive season. Okay, wonderful. The other question is, you know, it's fantastic to see you giving consolidated numbers and putting into a cricket franchise, into the overall accounts. My question is, I also heard that you've now wiped out all your accumulated losses. Is that going to translate into the company starting out dividends and cash flows gonna be going to show in the pockets? Or, and two, is there anything else you think you'd be doing as you access the cash flows from the cricket franchise? Pradeep, you want to take that? Yeah, I'll take that. Jeetu, we have stated this earlier, pretty consistently in our calls, right, that, you know, once the mothership, which is USL, wipes out the accumulated losses, we would want to come out with a formal dividend distribution policy. We are working on that, you know, a few scenarios, et cetera. Hopefully, over the next three to four months, we will issue out a formal dividend distribution policy, right. Then all of you will have access to it. Therefore, yes, I mean, the simple answer is, we would want to get back into dividend distribution, right. Having said that, I mean, we continue to explore, any, you know, any opportunities, et cetera, for growing our business for the longer term, et cetera. In case that comes, obviously, we have the cash and the leverage ability on our balance sheet to be able to do both, right? That's what we will go ahead with. Okay. Super. Thank you. Good wishes as always. Thank you. Thank you, Jeetu. Thank you. Our next question is from the line of Abneesh Roy from Nuvama Institutional Equities. Please go ahead. Yeah, thanks, and congrats. Good set of numbers, including with from IPL. I wanted to understand in IPL now, all the key things are being held. In fact, in Q4, you won the right to women's IPL team also. If you could share over a longer time frame, how would you see the revenue and the EBITDA scale up to put the things together? I'm not asking for any specific guidance, but just the way men's team is now doing so well, do you expect that the women's team overall, over a longer time frame, will also be quite profitable? Let me ask Pradeep, who's here, Pradeep, to answer that question. Okay, super. Abhi, I mean, you know, like Hina mentioned, you know, my response will be more as a cricket consumer, right, and not as the CFO of USL. Look, I think our bet is on cricket and the women cohort, right? I mean, that's what we have to fundamentally believe in. Even if you look at the trajectory of the men's IPL, the first 10 years were an EBITDA loss-making proposition, right? At that point of time, no one thought that the media rights would reach the scale at which they reached, right? What the men's IPL trajectory reinforces our confidence is, that at some point of time, the women's cricket will also hit that inflection point, right? That's what we are betting on. So far, there is nothing that is kind of pointing to the reverse in that, right? Therefore, we remain equally confident that in eight, 10 years time, et cetera, women's cricket will also, you know, hit that inflection point, and it will be as profitable, if not more. Actually, you are saying all the figures even today, Pradeep. I mean, if you look at women's cricket, you know, popularity, et cetera, the metrics are all in the right direction, right? Absolutely. Yeah, Yeah, absolutely. Sir, broadly, I just want to also kind of manage expectations. Look, the RCB team has just capped for five years, right? The media rights, auction happens once in 5 years. Broadly, it's a capped team, and obviously, we'll continue to drive some accretive, you know, revenue growth management, et cetera, et cetera, local sponsorships. Fundamentally, it's a INR 300 crore profit for men's IPL and a INR 90 crore loss for women's player, you know, for women's premium, very broadly, right? That's the way it'll stay for the next five years now. Sir, one follow-up on the cricket series. We are having the World Cup in coming months. In the past, and even, which is actually the same program, do you expect some kind of an uplift in terms of the cricket-related demand, people would be more in terms of the bonding? Would you expect some kind of uplift because of the Cricket World Cup also this time? It's happening in India. Timing, et cetera, would be quite suitable also. We do see uplift, and we do see an uplift during cricket. I mean, IPL, et cetera. I mean, you know, it is a very big social occasion, right? I mean, we activated Royal Challenge this time around IPL, and it is very much about, you know, people getting in, especially because in-home consumption has become far more normalized. Okay. I would imagine that, you know, there will be some uplift. I don't know, you know, a quantum uplift measure, but definitely it is a very big celebration and social occasion. Last question, your BIO portfolio now has come back again. BIO City could update. Is it meeting your initial expectation? Especially in terms of market share, when I see, clearly it seems that now you are doing far better than what it was just four years back versus your key competitor. Your key competitor is employed in some of its own legal issues. I'm not going into that. I'm just asking, what is your strength in terms of market share, and in terms of BIO, would you be happy with the way things have gone as we reach their expectation? Yeah, I would say yes. BIO has come back as per our expectations. As if you remember, I mean, last quarter onwards, we have started putting, you know, in back into that portfolio and keep building the brand. I definitely, you know, I talked about Johnnie Walker Blonde, which is actually