Ladies and gentlemen, good day and welcome to the United Spirits Limited Q3 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 call, please signal an operator by pressing star then zero on your 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 afternoon, everyone, and welcome to United Spirits' third quarter and nine-month ended 31st December 2023 earnings conference call. I wish you all a very Happy New Year. 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. We will kick off today's call with Hina sharing her thoughts on overall business performance. This will be followed by Pradeep taking us through the financial highlights of the quarter. Post which, we will open the forum for Q&A. We'll be referring to the financial releases available on the stock exchange and on our company website. With that, I now request Hina to commence today's call. Thank you, and over to you, Hina. Thanks, Shweta, and good afternoon, everyone. Thank you for joining us on the third quarter FY 2024 earnings call of United Spirits Limited. Hope all of you are doing well, and I wish you and your loved ones an incredibly happy and healthy 2024. My brief thoughts on the overall macro context and our performance. As I had indicated in the last quarter call, a relatively muted sequential demand momentum versus prior trailing quarter. Although festivities, the Cricket World Cup and the peak wedding season enabled our brands to be salient and present with the consumer, the seasonal uptick, while being resilient with the premiumization ladder remaining intact, was below our aspirations. Amidst this environment, our strategy to be value-focused has helped us deliver a resilient quarter. Our Prestige & Above segments clocked a double-digit growth of 10% year-on-year and overall NSV growth of 7.5% year-on-year. The external environment on COGS remains challenging on our key ingredients, Neutral Alcohol spirits, partly offset by stability in the rest of the commodity portfolio. A little bit on our key portfolio updates, starting with our IMFL portfolio and prestige segment. We continue to make steady progress with our brands in this segment. The renovated bundle of Antiquity Blue is performing well in the launched markets and adding to the steady, strong performance of Signature and Royal Challenge American Pride. The new bundle has garnered positive appeal across all age cohorts on the back of impactful visibility and penetration driven by the Hipster Pack. The brand has also shown considerable improvement in awareness and consumer trials since the relaunch. Coming to Royal Challenge American Pride, it continues to be our fastest growing innovation. We have expanded the brand to three new markets, Himachal, Arunachal, and Uttaranchal. Our Signature trademark is continuing to build on the pillars of taste good, live good, and do good across different touchpoints for consumers. In the mid-prestige segment, our Royal Challenge Naya Sher roar during the Cricket World Cup with a strong presence on Disney+ Hotstar during the India matches. We celebrated our Naya Sher, Virat Kohli, and his record-breaking World Cup performance with a special tribute on his birthday through the largest freestanding 3D anamorphic hoarding and 20 ft hand-painted murals across seven cities. We also had a partnership with ESPNcricinfo for co-branded content. Last but not the least, our flagship IMFL brand, McDowell's No.1. We launched the Yaaron Wali Baat campaign for McDowell's No.1 Soda with our new brand ambassador, Kartik Aaryan, who embodies the can-do spirit of millennial youth as one of the most successful INR 100 crore+ film actors to emerge from boomtown India in recent times. This communication has received positive consumer reviews with its impactful launch through a strong multimedia plan, as well as clutter-breaking local amplification, which included anamorphic display and the world's largest selfie booth in Mumbai. In Assam, we have launched the McDowell's No.1 premium smooth variant, which is at a premium to the core McDowell's No.1 Luxury in the state. Coming now to our global brand portfolio, we continue to witness healthy premiumization trends, with the premium and luxury offerings growing ahead of the mainstream prestige segment and repertoire behavior continuing at the top end. On Black Dog, the consumer engagement with easy evenings to savor the pause continued during the quarter. Black & White trademark continued to scale up their experience platform Table For Everyone, partnering with some of the biggest third-space properties such as Zomaland and activations across key Tier One and boomtowns across the country. Overall, our Scotch portfolio continued healthy growth in Q3, led by Johnnie Walker. Earlier in 2023, we launched Walkers & Co. and in the October to December quarter, we brought this alive with a never-before-scale activation with the Aravani Art Project and artist Pearl D'Souza. Walkers & Co. celebrated Aravani and Pearl, pushing bold boundaries and conversation around gender, and we brought this alive via social media, outdoor activation and limited edition merchandise, enabling conversations around diversity, equity and inclusion. This has been recognized across fora for its empowering narrative, including at the ASCI Diversity and Inclusion EDGE Summit, which hosted the best of marketing and advertising professionals... All our key Scotch trademarks for sale during the season, with innovative visibility deployed on screen at trend leading accounts, cut through displays and off trade, and crafted sales suggestions. Our trademarks were also visible through the Cricket World Cup, creating celebratory moments for Indian consumers wherever they were. Finally, I'm delighted to share that we hosted the most talked about launch event of Don Julio, our tequila brand, in Mumbai and Gurgaon. We saw 800+ A-lister influencers, celebrities, designers, and media reveling in the Don Julio experience. We remain optimistic on the India potential of this opportunity, and the initial response that we have received is encouraging. We will scale up investment from Don Julio to play the role of a market maker