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. Thank you, Michelle. Good evening, everyone, and welcome to United Spirits' first quarter ended FY 25 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. We will kick off today's call with Hina sharing her thoughts on operating environment and 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 will be referring to the financial releases available on the stock exchange and on 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, ladies and gentlemen. Thank you for joining us on the Q1 FY25 earnings call of United Spirits Limited. To start with, I would like to give you a brief update on the macro environment. We have been monitoring the external environment closely and have witnessed sharp consumption growth for the latter half of fiscal 2024, with an overhang of sustained food inflation. However, as you are aware, some green shoots are emerging in the economy, driven by rural consumption recovery and the expectation of a normal monsoon. With this, we hope for some consumption revival going forward. On alcohol base, we continue to see a relatively slower but more thoughtful spend by consumers, favoring their preferred brands, brands that are offering the right price value proposition. Amidst this softer demand environment, our strategy has been to remain value-focused. I would like to reiterate that while the premiumization ladder is intact, it is still below our aspiration and what we have experienced in 2021, 2022 a nd 2022, 2023. In this environment, we are delivered, we have delivered a steady performance with overall mixed sales value growth of 8.3% over prior year, same quarter. Considering the rapid sequential changes in the demand environment and prior year same period that we are lacking now, it will be our request to look at the first half of the current fiscal year as one consolidated block. Pradeep will provide a little more color on this in his comments that will follow. It is also our firm belief that fiscal 2023-24 was a story of two halves, as most of you will remember, and we also think that fiscal 2024-25 will also be the same, with only the sequence of the halves being reversed vis-a-vis growth. We do, however, remain firmly committed to deliver our growth guidance on a full fiscal year basis. On the cost side, our key ingredient, extra neutral alcohol, remains inflationary, while the rest of the commodity portfolio is stable. We have delivered on our margin aspirations by successfully countering inflation through efficiencies across the value chain and revenue growth management initiatives. A quick update on the policy front. During the period, new excise policies were released across north, central, and eastern states. We have received some headline pricing in a few states. New policy in southern state, Karnataka, has suggested flat changes with reduction of duty, which is a positive development. However, at this stage, rollout of the new policy is put on hold as the industry awaits some clarification. Industry body is also in discussion with the state and making necessary representations for serious adjudication. We hope this change will help revive demand within the state and enable some premiumization of the spirits category, which is currently highly skewed towards the lower end. As all of you will recall, about a year back in July 2023, we saw some duty hikes in Karnataka, which had put tremendous pressure on demand in an already inflationary environment. In that context also, we are happy with the recent announcement. I'm also sure that you have been hearing about a state intending to open for business again. At this stage, we remain cautiously optimistic and are waiting for the new policy announcement. We are also gearing up our preparation to recommence business in the state as and when the new policy enables the same. Briefly now on key portfolio updates, starting with our IMFL upper prestige segment, we continue to make steady progress with our brands in this segment. Our Antiquity, Royal Challenge, continues to build stronger equity with the consumer. Post renovation, we have conducted a very nice activation on a photography challenge powered by Antiquity Natural Mineral Water. The coastal bird heron on the label represents grace, elegance. It embodies the spirit of fearless exploration, and limitless possibility. The initiative featured eight talented artists and had the honor of jury members Satyan Bien and Naveen Bajaj. The campaign engaged around 140,000 people and culminated in a stunning digital magazine cherished by the community. Within the upper prestige segment, Royal Challenge American Pride continued to uptake the segment. We launched the first of its kind 375 ml pack in the Hipster format for Royal Challenge American Pride across key markets such as Uttar Pradesh, Telangana, and Assam. From a consumer lens, we continued the ride with trade activation, which was done across all key markets over the last quarter. Coming now to mid-prestige, Royal Challenge has been winning share of mind by challenging status quo with our distinct persona. We have reignited our television presence with a scale 360 campaign, our first in four years, achieving a remarkable 65%+ reach. This campaign extended across 70+ television channels, 1,200+ cinema screens, and included 30+ front-page newspaper ads. We have scaled through Goal 2.0 through the above-mentioned media and launched a limited edition product, RC Play, for the cricket season. As a limited offering, BF flavored whiskey, RC flavored launched in the key markets of Maharashtra, Assam, Madhya Pradesh, Goa, and Uttar Pradesh. Coming now to McDowell's Number One. In the current quarter, we focused on scaling the Yaaron Wali Baat campaign featuring our brand ambassador, Kartik Aaryan. The campaign continues with a strong presence on digital trends in key markets like Assam, and in UP, we launched the renovated McDowell's Number One whiskey with the new brand world and retail toolkit being deployed. Coming now to the new launches under the McDowell's trademark, X Series. This range includes a wide range of whites, including vodka, gin, citron rum, as well as dark rum, that will operate in the upper prestige price segment. This is a huge step in our premiumization journey of the overall portfolio, as well as our anchor trademark. Our initial consumer and trade response is very encouraging. The X Series will scale up to more markets with the, with a target for national distribution. Coming to premium and luxury, one of the highlights from Johnnie Walker was our partnership with the Euro Cup 2024, as we built up our presence in impact properties to reach our target audience. We also scaled up our experiences in Blue Label with our exquisite dinners across key markets of Delhi, Mumbai, Bengaluru and Hyderabad. We are also scaling up the Jaguar in the northern states and have anchored premium visibility for the brand at stock outlets. We