really doing well. Yes, the answer is yes. The second part of your question, Abneesh, was market share? Yeah. I would say yes, we continue to perform very competitively across segments on market share. Thanks, sir. This was all. Thank you. Thank you. Thank you. Our next question is from the line of Prakash Kapadia from Anived Portfolio Managers Private Limited. Please go ahead. Hi, Prakash. Hi. Hi, Pradeep. congrats to the team for, you know, wiping out your accumulated losses. That's a big, big, nice one. you know, could you give us some sense on, you know, Delhi market, have things like average growth rates been in the last few quarters are better from where they were? I had one more question. Media reports, you know, suggest, Bottled India brands' growth has slowed down post the, you know, excise, policy reduction, where, you know, premium and, you know, higher brands are growing much faster after the, you know, price cut by almost 25%, 30%. What are you seeing in, you know, some of the Bottled India brands, such as Black & White? If you could give some sense, that would be helpful. Sure. Look, on Delhi, no comments on, you know, competition or anything, but in general, because of the duty market change, the market has shrunk for us, and we have stabilized at a certain volume. We are supplying all our brands, but it is, you know, a fraction of what it used to be. It is stable. Our focus has been on whatever, you know, is lost in Delhi to grow and new, you know, to set up in the rest of the country. We have, you know, 36 other states or 35 other states for us to do it. We are focused on that. Actually, our experience is not showing that, you know, just because BIO is growing, BII has stopped. BII also continues to have very robust growth, as does, you know, upper prestige, mid prestige. Because like I mentioned initially, the penetration of our category is still quite low, and because this category is now seeing across various segments, a lot of innovation and renovation. And, you know, consumers are experimenting much more, so they don't get to own one brand or this brand. Many small things. Growth across the segment still looks very healthy, and it, you know, BIO is not, like, slowing down the others, right? We see a lot of ups through directly, or entry directly into the upper category. Okay. Okay. Understood. Thank you. Thank you. Thank you. Our next question is from the line of Tejas Shah from Spark Capital. Please go ahead. Hi. Hi, Hina. Hi, Pradeep, thanks and congrats on the set of numbers. A couple of questions from my side. First, if you can give us a sense on RM scenario and how should we think about margin trajectory in the near to nearer term? Yeah. Tejas, thanks. Let me take that, right. I mean, let me give, you know, let me cover the two core ingredients. Alcohol spirits, it played out pretty much the way we had thought, right? We had called out three factors, which are unfortunately all headwinds, exactly playing out the role. The ethanol fuel lending policy, the union elections, and therefore the increase in minimum support prices from the feedstocks... and El Niño factor, right? Whatever, you know, you are reading, is pretty much, you know, what is the reality. Therefore, neutral as cost spread does remain inflationary. Now, we are doing tactical things, right? Right now we are doing tactical things in terms of increasing our physical coverage, going slightly long on physical contracts. Obviously the longer term intervention of increasing our co-location footprint that as part of the supply delivery program is already on, and we are trying to improve our railing deflation coverage, right. That's on neutral as cost spread. It does remain inflationary. Okay. Coming to glass, I mean, it is a completely sellers market right now. The glass industry capacity utilization is close to 100%. On top of that, there is consolidation in the industry happening. Therefore it does remain inflationary. April, May, June are quite inflationary. If you also remember, the real inflation in glass last year started somewhere around the August, September mark. Therefore, we are still lapping low bases of glass in the prior year because we had, you know, our suppliers had longer-term contracts coverage in places. Therefore, you know, the inflation still remains high. We'll have to watch out. I mean, there is some unwinding. The natural gas was a relief. Some unwinding happened on account of that. Soda ash is beginning to unwind. Again, we'll have to see how much coverage we have, et cetera, and then the last thing is furnace oil. We do expect, crude has come down. So far furnace oil hasn't yet come down, to the levels that we had thought. Hopefully, you know, it does track crude and over the next three, four months, et cetera, as it comes down, hopefully we'll get some relief, right? That's broadly the, you know, the inflation landscape. Sure. One follow-up, all the headwinds that you just talked about were already there in this quarter or they are actually incrementally picking up pace as we go along? Actually, all of them to some extent are there, right? Now, El Niño completely has not played out, but we do hear that the current showing of rise has got delayed to some extent, right? That will probably play out in the next two, three months. The other two are very much playing out. Sure. We have seen a lot of recent years, BBs have not rolled out, unfortunately, our sector has been punching back through several. We have also seen the kind of unpredictable 24 months. I don't see that trend changing much. How do you kind of accommodate that kind of growing headwind in terms of predictions