Radico Khaitan Limited (RADICO) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to Radico Khaitan Limited Q2 FY '24 Earnings Conference Call hosted by Dolat Capital. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Himanshu Shah from Dolat Capital. Thank you, and over to you, Mr. Shah.

Thank you, Nirav. Good afternoon, everyone. On behalf of Dolat Capital, we welcome you all to Q2 FY '24 Earnings Conference Call of Radico Khaitan. We would like to thank the management for giving us the opportunity to host the call. On the call, we have with us Mr. Abhishek Khaitan, Managing Director; Mr. Amar Sinha, Chief Operating Officer; Mr. Dilip Banthiya, Chief Financial Officer; and Mr. Sanjeev Banga, President, International Business. We would like to congratulate the management for stellar 36% revenue growth in P&A segment and 49% in non-IMFL segment. All the best for future endeavors. Let me now hand over the floor to Mr. Abhishek Khaitan, Managing Director, for his opening remarks. Thanks, and over to you, sir.

Good afternoon, ladies and gentlemen. Thank you for joining us on our Q2 FY '24 results conference call. Strong growth momentum seen in quarter 1 was continued in the second quarter of FY '24, with Prestige & Above category brands growing by 22% year-on-year. The growth was driven by all our core brands such as Magic Moments vodka, which crossed 1.5 million cases sales again during the quarter. Morpheus Super Premium Brandy, Royal Ranthambore, After Dark Blue whiskey, 1965 Spirit of Victory rum, et cetera. This underscores the strength of our brand portfolio, operational excellence and clearly defined strategic road map. Given the increasing premiumization, our margins have shown sustained improvement. We are making remarkable progress in further expanding our luxury brand portfolio. We launched the next 2 whiskeys in the Jugalbandi series of 8 Indian Single Malt whiskey. That is Jugalbandi #3 and Jugalbandi #4 at the Whiskey Show in London, priced at GBP 400 per bottle. There is a lot of mysticism about India, and the global consumers are always intrigued by the Indian culture and heritage. With our Rampur Indian Single Malt portfolio, we have always tried to take India to the world. The recent launch is a testament to our brand creation capability and celebrate an ancient Indian art form. We are rolling it out to the U.K., U.S.A., EU, Singapore and global travel retail. Furthermore, we continue to expand the distribution of Rampur and Jaisalmer in India. Rampur is now available in over 10 states, and Jaisalmer is available in 20 states. With Rampur, we have surpassed FY '23 volumes in the first half of FY '24. Capitalizing on the growth in the white spirits space and our vodka market leadership, we are planning to launch a unique and premium pink vodka made from 100% natural ingredients under the Magic Moments umbrella. We are quite excited about this product. I'm confident that it will take Magic Moments portfolio to new highs. While we have seen prices of certain commodities stabilizing, the scenario remains volatile for glass and ENA. We continue to cautiously monitor the industry trends. Given the IMFL portfolio premiumization and price increases in both IMFL and country liquor businesses, we have seen our margins improve both on year-on-year and quarter-on-quarter basis. Although we have faced raw material pressure in the short term, but that does not impact the mid- to long-term growth and margin trajectory. During the quarter, we successfully commissioned the new 350 kiloliters per day grain ENA distillery at Sitapur. The plant is now running at optimum capacity and achieved key operating parameters. The commissioning of the Sitapur plant not only secures long-term ENA supplies but also positions us strongly to capitalize on the future growth opportunities in the branded business with enhanced bottling capacity. Together with the Rampur campus, the ENA production from Sitapur plant will be able to support the branded business growth for the next 6 to 8 years. We are committed to our long-term strategy of delivering a sustainable premium volume growth. With our strong backward integration platform and dedication to brand excellence, we are confident in our ability to capitalize on the long-term growth prospects within the Indian spirits industry. We are focused on delivering a value-led growth, managing business with agility, harnessing the strength of our extensive distribution network and manufacturing platform while we're consistently improving our profit margins. I would now like to hand over the call to our CFO for a detailed operational and financial review. Thank you, and over to you, Dilip.

