- May 30, 2018 / 5 min readThe Indian unit accounts for nearly 10% of its sales and 8% of EBIT. The company, over the past few years, had been growing sales consistently by over 15% on the back of premium brands but saw growth slowing in the last two fiscals.
France based world’s second largest distiller, Pernod Ricard, saw its India revenues jump 6% but profits fell amid regulatory hurdles in FY16-17.
The maker of Absolut Vodka and Chivas Regal Scotch had sales of Rs 12,938 crore in the year to March 2017 with a net profit of Rs 956 crore, a 12% dip from the year ago, its latest filing with the Registrar of Companies showed.
India is one of the largest and most profitable markets for Pernod Ricard globally.
The Indian unit accounts for nearly 10% of its sales and 8% of EBIT. The company, over the past few years, had been growing sales consistently by over 15% on the back of premium brands but saw growth slowing in the last two fiscals.
The company, however, seems to have recovered from last fiscal’s performance, with its India sales growing 14% during the nine months ended March 2018.
“We had good performance across the portfolio, enhanced by favourable basis of comparison. The highway ban is now fully implemented and no further disruptions are expected,” it said in its recent investors' presentation.
Earlier this month, Pernod India trimmed more than 100 people from its workforce with one-and-a-half year’s salaries as severance pay, officials said.
Over the past two years, there have been policy changes in West Bengal, Chhattisgarh and Jharkhand to allow liquor sales only through government owned corporations, similar to states such as Delhi, Rajasthan, Kerala and Tamil Nadu.
Supreme Court restrictions last year, on the sale of alcohol near state and national highways, led to the closure of about a third or 30,000 of the country’s liquor vends, causing a drop in demand for beer and spirits. The court subsequently clarified its ruling, easing conditions for liquor sales and allowing many outlets to reopen.
Liquor companies saw a revival in consumer demand in the January-March quarter on a low base, especially after the impact of demonetisation wore off, the impact of last year’s highway ban receded and on increased stability following distribution changes in some states.
Rival United Spirits, which is now operated by Diageo, has historically been incentivised on volume growth with nearly 150 brands but has improved its share in premium segment to over 63% in FY18 compared with 38% in FY13.
USL also relaunched three core brands McDowell’s No 1, Bagpiper and Signature.
“USL is seeing an upward trajectory in its margins. Its close competitor, Pernod Ricard is seeing some compression in its EBITDA margins owing to tough competition given by USL which has ensured Pernod undertakes some price rationalisation,” said Abneesh Roy, senior vice president, institutional equities in an Edelweiss Securities report.Trending ArticleDaily UpdatesWhich is the highest format preference of Fun-Seeker?
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