Associated Alcohols & Breweries Limited (ASALCBR) Q4 FY23 Earnings Concall Transcript

Associated Alcohols & Breweries Limited (NSE:ASALCBR) Q4 FY23 Earnings Concall dated May. 09, 2023.

Corporate Participants:

Anuj Sonpal — Investor Relations

Tushar Bhandari — Whole Time Director

Ankit Agarwal — Chief Financial Officer

Analysts:

Umang Parekh — Ashika India Alpha Fund — Analyst

Harsh Shah — Dimensional Securities — Analyst

Nirav Seksaria — Root Capital — Analyst

Rajnish Bhairav — Individual Investor — Analyst

Rahil Shah — Individual investor — Analyst

Imran Khan — Longbow India Capital Advisors — Analyst

Muthu Kumar — Fidelity Ventures — Analyst

Presentation:

Operator

Ladies and gentlemen, good day and welcome to Associated Alcohols and Breweries Limited Q4 and FY 2023 Earnings Conference Call, hosted by Valorem Advisors. [Operator Instructions] Please note that this conference is being recorded.

I now hand the conference over to Mr. Anuj Sonpal from Valorem Advisors. Thank you and over to you, Mr. Sonpal.

Anuj Sonpal — Investor Relations

Thank you. Good afternoon, everyone, and a very warm welcome to you all. My name is Anuj Sonpal from Valorem Advisors. We represent the Investor Relations of Associated Alcohols and Breweries Limited. On behalf of the company, I’d like to thank you all for participating in the company’s earnings call for the fourth quarter and financial year ended 2023.

Before we begin, let me mention a short cautionary statement. Some of the statements made in today’s earnings call may be forward-looking in nature. Such forward-looking statements are subject to risks and uncertainties which could cause actual results to differ from those anticipated. Such statements are based on management’s beliefs as well as assumptions made by and information currently available to management. Audiences are cautioned not to place any undue reliance on these forward-looking statements in making any investment decisions. The purpose of today’s earnings call is purely to educate and bring awareness about the company’s fundamental business and financial quarter under review.

Now let me introduce you to the Management participating with us in today’s earnings call and hand it over to them for opening remarks. We have with us Mr. Tushar Bhandari, Whole Time Director; and Mr. Ankit Agarwal, Chief Financial Officer. Without any further delays, I request Mr. Tushar Bhandari to start with his opening remarks. Thank you and further to you.

Tushar Bhandari — Whole Time Director

Thank you, Anuj. Greetings, everyone. I am delighted to welcome you to our earnings conference call for the fourth quarter and the year ended financial year 2023. Associated Alcohols has continued to maintain consistent financial performance in both quarters and years propelled by our strong brand portfolio and exceptional execution capabilities. We are extremely content with the performance of our product portfolio and we are delighted to announce that we have reached a major milestone of 1 million case of IMFL in Kerala during the financial year ’23.

Our sales volume for the financial year ’23 was impressive as well. The sales volume of IMIL grew by 92% year-on-year and reached to 62 lakh cases. The sales volume of IMFL proprietary brands grew by 70% year-on-year and reached to 15.6 lakh cases, whilst the sales volume of IMFL licensed brand grew by about 53% year-on-year and reached to 16.5 lakh cases. Regarding our Q4 FY ’23 performance, we are pleased to report significant growth in our case volume. Our IMIL sales volumes grew by 97% year-on-year and stood at 15 lakh cases. Similarly, our IMFL proprietary sales volume increased by 35% and stood at 4 lakh cases, while our IMFL licensed brand sales volume grew by approximately 49% year-on-year and stood at 4.75 lakh cases.

Regarding our operation, it is important to note that our company is not immune to the industry’s cost pressures [Indecipherable]. Specifically, we have faced challenges on the margin front due to sharp unexpected rise in the price of raw material being right and glass bottles, both physical inputs for our product. While we anticipate this elevated price to persist in the near future, we have devised [Indecipherable] to counter this trend. These measures include increased product price, optimizing costs and enhancing our process. We are confident that these actions will enable us to regain profitability.

