United Spirits Limited (UNITDSPR) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to the FY '20 Annual Investor Presentation and Earnings Call of United Spirits Limited. We have with us today, Anand Kripalu, Managing Director and Chief Executive Officer; Sanjeev Churiwala, Executive Director and Chief Financial Officer, United Spirits Limited. [Operator Instructions] Please note, this conference is being recorded. I would now like to hand the conference over to Mr. Anand Kripalu. Thank you, and over to you, sir.

Thank you very much, and very good morning, everyone, and a very warm welcome to this virtual session. I'm Anand Kripalu, Managing Director and CEO of United Spirits Limited, and I am joined by my colleague, Sanjeev Churiwala, the CFO and Executive Director of United Spirits Limited. What we are going to cover today is, first, a quick recap of the F '20 performance. Sanjeev will walk you through the financial performance first. Thereafter, I'll give you a brief update on the progress that we have made against our medium-term strategy in FY '20. And then finally, I'll talk about what I know is of most interest to many of you at this point. So with that, over to Sanjeev.

Thank you, Anand, and good morning to all of you. I'm Sanjeev Churiwala, Executive Director and CFO of United Spirits Limited. Let me, in the next 15 minutes or so, cover the full year performance for you. F '20 witnessed the macroeconomic slowdown, with the GDP growth falling to a multiyear low. We witnessed a broad-based consumption slowdown. And as you can see from the quarterly trend, the quarterly GDP growth kept deteriorating sequentially with every progressing quarter. The outbreak of COVID-19 and the consequent lockdown have put figures, facts on an already precise economy and the social and economic impact of the pandemic is going to be truly unprecedented. Anand will cover this topic in a session in more detail. In the context of that macroeconomic backdrop, let's look at our financial performance in FY '20. Reported sales grew 1.2% year-on-year, while net of bulk Scotch sale, we saw net sales declined 1.5%. If we look at the first 9 months of the financial year, underlying net sales grew 3%, impacted by the consumption slowdown, but COVID led disruption in the fourth quarter positive 2 or negative trade 3 for the year. P&A segment was almost flat for the year. Not only was the demand environment subdued, we also saw significant inflation in our key raw material cost, especially ENA. That resulted in a gross margin compression of 408 bps year-on-year. What we are really pleased about is the cost rationalization effort in our operational cost, which helped us deliver an EBITDA margin improvement of 92 bps on an underlying basis. Our journey towards debt reduction continued with an interest cost saving of INR 39 crores during the year. Overall, we delivered a PAT growth of 7% in full year 2020. In subsequent slides, we will get into more details on the P&L lines and balance sheet. Now looking at the net sales a bit more in detail. Drying days resulting from general election schedule impacted sales growth during the first quarter, while broad-based consumption slowdown weighted on our business in rest of the year. Additionally, during second quarter, we had a temporary supply chain disruption in our bottled-in-origin Scotch portfolio. The year ended with lockdowns initially enforced in some states and eventually all over the country to contain the outbreak of coronavirus in India. Underlying net sales declined 1.5% during the year owing to a volume decline of 2%. The price mix during the year was 62 bps -- 64 bps, led by lower pricing as a result of part absorption of ED hike in Maharashtra last year in January 2019. The Prestige & Above segment's net sales remained almost flat for the year, they are showing a 6% growth in the first 9 months but falling by 16% off the back of COVID-led disruption in the fourth quarter. P&A segment was disproportionately impacted by drying up of social locations and closed-off on-premises channel in several states, much before the national -- nation-wide lockdown got the business towards to a complete halt. Popular segment net sales declined 4.1% overall, but priority states held up relatively better with a decline of 1.5% during the year. A little more deep dive on the EBITDA margins. During the year, driven by significant cost inflation and our decision to part absorb the ED hike in Maharashtra, gross margin came in at 44.8%, down 408 bps year-on-year. To mitigate the impact of gross margin erosion, we accelerated our cost management effort. And as a result of that, our staff costs were down by 18% on a like-for-like basis after adjusting for the restructuring cost of last year. We were also able to bring down other overheads by 15%, a big part of which was linked to delta in provision versus last year. And that can be attributed to our consistent unconscious decision to prioritize credit risk over sales. Additionally, we brought down A&P by 17%, although the reinvestment rate, net of bulk spot sales, was maintained at 8.1%, which was very much within our guidance for the year. Despite significant gross margin erosion, we delivered an underlying EBITDA margin expansion of 92 days. I would like to add here that although we had delivered an EBITDA margin expansion consistently over the last 2 years, the near-term outlook for margin progression remains uncertain, and will depend on the post-COVID recovery landscape. For the year, we had delivered a PAT of INR 705 crores, up 7% versus last year; and a PAT margin of 7.8%, up 42 bps compared to last year. We delivered higher PAT, mainly as a result of higher EBITDA of INR 219 crores and interest cost savings of INR 29 crores. This is in spite of a lowered other income by INR 50 crores on account of lower property sale income and a lower interest received from such. And then higher depreciation, primarily due to IND 116 regrouping impact of roughly INR 64 crore. Tax was higher due to the valuations of some legacy tax matters which resulted in a few reversals as well as some provisions, while the benefit of reversals came in exceptional items for provisions with the tax line. We've continued our focus on cash management. Overall cash generation during the year was INR 1,742 crore, mainly from our core operations, and we were able to use this part to reduce our debt by INR 492 crores. Unlike the last couple of years, during this year, we saw an increase in working capital. The increase was mainly driven by a decrease in current liability, liabilities resulting from software business, which was partly offset by an improvement in inventory and trade receivables. In spite of volume of the business due to lockdown in March. On the balance sheet side, as I said, we repaid our debt by INR 492 crore, which is a further reduction of 20%, following a similar reduction over the last 2 years. The debt at the end of the year stood at INR 2,073 crores. We repaid commercial papers of INR 900 crores and availed bank loans amounting to INR 408 crores during the year. This reduction in debt, together with more favorable interest rate helps reduce total interest cost by INR 39 crores during the year. We have been consistently reducing our debt over the last few years. And as a result, have a much stronger balance sheet and a solvency position now. This places us in a good spot to capitalize on a financial strength and phase ongoing prices and emerge stronger. This slide is pretty self-explanatory and captures the consistent progress we have been making in key matrices of financial performance and financial strength, be it a return on capital, debt equity ratio, or interest coverage ratio. And finally, a number that sums up the value we are creating for our shareholders. We have been on a consistent upward trajectory. As you can see in the chart, from a INR 1.7 per share EPS in financial year '16, we have delivered an EPS of INR 9.7 per share in financial year '20, an increase of 478% over this period. What is more important is that we have delivered an increase in EPS even in current year, which was fraught with a multiple of headwinds on the demand side that coincides with the significant raw material, inflation and, of course, followed by a COVID impact in March. Now I'd like to hand over to Anand for the next part of the presentation. Anand, back to you.