and numbers and such like that? You had also raised this point that you were raising it with government in terms of changing or using this problem statement from much more structural lens. If you can share your thoughts both on near term and on the longer term on this point. See, I would say in the near term, I mean, our experience is that, you know, some play out positive, some play out negative, and balance, I think we know how to deal with it. I would also say that a number of states, especially if you look at COVID, I think there was 1 instance where a number of states put out, you know, COVID tax on the category, and the category shrunk drastically in these states, and then all states, you know, very quickly retracted the tax, right? I think state governments also have the experience and understand that there is a sweet spot between revenue maximization and through tax versus revenue maximizations and the balance with volume. Our continued advocacy, you know, helps balance the narrative, and we have modeling that shows the state government as, you know, there is a balance, and that balance is quite critical. You know, we don't have a way of factoring this in, but I think the experience that the team has and, you know, what we've seen over the last few years, I think balances itself on the edge, right? The longer term advocacy that you were talking about, we continue to do, and we are, you know, continuing to try and find models that will make it a win-win, you know, for the government and a win-win for the industry. It's something that we do through our industry association, and we are also doing it internally as a company. That is a, you know, mid to long term strategy. You know, I can't really say that it's going to play out over the next two, three, four months, but definitely it's something that we will continue to work on because, you know, harmonized tax, maybe an inflation link, you know, sort of price regime, these are all good for the industry and its growth. Great. That's all from my side. Thank you so much. Thank you. Ladies and gentlemen, in order to ensure that the management is able to address questions from all participants in the conference, please limit your questions to one or two per participant. Should you have a follow-up question, we request you to rejoin the queue. Thank you. Our next question is from the line of Harit Kapoor from Investec. Please go ahead. Hi, Harish. Hi, good evening. I just had one question on the near term, you know, kind of growth in P&H. You know, the annualization of the BIO business, it wasn't, it was, you know, out there in few states, probably happened only since Q4. Also, you know, your the fact that you've pulled out, some of the renovations, over the last couple of quarters, it means that... Wouldn't this mean that some of the incremental growth that you saw this quarter could also at least a portion of it, could be there in the near term also becoming quarters as well, at least in the next quarter? Obviously, I mean, renovations, innovations have now largely obtained the strength that they need to obtain in terms of, you know, distribution. Definitely there is a lot of juice in these, right? Just because they've distributed, doesn't mean penetrated all the consumers. Definitely I'm focusing on juicing out, you know, the benefits of all these renovation, innovation work that we have done. That is a, there is a premiumization that is inherently happening in the market. There, you know, totally reasonable demand. There will be some normalization, I think. I think, you know, our commitment to double-digit growth remains. Now, you know, a little bit, like I said, of filling the gap with BIO normalization, you know, ramping up the innovations, renovations that happened over the last few quarters, we expect that to normalize a little bit. I think, you know, the guidance of double-digit top line growth, we remain confident. Got it. Got Got it. The second one is just a little bit more detail. This quarter there's been a significant, you know, increase in the consolidated debt or standalone, which will be RCB business. Do you expect over the next few quarters, consolidated profits will be slightly lower, given that some of the costs in the current business, continue, or the revenue cost trends and so on? Is that the way to look at it? That's right. That's absolutely the right way to look at it. RCB cost base is not so high, right? A lot of it is variable expenses, you're absolutely right? Some amount of overheads will continue to be spent throughout the year, if the revenues come only in one quarter. Got it. That was my That was my next question. Thanks, Pradeep. Thank you. Thank you. Our next question is from the line of Latika Chopra from JP Morgan. Please go ahead. Hi, Latika. Hi. Hi, Pradeep. We have some small follow-up questions to your comments. The first one was on Karnataka State. You know, is it correct to assume that the sales in this state, in your overall revenues would have reduced, you know, growth management of popular portfolios? Absolutely right, Latika. Is it okay for you to get some little flavor? Is it like mid to high single-digit sales or any rough sense there? You know, we are talking about some very strategic features. I don't. We don't have the numbers in our head, right? The number is low, but you could figure that out. I mean, Shweta could tell you also. Sure. Sure. The second, which is just to, you know, get some color on or some feature on how are your key states are behaving in terms of, you know, consumer demand? And if you can talk about, you know, any large states for you where you are seeing, you