United Breweries Limited (532478) Earnings Call Transcript & Summary

Ladies and gentlemen, good day and welcome to the Q3 FY '22 Earnings Conference Call of United Breweries Limited hosted by Investec Capital Services. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Harit Kapoor from Investec. Thank you and over to you, sir.

Yes. Thank you, Margaret. Good evening all. We'd like to welcome you to the Q3 FY '22 call for United Breweries. From the management in United Breweries, we have Mr. Berend Odink, CFO; and Mr. P.A. Poonacha of Finance and Investor Relations. I'll now hand over the call to Berend for his opening remarks, post which we will take the line for Q&A. Over to you, Berend.

Thank you, Harit, and good evening, everybody, and thank you for joining the results call today. I'm joined with -- by Mr. Poonacha. And after the usual opening comments, we'll be happy to take any questions. So let us dive straight in and turn to the results highlights for the quarter. We posted volume growth of 19% for the quarter versus prior year, driven by continued recovery of demand prevalent nearly across all the markets. Versus the preceding quarter, there was a 10% sequential volume growth. In the quarter, there was a full recovery of volume levels versus pre-COVID. UBL achieved share growth both in the quarter as well as the year-to-date performance, thereby further solidifying market leadership. Gross margin during the quarter was lower by 390 basis points and lower by 178 basis points compared to the preceding quarter. The quarter was thereby impacted by inflationary pressures in packaging materials as a result of general market commodity increases, partly offset by positive price and product mix. The EBITDA reached INR 180 crores with 11.4% margin for the quarter, impacted also by higher marketing investments to drive demand recovery. Excluding some non-recurring items, the margins were at 13.6%. The overall liquidity position is very strong with about INR 800 crores of bank balance. In the quarter, the company prepaid all remaining term debt. On Page 4 and 5, we depict the Q3 and year-to-date results. For the year-to-date, the net sales was up 53%. And year-to-date, EBITDA reached INR 451 crores, up 188% from INR 157 crores in prior year. On the performance by region, North posted strong growth at 35%, particularly in U.P. and Rajasthan. In Delhi, there was single-digit growth due to the policy changes in the state. West posted 11% growth, and East 12%. South posted 19% volume growth with a number of differences amongst states. The good volume growth was posted in Telangana, Andhra and Kerala, while in Karnataka and Tamil Nadu, volumes were flattish, impacted, amongst others, by poor weather. Turning to net sales. This was up 23% in the quarter, driven 19% by volume and some 3% favorable price/mix, again partly offset by unfavorable state mix. On Page 8, it depicts the EBITDA breakdown. There was a gross profit improvement in absolute terms, but a lower gross profit margin due to the earlier mentioned commodity inflation mainly in packaging. Fixed costs showed a good leverage effect of revenue growth coming through. And third, the quarter was impacted by higher marketing investments to drive demand recovery, for which we have seen strong share performance. The quarter saw some nonrecurring items. INR 15 crore for doubtful debtors taken as a cautionary provision, and INR 21 crores for restructuring costs. And in the quarter, the company reviewed its organizational structure to ensure that it's lean, efficient and future ready in light of the rapidly-evolving market circumstances. Excluding these nonrecurring items, EBITDA margin posted was 13.6%. And to share an update on the portfolio, where we continue to invest to rejuvenate and expand it, we've launched the new digital identity of Kingfisher. It is being rolled out nationally and met with great initial consumer feedback. Ultra expanded its offering in the on-trade with Ultra draft launch in Maharashtra. Witbier is now available in 9 states. And for AMSTEL, it expanded its footprint to U.P. and Mumbai and new markets. In the quarter, we saw that the overall premium portfolio growth was ahead of the total portfolio of the company. Finally, our outlook and summary. So with the new COVID wave prevalent in India, we continue to focus on health and safety for employees and stakeholders while ensuring continued focus on cost actions and working capital management. Although the COVID trajectory is unknown, the company is confident in successfully navigating the current uncertainty with leadership position, strong brand portfolio and healthy financial position. As always, we continue to be optimistic about the long-term growth drivers of the industry at the basis of GDP growth, urbanization and evolving consumer trends, where we're well positioned to leverage and drive these opportunities. With that, we'd like to conclude the opening comments and move to the Q&A part. Thank you.