are aimed to further accelerate momentum with continued omnichannel engagement. The Tequila category is continuing to see good momentum. Don Julio initial response is good, with robust consumer traction and scale up across states. Premiumization within the trademark is also visible, with Don Julio Reposado growing faster than the entry variant Blanco. Consumers also prefer Reposado as the mixer versus Blanco, which is mostly consumed as a cocktail in the on-trade. Don Julio has done some significant activations in the quarter, partners with Culinary Culture, Marriott Bonvoy, and American Express to get the world number one restaurant Central from Lima, Peru, to India. This is the first time a reigning world number one restaurant has come to India, and Don Julio was the proud exclusive spirit partner, reaching out to 100+ exclusive guests who bought this experience at a super premium ticket price. As you know also, in our portfolio, Royal Challengers Bengaluru men's team, they significantly moved up the rank in the current season of the Indian Premier League, and it was a delight to see both our women and men's team performing strongly and the fan following scaling new heights. Last but not least, in line with our strategy to add premium Indian sovereign craft brands, which complement our existing portfolio, the board of directors has approved the investment in V9 Beverages Private Limited, the makers of sober non-alcoholic beverages, and Indie Brews & Spirits, makers of Quaffine coffee liqueur. Our strategic minority stake in both the companies is a step forward in our mission to strengthen our portfolio by partnering with breakthrough startup entrepreneurs and offering our consumers a wider choice of brands. Both are early-stage investments for us. You can find more details in the announcement to stock exchange last evening. Looking ahead, we remain focused on harnessing the macro trends of premiumization by targeting the right consumer opportunity. Our renovation and innovation portfolio will play a critical role in this next phase of growth. We are confident to deliver our growth ambition by remaining agile in a soft demand environment and harness every profitable opportunity to create long-term value for all our stakeholders. Before I hand over to Pradeep, since the Union Budget was announced yesterday, here are my quick thoughts on the same. The Honorable Finance Minister of India, Srimati Nirmala Sitharaman, in the first budget speech of the current government, introduced positive changes in taxation and fiscal policy, emphasizing policy continuity to drive economic growth. The budget prioritizes a Viksit Bharat, focusing on tax certainty through simplified and streamlined litigation processes. Key areas include enhancing FDI, generating employment, bolstering agriculture and solar power sectors, empowering women, which is very much on our agenda, and advancing infrastructure development. A notable announcement was the FM's decision to undertake a comprehensive review of the Income Tax Act 1961 and complete it within six months. This initiative aims to simplify taxation, reduce litigation, and provide certainty to taxpayers. The introduction of a dispute resolution scheme is a welcome initiative that will further streamline tax litigation. Closer to our category on the indirect, indirect taxation front, excluding extra neutral alcohol used in the manufacture of alcoholic liquor for human consumption from GST is a much needed reassurance for our industry in lieu of the uncertainty associated with this issue since 2017. This amendment will help in significantly reducing unwarranted tax litigation. Raising GST on ENA would have added cost for alcohol industry without a corresponding input tax credit, adversely affecting sales and tax revenue for the state. The government is also empowered to now regularize non-levy or short levy of tax due to prevalent trade practices, which is again a very welcome move for us. Overall, the budget lays the groundwork for a resilient, inclusive economy, offering a forward-thinking and balanced approach to Indian economic policy. 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. As always, it's a delight to interact. Before calling out the quarterly financial performance highlights, we'll request all of you to refer to the results press release posted last evening. With the start of the new financial year, the results are absolutely clean in terms of basis, hence, the terminology of rebased and reinstated has been eliminated.... As Hina mentioned, we have delivered a steady quarter despite the demand environment being soft. Price mix at 4.8 per, at 4.8% was in line with the low BIO cadence quarter. We have delivered an overall portfolio NFC growth of 8.3% during the quarter, within which the PNA growth stands at 10.1%. It is important to call out that a combination of two events, one, a regulatory challenge in a North Indian state, and another business as usual development in West, has led to a favorable growth in the current quarter that will normalize in the next quarter. It is in this context that we are requesting you to look at the first half of financial year 2024/2025 as one consolidated block. Our growth, our core growth drivers remain a combination of innovation, renovation, and driving premiumization at multiple levels to enrich price mix. As it stands today, we remain committed to deliver our growth guidance for the full fiscal year 2024/2025. Gross profit for the quarter was INR 1,046 crores, with a gross margin of 44.5%. Our marketing reinvestment rate during the quarter was 7.4% of net sales. This will step up from here as we approach the peak season of October-December to keep our virtuous growth cycle intact, to drive consumer engagement in the short to medium term, and to establish strong equity for our brands over the longer run. EBITDA for the quarter stands at INR 458 crore, a growth of 18.9% over the prior year's same quarter, and EBITDA margin is at 19.5%. It is important to caveat that the margin for the quarter incorporates a hundred bps benefit on account of ongoing true up of provisions in the overhead line against two specific items. As all of you are aware, the A&P investment rate in this quarter is the lowest across the four quarters, in line with the business seasonality. On the cost side, Hina has already called out. ENA remains inflationary, while the remaining input commodities are largely stable. We expect this trend to continue over the next couple of quarters. This, along with other structural cost reduction initiatives across the value chain and revenue growth management interventions, has helped us progress the margin trajectory in line with our expectations. Overall, our PAT for the quarter is INR 299 crore, with a PAT margin of 12.7%. In conclusion, we would like to say that sticking to our core strategic pillars and executing them with passion and ownership in a continuing soft demand