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00:00We have the management of Piccadilly Agro with us.
00:02We have Dharmendra Kumar Batra, who's
00:05the whole-time director at Piccadilly Agro.
00:07Welcome to NDTV Profits, sir.
00:10Thank you so much, Neeraj, for having me here.
00:13Yeah, so, sir, I'm Harsh.
00:15I have Neeraj alongside me as well.
00:17And we'll probably try and break down some updates
00:21from your company together.
00:22So, sir, first off, I want to try and understand
00:25with regard to the fundraising via QIP,
00:28what's the purpose of the fundraise?
00:31What are the plans going forward?
00:33So, as you see, we've got this huge surge in demand,
00:38which we are thankful for.
00:40But we were not expecting it.
00:41And so we make about 12,000 kales,
00:45that is 12,000 liters of malt every day.
00:47And that's quite a lot.
00:49That's one of the largest in the country.
00:51But the way the demand is coming,
00:53we think we will need much more capacity for that.
00:56And as you know, single malts don't mature
00:59like ENA or other products.
01:01You need a gestation period of five to seven years for it.
01:04So your capacity has to go up now
01:06so that the projections that we have
01:08for the next three to five years can be met.
01:11So we are doing a capacity expansion
01:13at the existing Indri plant.
01:15And there is a new plant coming up in Chhattisgarh
01:18where a malt expansion plan is also underway.
01:21And so what entails a malt expansion plan is,
01:25basically, you lay down liquid and barrels.
01:27So that is a huge capital cost.
01:29And most of this, the money which we are looking
01:33for expansion is for that purpose.
01:37Mr. Batra, good afternoon.
01:38Neeraj here.
01:39So what is the current capacity, Mr. Batra?
01:42And at what stages would the newer capacities
01:46come on stream, assuming
01:47that the fundraise exercise is successful?
01:50So we started this exercise
01:53before even the fundraise was announced.
01:56And the capacity in Indri will commence within this year.
02:00So we will be almost two and a half times
02:02the capacity we are within this year.
02:06And the next capacity will be installed next year.
02:08Okay.
02:09Which would take your capacity
02:11to what times of the current capacity, if you will?
02:15So we have 12,000 liters of malt every day today.
02:18Right.
02:19So it'll go up to 30,000 a day
02:22towards the end of the year, say September, October.
02:25And the new capacity coming in FY26
02:28takes it up to how much?
02:3060,000.
02:3160.
02:31Wow.
02:32So you're nearly going 5X your current capacity.
02:36Yes.
02:36And I think India, people, especially after COVID,
02:41kind of made up their mind
02:42that they want to maybe drink less, but drink better.
02:45So people are going for quality over quantity.
02:48Sure.
02:49So if you're drinking a whiskey made out of molasses,
02:52EMA, versus something which is made out of malt
02:56and it's been matured, is far superior.
02:58And I think people are now,
03:00they understand people are well-traveled in the country,
03:03much more education is there, and more disposable income.
03:06So we think this trend is going to carry on
03:08and we'll have a better year this year
03:10than we had the last year.
03:12And each year should be better than that.
03:14Sure.
03:15So Harsh, again, joining back.
03:16I want to try and break down.
03:18So the thousand crore would take care of
03:20pretty much all of the expansion?
03:23All the expansion.
03:24And so expansion is a very small part of this.
03:28And like the machinery and equipment
03:31is a very small part of this,
03:33but the barrel and the liquid expansion
03:35is the major part of this.
03:37Right.
03:38And just in terms of how this will help you scale better,
03:43how your margins will therefore evolve,
03:47what's the sense like with regard to FY25 overall?
03:51So we have a net profit margin this year
03:54of about 13% plus,
03:57which is, I think, healthier than most other
03:59Alcobev companies in the country.
04:01And I think it should marginally improve over the next year.
04:06But overall, because there will be products in the mix
04:09which are very high margin and medium and low margin.
04:12So when you balance that out,
04:1413 to 15% margin is what we're looking at.
04:19Okay.
04:20Mr. Batra, a couple of questions.
04:22Have you put out any formal guidance for,
04:25or if not a formal guidance,
04:27a formal view of what you reckon growth could be like
04:30for FY25 or FY24?
04:33Yes, we have put it out,
04:36but those are documents work in progress as we speak.
04:39So we just got the approval from the board yesterday,
04:42and we will be now with our consultants
04:45putting in the key numbers
04:46and then probably speaking to the capital market
04:50regarding that.
04:51Okay.
04:51So the formal guidance might come out
04:52in the next two or three days, maybe, if you will.
04:54That's correct.
04:55Something like that.
04:56Okay.
04:57But just to the question,
04:59you mentioned the net profit margins.
05:01The highlight amongst everything else
05:03was also the expansion in the operating profit margins.
05:05I believe 23% versus 5%.
05:07Is this the new normal?
05:09Would you believe you will be able to maintain
05:10an average of 20 to 23% for FY25?