for this segment and keep a close eye on the evolution of consumption patterns and consumer trends on tequila to tailor our offerings, initiatives, and channel availability accordingly. Touching briefly on awards and recognitions for our brand. Black Dog Renovation continues to be recognized globally. We won the prestigious gold at the DBA Design Effectiveness Awards and silver at the Pentawards. Godawan Artisanal Single Malts continued to win many more awards for design and overall brand proposition, which includes its unique conservation story, which is at the heart of the brand's DNA. Coming to Diageo and society, I'm proud to share that we entered a unique industry-first partnership with Skill Council for People with Disability to train people with disability through an NSDC certified hospitality business skill program. Several hotels and hospitality businesses have shown their commitment to absorb these candidates in their workforce. Our first batch is now ready for employment. In addition, we've made significant commitments on our water, sanitation, and hygiene programs by supporting schools, village institutions, and individual families with toilets and drinking water facilities in Rajasthan, U.P., Odisha, and Maharashtra. And last but not the least, we remain committed to promoting responsible consumption and championing road safety in India. As part of our Wrong Side of the Road program, the company extended its support to U.P. and Punjab Police in curbing drink driving by providing advanced alcohol breath analyzers to both the states. I'm happy to share that we've been recognized for our efforts by the Spiritz Magazine with the CSR of the Year award. Coming to our last strategy pillar, building an organization of the future. What sets Diageo apart is its people, purpose, and culture. Our employees and our culture are our biggest competitive advantage. We recently launched our employee value proposition campaign, which is about celebrating our people and aptly titled Celebrating You. Our EVP stands on three important pillars: This is the best place to grow, you can shape your future with us, and we will support and reward you. The recent win as a gold employer for LGBT+ inclusion by our IWEI is testimony to our efforts in building an inclusive and diverse organization. With this, I hand over the call to Pradeep for an update on the quarter's financial performance. Pradeep, over to you. Thank you, Hina, and a very warm welcome to all. As always, it is 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 that were released, posted last evening. This is the first clean quarter with a like-for-like base. As you'll remember, the slump sale and franchising transaction was completed in September 2022, and third quarter numbers for last year are only restated to include the impact of the Pioneer Distilleries merger. However, the nine-month financial year 2023 numbers are still rebased, wherever mentioned, to make comparisons absolute like for like. As Hina mentioned, we have delivered a resilient growth performance despite the demand momentum being subdued compared to the usual festive pickup uptake in the October, November, December quarter. Price mix has remained strong at 9.3%, driven by continued premiumization focus, headline pricing flow through, and other revenue growth management initiatives. We have delivered an overall portfolio and [organic] growth of 7.5% during the quarter. P&A growth stands at 10%, with double-digit growth in our Scotch portfolio. ENA remains inflationary and the impact of the same has started to flow into the P&L. For most of the quarter, we have kept ENA inventory to a minimum and are on a wait and watch approach for the prices to settle as the new crop enters the market, which is, by the way, already delayed. On the bright side, we do have other input commodities, especially glass, remaining stable with some downward revisions, which is partially offsetting the ENA inflation. That said, our ongoing productivity measures, especially in the last two quarters, have been robust and are aiding the margin delivery and giving us the fuel to invest in our brands. Gross profit for the quarter was INR 1,298 crore with a gross margin of 43.4%. Our marketing reinvestment rate during the quarter was 11% of net sales, stepped up in line with seasonality in the OND quarter with festivals, peak wedding season, and the Cricket World Cup. As we have emphasized on several occasions, A&P is an extremely critical component of our virtuous growth cycle, and we will continue to invest behind the brand to drive consumer engagement and long-term equity. EBITDA for the quarter stands at INR 491 crore, a growth of 33.6% over the prior year same quarter, and EBITDA margin is at 16.4%. Overall, our PAT for the quarter is INR 348 crore, with a PAT margin of 11.6%. As we look ahead, ENA inflation is expected to remain high. However, we are confident in the resilience of our business, our strategic choices, and our ability to navigate headwinds, which our teams have demonstrated over the last few years.... We remain committed to sustained double-digit profitable growth, while driving commercial excellence, everyday efficiency, and improving the effectiveness of our spending. All of which, in turn, helps us to progress on our mission of creating a long-term value for all our stakeholders. With this, we can now open the floor for the Q&A. Thank you. Thank you very much. We will now begin with the question and answer session. Anyone who wishes to ask a question may press star and 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 questions. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Avi Mehta from Macquarie. Please go ahead. Hi. Hi, team. This is Avi here. I just had a small question on, you know, first of all, congratulations on this performance. It's been really nice to see such a healthy margin trajectory and being able to maintain this input cost inflation. If you look at the 9-month performance, you've done almost 16%+ margin, and in the last quarter, you indicated that you would look at full year of slightly more than 15%. Would you help, would you please suggest if there is a revision in that expectation? And even just a follow-up question on that, if you look at this year, and we'd like to expand it for next year, should we see this changing or increasing scope for more margin expansion, given that you are still arguing for the ENA increase? Those are two questions. Thank you. Hina, should I take that? Hello? Go ahead, Pradeep. Yeah, thank you. Okay, Avi, so, you know, a couple of thoughts on that. Nine months, we are happy with what we have performed, right? And as we had mentioned, you know, 15% is our first milestone. January, March in our assessments will also remain a high A&P quarter this time, right? There are two or three reasons for it, right? One is that, Don Julio has just been launched, right? So we would want to sustain our A&P investment on that, right? All of you may not be aware, right, there is some discussion in view of the union election, right? The IPL probably to be advanced, right? So WPL and IPL will happen in February, and a good part of it might well happen in March also, right? So therefore, we would want to remain absolutely salient during the cricket season when the entire country kind of gets together, right? So, that's the second thing. And look, the third thing is that now that we have generated the fuel, right, in, in financial year 2023-2024, if you look at our popular performance, that doesn't leave us, right? Absolutely, right. So we will be actually injecting some amount of, you know, A&P into our popular brands also to resurrect the momentum, right? So, I mean, net, net, to answer your question, Avi, yes, we will definitely be hitting 15%. Will it be dramatically different from 15%? Yes, there will be a little bit of an upside, and we are happy with that, right? That's the way it goes, right? But it's not that we will kind of, you know, dramatically, you know, beat that performance. So, so that's the first one. Sorry. Can you repeat your second question? I kind of missed that due to the - Yeah. So let me kind of. Sorry. So on the FY, as we move into the next year, you know, I'm just trying to build the ladders for further, you know, you have clearly shown the ability to manage input inflation, and congratulations on that. Given this performance, would you - would it be fair to expect that there is room to move the margin trajectory further upwards, you know, as you've done almost 16% this year, is it rational or is it? How would you kind of look at the equation? What are the levers or is input inflation a cause of concern? I would love to understand how should we look at the next year in terms of your, when you kind of think about margins. That was the first question. So Avi, I will want to respond to that question on a slightly elevated level. Look, as a forward-looking organization, you know, we do believe firmly in a leveraged algorithm growth, right? So yes, we would want to continue with our sustained double-digit growth, and we would want to kind of also grow our EBITDA at slightly above the, you know, net sales revenue growth, right? Which means that like any forward-looking organization, we would want to expand our margins on an ongoing basis. I don't want to take any calls or commit any numbers at this point of time. It will be fair to say that after having achieved our first milestone of 15%, and actually coming out slightly better than that, we would want to progress towards our, you know, a stated guidance of mid- to high-teens, you know, mid- to high-teens margins over the next two to three years. Okay. Okay, perfect, sir. And sir, last bit, on the demand side, you know, any update, are trends improving? Anything on that side? Hina, you want to take that? Your voice is a bit garbled. Are you asking if the demand trend improved? Yes, yes, sorry. I'm sorry, Hina. This essentially is on the demand side. You know, you did highlight that it was weak in the quarter, but has that started kind of moving up? Any update on that? Well, I would say that the demand environment remains subdued, Avi. We are not seeing any dramatic change between December and January, right? But you know, the good news is we are not witnessing down trading. So the luxury premium segments are, you know, the premiumization trend is quite intact. People are still experimenting, but what's happening is they are drinking more out of home, and, you know, out-of-home prices are higher than sort of buying from off-trade and drinking at home. So there is a little bit of impact on volume there. I think the, the real pressure on the, wallet is on the lower side, where we do see, as I have been calling out the last few quarters, upgrades are not happening from country liquor to popular, or popular to, you know, the lower end of prestige, right? The good news there also is that people are not changing their brand, but they are reducing the number of occasions of drinking, right? So we expect this, environment to continue over the next, couple of quarters at least. You know, on the other side, we, you know, with our renovation, innovation pipeline, and the performance that we've been having with these, you know, renovations, innovations, and the activation plans and investments in our brands, you know, we, we will continue to sort of drive to the double-digit growth guidance we have given. Perfectly. Now, thanks a lot for this, and wish you luck. Thank you very much. Thank you. Thank you. The next question is from Abneesh Roy from Nuvama. Please go ahead. Yeah, thanks. Hi, hi. Thanks. My first question is on the difference in terms of P&A sales growth versus P&A volume growth. So a few quarters back, it has been more in the 8%-11% range in terms of difference. This quarter, it's around 5.4%. So is this because pricing is now catching up? Because in a lot of FMCG we have seen that. So in your case, the difference is because of the catch-up in terms of pricing, or it's because of the reasons that you mentioned in terms of the demand trends being a bit subdued? Which is the main reason here? It's a combination of both the things, you know, Abneesh, I would say. See, first and foremost, if you remember, Hina and I