environment currently, as well as highly inflationary periods in 2020- 2023, has been a key enabler to deliver our growth and margin aspirations. It also provides us the confidence in our overall business strategy and the capability of our people that remains our biggest asset and a competitive advantage. And as we look around, and as we look around and hear the new, new flow on policy front itself, we remain optimistic on the prospects of a conducive business environment and the improvements in the consumption momentum, and thereby our ability to further enhance stakeholder value. With this, we can now open the floor for Q&A. Thank you. Thank you very much, sir. We will now begin the question and answer session. Anyone who wishes to ask questions may press star and one on their touchtone phone. If you wish to withdraw yourself from the question queue, you may press star and two. Participants are requested to use only handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Abneesh Roy from Nuvama. Please go ahead. Yeah, thanks, and, congrats on good set of numbers in a very tough quarter. My first question is on the two M&A, which you have just announced. Wanted to understand the thought process, because when I see the sales in FY 2023, also for both companies, it's broadly quite small, at INR 0.6 crore. But in FY 2024 also, there is no growth. In fact, both companies seem to have seen a YOY dip on that small number. So what has made us buy this? Is it the technology? Is it the manufacturing capability? Plus, from a longer term perspective, can both of these brands grow much deeper into most of the states? Wanted to understand how you see distribution from longer term perspective. Hi, Abneesh, thanks for the question. So, as you know, we've been following an agenda of future-backed, consumer insights-led, sort of, innovation engine creations, right? And, both these categories, which is non-alcoholic and, zero alcohol, as we call it, plus, liqueurs, are categories that we do look at, growing in the future. They have some traction, and they are categories that we expect, will gain much more traction. And therefore, our investment is very early, but, early stage investment, to create future engines of growth. We were small entrepreneurs, and clearly, as one of the objectives, and goals that we have identified, is not only to operate in a local craft, premium craft, but also help the craft ecosystem to grow. So, clearly with Diageo's scale and support in terms of technology enhancements, in terms of the distribution might, these are categories that we definitely see will have the potential to scale up, to grow and, become national, in the future. So, you know, and what we look for is the culture and culture fit of the founder and the, you know, the quality of the product, which both, ranges are very high quality. So, this is in anticipation of creating a new growth engine based on future back, assessment of the other consumer sets. ...Understood. My second question will be on the excellent margin delivery you have done this quarter. So when I see the other cost, there is a very good control, both quarter-on-quarter and YOY. So is there any one-off here, because such a sharp control here, is this sustainable? I understand Q1 elections were there, and generally it is a big quarter. So how easy will it be to have this kind of a cost control in rest of the three quarters? Pradeep, can you take that question, please? Yeah, Hina. No, thanks, Amish, and I did kind of refer to it in my opening comments, right? So, on a quarter basis, as I mentioned in my opening comments, you know, there are, there are certain true-ups of provisions, right? Which, which for the quarter are, are giving us 100 basis points benefit in our EBITDA margin, right? So if you normalize for that, the 19.5 should be read as 18.5. And then, you are well aware of the A&P, which is the lowest in this quarter. Once you normalize that, we are back in that, you know, 16.5 kind of a range, right? Now, I will look at it positively, because that gives us the confidence that we are pretty much in a position to continue to expand the margin trajectory a little bit from where we ended last year. So we are in good shape. I think that's the way I look at it. Why I called this out, Abneesh, is so that you guys don't end up extrapolating this quarter, right? The number is material for the quarter. If you look at it on a full year basis, these are absolutely business as usual items, but it's just because of the quarterly timing, they tend to kind of come up in different quarters. Therefore, we just thought it, in terms of transparency, I need to call it out. Hope that helps. Understood. Understood. My last quick question, so, Hina, in your initial remarks, you said, FY 25 also will be a story of two halves, and you rightfully had called out slowdown around one year back. What is giving the confidence of further acceleration? You're already doing a good growth in terms of volume and sales, both in PNA. In second half, the optimism, is it largely because the base effect? Because overall, still there is no big change in other discretionary categories when you see pizza or apparel or footwear. Most of the other discretionary categories, still things are quite challenging. So it will be mostly marriage season coming back, it will be the base effect catching up? So, Amish, I think it is base effect, right? I mean, last year we were very high growth quarters in the first two, and then there was a slowdown in the next two, right? And this year we are kind of seeing the reverse, right? So we are expecting the first half to be, you know, steady, little muted, lower than our aspiration. But overall for the year, you know, we are sticking to our guidance. There is hope that consumption will pick up this season, right? And there is also the scale-up of some of our innovations and renovations, which will really dial up as we go along the year. McDowell's X Series, for instance, with our range of vodka, rum, and gin, we expect to, thanks to national distribution. You know, we've got Johnnie Walker Blonde, we've got Royal Challenge American Pride is scaling up. So, it is a question of base effect, plus the fact that we will have national rollout of our innovation and generation products. Sure, thanks. That's all from my end. Thanks. Thank you very much. Thank you. The next question is from the line of Avi Mehta from Macquarie. Please go ahead. Hi, Hina and Pradeep. Hi, hi, Pradeep. Pradeep, I actually wanted to just pick up on one comment that you made in the initial comments about some benefits on North East and West India. Could you clarify what exactly was it? And that I kind of get to the question then. I didn't quite get the understanding, so it'd be useful if you could clarify please. Yeah, Avi. So, no, so what we want to share was that, look, based on what we had experienced in April, June, right? We have experienced a certain momentum