Allied Blenders and Distillers Ltd (NSE: ABDL) Q3 2025 Earnings Call dated Jan. 30, 2025
Corporate Participants:
Jayathirtha Mukund — Head of Investor Relations & Chief Risk Officer
Alok Gupta — Managing Director
Analysts:
Abhijeet Kundu — Analyst
Abneesh Roy — Analyst
Nikhil Kapoor — Analyst
Kinjal Desai — Analyst
Kunal Shah — Analyst
Avi Mehta — Analyst
Sunny Gosar — Analyst
Sanjaya Satapathy — Analyst
Rohan Patel — Analyst
Rachita Kharge — Analyst
Pranav Shrimal — Analyst
Dhiraj Mistry — Analyst
Presentation:
Operator
Ladies and gentlemen, good day and welcome to the Q3 FY25 Earnings Conference Call of Allied Lenders and Distillers Limited hosted by Antique Stock Broking Limited. As a reminder, all participant lines will be in the listen only mode and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing Star then zero on your touchstone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Abhijeet Kundu from Antique Stock Broking Limited. Thank you. And over to you sir.
Abhijeet Kundu — Analyst
Thanks. Hi everyone. It’s our absolute pleasure to host the management of Allied blenders and Distillers Ltd. For the third quarter of the financial year. If. Over to Mr. Mukund, Head of Investor Relations and Chief Risk Officer for further proceedings. Thank you.
Jayathirtha Mukund — Head of Investor Relations & Chief Risk Officer
Thank you Abhijeet. Good evening everyone and thank you for joining our Q3FY25 results conference call. I hope you have received a copy of our results presentation. I would like to urge you to go through this along with the disclaimer slides. Today we have with us from the management of abduct Mr. Shekhar Ramamurthy, Executive Deputy Chairman; Mr. Alok Gupta, Managing Director; Mr. Anil Somani, Chief Financial Officer. Now I would like to hand over the call to our MD Mr. Alok Gupta who will give you the summary of the company’s quarterly performance before we open up for Q and A. Over to you Alok.
Alok Gupta — Managing Director
Thank you Mukund. Good evening everyone. First of all wishing you all a very happy and a successful 2025 and thank you for taking your time out in the evening to participate in our earning call for quarter three of FY25. A little bit about the Indian Spirits industry Overview as expected, the consumer sentiment was positive with celebration and social gathering in the festive and the wedding season during October to December quarter and the industry witnessed a surge in demand. We witnessed a strong demand for our brands as well both in the Mass Premium and Prestige and above categories. In the Mass Premium category where our flashy brand Officers Choice Whiskey has a dominant market share, witnessed a high single digit year on year growth at the backdrop of a strong festive demand. In the Prestige and the above category Premium Sprint continued to be a key growth driver with consumers showing continued strong preference for high quality and innovative offerings. Our TNA portfolio witnessed a strong growth both on quarter on quarter and year on year. Basis. Additionally, the opening up of the state of Andhra Pradesh has benefited all established Pan India players which has also contributed to the overall volume growth of the key industry players. We also witnessed a 2x growth in the state on year on year basis. Now coming to our performance during the quarter three of FY25, this has been a quarter of overall strong operational performance coupled with key strategic initiatives undertaken. Our total income stood at rupees 2,346 crore which was higher by 15.5% versus 2031 crore in Q2FY25 and higher by 12.9% versus 2077 crores in quarter 3 FY24. Income from operation at rupees 977 crore was higher by 12.4% versus 870 crore in Q2FY25 and Higher by 8.9% versus 897 crore. In Q3FY24 EBITDA was at R20 crore which is higher. By 15% versus 105 in Q2FY25 and higher by 94.7% versus 62 crores in Q3FY24. Bank at rupees 57 crore was higher by 20.8% versus 48 crores in Q2FY25. Moving to our top line performance from volume performance perspective, Overall we delivered 8.9 million cases in quarter three, a growth of 7.1% over Q2 FY25 and 11.3% versus 8 million in Q3 last year FY24 as already stated, the positive consumer sentiment during the quarter we witnessed strong demand for our product at the backdrop of the festive season. In Q3FY25 our revenue saw a quarter on quarter 12.4% increase compared to 870 crores in Q2FY25 driven by robust growth across all our millionaire brands in the PNA segment and the mass premium category. On a year to year basis Our revenue was 8.9% higher than Rupees 897 crores in Q3FY24 primarily due to growth of our greatest Millennia brand which is Iconic White which has helped us in increasing our market share in the P and A category on Pan India level. The growth was led by premiumization of our portfolio with continued increase in P and a volume to 42% in Q3FY25 as compared to 39.7% in Q2FY25 and 40.9% in Q2FY24. The PNA value salience also increased to 52.1% in Q3FY25 as Compared to 49% in Q2FY25 and broadly in line with 52.3% in Q3FY24. Additionally, our overall realization per case improved by 3.8% on quarter to quarter basis led by state brand mix optimization and premiumization efforts. Moving to our EBITDA performance, we delivered a strong growth in EBITDA led by a strong improvement in gross margin on a year. On year basis the gross margin improved to 42.8% in Q3FY25 as compared to 35.3% in Q3FY24 that is the last year and broadly in line with 42.9% delivered in Q2FY25. Our gross margin improvement journey is driven by the following initiatives. First, our continued focus on profitable state brand mix. Second, continued buildup on the efficiency in procurement process and cost saving initiative, positive flow through of renegotiated terms with vendor post listing. This is an event that happened post IPO efficiency in raw material procurement, lower pricing of the.Various packaging material in PET bottles and others. Continued benefits from various packaging material cost initiatives undertaken in FY24 on a higher volume base of mass premium category, continued improvement in the market bottle utilization from 13% in FY24 to about 18% in quarter three FY25 on a high volume base of the PNA volume category and finally the routine price increase in various states during the course of the last 12 months. As a result of the above we were able to deliver a better gross profit as compared to Q3FY24 and on similar level as compared to Q2FY25. At the Opex front the total operating expenses as a percentage to income from operation was at 30.7% in Q3FY25 which is marginally lower than 30.9% in Q2FY25. Moving on to interest cost, our interest costs are marginally higher at rupees 27 crores in Q3FY25 as compared to rupees 25 crores in Q2FY25 however significantly lower as compared to rupees 46 crore Q3FY24. The interest cost was marginally higher on quarter on quarter basis mainly due to higher net debt. The increase in net debt was largely due to high working capital deployment for high volume in the quarter. Continued impact of overdue in the southern states Telangana and kickstart of Capex cycle which we initiated during the quarter. Our net Debt as of 31st December 2024 was at Rupees 763 crore as compared to net debt of Rupees 676 crores as on 30th September 24th. Overall we were able to deliver a net profit of rupees 57 crores, a growth of 20.8% versus rupees 48 crore in Q2FY25 mainly driven by increase in EBITDA as stated above. Moving on to our new brands Arthouse collection, this is a blended Scotch Malt ABD forayed into the luxury spirit market in November 24th with launch of Art House Collective which is our first blended malt Scotch Whisky. Arthouse is crafted from a harmonious blend of single malts so so Swayside and Highland Inner Scotland. The whisky embodies a perfect balance of depth and