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

My first question is on the cost side. So gross margin, severe pressure, Q-o-Q and Y-o-Y. On glass bottles and corrugated boxes, are you able to do anything proactive either in terms of, say, using more older bottles or thickness -- lesser thickness in corrugated boxes? And second, on the states, are you getting any feelers on when you can get the price hikes in any of the states? Or really something else in the advanced phase?

On the first question, yes, absolutely. So we are continuing all kinds of cost actions. So that includes some corrugated materials, switching some of the materials to cheaper versions while, of course, ensuring the durability. On glass, although that's not the main driver for the input cost increase we saw for the quarter, but also on glass, we are taking actions to change some of the colors, look at increased levels of collections, et cetera. So those actions have been taken, and we're definitely continuing on those actions. On the pricing side of your question, yes, we continue the dialogue, of course, with many of the states. I would say it's not a one-off dialogue where we take price, but it's a continuous one. As of now, it's a bit too early to comment on that more. But of course, we always strive for balanced price increases that, of course, are now -- once we have reached the full volume recovery and we have seen the commodity cycle, of course, in the last few months, topic of pricing is, of course, becoming more and more important, absolutely.

Sir, that's helpful. In Q4, do we expect more sequential pressure? For glass and the corrugated boxes, is Q4 looking a bit more challenging than the Q3 from a cost perspective?

No, I don't want to start with giving guidance. But as I said, we, of course, look at pricing actions where possible not only next quarter but also Q1 of the next financial year. With that, we also continue the cost actions on the input cost. And hopefully, with that, we get that margin a bit up. And I think -- I've always said that we shouldn't read too much individually in a quarter at the gross margin given the setup of the pricing restrictions in the industry. But as we look back to previous commodity cycles, we have been able to recover always the margins, and I'm confident we'll do that the same time now.

Sir, my second question is on the marketing investment and the branded retail outlets. So we are seeing Pernod, which is not a direct competitor but in the broader same space. Pernod is looking at branded retail outlets in India. So what would be your thought process on this? And second, marketing investment, you called out that you are putting more, yes. You have done a spectacular recovery versus the 2 years also on volumes. But on the overall intensity in terms of ad spend, is it going higher because of the funding coming to some of the startups?

On the retail side of it, definitely we continue to invest. I think we have probably a bit of a different proposition than the company you refer to. But we are very active with displays, with promotion materials, with signages, et cetera, in various outlets, and that's a strategy that we will continue. In the ad spend part of your question, I don't think that has come down or increased significantly. I think that is relatively probably on the same pace. Where we have invested a bit more is particularly on the on-trade side of the business to support the startup and reopening. So with the on-trade much more open versus Q3 of last year, we really want to drive it as well. And hence, we have allocated some of the spends in the on-trade in the quarter.

And last question for doubtful debtor of INR 15 crores. Is that government [ CMD ]? Can you elaborate that?

Well, it's not a government doubtful debt provision, it's related to an entity where we have legal disputes. And as a cautionary step, we took that provision. But of course, the dispute itself will continue, and we look to pursue that with a lot of vigor. But it's not another government entity, no.

The next question is from the line of Krishnan Sambamoorthy from Motilal Oswal Institutional Equity.

My questions are on commodity costs and beyond the on-trade impact. While you did highlight the packaging cost, what's the Y-o-Y inflation that you're seeing on barley cost? And this is also important to note that since you procure barley for the rest of the year in the beginning of the year, how do you see barley cost panning out over the course of the next couple of months?

On barley, we have not seen that much price changes this quarter because we continue with existing stocks from last year's crop. So for new pricing, it's a bit too early. We'll have to see in -- towards March, April when the crop is really coming to the market with enough depth and liquidity in the market as to what is the quality, what is the quantity and hence the pricing around that. So we're -- too early to tell. But at least for the current quarter, we have existing stocks, and that's part of the pricing, as you have seen in the -- this quarter's results.

But market prices prevalent are up in double digits, right, in case of barley? Well, it may not have impacted your own cost for the quarter.

Yes. So I think some of the spot trading is a lead-up, but those prices are not yet prevalent for us as we, as I said, continue with existing stock positions. And I think the real pricing indicators, I think, are around March to April because at the moment, it's more nominal volumes that are traded.