Thank you, Sanjeev. So let me just now share some highlights of our F '20 performance. Now our performance ambition is to be one of the best performing, most trusted and respected consumer products companies in India. And we aim to do that through our 5 strategic priorities to accelerate and strengthen our core brands; to evolve our route to consumer, which is really a distribution system; to continuously drive productivities so that we can invest in growth; become a top-class corporate citizen; and do all that by building an organization that can deliver all these priorities. So let me start with the first priority of accelerating and strengthening our core brands. As I explained last year, we are aiming to link each of our power brands with a key passion point to the Indian consumer. So for Black & White, we aim to pair the brand with food, which we believe is like a match made in heaven, specially crafted menus that is made for sharing, and that magnifies the flavors of Black & White whiskey when you share it with friends and shared occasion. Cricket with RC, particularly riding on Virat Kohli as the brand ambassador. And finally, travel with Johnnie Walker, which I want to explain to you in a bit more detail now. Now Johnnie Walker, as we know, is amongst the brands with the highest equity, not just in its own segment, but actually across the category. Our vision for the brand is to make Johnnie Walker an icon in culture and the new brand passion point of travel and exploration just seems appropriate to enable us to make that happen. So some journeys begin where the road ends, and the traveling billboard, which was our campaign last year, is one such where we have traveled miles across the country, visiting 5 different locations across the 4 corners of India, across mountain peaks as well as the depth of the ocean. The mid-Prestige segment, where Royal Challenge whiskey operates, presents a big opportunity as it's one of the fastest growing segments. And this, in fact, has attracted many local players as well as regional players into the fold. The Royal Challenge brand vision is to be the most iconic millennial and post millennial brand in India. And the all-new Royal Challenge, for which you can see the pack on the left is -- has a new blend, which is crafted by the master blender, Craig Wallace, customized to be the most accessible and preferred blend by millennials. It's a smoother and richer experience and all this packed in a new bold look with the rampant lion in all its glory on the pack. We also have a new bolder logo for RCB, which hopefully you'll see more of as and when the IPL season starts. We've had an encouraging start to the relaunch of RCW, which was launched in Kolkata just 3 weeks prior to the market shutting down. We are now beginning to push it harder with the markets opening up, but I must add that we are extremely encouraged by the start that we've had. No.1 is clearly one of the most iconic brands in this country. And the No. 1 renovation is probably one of the biggest renovations, I would say, of the last many years. The renovation includes a new carton, a new bottle and a new liquid. In fact, our test results show that this is the best ever No. 1 that consumers have ever had. We launched this in March in Rajasthan and Orissa, and again here, the initial consumer response has been extremely, extremely positive. Apart from the 2 renovations that I spoke about, there have also been 2 key innovations that have hit the market in the year: first, Hipster, which disproportionately recruits consumers are generating trials at scale, but also disrupts the potential for Scotch whiskey because they've seen as cool and trendy, right? And that's something that really appealed to the younger audience. And McDowell's No. 1 Platinum, which has seen strong success, it's now available in 82% of the country. And most recently, it's been extended to Maharashtra and Orissa. Moving on to our second priority, which is evolving our route to consumer, our commercial strategy is based on serving the 3 Indias that I spoke to you last year as well about. And really, the principle here is to have horses for courses, that is the right kind of salespeople with the right kind of skills for the right segment of India, and to marry that and support those sales guys with technology that enables better performance management and execution across channels. And we have 2 technologies that we've deployed here. One is called [TRAX], which is a real-time visual scanning technology that records images of the product display on shelf, giving you simple analysis of availability and share of shelf. And Power BI, a simple integrated platform that houses the most granular level of sales performance data across all parameters. So only one source of truth for the entire company. Moving on to the third pillar, which is all about productivity. We continue to focus our efforts on productivity across all lines of the P&L, and this becomes even more acute in a tough commodity year like the one that we just had. We are focused on cost productivity through modernization initiatives, including putting a high-speed automated line in one of our factories. We're also simplifying our manufacturing and supply footprint across the country as we speak. We've also driven a lot of non-COGS productivity in terms of our marketing spend by leveraging scale, by doing things more centrally and also leveraging digital more aggressively and looking at new agencies who can do this more efficiently. And we have continued our focus on improving the efficiency of our non-staff spend, such as IT and professional services, rents and so on and so forth. And all this has delivered some contribution to compensate for the huge COGS increases that we have had. Our fourth priority is to make sure that we are a corporate citizen that people take notice of. We have continued to work on shaping the regulatory environment. In fact, last year, we got price increases across 18 states, and that partly helped to offset the impact of ED absorption in Maharashtra as well as some price correction that we took on our McDowell's brand. We achieved a price increases in Rajasthan after 6 years and we've started unlocking the power of ease of doing business in certain select states. We have continued now for our sixth year in a row, our road to safety program, where our continued partnership with key state governments has helped us to enhance road safety in the country. Most recently, in Pondicherry, we have actually started seeing a reduction of road accidents and fatalities as a result of road accidents. And finally, a look at what we are doing to continue to build our organization. First and foremost, our top priority is to proactively plan and build a strong succession plan for all critical positions in our company. The second is to work comprehensively to strengthen our people manager capability, where the effort is to strengthen coaching skills and make our frontline leaders better and driving clear accountability. The third is on inclusion and diversity. I must say, I'm really proud that in this kind of industry, we have more than doubled our women representation from less than 9% to over 19% in the last 4 years. Women representation in our senior teams, which is like our top 15 managers, has increased from 23% to 32% in the last 1 year alone. And finally, we continue to build on the culture of our organization because we really do believe that more than anything else, culture drives performance. And we are continuing our journey to build a nonhierarchical, meritocratic, collaborative, performance-oriented kind of company where celebration is really a way of life. So just to pull FY '20 together, I am happy about the continued focus on margin improvement and the delivery of margin improvement in a very, very tough environment like we've seen. I'm encouraged by the initial signs of feedback that we've received on the relaunch of No.1 and RC. We're happy about the innovation impact that McDowell's No.1 and Hipster have had in the marketplace. We have continued focus on our operational and financial efficiency to make sure that irrespective of when costs become unpredictable, our controllable costs are kept really, really tight. And finally, we made another step in building our people and culture to transform our company from really a company to an institution. However, as always, there are things that we need to do better. We are -- have been challenged in a few select state brand combination, which we believe, the interventions we put in place will fix. We've had pricing challenges in some critical states like Karnataka, for instance, and we have been challenged on market access in another important state of Andhra Pradesh. We are not happy with the amount of volatility and predictability we've seen on our commodities. And while these are behind us, the year was impacted to some extent by some supply chain disruptions. So with that, moving from the rearview mirror, I'm now going to look into the wind screen really and talk about what everyone wants to talk about, COVID and beyond. Now as Sanjeev also said, we were already having a soft economy. And COVID-19 has dealt another body blow to the economy with the results that current outlook for FY '21 is the model outlook is somewhere around minus 5-odd percent. Now if you look at what happened with the onset of the pandemic, is that obviously, our sales were severely impacted. While the lockdown was announced from March 24, the impact on the alcobev sector had actually begun even before. Many states, such as Karnataka and Delhi had announced the closure of on-trade operations like bars, pubs and restaurants, in the second week of March itself. And also many of our statutory operations in many of these states, were also asked to stop to ensure that there was enough social distancing. For the period between March 24 to May 3, which is really lockdowns 1.0 and 2.0, alcobev manufacturing and sales was completely banned in all states in India, which means India pretty much had prohibition across the country. With the onset of lockdown 3.0, many states began allowing the sale of alcohol. The pent-up demand and consumer thirst for our category was clearly visible and highlighted by the massive queuing outside outlets. Similarly, manufacturing operations for Diageo India also followed a sequential process with factories being allowed to operate based on the zoning criteria with the easing of the lockdown norm. As of today, pretty much all our factories are running on a single shift operation. Finally, many states started demonstrating interest in exploring home delivery and online ordering, something that we've been trying to unlock for a long time. And as many people say, it takes a crisis sometimes to unlock things that are really hard to do during peace times. And as of today, 6 states have allowed home delivery, and we'll talk more about that. So what's been our response to COVID, as a company? Simply 2 things: first and foremost, manage the crisis; and then use the time of the crisis to emerge stronger. So let's take a look at what the company has been doing during this period. So in the first week of March, we set up a dedicated working group led by me, called the Crisis Management Team to start monitoring the rapidly evolving COVID-19 situation. The team met almost every day focused on monitoring the external situation as well as what should our response be as an organization towards this changing dynamic. And what we did is, we focused on what we have called the 6 Cs of COVID