Associated Alcohols is making steady progress on its journey of creating exciting premium brands with robust manufacturing platform that will further support through backward integration. Going forward, our focus remains on expanding our premium portfolio of IMLF by introducing new brands in gin category, in blended malt and in rum category liberating the advantages of our capital intensive for long-term growth. The stock exchange has asked to submit another valuation report addressing certain observations.

In response to this direction, the company obtained a new valuation report and awareness report, both of which were approached by the Board of Directors — approved by the Board of Directors in the meeting held on April 15, ’23 and submitted to the stock exchange for further action. This evaluation report reconfirms the valuation considered in the company’s previous submissions to the stock exchange. As of now, the company has yet to receive any further communication from the stock exchange regarding this matter.

I would now like to hand over the call to our CFO for a detailed operational and a financial review. Thank you and over to you Ankit.

Ankit Agarwal — Chief Financial Officer

Thank you, Tushar Ji. Thank you, everyone, for joining us on this call today. During FY ’23, the company achieved a record gross revenue of INR703 crores, reflecting a Y-o-Y growth of 37%. EBITDA [Technical Issues] margin of 8.9%. Additionally, the profit after tax for the year amounted to INR42 crores with a PAT margin of 5.94%. In Q4 FY ’23, our net operating revenue increased by around INR25 lakh reaching approximately INR185 crores. We reported an EBITDA of around INR15 crores with an EBITDA margin of 7.95%. Our profit after tax for the quarter was around INR10 crores with a PAT margin of 5.3%.

The rise in glass prices as mentioned by Tushar Ji has experienced installation with an 8% increase in rice price and 12% increase in the glass cost on a quarter-on-quarter basis. Nonetheless, some commodities such as PET resin and paper have shown early sign of softening, although we expect the price situation of raw materials to remain volatile in near-term. EBITDA margin are projected to be a range bound in the near-term. Still in the long run, we are optimistic about continuing our margin expansion trajectory, driven by our premiumization portfolio and backward integrating capabilities.

As you are aware, ABL is currently going on a substantial expansion phase which we intend to finance mainly through our internal accruals. Despite this, the Board of Director has proposed a dividend of INR1 per share on a face value of 10 per share. Additionally, we are making good progress with our Ethanol project, which is a capacity of 40 MLPA and we anticipate commissioning commercial production by the second quarter of FY ’24.

Thank you for your attention. And now we are available to answer your questions. We can open the session for question-and-answers. Thank you.

Questions and Answers:

Operator

[Operator Instructions] The first question is from the line of Umang Parekh from Ashika India Alpha Fund. Please go ahead.

Umang Parekh — Ashika India Alpha Fund — Analyst

Yes. Thank you for the opportunity. First of all, sir, congratulations on the highest ever gross revenue of INR702 crores. Sir, my question is despite of that, it is not getting reflected in our EBITA. I think the margins have taken a major hit. So can you highlight the key raw materials apart from rice and glass? And what was [Technical Issues] price with respect to that for FY ’23 vis-a-vis FY ’22?

Tushar Bhandari — Whole Time Director

So good afternoon, Umang, and thank you for the appreciation on our performance and increase in the top line. So I definitely agree that there has been — the bottom line has not been consistent with the top line performance that is across the industry. And if you see the performance of the company is as per the peers and is as per across the industry, the major — as I told you earlier also, the major impact has been due to the major price in, one is the raw material, which is rice, which we’re using rice, corn, all the prices have shot up.

So a year before that, the price of say, for example, rice was around INR12,000 to INR13,000 which has shot up to around INR22,000 to INR23,000. And the price of — and in the last quarter itself, we saw an upward movement in the price of glass. So the glass prices have shot up by approximately around 40% plus. So that has also impacted because the nature of the premium product which we are selling everything is in glass. So that has also impacted the margin to a certain extent. So to mitigate these, we are going to representing to the states in this year and trying to take a price increase. At some levels, we have been able to take the price increase.

So in IMIL this year, we were able to take some price increase. In certain products, we’ve been able to take the price increase. And in terms of in terms of glass, what we are doing is that we are trying to use innovative packaging products to mitigate the increase in the price of the glass. At certain cases wherever we can reduce, we are trying to reduce the weightage of the glass. In certain cases, wherever we can increase the usage of the market bottle, we are trying to do that. And in cases wherever we are able to move to PET bottles, we are trying to do that. So hopefully, we will see a double-digit bottom line in the coming year.