sophistication. It boasts rich distinctive flavor notes that captivate the palate. It is inspired by the Bauhaus movement in Germany and reflects the unity of art form merging tradition with innovation to create an exceptional drinking experience to consumers who are constantly looking at the newer brands. With Art House, ABD has elevated its portfolio catering to the growing demand for the luxury space and reaffirming its commitment to delivering high quality products to consumer. Currently, we are available in key markets of Maharashtra, Haryana. Goa and West Bengal Zoya Post the successful launch of our first non whiskey super premium brand in Haryana, Maharashtra, Goa and Rajasthan, we have expanded Zoya’s presence to West Bengal and Chandigarh. Also two new flavor India’s first Watermelon Gin and Espresso Coffee Gin have just been launched in the current month that is January 25 in Maharashtra. The initial consumer response has been very promising. Iconic White the world’s fastest growing spirit brand of 2023 iconic white has been launched in the key markets of Karnataka and Andhra Pradesh in Q3FY25, expanding its presence to a total of 23 states and Union territories. The continued strong growth momentum has helped us in increasing the market share in the PNA category across India and across all regions. The brand is currently at an annual run rate of of 4.5 to 5 million cases which is more than 2x volume that we did in the last financial year. Moving on to some key initiatives that were undertaken in Q3FY25 and also covering some initiatives that were taken in January 25th to strengthen our luxury portfolio, we have now secured approval from our board to invest in two two distinct brands. The first brand that I want to cover is Woodburn. We are excited to announce ABD’s strategic expansion into Super Premium Whiskey segment through the acquisition of Woodburn Contemporary Indian Whiskey Brand. Woodburn is a distinguished Indian malt whiskey aged in handcrafted barrels crafted using 100% Indian ingredients. This acquisition, valued at 39.5 crores includes the intellectual property for the brand Woodenburn and other luxury brands from Fullerton Distilleries Private Limited. Currently, Woodburn is available in three states and Union territories and we plan to expand into six additional states on an accelerated basis. The Supra Premium Whiskey is poised for significant growth with an estimated annual growth rate of early teens. This acquisition aligns with our vision to establish a Pan India footprint and also explore overseas markets. Rock Paper Rum we are pleased to announce AVD’s strategic investment in Good Barrel Distillery, the innovative startup behind Premium Rum brand Rock Paper Rum. This Investment amounting to rupees nine crore, secures up to 51% equity stake in Good Barrel linked to business milestone with an option to acquire entire paid up capital share. Rock Paper, currently available in eight states with five distinct variants including Whiterum Dark Rum Flavored Rum present a significant growth opportunity in a large volume Premium drum segment. By leveraging ABD’s extensive pan India distribution, procurement and manufacturing network, we aim to drive growth and achieve margin expansion through cost synergies. The Premium Drum market is. Projected to grow at mid teens annual rate and this acquisition aligns with our vision to establish a Pan India presence and explore overseas market. Moving on to exports we are continuously expanding horizon in the global market by increasing our export footprint to 22 countries from 14 countries at FY24, mainly by increasing our presence in high growth markets of Africa. The latest Millennia brand in our portfolio Iconic Wise has already been launched in three overseas market and our first luxury product Zoya Gym is being launched in UAE in quarter four FY25. Also I’m happy to share that Abidi has secured approval for exporting its product to United States of America. The label for our product have been approved and we expect supplies to commence in quarter one FY26 moving to CapEx update our ENA Unit Acquisition in Maharashtra we have completed the acquisition of Meenakshi Agro Industries Limited located in Aurangabad, Maharashtra in December 2024 and it has now become our subsidiary. Post acquisition we have completed the required upgradation of certain plant and machinery and related infrastructure and I’m happy to share that the operation is expected to commence on February 2025. Now let me update you with the progress on Malt Plant project and PET Plant project which are being set up in our manufacturing facility in Rangapur where we already have our ENA facility. We’ve initiated ordering of the equipment from the OEM and relevant Stage Wise approval application has been initiated. We expect PET plan to operationalize by Q3 FY26 of the coming financial year and March front to start production in Q4FY26 as per our timeline. Overall we have built around our Future Ready framework which has broadly four pillars with a clear roadmap of where we want to be in the next three years. Improved salience of our Prestige and above brand to about 50% from current level of 42%. This will be driven by driving growth of our consolidated pea and whiskey segment through 3 Millennia brand of Officers Choice Blue, Sterling Reserve V7 and iconic white Create a premium to luxury portfolio through adoption of three pronged model of Build buy and partner. We have already initiated on this strategy and building our own brands such as Zoyan Art House, buying steaks in brands like Rock Paper Rum and partnering with global players and bringing brands such as Russian Vodka in India. Needless to say, in the Mass Premium category we will continue strong focus on retaining and improving market share of Officers Choice Whiskey along with focus on our gross margins. The next initiative is secure supply chain by being 100% captive for Ena Malt and certain packaging materials, such as PET, we expect our margins to improve further. We are adopting a prudent capital allocation policy. Which ensures that IRR of these projects ensure continuous improvement in ROCE of the company, strong focus on margin improvement to reach industry parity in gross margin of 40 to 45% and EBITDA of 15% plus through a combination of above mentioned CAPEX initiative and establishment of a premium to luxury portfolio at industry parity margin. Our fourth pillar is to establish a robust governance and a cultural framework driven through an independent board oversight, segregation of ownership and management, digital compliance and developing a culture of excellence driving accountability, collaboration and innovation. Overall, this four point framework will help us in developing a world class organization with process excellence delivering shareholder value creation through a sustainable profit growth model along with a robust corporate governance framework in place Coming to the Near Term Outlook Looking ahead, we expect the growth momentum to continue as consumer sentiment remains positive. The PLA category is expecting significant growth driven by an increasing trend towards experience driven consumption. On the input cost front, we anticipate grain and ENA prices to remain neutral to soft while glass and PE prices are expected to stay stable. These factors collectively position us well to capitalize on the market opportunities and sustain our growth trajectory. Finally, I would reiterate that the second consecutive quarter of overall performance validates both our adopted strategy and its execution. On this foundation, we remain optimistic and committed to enhancing our offering and meeting the evolving needs of the consumer with innovative and distinctive products in the coming quarters. I finished my briefing here and we can open the floor for any questions.
