Radico Khaitan Limited (RADICO) Earnings Call Transcript & Summary

Ladies and gentlemen, good day and welcome to the Radico Khaitan Q4 FY '25 Result Conference Call, hosted by Dolat Capital Markets Private Limited. [Operator Instructions]. Please note that this conference is being recorded. I now hand the conference over to Mr. Himanshu Shah from Dolat Capital Markets Private Limited. Thank you and over to you, sir.

Thank you, Navya. Good afternoon, everyone. At this moment, we would like to thank Radico Khaitan Management Team for providing Dolat Capital with the opportunity to host the Q4 FY '25 earnings call. We have with us the senior leadership team from the Radico Khaitan: Mr. Abhishek Khaitan, MD and CEO; Mr. Amar Sinha, Chief Operating Officer; Mr. Dilip Banthiya, Chief Financial Officer; and Mr. Sanjeev Banga, President, International Business. I will now hand over the call to Mr. Abhishek Khaitan, MD and CEO for his opening remarks. Over to you, sir.

Good afternoon, ladies and gentlemen. Thank you for joining us on our Q4 FY '25 results conference call. There has been a major development regarding the much-anticipated UK Free Trade Agreement last evening. While we await the fine print, I'd like to provide a broader perspective before diving into the details of our Q4 results. Given the strong growth of our whiskey portfolio, including Sangam, Royal Ranthambore, After Dark and 8PM Premium Black whiskey, we are among the largest importers of bulk scotch for blending purposes. Our scotch imports in FY '26 are projected to exceed INR 250 crores in landed price inclusive of import duties. Any reduction in these duties will translate into meaningful cost saving for us. Luxury spirits are a lifestyle category and pricing plays a crucial role in shaping consumer aspirations. We do not anticipate altering our pricing strategy as our brands hold a perceived value that resonates with consumers, positioned at a premium compared to existing brands. Our products competes not only with the global brands in India but also internationally. Over the years, each of our luxury brands has carved out a distinct identity. This development is a welcome move and will significantly contribute to our premiumization journey as we continue to focus on creating more luxury brands. The first quarter of FY '26 marks an exciting milestone as we prepare to introduce two luxury brands projects that have been under development for two years. These launches represent a major leap in Radico Khaitan's premiumization journey, reinforcing our confidence that the best is yet to come. Now moving on to the quarterly performance. Building on the strong momentum from the third quarter, Radico Khaitan delivered an impressive 28% volume growth in quarter 4 FY '25, our highest quarterly growth in the past three years. FY '25 has been the best year in our history on all key financial metrics, with highest ever turnover of INR 4,851 crores, EBITDA of INR 668 crore and PAT of INR 341 crores. FY '25 was truly a year of transformation for Radico Khaitan, fueled by our commitment to expanded backward integration, enhanced distribution capabilities including on-trade, a robust innovation pipeline and impactful consumer engagement. Our flagship premium brand Magic Moments Vodka has crossed the milestone of 7 million cases during the financial year, a true testament to its growing popularity. Adding to this momentum, we are thrilled to welcome Kriti Sanon as our brand ambassador, with her charisma style and widespread appeal. This partnership is set to elevate Magic Moments to unprecedented heights, redefining the benchmark for premium vodka in India. Continuing our commitment to innovation, we unveiled 8PM Premium Black in a bold new look design to elevate brand imagery while showcasing its distinctive product story crafted around the harmony of 8 select notes. Furthermore, within the first half of the year, we will also enter the super-premium whiskey segment, strengthening our presence in high growth category and setting new benchmarks in excellence. While innovation remains the cornerstone of our strategy, our immediate priorities center on strengthening our existing portfolio, meeting targeted marketing investments and expanding our distribution network. Looking ahead, we are poised for strong double-digit growth in the Prestige & Above category, enhanced profitability and a persistent focus on cash flow generation, all driving long-term value creation for our shareholders. With this, I would now like to hand over the call to our CFO for a detailed operation 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 4 of financial year '25, we reported a total IMFL volume of 9.15 million cases, representing a growth of 28% on year-on-year basis. This is the highest-ever volume recorded by Radico Khaitan in a quarter. Prestige & Above category volume grew by 17%. In value terms, the P&A category registered 22% growth. IMFL realization increased by 4.6% on year-on-year basis. Regular category volume was impacted due to certain state-specific industry-related issues, an ongoing strategic rationalization of the portfolio, which has now returned to a sharp growth trajectory. This was due to a lower base coupled with normalization of state-specific industry issues. Changes in route to the market in Andhra Pradesh contributed 1,500 basis point to our overall volume growth. It is important to highlight that the Prestige & Above segment, excluding Andhra, the growth has been higher. The recent RTM changes in Andhra Pradesh have progressed well, promoting stability, predictability in the regulatory environment. As a result, we have seen strong traction for our brand portfolio and gained market share from 10% in the first half to over 17% in quarter 3 and now 23% in Q4, which is highest in the industry. We quickly adapted to the changing environment and created capacity to capitalize on this industry opportunity. Gross margin during the quarter was 43.5% compared to 41% in quarter 4 of last year and 43% in quarter 3 of financial year '25. Gross margin improved both on year-on-year basis and quarter-on-quarter basis due to the ongoing premiumization in IMFL business coupled with relatively stable raw material scenario. We are optimistic that the pricing scenario for ENA and grain will remain stable going forward during financial year '26. Ad spend is within our targeted range of 7% to 8%. It has been higher during the quarter due to new celebrity engagement and other new brand-related spends. Interest costs increased sequentially due to higher working capital utilization during the quarter. However, we have seen significant liquidation of inventory in quarter 4. Furthermore, we have also realized significant debtors towards the end of the quarter, resulting in a debt reduction of INR 114 crores over last year. Going forward, our focus will be on driving profitable growth along with cash flow generation and more efficient working capital management, resulting into debt reduction. With this, now we open the house for Q&A. Thank you.