Management: care, communication, consumer, customer, cost and finally, cash. And let me give you a flavor of what we have done on each of these. First and foremost, care. Care for our community. And you'd be pleased to know that to help overcome any shortage of hand sanitizers across the country, 300 workers and 15 of our manufacturing units were repurposed to produce hand sanitizers very quickly off the block. In fact, we took this decision started in the first 5 days itself because that was when the need was the most difficult. I was getting calls from people saying, I cannot get hand sanitizer. Can you help me? So it was really, really hard to get it in that time. So I think we just came to the rescue at the right time. Moreover, with the bar and restaurant communities facing unprecedented challenges from the impact of COVID, the company pledged to support the trade with a INR 3 crores health insurance cover for bartenders associated with the Diageo world-class program in India. And lastly, we contributed about 150,000 masks to public health departments across the country to be used by health care professionals and caregivers. All this has helped us to certainly raise the stature of our company, to raise the pride that people have in our company and in some ways, to enhance the narrative of our industry. Moving on from just care for our communities, we also had to make sure that we care for our employees and constituents and also communicate. At a time like this, you can only under communicate. You cannot over communicate. So we have, effective the 16th of March, we announced work from home for all our office employees, and we make sure employees had the necessary tools and systems to support that work from home. In order to aid the well-being of our employees, we launched several initiatives across free online 24/7 confidential counseling sessions, live sessions on mindfulness to help employees stay well and stay balanced and partnership with health care start-up, Cure.fit, to provide complementary mental, physical and emotional well-being services. In the first week of March, we also started extensive communication with our employees, and dos and don'ts, preventive care, work from home etiquettes, policy updates, et cetera, et cetera, to ensure that people were kept up to date. And we used multiple channels of communication, including Zoom and emails, and so on and so forth. Moving on to the next 2 Cs, which is about consumer and customer. We have tried to leverage our consumer planning and insights department to help the business make sense of this change and show that we have our finger on the pulp and that we are always geared up for these changes in the short term as well as the medium term and thereafter. We also ensured that our customers were well supported during this period. And we ensured that our salespeople were communicating constantly through phone and video, ensuring that every call begins with a human touch, which is about -- inquiring about customers' well-being and their families and seeing how we could help a partner. And finally, cost and cash. We have really been ruthless on eliminating costs that could be eliminated. But I must tell you, we've also invested costs where we believed it was the right thing to do. And we have been really focused on cash, rigorously managing our receivables and credit, managing inventory and reducing CapEx because as all of you know, at a time like this, there is no other thing, other than cash. So looking ahead, we are reminded of the saying from Winston Churchill, "Never let a good crisis go to waste." And that's how we are trying to approach it as a company in terms of a mindset that we have to take advantage of the crisis and not be burdened by the crisis. So what are some of the opportunities and challenges that we see in our sector over the short to medium term? Clearly, there are some green shoots of opportunity in our sector to do with the opening up of home delivery and online ordering in a category which is most challenged because of accessibility, this could be the ultimate unlock if it happens in more states and happens with scale. We do believe there is an advantage to spirits compared to, let's say, other alcobev categories, particularly if consumption tends to be more at home, people have to carry stock from the store to the home. It's much tougher to carry categories that are more voluminous. And therefore, we do believe that spirits will have an advantage. Also, as long as the on-trade remains largely shut, spirits is more likely to be consumed because beer and other categories tend to be more weighted towards the on-trade. With international travel slowing, obviously, duty-free sales have taken a big hit. And we do believe that there will be some boost for duty-paid sales, particularly of our more premium categories within India. And just to give you an example, many neighbors where I live right now in Mumbai, normally travel out every month. And now they're all buying here in Mumbai. And when you go to their homes, they're serving duty-paid stock because they now need to buy their products here. And finally, something that we've been try to convince the public for a long time that alcobev plays a big responsible part of helping state governments to invest in other areas of development through the economic contribution that we make. I think during this crisis, it became amply clear with many people across many states, talking quite vocally about the fact that they want alcohol to be reopened because, otherwise, they're under a huge pressure, given that they're also facing pressures on GST and GST collection. Now having said all of this, there is no doubt about the fact that in the short term, certainly, the challenges will outweigh the opportunity. The aggressive taxation that we have seen pretty much across the board, ranging from 7% to 8%, increase in MRT, all the way to 75% is enormous. We do believe that with these kinds of prices, there will be some down-trading in this sector, right, like you would expect in any sector. On-trade sales will mean that some of the more premium parts of our portfolio will be impacted. And with the adjacent sectors like tourism and hospitality, taking a hit that will also have an impact on some of the segments of our portfolio. And there are also some ambivalent trends that, obviously, we are seeing. The changed ways of socializing. Many people are now socializing on Zoom and not socializing physically. And this could get redefined certainly for the short to medium term. And the changing store structures, many stores don't want to allow people in. So if you had a relatively tight browsing kind of store, many store owners are just putting a counter in the front and not allowing people into their stores, and that could impact the way our brands show up in the stores. So what's our response to all of this? Well, our response is across, what I would say, 4 verticals. First, in terms of strategic choices, we believe that we have the widest portfolio. So if, for instance, down-trading does happen, we have a big popular business as well, right? So from the most premium to actually the most popular, we have it covered, and I think that could be a point of advantage. We're also being very ruthless about what we will invest behind, using the ROI metric to make sure that any money spent is spent right, and that will give you the best return. Doing a few focused high-impact things, rather than doing many small things. We have actually supported many of our business partners through this period. Our customers, where we extended contracts; our third-party manufacturers, where we have chipped in to help them at this tough time to pay their workers; and vendors, where we've actually made all payments on time. Because we said, keeping our vendors healthy at this time is most critical. So we have taken on, I would say, a win-win mindset as a business so that our ecosystem stays strong, rather than try and extract our pound of flesh at a time like this. Supply chain readiness is everything in the short term. And really, everything will be driven by supply. In fact, physical availability is the most important priority and making sure that our supply chain restart and we use innovation in manufacturing to ensure that there is no impact of social distancing and the number of work has being led to our plant, right? It's really our priority to make sure we are able to produce. And I'm happy to tell you that we are now producing pretty close to the pre-COVID single-shift production rate. So as we hope to get some more approvals for second shift, with opening up or unlock 1.0 now, starting from today, we hope that we'll be able to feed the demand fully. And finally, regulatory intervention. Regulatory intervention, working with state governments to enable home delivery and online ordering and self-sustain to stabilize this new business model, which everyone is learning through. Getting states to recognize the downside of high taxation by demonstrating that nothing is completely inelastic. And while you might mop up some extra taxes in the short term, you will not have a sustainable model, which is win-win, which is growth for industry and growth in revenues for the state in a sustainable way, if pricing goes over the top. And we're looking at collecting data once we have it on what is happening specifically in the short term, so that we can go back and have a conversation with the states who have taken up taxes very, very sharply. And we are also trying to make sure states understand the potential rise in counterfeit, right, which is a real menace in our industry, if prices just go up inordinately. So while the short to medium term does look uncertain, and I have to be honest, it is uncertain. It is hard sometimes for us to predict what's going to happen in the next month, in the next quarter. What I would like to leave you with is our own sense of the longer-term outlook of this industry. And I believe when you look at that, there is reason to be optimistic. We have, I would say, excellent consumer demographics, 17 million people entering legal drinking age every year, low penetration of the category, low per capita consumption and the attitude was shift breaking down where people are now more open to drinking alcohol, not just for men, but importantly, also for women. The long-term premiumization, because the economy will come back, indeed, even the minus 5% outlook for FY '21, will have a first quarter, which is going to be seriously negative. But after that, it has to be positive. Otherwise, we're not going to get minus 5 weighted average in the full year, which means there'll be more money in people's pockets. Also at a time like this, people tend to postpone the spends on big expenses like a new car, a new 2-wheeler, a new washing machine, new television and hopefully spend a bit more on the small joys of life, right? And hopefully, having a drink is really one of those. And therefore, I think, that will continue to drive premiumization. And finally, this category has been resilient across many hits, right, many challenges and many slowdowns. Of course, this time, it is unprecedented. But even if you looked at the U.S. apart from the time when the U.S. had prohibition in the 1920, the category has never really declined. So it's the nature of the category that has very high consumer stickiness. And therefore, we do believe that the long-term potential of this category is intact. And with that, I just want to thank you and hand back to the operator for questions. Thank you very much.

