Ladies and gentlemen, good day, and welcome to the United Spirits Limited Q2 FY 2024 earnings conference call. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star then zero on a touch-tone phone. Please note that this conference is being recorded. I now hand the conference over to Ms. Shweta Arora, Head of Investor Relations, United Spirits Limited. Thank you, and over to you, ma'am. Good evening, everyone, and welcome to United Spirits first half and Q2 ended 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. Shweta will start today's call by providing an update on business performance during the period, while Pradeep will run you through the financial performance, for which we will open the floor for questions. With this, I hand over the call to Hina for her opening remarks. Over to you, Hina. Thanks, Shweta, and good evening, ladies and gentlemen. Thank you for joining us on the Q2 FY 2024 Earnings Call of United Spirits Limited. I hope all of you are doing well and enjoying the festive season and the Cricket World Cup with family and friends. I'm going to keep today's result update short to allow more time for Q&A, and as always, we'll start the call by giving a brief context of the business environment as we have seen it. Environment remains volatile, challenging with geopolitical tensions, rising fuel prices, and stubborn inflation, which continues to impact the value-sensitive consumers in lower SEC. We continue to experience this in our retained popular and lower prestige end of the portfolio. Amidst this environment, we've had a strong quarter reflected in our prestige and above segments, which saw a double-digit growth of 12.8% year-on-year, lacking a high base. That said, we are seeing the early signs of caution in the discretionary spend. It is difficult to ascertain at this stage if it is something structural. We continue to monitor the situation and will take necessary action depending on how the scenario evolves in the coming few months. Coming to overall performance for the quarter, we've delivered strong double-digit growth at 12.2% in the overall NSP. This is despite the headwinds related to double Shravan in July, August, September quarter, and the shift in the festive season to October, November, December. Cost inflation remains stubborn, and Pradeep will provide additional sound bites on that front. The ramp-up headline pricing in the back half of FY 2023 continues the healthy flow-through into the P&L this quarter. This is a confidence-building measure on our ongoing efforts around pricing advocacy. I'm also delighted to inform that the board of directors have approved an interim dividend of INR 4 per share. This is after a long hiatus enabled by the successful turnaround of the company to sustain profitability. As called out in the press release, we would like to thank all our long-term investors for remaining committed to USL over the years. Briefly on our key portfolio update. Starting from the upper prestige portfolio, the segment is performing competitively, especially the renovated and innovated bundles are delivering desired results. The renovated bundle of Antiquity is now rolled out to most of the salient markets and is launched with focused growth drivers, impact visibility, scaling up of the hipster pocket pack and gift-on packs in select markets. In the launched markets, the brand has gained significant traction with overall uplift in consumer metrics and volumes. On Royal Challenge American Pride, it continues to witness healthy growth rates, and our Sip Your Way to America consumer campaign has received great traction in resonating well with the consumer. We are also scaling up sampling opportunities with special focus on the boom town. Our Signature trademark is continuing to build on the pillars of taste good, live good, and do good across different touchpoints for consumers. We were the title partners of Ziro Festival of Music, India's largest and most eco-friendly festival. Also very proud to share that Signature has come out with its latest One Good Nature campaign, and in line with the ethos of the brand and its commitment to leave a positive mark on nature, it is continuing to be the most sustainable whiskey in the market. And this sustainability campaign is one of the first in the industry. Within mid-prestige, our renovated Royal Challenge is also performing competitively, grew ahead of the category in the quarter gone by. We are investing in the brand across TV, print, cinema, and digital, with special focus on OTTs during the Cricket World Cup. Our flagship brand, McDowell's Number One, is back on TV after three years as a strategic choice for the mass prestige, what we call the prestige audience, with the reimagined Yaari song during Friendship Day by Armaan Malik, Amaal Mallik and Nikita Gandhi. Coming now to BII, BIO and Luxury. We've seen healthy growth on Black Dog during the quarter, and the premiumization journey stays intact with Black Dog Triple Gold Reserve now going ahead of Black Dog Black Reserve. We continue to amplify the communication featuring global celebrity Keira Knightley. We are also delighted to bring back Black Dog Easy Evenings to Savor the Fall with a one-of-a-kind association with global icon Trevor Noah in key markets of Delhi and Bombay. This association has driven significant engagement on the brand. Our overall portfolio continued to see healthy growth in the quarter, led by Johnnie Walker, benefiting from a favorable base and continued consumer recruitment, driven at pace by the scale-up of Johnnie Walker Blonde, along with Black & White. Johnnie Walker Blonde, which was launched in December last year, has now been scaled up across all key markets in the country and has been really well received by consumers. Black & White growth momentum also remains intact as it continues to be the preferred Scotch in casual occasions. In the current quarter, the brand was associated with the India Western and continued to activate the much-loved platform of Tables for Everyone across regions. Our gin brand, Tanqueray, started its flavor journey in India with the signature Malacca and Rangpur variants. We expect this current quarter to be an exciting period for consumer outreach and engagement, adding to their responsible celebration. Last but not the least, I am delighted to inform you that we have launched our global tequila trademark, Don Julio, in India. I know many of our consumers, and many of you indeed on the call, were probably waiting for this. We are continuing the path of our future-backed consumer-focused approach, and this is in line with our strategy and commitments to bring the best from around the world for our aspiring Indian consumers. The variants of Don Julio