[Operator Instructions]. The first question is from the line of Abneesh from Nuvama.

Yes, congratulations on very good volume growth. My first question is on your first statement on FTA. So wanted to understand this, it is a competitive market. For example, in Karnataka, where the state government has cut taxes in the premium spirit, obviously, most of the players have passed it to end customers. So in this scenario, when the raw material of cost becomes cheaper, two scenarios can be there. One, because it's competitive, the players could cut prices so that it becomes affordable and because they have higher gross margins, they will be in a position to cut. I note your comment that you don't think pricing cut will happen given it is a premium brand. But I just wanted to take on that. And the second is, could some state governments in compensation, because they suddenly see that prices have reduced in many states, then can they increase taxes on their own because state governments need more revenue and this is one of the ways to achieve that? That is my first question.

Thank you for your question. So first of all, I must say that the FTA with UK has been a very progressive and favorable step that the Government of India has taken and the government needs to be congratulated for the same. As far as the alco-bev sector is concerned, see, custom duty reduction will result in a 6% to 8% consumer price on MRP reduction. Now, in the premium and luxury segment, most international brands of repute are already present in the country. It is very unlikely that reputed foreign brands will reduce their price for this small benefit of 6% to 8% to their ultimate consumer. This would also, in fact, dilute the imagery of the premium brands. The companies are likely to mop up this saving and save on their costs rather. That's our understanding of the situation. There is a chance that there might be some smaller companies with smaller scotch-whiskey brands that may come in. But as far as the premium and luxury segment consumer is concerned, there is really no market and traction for cheap scotches. So for Radico, cheap scotch whiskeys are no competition to us. Now, with regard to Radico's perspective on business: Radico has always, if you see our track record, in the last few years, we have believed in pricing all our products above the market leader in every category, irrespective of what the price position is for international brands or any other brands in India. The example is very clear. If you see the pricing of Jaisalmer, Royal Ranthambore, Rampur, we are priced much ahead of the competitors. Actually, we are creating a portfolio of the best Indian brands and therefore we do not anticipate any change in our pricing strategy or price positioning. So truly speaking, we see FTA as a big win for India and companies like Radico, which are making India proud and taking it to the world. Radico -- as Mr. Abhishek Khaitan mentioned a little while ago, that we plan to import branded malt scotch to the extent of INR 250 crores in FY '26 for blending with our products and that reduction, if it happens, which is likely to happen, will give us substantial cost advantages and a margin uptake. So hence, it is a net positive for Radico. Your second question was whether state excise departments will raise duties? See, if state excise departments have the autonomy to make price changes on their local taxes because liquor is a state subject matter, but then we need to see because every state government today is looking for increasing sales and collecting more. It has been seen in the past that whenever you raise prices beyond a point, it affects the brands adversely. So I do not think -- it is very difficult to comment as of now. Let's wait and watch.