Umang Parekh — Ashika India Alpha Fund — Analyst

Okay. So where would our gross margin settle at, a ballpark number?

Tushar Bhandari — Whole Time Director

[Indecipherable]

Umang Parekh — Ashika India Alpha Fund — Analyst

Yeah, for the current year itself FY ’24.

Tushar Bhandari — Whole Time Director

So FY ’24 gross margin was 46.60% [Phonetic].

Umang Parekh — Ashika India Alpha Fund — Analyst

No. The current margin has taken a hit because of the existing raw materials. So where do you see this settling at?

Tushar Bhandari — Whole Time Director

So raw material is always at a decent price. Right now, it’s settled, but depends on this financial year because as most of the ethanol plants are also coming in grain-based ethanol plant. So we are not sure what the prices is going to go up to, but On the other side, we are seeing the price of rice going up. And on the other side, we are seeing the price of corn coming down and the corn crop has been good. So the advantage to us is that our is a multi-feed plant. So we can use any commodity as a feed as a raw material. So that might mitigate the price increase this year. So we’re not seeing a substantial price increase in this year.

Umang Parekh — Ashika India Alpha Fund — Analyst

Okay.

Ankit Agarwal — Chief Financial Officer

So adding to Tushar, we are seeing — we should be improving the gross margin from here since we are planning to increase our realization on the FG front and the output products. So this should be somewhere we’ll be able to reach FY ’22, levels we should be able to.

Tushar Bhandari — Whole Time Director

And plus apart from that, we are also planning to as I told you earlier that we are planning to go into premium product category. So within a month, we have planned to launch a premium gin, which would give a higher realization to the company and we are also planning to launch a blended scotch.

Umang Parekh — Ashika India Alpha Fund — Analyst

Right. Okay. Got it. Understood. And sir, lastly, can you give numbers with respect to Mount Everest with respect to what was the top line EBITDA impact for FY ’23?

Tushar Bhandari — Whole Time Director

Mount Everest for FY ’23, the results are not audited. Report is not out yet. So we cannot comment on that. But as soon as it’s available, we will put it on the public forum.

Umang Parekh — Ashika India Alpha Fund — Analyst

Okay. That was it from my side.

Tushar Bhandari — Whole Time Director

And we have done really well. So one of the factor is growing company and we have the highest market share in the state of Madhya Pradesh.

Umang Parekh — Ashika India Alpha Fund — Analyst

Understood. Thank you.

Operator

[Operator Instructions] The next question is from the line of Harsh Shah from Dimensional Securities. Please go ahead.

Harsh Shah — Dimensional Securities — Analyst

Hi, good afternoon, sir. So sir, the first question is on the realization especially on IMIL trends. Have we taken the price that — I mean, if you look at the yearly realization, it is down by 20%. So is it because of higher competitive intensity or is it just to push the product to go get our realization — our capacity utilization up?

Tushar Bhandari — Whole Time Director

Yeah. So basically the last — the year we are talking, the financial year ’23, we have taken a slight content realization of IMIL in an intention to increase the market share of our own product, okay? So they go hand-in-hand because in IMIL, we get a monopoly, the status of a particular district where we can sell it. So to increase the sale of our IMFL products, so that’s what we did last year. But this year, we have also looked into the cost pressure and we have been able to take the price hike in IMIL.

Harsh Shah — Dimensional Securities — Analyst

Yeah. So talk about the realization hike which you’re planning to take or if you can give — just give a ballpark range as to what kind of hike are you planning in IMIL and also in IMFL products?

Tushar Bhandari — Whole Time Director

So see, we have just been talking terms. So in IMIL, I cannot tell you the figures right now, but as soon as it is out, we’d be able to inform you, but at least 15% hike we are planning to take.

Harsh Shah — Dimensional Securities — Analyst

Okay, sure. Thank you. Thanks so much.

Operator

[Operator Instructions] The next question is from the line of Nirav Seksaria from Living Root Capital. Please go ahead.