will be launched progressively, starting from the core range, Blanco and Reposado, to the iconic Don Julio 1942, which, as some of you know, we've been seeding for a while. We are optimistic on the India potential of this opportunity in line with global trends. I'm confident that we'll be able to scale this up and touch great milestones similar to our Scotch journey in India, wherein we now have three trademarks which are clocking upwards of one million cases each, that is Johnnie Walker, Black & White, and Black Dog. For our overall marketing investment strategy, we are focusing on digital initiatives to drive a connected omni-channel consumer journey, which has continued into Q2, and we are leveraging the external digital ecosystem platform partners to drive consumer resonance. I'm also very happy to share our progress on Diageo and society. We have published our second annual ESG reporting index. As some of you may already know, that the reporting index is developed in accordance with the comprehensive level of the globally acclaimed GI, GRI Standard 2021. In addition to the GRI Standard, the index also maps Diageo India's performance with the UN's Sustainable Development Goals, the United Nations Global Compact Principles, and the Sustainability Accounting Standards Board's standards for the alcoholic beverage industry, which recommends disclosure on material issues. These include energy management, water management, responsible drinking and marketing, packaging, lifestyle management, and environmental and social impact of the supply chain, among others. This takes us further ahead on our journey of progressive reporting practices and improved disclosure. Another key update on our sustainability initiative is the removal of monocartons from 90% of our portfolio. In addition, we have introduced biodegradable packs as well as recyclable packs in some of our brands and continue to expand it to others. This is aligned to our global mission to ensure 100% of our packaging is widely recyclable or reusable or compostable by 2030. Second, briefly on awards and recognitions for our brands. The Urban Artisanal Single Malt received a silver for packaging design at Rapid and Best Homegrown Whiskey at Travel and Leisure India's Delicious Dining Awards 2022. As my concluding remarks, I would like to reiterate that we are witnessing lower than anticipated demand momentum. However, we look forward to the remaining part of the OND quarter with festivities and Cricket World Cup further. We have ramped up our brand investments, and our key brands are participating well in the Cricket World Cup. Specifically, we are associated with the Cricket World Cup as an associate sponsor, and we are building impact from this association in Q3 in a very cost-efficient way. Our focus is on delivering growth through our differentiated offerings and by maximizing potential of our renovated and innovative bundles. With this, I hand over the call to Pradeep for an update on the quarter's financial performance. Over to you, Pradeep. Thank you, Hina, and a very warm welcome to all. Thank you all for joining us, and as always, it's great to interact with all of you. Before I call out the quarterly financial performance highlights, we'll request you all to refer to the results press release posted on our website last evening. You will remember that with the simplification of our legal entity footprint, we have started sharing a consolidated financial snapshot with effect from the last quarter. Driven by the seasonal nature of IPL revenues and the, of the entity housing the RCB cricket team, the delta between consolidated and standalone will be minimal for this and the next quarter. By now, all of you are also quite familiar with the terminology of reinstated and rebased used in the document, and therefore I'm not repeating the explanations. Post this quarter, we would have completed one full year with the retained portfolio, hence, going forward, the reported numbers will be absolutely comparable with the prior year reported numbers for the respective quarter. The year-to-date numbers will even out with effect from April to June 2024 only. Quick update on the quarter. Hina has already covered the overall business context and the external environment in her comments. We have continued the momentum of our performance into the Q2 of the fiscal 2024, both in terms of P&A and overall NSP growth. Price mix remains strong, driven by continued premiumization focus, headline pricing flow-through, and other revenue growth management initiatives. Like for like, we have delivered an overall portfolio NSP growth of 12.2% during the quarter. P&A growth stands at 12.8%, with strong double-digit growth in our Scotch portfolio. On the cost side, Hina remains inflationary. However, the impact is muted in our PNL this time, owing to our systematic forward coverage positions that have now lapsed, and the inflation will reflect in the coming quarters. On the bright side, we do expect some stability in glass that should partially offset the ENA inflation. The mono carton removal project is now almost complete across the portfolio, and the full benefit of the same is reflecting in our quarterly financials. Gross profit was INR 1,244 crore, with a gross profit margin of 43.4%, reflecting the continued sequential improvement. Our marketing reinvestment rate during the quarter was 8.4% of net sales, stepped up in line with seasonality as we enter the peak quarter, and this will further ramp up in the October to December quarter, owing to the festive season and the ongoing Cricket World Cup. As we have emphasized earlier, A&P and it, A&P is an extremely critical component of our virtual growth cycle, and we will continue to invest behind our brands to drive consumer engagement and long-term equity. EBITDA for the quarter stands at INR 470 crores, and EBITDA margin is at 16.4%. Below the EBITDA line, there is a gain of INR 31 crores during the quarter on account of the final tranche of consideration from the slump sale, which is now recognized as an exceptional income, post completion of customary obligations. Overall, our PAT for the quarter is INR 341 crore, with a PAT margin of 11.9%. Repeating what Hina has already shared, we are absolutely delighted that the board has approved an interim dividend of INR 4 per equity share, which is 200% basis the face value of INR 2 per share, and amounts to an outflow of circa INR 290 crore. This is after a long hiatus, and we truly value the commitment and patience of our long-term investors. Our new dividend policy, duly approved by the board, is now available on our website. As we look ahead, input inflation is expected to remain high. That said, our sustained efforts on 360-degree revenue growth management, the three pillars of headline pricing, mix management, and trade spend effectiveness, along with our proven muscle on enterprise productivity, are yielding results, and we remain focused on what lies within our circle of influence. With that, we can now open the floor for Q&A. Thank you very much. We will now begin the Q&A 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. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. Our first question is from the line of Abneesh Roy from Motilal Oswal Institutional Equities. Please go ahead. Thanks, and congrats on margins and dividend payout. My first question is on the new launch, Tequila, Don Julio. So, Diageo has got several brands in their portfolio. What was the thought process for bringing this? Any examples of other emerging markets, how does this do post five, six years of launch? And third is, what will be the positioning, and how big can this industry and the brand be over a longer timeframe? Not asking for a specific guidance, but is this something which you are very excited over a five to seven year timeframe? Sure. Hi, Abneesh, good to have you on the call. So, look, Don Julio was being seeded for quite some time. It is the leading brand of tequila globally, right? And just to give you a sense of how large the tequila category has become, particularly, you know, if you look at our Diageo global perspective, it overtook vodka to become the number two category in the Diageo portfolio over the last, you know, four to five years, right? So, we expect the potential to be strong. And, you know, as I mentioned, our ambition would be to see over a few years, you know, it take the same trajectory as Scotch has taken over the last few years. The thought process was we were seeding Don Julio for quite some time, and we did see over the last few months, if you just go out to bars and if you look at, you know, what's being served, there was a growing trend of tequila availability in the country. And, because of the global exposure that a lot of our consumers have, I think the tequila category, you know, if you see, was getting very strong double-digit growth, though on a very, very small base right now, in every single state. So it is not restricted to, you know, one or two markets, but it is beginning to see traction in a number of states. So we felt this is the right time to, you know, bring it here. It is, it is premium priced, and it is a premium category, you know, fits in well in the BIO portfolio, and we expect it to be a significant contributor over the next five to seven years. So, thanks. One follow-up there. So just like globally, this has, tequila has become larger than vodka. In India, vodka category is small, but there's another distinct player, which is quite large there. So longer term, do you expect that consumer switch can replicate what has happened for Diageo globally, that in India also this segment over a longer timeframe could mirror or be bigger than vodka? Abneesh, what we are seeing is that actually both tequila and vodka are growing in the, you know, if you look at globally, right? So, it is difficult for me to say whether it will exceed vodka or it will continue to grow. The white space will continue to grow with both vodka and tequila. I think this is a space we will watch as Tequila is now getting rolled out on, or you are getting rolled out to the rest of the world, and I'm sure we'll get learning, you know, as we, you know, sort of go along over the next couple of years. So I guess we can, you know, keep discussing this over a period of time. Sure. My second and last question is on the volume and demand side. So in Q2, we also had the Karnataka price hike impacting for the Q1, and you rightfully alluded to discretionary slowdown, initial signals. And if I see Q1 volume and sales growth was higher than Q2 volume and sales growth. Now, if I put the very high marriage season in Q3 and the full festival impact, et cetera, so would you be, say, expecting that Q2 was a slight one-off? Because in earlier quarters, when we had asked on discretionary slowdown, you had pointed towards the resilience of this category, but this time, first time, you sounded a bit cautious. Yeah. I think, for us, Abneesh, the, you know, the signal of the robustness and momentum of the, you know, season actually comes from September and October. October is, you know, sort of September and October are lead indicators for how the momentum and festival season will be. We've seen slowdown, you know, some slowdown in discretionary spend in this season, and the festival pickup has not been, as buoyant as we have seen in previous years, right? I had alluded to, you know, sort of pressure on the lower end for quite a few quarters actually. We were seeing volume pressure. I think we are seeing the, you know, some, pressure even in the middle India segments, right? So, like I mentioned, we are continuing to activate our brands. We don't know whether this is structural or not. We continue to invest behind our brands and activate them to continue to, sort of drive the momentum of our brands. But, it is a wait and watch area for us. Early indicators of, you know, the 45 days into this quarter are also not showing as, buoyant a momentum as we would have expected, so that's why the caution. Sure, thanks, Hina. That's all for me. All the best. Thank you, Abneesh. Thanks. Thanks, Abneesh. Thank you. Our next question is from the line of Jay Doshi from Kotak. Please go ahead. Hi. Thanks for the opportunity. Just following up on your earlier response on demand slowdown. So is this also across the, you know, across all price points, even in the BIO, BII portfolio, you're seeing slowdown upper prestige, and whether it's across the country or some states, you know, some more color will help? Hi, Jay. Basically, I would say that, you know, lower prestige and popular, we were already seeing the pressure. It is gone a little bit upwards. I would say, you know, if you look at the middle India, as I was alluding to, we do see some, you know, slowdown from the previous quarter. BIO, BII, the demand on the luxury side and the premium end still remains robust. So really, I think, you know, that tells us that there is some inflationary sort of pressure which is being felt by the consumers, you know, at the lower to mid end. Is it across state? Yes, pretty much. I don't think there are one or two belts. We are seeing, you know, this pretty much across India. I don't know if you want to add anything, PJ. No, pretty much that, Jay. I mean, I think it's more governed by the festive pickup, like Hina mentioned in her earlier response to Abneesh, right? That's a lead indicator for us, right? And clearly, we