Questions and Answers:
Operator
Thank you very much Ladies and gentlemen, we will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on the touchtone telephone. If you wish to remove yourself from the question queue you may press star and two participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Abneesh Roy from Nuvama Wealth. Please go ahead.
Abneesh Roy
Thanks and congrats on good set of numbers. My first question is on Art House and the two M&A you have done so Obviously this industry is media dark and we have seen one small listed company do very commendable job in terms of creating new brand which is a rival for you. So wanted to understand how you build up given that constraint of media duck and in terms of the addressable market for all these three, if you could tell us what is the addressable market and in terms of product and pricing and positioning how you’d be different because you need to be different so that you can. Get here traction. So if you could talk about that also.
Alok Gupta
Sure. Thank you for your question. Starting with what is the total addressable market. If you look at the IWSR data of last year of the 410 million cases that were sold, about 3% of this 410 million cases, roughly 12 million cases is what we qualify as a luxury portfolio which also accounts for more than 20% of industry profit. So that’s the size of the market. The industry is growing at a very healthy rate and we expect the segment to become bigger in time to come. The way we are building our portfolio we already have now five brands in this segment. We started with Zoya, then we added Art House, then India Partnership for Russian Standard Indian Market and now we have Rock Paper Rum and we also have Woodburn. So these four my brands and the newer brands that we plan to launch in this luxury segment give us a curated portfolio that will allow us to engage both the on premise, off premise and the consumer in a meaningful manner. So that’s our outlook and over a period of next few years if we can get to a, you know, high single digit or a double digit share of this maybe 18 to 20 million case market is the way we are looking at it. On the aspect of whether it’s Woodburn or whether it is Rock paper or it is Art House, I think the consumer is driven by high sense of curiosity and is constantly seeking newer experiences which is a combination of any web search that a consumer might do or social media connect that might happen or recommendation and more importantly trying a new product at an on premise. So all the brands that are coming as part of our luxury portfolio they’re essentially looking at how are we able to showcase our product mostly through on premise through participating in the right event platforms where liquid trials can happen. And like I said, consumers stay very curious. So there are many markets where they are able to also do brilliant displays of our product in that catches the customer attention on the pricing front. Art House is priced in Bombay at 4800 rupees for a 750 ML bottle. It is priced almost cross line to the 2Bio brand of copper Dog and Monkey Shoulder. And that’s really where we are positioned a slight premium to Black label as we know that malt consumption happens both from committed malt consumer and lot of blended with the consumer who also enjoy malton occasions. So that’s really where Arthouse is positioned. Moving on to Rock Paper Rum. Rock Paper Rum will operate at a price point in Bombay again between 1300 rupees and 1500 rupees. So it makes it a premium, super premium price point. It is crossline to Bacardi and as you know, that is. In this segment, Bacardi is the only player. Currently the segment is roughly 3 million cases. So that offers us a wonderful opportunity to offer an interesting brand to the consumer which is younger, which has got multiple flavors and hopefully not only will it gain market share, we’ll also expand the segment. The third brand that we spoke about, Woodburn. Woodburn is Cross line to Royal Ransomwood. So it is going to be the most, it’s going to operate at a price point of let’s say about 2,500 rupees. So this is the price positioning. Each brand has its own distinct price positioning. It has its own competitive set and is able to offer therefore, as you rightly said, unique and distinct experience.
Abneesh Roy
My last question is on Andhra market. So you said it has doubled yoy now the multinational players had almost exited Andhra and now they’re coming back and they have seen obviously good numbers on a almost zero base. So my question is when you had normal operations in Andhra, what percentage of sales was coming from there? And given multinationals are going to come back very strongly from zero based and now it is three market dynamics, how do you see eventually the market shares settle here because you already had some presence but now multinationals have also entered Andhra.
Alok Gupta
Sure. So first of all I think we compete with the multinationals across the country. Andhra is no exception. Across all markets our brands have a certain market share. As far as Andhra is concerned, the doubling of our volume on a year on year basis has happened from the period when multinational brands were available or are available. So you have to see the growth. I think everybody’s got an opportunity, especially the Pan India players like ourselves and the multinationals that we’ve spoken about. Everybody’s volume has grown and our volumes have also more than doubled. So that’s really where we are on share of sale. About between 5 and 6% of last year volume would have come from the Agra market and I think by the time we end this year would be trending more like between 8 and 10%. Between 8 and 9% of the volume will come from Andhramark. Sorry.
Abneesh Roy
Yeah, please continue.
Alok Gupta
No, no, go ahead. You were saying profit.
Abneesh Roy
Yeah. And the profit and the working capital in Andhra, is it as challenging as Telangana because both were part of same state earlier and my sense is the policies are still fairly similar.