Thank you, Abhishek. Thank you, everyone, for joining us on this call today. During quarter 2 of financial year '24, we reported total IMFL volume of 6.96 million cases, which is a degrowth of 3% on a year-on-year basis. Prestige & Above category volume grew by 21.8%. In value terms, the Prestige & Above category registered 35.6% growth. During financial year '23, we had rationalized volume of certain regular category brands as a conscious strategic decision to mitigate input cost pressures. We have recently received price increases in the regular category in defense services. This should support us the volume in the coming quarters. Prestige & Above category now accounts for 47.1% of the IMFL volume as compared to 37.9% in quarter 2 of FY '23. The percentage of P&A is slightly higher due to the significant degrowth in the regular category. Improvement in IMFL realization is due to the combination of price increases and the continued premiumization. On year-on-year basis, there has been 165 basis point impact due to the price increase on our IMFL sales volume value. Gross margin improved significantly on year-over-year due to the price increases and ongoing premiumization in IMFL business, coupled with price increases received in the country liquor business. On a quarter-on-quarter basis, despite commodity inflation in ENA and grain prices, we have been able to sustain our gross margin. Although prices of certain packaging materials have softened recently, we are cautiously monitoring the trend of ENA and glass bottles, where volatility still persists. Overall, we have a strong financial position and comfortable liquidity. During these times, we are taking all necessary steps to sustain our financial strength, maintain robust business model and grow consistently, competitively, and profitably. With this, we will now open the lines for Q&A.

[Operator Instructions] The first question is from the line of Harit Kapoor from Investec.

I just had 2 or 3 questions. First was on the new plant. So if you could give us a sense of what is the kind of capacity utilization that will be for your own brands and what amount of capacity will be utilized for selling outside in terms of bulk alcohol, at least for the first 6 to 12 months. If you could give some sense on that.

So the Sitapur plant has been commissioned, keeping in view the strategic angle in mind. This plant is having a capacity of 350 kiloliters per day. So initially, this is being used for our branded business where we were chock-a-block. And as you see, our brand business, particularly the P&A category growth, is in the strong double digit. Some of the ENA -- grain ENA will be used for our UPML, which is a new segment introduced in Uttar Pradesh this financial year. Rest of the ENA for the time being, will be either sold to the local manufacturer or exported out of India. But with our business model, we are confident of achieving that our captive utilization in next 3 to 4 years.

Okay. Okay. Understood. Just the second thing was on the popular segment. So you've seen -- as the industry has also seen, significant...

Harit, sorry, but your voice is not coming clearly. Can you please speak with the handset? Harit, we have lost you.

Is this better?

Yes, yes. If you can carry on.

Yes, yes, so my second question was on popular. So you've seen an impact there in the last a few quarters. I just wanted to get a sense whether this is in certain states where the pressure is more. Or how are you seeing the outlook for this segment going forward? Do you think volumes stabilize at these levels? Just wanted to get your outlook on that.

So in general, the regular category or the popular category is having a muted growth as far as the industry is concerned. Certain states, which are big states like Karnataka, increased the duty by 20%. There is an impact on the demand at that price point. And UP, where there's a difference between UPML, and regular category is higher. There is some down trending. But this actually -- and as far as defense is concerned, we got the recent price increases, and I think that will be arrested in Q3. Some export markets where the currencies have been depreciating against dollar, there also the regular category brands are having less saliency. And because of that, there is a degrowth in general -- in the regular category. But I think as far as Radico's business model is concerned, we will be able to come on the flat basis to some low to mid-teens -- low-mid-single-digit volume growth in the coming quarter.

Got it. And Dilip ji, you mentioned the price increase in canteen. So how much has that happened?

So overall, in that price category, around 6%.

Okay. I have some more questions, but I will come back.