[Operator Instructions] We take the first question from the line of Avi Mehta from IIFL.

Am I audible?

Yes.

I just wanted to understand there, we hear that there have been payment delays from cooperators. In such a situation that we are kind of hearing about this, a, if you could kind of confirm or deny this? And, b, if that is the case, how would you look to balance growth and the potential credit risk from such markets?

So I'll add a few lines and then maybe Sanjeev can chip in as well. So I would say that, actually, in May, our collections have come in quite well, okay? We're actually pleased with the collections that have come in, in the month of May. So many corporations have actually paid on time. Now there are 1 or 2 corporations, right, that have traditionally delayed, and we are still working to collect those. But my sense right now is that, on an overall basis, it's a challenge that we can manage and manage quite well. Sanjeev, do you want to add to that?

Yes. Thanks, Anand. I think, Avi, I'll let you just pull back and give you an overall perspective, that's not on working capital and debt because this question will keep on popping up. I think, as I've already explained in my initial part of the presentation that while our working capital have gone up and not a big quantum given the size of the operations we have, our receivables is well within the control. It's actually gone down in spite of the lockdown impact that happened towards the end of the March, which is a critical period for collections, right? And as Anand has said, while we did face some initial challenges in the end of March and possibly because of a lockdown in April, subsequently in May, we have seen some good growth coming from the corporation. The good part is 70% of our sales almost is to corporations, and those moneys are absolutely safe and secured. So I suppose this is a great blessing in disguise for us. But I think what is important is, as we stand as of 31st of March and beyond, when I look at in how we're doing on a debt repayment. As of 31st of March, we have repaid INR 492 crores of debt, which is almost a 20% reduction. And that's happening for almost the last 2, 3 years, right? I think now we are just sitting on a very, very strong balance sheet with a debt equity ratio of 0.5%, with interest coverage of almost 7x. I think we are financially very, very strong that will allow us to invest into the market recovery during this crisis time and emerge stronger. So we are very happy with where we are standing now on the balance sheet strength.

Perfect. Perfect. The second question was -- Anand, was on the environment. Now in your presentation about dealing with -- actually a very good presentation, I must compliment you on that. There has been a lot of focus on also advocacy. And I just wanted to kind of pick your brains on this. Is there -- with home delivery now kind of starting, do you believe that the current environment enhances the ability to gain price increases along with -- while there is a tax increase element? Does the environment for getting a price increase improve? Or if you could share your thoughts on that.

It's very tough to say that this will make it better for price increases. Having said that, we have got price increases in a couple of states in the last few weeks. So it's not as if it won't happen at all. But the reality right now, I think, is that states are desperate to mop up whatever they can mop up, okay? Because of the challenges on GST payments and so on and so forth, states are bankrupt. Many of them are not able to pay salaries to government people. So we believe that we're just going to play out the next month or so. Look at data about the huge tax increases that have happened, go back, try and get that rationalized and then start the advocacy again for doing what's right for the health of the industry and the category, right? Right now, it's just not the time, even though we have had success in a couple of states, okay? It's just not the time because I think it will be a complete mismatch of priorities. And states will say, here people are dying and they've all kinds of challenges and here you're looking for a price increase. So I think it's too premature for me to comment whether this will enable price increases or disable it, but I'm just sharing with you how we are thinking about it. I don't think doors are all shut, right? But I think they are relatively shut for the immediate few weeks and maybe a couple of months.