know, consumption coming through much stronger than the others. Any qualitative flavors? I mean, I would say that, Latika, if you look at, you know, even historically, right? I mean, the southern states have always been more less premium, you know, portfolio-oriented than the northwest, et cetera. I mean, in that sense, I think the pressure on popular and the lower end is still more in the southern states than you do, at the, you know, other regional levels, right? On the other regional regions, I would say premiumization is playing out quite strong across. I mean, there is no one or two states where I can call out and say, "Oh, my God, these are, like, really going out." I think we are seeing this pretty much across. I don't know, Pradeep, if you wanna add any other comments? No, no, pretty much. Latika, exactly the same thought. The premiumization is fairly broad-based. Yes. Now, having said that, to Latika's point, right, you made this point earlier, North is 60% of the national Scotch market, right? On that high base, it continues to grow so well, et cetera. The share of growth of North is obviously, you know, the highest in the overall algorithm, right? That's I think that should give you some sense of where the growth is coming from. Understood. Got it. This is helpful. Thank you. Thank you. Our next question is from the line of Alok Shah from Ambit Capital. Please go ahead. Hi, Alok. Yeah. Hi. Hi, Pradeep, Pradeep, and Shweta. Congratulations. First is, now that after COVID, we are in the much more normalized environment. Just wanted to check from an overall category perspective, are you still seeing risky category doing faster than beer, or that was more like the COVID era where there were logistical issues we had to go through? What's your reading on that? I think beer has come back, right, quite strong, particularly after COVID. I mean, they were impacted quite badly, so they are growing. You know, there is continued momentum and growth that we saw post-COVID. Irrespective of beer growth, spirits is on its own trajectory. You know, what we are seeing is that consumers have really gone into experimentation and purposeful drinking. This is a lot more after COVID. You know, a lot of experimentation with cocktails, a lot of experimentation with white spirits as the base, a lot of experimentation with new brands. I mean, overall, I would say the spirits market remains very robust despite the, you know, beer market coming back. Got it. Got it. Just to build up, Alok, right? Just building up on what Hina has mentioned. I mean, India is actually a unique market, right? I don't think one of the, you know, alcohol-based sectors will grow at the expense of the other, even though there is interaction. I think there is enough headroom, right, for both to grow and both to thrive, right? That's what we've seen long term. You know, from a normalized environment perspective, would you actually, in terms of the volume, would have come back to about single-digit kind of levels or what would that be broadly from an industry context? Well, the market, I mean, is at mid-single digit level growth, right? I mean, if you look at the numbers, there is a little bit of shrinkage coming from Delhi, frankly. Mm-hmm. You know, that would be a couple of percentage points of growth. Yes, I think, you know, short to medium term, I think mid-single digit growth is on, and it probably continues to be, you know, be effective. Got it. Perfect. Okay. On the second question, now with respect to stock options and considering it's a, you know, part of global conglomerate, that's why I had this question. From a stock option perspective, is the management, sort of, giving nice great stock options or just stock options? Is there anything in other than these? Yeah. Okay. Okay. Okay. It's a combination, right? I mean, for the exec committee, it's a combination, right? They have a stock appreciation right for USL, and they have, you know, they have rights as well. Whereas for the next layer, for the rest of the senior leadership team, we by and large have the USL stock appreciation right. Got it. Got Got it. Thank you very much. Thank you. Thank you. Our next question is from the line of Karan Taurani from Elara Capital. Please go ahead. Thank you. Thanks for taking my question, Pradeep, and hi to you as well. First question was pertaining to IPL. You know, this delta of what you thought, in terms of the EBITDA or the PBT of INR 300 crore, you know, can this reduce over a period of time? Because I think player costs will also go up and other costs will also go up. What is the number that we are broadly looking at, you know, in terms of the overall PBT for IPL, say, two years from now? Karan, I think I mentioned that, right? I mean, basically the IPL P&L gets set once in five years. The biggest driver is the central media rights, right? And the local sponsorships, right? A little bit of inflation happens in our costs, et cetera, but so far we have managed to do well by increasing our local sponsorship revenue from dynamic revenue growth management interventions, et cetera, et cetera, right? If you look at the 20-year trajectory or the 15-year trajectory of what the main IPL, I don't think our P&L has worsened in any year, right? It has remained stationary or it has improved in those steps of every five years, right? That's the way we are looking at it, right? Obviously, we are trying to kind of do additional initiatives, et cetera, that hopefully give us some amount of, you know, growth and margin as well. Got it. In the best case, it will remain static, the INR 300 crore of delta over the years. Yeah, that's right. A lot will