Sir, one quick follow-up on this. When is the earliest date when your raw material becomes cheaper in terms of scotch? Any clarity on that?

See, it depends when the notification will come out. So that only the government knows. As of now, there is no clarity.

No, my question was not only from a notification date, that was also there. Do you have some forward contracts or inventory which could delay that and how much?

No, no, the question is the inventory in pipeline is normal inventory and as and when it is made applicable, after which the imports will attract lesser duty, the cost will come down based on that.

So just to be very precise, we are not holding huge stocks at all.

Sure, sure. Last question. In Andhra, if you could tell us in terms of the overall industry scale-up post the new reforms, anything you want to highlight there? And how do you see FY '26 in Andhra?

So, let me tell you, Andhra, as we have just mentioned, has progressed very well with the new excise policy and route to market change. What is actually happening now is that the market has started to stabilize. It is picking up. And even in the previous year, in fact, 60% of the business was with local players. But in the current regime right now, 60% of the business is with national players and organized players. So it's actually progressing very well and we hope that the market will not only stabilize, but it will, from here on, continue to grow. New brands are likely to be introduced with the tender that is going to open sometime shortly. And we hope to do well in that. I think the most important point is, as far as Radico is concerned, we have a market share now which is 23%, which earlier in H1 was 10%, in Q3 it went up to 17% and now it's 23%. We are the largest player, and this actually supports the point that the consumer there was looking for national and organized players to come in. So that's benefiting us as a company. Our volume growth overall is 28% all India and substantial growth is also being contributed by AP for all organized brands.

Next question is from the line of Anil Shah from Insightful Investments.

Yes. Sir, just wanted to get a sense on your raw materials scenario, has the broken rice from the government, Food Corporation of India, started? And generally how the raw material situation be in terms of pricing and availability is concerned? And second question is on the Delhi opening up, if you could throw some light in terms of how that state is shaping up?

So as far as the raw material scenario is concerned, after the government announced in the state the Food Corporation rice available for ethanol to the extent, the demand from the market has gone to the government, FCI godown and that has resulted into the softening of the prices. The prices which were in the range of around INR 27,500 to INR 28,000 has come down to around INR 25,000 now, okay? So it is a good development and at this stage, this has also impacted the other key raw material like maize, etc., and all that. So that has also seen a correction of INR 2,000 approximately per tonne. What is your second question?

On Delhi opening up, sir. How is the state shaping up? I mean, any progress on that?

No. So let me tell you the Delhi policy is right now the way it was last year. And the existing policy has been extended for another three months. Hopefully, in July, we will see the new policy. As a company, we feel that the policy will benefit all national and organized brands.

Next question is from the line of Harit Kapoor from Investec India.

So I just have three questions. In light of the recent developments yesterday, you had a FY '26 target of INR 500 crores for the super-premium luxury portfolio. Do you believe that it is kind of wait-and-watch whether that can be achieved given that you might see some changes in the competitive environment in the next 12 months? Or do you believe that, that is something that you're still very confident of hitting?