Your next question is from the line of Abneesh Roy from Edelweiss.

Sir, my first question is on the cost. You have done a commendable job in FY '20. So coming specific to Q4 on ad spend, it was 6% of the sales. So was Jan and Feb also lower in terms of ad costs? And you mentioned that now you'll do more of few impactful events rather than small fall activities. So overall, ad spend for the competition also will come down in FY '21?

So Abneesh, so first of all, on a full year basis, our NPA is 8.1% and on P&A, it's double digit, okay? So it's very much competitive and not a million miles away from what we have been talking about. Now absolutely, at a time when your business is shut, it is futile to advertise. And right now, in this quarter, let me tell you that the entire emphasis is on supply, getting the supply chain to restart. Who needs to advertise, when I'm not able to supply, just doesn't make commercial sense at all. Now as we look out into FY '21, the reality is this. I'm not in a position to tell you how much we'll spend on advertising. And I'm not sure competitors also would be clear about what they will spend on advertising. We're going to manage FY '21 on a quarter-to-quarter basis, seeing how demand picks up and then deciding how to support that with advertising. I think our priorities will remain to say we must properly support our key priorities, let's say, the big relaunches we've had. We need to support them and support doesn't always mean having an add-on television, right? There are other ways of supporting it and driving it hard. And I would say the other thing that is that we will try and make sure we are not uncompetitive in terms of spend because we can afford to spend. But I think the thing is about doing what's right for the business at this time. And that's how we are approaching it. Quarter-to-quarter, month-to-month, Abneesh, we're going to play this game, okay? And as the plot unfolds, our strategy will also unfold.

And Anand, that was helpful. One related question is, in Q4, when I see the growth of furlough, whatever numbers are available and radical set, their growth seems to be better than what you reported in terms of the P&A 19% dip. Is there any base threat here? Or is there any share loss here? I think quarter is a short period, but any comments there?

Well, if you look at this quarter -- so first of all, I don't want to compare with other, that's for you to do. But if you look at this quarter, first of all, this is a very unstable quarter, Abneesh, and you will recognize that, okay? Now there are a couple of state brand combinations where we have been a little challenged on share, okay? And I put that as part of my summary, okay? So I'm saying that, I also believe that with the interventions that have gone in, we have a model that is proven to sort that out. So I think that will be short-lived. Having said that, there are certain things that we did, right? And I will share what we did. So first and foremost, some of our competitors dropped price in key states. We have not followed. There's a short-term impact of not following a price drop, I think there's a long-term advantage of doing that, right? And this is not the first time it's happened. Some of our competitors have actually increased credit and trade discount. We actually started tightening credit and saying credit risk over revenue risk much earlier in the quarter because we could see things becoming unstable. And at that time, it's easy to sell, okay? But then you have to pay the price sometimes because it's also hard to collect, okay? So that's happened. And finally, I would say that -- 2 off points. One is that as our relaunches of RCN No.1 have gone in, we've had to run down stocks of the old pack, almost close to 0 in those key corporations and build the stocks back. And finally, Andhra Pradesh was one of our strong performing states, okay? It's gone up for some of us, not gone up for all the players in India, by the way, right? But it's got seriously hit for some of us. And therefore, the relative impact for us has been higher there. But I just want to leave you with the fact that you have seen previous quarters, I mean there was some difference here and there, not dramatic. And I do believe with some of our interventions that have gone in, I think, we will be able to deliver competitive performance. So that's the way I would like to see it. I'd like you to see it as well, Abneesh, if you could. Yes?

Yes. Right. That's helpful. One bookkeeping question, FMCG companies are saying around 70% of their output pre-COVID is back. When you take all shifts into consideration, not just one shift, then how are things currently?

I would say that -- so quite simply right now, about 2/3 of our outlets are open because remember, all the on-trade is shut anyway. And many outlets are just opening in some places. Bombay, actually home delivery is allowed, but the retail stores are shut, okay? So about 2/3 of outlets are really open right now, okay? And I would say right now, we are also, I would say, about 60%, 70% of our pre-COVID production rate, right? And we are very hopeful actually of getting second shift approvals in some of our key states. In fact, I've just got a message from my manufacturing head saying they've given us some approvals in some places. So I think it will ramp up, okay? But the key question for us is how will demand play out, right? Because if supply will be a priority only till the supply/demand gap is bridged after that demand has to come in. And we are still not able to read the stages of demand, particularly in states which have had significant tax increases. So I think this will almost be like a [Foreign Language]. Initially, it was about supply, then it will be about demand and both have to then play in tandem together.

Sir, last question is a small one. There has been a speculation on the delisting. I know the parent takes a call on this, but any comment you can make, which kind of addresses and helps us in better understanding of this.

So no comments at all, Abneesh, as you would imagine, this has to be directed to Diageo. We have no comments on this locally.

Next question is from the line of Arnab Mitra from Crédit Suisse.

Anand and Sanjeev, my first question was on your comment on down trading. So if depending on the first 3 weeks or whatever you've seen, are you seeing a bigger risk of down-trading from something like a McDowell's No.1, which is just the start of P&A into Popular? Or are you seeing it across the board, including from something which is premium P&A to the lower-end P&A? Because both the things impact you quite differently given how big McDowell's No.1 is for you.

So it's really hard to read this without having more points of data, right? I mean right now, it's so unstable. Things are just opening up and to be the trend with the data points which are erratic, right, because there was an initial surge of buying, there might have been pantry loading. So it's really hard. But I'll tell you a few things that we've seen in the short term. Certainly, there's a shift towards larger SKUs. So there's more purchase of the quad packs because the lifts and fines are more consumed in the on-trade and the math on-trade. People, when they buy it for taking home, are buying the larger packs. Also, they don't want to go so often to the shops. So they're buying larger packs or maybe even more bottles and taking it home, right? So -- but in terms of real down trading, it's very hard to judge. I'm just saying, it is intuitive to say when you have such sharp tax increases, that somebody will balance their money and their budget. There are many people also who had challenged income during this period. And what would you do, right? But on the counter side, this is a category where people don't down trade easily as well. If you were a Popular whiskey consumer, you don't start drinking Country Liquor again. And all the way down from the top. So there could be short-term hits and misses, but I would wait for a few more data points. And once we can read this, we'll be happy to share with you the trend that we are seeing.

Sure. And my second and last question was in terms of your Prestige & Above segment, if you could help us with a very ballpark sense of what percentage, or what proportion of sales comes from the restaurants, bars and occasions like weddings and things like that, where the impact could be quite big and may continue for 6, 7 more months. And based on your leading of other markets and consumers, do you expect this to be lost sales till that period because this is a different occasion? Or have you seen some bit of sales in other markets being made up from on-home, in-home consumption from this?