Got it. My second question is on the extent of on-trade sales impact in January. Can you just call that out? And what's the outlook here?

So in January, we've definitely seen some impact in particularly, I would say, the rural -- sorry, the urban areas. So a number of cities had evening curfews, limiting seating capacity or a few instances where trade was -- on-trade was closed. At the same time, of course, this COVID wave is very different from earlier. We've also seen, even up to today, some of these restrictions being rolled back. So it's too early to conclude on the impact. But hopefully, the impact is much more limited than we we'll have seen earlier.

The next question is from the line of Pratik Rangnekar from Crédit Suisse.

If you could just let us know what is the recovery level of used bottles that you're seeing this quarter. And I understand that in January, you've had some more impact on on-trade as you just mentioned. So maybe if you could give us a sense on December versus last December, how does that level look for the used bottles.

On the used bottles, we have seen more or less normalcy in this quarter. So a lot of the recovery of the market also coincided with the normalization of the [indiscernible] cycles and the participants in the collections. So normally, we are the kind of 1/3 new bottle injection, and we are at that number for the quarter. If I understood, your second part of the question was on on-trade in January?

Yes.

Yes. So for the other question, there was certainly some impact, particularly in the bigger city areas like Mumbai, Bangalore, Delhi. At the same time, a number of those restrictions in terms of weekend curfew or earlier closing hours have been also partly rolled back. So with that, yes, we would expect some impact still in February. But let's see how it'll develop. I mean it's ongoing as we speak, so it's a bit too early to conclude on it. But in summary, some impact. But definitely, of course, not to the extent that we saw in the earlier way reported.

And just one last question from my side. The Maharashtra government had issued some sort of a notification allowing wine sales through regular grocery channels. As we understand, there used to be a combined license for wine and beer earlier. So this [ GTL ] freeing up is as of now, and as per your knowledge, is only for wine or does it apply to beer as well?

To my understanding, that -- this announcement only applies for wine. So that's the news I have.

The next question is from the line of Ashit Desai from Emkay Global Financial Services.

Our losses in nonalcoholic beverages have almost doubled. When do we expect it to stabilize?

Yes, the losses there are partly, of course, operational or the NAB portfolio that we have and we continue to invest in. But also, to a certain extent, it is advertising, for example Heineken 0.0 that we do, which, of course, has its spill-on effect on the variants of the brand. So that is also a conscious strategy that we pursue.

Okay. Should we expect this run rate going ahead? Or will it come back to the -- will it be lower as we've seen in the previous quarters?

Yes, I would expect more the previous quarter trends. And of course, overall, step-by-step, we have the milestones defined for the NAB portfolio which, of course, should make it that it's profitable in its own segment. So that's what we pursue.

Okay. Okay. And I see your volumes have come back to pre-COVID levels, but your depreciation rates are still lower versus what they were substantially. Is this due to lower number of [ shifts ]? Or there are some fully depreciated capacities also that's driving this?

I'm taking this question. Ever since the pandemic started, we have started depreciating our assets, to use the word loosely, more scientifically. What we are doing is we are doing it based on number of shifts, the -- each unit is working at. In the past, it was assumed that all shifts were utilized and all units were depreciating as if they worked on 3-shift basis even though there were months that they did not operate on 3 shifts. As a common principle, it was depreciated across units. Ever since the COVID hit the business, we have been depreciating each unit assets based on the number of shifts it is practically used, so thereby the difference.

Okay. But I see quarter-on-quarter it's more or less similar. So even in Q1, it was a similar run rate. So...

Yes. It will depend on what are the opening stocks which they carry into the quarter and what are the closing stocks. Net-net, it is based on the shifts which have been physically run in the various locations.

Okay. Okay. So it's -- one can say that the depreciation is structurally down, and this is the base number that we should look at?

Yes.

[Operator Instructions] The next question is from the line of Alok Shah from AMBIT Capital.

Congrats on the good set of volume recovery. My first question is on the market share gains. Would you be able to comment whether the current market share of your company would be above the CY '19 or FY '20 levels?