haven't seen that lead indicator as robust as we have seen in the prior years, right? So it's pretty much across the country at a national level and pretty much across the portfolio, barring for the real low end, probably. Understood. That help, that's helpful. Second question is: Is it possible for you to share some more color on progress of American Pride, possibly some quantitative number that helps us appreciate it better? PJ, do you want to go with that? Yeah. So, Jay, we've not shared quantitative numbers, right? We will, we will, set a precedent that we may not be able to kind of, you know, sustain, right? So we don't want to, share. But, I mean, we can suffice by saying that it's been our, it's been our, most successful, innovation, since Diageo acquired USL, if that helps. In terms of repeat offtakes and sales, the strength in demand or momentum continues, right to assume that? Yeah, yeah. And I will give you one statistic, Jay. 90% of the people who have tried the brand are repeating it. So that tells you the power of the proposition, right? So, you know, repeat is quite robust. Right. And in terms of distribution, it's available across the country now? Yes, pretty much. Understood. Thanks. Thanks, I'll get back in the queue. Thank you. Thank you. A reminder to all participants, you may press star and one to ask a question. Our next question is from the line of Percy Panthaki from IIFL. Please go ahead. Hi, Pradeep. Percy here. So I just wanted to check one thing. In the last call, you had mentioned that with the new portfolio and all that, the Jan to June seasonality, Jan to June would be 46% of the full year. So would you still sort of go with the same number? No, so, Percy, yes, absolutely right. I had mentioned that, right now that you remind me. Look, like, I guess the only caveat I'll put at this stage is, what Hina has cautioned all of you on, right? So we don't know what we don't know. Had it been a business as usual, probably that seasonality would have sustained, right? But in case there is something structural to what, what we are seeing in the lead up to the festive season, I guess those numbers could potentially change, right? But over the longer arc, I would want to believe, you know, three, five-year averages will not, will not dramatically change. So sorry, I didn't understand your comments on the festive season and stuff. Can you just elaborate on that? No, no, it's just the point that in case we do not get the requisite pickup that we historically get in the festive season, right? Uh-huh. Then the seasonality would shift a little, nah, the seasonality number would shift. We've had a reasonably robust July, September, right? And if the demand kind of tweaks a little, right, going forward, the seasonality numbers could change between the two halves, as I mentioned about it. Okay. The reason why I'm asking this is, see, now we have nine months numbers with us. If we go with the 46% number, that implies a 6% year-over-year decline in the December quarter, which I'm sure it will not be so bad in spite of whatever, headwinds, et cetera, are there, on the demand front. Would I be correct in assuming that? Okay, okay. So, so then, Percy, I have to convey, when I gave you the numbers, our performance year is July to June, right? And therefore, I would have given you the numbers of July to December is 55, and the following January to June is 45, right? And that's the one to which I'm responding, right? That in case the slowdown is a little going forward, those seasonalities could change. Understood, understood. My second question is on gross margin. So I understand you have covers this time which save you from the contraction in the gross margin, but what is the reason for the expansion in the gross margin on a sequential basis? Okay. So, I think we've called out. There are two, three things that have really kind of colluded, right, for the sequential increase. If you look at the headline price increases that we have got, probably starting November of 2022 onwards, they've pretty much carried on till about June of 2023, right? So the full flow through of the headline pricing has been realized for the first time in the July to September quarter, right? So that is one. The second thing is, the big one is the mono carton productivity, right? So the full impact of that mono carton productivity initiative has been realized for the first time in the full quarter of July to September, right? And then the third thing about the forward covers, et cetera, right? So those are the three primary reasons, Percy, that you know that's given the sequential. What is the floor pricing growth on a YOY basis for this quarter? It's pretty high, right? If you look at the volume value delta, I think one and and 12, right? So 11 is the total price mix. Of the 11, I think 4.5 points is pricing. Oh, 4.5% YOY pricing that we have this quarter. Okay. And that will continue at this pace, for how many more quarters? It will start falling off now, because the first set of price increases came in November, October and early November. Uh, right. It'll start falling off. Right. Right. And last question, if I might be permitted, if the FTA does happen, what kind of margin accretion do you expect from it? Yeah. Percy, look, as a management, we are very, very kind of, you know, emphatic on that. We don't want to delve into all that, right? I mean, our role as a management is to make the business efficient on an ongoing basis as it stands right now. Tax benefits, et cetera, that will come, we will worry about at that point of time, right? Once in a while, these windfalls have happened, right? And the management takes a very, very kind of objective view of that at that point of time. Some part of it is kind of reinvested for growth, for sustained growth, and some parts will fall into the bottom line. We don't want to discuss any numbers on the FTA right now. I mean, it's been in discussion for the last three years. Whenever it happens, we will be the first one to come and share the impacts with you. Okay. Okay, that's all from me. Thanks, and all the best. Thanks. Thanks, Percy. Thank you. Our next question is from the line of Latika Chopra from JP Morgan. Please go ahead. Hi, Hina. Hi, Pradeep. Thank you for the opportunity. Uh- I'll just expand on the, you know, question on the margin front. So we clearly understand what happened with gross margins in this quarter, and thanks for that. But going forward, what is the kind of sequential inflation that you anticipate in ENA prices, you know, as the covers, are no longer going to be there, and you do definitely talked about glass prices being stable. So are we sensing a downside risk to overall gross margins as the, last