[Operator Instructions] Next question is from the line of Abneesh Roy from Nuvama Institutional Equities.

So we are seeing a very strong mix change which is happening in your business. Ex of Karnataka, there is the consumer going because such a sharp dip in the regular category in the lower end, obviously, consumption will not happen so drastically in terms of change. So obviously, that consumer is going to other brands. For a lot of the multinational companies, this is a very conscious strategy. So in your case, how much of this mix change -- dramatic mix change is conscious strategy? And how much is a risky proposition for medium, long term, given the consumer will shift to other and possibly the local brands?

So in general, as I said, in this category, the industry is also very, very muted to flat kind of thing. Secondly, these are the 2 states, which I talked about, which are larger ones. But where in general, this is small, small listing and, secondly, degrowth. And secondly, as I said that our focus is P&A and above. So strategically, where there is an input cost pressure, there has been a cutdown as a strategic call. So I don't think that, that is our focus. And I think that will come back where we got the price increase.

Okay. Understood. And in terms of the advertising and more so surrogate advertising, could you take us through -- because you are doing so many new products at the P&A level, especially in whiskey, where traditionally, there are other players who are having the higher market share. Could you take us through how that trends will pan out in the coming quarters? Because now Q3 clearly is a festival quarter, but more from a 1 to 2 years' perspective, how do see your ad spends panning out?

So see, as far as our A&SP spends are concerned, we feel that despite all the new brand launches, we will continue to be within 6% to 8%. However, when we are right now -- launching new products, what we are right now focusing on is a lot of on-ground visibility and consumer trials, which will continue for at least the next 1 year. On a selective basis, for brands like Magic Moments, we are continuing with our initiatives on in-film brand integration for premium brands. We are -- like for Royal Ranthambore, we are concentrating on golf. So we are picking up events as a prime source for above-line advertising rather than working too much on to the surrogate route. Event is something that's currently being allowed. And if you see the World Cup matches also, practically every liquor company is there, and we're following the event route right now. So I don't see this as a big problem. We have to be a little creative, and the strength of Radico has always been in innovation and creativity for our brands, which we will continue.

[Operator Instructions] Next question is from the line of Pankaj Kumar from Kotak Securities.

Congratulations on a very good set of numbers. Sir, question is on gross margin that you have seen even the sequential basis, it has improved though there is a pressure you said and the volatile scenario on the raw material prices. So I want to understand what benefit we have got from the backward integration in terms of gross margin contribution for this quarter and going ahead.

So we have improved on our gross margin on a year-on-year basis by around 260 basis points and on a quarter-on-quarter basis by 60 basis points. It is on account of the premiumization and price increases. The higher-end product side, Royal Ranthambore, Jaisalmer, Rampur Indian Single Malt, are having a big traction and with percentage growth in these segments are much higher. We have been able to mitigate this cost pressure. There has been an increase on broken rice or this thing by around Y-o-Y basis around 15% on a quarter-on-quarter basis also by 4%. Last year, 2 price increase in the glass bottle has taken away, on a gross basis, a margin around 225 to 250 basis points. So in spite of that, the margin improvements are there consistently. And I think on commodity side, the season has started. We expect from November into December, the commodity should also have some softening and which will have a tailwind to our margin. I think we will continue to improve.

Okay. And sir, because now this backward integration, the benefit will also be coming in. So you'll see that will be adding your gross margin? And any outlook, any commentary on that, if you can comment?

Yes. So backward integration will definitely add on to the gross margin. But at the same time, we'll add to my branded portfolio more, which will be a value-added products.

And sir, second question is on your overall capacity. So on the bottling side as well as the ENA side. So now with this expansion, so how much we are utilising in-house in terms of ENA supply? And in the bottling also, how much is the in-house versus contracted and output?