Alok Gupta
Working capital is not a challenge in Andhra. The payment cycle is very well defined and payments are made on time. So there is no challenge on the working capital side. On the pricing front, the pricing continues. What was at the start of the financial year as you know there’s a tender. That is out. So if there is any price change we’ll get to know once the price negotiations are over. But as of now it is the same price with which we started the year.
Abneesh Roy
So my question was if we assume the same prices Andhra margins for you, once the stability comes, will it be similar to the Pan India margins, rest of the business margins for you?
Alok Gupta
Yes.
Abneesh Roy
That’s all from my side. Thank you.
Alok Gupta
Thank you very much for your question.
Operator
Thank you. The next question is from the line of Nikhil Kapoor from LIC Mutual Fund. Please go ahead.
Nikhil Kapoor
Hi, I’m audible.
Alok Gupta
Yes you are.
Nikhil Kapoor
Hi. Congratulations on good set of numbers, sir. Very good performance from both gross and EBITDA margin point of view. One question to that extent, how much lever do we think we have to even expand this margin further and will that be a function of cost optimization and internal efforts or would that be will that take portfolios tilting towards more of a PNA which will drive eventually margin from 12% to 13 14% on the EBITDA level. So just your thoughts on going forward. How should we look at your margins?
Alok Gupta
So there are two strong levers from EBITDA margin expansion. The first is our CapEx program. Most of our listed peers have finished the CAPEX cycle. We are just about starting our CapEx cycle. We expect on back of the CapEx program we should see let’s say about 300 basis point odd improvement in our gross margins and therefore it should all flow down to ebitda. So that should get us to what we call an industry parity of 50%. The second pillar of driving our margin is going to be the improved salience in P and a from 43% to 50% and also strengthening of our portfolio and national rollout of our portfolio in the luxury segment. So from where we from the way we see the numbers from a current level of about 12% EBITDA margin, 3% should come on back of our CAPEX cycle and we should have incremental margins coming on back of the way we’re building the portfolio. Of course focus on cost optimization will always continue.
Nikhil Kapoor
Understood. Just one question on the popular segment, when we look at the industry, this segment has been in pain for the last eight, nine quarters and of course there’s a base effect that is flowing through. But even when you look at your numbers, there has been decent 9.2% volume growth on the popular as well as 9 and a half 9.3% growth in terms of value terms in popular segment. So how should we think about this? Is it a demand revival or is it the base effect playing effect? Or is it just a festive thing which should propagate? Not playing going forward. Are you seeing on ground some demand revival in this segment per se?
Alok Gupta
Well Q3, we did see some bit of demand coming back on the mass premium segment. Clearly as part of the whole premiumization story, consumers are finding some of the more high priced brand at the point to enter the segment once they do choose. So we believe that the growth in this sector, the growth in mass premium will remain single digit. I think the opportunity for us is really to leverage the strength of Brand Officer’s choice and our distribution and to continuously beat the segment growth. But we expect segment growth to be single digit at best.
Nikhil Kapoor
This last question on the acquisition that we did on Good Barrel and are there any debt associated with these acquisitions?
Alok Gupta
The acquisition will be a combination of our internal accruals and some bit from that. Are there any debt on their books already which will in case of Woodburn we are acquiring the brand, we are not acquiring the company. So yeah, right. So there is no debt. There is, there is a very small number of I think 30 lakhs or odd of some promoted debt sitting. So nothing secret.
Nikhil Kapoor
Thanks. Thanks.
Operator
Thank you. The next question is from the line of Kinjal Desai from Nippon India Mutual Fund. Please go ahead.
Kinjal Desai
Hi. Congrats on a good set of numbers. I wanted to get a bit of clarity with respect to, you know, how is our ad spends and reinvestments. Given that we would be supporting a lot of brands, we’re looking at significant growth. So maybe some clue on how reinvestments and in line with especially our guidance of margin expansion.
Alok Gupta
Thank you for your question. I would break the brands into broadly three categories. In the PMA segment we are looking at further strengthening our AMP spending and therefore net of the increase in A and P spend. It will be EBITDA accretive. On Mass Premium segment which is officers choice. We will maintain what we are doing because we have a very very sharp gross margin and EBITDA focus coming through Officer’s choice. We do not plan to make any major changes in our investment outlook. We just focus on profitable market and leveraging our distribution strength. As far as the new brands and the luxury portfolio is concerned, by and large our outlook is that we will manage the AMP on this brand more in line with the net contribution that these brands generate. What we call as cap neutral and. Over a period of maybe two years we should start looking at these brands to actually start contributing on the ebitda. So the luxury portfolio should not take away from our current EBITDA and will start adding to ebitda, you know, within two years of the brand sort of reaching a critical mark.
Kinjal Desai
Sure. Thanks so much.
Operator
Thank you. The next question is from the line of Kunal Shah from Jeffries. Please go ahead.
Kunal Shah
Hello. Thank you for the opportunity. So my question is on Telangana. Can you give an update on what’s the receivable amount now and if there’s been any progress or what are the discussions ongoing and what are the options that you are considering given these receivables?
Alok Gupta
Okay. So from October onwards, Telangana, we are receiving regularly our payments for the supplies that we make for the month. So to that extent we are out of an uncertain zone on how much money will come to us so we can plan our cash flows better. The overdue position is that we have roughly 400 odd crores of overdue. So that’s the number as far as overdue is concerned and also reflects in our interest cost. The question on what we are doing, there is a continuous proactive engagement with the decision maker through the industry body which is cibc. And in this case it’s a joint exercise with ISWAI where there’s a constant engagement with the policymaker on resolving the issue of overdue payment. From what we hear from Telangana is that there is a serious effort being made to resolve this issue. Once you have an update, we’ll certainly share it with you.
Kunal Shah
Understood? Understood. And have you seen any change in competitive dynamics because of these receivables? Maybe some companies are not able to bear that working capital load and that benefits some other players or benefits you probably has anything played out on those lines.
Alok Gupta
So I think there was a phase where there was a phase when the payments were uncertain where a lot of players were hesitant whether we should continue supplies or not. But since from October onwards our payments are coming on a regular basis. I would say the national players have continued to support the market of Telangana while they’re also engaging with the government to release the overd payment. There can be cases of a regional player or smaller player who has vacated on not supplying. But again the key players are continuing to support on back of a dialogue that is currently going to the selling another.