have always maintained, right, that our more kind of, you know, sustainable price mix is in the range of about 7%-8%, right? And we've still come in at about 9%. I don't think we've ever kind of commented on our, price mix, only for the P&A segment. At a portfolio level, we've always said that our sustainable price mix is about 7%-8%. We've come in at 9%, right? So I don't see... But yes, I agree that, in some of the quarters, we've posted as high as about 11%- 12%, right? So that's obviously driven by when Scotch was growing at a very, very, you know, high level, et cetera. So that's kind of moderated to a, you know, more realistic level now, and therefore, the price mix is closer to what we always thought was the sustained level of about 7%-8%. Sure. My second follow-up question on demand is in terms of consumer behavior. So Hina did mention that in the upper end, out-of-home consumption is more common now versus at home. During COVID, that at-home trend had really picked up. So what is the reason for this? Is it because occasions here are also being cut? Because out-of-home consumption clearly is more expensive. So why is the customer going for a more expensive experience rather than at home? What is the reason? Abneesh, there has been a post-COVID, right? We have seen the occasions shift to more of casual socialization, right? And people really want to socialize with their friends in a casual way, right? Rather than special moments favored at home, et cetera. And I think the out-of-home consumption is really reflecting that. People want to, you know, sort of socialize in a lively environment with their friends. They are going out to bars, et cetera, and they are saying that, "Look, we," and as I said, you know, especially the new consumer, they don't want to drink more, they want to drink better, right? So, they want to be out in the environment, celebrate with their friends, and have, you know, the drinks of their choice, and they're willing to, at the upper end, spend the money for that experiential, for the, you know, repertoire and experimentation. I think that's it. So there is a distinct shift in, you know, the occasions of drinking, distinct preference for, casual or lively socialization, and, you know, the drinking patterns are reflecting that. Sure. Last question is on the competitive dynamics. So in terms of market share, if you could comment a bit, how the trends are versus rest of your peers in the P&A. And second, of course, is, you did mention demand trends being subdued. So in terms of the impact in terms of competitive intensity, either in terms of below-the-line spends or say in terms of slightly more affordable pricing to end customer or say even the pubs and bars discount the promotion programs, any change you are seeing in the last two quarters versus earlier quarters when the demand trends were better? Anything to call out there? So I think two parts to your question. The first is on our competitive performance. I would say we continue to perform very competitively and, you know, we are continuing to see strong growth, you know, in the prestige categories. Our renovations, innovations are continuing to perform very well and as, you know, as is the performance on, our Scotch portfolio. Like, are we seeing more competitive intensity? For sure. I mean, one is that, you know, in the festive season there's always more investment, right? Media as well as, below-the-line activation. We are definitely seeing more intensity, but, you know, we are making sure that we are fully invested in our brands and, you know, we continue to be focused on our consumer-backed strategy, which we think is working, and giving the best offering for the consumer needs. You know, we are quite confident that we have the right portfolio, the right, you know, innovation, renovation pipeline, and the right activation to continue to perform very competitively. ... So thanks, that's all from my side. Thank you. Thank you, Apoorv. Thanks. Thanks, Apoorv. Thank you. The next question is from Percy Panthaki from IIFL. Please go ahead. Hi, Percy. Hi, Pradeep, I just wanted to understand regarding the ENA costs. I think last quarter, you had the benefit of some low-cost inventory, and the ENA prices had already gone up. So this quarter, we had expected some amount of pressure on the gross margin, but sequentially, that is, versus 2Q, your gross margin is absolutely flat. So how come we are not seeing that pressure? Yeah, yeah. So Percy, look, you know, in fact, you know, I think, you know, as all of you kind of ran up with Shweta, this question did come up. Look, here is... The ENA inflation is very much coming in, right? I mean, in fact, I can share a broad metric. Our October, November, December, right, consumption rate for ENA is about 7% higher than our, July, August, September, consumption rate, right? So ENA inflation has definitely flown into the P&L, right? What has probably kept the gross margin at its same level is, you know, I can just give some anecdotal, you know, example, like, Popular shrinking at 22%, right? I mean, I don't think we wanted that, right? But the moment Popular shrinks by that level in the sales, it gives a gross margin, you know, improvement, right? So that is, I would say, an artificial, you know, gross margin improvement. Similarly, if you go, you know, if you move sequentially, the July, August, September versus the October, November, December sales of our high-end luxury portfolio, it picks up about, you know, 2 percentage points-3 percentage points in the overall business sales, et cetera. And that is about, you know, 12-14 points of gross margin higher, right? So it's more that which is kind of offsetting if you compare it sequentially on a quarter-on-quarter basis, which is probably offsetting the ENA inflation to my mind, right? But the ENA inflation has actually kind of crept into the PM. So does that help answer, Percy? Yes, yes, very clear. But, this raises one more question in my mind. So basically, if the ENA is up, you're not seeing much improvement in glass prices, is what I understand, then in the coming year, FY 2025 on a full year basis, versus