in, you know, in one of the western states, right? We have probably a handle on it as to why, right? And therefore, we see some amount of the growth for the first half getting frontloaded in the first quarter, right? Which is likely to normalize in the second quarter. And therefore, I think Hina also mentioned in her comments, and I also mentioned, that it is again ou r you know, our recommendation that you guys don't extrapolate these numbers, right? And look at the first half, which is April to September, as a consolidated block, right? So that's what I would want to share at this point in time. Okay. Is it possible to give us a sense on what... I mean, I'm not sure if you can give some quantum or some way to understand how much would this benefit be, or? You know, like you said, it's business as usual, therefore it's difficult to quantify that in this vast kind of you know, deep and wide business. But we know that there is a certain amount of, you know, benefit that we've got in the current quarter. So, okay, let me rephrase this, Pradeep, and, you know, where I'm coming from is the fourth quarter, you had highlighted the concerns on demand, and, I mean, this 10% growth is pretty good in that context. Now, I understand there is some one-off aspect, but if I look at the first half and the second half, and given our target of 10% plus double-digit growth in FY 2025, the way I should see this, and please clarify, it's first half should be closer to that 10% or to be ahead of... Is that how you're seeing this? Could you give us some sense on how we should look at growth rate from a sales perspective? Would be helpful. Absolutely. So let me help on that. And that, I think, is pretty much called out, Avi. As Hina mentioned, it will be exactly a story of two halves, only the growth will change in the halves, right? So, therefore. Okay. You know, I can go on record and say that first half will be less than double digits. Right? And the second half will be higher than double digits. As of now, we stand absolutely committed, right? That on a full year basis, we should be, you know, we should be on our double digit item. Got it. Perfect. You know, very helpful, Pradeep, thanks a lot for sharing, being, you know, transparent in these disclosures. The other bit I just wanted to understand is on, I, I got you 100 basis impact in provision. You know, is this something that will, that is, you know, changes in the next quarter, or no, this is something that has happened, and now from here on, whatever number I can true up based on, will continue going forward? And a, a related question is on the- or actually, more important is the gross margin. Is there any one off the gross margin? Because that moved up quite sharply on a sequential basis, and I wasn't sure if we can take that number as, as steady state, because MEA costs seem to have, flatlined, but we'd love to hear on that part, please. No, fair. So I think, you know, on the first question of yours, Avi, my response will be same as what I've provided to Abneesh, right? So there is no one-off, right? These are pretty much in the normal course, right? But on a full year basis, right? And, you know, when these trigger events happen, etc., and your, you know, provisions get tuned up, in the quarter, because the period is so small, right, the numbers become material. So therefore, you know, I do want to call that out, right? The 100 bits, right? Because I know how you guys run your models, the 19.5 become base, and then from there onwards, right? So I kind of worry on that front. So therefore, I'm calling it out. But in the... You know, on a full year basis, these were absolutely par for the course and normal, absolutely normalized items. So yes, the sharp answer to your question is, do not extrapolate our current quarter margins on the overhead line. Absolutely. That's one. Your second question on gross margin. You are right. Look, I will only say, Avi, that you know, we are fairly refined in dynamically allocating our growth driver resources, right? So, and look, there are two big growth driver streams, right? There is, there is A&P and there's obviously the trade spend, right? Both are equal, but one is above the gross margin line, one is below the gross margin line, right? Depending on the tactics you have for a quarter or for a particular month also at times, right, there could be dynamic allocation between the two, right? So, I think that's broadly what has happened. That's why you see the A&P a little higher. We have, you know, done that, and because we kind of, you know, reduced our trade spending, that provides a kicker to our gross margin. But yes, you're right, there is absolutely nothing sustained in the gross margin that has happened in the quarter. Got it. And just a last bit, if I may. You know, this Karnataka bit, by when do we expect clarity? I was under the understanding that it's beneficial from a premiumization perspective. But given Karnataka is a heavy, popular heavy market with NOW, I would like to know how should we read this change? Thank you. No, absolutely. Absolutely. Hina, you want to take that? Sure. Yeah. So, Avi, we are in touch with, obviously, you know, the relevant government officials as an industry. We do expect that sometime in August we will get more clarity, and should, you know, business should resume as usual. As I mentioned in my opening, we do expect to see some premiumization in the state. It is a positive policy announcement. But I just want to say that even with the duty adjustments, the product will still remain relatively more expensive than many other markets. So, you know, there will be some benefit of premiumization, all in the right direction, but we don't expect that it will be an explosion, right? Because the product remains, still will be expensive. Okay, Hina. Perfect. No, I'll come back in the queue for the other questions. Thanks a lot, and thanks, yeah, for being so crystal clear and transparent on how should we read these performance. Thank you. Thank you, Avi. Thank you. The next question is from the line of Latika Chopra from J.P. Morgan. Please go ahead. Hi, Latika. Hi, hi, Pradeep. Hi, Hina. Thank you for the opportunity. I think some of the questions got answered. But I wanted to first check on any color that you can share with us on any kind of impact, you know, from changes in West Bengal taxation policies. It's still in the works. I didn't really catch the question. Praveen, did you? Yeah, yeah. So I think Latika's question, Hina, is on the West Bengal excise policy. The expression of interest has come, Latika. We are still working on it, right? So, a lot more clarity will emerge in the next 2-3 weeks, right? So, right now it's too early to call anything. Yeah. Okay. All right, the second was, you know, I, Praveen. [crosstalk] Latika, you're breaking, you're breaking a bit. Okay. I'm sorry. Is it better or not? Yeah. Now it's better. Now it's better. Okay. Yeah, my