Kunal Shah
Understood. Understood. Thank you. The second question is on. So how should we think about pricing going into the next year? As you know, exciting. Cycles will start kicking in in the next few months. Do you have any sense of what sort of price growth can you get from the different states that you operate in?
Alok Gupta
I think it’s a bit early for us to talk about it. You know, the new excise cycle has just about started again. The industry body CIBC is actively pitching to the various Excise offices about our outlook on what needs to be done. So I would say it’s a little early for us to have a view on it. Historically, what we have seen is that, you know, the price increase or the NSE increase could be up to about 3% on a sort of a weighted average basis, but providing specific guidance at state level is a little early.
Kunal Shah
Understood, Understood. Thank you. That’s all from my side.
Operator
Thank you. The next question is from the line of Avi from Macquarie. Please go ahead.
Avi Mehta
Yeah, Hi, team. I just wanted to double check on the input cost. You know, there has been a hike announcement in government. I wanted to ensure that that is factored in when you said
Operator
Mr. Ravi. But your line, your voice is breaking, sir. We cannot hear you clearly. I
Avi Mehta
I’m sorry. Is this better?
Operator
Yes, thank you.
Avi Mehta
Hi, I just wanted to check when you’re, you know, on the input cost bit, given that, you know, there has been a hike that has been announced, the government in internal production. Is this something that you factored in this estimate? And secondly, in Glass, if you could give us a sense on period of capacity addition now that it is behind us, is that something that worries you? Thank you.
Alok Gupta
The question on glass is not clear. If you don’t mind repeating, please,
Avi Mehta
Glass. You’ve seen a period of benign costs for a long time now and just wanted to understand. There is talk about consolidation, there’s talk about capacity addition now more or less behind us, so we’d love to hear your thoughts on how do you see this?
Alok Gupta
Thank you. So, as far as ethanol is concerned, you’re also aware that the government has reduced the price of FCI rice. And in ethanol production, for example, in portable alcohol, only broken rice can be used, but for ethanol production, full rice can be used and there is a significant price reduction of 5 to 55kg that has been announced. And the idea is to sort of make sure that there is raw material security to the ethanol industry. And therefore we are hopeful that if once this price gets settled, the new FCI rice price gets settled, we are hopeful that it will take away some pressure on broken rice. So that’s our outlook. When we said that our outlook is at least in the near term is soft neutral on the ENA prices. On our grain procurement which we are now doing both for our Maharashtra distillery and for Telangana distillery, we are seeing some softness in the grain prices. However, we need to see that it sustains itself over the quarter. But we are seeing soft to neutral outlook on the grain procurement. On the glass industry, I think our outlook is that at least in the near term we do not expect anything that will impact us materially. That is our outlook at least.
Avi Mehta
And soy. Sir, when do you typically, you know, when is the typical negotiation cycle in glass?
Alok Gupta
See the glass industry at least we have moved to a procurement model which means it’s a formula driven pricing and until there is no significant change in input cost, positive or negative, prices remain stable. So what we’ve done is we have moved away from a dynamic month on prices to a agreed formula which has now been running for several quarters and that is giving us a better view on the price and avoiding a need to sort of get into constant negotiation.
Avi Mehta
Perfect. So my second question is on the marketing side now you have movement towards you and that segment is relatively consolidated or you know, there are two large players. Do you believe that while at the EBITDA you don’t expect a hit? The the ad spend intensity needs to be, you know, your share of voice has to be much higher or how should I look at that segment? If you could give your thought, share how you see this growth. Thank you.
Alok Gupta
See our bet is on the consumer. Consumer is sort of looking for newer experiences and therefore as long as your proposition is unique and presented in an interesting manner, I think consumers certainly give up any brand a chance. And our brands, therefore we tend to, you know, we believe that we tend to gain from this sort of experience driven consumption. On the investment side, I think like I was responding earlier to query of Nippon, the outlook we have built is that we will the sort of contribution that we generate on this brand, we will deploy back on the brand. So they may not contribute anything to EBITDA in the short term, but two years down the line they should start contributing to beta. That’s the outlook that we currently have. I think it’s about sort of interesting innovative marketing. Of course it will require amp but we believe the brand should be able to generate enough contribution because they’re high gross margin. Another focus is that how do we accelerate the rollout of this brand so we gain from multiple markets and therefore the total volume that we do also generate free cash to be able to invest in the bank.
Avi Mehta
Very clear. Thank you very much sir. That’s all from my side. Thank you. Thank you.
Operator
Thank you. The next question is from the line of Sunny from MK Ventures. Please go ahead.
Sunny Gosar
Yeah, thanks for taking my question and congratulations on a very strong set of performance for the. Second consecutive quarter. My first question is related to the brand portfolio. So we have done a couple of launches in the last 2, 3/4 including Russian Standard Vodka, Art House. So if you can give some color on how has been the initial response and if any takeaways or some perspective that you can share about the new launches that would be quite helpful.
Alok Gupta
So Art House was launched in November, early December. So again early to talk about numbers. We are happy with the feedback that we have from the trade we have from the consumer, the on premise promotion that we do. The packaging is really appreciated, the liquid is really light. So that’s the early stage feedback that we have on the brand. So we are expanding the footprint of our house on Zoya which has been there, which has been there. We have seen in quarter three over quarter to about a 53% quarter on quarter growth on this brand. And as we are rolling out to new markets and expanding our distribution, hopefully this growth momentum will continue.
Sunny Gosar
Yeah. And anything on Russian Standard vodka?
Alok Gupta
Russian Standard we are expecting since the Bio brand we are expecting stock availability in the month of February. So it’s yet to hit the market.
Sunny Gosar
Got it, got it. And on Iconic White, based on some checks, what we understand is it was launched in the last few months between Karnataka and Andhra Pradesh. So have we started seeing benefits of that in Q3 volumes or the pickup will happen now going forward?
Alok Gupta
The pickup will happen going forward Q3. In fact Amdhara distribution has just about started. This month is the first month of proper distribution and same as the case with Karnataka. So we see real benefit of this growth coming in this quarter.