As far as the ENA is concerned, now we are self-sufficient for our 100% of the branded product and UPML or CL. But the point is on logistic reasons, some of the states in Southern and all that, which are distance away, we buy the alcohol for our popular product. And to that extent, there is a buying of P&A. As far as the bottling capacity is concerned, we have a very large bottling capacity now at Sitapur. So we will be sufficient for our own bottling. And I think our own bottling at this point of time is around 55% or between 55% to 60%, and the third-party bottling is around 45% to 40%.

And sir, my last question is on the volume growth outlook for the P&A side. We have seen the more than 20% volume growth in the first half. So how do you see for the second half and for FY '25, any comment, sir, there?

So we have always been talking about P&A, our focus area, and we continue to focus and have a strong double-digit growth on our P&A category for next 2 to 3 years.

[Operator Instructions] Next question is from the line of Jayesh Shah from Ohm Portfolio Equi Research.

Am I audible?

Yes, please carry on.

Yes. Congratulations for a good set of numbers. I just wanted to understand that gross margins of 44%, EBITDA of 13%, is this the new normal now, given the past volatility where we had a couple of issues hitting us?

So as far as our business model is concerned, we are confident about improving the margin year after year. At the same time, as I said, that these commodity like the soft commodity of grain and ENA and glass prices, I can't have visibility more than. So if it remains at steady state at these levels and all that, then we will improve on our gross margin as well as EBITDA margin, given our premiumization and product portfolio.

Yes. And you also have the backward integration benefits kicking in so...

Yes, yes. That's part of the whole business model.

Right. And secondly, this Prestige & Above sales, which is already 54% of IMFL, so effectively, 50% of company revenue. When can this peak out? I know you're focused on strong double-digit growth, but does it peak out at, say, 60%, 70% of the company revenue? How should we look at it, sir?

This quarter, there has been a double impact. One is the regular has degrown by 15% or so, and this has grown by 22%. That's why the mix of that is around 47% in volume terms. However, as our business model further going forward, we expect that the P&A in a normal state where it grows mid, low digits by the regular and P&A in double digit. We will be in the range of 55% to 60% on volume terms in the P&A category next in 2 to 3 years.

Next question is from the line of Kaustubh Pawaskar from Sharekhan by BNP Paribas.

Congrats on good set of numbers. Sir, my question is on the debt front. So now our -- the major CapEx has been done. Actually, all the factories are now operational. So any time line when we can see substantial reduction in debt since you are expecting cash flows to improve over the next 1 to 2 years, sir? So any thought process on that?

So yes, the major CapEx has already been done and commissioned. We as -- I have already guided that we will continue to -- the debt will be peaked in the Q3 of this year. And then thereafter, there will be continuous declining in the debt and by 2026, and it will be a very negligible kind of debt with the business model.

Right, sir. And sir, talking about the EBITDA margins, we have seen sequential improvement in the EBITDA margin this quarter. The margins are still at around 13%. And you have guided that by end of FY '24, margin should be close to around 14% to 15%. So considering the strong performance of P&A segment, should we expect margins -- EBITDA margins coming close to around 15% by end of FY '24? Also the full benefit of -- yes, go ahead.

As I said that margin from here onwards will continue to improve. And we already said that I think every year, the margin improvement trajectory will be seen. By 3 years' time, it should be kind of late teens kind of margins. That is what we are expecting.

Right. And the full benefit of the Sitapur facility should start flowing in from FY '25. Is it the right understanding?

Come back again, please?

Full benefit of commissioning of Sitapur facility would start flowing in from FY '25. So that would further support your numbers.

So full capacity utilization of Sitapur will be there as far as the distillation is concerned, so in Q3 also and next year, it will be a full year.

Next follow-up question is from the line of Harit Kapoor from Investec.

Yes, I just had 1 follow-up. The operating costs for the quarter, do they have an element of the Sitapur plant having commissioned and actually revenue hasn't come in to that extent, but costs would have come in. I just want to understand will the revenue and cost kind of match from Q3 onwards there is little upfront in Q2.