FY 2024, should we be expecting any gross margin improvement at all, because of efficiencies or whatever other levers that you have? Or you believe that where the prices are today, in terms of ENA, they will sort of offset any of the internal efficiencies that you will generate, and at a net level, the gross margin will only sort of be flat? Yeah. So again, Percy, like, it'll be a slightly conceptual answer, not very different from what I have said earlier, right? There will be some amount of inflation, right? ENA, there is absolutely no reason to expect any relief in the next couple of years, right? And therefore, our desire, again, you know, as a forward-looking organization will be, right, that if we can neutralize the overall, you know, portfolio inflation, roughly, right, 50% through internal management productivity, right? And we always have a pipeline of, you know, initiatives, right, 50% through that. And the balance, right, I mean, it is back to, you know, advocating with the government, right? And trying to get some headline price increases, right? So it'll be a combination of those two. Apart from that, whatever driven by growth, we can get operating leverage, right, or, or extract some revenue growth management initiatives, et cetera, that will also kind of add into the, to the offsetting. So that's broadly the construct of how we kind of, you know, target our algorithms, et cetera, and hopefully, you know, we should be able to do a good job of it. Very clear. One last quick question, on Q4. Your ad spend last year in Q4 was very high, close to, like, 14% of sales. So although you did mention today in the con call that Q4 will be a heavy ad spend quarter, I would still be sort of reasonable in assuming that on a YOY basis, you will see sort of material saving in ad spend to sales ratio? Yeah. So I don't want to comment on that, Percy. Right? That's, that's kind of giving up, but I did, you know. See, consciously, we are trying to kind of also be, you know, be aware, right, driven by the awareness that April, June will be union elections. There would be disruptions. Our ability to execute kind of, you know, in the marketplace would be limited. So we are kind of, you know, also consciously frontloading our commercial calendar, you know, into January, March, right? And pretty much the three or four reasons that I mentioned, our A&P spending will probably, we will want to remain, as resilient as possible, as salient as possible, right, with the consumers, during January, March. Understood, Pradeep. Thanks. That's all from me. All the best. Thank you. Thanks, Percy. Thank you. The next question is from Tejas Shah, from Avendus Spark. Please go ahead. Hi, Teja. Yeah, h i, Pradeep. Hi, Hina. Thanks for the opportunity. Hi, Tejas. Yeah, a couple of questions. First, your read on the consumer sentiment, because if I rewind to the last quarter, this quarter is loaded up with many demand triggers, bunch of festive season, weddings, high number of occasions to consume, and obviously, World Cup was also there. So should we say that, despite all these triggers, the demand has not bounced back, so the condition is actually much more depressing than what the numbers suggest? I would say that, look, it is subdued, right? But, we are, you know, our category behaves a bit different from the rest of CPG. I mean, there is clearly pressure on the wallet, and you can see that in all CPG performance, right? But in our category, I think, you know, the difference is that, in CPG, people are moving to value packs and, you know, downtrading. In our category, they are not downtrading, they are just sort of, cutting back on occasions. So they're drinking fewer occasions, but, you know, sticking to their favorite brands. And, you know, I think the premiumization trend is still intact, right? So, you know, this category bounces back pretty fast when the consumer is back. So, I would say in the short term, we'll see where it goes, but in the medium term, right, I mean, if you just look at, you know, the penetration headroom, if you look at the premiumization trend and the potential for premiumization, I would say the medium-term fundamentals are still intact for our industry. And, you know, in the short term, I think addressing consumer needs with the right sort of brand, with the right activations, will, you know, help us continue to deliver our guidance. So, I wouldn't call it any worse. I wouldn't read too much into, you know, is this much worse than it is? I just think the consumer is adjusting consumption to, you know, the pressure on the wallet and has exhibited the behavior that we have seen for the category, which will then continue over the next few quarters. Sure. But, how do you reconcile this read of ours with, let's say, hotel occupancy or airline traffic, which is essentially our customer for P&A? And that segment is showing very divergent trend on, in fact, one end, their spending is closing rather, and other end, they are actually kind of, as you said, they are consuming less. We are seeing the same divergence in our category, as I called out earlier. The premium and luxury end is continuing to spend, continuing to experiment, continuing to do repertoire drinking, especially, you know, experimenting with the white spirits, right? Drinking out of home. Whereas the, you know, middle India, or the value-oriented consumer is actually, cutting down on number of occasions to manage their money. So it's pretty much the same in that sense. Very clear. Last question: in our conversation three quarters back, you had mentioned that 15% margin would be your initial target. Following that, you plan to focus on long-term initiatives like Supply Agility Program. Should we say that this quarter or last quarter, resilience that we have shown in margin despite inflationary headwinds, those benefits have started surfacing or, or will it, this is without that? Can you take? Yeah. Okay. So, well, a little bit of supply, you know, Supply Agility initiatives are beginning to kind of, you know, kick into our P&L, absolutely. So that is one reason. But again, I do want to call out something that