So listen, about 20% to 25% of our revenue is from on-trade, weddings, banquets and so on and so forth, okay? So just take it about 20%, 20% odd is from there. Now again, it's very hard to read whether some of this will be picked up or not intuitively some of it will be picked up, for sure, because -- and that's why I said, I think more spirits will get picked up, less beer may get picked up, right? Because the occasion of socializing, sitting at pub or a bar are -- tend to be often beer occasions. But when it shifts home, it may not be a beer occasion at all, right? It may be a spirits occasion. So I would say -- so that's what happened. The way -- I'll tell you what's happened in the West is interesting. So in the U.S., for instance, where 20% is on-trade, similar to India, 80% off-trade. Off-trade has grown very strongly, right? Because there's been significant pantry loading and there are a lot of articles in the public domain of what's happened in the U.S. In fact, in U.S., it is more than compensated for the loss of opportunities. In Europe, it hasn't fully concentrated -- compensated where the contribution of the on-trade is much higher, 40%, right, or sometimes even 50%, okay? So we have to see them play out. But on the positive side, I'm saying in India, for many people who drink, it's taboo to drink at home. And I believe, just like I spoke about a crisis as a point of inflection for decision-making of regulators, it's also possible that some of the attitudinal barriers of this kind to say, [Foreign Language], right? Carry your bottle back home, and people may say, listen, it's okay to drink at home. And it was never okay to drink at home earlier that's why you drank outside. Some of those shifts may happen. So I think there are multiple dynamics at play. And we'll just have to wait and watch this. Honestly, we have so few data points now [Foreign Language] just 3 weeks since the market has opened up, and we've all been scurrying around just to get stand on our feet again. But we'll share with you some of these trends at the moment we can read more. But I'm just giving you some lead indicators of other countries just so that you can see the relationship with it.

And here we'll take the next question from the line of Manoj Menon -- we'll take the next question from the line of Amit Sinha from Macquarie.

My first question was on the overall industry dynamics. And given that you guys have much better balance sheet and better cash positions overall. And basically, just wanted to understand why you have highlighted that between spirits and beer, you guys will gain. But wanted to understand the dynamics within the spirits industry, is there a possibility to gain market share from the smaller players or the smaller players are too few in Delhi?

The smaller players are not so few, and they are meaningful in several states. And I do believe a company like us should have a competitive advantage because of our cash position, particularly in an environment where cash is going to be tight, right? And we know that cash is going to be tight, not everywhere, but certainly in some places. This increase in excise duty in some states has also caused an increase in working capital, right? So we have to deal with that, and we are finding ways to also compensate them somewhere else, but that's going to impact everyone. So we do believe that the focus that we have put on cash over the last few years, and importantly, even in the previous quarter, right? We have really put a lot of focus on cash to make sure our cash position is solid. I do believe we have a source of competitive advantage. We have to see how this will play out, again, and that will only be known in the full with the time.

Okay. Sure. Secondly, on the ENA pricing trends. Last quarter, you had highlighted in the earnings call that there are initial signs of pricing peaking out. How is the trend now? And when is the softer pricing going to impact the P&L?

Sanjeev? Over to you.

Maybe I'll take this question. Yes, I think you're right. In the last quarter, we did say that we have seen the peak of the unit prices, and we were so close. When we look at the fourth quarter, the ENA inflation is almost second to as compared to the -- just the bidding quarter, right? It's almost on a flat trajectory, however, as compared to quarter-on-quarter and year-on-year, the ENA inflation is still sitting on a very high rate. Now how will the things pan out? It's very difficult to say. We have to absolutely see the demand and supply, how it moves on. But I think it will suffice to say that we don't expect a hyperinflation coming in now, right? This is where we are. And as Anand was saying in just 3 weeks of the market opening up, we're kind of just checking in all the dynamics. We don't have just sufficient data point at the moment, there are a lot of variables that we're kind of watching out.

Okay. Just a follow-up here. I mean from the peak, as of now, in terms of sourcing, how much has ENA prices corrected? I mean if you can provide that.

For the first quarter ENA prices on the average was kind of almost at similar levels than what we saw somewhere around November, December.

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

My question was on, if you could just take us through -- how you've been working with your franchises in the current context, especially because there could be a pickup at the lower-end segment. And just your view on allocation of spend in the regular portfolio now versus the P&A portfolio, do you see possibly that there could be an incremental investment in the Popular portfolio, at least for the near term for you?

So we haven't thought of incremental investment in the Popular portfolio. But just to your point on franchisees. Now listen, at the end of the day, everybody is stressed, right? We are stressed. Where we've had 1.5 months of almost no sales and sitting with our fixed cost. The same is true for our franchisees. And our philosophy is that we have to have win-win relationships with all our business partners, franchisees, third party manufacturers, customers, vendors, et cetera, et cetera, right? So that's our approach. That you're going to be realistic and these partnerships are like marriages, they are meant for the long term. So we are in close touch with our franchisees on how they're doing, what's needed. And if they are under significant stress, then there are cases where we are now sharing a bit of that pain, okay? Now as we move ahead, we have to still wait and see exactly what happens to the Popular portfolio. We believe that the predominant drivers of performance in the Popular portfolio is not A&P and stuff like that, but it's just having good consistent product quality and good packaging that shows up in store, okay? Those are the fundamental drivers of the Popular segment. Absolutely, we are looking at our own Popular portfolio in the retail state and talking to our franchisees to be absolutely ready and push as hard as we can because we are anticipating that there could be some gains in Popular, particularly in states which have had dramatic increases in tax, okay? So we are absolutely waiting to capture any things that drop from above. So that's how we are approaching it. And our objective is to make sure that our franchisees remain profitable. And sustainable and keeping that model up and running, and that's our approach.

The second question was on a follow-up from the earlier one was that if you look at the, say, smaller player share, is there any state where the fringe players or the smaller guys ex the top 3, 4 players, have a larger share compared to others? Just trying to understand, in the next 1 or 2 years, are there any states where there is an opportunity for you to gain a higher proportion of market share?

Listen, there are -- this is an industry where you do have regional players, right? And the definition of regional players is that they have more strength in their regions. So you will find players, and many of them really are born out of North India. And as one of my colleagues says, they use Delhi and places like that as the Trojan Horse, to seed their brands and then that kind of spreads through the surrounding states of North India, okay? And most of them have been borne out of North India. Now -- so obviously, they are stronger there, which means they have relatively higher shares there. Now I think our approach is really to make sure -- and with the relaunches of the No.1 and RC is to make sure that the offers that we have created are competitive and superior. And as we roll those out, I would like to believe that we have a good propensity for share gains in those sectors, right, and that's what we're going to continue to do.