So Harit, Sitapur came into operation in the last 10 days of the current -- quarter 2 and next quarter onward, there will be top line also from that, and the full expenditure will also come into the P&L. So yes, it will be seen in both.

No sir just, I just wanted to check that if the employee cost or some of the other costs come in a little bit before. So that impact would have come in Q2 to some extent and revenue would have just -- would have lagged a little bit in Q2. I just wanted to see if there is any extra cost coming in on Sitapur, which will obviously get matched by revenue in Q3.

So your -- actually from here onward, the interest depreciation and all that will be charged out. And I think you will see, as I said, I can say only this business model and integrated business model with the Sitapur coming into full operation, we will continue to improve on our margin because there will be backward when integration benefit also and the premiumization, which is going on, we'll continue to further strengthen.

Next question is from the line of Anurag Jain, individual investor.

Congratulations on the excellent quarter for the premium and above segment. It's a record quarter for the segment and with sales touching almost INR 500 crores and the P&A sales have almost doubled in last 3 years, which is significantly ahead of the industry. Now comparing the regular segment has been -- has seen the lowest sales in last 5 years for a -- on a quarterly basis, barring the COVID lockdown quarter. Now from the previous questions, I gather that there are 2 reasons. One is at the industry level and second is management's own evaluation that the sales in regular segment will not be margin accretive, so you have probably given up those sales. So now based on these 2 factors, what would explain the decline like 50-50 or which is the larger reason for the decline in volumes in the regular segment between these 2 factors?

As I said, one industry -- I can't have the division or the separation between that what is on account of the industry and what is on account of this thing, cost push. But yes, of course, we are doing the regular segment in certain states where we make reasonably okay margin. A certain state where it is very, very miniscule or negative. I think we are doing away with those volumes. So I feel like that the -- because cost pushes across and the defense has given the price increase this at the end of the last quarter, Q2. Certain more markets will give the price increases in those areas. Then as the industry is concerned, industry is going in mid-single digits. So we will continue to come on that in next year. This year, H2 also will be like flat to some growth.

All right, sir. And I have one more question on the export segment. How has been the performance of the export segment and for Radico is now the export segment bigger than its largest state or not?

Well, in terms of export, we've been doing fairly well. We are, in fact, one of the largest exporter of IMFL from India. And we are seeing increase in the acceptance of our brands, especially the luxury portfolio across the world. There have been a few issues in certain markets because of the local currency situation. But I think overall, we continue to keep growing.

[Operator Instructions] Next question is from line of Sneha Jain from SKS Capital.

I just wanted to know the impact of the RM prices, like -- I mean, what are the trajectory you're seeing them to go to? And what are the major RM prices that we are seeing being impacted? And anything -- like any sort of recovery or something like that from that?

See, in the raw materials, the major raw material is grain. And as I said, that grain prices on a year-on-year basis are up around 15%, on quarter-on-quarter also 4% to 5%. But all this thing shows that the crop in the northern part is good, the export has been banned and all that. So we see some softening as we miss processing and all that come on full swing, at that November and onwards, when there is a season, for 3, 4 months, we should see those prices to decline. And the major impact on account of the ENA is also on account of that we have seen and ENA also a 7% to 8% inflation on a year-on-year basis, around 2% inflation on a quarter-on-quarter basis. This is a major raw material, rest all are the hard material is under softening side. The glass prices have already said that has risen and 30%, 35% last year, and that is also an impact of around 225 basis points to 250 basis points on my gross margin.

But glass price continue to be like?

No, now it's stable. Now it's stable, yes.

Next question is from the line of Nirav Seksaria from Living Root Analytics.

Yes, so I just wanted to know going forward how much the revenue mix, are we expecting from regular since we are focusing on premiumization?

Revenue mix right now, it is around 45% versus 55% in this thing. As I said, our growth strategy is on the P&A category where we will have a strong double digit. In 3 years' time, if we are able to do 60% of volume from P&A and 40% volume from the regular category, I think there is a -- that business model will be a stable business model.