Hina and I had mentioned in the last quarter call also, right? Which kind of also explains the, you know, the healthy performance on the margin front in the last two quarters, right? The quarter that we are discussing and the previous quarter as well, which is one is the entire mono carton removals, you know, initiative, right? The majority of that, almost, almost in its totality, right, has pretty much come in the last two to three quarters, right? I would say two to two and a half quarters, right? So therefore, that's a big if. That falls off, right? That falls off now, right? And therefore, you know, we're not getting that kind of, you know, bumper initiatives, you know, into the P&L. As fresh initiatives, obviously, what we have done, stays in the P&L. The second thing also that I did remind the audience in the last quarter call was our headline pricing flow through, the attractive headline pricing that we got from the various state governments, majority of them happened between end October of 2022 to about May of 2023, right? That six-month period, right? The West Bengal, the Telangana, the Odisha, et cetera, all the big pricing increases. You know, that starts falling off now, right? So, like West Bengal, we've already started lapping now, right? So therefore, that falls off. So our headline pricing is going to come down a little, right? And therefore, it is back to kind of, you know, coming up with a new set of initiatives now, and how much of that we can counter inflation. The good thing is, inflation also is largely restricted to one commodity now, which is ENA, and that's what we have to manage well. The rest is by and large, stable. So let's see how it goes, right? Let's see how it goes. That's all that I can say at this point in time. Very clear. Thanks, and all the best. Thank you. Thank you. The next question is from Harit Kapoor of Investec. Please go ahead. Hi. Yeah, good evening. Just, just two questions from mine. Firstly, if you could just help deconstruct this popular performance, 20-odd% decline in volume, however, 13% kind of increase in realization, especially that now we are on a like-to-like quarter. And maybe just, you know, give some more, you know, more color on, you know, how do we look at this? Yeah. Hina, should I take this? Yeah, yeah, please. Yeah. Okay, Harit, so, so look, I do want to start with saying that, you know, broadly, the 10%-12% volume decline has been, you know, we've been experiencing that for the last three quarters, right? So, so we ourselves haven't liked this 22% shrinkage, right? You know, I do want to put that fairly and squarely, right, in front of everyone. And that 10%-12% volume decline was leading to roughly a flattish NSV, right? Which we were absolutely, comfortable with because we had not got pricing for the last six years-seven years, right? So we... Now, having said that, right, our sense is that a couple of things have happened, right? One is obviously the industry had jumped slabs, etc., and taken MRP pricing because they had not got pricing. So that was that. And then on top of that, you know, Karnataka increased excise duties by almost 18%-20%, et cetera, which effectively started impacting us from September, right? Because there is always a little bit of pipeline, et cetera, et cetera, right? So that impact has further, you know, accelerated the decline, right? And not to say, right, there is a little bit of, you know, Maharashtra also, right? So these are the two salient states of our popular business. And like Hina has already said, we are absolutely kind of working on this, and we would want to reverse this, you know, this trend, you know, over the next couple of quarters, and very, very, you know, very, very quickly, right? So that's broadly it. There's nothing else that I can say at this stage. Just to follow up on that, is this higher realization kind of growth more mix-led, that you know... But, you know, my, the reason I was asking is because in P&A, we have a very, very, you know, divergent price point, starting from INR 500, going all the way up into the high thousands. Here, we don't. So I just wanted to understand this kind of a broad 13% kind of realization increase. Okay. So when you said 13%, the headline pricing that we have taken, I think we had taken some time. We jumped the slab sometime in, January, January, if I, if I'm not wrong, or if my memory serves me correct, January and February, in, in Karnataka, right? So we'll just start lapping that from January, March onwards, right? So that, that, that realization will disappear now. Got it. Got it. Got it. The second part was on price increases again. You know, given that only 50% of your portfolio is inflationary, would it be... And given that, you know, you've got fairly decent, if I can call it that, price increases over the last two years from states, would it be harder over the next, say, 12 months-18 months to kind of go back and have those conversations? Just wanted to understand how you think about it. Well, for us, the cycle is annual, right? So we will obviously, you know, put our best foot forward, right? And, you know, there is a full machinery, right, that we have in our organization, along with the industry associations, right, to get, you know, to advocate with the governments. Let's see what we get, right? I mean, there has- Yeah. So we do not hold back any pricing conversations. Yeah. We do that every year. Absolutely. I would say every year the pricing conversations are hard, but, I mean, we continue to push and progress both individually and through industries, to try and realize price increases at least to cover for inflation. So we'll continue to do that in this, you know, what we call the excise cycle, which starts now and goes on till about May. We'll see where we net out. Yeah. And the last bookkeeping one was on, you know, the IPL. So the WPL annual fee comes in Q4, right? Yeah. That will come in Q4, right. February, February is when the tournament is scheduled to happen. That's right. That will come in Q4. All right. Wish you all the best. Thank you. Thank you. Thank you. Thank you. The next question is from