Yes. The market shares are trending for the year -- last quarter at kind of 54%, 55%. So that's definitely on the upper end of what we historically used to be, which probably was closer, 52%, 53%. Of course, after the first COVID wave, we've seen a bit of a dip due to all kind of closures, the cleaning on-trade that disproportionately impacted us. So it's good to have now fully recovered that and even be a bit higher than historically we've been on.

Okay. That's great and congratulations for that. My second question is more a strategic one. So your Witbier beer is under the brand Kingfisher. Now of course, while it can have advantages since consumers already know the brand Kingfisher, but on the flip side, do you also reckon that consumers may want a unique craft beer and not something which is kind of generic? So do you -- or does your marketing or sales team feel the brand Kingfisher getting attached to Witbier to be constraint or a deterrent for some consumers? Or you really don't think because the market share gains in Witbier is also quite strong? Your thoughts on that.

Yes. So I think at the end of the day, we are continuing to build the whole portfolio. So partly, that is, of course, very much Kingfisher and Kingfisher line extensions, which I think come with a lot of inherent recognition, brand equity and strength of the brand and the franchise itself. At the same time, you also have a number of other brands besides Kingfisher, partly, for example, from Heineken International but also a lot of other local brands that we have regional strength. Have the market and consumers continued to evolve? Definitely. I think the number of brands will only increase. So most likely, you will see examples both on the Kingfisher and also not under Kingfisher. And I think that's how the consumers are evolving, and I think that's for us to find the right propositions in the total brand portfolio.

Okay. So sir, just a follow-up to that. Basically, what I'm trying to say is that you don't see any restraining factor? And you seem to be suggesting that the follow-on portfolio that you built potentially in the craft or a Witbier segment may still have a branded H offer existing on one of the existing labels that you already have? Is that understanding correct?

You should also realize that when a consumer goes to an outlet, when he refers to Kingfisher, he does not mean Kingfisher Ultra. Of course, though, the bird is there. So Witbier is under the Ultra, but -- and in the consumer's mind, Ultra is the premium segment of Kingfisher. So volumes are small, and that signifies premium of our portfolio.

Got it. Got it. No, so essentially, what I was thinking also is that globally, when the incumbents have moved to this craft or a Witbier kind of segment, have they tried to use the same brand level and then leverage on that? Or they have sought to sort of build a unique thing because consumers resonate to a different name better? So that's where I was essentially moving to, some better experiences. How do you see that?

I think what my thinking -- my observation on the market in India would be that it's a bit different in craft versus maybe U.S. or Europe is that in U.S., for example, I think a lot of the craft has also been developed out of the kind of consumer interest to be something which is more local, which is maybe less mass produced, mass -- national level. So they distinctly move away from that. And we have something which is more on a smaller scale, more local, more, let's say, nonmainstream, if you will. I think in India, that is less of the case. It's less against large corporations or large brands, but it's more about, I think, experimentation, new flavors, new segments. So as such, I think the trends are a bit different. But of course, overall, the number of choices and offerings in the market, I think that will -- so those only will continue to go up.

The next question is from the line of Nillai Shah from Moon Capital.

Just a quick question from my end. [indiscernible]... [Technical Difficulty]

Sorry to interrupt you, Nillai Shah, but your line is not very clear. [Operator Instructions]

Sure. Better? So my question is essentially on the input costs. In the last conference call, I think Berend mentioned that costs were pretty much under control. And he cited the fact that barley stock is there, et cetera. So what has surprised you in terms of input cost inflation on a quarter-on-quarter basis given the sharp decline Q-o-Q on gross margins for this quarter?

Yes, there's not so much, I would say, an area of surprise. I think, of course, commodity markets develop with their ups and downs from month-to-month, week-to-week, et cetera. But a large portion, we have had -- a large portion, we have, let's say, forward visibility with long-term contracts. So it's not a matter of surprise. I think for this quarter, of course we compare to a prior year which had a particularly strong gross margin. Secondly, we've seen that we had a bit of negative state mix, which is something, of course, which is less predictable and depends on how the recovery pans out. And thirdly, I think traditionally, this quarter is not one where a lot of pricing actions are normally also taken. So we really want to drive also the volume recovery. And now that that's really taken place, I think the next point of emphasis is really more on the pricing side.