Nirav Seksaria — Root Capital — Analyst

Yeah. Hi, sir. You had mentioned that you will be launching a premium gin and also blended scotch. So sir, what will be the price range in both products that we launched?

Tushar Bhandari — Whole Time Director

Hi, Nirav. So basically the premium gin which we have planned to launch is we are planning to launch in a price range of MRPs as the entire country has different MRPs. So it should be around in the range of around INR1,700 to INR1,800 a bottle. That’s the premium gin. And blended Scott also we have planned to launch in the same category of around INR1,800 to INR1,900 a bottle.

Nirav Seksaria — Root Capital — Analyst

Okay. Thank you so much, sir.

Operator

[Operator Instructions] The next question is from the line of Rajnish Bhairav [Phonetic], Individual Investor. Please go ahead.

Rajnish Bhairav — Individual Investor — Analyst

Hello. Am I audible?

Tushar Bhandari — Whole Time Director

Yes, Rajnish Ji.

Rajnish Bhairav — Individual Investor — Analyst

Yeah. So congratulations on competitions on good set of numbers. So I have three questions which is on ethanol. We were told that it will be operational by Q2 of this year and how do you plan ramp-up in this year? And do you have any like orders from the oil companies?

Tushar Bhandari — Whole Time Director

Yes. So basically, we are in the process of the — second quarter, we’ll start the ethanol production. And in this ethanol production, we have already been in touch with the oil companies. And as soon as the production will start before that itself, we will have a tie up agreement with them. And as you are aware that in the entire country, there is a shortage of ethanol at present Government is planning to reach to ethanol capacity — ethanol blend to 20% by 2025. And right now, last year, it was done only 9.8%. So there is a huge gap in the same category. So just before starting and we are already in talking in terms with the oil manufacturing companies and they said that, sir, don’t worry, your demand would be complete. Your — whatever you’ll manufacturer will completely be lifted the day the production starts.

Rajnish Bhairav — Individual Investor — Analyst

That’s good know. And how much like interest convention you’ll receiving on this plan? And plus do you have also a subsidiary like other players from the state government like Gulshan Polyols is getting some subsidy from the state government on per liter basis?

Ankit Agarwal — Chief Financial Officer

Yeah, hi. Ankit this side. So we have subsidy applied for the subsidy and post subsidy, we are expecting our interest cost should be somewhere around 4.5% over this term loan. And as far as the other subsidies are concerned, we are in touch with the government. And as of now, we don’t have a specific — we have sales based subsidy which we save. We will get a better reimbursement from the government of around INR1 per…

Tushar Bhandari — Whole Time Director

INR1.5.

Ankit Agarwal — Chief Financial Officer

INR1.5.

Tushar Bhandari — Whole Time Director

So basically, we are in touch with the government on two fronts. One is the capital subsidy. And second is the government has already disclosed the sales based subsidy of INR1.5 per liter. So that we are already there. Plus the interest I mentioned which you spoke about, so we’ve applied for the interest submission and post the interest submission, our effective interest rate would be 4.5%. And we have already started getting the refund of the interest.

Rajnish Bhairav — Individual Investor — Analyst

Okay. And second is on your like new products which you are marketing under your brand name. So what is the marketing cost plan for this financial year?

Tushar Bhandari — Whole Time Director

So basically, sir, the marketing cost and the plan for this financial year is just to launch this brand. And as we look in the earlier conversation also, we will primarily play a bottoms-up approach that is we will try to push at the shop end and the sales person end. But definitely, when we try to develop a premium gin and as the category is expanding substantially and you must be seeing that across India, lot of gins are coming. So to stand, definitely, there will be a marketing cost. So right now, we have set aside almost around INR25 lakhs for the marketing budget for gin and the premium scotch. For these two, we will be doing and plus on the on ground activities we’ll be doing that involves a minimal cost. That is to influence the local sales to influence the bar tenders because these are the main persons who purchase it, who influence the purchase of the customer. So we’ll be spending more there.

Rajnish Bhairav — Individual Investor — Analyst

Understood. And what percentage of top line it will be contributing the new products and which — what will be the margins, rough idea over the next two, three years?