question is, you know, on the quarter for PME realization, it's close to about 5%, you know, on a YY basis. What would be pure pricing in your assessment, in this number versus the mixed benefit? In the current quarter? Yes, in the current quarter or, In the current quarter, I'm just kind of, you know, thinking off the shelf, Latika. I think our PNA volume is at 5.1, if I'm not wrong, and total NSV is 10.1. So the breakup of the balance five would broadly be about, I would say, it's about 1.6% of pricing and the balance is mix. Pradeep, would you expect the pricing path to keep improving depending on, you know, what are your sensing on, you know, the realization of pricing flexibility ending up in the remaining part of the year? Considering whatever you have knowledge on, you know, different, policies you know, that are playing around, plus of course, your own continued initiatives, you know, that you are seeing on, driving premiumization. Yeah, yeah. So look, Latika, I mean, Hina and I have maintained a consistent stand on this, right? Mm-hmm. And we don't want to get into a breakup of the two, but price mix as a whole, the volume-value delta, right? We've always maintained, and actually we took this position two years ago when BI was very, very buoyant. But yeah, I'll probably go ahead and still kind of put ourselves on the hook, which is that it will stay in the range of about 6%-8% on a full year basis. Again, there might be quarterly wiggles, right? But I guess, you know, on the lower end, 6%, on a higher end, 8%, etc., that will probably stay, right? So that's what we will probably hold ourselves to. And this I'm kind of talking PNA, right? So PNA price mix will remain in the 6%-8% range, and that's what we will probably sign up for. The breakup between headline pricing and mix could vary, right? We've had pretty good 24 months, I would say, on headline pricing, even though nowhere near the inflation levels, but you know, can't complain compared to our historical run rate. So probably the headline pricing will will moderate a little bit, but we continue to remain very, very focused on our premiumization and driving the you know driving the realization through that. This is useful. And absolutely the last question, Hina, you know, your opening remarks, you started off. Yeah. With, With, you know, green shoots in, you know, rural, right? Just want to understand a bit better, you know, in the portfolio, you know, skewed, or what segments of the portfolio skewed towards smaller cities, is that what you're calling for, some bit of an uptick, possibly in popular and lower prestige? That was one part that I wanted to understand. Right. Right. And the second bit was, just checking, you know, are you sensing any kind of moderation risk on growth in any of your urban centers or, you know, urban consumption, at the same time? That's all. Right. So, on the green shoots, it was more a general comment, Latika, on the sort of economy, right? And, as rural economy improves monsoons, I think the overall sentiment improved. And, we don't see a direct consumption impact, though at the lower level there will be some, right? But, it is more about the sentiment of the economy, and therefore, the consumer sentiment hopefully leading to more demand, right? On the moderation risk, I have been calling out for two, three years now that consumers, we do see, and this is not state-specific or town-specific, we do see consumers saying that they don't want to drink more, they want to drink better, right? And, that is only getting, I think, accentuated with the newer consumer coming into legal drinking age. And therefore, you know, our story of robust sort of premiumization and expectation of robust premiumization trends as we look forward, is based on. And I would say that overall, Latika, still I would say that, look, I mean, penetration still remains quite low in the country. Per capita still remains quite low in the country. So if I just look at enhanced penetration, if I look at, you know, consumption, and if I look at premiumization and the desire to continue to start adopting better products, that bodes really well for us as an industry. Understood. Very clear. Thank you so much, Hina and Pradeep. Thanks. Thank you, Latika. Thank you. The next question is from the line of Jay Doshi from Kotak. Please go ahead. Hi, Jay. Hi, thanks for the opportunity. Hi, Jay. Hi, Hina. Hi, Pradeep. So you have delivered, you know, consistent gross margin improvement over the last 4-6 quarters, notwithstanding, you know, inflationary environment, especially in PNA. So I just want to understand, you know, what benefits of the cost-saving initiatives you undertook about two years, one and a half years back, which is mono carton elimination and then Supply Agility Program. You know, what percentage, where are you in that journey, and how much more headroom do you have? I'm assuming that those benefits are essentially helping gross margins or, you know, helping you mitigate inflationary pressure. Yeah, yeah. Maybe, Hina, I can take that, right? Yeah, please. Yeah. Yeah. So, Jay, I think that, you know, we mentioned in the last call also, the mono carton is fully in the P&L now. Absolutely, right? Completely in the P&L. And you're right, I mean, our last year, if you look at the financial year 2023-24, the big bump up on productivity that we shared in the May annual investor call as well, right? Was largely driven by the mono carton initiative, right? That was roughly worth around, I think, INR 160-170 crores on an annualized basis, right? So that's all fully into the P&L. And therefore, the productivity numbers, you know, will moderate compared to 2023-24, right? But hopefully, the good thing is that inflation is also kind of moderated a little, right? So that should help our... You know, that should see us in good stead, right? Sorry, I've kind of missed your second question. Supply Agility Program. Supply agility, right? Supply agility. We, yeah, we had shared the status of it again in the May call. You could refer to that. We had said, I think 40% of our stated benefits, right, of the full program were already in the P&L by, by March 31st, right? And the balance 60% will kind of come in a piecemeal manner. I think we had mentioned when we announced the program, that the full program benefits will be into the P&L only by financial year 2027, 2028, right? So, so I mean, in a way, we are pretty good actually, 40% already in, right? But obviously, the tougher ones are now kind of, you know, being queued up, and they will take a little while to come into play. Understood. So at this, at this point of time, you-- it looks like you're directionally are comfortable on gross margins, right? There is no incremental headwind per se, if at all, you know, gradually it could get better, a little better, right? Yeah, I mean, it's... Yeah, see, right now it's a balancing, right? ENA remains awfully inflationary. And, you