Okay. And second question is I'm having trouble reconciling the volume growth with net revenues that has been reported for 9 months. Has there been some change in the contract manufacturing unit volumes on a year-on-year basis, the 9 months?

No, that network and the share of it has been more or less the same. There might always be, from time to time, small changes, but that will not have a meaningful difference in that figure.

Just to confirm this, the project manufacturing unit volumes, are they reported in the growth numbers that you report for the quarter? When you talk about volume growth for the quarter, does it include the CMU units too?

Yes, it does. Yes.

The next question is from the line of Jaykumar Doshi from Kotak.

Yes. My question is, is it possible for you to give us some more color on cost optimization that you have carried out during the pandemic period? And some comments that -- in terms of what is the extent of saving that you would sort of realize if FY '23 is a normal year versus FY '20 either in terms of EBITDA per case or other cost per case basis or absolute numbers. In employee cost, we can see some correction -- you can expect some correction going forward. But other than employee cost, are there other areas where you've seen significant savings?

Yes. Thank you for the question. So definitely, employee costs, of course, given the restructuring that we've done that was towards the end of the quarter, so that impact in terms of new run rate, if you will, becomes more visible the next quarter. But if I compare to prepandemic and today, I think we have more or less on all the P&L line items taken initiatives with the various teams within the company. So they go from logistics to some of the packaging, to some of the sourcing, to back-end costs, to automation in certain areas. So there has been quite a widespread set of actions that have contributed to the results. Like in the past, I will not really split out how much and in which quarter, et cetera, because at the end of the day, we would look at that set of initiatives partly, of course, running through to the bottom line, partly offsetting inflation in various categories but partly also, for example, to make sure there are enough resources freed up to invest in the brand portfolio and innovations from time to time. So with that, we will try to balance the effort of costs but also investments for the portfolio, the market share position and hence the bottom line profitability.

Understood. And just a clarification on the previous question that was asked on depreciation. So your quarterly depreciation used to be INR 70 crores, INR 73 crores -- INR 72 crores, INR 73 crores in FY '20. Now it has come down to INR 50 crores to INR 53 crores. So is the understanding correct that in peak season, the number -- let's say in your peak quarter, that this number, quarterly depreciation number, will go up but overall basis it will still be 10%, 15% below FY '20 level?

Yes.

Yes. I think...

While it will be lower, it will be lower on an overall basis, the reason being in the last 2 years, if you see, our CapEx programs have been largely maintenance CapEx and there's been no major increase in CapEx. Normally, in a normal year, we have somewhere between INR 350 crores to INR 400 crores of CapEx. Now in the last 2 years, because of pandemic, it is limited to approximately INR 200 crores. So -- and the amount you see in the past prior to the pandemic was about INR 280 crores per annum, which was equal across 4 quarters considering we had an equitable method of doing depreciation, 3-shift, across all seasons, across all units. So you saw somewhere between INR 65 crores to INR 70 crores every quarter. However, post the pandemic, we started doing what we said, that is, depreciating only based on shift usage. And of course, there is a fall in the additional CapEx that we are doing in the last 20 to 24 months.

And do you foresee any significant increase in CapEx next year, FY '23? Or when then should we see increase from current levels? FY '24, or...

Yes, we first -- we'll then monitor the upcoming peak season to make sure we have the visibility there and we have the uninterrupted peak season. From there, I think we will assess again the growth outlook and then the need to invest. But as of now, as Poonacha indicated, probably this year, we will end the CapEx investments well below the INR 200 crore mark. And -- yes. Then after next peak season, we will assess again.

Final bookkeeping question. Could you give us an idea what was the A&P spend as a percentage of sales in this quarter, December quarter?

It will be around 5%, 5.5%.

[Operator Instructions] The next question is from the line of Mehul Desai from Anand Rathi.

So just on the market share gains that you have highlighted, 54%, 55% versus 50%, 53% pre-COVID. Just wanted to get your sense, is there any particular state where you are underindexed or where you had a lower market share compared to your national average and have gained a significant share there? If you can give some color as to state -- I mean, in terms of key states where you have -- where you would have gained more market share and that has led to this 200, 300 bps higher market share compared to pre-COVID levels.