the line of Vismaya Agarwal from Citi. Please go ahead. Hi, team. Thank you so much for taking my question. Just one question here on the other expenses. You know, I do remember a couple of quarters ago, we had this discussion where you explained that there's a variable component and hence, you know, it moves in line with the top line. But now when I look at it sequentially, Q2 and Q3, they're very similar from a net sales value perspective, very similar from a volume perspective, and still we have a big savings in other expenses. So can you just elaborate on what are the drivers that led to this benefit? And is it more sustainable if those benefits do they continue, or you know, how to look at that going ahead as well, please? Vismaya, when you say other expenses, these are the overall expenses, right? Yes. Yes. Okay, okay. No, so look, I think again, October, November, December quarter is the highest volume and the highest revenue months, right? So there is always a little bit of operating. If you look at it sequentially, right, there is always an operating leverage that comes during the October, November, December quarter, right? So my guidance will be, Vismaya, please look at these numbers, because there are a lot of fixed cost components, you know, incorporated in these numbers, right? Please look at them on a four-quarter trailing annualized basis, right? That will be the best trend that you can pick up on these numbers. Quarter-on-quarter, there will be noise, right? There is always... You know, we are running about INR 10,000 crore business, right? So there is always accounting noise, there is always a little bit of one-off here and there, et cetera, both, you know, debits, credits, et cetera, right? So I don't think we will want to get into that level of granular, but I think the fourth quarter trend will be reasonably kind of, you know, secular. Got it. That's the same. Sure. That's it from me. Thank you, and all the best. Thank you. Thank you. The next question is from the line of Amit Thawani from ClearBlue Capital Advisors. Please go ahead. Hi. Thank you for taking my call. My first question is, Don Julio is actually already available in stores, so I'm wondering where is that coming in, today's... Where is that coming from? So there were some Don Julio, which was flowing in through informal channels into the country. And, you know, and then we had brought in some small quantities to seed Don Julio in the past, right? And, we were sort of seeding and testing. So, our own team had, you know, brought in some, but there were some which is flowing through, which happens sometimes. And, you know, what we have done is now formally launched it, and we are creating a formal channel of distribution for Don Julio. And, therefore, curbing any, you know, sort of informal channel and also, you know, then inconsistency in pricing, and then also building the demand, right? Because, I mean, any new brand like this needs to be-... The demand needs to be built for the brand, and so therefore, we are going to consistently invest to build the demand in a sustainable, consistent manner and, you know, build it and scale it over a period of years. That is our experience globally, that it takes a few years to build this up and really seed it into the drinking sort of the dream of our consumers. So that's what we are working on now. Great. Great. Thank you for that answer. It, I'm pretty sure that, it will be very successful, considering, as you mentioned, that the country is moving towards repertoire and experimenting. Can you tell me what kind of... So, as a subset, as a subsegment of these, you know, of our company, how much percentage of our sales would be that fast-growing, you know, Repertoire drinking thing, which includes maybe, Johnnie Walker would be there, Scotch would be there, maybe some other white spirits which are growing faster, Indian single malt. What would that be as a percentage of our portfolio, the fast growing? Pradeep, do you want to answer? You know, can I recommend that you look at our investor presentation of May of 2023? We had actually provided a fairly granular breakup of the subsegments, right? You will get all your answers there. Got it. Got it. And my final question is on canteen stores. Is there some market share number we have in canteen stores? Is our market share in canteen stores lesser than our domestic market share? No. So we've never shared channel-wise, you know, share numbers. In fact, we've never shared national share numbers also, right? But I just want to kind of, you know, provide comfort to you know, to the audience, that you know, despite that, you know, that dispute and the claim, et cetera, business continues as is. Business absolutely continues as is, and we are not seeing any impact on the business, right? And that's absolutely, you know, we would, you know, we would want to maintain at this stage. Got it. Got it. Thank you. Thank you so much. Thank you. Thank you. The next question is from Pankaj Murarka from Renaissance. Please go ahead. Yeah, hi. Hi, Pankaj. My question is for you. India is a price-constrained market where you have to take state-level approvals for pricing. I mean, as we, as you said, it's an every-year phenomenon. What I want to understand is, given now the construct of the business is largely dominated by P&A in an unconstrained market, what kind of profitability at which you think this business can operate after making sufficient investments for future growth of the business? Sorry, your voice broke in between. I'm not very clear on what's the question you asked. Pradeep, did you get that? Yeah, maybe let me just take a shot. Question is, that it's a counterfactual question. Today, the category operates in a price-constrained environment, right? Yes. We have to- Right ... seek approvals. For a minute, if you want to run, you know, let our imagination run wild and the pricing constraints are removed, right? What is the, what is the profitability, you know, of the business, right? So, maybe I'll take a shot, Hina, and then you can give your builds. So, look, Pankaj, I mean, broadly, I would say, right, that