See, in the current year, we've achieved INR 340 crores and we've grown by 32%. And in our luxury portfolio, like the way Royal Ranthambore is growing month-on-month and also how Jaisalmer and Rampur and specially with the two new introductions, we are very confident that we'll surpass INR 500 crores.

Fantastic. The second point was on the debt side. So we are up to about close INR 600 crores of net debt. Just wanted to get your sense of, I know there's a 2-year plan of going to zero, almost zero. In FY '26, is there a kind of target that you'll half this number or anything that you can give a sense on?

So, Harit, actually, as the debt is coming down now, and we'll see in two years. So it is next year, '26, around 35%, 40% further and then year after that, almost zero.

Got it. And last thing was on the commodity environment. I mean, in the current context, did you see, bulk scotch has obviously become cheaper. On ENA and grain has also become cheaper. So on ENA and glass, both of those elements, do you see a kind of a stable environment for the next 6 to 12 months, at least from where we are right now? Is that the right way to think about it?

So ENA till now has been stable, but grain has definitely given this thing and our main input in alcohol. We have a large grain alcohol capacity also. So there, the advantage of the cost being coming down and all that will come. So ENA, actually, when the grain price has gone up, has also not gone too high as compared to what the grain price has gone. So let us see if the demand and supply scenario, but we don't definitely foresee any pressure or inflation on that in '26. Yes, glass has seen some correction and that correction has been twice in last year. It was 3%, 4% those kind of corrections were there and now the scenario looks like they are also stable.

Next question is from the line of Vishal Gutka from ASK Investment Managers.

Congrats on a good set of numbers. Sir, two questions from my side. I think on Andhra Pradesh, you have achieved 23% market share. So any further opportunities where to improve the market share from here onwards because although 23% is a very high number? And ancillary question is that any state were expecting route to market changes? Like maybe in Bihar, the elections are there, there is a change; in Delhi, definitely that you have highlighted. Any other state where you are expecting any changes in route to market or policy changes?

So, as far as Andhra is concerned, see, we are becoming stronger with our whiskeys like After Dark, which is the deluxe segment, which obviously means that we are getting a stronger distribution base. Now, as Mr. Abhishek Khaitan mentioned that we have two luxury whiskeys, one super premium whiskey on the cart over the next six months and two luxury products in the first quarter. I think with new products coming in, existing whiskeys becoming stronger, there is a strong chance that our market shares may further improve.

And as far as your question of regulatory changes, we see Delhi being in near future [indiscernible].

Bihar, like there's prohibition. If the election is favorable, then maybe prohibition goes away, which is very good.

Yes. And sir, the ancillary question of UP market, so UP market has got a lot a policy changes in last quarter and I think the new policy is coming. If you can just broadly highlight what has happened in the new policy? How is the performance in the month of April, if you can broadly highlight for UP market?

Yes. So, UP, in fact, the best thing that has happened in UP with the new excise policy is that you've got composite shops which have come up which have expanded the universe of outlets by almost 40%. Another big advantage that has accrued to the industry is that in IMFL, the wholesalers are now paying the excise duty, which means that the industry is lowering its working capital requirement, which is a big plus. This also means that any organized company like Radico or an established player like Radico will gain huge benefits because the traction for fast-moving brands will be much more because wholesaler would like to take cash and rotate it faster. So that's a very big plus which has happened. I think with the increase in the universe, Radico certainly is very optimistic that the market share will also improve. So that's a big win. And in Q4 itself, Radico has seen a 37% growth in ENA segment and the market share actually has improved to 29% in Q4 from 23% to 29%.

So that's a very big number, sir. Wishing you all the best for future quarters.

Next question is from the line of Akhilesh Bhatter from IKIGAI Asset Management.

Congratulations on a good set. I just had a question on the margin side. So when do you expect to catch up to your previous peak margin levels that we had seen in FY '20, FY '21? And with the headwind that we have right now in terms of the UK FTA deal and other headwinds, so what are the tailwinds that you foresee? And what is the timeline that you are are foreseeing as to catch up for margins?