Sunny Gosar
Got it, got it. That’s helpful. My second question is related to the Delhi market. So how large was Delhi as a proportion of our volumes before the entire market disruption happened? And we hear about stability in terms of the policy in the last few months. So has there been any benefit of that stability in terms of the volume pickup and how do we expect the Delhi market to perform in the coming quarters still?
Alok Gupta
So we have moved in Delhi, as you’re rightly saying from an uncertainty, uncertain environment to a certain. Our brand volumes have moved from an average of 15,000 cases a month to this month, hopefully about 100,000 cases. So there is a 5 to 6x growth in Delhi on back of a stable policy. And if there is no major change in the policy irrespective of the election outcome, we believe that we should be able to maintain this momentum.
Sunny Gosar
Right. And just a related question to this. Like before the entire disruption happened in Delhi, how large market, either from our perspective or like from an overall market potential perspective, how large the market was for us?
Alok Gupta
The market was, I think we did maybe about a million or not about 1.5 million cases prior to the policy disruption. That would be the size of market. So roughly about 5% of our volume, 4 to 5% volume coming from Delhi. I think you have to keep one thing in mind that Delhi is also very large premium and a luxury market. And as the policy is getting stable and we are getting access to the market, we also see upside on our luxury portfolio. We are at the last leg of getting approvals both for Zoya and Art House. And no sooner we get those approvals then we will also launch those brands there. So we are happy with the fact that the policy is stable. Our mainstream brands are already selling their 5 or 6x growth versus what we were doing earlier. And now we’re sending our premium luxury portfolio in Delhi and on back of label approvals we’ll start rolling out the brands.
Sunny Gosar
Got it. That’s helpful. And one last question relating to gross margin and our backward integration initiative. So we’ve seen a very sharp improvement in gross margin post the IPO, especially in Q2 and Q3. So we mentioned that we renegotiated terms with our vendors and got better sourcing contracts. So is the benefit completely reflected in our Q3 performance or do we see some further scope based on the supplier renegotiation?
Alok Gupta
It completely reflects in our Q3 numbers.
Sunny Gosar
Got it. And one related question to this. So the Maharashtra distillery that we have acquired so that has I believe currently a capacity of approximately 1 crore liters. So does that benefit of backward integration start reflecting immediately in the coming quarter or the production will reflect once the entire expanded capacity is ready. And what would be the timeline for the full scale? Production from an expanded capacity.
Alok Gupta
So we are starting our production in the month of February. So we’ll start seeing the benefits of this acquisition within quarter four of FY25 itself. As regards the full expansion we’ve already applied for necessary approval which we expect we’ll take between three to five months. Thereafter it will take us about 12 to 15 months to complete the project. So currently we’re anticipating benefits of this to start flowing in Quarter 4 FY27 of the Additional capacity that we’ll put in Maharashtra.
Sunny Gosar
Got it. Got it. That’s very helpful. Thanks for all the detailed replies and all the best for the coming quarters.
Alok Gupta
Thank you very much.
Operator
Thank you. The next question is from the line of Sanjaya Satapathy from Ampersand. Please go ahead.
Sanjaya Satapathy
Yeah. Hi sir. Thanks a lot. So my question is that you’ve guided for this 300 basis point margin expansion and it is contingent on your completion of CAPEX this. So does it mean that bulk of the capex bulk of the margin expansion will come towards the end of this three year guidance that you have given?
Alok Gupta
Thanks Sanjay for your question. So as far as our calendar, as far as our Meenakshi project is concerned like I said it goes revenue and EBITDA accretive from next month which is February of 25. As far as pet project is concerned which is coming up in Selangama we’ll go revenue and EBITDA accreted by quarter two. So let’s say August 25th the mall plant that is coming in Telangana should go revenue and ebitda accretive in Q4 of FY25. So we will start seeing benefits of the Meenakshi acquisition in February pet from August onwards and our malt unit from Q4 of. Sorry FY26 and not FY26 last quarter FY26 only the 150 KL facility that will put in the Maharashtra for Maharashtra which I explained will happen in Q4, FY27
Sanjaya Satapathy
And of this 300 how much of it will be because of this capex and how much will be because of your premiumization and operating leverage. Things which you can really which you are trying in the business.
Alok Gupta
So just keep it simple. We are currently at about 12% EBITDA margin. We expect 300 basis point improvement in our gross margins on back of this capex. That will take us to about 15%. And any improvement that will surely happen on back of premiumization will reflect over and above that number.
Sanjaya Satapathy
Understood. Last question. That I wanted to ask you is that it looks like you are getting into quite a few categories and quite a few new brands which most of them are appearing to be very niche in the sense that is that something which will keep your costs etc a little bit elevated and how the brand selling will be achieved.
Alok Gupta
So going back to one big number, about 12 million cases are in the luxury segment of which about four and a half million cases is left in non scotch. So the segment is meaningful. Gross margins are extremely attractive. Growth is extremely attractive. Purchase contribution is very high. So from a volume perspective it may not move the needle significantly. But from impact on NSV and two years down the line, once the brands are getting built out then the impact on EBITDA should be positive. So I think we have to think about our luxury portfolio from a maybe a two to three year horizon and not an immediate horizon. And like I’ve clarified, the way we want to manage this portfolio is to make sure that it does not take away from the current operating ebitda. So that’s a bit of a tightrope walking that we want to do.
Sanjaya Satapathy
Thank you so much. Thank you.
Operator
Thank you. The next question is from the line of Rohan Patel from Turtle Capital. Please go ahead.
Rohan Patel
Opportunity. I have questions. I’ll divide question into two part One is your premium segment and one is. Sorry, one is for prestige and above and one is for premium to luxury. So we have seen that iconic white whiskey is one of the world’s fastest growing whiskey which comes from elite blenders. So what has really worked well that we have been growing this whiskey at the fastest pace. If you can explain us.