know, pardon the pun on that, right? But it's being balanced completely by the entire rest of the commodity portfolio, right? So therefore, it's pretty much, you know, one input kind of inflating at a very rapid pace, and everything else kind of, you know, neutralizing it, right? So that's a good place to be in, I would say, and probably this trend will stay for the next couple of quarters at least, right? And then once the new crop comes sometime in December, etc., then we'll have to probably see, you know, how the next two, three quarters look like. Sure. Perfect. And last one, which I think I've asked earlier as well. You know, if Andhra Pradesh opens up, that will basically, that poses upside risk to your, for your, growth guidance, right? Yeah, I know that's a tough one to call, right? You know, and I would say there that, yeah, I think I have said this before, Pradeep has probably said this many times before, right? Correct. During the course of the year, many markets open, many markets close, right? I mean, over the years, we've seen that one market closes, one opens. So, you know, can we factor everything as an upside? It's very difficult to say, right? Because we don't know what happens in any market next, right? So, I mean, we had the case of Delhi, which went away from the base completely. Then we, you know, sort of, had to recover the growth from somewhere else, right? So I don't think that, you know, we can say that everything will remain on category, and Andhra will come and stay with the full year on track. Of course, it will give us positive upside, but, at this point in time, I don't think that we can say that this will end up well, right. Sure. Thank you so much, and wish you the very best. Thanks. Thank you. Thank you, sir. Thank you. Thank you. The next question is from the line of Percy Panthaki from IIFL Securities. Please go ahead. Hi, hi, Percy. Hi, hi, Pradeep. How are you? Hi, Hina. My question is, again, on the gross margin front. So you mentioned in response to an earlier question that there is some lower sort of trade spends this quarter, which has benefited the gross margin. So what I wanted to understand is, is this lower trade spend something structural which can continue? And just wanted to understand basically, see, you've done 44.5% gross margin this quarter. Is that a good number to take for the remaining three quarters as well? Or this trade spend which is lower will sort of come back, and we need to take a lower number than this for the remaining three quarters? No, no, so Parthy, like I said, it's a very tactical shift for the quarter, right? It's a very tactical shift for the quarter. Nothing structural, you know, on trade spend. There is a set of structural interventions we anyway target, right? And that is kind of chugging off beautifully. But this kind of a shift in one quarter, this is completely tactical, right? This we wanted a little more AP for the extended cricket season, and therefore, we thought, you know, our brands are in kind of reasonably good shape, right? And we could squeeze a little from trade spend. So those are, you know, ongoing tactics that we apply, right, as we run our book. Understood. Understood. So basically, if the inputs remain where they are today for the rest of the year, then the gross margin would be a tad lower than what we have seen in Q1. That's right. That's right. Understood. Secondly, just wanted to understand your traction on the global brands, which are benchmarked at that 10% EBIT margin, that entire portfolio, over the last, let's say, one to two years, what has been the growth in that portfolio? And how do we sort of model the margin impact of that into... I mean, I understand the absolute EBITDA per case is higher, but we are already getting the benefit of that in the top line, so we also need to model in some amount of impact of that into the margin. So how do we basically go around modeling that, in your view? Any kind of pointers would help. Look, so first- I mean, I can talk on the growth, PJ. You can talk on the modeling, if you want. Absolutely. Yeah, Hina, why don't you go ahead? Yeah. Yeah, so firstly, I think as you know that over the last couple of years, I mean, our you know beauty brands have been were growing at very strong double-digit rate, right? So but that growth we have called out over the last few quarters, while premiumization lever is still intact, the growth has moderated quite a bit, right? So there is premiumization, the growth has moderated. And you know the we continue to get good benefits, like some, we continue to get the uplift from aggregate EBITDA, and you know Pradeep can then you know follow on with how do we model that and what should we take, right? Right. Mm-hmm. Understood. Understood, and lastly, if I can just squeeze in one question. Supposing the UK FTA does take place, what kind of benefits do you expect from that? So I understand theoretically there'll be two benefits, like, one is on the price of the bulk scotch, which will basically be a reduction in to your COGS. And the second is basically making the global brands a little more affordable and pushing up their volume. But any kind of a way to think about the quantum of these two points would sort of help. I think we've addressed this earlier on, so firstly let me remind you, and let me remind the group, right? So, I mean, first of all, it's very difficult to say how much reduction would happen, but I just want to say conceptually, right? It is a very small part of the value chain of our, of brands, right? So, you know, the national customs duty is a small part. The main, sort of, duties are from the states, where a lot of the adjustment on, duties from several states has already happened over the last two, three years. So, you know, depending on where that 150 went, right? If the 150 went to 100 or 50, depending on that range, we expect that, you know, the impact on, say, pricing. Pricing will probably come down between 5%-15% with the corresponding increase in demand, right? So that's the range, right? And we really want you to understand this, that, I mean, it is not as if scotch will double. Firstly, there's not enough scotch in the world to double, but you know, because of the components of the value chain being fairly low, I would say the range could be 5%-15%. Right. And on the bulk scotch, which input- Sorry, sorry, one second. Assuming that there are not corresponding state taxes that are brought in to, you know, counter this, right? Right. Right. There's a lot of ifs and buts, and, depending on what actually emerges, we would be in a slightly better position to comment on this. Understood. On the bulk scotch part, sort of reducing your COGS, any kind of, sort of, way to think about the quantum of that? Yeah. Let me take that, Percy, right? Yeah. So, Percy, I mean, yes, there will be a benefit, right? Now, I don't want to get into assumptions of, you know, what will that INR 150 