So we have improved the EBITDA margin as well as gross margin in this year, FY '25 versus FY '24. The EBITDA margin is almost improved by 150 basis points and with the kind of growth in our brand portfolio and P&A being spearheading the growth in FY '26 and onward also. So we see a continuous improvement in our EBITDA margin. I think 100 basis points minimum EBITDA margin improvement will be there and after that we will have to see how much we will benefit through [indiscernible] and all that. So these are -- actually our business model is tuned to improve the margins in continuous for three years.

Next question is from the line of [ Bhavdeep Vora ] from Franklin Templeton Asset Management India.

I just wanted to understand with this reduction in the import duty for the imported scotch, so when one thinks from the perspective of a state government, so in terms of the collection of revenues, so whether their revenue collection kind of per bottle is higher in this this BIO, BII stuff or it would be more like say, the Indian on the Prestige side say the P&A, the Prestige & Above segment? So how does both this compare? So just trying to understand that in terms of what does this do to the competitiveness of the premium Indian IMFL basically compared to an imported spirit? So maybe your perspective on that would be helpful.

So, right now see, the BIO sector is not very huge in the country in an industry of 400 million. Basically, 5 million cases is the BII and BIO market. So it's a small niche segment, which is growing, of course, but really if you ask me any tax changes, it does not impact and it is not comparable with what one gets from the semi-premium and premium segment. In fact, the premium segment in India, it sells 18 million cases and the deluxe segment is approximately 70 million cases. So the tax condition is obviously [indiscernible] huge.

Sure. That's fine. So from an incremental perspective, right, so if basically BIO becomes more competitive, right? So maybe now reaching probably INR 2,000 or even below price points in some of the states, so does consumer shift from say the Indian P&A -- the top end of India's premium to some of this imported stuff? And does it kind of is more attractive to government or how does it matter -- I mean to say in terms of how does it flow to the revenues?

No. I just mentioned to you a little while ago that see, this duty reduction at the current rate from 150 to 75 will only give relief by 6% to 8% on the consumer price side. So that's not a very big reduction, actually, if you calculate. And we do not foresee the foreign brands reducing the price of premium brands for this 7% to 8% because it dilutes the image of such premium brands.

Okay. But it also kind of calls for bringing the duty down to 40% over 10 years. So -- and...

So we'll cross the bridge as it comes because by then Indian brands are now reaching out to the world and in the next 10 years, we don't -- yes, Indian single malts would be force to reckon with globally, which has already started happening. And if you see last year, Indian single malt sold more than all the international malt whiskeys in the country.

[Operator Instructions]. Next question is from the line of [ Palak ] from [ MIV Investment Management ].

Sir, my question is again on the update on...

Sorry, your voice is not clear.

Again on the UK space. Sir, I understand that your a little concerned about the pricing aspect...

So sorry to interrupt. Your voice is still not clear. Can't hear you at all. Could you speak a little louder, please. You might want to reconnect.

Next question is from the line of Abhijeet Kundu from Antique Stockbroking.

Congratulations on a very strong set of numbers. Sir, my first question was the raw material -- the backward integration that you had done for raw material with the broken rice price is now correcting about 10%, maize prices also lowered, what would be -- there were expectations that you would save about INR 12 to INR 13 per liter on your raw material. So where are we now and what could be the kind of savings that can happen in FY '26?

So the raw material side, as your question is regarding make versus buy, the delta was around INR 12, INR 13, 3 years back. After that it has reduced to INR 3 to INR 4 and now it is stabilizing between INR 7 to INR 8. And we see that this kind of this thing will remain and this is a stable scenario.

Okay, this would be the stable scenario. And then you are planning to repay your debt in 2 years' time, that's why the cash flows have risen, right? I mean by FY '27 -- in this year, I just wanted the clarification. In FY '26, you would reduce your current debt by about 30%, 40% and the rest of it you would reduce in FY '27. Is that right or it would take 3 years?

That's correct.

So you would be debt-free in 2 years' time, right?

Yes, of course.