Alok Gupta
You know they say magician never reveals its secret, but I will do that for you. See the segment is 120 million cases. The brands that are operating in this segment are very, very successful, very well respected, but they’ve been around for more than 25 years. And like in any other category, a segment that is as big as 120 million cases, you know, with millions and millions of consumers consuming it over a period of time, there is what we call a customer segmentation. So the larger part of our success is in terms of understanding the customer segments within the R9 coating million cases and to identify a set of consumers who are looking for a newer younger offering. So if you look at iconic white, typically the whiskey codes are dark color gold foil stamping. If you look at iconic white, it does not follow any of those codes. It’s actually quite a code breaker. So if you look at the label, it’s white in color. It’s bronze. There is no coat of arm. So the reason of the success of the brand Iconic is sort of deep rooted in a key customer. Inside that the younger consumers are looking for something that sort of they can connect with. And in Iconic, they find a brand that is sort of talking their language.
Rohan Patel
Okay, that was fairly understandable. And now we have seen that you have added a lot of your brand in premium to luxury segment. And what we have seen that lot of incumbent players are also adding a lot of, you know, expressions and brands in this segment. A lot of new companies are also coming into this segment backed by celebrities, and a lot of players are showing up into this segment. So how does a player like Allied Blenders have an advantage over say, some new company which has just started and wants to tap into this market? Considering that you are having two to three millionaire brands with you, so how does this help us and what advantages do we have over others that creates a certain competitive advantage for us?
Alok Gupta
I think let’s start with some very basic facts. They built a distribution, manufacturing and sales infrastructure over the last 35 years. So we do not need to build anything new from a manufacturing point of view, distribution point of view, and from a sales and revenue point of view. What we need to build is capability, which is around on premise, which is around liquid, on lifts, understanding the whole mixology and the cocktail culture. And that’s what we’ve built over the last few quarters. So we have a natural springboard, if I may speak, to be able to tide over the complexity and distribution. Second is, I think at the heart of any alcoholic beverage, other than the fact that packaging must be unique, a great consumer story is really the liquid. I think that’s one thing that we understand extremely well. We have a CQCL center, which is our innovation center out in Aurangabad. And that’s something that gives us the comfort that we create the right wing. So that is really what we call a right to play, saying that we have the distribution behind us, we have manufacturing behind us, we understand blends, we understand packaging, and we have built the infrastructure that is required for key accounts and for on premise. And as you would recall, we have created a new entity which is ABD Maestro, along with rund, which will focus on the luxury brand portfolio. So the attention that some of these luxury brands need in terms of our route to market, how do we take it? The social media, you know, the whole idea is that this new entity will focus on the entire luxury portfolio along with sort of the phenomenal. Reach a celebrity like Randy brings on the table. So apart from the fact that we have distribution, manufacturing and sales infrastructure and we build the on premise infrastructure, it also is being, it also will be taken to the market through ABD Maestro with sort of, you know, reach of a superstar like Randir.
Rohan Patel
Got it. So if we have to boil it down so it means that the existing distribution channels that you have and experience over this three and a half decade plus the brands you have built up, the addition for premium and luxury was that you have to get the right liquid, right packaging story and has to distribute it to right places to make it a success for you in this segment.
Alok Gupta
Excellent. And if I may add one point is that in this segment it’s about constantly providing newer experiences and as we would see with Zoya, we launched in January of 24 and we’ve already launched the first watermelon and espresso coffee gin. So in this segment it’s also about consistently offering newer exciting offerings. So it’s not about just liquid at a point of time but it’s consistently doing the new stuff. So that another capability that we believe we have to be able to consistently offer newer exciting variants to the consumer.
Rohan Patel
Okay. Yeah, got it. Thanks for answering all of this question in deep and explaining it. Thanks and best of luck for the future.
Alok Gupta
Thank you much appreciate it.
Operator
Thank you. The next question is from the line of Rachita Kharge from iWealth. Please go ahead.
Rachita Kharge
Hello sir, very good evening. So my first question was on the capex side. So what is the kind of capex we are envisaging for this year and remainder of this year and the next year.
Alok Gupta
The total capex that we’ve already announced is 527 crores. Of this roughly 25% will need to be invested in FY25. About 60% in FY26 and the balance figure would be in F527. So this 527 crore would need to be invested over a period of three financial year.
Rachita Kharge
Okay. And sir if I may ask you another question on the working capital cycle, I understand right now you’re facing some issues in Telangana but where do you think you know your working capital days will settle at going ahead.
Alok Gupta
Whereas Telangana payment was to be resolved the payment cycle would be between 45 days give or take.
Rachita Kharge
Okay. And sir, one more thing was on. The PET and the malt. So you know a participant did ask you about this also had a follow up on that. So when you say it will also be revenue accretive so you will also be selling it outside
Alok Gupta
No BD bottle we produce roughly 600 and 600 million bottles on an analyzed basis and the the entire 600 million bottles will be consumed will be used by us but it will be EBITDA aggregator the EBITDA will start coming in from quarter to next financial year all PT
Rachita Kharge
And just one last question on the depreciation so we’ve seen the depreciation going down during the quarter so what was the reason for the same?
Alok Gupta
Well it’s a one time change on back of restating asset life for some of the lease assets in this quarter.
Rachita Kharge
Okay, okay so we should see a similar trend or it’s just one off.
Alok Gupta
This is a one off so we see no major changes in our depreciation other than the depreciation that may come on back of the new capex saving.
Rachita Kharge
So that’s it from my side. Thank you so much.
Operator
Thank you. The next question is from the line of Pranav Shrimal from PINC Wealth Advisory. Please go ahead.
Pranav Shrimal
Hello. Hello. Questions have been answered. I just had one question to understand the EBITDA profitability of each of each of the segments Sorry EBITDA a bit of margin of each of our segments that is Mass trillion, PNA and luxury. If you could just send out the numbers
Alok Gupta
We do not track EBITDA margins on the segment we track gross margin.
Pranav Shrimal
If we just execute the gross numbers that also would work.
Alok Gupta
So like I think we’ve already covered that. If you look at our portfolio that is a big important point of catch up. Last year our gross margins were about 37% at a portfolio level peer parity is between 40 to 44 and we are at 43. So the sort of gross margin on our portfolio is now at about 43% and we again spent time saying that these margins should expand long term. Capex cycle is fully, fully done.