second half? Yeah. Yeah. Yeah. So, Latika, look, Hina, we have a clear view, right? That it will remain inflationary as we run up till the union elections, right? I mean, largely driven, all of you are aware of the MSP price increases that have happened across the grain portfolio, right? So that immediately kind of starts impacting our inflation. In fact, October onwards, it's already impacting us, right? So that, and glass, we see sequential stability, right? We don't see further inflation on that, right? So broadly, that's what the impact would be, right? I mean, I don't want to take a shot in terms of what the absolute growth margin percentage, et cetera, will be. It's a dynamic sport that leads to the growth margin. Can we extract a little more pricing? Can we do a little more revenue growth management here and there? You know, can the top end, you know, outperform the lower end, et cetera, et cetera? So I don't want to take a shot on that, right? But broadly, yes, inflation would be much higher than the July to September quarter. Can I just then connect this question, you know, with the fact that in the prior quarter, you know, you were kind of, you know, alluding to a 15% kind of a better margin target for the full year. During first half, you've done 17, and I understand, you know, as we hit the peak season for you, advertising spends, et cetera, will also step up. So you are still sticking to that or okay? No. So absolutely, Latika, let me take that. Look, now I can say that, you know, when we traced, and yes, I'm not running away from the fact, you know, and I did say that 15 will be our target, right? Very clearly, we did see the first half being significantly better than the second half on margins, right? And we are actually happy that we have pretty much performed the first half exactly in line with our expectations, right? Both the quarters, actually. If you look at our underlying margin, it's probably 17.1 in Q1 and 16.4 in Q2, so we are somewhere around 16.7, 16.8, right? You're absolutely right, A&P spends will go up. So my sense is, if you normalize now, all right, going forward, we will probably be.. Yeah, we would definitely be ahead of 15%, right? Which we are confident. Will we be materially ahead of 15%, right? The answer is probably no. Sure. That's, that's clear. And then the last bit, you know, just wanted to understand the Q3 dynamics, and I completely appreciate, you know, the comments you talked, made about the demand in the first, you know, 45 days. But how is this quarter generally, you know, like, this time you have festive and then you have, you know, this, New Year, Christmas period. You know, which side is, are the volumes more tilted towards? And then we also have a wedding season, which should be playing out in the second half of this quarter. And, versus last year, you know, I'm sure there'll be some of the base effects. Do you think this time probably the peak demand probably hits us later in the quarter? Is there any seasonality? Because first part of October was, you know, also, like, non-auspicious or, and then we have Navratri, right? So I don't know. How should we think? We should basically think it's more a base effect thing, or you think it's more than that? No. So maybe let me start. You know. Okay. Yeah. Yeah. Go ahead, PJ. Yeah. Yeah. Maybe I, I'll start, Hina, and then you can build on it. No, so, Latika, look, my view on this was that, when we had a fairly soft September, right, and, you know, we as a leadership team, actually, at that point of time were not so cautious in our outlook, because at that point of time, we concluded exactly what you've just called out, Latika. Which is that it's a delayed festive season, right? And there is no reason to be so cautious. We have to be absolutely, you know, remain committed, right? It's more the October performance, right? And Durga Puja in the, on the eastern side of the country actually pretty much becomes the lead indicator, right? Because that's where the festivities begin, even before the Diwali celebrations happen in north, et cetera, right? So that's where we are saying, right, having seen October now, we just haven't experienced the kind of national pickup that we get typically in every year, right? I don't know, Hina, whether you want to build anything in addition to this. No, nothing. I mean, I think we remain cautiously optimistic that demand will pick up. You know, though we don't see the signs right now, but, you know, we've still got a big festival season to go through, the Diwali and then Christmas, et cetera. So we are cautiously optimistic, and we are definitely investing and activating for growth so, right? We'll just continue to focus on what's in our control and, you know, have the right investment going on for our brands. And, you know, we'll see, we'll see what happens in the quarter. Sure. Very clear. I think the last build will be, we are not holding back on the A&P spending Mm-hmm. Right? Very, very clearly. No, that's, that's good to know, actually, and well appreciated. Thank you so much, and, wish you the best. Thank you. Thank you, Latika. Thank you. Our next question is from the line of Harit Kapoor from Investec. Please go ahead. Yeah, good evening. I just had one more question on the cost side. So, you know, you mentioned glass stabilizing, and I had a Sorry, may I request you to use your handset, sir? Your audio is not clear. Yeah. Is this better? Yes, sir. Please go ahead. Yeah. I just had a slightly more medium to long-term question on glass. You know, you are, you know, calling out glass kind of stabilizing, but I just wanted to get your sense on, you know, as we stand today, do you think that this stabilization could be slightly a more medium to long-term, you know, phenomenon, given the fact that the last few years have been, you know, consistently inflationary? Is that what, you know, you're starting to see now? Yeah. Yeah. So Harit, again, maybe I'll not respond to the specific question, but having kind of followed glass, right, over the last 20 years, we are fairly firm in our belief that the glass cycles come in groups of about three to four years, right? Right. So, yeah. So therefore, from that perspective, one would want to believe, right, that this is probably the beginning of the cycle reversing, right? For a slightly more sustained period of time. But the only thing that is probably we need to wait and watch out is, there is, as all of you are aware, there is consolidation happening in the glass industry, right? And, and our quotes are involved in that, et cetera, et cetera. So how does that play out? When does that capacity kind of become available, et cetera? Those are some of the factors, et cetera, that will