00:00 Hello and welcome to BQ Primer. Very good morning to all the viewers. I am Heeral Dhadia.
00:04 You are watching Stocks in Focus and you have Some Distilleries,
00:08 which reported second quarter numbers. Clearly, if you go to see 80% growth that we have seen
00:14 on a year-on-year basis in terms of the profit number. So, good growth coming in there. Apart
00:19 from that, if you see in terms of revenue as well, a growth of around 74% there. The margins
00:25 have seen a slight dip that has come in, and that's probably because the excise duty has gone
00:31 up by around 80%. Let's welcome in Mr. J.K. Arora, Managing Director at Some Distilleries,
00:39 to understand more about the quarter and the strategy going ahead.
00:42 Good morning and welcome to the show, Mr. Arora. Good morning, Heeral.
00:48 Mr. Arora, firstly, congratulations on the strong set of numbers that we have seen from a profit
00:53 and a top-line perspective. Has it met your internal expectations?
00:57 Yeah. Actually, if you look at the second quarter is generally normally is a weak quarter in the
01:06 whole year because of shavan, shahad and lot of religious sentiment. This quarter is generally
01:15 for the beverage sector it's a weak. But it is much better than our expectation is because the
01:22 best quarter is the first quarter where we had the growth of 51% and here we have the growth of
01:29 more than 67% and PVT has gone up by 88%. So, we are satisfied that progress, the acceptance of
01:40 the brand, the overall acceptability of the company is doing pretty good.
01:46 Right. Mr. Arora, so, yes, as you mentioned, second quarter is usually weak because of shahad,
01:52 etc. Now, all of that is actually moved to the third quarter this time, right?
01:56 Does that mean that the third quarter then will be weak?
02:01 No, no, no, no way. No way. It's going to be better than this. Going to be better than this
02:09 because a lot of festivities is there. Diwali is there and it is like all events takes place,
02:21 most of the marriages which are the major consumption factor and a lot of activities
02:29 on the things. So, the third quarter is going to be good.
02:33 Right. So, overall, have you already started to see an increase in terms of volumes?
02:40 Taking into consideration, you already have the World Cup which has started,
02:43 right? So, that is one of the key due to which consumption increases as well.
02:50 So, are you already seeing that trend?
02:51 Yes, you see, if you remember last we have talked that we talked about the guidance of
02:59 about 1000 crores. At that time, you guys were saying that 1000 crores is really possible.
03:06 So, now if you look at we have already crossed more than 600, 633 crores in the first half of
03:13 the year. So, definitely we are crossing what we had proposed and what we have given an estimate,
03:22 it's going to be much, much higher than what we have initially given the guidance.
03:26 It's much more than that.
03:29 Right. Apart from this, in terms of where capacity goes, now,
03:34 Capex is around 300 crores that you were looking at in terms of the new unit.
03:40 However, there has been a recent QIP worth 350 odd crores that has been cancelled.
03:45 How does it impact business and what's the plan ahead with it?
03:50 You see, it will not impact at all because the company is doing very well and the company has
03:58 got a lot of sufficient internal accruals. We are hardly utilizing our bank limits and all.
04:07 We are quite comfortable. If you look at, we have done the lot of expansion in all three units
04:14 in this year and plus we have reduced the debt burden of 100 crores also.
04:19 So, all this expansion work we did at our own by the internal accruals only.
04:27 So, having capacity doubled at the Hassan plant, almost doubled at Odisha plant and
04:35 a lot of additions in Madhya Pradesh plant, having done all this and then
04:40 bringing down the debt by 100 crores, it's a story in itself.
04:50 As of now also, the company is cash rich and having no problems. So, our expansion plans are
04:58 fully on and not only expansions, we are also targeting at some acquisition as well. Let's
05:05 see how it, when it progresses but there is no change in the plan. You see, we want to do the
05:14 QIP for want of some good mutual funds or this thing to be in. You see, as of now, funds is not
05:24 a constraint for the company but you know, if you have a, what the elderly, elder people say that
05:31 if you have a good company around you, go good way. So, we wanted some good names to be in the
05:40 shareholders list. That's why we have this thing planned for it. Otherwise,
05:46 since people were asking for little unreasonable terms like you will not liquidate for the others,
05:53 that I said we cannot get it by the investors, this thing. The company management will do whatever
06:01 best interest of the company. So, when such things come, we thought, okay, let's withdraw it
06:07 and we'll do it at the right time again when actually market needs it or we need it more. So,
06:13 we just withdrawn it. So, rather than getting dictated by someone, we thought of going
06:22 maybe at a later date. So, it will not affect the expansion plan or the acquisition plan.
06:29 We will increase some debt. We have a lot of leveraging available with us. Our debt is
06:36 very very low and we have a lot of scope to and at this moment, where the company is,
06:43 we feel that debt is a better option than equity at this moment. Okay. So, with that,
06:51 if you have to look at the year as a whole, earlier you were looking at a target of thousands
06:58 of crores which we already spoke last time as well, where the idea was that definitely the
07:03 company will be able to surpass that and that's what it seems like taking into consideration the
07:08 first half of the year numbers. Will you say that it's the best time to now revise the guidance
07:15 upwards? You see, you can see at your own that you see now Q3 and Q4 is going to be better than
07:28 Q2. So, you can see that what the guidance is actually going up. This thing, need not to say
07:39 anything. I think it will cross 1200 crores as it is. There's no doubt about it. Right. I think
07:47 that's the number we should be eyeing from here as well and the kind of expansion plans that the
07:52 company has, the markets that the company is looking to enter as well. That's going to be an
07:57 interesting one to watch out for. Thank you, Mr. Arora, so much for joining us on the show and
08:02 sharing the views. So, that's the management of Soam Distilleries. In fact, a lot of analysts
08:07 have actually gone ahead and upgraded their estimates as well for FY24 as well as FY25
08:12 with regards to Soam Distilleries, taking into consideration that they had given a revenue
08:17 guidance of 1000 odd crores and now, Mr. Arora, as he's stating that 1200 crores is going to be
08:22 easily achievable as well. So, an additional 200 odd crores that he's adding to his kitty for FY24.
08:29 That's all that we have on this session. Thanks for watching and lots more lined
08:32 up on the other side. Please stay tuned to BK Prime.
08:42 Thank you.
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