depend also on the team performance. If we slip from sixth to eighth, right, we will reduce further. We move from sixth to fourth to second, first, et cetera, obviously that's the kicker of performance relationship around. Got it. My second question was pertaining to market share and brands. I understand that internally, you know, your upper mid-tier segment reservation is high, and you can capture target markets. The volume growth has been good. In terms of external factors, can you highlight as, you know, what is our P&A volume growth number? Is it in line with market averages? Are we gaining market share? How is the market share? Just any color on that would be really helpful. We are performing very competitively on market share. I think, we shared this a couple of quarters ago with you, and, certainly those growth are very, very robust from a competitive point of view, and we continue our trajectory. Like I said, I'm pleased with the, you know, competitive performance, and that continues. Is it safe to say that we are kind of going ahead of the industry average in the mid-term competitive segment? We currently have never shared those numbers, right? Okay. Yeah. We don't want to get into that, right? What we can guide is, look, you get the earnings releases of both the companies, right? Pernod releases to the global earnings release, right? Therefore, you know, you can do your own simulation. Pricing is fairly consistent for all players, right? Barring for the mix factor. I think you guys can do your own modeling, right? You'll get a reasonable sense. You'll reach a 90% accuracy level answer, which should be good enough. Got it. Got it. Thank you for this. Thank you. Thank you. Thank you. Our next question is from the line of Tarbir Shahpuri from Nidara Capital. Please go ahead. Hi, thank you so much. Congratulations for the second quarter. I have some questions. The first one is a little bit abstract. If you could just maybe, you know, talk to us, if the UK FTA were to come through in some form or shape, what would that mean for us over the next few years? The second one is a bit specific. Is there any talk internally to change the name from United Spirits to Diageo India? Thanks. Let me answer the UK FTA first. From India, right, it is on the agenda, right, in the UK, India talk. We are optimistic that, you know, something will come through. It's very difficult to talk of impact, because that really depends on quantum and timing and phasing, right? I mean, there have been many discussions on phasing. Quantum, we have absolutely no idea finally where it will turn out. Broadly speaking, I mean, if the 150% duty was to go to 100%, there will be a 5%-7% change in pricing because customs, this customs duty is relatively a smaller portion of the value chain compared to the state excise, right? If the, you know, basic custom duty goes from 150 to 50- Right. You can see about, 12%-15% impact. Generally, if the price changes by that much, that reflects in, you know, sort of volume uplift of that kind of, liquor, right? That's the kind of range we would imagine, but it really depends on, you know, how is it implemented, how much is implemented, and, you know, hopefully whatever gains here are not made up for by the state by charging something else. There's a lot of ifs and buts. Very difficult to sort of calculate impact at this point in time. Hopefully, you know, if it comes through, when it comes through, it could have a positive impact on the industry. Fair enough. I was curious if you have any thoughts internally of changing the name of the company? Listen, we've explored it, right? It is a very long drawn process, and it means, you know, a lot of regulatory change, a lot of admin work. Let's put it this way, you know, license this, that, and the other. It's something that is under review, but we don't have a firm, sort of, plan as of now. All right, fair enough. Thank you so much. Thank you. Our next question is from the line of Akshen Thakkar from Fidelity. Please go ahead. Yeah, please make this the last question as well. Sorry, 2 questions. Going to the annual report, the trademark fees last year were 0, versus a high number in the past, then you had, I think, the distribution cost went up, last year. I don't know if this is to do more with the change in, you know, business scope to fit a popular portfolio, or was there something or not in both these line items? I'm looking at the P&L, PNL, items, disclosures in your annual report. Sorry, yeah. I didn't get the question. You are referring to the annual report. Annual report will be a bit of a hotspot this time because of the divesture, the franchising that happened in the middle of the year, right? It'll be very difficult to correlate numbers on a comparable basis, right? Yeah. Maybe we should take that offline, right? I mean, we'll be happy to answer that, right? If you could take that offline, right? The numbers right now, we're not able to read them, you know, in my head. I'll check it out. Thank you. Yeah. Thank you. I think we've come to the end of, you know, the session and, you know, as always, thank you very much for joining our call, and thank you again for your ongoing support to our company. It's always a pleasure to talk to all of you, and I look forward to doing this again end of next quarter. Have a lovely day. Bye-bye. Shweta Ma'am, any closing comments from your side? Hello. Yeah. Thank you. We'll just close today's call. For any follow-up questions or clarifications, please feel free to reach out to me. Thank you. Thank you to all. On behalf of United Spirits, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.