play out. But yes, if you look at the last 20-year pattern, last three to four years has been a seller's market. We would want to believe, right, that it is probably the beginning of a slightly longer term correction, right? But again, no call outs on that right now. We'll have to wait and watch for another two, three quarters. Very clear, Pradeep. I, I just had one more question, that was on the competitive intensity side of things. So, you know, you're, you're in a position where, you know, the, the material costs have moved up, at least on Hina, and you have, y ou probably have, you know, you know, had longer covers, maybe some competitors didn't. I just wanted to understand, you know, if, you know, you saw media intensity, cool off a little bit, on account of demand slowing as well as, competitive or, you know, on the RM inflation. Obviously, I don't see it during World Cup. You know, everybody seems to be spending there, but you know, just generally, you know, on ground, whether it's BTL and those kind of things, just a call out on, you know, what's happening on that side, given the RM environment and little bit of slowdown. I don't think so. I don't think we have seen any letdown competitive intensity, but I'll let Hina answer that. You're pretty much right. You know, I'm also watching the World Cup cricket. I mean, alcohol seem to be the most, salient category, right? Hina, over to you in case here. Yeah, yeah. I mean, I don't think there is any letup on competitive intensity. In fact, it will continue because of, you know, if demand momentum is slower, everyone will want their shares, you know, the share of the pie. But I think we focus very much on, you know, the effectiveness of our spend, and we are continuing to drive that, right? So I said, I mentioned in my opening that, you know, we are associate sponsors on World Cup cricket, and we have probably, you know, worked to get an extremely cost-efficient deal compared to, you know, several others, right? So we are being very sort of cautious or conscious of the way we spend our money. We're continuing to drive productivity in our BTL and get the maximum out of our spend, right? I think we continue to do that, right. I think competitive environment will probably continue to be intense, but we will continue to, you know, focus on our circles of control. All right. Thanks, Nishit. All the best. Thank you. Thank you. Thanks, Harit. Thank you. Our next question is from the line of Prolin Nandu from Goldfish Capital. Please go ahead. Yeah, thanks a lot. Hina, my question to you is slightly more medium to longer term. Mm-hmm. Now, you know, we have an aspiration to be a double-digit, top-line, profitable growth kind of a company, right? CPG company. Yeah. So if you break down the spirit segment into prestige, premium, and luxury, do you think that every segment within our portfolio will grow to double digits? And where I'm coming from, Hina, is that if we look at a 15 to 20 year kind of a history, right, we were leaders in some of the prestige and upper prestige kind of a category, which over the period of time, we have lost leadership to, you know, some of our competitors. So, I mean, going forward, do you think that, I mean, all the three segments, I mean, prestige, premium, and luxury, will contribute towards this double digit? Even in times like these, right, where you are saying that there are some macro challenges, right, in terms of inflation, do you see the, I mean, any cool off in terms of gains in market share that we have been doing because of renovation and innovation to our portfolio? So I think, you know, I'll try and answer your question a couple of ways. I mean, we've always said our strategy is one of end, right? Where we are going to look at growth in both prestige and, you know, premium and luxury, right? Given, you know, given the weight of prestige in the market in terms of category and even in our portfolio, it would be very difficult for us to grow double digit if we didn't grow both the portfolios, pretty strong, right? So, do I see, you know, the categories growing in future? Absolutely. I think, you know, these inflationary pressures are cyclical over a medium and longer term. Since you ask in that perspective, I would think that, you know, consumer needs will evolve, and there will always be a role for innovation and renovation to address these needs as they evolve. And there will always be scope for us to grow in, you know, both prestige and, the premium luxury segment. And, I think the role of innovation and renovation will continue to be quite strong because the consumer is evolving, and the consumer is evolving quite fast. And, you know, we will, we have a very strong future back approach on consumer insights. So I feel quite confident and pretty sure that, you know, we have lots in our portfolio, both in the IMFL portfolio and in the global portfolio, to bring into India and to grow in India and to address these consumer needs on a very competitive basis, right? Your question on market share, look, we are performing very, very competitively. You would have seen the performance of some of the competitors, key competitors as well. You know, we continue to drive a very strong competitive performance. So, our endeavor will be to continue to satisfy consumer needs in the best way and continue to, you know, derive competitive performance and market share. Sure, Hina. Thanks a lot. That was very clear. Second question again on this whole A&P spend, right? And this is also coming from more like a medium to longer term. Yeah. Now, since we have two IPL teams, where one of our brands is used, right? I mean, in terms of the name of the IPL team, is it fair to assume that, you know, A&P spend over the period of time as a percentage of sales might come down, and I'm talking from a more from a medium to longer term point of view, right, in some sense. Do you think that one, I mean, one category of our business will have a rub-off effect on the other category, and is that a fair way to look at things? Or do you want to look at them as an individual assets and not mix the, two segments? Yeah, I think we'd have to look at them not as, I mean, I don't think one brand will give halo to everything else that we launch or, you know, renovate and innovate. So we do want to, you know, keep our A&P, you know, at a robust level. We would ideally want to, you know, keep it at least at 10%, right? And, especially when we bring in new launches, like I mentioned, Don Julio, et cetera, right? I don't think it can get the halo of, you know, one of the other brands. It really needs to be built on its own. And as we expand the portfolio, with newer offerings, we will need to invest, A&P. So, you know, will