become. Will it become INR 100? Will it become INR 75, etc., right? It will be. You know, there will be a benefit, and, you know, my, again, remit would be we don't even think about that, right? Because, look, that's the one thing that, you know, that, that we've been taught. Fiscal benefits, when they come, only then they come, right? So our, our role is to continue to make the business more, you know, more productive by the day, based on the current landscape and the current regime, right? Yes, I do want to assure you, the number, let's say the 150 comes down to about 100 or 75, the number will be, it'll be upwards of, you know, 50-70. Okay, okay. Thanks very much. That's all from me. Thanks. Thank you. Thank you. Thank you, Percy. Thank you. The next question is from the line of Krishnan Sambamurthy from Nirmal Bang Institutional Equities. Please go ahead. Hi, hi. Yeah, hi. Two questions. One is, what exactly is the clarity that you are seeking from the Karnataka government on the tax slab revision? You mentioned the timeline, but, what exactly is the clarification that the industry is seeking? Yeah. No, so the association were in discussion. There are a couple of, couple of clauses which the industry thought were a little regressive, right? And therefore, the discussion is all around that. As, you know, we have already mentioned, you know, mentioned in our opening comments, overall, the direction is very, very positive in terms of reducing the duties on the higher end of the portfolio, which kind of provides, enables the state to premiumize the category and hopefully drive more exchequer revenues, while, you know, giving the consumers an option to drink better, right? But there are a couple of other minor clauses which are a little regressive. I think that's what the industry is kind of discussing right now with the government. Understood. The second thing is on the price increases by various states. What are the incremental price increases that you have obtained in the last three or four months? Which are the states, if you can highlight them? In the quarter or in the year, In the quarter. In the quarter or over the last three or four months. I mean, we've received price increases from a lot of states over a full year basis. Like I said earlier, right, last two years have been pretty good on headline pricing, right? Again, I want to caveat, nowhere compared to inflation, right? But again, with our historical runway, you know, we have actually inched up our, headline pricing realizations here. In fact, you can look at our last two years' annual, investor call presentations. The numbers are very transparently shared in that, Krishnan, right? So you will get the numbers. And this quarter also, you know, we've got price increases in UT, we've got price increases, you know, in CFD, we've managed to get some price increases, and, yeah, and, and one more state, I think. Three states are the bulk of our price increases in the quarter. Understood. And, one last question, if I may. Just a quick update on, how Godawan is progressing? Yeah, I mentioned that in my opening. Yeah, Godawan is progressing very well. I mean, you know, I think I mentioned that, you know, the liquor award has now substantially appreciated, you know, more than 40+ awards, and our focus is really to scale Godawan up. It is an artisanal brand, so we don't expect that Godawan will be, you know, as large as some of our IMFL brands, etc.. But still, I think there is scope for further expansion, and so we want to look at national-level distribution. Godawan is only in a few states, so we are now focusing in the north and really looking at scale distribution in the north, and, you know, wherever we have launched in the west and south as well. So progressing quite well. I think the team is focused on now commercially scaling this up with fantastic visibility in our retail outlets to achieve national level distribution. Great! Thanks, Hina. Thanks, Pradeep. Thanks. Thank you so much. Thank you. The next question is from the line of Harit Kapoor from Investec. Please go ahead. Hi, Harit. Yeah, hi, good evening. So most of the questions have, have been answered. I just had a couple of product-related questions. One was on X Series. So, you know, I think you mentioned in your earlier opening remarks that response has been very encouraging. Could you give us a sense of, you know, the first one or two markets? I think Goa was the first one. I I think you were targeting Maharashtra post. If you could give a sense of, you know, you know, what are the, you know, even quantifiably, what are, you know, what are the, you know, the, the positive factors which you've seen, given that this launch kind of you can translate across, you know, across categories. So, just, just a sense on that. Yeah, it's actually, it's quite early to say, right? It's. I cannot quantify. As we rightly said, we were in Goa, and now we are just about rolling out in Maharashtra. It's just too early. But what we can say is our response on positive response is based on the qualitative feedback and the excitement we see with our retailers and trade, right? And clearly, I think even with the influencers who have helped us with the launch and the partners who have helped us with launch, I mean, you know, some of them have said it's about time that McDowell's expanded into categories like this, etc.. So there is huge traction and excitement about the expansion into these brands. We'll have to wait a few quarters actually to quantify where we can reach with this, but we've got a very good sense of the initial sort of scale. So, you know, please do wait for a few quarters for us to be able to respond to that. And from a rollout perspective, is it a rollout in 18 months nationally? Is that the thought process? Or still early days? Rollout will be national. Yeah, yeah, the rollout will be national. Because, I mean, as you know, the whites category has seen significant traction over the last few quarters, right? And we've been calling that out, whether you look at gin, vodka or even, you know, the tequila, which is a small category today, but seeing pretty good growth rate across sales. So the whites category has momentum, and therefore, we fundamentally believe we have a very good offering in the whites category at the right price point in the market. So, certainly we will be aspiring for national distribution. And the last one was on the four minority investments which you've made over the last two, three years. Sorry, I... Sorry, I'm losing you. I'm a little... I'm hearing it very muffled. I can't really understand your question. Yeah. Can you hear me now? Is this better? Slightly better, yeah. Yeah, yeah. So the second question was on the four minority investments that we've made over the last two years or so, of which two have come in recently. Yeah. I just had one question on them. You know, are we supporting these brands with our own out-of-home