Yes. I think broadly, across many states, it's been a good performance. So all the way from North in Rajasthan/U.P. to a number of other markets like Telangana, Goa, West Bengal, Kerala. So yes, it's not 1 or 2 states that there's a major turnaround or something which drove that number up, but I think pretty broadly across various parts of the country, we've seen that performance.

The next question is from the line of Himanshu Shah from Dolat Capital.

Congratulations for good set of numbers. Sir, can you just provide some more color on the organization restructuring that we have done and what kind of savings it should entail in employee cost on a per annum basis? What is the nature of reorganization?

Yes, the reorganization and the restructuring that we have done was really with a view to look at the evolving market dynamics and the long picture and make sure we have, yes, the appropriate resourcing from an organizational perspective. For example, in a number of hierarchical lines in the company, the number of teams and functions we have on the various topics. So that has led to a redundancy and of course, that, we have to say, to very valued colleagues, which was not a great process, of course, as such. But I think from a future perspective, to be well organized with a quick decision-making, we've seen that's the best way forward. As to the number or the savings amount of that, we will come back to that more in the next quarter when we see those numbers flow through. But of course, you have seen the one-off impact in terms of restructuring that happened in the latter part of the quarter. But yes, for the next quarter, we will come back more on that.

Fair enough. Sir, secondly, just on the pricing flexibility from the state government, various state governments, is there a case that pricing flexibility in beer as a category is slightly more better than IMFL as a category or would it be similar? Because we are generally seeing our price/mix on both of the count being on a positive side on a Y-o-Y basis, which we have not been able to see in case of IMFL as a category for some of the players.

No. I mean -- yes, I mean, price flexibility is -- I mean, it's a very difficult question to answer because when you mean price flexibility, do you need to say that the spirit companies are not able to price their products differently? Because...

They are not able to take...

Premiumization...

on the -- yes, yes, please.

Premiumization is possible to a larger extent in spirit than in beer. There's a limit to the extent to which you can premiumize beer. So that way, there is a flexibility of having several layers of hierarchies for spirits, right, from bottom, right, right to the top. But at each level, flexibility is purely limited to negotiations with the state government authorities, which is similar to both beer and spirit. It's no different. The process is the same.

And generally, sir, if we approach the state government for price increases, how easily it comes through? Like it comes through on most of the occasion? And how much time it would be taking? I know it could be varying from state to state. But at a portfolio level, if you could provide some color.

If you -- yes. You have to go state by state and see the premiums because in a state like Karnataka, though, it's a government corporation. It is far easier to apply for a price increase, and within 45 minutes, it is in place. But in a place like Telangana, I mean, it's not as simple. I mean you could go on for more than a year. The negotiating -- the corporation and the state excise will not get anything. So it depends from state to state, and you'll have to look at it state to state and see an overall sales level.

Sure. And sorry, sir, to just drag on this. And [ so has UBL ] applied for price increases now with the upcoming excise season to most of the states? And do we do this on regular basis? Like annual price increases?

We have a lot of complications around price. And of course, it has now stepped up given the general inflationary environment. So not only us, but I think many industry participants will look to recoup some of that via pricing. But as Poonacha said, some states only allow pricing maybe every 3 or 4 years. So that's a very challenging process. Other states, it's a bit more easy. So that is the -- yes, the industry environment in which we operate.

[Operator Instructions] The next question is from the line of Ashit Desai from Emkay Global Financial Services.

Yes. Berend, when you say higher investments to drive demand recovery, do these include higher BTL spends also?

No, this is mainly related to trade spend [indiscernible] into on-trade institutions, et cetera.

Okay. And what would be the reason for -- so when we look at your realizations, they are down on a quarter-on-quarter basis. What would be the reason for that?

So the -- we have noted some positive price/mix in the quarter versus prior year but some negative state mix due to the problems, of course, of how the recovery panned out.

Okay, okay. And could you give us some idea how different was -- you've said for the quarter we've reached pre-COVID. But how different was November/December versus pre-COVID?

Yes. In general, we've seen during the quarter, of course, continued recovery. I would say that in November, probably a bit lower due to some poor weather in South. But barring that, yes, a good recovery, and that as a total gave us slightly ahead of pre-COVID volumes. So that's -- that was the trend.

Okay. So December was more than 100%?