We take the next question from the line of Manoj Menon from ICICI Securities.

Anand and Sanjeev, just only one question on the home delivery piece, particularly on the branding marketing side of it. I don't know what -- just your thoughts. I understand that it's still early days. Just 2, 3 things, actually. One, does it, in any way, helps in terms of, let's say, greater branding, better showcasing of anything, given the fact that the consumer touch and feel was anyway not happening at the store. So that's one. Second is logically, what I've seen in the market in many places that the retail is overcharged. Obviously, that's one, probably, an advantage of home delivery. And third is just several variables. Does it really also mean that the volume consumption can increase or, let's say, better, let's say, premium or trade trading up. Basic assumption here is that which I'm actually going with is that, look, consumption really did not get hampered because of access earlier. So just trying to understand the home delivery benefits on the marketing side. That's one aspect. The second aspect, at this point in time, in these 6 states, where it has really happened, is it direct supply from the back end? Let's say, in Maharashtra, is it directed from your distributor? Or is it really happening from my near store? The context I'm trying to understand is both can have very different medium-term implications.

Okay. So this is a big question, Manoj, on the home delivery and how it's going to play out. So first and foremost, in most states, in fact, in all states, the home delivery model, is -- includes the retailer. It doesn't try and bypass the retailer, okay? So that's, first and foremost, right? And you have to understand the dynamics in our industry, where retailers have paid high license fees and so on to get their retail business. You have to make them part of the solution, right? You can't have an Amazon kind of model in this industry because the outlets are so few, and they've paid high license fees to exist. And I don't think any excise department will easily create a model that will destabilize the retailers itself, okay? So this is about enabling the retailers rather than bypassing the retailers. The second thing is that, listen, look at your own personal example. When you start browsing in a retail store, you end up buying more than you did in an over-the-counter store. The day you start browsing on Amazon or Flipkart, you'll start buying a lot more things than you did. And you're able to double-click and get a lot more details about the product and the brand experience to convince yourself that, that's what you want. So the whole ability to build brands digitally, to explain the details about brands digitally is far superior than you can do at a retail store. So you've got to believe that the opportunities for choice and the opportunities for brand building are superior. And finally, I don't think it's fair to say that accessibility -- I think accessibility is limited, and it is one of the biggest barriers for consumption. In many states, by the way, women do not want to go into a retail store to buy alcohol. It's just unpleasant. In fact, I would go to the extent of saying they feel unsafe. If you're ordering online, you will browse, right, and you will buy what you want, right? Now the fulfillment will be done by the retailer, right? But the payment can be made online, the choice-making can be done online, age gating and verifications and whatever regulatory requirements are there can be done online, okay? Now having said all of this, the few states where we've got permission, you've got to realize that you are still at a stage where e-commerce was in the first month when it started. So it is timing, wherever it is. But I can tell you this, we are working very closely with the state companies, right, directly as well as through our industry association to help them work this through and create a model that is sustainable and that's win-win for all constituents, which actually includes the retailer, includes the consumer and includes the manufacturer. And I think the state governments are also seeing the opportunity for enhanced revenue because they believe that there'll be more upgrading, and there will be more increase in business because of better accessibility. So it's a big piece of work, and there are people all over it, by the way, within our business and in the industry association. So let us just get a bit more scale, and I think then things will become clearer.

Understood. Understood. And that is quite comprehensive. Just only one follow-up, if I may. What about the regulatory angle, let's say, what I mean is the advertisement and the marketing piece. In this business, surrogate advertising is now, I think, it's permitted, right? So I'm saying, I'm just trying to understand what are the dos and don'ts if there is clarity at this point in time. I think where I'm coming from. While when I think about home delivery, it appears, it's significantly positive quantum of military estimation could be different for different people, different analysts could estimate differently. But when I think about it, it's either neutral or positive. I really can't think of anything negative from a home delivery point of view, which, let's say, affect a company, a large company like you, except for the fact that does it really create a slightly better level playing field for, let's say, those folks who would actually now kind of, let's say, use a little bit of higher pricing or trade margins or kind of use those platforms to really push their brand. So just trying to understand kind of what are those regulatory barriers, which applies for the online piece versus the off-line piece currently? If there is clarity currently.

This is all just evolving in this space, Manoj. I think you're asking me questions, which I may not have all the answers for yet. This is all just evolving, okay? But the simple things are this, which is, first of all, we don't do surrogate advertising. We do brand extension advertising. So just a small correction there. The second thing is that on digital, you definitely have far more flexibility than you have on the other mass media. So on digital, yes, there are more things that you can do to engage consumers once you've done age gating and so on, right, which you cannot easily do on mass channel. So I think you have to watch this space. But we believe there is significant potential to enhance the experience for our consumers.

We take the next question from the line of Ashit Desai from Emkay Global.

I have two questions. One on, you talked about reducing ad spends, does the industry have a very high percentage of trade schemes also? And what's your view? I mean in this kind of environment, do you see a possibility of reduction over there?

So trade schemes, I would say, are reasonably high in the industry, right? And so -- and the trade schemes, there are 2 parts of spends in trade, okay? One is just the simple trade scheme, which is rupees per case kind of a discount. And the second is what you spend in store, which also goes to the trade, right, and to the owners of the trade. So I think the way I would say it is this, that we are not being opportunistic, okay? These are our customers. And you have to work with them, not just for these 4 weeks when you might be in a seller's market, right? But you have to work with them over time when they will be in a buyer's market. So we are not being opportunistic to say, cut a little bit here, cut a little bit there because it just seems very tactical and not really in line with the kind of philosophy you want to build with your ecosystem. So I would say at this point in time, it is nominal, if anything, in terms of the savings opportunities on-trade spends.

Got it. Got it. Could you quantify how large are trade schemes in the industry?

I'm not sure if -- do we share that information, Sanjeev, in our P&L?

Yes. It differs from state to state and brand to brand. It's going to -- very difficult to give one particular number to this.

Okay. Okay. My second question was on the -- you talked about duty-free to duty-paid, if you could give a sense of how large is the duty-free or travel retail channels. And in your view, would a consumer shift from a duty-free BIO to duty-paid BIO? Or will you down pay to BII or some other senior segments?