distribution as well as, you know, high-end retail distribution as well? Is that something where we do across the brands when we kind of invest in them? Just a bookkeeping kind of question on this. Right. So, look, what we do is when we make these investments, we support, you know, the founders of these brands with, all the technical expertise, the management experience and expertise in scaling up, and also where synergistic with our activations, whether it's distribution or whether it's activations on trade, etc.. So they get the full benefit of our experience, our network, our, you know, expertise to scale it. But what we try and do is leave the founders to do, their job, because the founders actually do it best. They really love know their brands, they're very passionate, and they know how to scale them. Wherever we find areas of synergy, whether it's the cost side or the activation side, we give them access to our network, and they're able to do it, but we don't physically do the work for them. That model we have tested globally and in India, and that model works really well for us. Got it. Those are my two questions. Thank you. Thank you. Thank you. The next question is from the line of Prakash Kapadia from Spark PMS. Please go ahead. Hi, yeah, Prakash. Hi, hi, Pradeep. Hi, Hina. I think just one question. What is happening in Delhi? Have we crossed the sales value before the new policy measures have come in? Has that settled? Actually, Delhi is steady state, right? There is no change, and whatever was the reduced rates of things that happened after the policy change, we're just remaining at steady state in Delhi. We haven't seen any change so to speak. Thank you. All the best. Thank you. Thank you. Thank you. We'll take the next question from the line of Mairav Saxena from Living Root Analytics. Please go ahead. Hi. Yeah, Pradeep. Yeah, hi, Pradeep. Hi, Hina. My question was in pertaining to the 4 previous acquisitions we have done or investments, as per se. So are we planning to increase our investments in any of these brands or in the near future? If yes, then what is the criteria under which we'll increase our investments? ... So we have very, when we make our first investments, I mean, there is an agreed sort of trajectory for the brand. There is an agreed business plan for the brand, and there is a very, strict, sort of not only due diligence before the investment, but also governance, for interviews with, some of our company members sitting on the board of these companies. And, so based on evaluations, you know, through periodically, right? Looking at the traction of the brands and whether they are in line with the business plan or not, and the response that we expect, if there is a natural evolution where you know there is a need for investment to scale up and grow because the brands are performing as per the KPIs and the business plan, then we would certainly look at more investments in these brands to ensure that the founders have enough money to scale up and enough something to really grow the brand in line with aspiration. Okay. Out of three of the four investments that we have made, we already have three products in our existing portfolio, which may be launched or not launched in the Indian market. So what is exactly the ideology to invest in these companies? Look, I think it is about, you know, the consumer behavior, right? So there is, especially post-COVID, an acceleration of the, pride in locally made craft provenance brands. And equally, there is, huge consumer, demand for global aspirational brands, right? And, the consumer repertoire of drinking has expanded significantly. So it's, you know, they're drinking different things in different occasions, right? And we see a role in the portfolio of both. So for us, it's an iron strategy, right? I mean, wherever there is a demand for global aspirational brands, we keep bringing them in, like Don Julio, which came in a few quarters ago. And equally, there is a demand for craft brands. If this fits with our, you know, future trend, insight, and if we feel that those craft brands are going to grow further, then, you know, our logic would be to bring both types of brands into the portfolio and global. Okay. Is there any plan to launch Mr Black in India? To launch what, sorry? Mr Black, the liquor that you had acquired a few years back. Mr. Black? Yeah. At the moment, I would say no. I can't say for the future. At the moment, I think Mr. Black is being consolidated in the markets where it is, and, you know, and the capacity is being utilized in those markets itself to scale up and build. I mean, in the future, you know, depending on whether strategy to roll out or not, we can look at it, and it will depend on whether there is enough demand for, you know, Mr. Black as well as, some of these investments that we have made. Okay. And just if, if I may please one last question. Is Diageo planning to help put on to the distributions of these new, newer investments from the aspect of increasing sales and helping out the founders? Sorry, Pradeep, did you hear that? Because, again, I heard very muffled question. Yeah. Yeah, I'm just trying to get the question here. So, I think this question was answered earlier. To answer... Your question is that, is Diageo planning to support the distribution of these brands, right? In which we have invested. Yes. Okay, Hina has already answered that. And, Hina, allow me to kind of repeat your answer. Sure, sure. -which is that, look, we support them in terms of the intellectual capital, in terms of mentoring, in terms of providing the guidance, in terms of R&D, technical, you know, expertise, supply chain expertise, etc.. But physically, we do not want to intrude. We let the entrepreneurs run the business absolutely independently themselves, right? Because we believe that they have the capability to do that, right? Just to add, we are able to introduce them to the right distributors from our network and, you know, help them with the synergies of this. That's right, that's right. But physically, we will not do anything. Prajit, if my understanding is right, you provide them with a base and the guidance towards the right direction or something like that? That's right. Yeah. Yeah. Yeah. Okay. And is Diageo setting up a different, a certain amount? I'm sorry to interrupt. Ma'am, sorry. Sir, I'm sorry to interrupt. That was the last question, sir. Thank you. Ladies and gentlemen, as that was the last question for today, I would now like to hand the conference back to Ms. Shweta Arora for closing comments. Over to you, ma'am. Thank you. Before we close today's call, I would request all of you to please go through our annual report, which is available on our website now. Please feel free to reach out to me if you have any more questions on the report or on the results. Thank you all for joining, and have a good evening. Thank you. Thank you. Thank you, all. Thank you, all. Bye-bye. Thank you.