over a longer period of time, right, one would want to believe that both the government and the brand owners have absolutely aligned interests, right? And therefore, I would say that, you know, the profitability potential of this category should not be any different from any other CPG that operates in the country, right? Broadly, the sense that, you know, one has is, right, or even if we benchmark with our core competitor, et cetera, the EBITDA margins are broadly in the range of, you know, you know, 20% or 20%-22% kind of a range, et cetera, right? So that's, that's broadly the sense, we have. Now, our category has a unique nuance, of the, you know, of the, of the global brands, where there is a, there is a, there is a distributor margin and therefore a margin capping, et cetera. You have to kind of, you know, rightsize for that. That's the only nuance compared to the rest of the CPG category, right? That'll be my view. Hina, in case you have any additional builds on it. No, no, I think you covered it very well. I would absolutely agree with that. Yes. But I have a counter question now as an analyst. Pradeep, see, India is a country where companies in the consumer business, which are in staples, someone like a Unilever, they make, like, 23%-24% margins. I thought discretionary categories with pricing power should logically make higher profitability. At least that's what I've learned as an analyst over the years. Which is true, right? And therefore, if you look at it, if you compare, let's say, the Diageo PLC global margins with that of a Unilever, et cetera, the margins are much higher, right? And then you kind of layer on, right? Layer on the fact that, you know, there is, there are, there are these constraints, et cetera, in the market, et cetera, right? And therefore, you know, we should at least aspire to get to the, to the CPG averages, right? That's, that's, that's, that's all that we are saying.... Now, your question is- function, Pradeep, of the portfolio, right? And, which India are you addressing? And, you know, the choice most companies make is addressing the full portfolio. We address the three Indias, right? We address the affluent, we address middle, and we address the, you know, aspiring India, right? And if I look at, even the longer-term picture in that, I would agree that I think, you know, what CPG has done, over the last few years is probably the benchmark, you know, that one would achieve, right? Yeah, yeah. But it'll be interesting to know where are you headed with this question, right? I mean, for our own question, right? Where are you headed with this question? No, I need to understand in terms of where this business can potentially go if it were to understand the underlying profit, true profitability of the business, where it is headed, let's say if it was not a constrained market. Because we understand that profitability in India is much lower than, not only, let's say the developed markets, but even some of the Latin markets as well, from a Diageo perspective. So that's what I- I honestly feel it's quite hypothetical because, I mean, given the constraints in the market, hard to imagine that it will become free pricing suddenly. But having said that, I, you know, taking a consumer-back angle, I would think that they would continue for at least, you know, many more years, a mix of, you know, addressing the three Indias, and therefore, probably netting out with what, you know, with what Pradeep said, is my sense. Okay. Okay, I got that. Just one more question. I remember we lost... Let's say we had to exit some markets like Telangana, and I think one more market where we and we lost volumes on account of that. So, do we have discussions with the government or the possibilities of getting back into those markets and gaining those volumes back, what we lost? Or not until the political cycle changes? Yeah, I mean, Andhra was the market we had exited a few years ago, and we have continued dialogue, you know, with these states where we have exited for various reasons, right? And, you know, whenever we can find a way to operate and get back, you know, in the right manner, following our code of conduct, we will certainly get back. And our experience has been that, you know, sometimes markets go away, but we always come back after conversations, you know, with the government. So we continue our dialogue with the government, and, you know, hope that, in the future we will be back. Okay. Thank you. Thanks a lot. Thank you. Thank you. The next question is from Sneha, from SKS Capital. Please go ahead. Yeah, hi. Thank you. Thank you for the opportunity. I just wanted to know, have we lost market shares in some of the areas? I was reading a bit about it. And, are there any particular regions where we've gained market share? See, we don't discuss region-wide, statewide market shares ever. On an overall basis, like I mentioned earlier, we have performed extremely competitively, registered, you know, strong growth for most parts of actually all parts of our portfolio, and we continue to do that for the last, you know, several quarters. So, on an overall basis, we are performing extremely competitive. Okay. Second would be, are we seeing any improvement in the raw materials of glass prices? Well, I said that, Sneha, I did cover that, right? So glass has been stable. In fact, there have been, you know, minor reductions that we have got in the October, November, December quarter, right? So yeah, glass is, as of now, stable, and we are hoping that it'll remain stable, for the next few quarters. All right. Thank you so much. Thank you. Thank you very much. That was the last question. I would now like to hand the conference back to Ms. Shweta Arora for closing comments. Thank you. With this, we close today's call. For any follow-up questions or clarifications, please feel free to reach out to me directly. Thank you, and good evening. Thank you very much. Thank you. Thank you. All right. Thank you, everyone. Thank you. Thank you. On behalf of United Spirits, that concludes the conference. Thank you for joining us, ladies and gentlemen. You may now disconnect your lines.