So I don't know. I don't think 100% of the volume will get compensated through duty-paid sales for sure because there is a price factor, right? And many people just buy in duty-free because you're passing through duty-free. Now people will buy based on absolute need for consumption. Our duty-free business, for our premium brands, I would say, it's about twice of what duty-paid is, okay? So it's much bigger. Duty-free is much bigger than duty-paid. We've got to believe that some part of that will come because many people who drink the BIO and serve BIO, are not going to start serving BII, right, a few might. But I would say a large part may not. Those people who are traveling abroad regularly, right, particularly, I'm not sure they're going to suddenly downgrade what they drink and downgrade what they serve because the category is also such where people don't do that easily. Now there may be a certain reduction of volume itself because it's not that every time you -- because every time you travel, you bring your 2 bottles of whatever, but now people are not going to buy that many bottles, right? So -- but I think, again, we have to wait and see. I will say that there is likely to be some benefit of this, it will not be a full transfer of volume. How much that is, is really, really hard to say. And whether it will be all BIO or some little down trade, is honestly very hard to say right now. I mean we're all learning this together, honestly, and we will share more insights with you as we are getting it. We have put a lot of trackers and so on through our insights team to be able to keep a finger on the pulse of consumer development, and we'll try and share whatever we can as and when we get it.

Okay. Could you give -- at least quantify how large are these segments that when we look at them in the P&A category as a whole?

Sorry, which segments, the duty-free?

I mean if you look at duty-free and if you paid BIO, BII.

No Duty-free is largely entirely BIO-owned, okay? So there's no BII. You might have the same brand in duty-free like Black 69 or Black Dog, right? But the bulk of the sales really are BIO brand in duty-free. And I said, it's about twice of domestic. I'm not sure what better quantification I can do for you. And there is something we'll pick it up off-line. There is something more that we can...

No, I was looking more from a sense so that you currently don't get any shares from the double retail revenues. It's largely in Diageo's books. So is there a large benefit that you guys can get if consumers start converting from BIO to duty-paid BIO, or BII spirits? [indiscernible]

Well, there is some benefit. Absolutely, there is some benefit. That's what I'm trying to say. Some shift is going to happen. It's really hard to assess how much. And then there are many moving pieces, right, for BIOs. See, the big weddings are less, the big five star hotels and bars are less. There will be some shift of this. So there are just many moving pieces right now to give, honestly, any more precision than I have given right now. I don't have it, honestly. That's simple as that.

[Operator Instructions] We take the next one from the line of [ Ashwini Timani from RC Capital ].

Sir, so could you please guide me that what are the margins on BIO that you sell from India? What kind of margins would you get on that?

So we have not given margins by segment and not shared margin by segment, really. And I don't think we're sharing that information, right? Sanjeev, anything?

Yes. Absolutely, Anand. And when it comes to the BIO, that is part of the distribution agreement that we have with BIO and that the BIO portfolio that we sell in India. But at the moment we're not getting into the margins split for subcategories.

Sure. So could you also guide that what are -- so you are still present in all states because not in the right ways that I'm asking. So we have a lot of factories, and furlough has a lot less factoring than we have. So I'm sure you will not comment on the individual competitive strategy. But the stark difference in the number of factories that we have, [but is per note, whereas we have the same number of bottling plants. So could you explain that to me? And what are we trying to do with that? ]

So I'm not sure I have fully understood your question. So we do have factories in pretty much every state, may not be in every 1 of the smaller northeastern space, okay? But we have at least 1 country in most key pace and multiple factory in the bigger states. So as you know, as a company, we have moved from 94 factories in 2014 to 48 factories today. And we believe there is further opportunity for consolidation. I don't know if that means other people have. But we have our own view of what is the optimal footprint of factories we need with the right basis for our kind of business. And we have a clear footprint optimization plan to get there over the next couple of years. And as you've seen over the last 4, 5 years, we have been doing that every year consistently, and we will continue to do that in the next year or so. So that's simply our manufacturing spend.

We take the last question from the line of Shirish Pardeshi from Centrum Broking.

Anand, I have two questions. What is the inventory level with the corporation market before COVID and now?

What is the inventory level in the corporation markets before COVID and now?

Yes.

It will be lower. I don't have that number but it will be lower, and I would say, materially lower.

My understanding is corporation market are in the range of 15 to 20 days inventory. Is that assumption is right in a normal scenario?

It varies state to state, but all I'm saying is that whatever it was when the shutdown happened. And today, it's lower because we have not been able to manufacture in line with the secondary demand because manufacturing took time to pick up and stabilize, right, and still not fully stable. So for the short run, in the month of May, our sales from the cooperation have been more than the sales into the cooperation.

So this outstanding, which is higher with cooperation market is because of the supply, which has happened in May or the earlier also is higher?

I'm not sure if it's higher in May in the cooperation market, Sanjeev can add to it. We have 1 or 2 states where there have been some old collections that have still not come in, right, specifically at Andhra Pradesh, right? So there are a couple of places where we have some old outstandings, which have got stuck, which we are working to unlock. But the routine business corporation, there has not been a significant delay as far as I know. Barring these bank holidays or closing of the month and stuff like that kind of issues. Sanjeev, do you want to say something more on that?

Yes. So I think I've said in my initial presentation that as of 31st of March, over the receivables, absolutely within control and it's actually lower than the last year. So I'm not really sure where you're picking up this outstanding numbers.

So simply don't worry. It's not a matter of worry right now.

No, no, no, Anand, I'm not worried. I'm only saying that there is an opportunity, a significant opportunity for [ CES ] push. My second and last question is on Maharashtra, Karnataka and UP market, if you could share what is the contribution in terms of volume in these 3 states in FY '19 and FY '20?

I mean I don't think we are giving state-wise volume contribution, and that's really getting probably too granular. But suffice to say that Karnataka, and Maharashtra are 2 biggest states, okay? Karnataka is the biggest state by volume by far because we have a massive popular business also in Maharashtra -- in the Karnataka. Maharashtra is big because we have a retained Popular business. In UP, our Popular business is franchise, okay? So my definition, Karnataka and Maharashtra are much bigger. UP is only a P&A market for us.

Anand, I got that. The reason why I'm asking is that the local competition in these 2 states is higher, whether you take John Paul or you just take the other player, they have really become aggressive and they're pushing the volume on discounting. So I just wanted to -- I mean, even if you don't want to share, can you state your growth between '19 and '20 in these 3 markets?

So, we're not going to share state-wise growth. But suffice to say that, listen, both in Karnataka and Maharashtra on Popular, we have actually grown share. Okay? And UP, we don't do Popular. So I'm just saying, in Popular business, where there's aggressive local competition, we actually gained share. So we are not -- I mean, we're not in trouble there because of local competitor.

Well, ladies and gentlemen, with that, we come to the end of the annual call. I would now like to hand the conference over to Mr. Anand Kripalu for his closing comments. Over to you, sir.

Thank you, and I'd like to just thank everybody for taking the time and joining us on this call. And most importantly, staying supported and invested in our company as we have gone through this very, very challenging phase. All I'd like to say is we're all beginning to see the sun shine and the light at the end of this long tunnel. And therefore, I would look to the future with some positivity. Thank you very much.

Thank you from Sanjeev here.

Thank you. Well, ladies and gentlemen, on behalf of United Spirits Limited, this concludes this conference. Thank you all for joining. You may now disconnect your lines.