the A&P come down on individual brands? Perhaps. Right. As we build more and more equity on each individual brand, yes, there could be a more optimization of A&P on that brand, but overall, I don't see the reduction because I see in the midterm at least, big innovation, renovation play and, you know, investment behind those. Yeah. And also maybe just to add to what Hina has said, Nandu, is that the salience of the top end of the portfolio, right? I mean, the ladder will continue to kind of move towards premiumization, and therefore the sheer mix, mathematical impact of higher investment ratios of the more premium brands will also, you know, impact the numbers, right? So it will only go north, yeah, and fundamentally, we are a brand organization, right? So we are an A&P-hungry organization, right? So we will want to keep doing more A&P. Great, Hina, and thanks a lot for your answers and wish you a happy festival season. Thank you. Same to you. Thank you. Our next question is from the line of Vishal Punmiya from Yes Securities. Please go ahead. Yeah, thank you for the opportunity. Just a question on the overall market, growth rates. One of the agencies recently had called out about a 4.5% CAGR over the next five years, for the overall industry, which also includes the country liquor. Just, wanted your thoughts in terms of excluding country liquor and specifically for whiskey. What kind of growth rates do we envisage, over the next four to five years? That would be very helpful in terms of understanding the potential. Pradeep, do you want to sort of Yeah. I mean, Vishal, look, it's, it's kind of inherently built into our, into our guidance, right? You know, I don't know where the numbers of 4, 4.5 are coming. I mean, they might be right, including country liquor, all that, right? But we are very clear that looking at the longer term macros and the profit pools, et cetera, we believe a sustained digit, you know, sustained double-digit growth is absolutely possible with the portfolio we have, right? And we would just try to kind of deliver on that and hopefully try and beat that, right? So, I mean, that's, that's broadly what our perspective on this is. Hina, unless you want to add something. Yeah, no, I think the question was on category growth. Look, our assumption. Yeah. Yeah, yeah. Midterm was, you know, anywhere between sort of, you know, seven, eight, nine, right? So at the moment, we have no reason to change that assumption, right. So our double digits obviously would then create competitive, you know, performance for us, right? So at the moment, I think it's no reason for us to change the midterm, sort of and I'm talking more prestige and above, right. So at the moment, I think, Pradeep, we are okay. We are staying with that, I mean, that assumption. There's no real structural reason for us to change that. Yeah. Sure. And just secondly, the other category which has been growing rapidly is the gin category, apart from whiskey and the other two big categories. What's your view on, in terms of, being aggressive in this category, especially with smaller SKUs? We are seeing the other listed players are doing very well at the 60 mL or 180 mL price point or, sorry, the SKU. What's your view on this category growth, and could it be actually bigger than the tequila category for you over the next few years? Look, we are quite buoyant on gin. The gin category has grown quite well, and we are also growing very well in gin. We have activated, you know, both our brands, Tanqueray and Gordon's in it, and we will do whatever it takes to play competitively in this category. I mentioned for Tanqueray, I mean, flavor is a very big part of the whites category and in gins, right? And I just talked about Tanqueray, Malacca and Rangpur to you, and similarly, you know, expanding the Gordon's portfolio. You know, on the smaller SKUs, yes, it's under evaluation. We will do whatever it takes to play competitively in this market. I can't answer your question on whether, you know, gin will be bigger than tequila or tequila will be bigger than gin. I mean, globally, in the markets where tequila started growing, it became bigger than gin. But, you know, that was largely North America, Mexico. So, and tequila is rolling out to the rest of the world now. It's anybody's guess, you know, what, which one will turn out to be bigger, but all I can say is that I do believe that tequila will also be a very good potential category in addition to gin. So we will activate on both. Understood. Thank you. First, everything to the team, and best of luck for the next quarter. Thank you so much. Thank you. Our next question is from the line of Tarbir Shahpuri from Nidara Capital. Please go ahead. Hi, hi. Thanks so much. Pradeep, a couple of questions. One, you know, there's been a step change in cash flow this quarter. Has some of it been because of the working capital that got freed from the sale of the lower brands? And could you just talk about that a bit? No. So, in this quarter, it could also, Tarbir, depend on, you know, what's the position at which we closed in June, right? If we did end up with a slightly higher net working capital engagement in June, the engagement that we typically see in July to September would have been lower. That's what would have resulted on the quarterly movement, right? But no, nothing material that will explain anything, right? But as you move to The brand is nothing. It's just a INR 31 crore. It's actually a INR 62 crore. The amount that was lying in the escrow, basically, that has finally come back once we've completed the formalities. As you move more towards PNA and maybe especially to BIO, should that not actually materially impact the cash flow? Not really. Not really, right? I mean, the working capital engagement in the category is fairly consistent across the ladder, right? So there is no, there is no big difference in the working capital engagement. The markets are very, very different. For example, North, the working capital engagement is of a very different order compared to some other, corporation markets, et cetera. But across the portfolio, there is no major difference, right? So, Fair enough. The other question was that are you guys open to stating a dividend policy as of now, or it's still, It's on the website already, right? It's on our website, yeah. It's on our website. It's already been loaded on the website. What is the policy, if I can just ask? No. So why don't you go through it and then we'll be happy to take answers. You can get in touch with Shweta, and whatever your questions are, Shweta will be happy to Okay, fine. Fine. I just have one for Hina. Hina, typically, I mean, tequila, at least compared to the browns, is inherently been