Yes. Another is, you are launching products, two new products in luxury segment. What happens in the upper-Prestige segment? Because they was an expectation that you would launch something -- you would target to launch something in the upper-Prestige segment, in the segment where the likes of Antiquity, Blender's Pride, Signature they are there, so any plans on that?

So I think we just mentioned to you that before the end of H1, we are already ready to launch the super-premium segment, actually, which is on the cards. And it's a huge segment of 18 million cases, which we are targeting, growing at double digit rate.

Okay. No, I had heard that, but I misinterpreted it. I thought that super-premium would be like in the leagues of Blender's Pride, for that matter, Royal Ranthambore.

No.

So this is, I mean, basically upper-Prestige segment, which you are talking about?

Yes, that's correct.

Next question is from the line of Pankaj Kumar from Kotak Securities.

Congrats on good set of numbers. Question pertains to again on the new launches that we are looking at. So which are the categories where we believe would be the potential or maybe the future opportunity to launch new categories? 18 million cases is one where you talked about.

So we are clearly launching in the whiskey segment, which is the super-premium whiskey that we are talking about and that's an 18 million cases market and before the end of H1. And then we are launching two luxury products in Q1 itself.

Okay. So with these launches, do you believe we would be done with the new launches or this exercise will continue in future?

So with these 3 launches, which will be 2 in first quarter and 1 in first half, I think we, for the time being, are done with. However, the pipeline always continues to be there. But we have to see, give justice to the brand launch and ways of distribution.

So let me clarify this question of yours. See, Radico in the last one decade has always been working on innovations, market research, coming out with new products, filling the gaps, and this practice will continue. We are always doing the research in the market and trying to build on new luxury products. But hereon, anything that we do in the years ahead will only be upscaling. We keep upscaling our price and category as well.

The question is on the Telangana, the outstanding amount that we had from the Telangana state, so any update on that?

Yes. So first of all, the positive side is that the Telangana government, for all the current supplies, has been paying us regularly within the specified period. So there is nothing to worry on the receivables side for all current supply. We had some old outstanding dues that have started being released since last month, so that is also positive side.

So what would be the current outstanding, including the dues that we had?

So current outstanding, actually, the overdue with us for the past period is within the INR 100 crores -- below INR 100 crores. We are the lowest in the industry.

Okay. Sir, my last question is on the regular category. So of course, we have seen in this quarter, we have seen very strong growth due to the RTM in AP market. How do you see FY '26 in terms of growth guidance for regular category? That's my last question.

See, what we said our concentration is more on the P&A category, which we are confident that it will be 15%-plus. And regular volumes are back, so I think regular also should grow 12% to 13%.

Next question is from the line of Sanjay Manyal from DAM Capital.

Congratulations on good set of numbers. Sir, one question I have. Largely, due to the way your volumes have been growing, you think that you would require to take another round of CapEx for the further set of increasing capacity for ENA?

See, I mean, about last two years back, we had put up our Sitapur unit, which is one of the largest in Asia. And with this, I think we are quite self-sufficient for the next three to four years.

Okay. Perfect. And just on the FTA front, though most of the questions have been asked on that, but which brand specifically would be in the price range where most of the foreign brands are -- where you'll be competing with most of the foreign brands of BIO category or BII category?

So we have Royal Ranthambore, which has been priced INR 100 higher than the largest selling scotch whiskey brand. And we are growing by 50%. And this brand is the brand of the future and we see great potential.

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

Sir, the previous participant's question on Telangana, there was an echo when management was speaking, so it was not clear. I'll just repeat the question. Like how are we placed in Telangana in terms of sales and outstanding receivables?

So as far as Telangana is concerned, outstanding today is not so much of an issue. Whatever we are supplying, we are getting paid within the specified credit period. As far as old outstandings are concerned, we have it -- we have the lowest overdue old outstanding, which is below INR 100 crores. And since last month, the government has started paying us that as well. We are hoping that Telangana as a state will perform better now because people are getting paid on time, so the industry will grow. We are anyway growing in that state.