Okay. And sir, there was an introduction of several gin brands at various price points. So how the sales in Jaisalmer are growing?

Yes, you are not audible, could you repeat your question, please.

Just there are several new gin brands entering into the market. How is the sale of Jaisalmer doing on a competitive basis overall?

See, if you compare to all the Indian brands like Jaisalmer is pitched against the highest selling global gin brands and Jaisalmer is priced at about INR 4,000 a bottle. And in that segment, today, we are the leading market share and our market share will be close to about 55%. And Jaisalmer everywhere, wherever it's gone, it's doing exceptionally well.

Okay.

And in fact, we have launched recently Happiness gin at about INR 2,000 a bottle, INR 2,000 to INR 2,200 a bottle. So that would be the gin which would be competing with the Indian local gins.

Okay. And what is the outreach for the Happiness brand?

Pardon?

What is the reach for the Happiness like in how many states is it available?

So this quarter, we are going to roll it out in about 5 states. And gradually next year, we'll take it pan India. So this quarter, we are rolling it out.

So which 5 states is it going to hit?

Your voice is completely...

Sir, I'm asking which 5 states is it going to enter?

Can you repeat, please?

Much better now?

Yes, speak.

Yes, I'm asking which 5 states is the Happiness brand going to enter?

So we are looking at states like Haryana, Delhi, Goa, Rajasthan and UP.

Next question is from the line of Himanshu Shah from Dolat capital.

Sir, just a couple of questions. First is, is our CapEx on the greenfield expansion of Sitapur complete? Or there will be some additional spend that will come up in H2 FY '24 for Sitapur plant?

So Sitapur plant CapEx is all complete. It's a complete but some of the payments, which comes after because these are after the performance and all that will come in Q -- H2 also. There are certain CapExes, which has been done by the company. This has been to do our -- the Happiness we had a new gin facility commission for that. We have tripled our capacity on the Jaisalmer also. So these kind of CapExes we are improving on our printing bottle capacity by around 33% to 35%. That will also come into play in this thing in coming years. So all these CapExes are now being done on the branded business side and in particular, the P&A and luxury brand.

Okay. So in this front, can you guide for our CapEx number for H2 FY '24 and FY '25?

So H2 the remaining CapEx payment side will be around INR 125 crores next year, I think the CapEx will be in the range of around INR 75 crores to INR 100 crores.

Okay. And henceforth, the CapEx run rate should be in that vicinity INR 75 crores to INR 100 crores?

Yes.

Okay. And INR 125 crores, sir, for H2 is only the payment pending, but we would have capitalized that particular amount. Is that...

No, payment pending is one part and another, as I said, that these CapEx, which has been done for our premium, super premium and luxury side. We are increasing our maturation facility. There will be more cask required. So all this will continue to happen on the malt side also.

Brand related.

Yes.

Okay. This is very helpful. Sir, secondly, if you can just help, what would be the market size of vodka and gin. Is the growth run rate that we have seen in first half of the financial year? Or what would have been the overall market size of vodka and gin for this particular financial year? Industry size, some color if possible.

See overall vodka market is in 3.5% like it is 400 million cases industry, so something 10 million cases, 10.5 million.

So the vodka market is about 3% of the total IMFL business in India. We are actually growing at a very healthy rate and expanding the vodka segment with our new offerings, which will continue.

Okay. And what about gin, sir?

So gin is right now, it's quite negligible, but it is growing at a rapid pace and especially like the premium gin. Gin is more at the premium side. So their volumes are quite small, but the profitability and the contribution is very high.

Okay. And sir, just a last question. Can you help me with the distribution of Royal Ranthambore like it's available in how many states Jaisalmer gin and these 2 products?

So Royal Ranthambore has expanded to about 18 states and the response to the brand is unprecedented, though we have priced at higher than the most popular selling scotch. The brand is well accepted, and we are now gearing up our capacities to cater to the market demand that is emerging for this brand. I think this is a future brand for Radico with unprecedented response.