globally very, very scalable, because of obviously raw material challenges are less. Do you see that being very good for potential growth in India as well? Sorry, I, I couldn't hear your question properly. Can you just repeat your question? Yeah, I said, typically, tequila inherently is a lot more scalable than some of the browns, given the, you know, gestation of the raw material. Yeah. Would you see a step change of growth for tequila in India as well, if that were to come? Well, I think, I mean, look, the, you know, potential for growth will be determined by consumer acceptance, and we are seeing pretty good traction. So I do believe it will be, over a few years, you know, five to seven years, a big growth driver. You know, there are some fundamental consumer acceptance parameters for tequila, right? It's seen as a, a lighter, healthier drink, more mixable, right, for cocktails, et cetera, which is the reason why it's scaled up, tremendously around the world. So, yes, I think we are quite, buoyant and confident about the potential in India as well. Great. Great. Thank you so much. Thank you. Thank you. Thank you. Our last question for the question and answer session is from the line of Ruchi, from Asit C. Mehta Investment Intermediaries. Please go ahead. Yeah, hi, good evening. I have a question that, on a, you know, cash side, we have a good amount of cash in hand, and also on our reserves also, we have a very good amount of reserves on our balance sheet. So my question is that, do you want to, have any kind of, you know, as far as, you know, strategic plan to have an opportunity to look as far as, you know, your core business growth is concerned? Or else, if you have any kind of plan to increase the stake in a company or, you know, the way that Eicher is using some kind of, you know, extinguishing, you know, making an open offer to the existing shareholder. So I need to say, just give, Can you throw some light on these two, you know, aspects of, you know, by, you know, you know, strategic growth point of view using that reserves, or you know, you want to increase these stakes, in a company? Hina, you want to take that? Yeah. Hello. Yeah. Yeah, yeah. So, look, first of all, I mean, we are always on the lookout, right, for any, you know, inorganic growth opportunities. Whatever scans we have done, et cetera, there is nothing which kind of fits the bill, right? So you know, which fits the filter of our decision making, right? And honestly, I don't think we were waiting for a healthy cash position to evolve, right, before we kind of make any such move, right? It's more driven by the opportunity rather than our cash position. I understand when we had debt of INR 5,000 crore, INR 6,000 crore, it was a very different thing. But if you look at it for the last six, seven years, we pretty much have a very, very healthy free cash flow generation, right? So, I guess the answer to your question is yes, we continue to explore. We have a business development team, which continues to explore inorganic opportunities, right? The second thing is, you know, we did kind of have made last year, we took a strategic equity stake in Nao Spirits and Beverages. Again, you know, to the point, the gentleman asked on gin, our own buoyancy on near gin going forward, et cetera. We have always kind of, you know, explored those opportunities. We made that intervention, and we will continue to explore such opportunities in future. A ny plan to increase the stake in a company? That's not in our and my call. In fact, we are conflicted on that. That's a call that the Diageo plc will take, right? So we are absolutely not stakeholders in, you know, in that decision. And last, one more question that you have, you are just saying that, you know, digitalization, we feel that it is going to be a very good, and you are also invested in your portal or in, in, inthebar.com, and also some kind of, you know, pub and restaurant kind of ties. That's what you are doing, you did. So I want, just can you throw some more light that it is helping as far as, you know, business growth is concerned, and moving forward, you want to make a further, you know, scale up such kind of digitalization or ties kind of move? Yeah, I can take that. So, I mean, the bar.com, bar, I mean,.in, which is our portal, is a very big platform for our positioning of all things celebration, right? We are about celebrating life every day, everywhere. And, as in the case of other consumer companies, right? The companies that will sort of win in future are the ones that will engage best with the consumer and, you know, be able to deliver personalized content to consumers. Now, obviously, in our case, a responsible way, right? So for us, that's quite an important, you know, platform to build as an engagement sort of tool with the community of our consumers to give them content and to engage them over a longer period of time. That is not the end of our digitization. I mean, we are looking at digitization across our operations. So there is, you know, tremendous efforts in our supply chain to automate, to digitize, to derive more productivity, efficiency. And, you know, similarly in sales, we have fantastic tools, which sort of help our field force to do very efficient route planning, to be able to look at gaps in availability, and to derive the right share set, share of shelf for our brands. So, each of these, I think, helps our business come together and engage with the consumer, and it's part of the whole omni-channel journey that we were looking at. So the answer is yes, we will continue to invest in these initiatives in a bigger way and, continue to sort of, do more precision marketing and to derive more efficiency, and effectiveness of our spends. Okay. Thank you, Hina and Pradeep. I'm wishing you both, you know, wishing you happy Diwali and prosperous New Year, and wishing you all the best. Thank you so much, and we wish all the people on the call a very happy Diwali. Thank you. Ladies and gentlemen, that was the last question. I now hand the conference over to Ms. Shweta Arora for closing comments. Thank you. Before we close today's call, I request you all to please go through the second annual edition of our ESG Reporting Index, which is available on our website. We look forward to your valuable feedback on the report, and please feel free to reach out to me if you have any questions on the report or on the results. On behalf of Diageo India, I wish you and your family a very happy, safe, and prosperous Diwali. Thank you all for joining. Thank you all. Bye-bye. Thank you. Thank you all. Bye. Thank you. On behalf of United Spirits, that concludes this conference. Thank you for joining us, and you may now disconnect your line.