05:15So, you know, in the sense that if we have a 30% growth,
05:20and we lose maybe a percentage or two,
05:22I don't think that'll make a difference
05:24in the larger scheme of things.
05:25Yeah, I agree, I agree.
05:26So I mean, I'm not stuck to a number,
05:27but say circa 20% is an average
05:30that you reckon you can maintain.
05:32We should be able to,
05:33because most of the products which we have now
05:35and which are in the pipeline
05:38are all premium or super premium products.
05:41And the company decided about four years ago
05:43that there's a lot of pressure on the cheaper products
05:47where the volumes are huge,
05:49but the market pressures and the inflation
05:52was affecting it very badly.
05:53And we decided that we would discontinue that segment
05:56and concentrate only on the premium segment
05:59and the luxury segment.
06:00Got it.
06:01So I have one more question on that
06:02because twice in this conversation with us,
06:03you've spoken about the product pipeline.
06:05We know Indri's been rocking,
06:08it's been a great performer for you.
06:10What else is coming out?
06:12Is it largely a whiskey-based newer segments coming in?
06:15What else?
06:16We do have a few products in that category,
06:19but what we are coming,
06:21what we've launched towards the end of last year
06:23is Kamikara.
06:25That's a pure cane juice rum.
06:27And we are very bullish about that
06:28because as you know,
06:30from Kashmir to Kanyakumari,
06:31India grows sugar cane.
06:33And if you were to look out in the market,
06:36we don't have a good rum in the market today.
06:38There is zero rums from us.
06:41We have a lovely old monk that we have nostalgia about,
06:44but a good quality rum,
06:45which is made from sugar cane juice,
06:47which is, so a sugar cane juice rum
06:49is more akin to a cognac
06:52because they're both considered fruits.
06:54So if you will drink a four or five-year-old
06:56cane juice rum matured properly
06:58and a cognac VSOP,
07:00you would get similar taste.
07:02So that is a market which is very strong down South.
07:06And the North drinks more rum,
07:08the South drinks more cognac,
07:10like brandy and those products.
07:13And we are looking at an expansion in that segment
07:15and to upgrade the drinker of the rums,
07:18which are at the level of a 300 to 500 price point
07:22to take them to a 1,000 to 1,500 price point.
07:26Right.
07:26You've spoken about 30% growth
07:31and giving away maybe one to 2% margin.
07:34I'm just quoting you here.
07:35Just doing the rough math,
07:37it looks like you're nearly gonna double
07:39in terms of your top line,
07:40if this is the trajectory at which you're going,
07:43just in terms of both capacity as well as pricing.
07:45You won't get a commitment from me on that,
07:47but yeah, we would like to go that way.
07:50Sure.
07:50And therefore, likely next year,
07:55at least the math seems to suggest that you'll double.
07:58I'm just trying to think harsh
07:59and I'd love to get Mr. Bhadra's comment on this.
08:02Again, no formal guidance here,
08:04but if Mr. Bhadra does what he's done in quarter four
08:08for the rest of FY25,
08:10then doubling PAT is also an understatement.
08:14Yeah, you're gonna more than double PAT.
08:15So, I mean, typically around 800 crore
08:19is the top line currently.
08:20Might go to 1,500 as per just the capacity increases.
08:24And we're not asking for confirmation,
08:26but of course, no, no, no, we're just chatting here.
08:29There is one correction to be done here.
08:32So when we do a capacity expansion in any industry,
08:35what happens is you start to get results the same year.
08:38But in malt production,
08:40we start to get our results a little later.
08:42So it'll be two to five year projections
08:44that would be, so what I make today and lay down,
08:47we cannot be bottled.
08:48So we follow the norm,
08:51which has been followed by Whiskey World over,
08:53that we mature a whiskey for minimum three years
08:55before it can be called a malt, a single malt.
08:58And so you need that gestation period for sure.
09:02Okay.
09:03Okay, so yeah, that kind of thing.
09:04I have one final question really,
09:07and this is off numbers, Mr. Batra,
09:09but Indian whiskey, Indian gin,
09:11Indian alcohol at large seems to have come of age.
09:15Indri is of course the standout,
09:17but the clutch of others are doing well too,
09:19across companies.
09:20You reckon global acceptance of this is picking up
09:23and therefore, my question is,
09:26would the balance of your sales
09:29over the course of the next five years,
09:32tilt more in favor of what is happening in exports
09:35versus what the share would be right now?
09:37Definitely.
09:38So that's what our plan is in the next five years.
09:41We want to have a larger share of export
09:43than the Indian market.
09:44So the Indian market is great
09:46and there's only so much that it can consume, right?
09:48In that segment.
09:50But if you see the US,
09:52which is one of my primary markets after India,
09:54is one of my largest consumers
09:55and the demand there has,
09:58I've not been able to meet the demand this year.
10:00And so we are looking to build this capacity
10:02also with the vision that, you know,
10:03the exports will increase many fold.