Yes. Yes.

And lastly, can you quantify the price hike given to glass suppliers in Q3?

In Q2 or Q3?

Yes, during the quarter. In Q2 or Q3? When was this given?

And so no, for us in general, we have long-term contracts, and they work with price adjustment formulas for the majority, meaning its underlying input costs move up or down. Outside of certain [ pivoting ] range, then there will be a trigger on the pricing. So that is how it's, let's say, shared with the suppliers. But for the quarter, I think, in glass itself, there were no major movements in glass prices.

So the inflation is largely led by non-glass packaging materials?

Yes. So then you have to think about cans, where the aluminum has moved up, but also things like cartons and crowns, et cetera.

The next question is from the line of Palak Shah from Infina Finance.

Firstly, on the recent changes in Delhi, Mumbai, Maharashtra or [ M.P. ], just want to take a competitive view from you. How has been the period over last 45 days of the quarter and also including investment all that you have seen, price hikes for spirits versus beers?

Yes. So I think each state and area that you mentioned has a different kind of [indiscernible]. So in Delhi, of course, there was some impact from, let's say, COVID measures. At the same time, the market, I think is kind of stabilizing after the policy change. So a lot of stocking happened in the market. New outlets came -- became operational. So in general, positive trading for Delhi. In West Bengal, we have seen, indeed, some changes again in the policy where probably spirits was down in the mid-20s in terms of MRP. But also, beer was down some 10%. After that, yes, we've seen good continued trading, although, of course, it's a bit difficult to distinguish kind of COVID impact versus policy impact. But in general, I think the lower end of these is a good environment. In Mumbai, I think we've seen a bit more impact due to COVID period. So although the online delivery model is active there and continues to see some traction, we have seen for -- what I said earlier in urban areas mainly, a bit more of the impact was due to if I look at the Omicron part of COVID.

Got it, got it. And just on the pricing front and on the excise policy discussions that are ongoing, how has been the conversation and approach from the state government with really all the deals with some other guys in the beer industry? What has been your take? Are they being more accommodative to the industry?

Sorry, the line is not very good. Could you repeat the question?

Just want to ask, how has been the state approach during this current excise policy? Are they more accommodative to and complementary?

I think that's very difficult to say in general. I mean the discussions are already on a state-by-state level and they are ongoing. So it's too difficult or too early to say in general that they're more accommodative or not. I mean I think if I look in the past, sometimes the external environment like commodities is something that is taken into account At the same time, we've also seen a number of states that have not really changed their approach based on those kind of external drivers. So in that sense, it's, I think, impossible to give one statement about how excise is taking that into account.

If I just change the question a bit. I'm just asking which states have been more accommodative in the last 2 years and this year as well for the industry and -- versus who have been more or less the same. Just your thoughts.

Yes, there are states that are, of course, more conducive in terms of how they look at pricing but also maybe broader, just precise pricing also, let's say, even doing business and the general environment of investments and operations. But as Poonacha mentioned, states like Karnataka, Goa, maybe Maharashtra, maybe Delhi, West Bengal, yes, there are probably more pricing actions that have been taken also, sometimes policy changes. And at the same time, there are states like Telangana, Rajasthan, et cetera, that are more difficult to obtain kind of prices over the period. But having said that, yes, the dialogue is on almost everywhere. So that is the effort we did from our side and therefore we continue to do.

The next question is from the line of Jaykumar Doshi from Kotak.

Just a quick one. What is the breakup of your volumes in terms of cans and glass bottles?

So in cans, the share of the portfolio is around 15%.

[Operator Instructions] As there are no further questions from the participants, I now hand the conference over to Mr. Harit Kapoor for closing comments.

Yes. Thanks, Margaret. On behalf of Investec Capital Services, we'd like to thank all the participants on this call. And we'd also like to thank the management for taking the time [indiscernible]. I'd now hand over to Berend for his closing remarks. Over to you, Berend.

I'd like to thank all the participants on the call for your interest and questions. Also, Harit and Investec, thank you for hosting us. I hope everybody takes care and stays safe. And I look forward to the next interaction.

Thank you. On behalf of Investec Capital Services, that concludes the conference. Thank you for joining us, and you may now disconnect your lines.