Okay, that's very nice and very heartening, sir. And about Jaisalmer gin sir? And if you can also help me with 1965 rum, number of states that its available?

So Jaisalmer gin is in about 19 states. We are a national brand, both for Jaisalmer and Royal Ranthambore. As far as Jaisalmer gin is concerned, Mr. Abhishek Khaitan has already told you, we are today in the region of about close to 60% market share across the gin category. And this brand is showing unprecedented results also despite being highly -- higher price premium to most international brands. We are very hopeful. We are tripling our capacity -- we have tripled our capacity as well. So I think Jaisalmer has a future in India. 1965 is in about 10 states. It is the most premium priced rum in India today. You see it's a -- rum has traditionally been seen as a cheap and medium-priced products in India. But with the launch of 1965, starting with defense, it was pegged at a premium price. Now it has been expanded to the civil domestic market as well. We are in 10 markets in domestic. We hold a good -- more than 10% market share in defense. The brand is consistently growing. And I think 1965 will become synonymous with the category in the years ahead. It's showing tremendous response.

Next question is from the line of Jayesh Shah from Ohm Portfolio.

I have 2 industry-level questions. First is have the -- do we expect any volatility in the liquor policy because of the state elections and the central elections, whether things are settling down? And secondly, can you comment on the impact of U.K. FTA if it goes through on Radico.

Let me first talk about the U.K. FTA. I think as an industry and especially as Radico, we welcome this FTA when it happens also because we import a lot of bulk scotch. So any duty reduction will definitely make a good impact on our costing as well. In terms of overall industry, the more scotch malt is available at competitive prices will definitely improve the quality of Indian blend as well. And with India premiumizing the portfolio in the beverage alcohol space. So even the international brands when they come in, there will be a big boost to the industry and the P&A category. However, our [ malt ] has always been that it should be a level playing field. So the British side would also have to go away with some of the nontariff barriers. Once that happens, the export of IMFL and Indian whiskey and rum will also increase substantially to the U.K. market.

And as far as the first question goes about the state elections and everything, I think one of the major decision, which took place was removal of ENA under GST, which the GST committee took, which I think is a very welcome move for the liquor industry. This ambiguity was there for 2 years, which has been done away with. And we don't see much of any policy change because of the state elections in the...

In fact, the state governments are very responsive to the liquor business because it's a state subject matter. So state elections will not disturb the policy, and there would be stability like always.

Just a follow-up on the U.K. FTA. I thought since you are more in the prestige and above category, RMB product pricing benchmark to be foreign brands like Glenlivet and whatever [indiscernible] and hence some kind of a pricing impact that may happen?

In terms of our luxury portfolio, say, Rampur way above the Glenlivets of the world or the Sauvignon and some of the other 12, 15-year-old scotches. So Rampur is far above that. And even in the global international market, we're competing with all these brands at a much higher price level. So we don't see a problem with that.

But with the vodka gin and other ones, I mean, Rampur, Jaisalmer may not be, but the other brands.

No, I think it's a very important to understand that Radico has already breached the international brands price positioning, whether in India or abroad, we are selling at higher price points. And we will -- we don't see any competition coming to our brands in the immediate future, even despite FTA.

Secondly, as far as gin and vodka is concerned, there will not be any impact of the duty reduction because in India everything is locally made for these gin and vodka.

As there are no further questions, I will now hand the conference over to the management for closing comments.

So we are confident of maintaining our long-term margin expansion even the premiumization of our portfolio, recently received price increases both in IMFL and non-IMFL and backward integration will further standard this. We look forward to interacting with you on all -- in our next earnings call. In the meanwhile, if you have any queries, please follow up with us and feel free to write to us. Thank you very much.

Thank you very much. On behalf of Dolat Capital Markets Private Limited, that concludes this conference. Thank you for joining us. You may now disconnect your lines. Thank you.