All right, sir. I have one more question on the export segment. How has been the export performance of the company for FY '25 versus FY '24?

See, FY '24, we had reached the record level, that was the highest ever. Fortunately, we exceeded that in FY '25 and we further grew. Current export in terms of volume is about 5% of the total business and in terms of value is about 9%, and it continues to grow.

All right, sir. Sir, the Australian FTA was signed about three years ago. How has the Radico's experience in terms of getting market access to Australia? Has the FTA really helped or is it still something that is in progress?

See, in terms of FTA, it was primarily on the wine. In terms of our exports to Australia, we do export our luxury portfolio, which is our single malt and Jaisalmer Gin. In terms of our rest of the whiskey or the rum portfolio, Australia also has certain non-tariff barriers in terms of aging and maturation and the Indian whiskey do not qualify for that. So we have been in discussion with them on removing these non-tariff barriers.

Next question is from the line of Vishal Gutka from ASK Investment Managers.

Yes. I think two questions. First is a regular segment, I think we've seen a bumper growth in the quarter. So what shall be your expectation for FY '26 given that Andhra policy changes have helped? Shall we expect 20%-plus growth in the regular segment? And second question is on Indian Single Malt Association, I think Radico is also a part of it. So just want to check from you what measures as an association you are taking so that there is no manipulation done by other new entrants who are entering this space?

So I will take the regular question. So first of all, we must say that after nine quarters of a bad period for the regular segment, from Q3 of last year, the regular segment has started bouncing back. Right now, since the previous three nine quarters were bad, though there is a low pace, so the growth in the next two quarters would be healthy. And there were many issues relating to specific states with regard to the industry, that's also normalizing. RTM change in AP has brought the sales back, which we see stabilizing in the year ahead. So as we guided earlier, some time back, we hope to see the regular industry growing at about 10% to 12% or 12% to 13% in the times ahead for Radico.

In terms of the Indian Malt Whiskey Association, Indian single malt is still a very nascent category. So the four founding members who are the pioneers and who have been promoting and working really, really hard in creating this category felt there is a need to set certain standards and norms to protect the authenticity and the goodwill of Indian single malt. So that's what the main objective is of this. And as we go along, we are in discussion with various government authorities to set certain specifications and standards for Indian single malts, so that everyone conforms to that, and we do not dilute the equity and the brand image of Indian single malts in the global market.

Next question is from the line of [ Palak ] from [ MIV Investment Management ].

Sir, my question is again on the UK FTA. So I completely understand your point that there's not going to be any pricing pressure. My question is that is this a welcome move for other players to enter the Indian market considering this has a very huge potential? I was listening to your morning interview in which you mentioned that you consider marketing and distribution as a very strength for Radico. Sir, can the player enter the market by collaborating with a national pan-India player? I mean, there is going to be a much more choices for the customers, so we might see an increase in the competitor intensity in the segment? I just want to know your thoughts on this.

So if I understand you correctly, you're asking can the foreign brands, the smaller brands take up national distribution with Indian players? Is that right?

Yes, in partnership with the national players.

No. So let me tell you, today, as far as the Indian players are concerned, national players are concerned, Radico is the largest, and there are one or two other players, but today, I think the possibility of any smaller company coming and taking up with them seems to be remote. So we don't see that as much of a threat, and they will not be brands which are of significant value, because they would be amongst the largest-selling brands which are already present in India.

As we have no more questions, we close the call and hand over to the management for closing comments.

Moving forward, we will continue to deliver a strong P&A volume growth driven by our diverse brand portfolio. Secondly, we will further develop our luxury brand portfolio, which will see a major contribution to our profitability. Furthermore, we are focused on ensuring that the capacity is always as efficient as far as possible. This will enable us to generate cash, will pay debt and return cash to the shareholder. We look forward to interacting with you on our next earning call. In the meanwhile, if you have any queries, please follow up with us. Please feel free to write to us. Thank you.

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