Pranav Shrimal
So where I was coming from sir, I’m trying to understand is that luxury portfolio will only increase from now on. Correct. Luxury portfolio Luxury portfolio contribution will only increase from now on. We are adding new brand expanded. Correct.
Alok Gupta
Contribution in terms of volume.
Pranav Shrimal
Volume. Yeah. In terms of value and volume both.
Alok Gupta
Yes, sure.
Pranav Shrimal
Yeah. So I was just trying to understand as you said that luxury portfolio will take around two, three years to come to have an impact on the EBITDA level.
Alok Gupta
Yeah, that would be correct. That the EBITDA impact we should see over the next two or three years.
Pranav Shrimal
Over the next two or three years. I just need to understand the reason why is there a gap. Is it because of Capex or is it some other reason?
Alok Gupta
No, it has nothing to do with Capex. First is that the brand volumes will grow over a period of time. And even though they are high gross margin brand, but as volumes grow we will start getting. We will start getting contribution from this brand which we intend to invest back in the brand. So we believe that first two years at least the money that we made from the brand we will need to invest that money back in the brand. And therefore these brands may not contribute to the EBITDA in the next two years. So there is no Capex related. There is no Capex related to our luxury portfolio or impact of Capex on its profitability.
Pranav Shrimal
Okay. So the amount that we are reinvesting back into the brand that is why it is taking some time to come at a level. Otherwise they would be profitable at the level. Correct.
Alok Gupta
These brands will be extremely profitable at a gross margin level. And that money is getting redeployed back. So as we build the brand and scale them up they will also start contributing towards their ebitda.
Pranav Shrimal
Great. Great. Thank you so much sir. Non. Best of luck. That’s it for myself.
Operator
Thank you. The next question is from the line of Dhiraj Mistry from Antique Stock Broking. Please go ahead.
Dhiraj Mistry
Yeah. Hi sir. And congratulation on very good set of number. So just couple of questions. One is basic like if I look at this quarter PNA realization per case which we have seen drop on a YUI basis. Can you explain reason for that?
Alok Gupta
Yes, thank you for asking that question. We were able to get ENA export permissions in Telangana. So last year we were producing ENA consuming and selling it to third parties. This year we were able to get ENA Expo permission. So we have used this ENA nsv. Sorry, maybe I think my team is telling me I got the question wrong. Is it about PNA nsv?
Dhiraj Mistry
No. Yes. Net realization per case.
Alok Gupta
Sorry, I got the question completely wrong. I think the way I will encourage you to look at the data is it’s quarter on quarter. So if you look at the PNA NSV improvement over last quarter is 4.2% and the PNA improvement of MAS premium is at about 5% and total weighted average is about 3.8%. So we put. Constantly said that we are now focused on making sure that our market shares grow in more profitable markets. And essentially there’s a state brand mixed change versus last year. But quarter on quarter you will see the number as part of the deck. Our NSV improvement is 3.8% in which PNA is 4.2 and MAS premium is 5%.
Dhiraj Mistry
Got it, got it. And so second question is regarding gross margin improvement. The measures which we have taken off vendor rationalization in terms of payment terms also Monocard and discontinuation and other things which we have already done. Is it like large part of that benefit is already being come through because if I look at on a sequential basis your gross margin is more or less stable or is there some part of benefit it’s come, it’s still due in coming quarters.
Alok Gupta
So there are three parts to this benefit. The first part of this benefit is cost rationalization like Monocartini spoke about. Second part of this benefit is in terms of resetting the procurement rate on back of timely payment. And third part is in terms of a better state brand mix. So as for as the first one is concerned we have finished the entire, you know, packaging substitution cycle. So all the numbers are now baked in. So we do not so no further, no further margin contribution coming by rationalizing packaging. As far as the procurement price reset has happened that benefit will continue because now we are procuring at new rates. So we see this benefit come in but again it will not have an impact on the gross margin because it reflects in our Q3 number how the third part which is the state brand mix as the PNA portfolio improves from current level of 42 to 50 and we continue to focus on more profitable market that will have an impact on the gross margins.
Dhiraj Mistry
Got it, Got it. And sir, one last strategic question like we have a very strong history of successfully and very fast ramping up of new product launches be it sterling is a V7 and also iconic white. What is the rationale behind purchasing a brand which we have done in this quarter versus developing in house brand.
Alok Gupta
So I think the entire approach is if I can put on a banner of how to make it asset light. We have seen that there is a clear demonstrated success of startup brand especially in gin as a category and therefore we believe that some of these newer startups are working with a very different consumer insight. They’re working with a very different go to market social media approach and they’re. Therefore, we want to benefit from it. And that really led to Rock Paper Rum. Very, very interesting. Rum already has five variants competing against a large multinational brand. So it makes absolute sense for us to invest in these brands because they require very different marketing, not just the product. Woodburn, of course, we’re very excited about the acquisition. It is, it is regarded as one of the finest craft whiskey in India and we believe that again from a speed to market a product like this, which has already proved its metal over the last two years in the market, will just give us, will give us speed in terms of moving out this product across market. As you know, the segment is already at 150,000 cases, growing at a very, very fast pace in India. And plus it’s also opening up doors in the international market. So it’s just about a fast catch up.
Dhiraj Mistry
Got it. Thank you very much.
Alok Gupta
It takes 18 months to two years to develop and launch a brand. And therefore we just sort of, you know, fast forward that cycle. Exactly what we’re doing in Meenakshi, that we already have a plant there and it’s only top of permission, so just helps us do an accelerated rollout of such strategic initiatives.
Dhiraj Mistry
Great, great. That explains a lot. Thank you very much, sir.
Alok Gupta
Thank you very much.
Operator
Thank you. Ladies and gentlemen. This was the last question for today. I would now like to hand the conference over to the management for closing comments.
Alok Gupta
Well, once again, thank you so much for taking the time out this evening and thank you for all the questions and being patient listeners and wishing the very best for the year ahead.
Operator
Thank you on behalf of Antique Stock Broking Ltd. That concludes this conference. Thank you for joining us. And you may now disconnect your lines.