Tushar Bhandari — Whole Time Director

So basically, I’ll just tell you as a brief that over last five years, the company has continuously been focusing. Earlier, the company was primarily a commodity-driven company and we were just doing DNA sales and job of manufacturing. But five years back, we decided and started going ahead with value-added products. So five year back, our value-added products was only 5% of the top line. Today, we are standing at almost 35% to 40% of our top line of our IMFL and all the sales of our IMFL products. So to tell you right now, the contribution of gin and the blended scotch at this present would not be a right time, but once it’s is launched, definitely, we are — we will see a significant — we assume that will give us significant contribution to our top line. But definitely value-added products over the coming years would increase the top line.

Rajnish Bhairav — Individual Investor — Analyst

Okay. ON the pricing front, what you mentioned for the gin and the blended, so don’t you think these are like at par with the established market there and your pricing is still so high?

Tushar Bhandari — Whole Time Director

The things is, sir, there will be a strategic call on this. So If I tell you about a particular say, so that is general strategy which we take because we are looking for primarily volume. So see, I can keep the gin because certain companies just not to name the companies, certain companies have price their gin at INR3,000, INR4,000 and not doing the volume. So we want volume also and we want the price also. So depending on that and depending on every state, as India, every state is a different country altogether. So depending on the state, depending after doing a detailed study of the market share, volume of each and every category, price category, then only we will take our strategy call.

Rajnish Bhairav — Individual Investor — Analyst

Okay. And the last question is regarding your merger with the beer company. After the merger, how much fixed cost will be like rationalized or will it come down or will it stay at the same level?

Ankit Agarwal — Chief Financial Officer

So see, post merger, we are expecting to reduce our fixed costs 1% to 2% — in the range of 1% to 2%. But as we go merger initially, there will be some expenditure which we’ll need to do to ensure that all the integration is on a systematic basis. But on a long-term, we are expecting to reduce 1% to 2% of our total fixed cost.

Tushar Bhandari — Whole Time Director

But sir, apart from that — Rajnish Ji, apart from that, the contribution of the fixed cost, the major advantage after the merger would be boost in sales in other states, okay? Right now, because the company beer company is more of a D2C company, so there’ll be a lot of synergies when we move to other states. And the cost and overheads of moving to other states would be very less.

Rajnish Bhairav — Individual Investor — Analyst

Okay. All the best for your merger and future quarters. Thank you.

Tushar Bhandari — Whole Time Director

Thank you.

Operator

Thank you. Next question is from the line of Nirav Seksaria from Living Root Capital. Please go ahead.

Nirav Seksaria — Root Capital — Analyst

Yeah. Hi, sir. Just a follow. So sir, in the gin segment, which competitors are you looking forward to, like is it more towards [Indecipherable].

Tushar Bhandari — Whole Time Director

So basically, in gin segment, what we are trying to look at is we are trying — what we will do is that what we have done in our product earlier also. Here, what we’re trying to do is we’re trying to give value for money to the customers, okay? So like in terms of vodka category also what we’ve launched, the vodka quality is almost equivalent to Smirnoff, but we priced it at a reasonable price as compared to Smirnoff. In gin also, we will try to achieve the same. So we will give a better quality and we will try to give value to the customers.

And also we will try to enter into more of a bar and restaurant business where the gin consumption substantially in making cocktails and at all. So we’ll have to price it accordingly so that it is able to enter in those category. Because right now, there are very few gin products which have been able to enter or breakthrough in bars and restaurants. Only one or two are there. So we’ll be trying to enter that category also. And plus on the consumer side also, it will be reasonable on the consumer’s pocket also and so that he will be able to try it and use it regularly.

Nirav Seksaria — Root Capital — Analyst

So sir, my question was the competitors that we’re looking towards, is more towards the distilled end or in the gin segment?

Tushar Bhandari — Whole Time Director

More towards?

Nirav Seksaria — Root Capital — Analyst

Distilled.

Tushar Bhandari — Whole Time Director

Distilled.

Nirav Seksaria — Root Capital — Analyst

Yeah.

Tushar Bhandari — Whole Time Director

This will be completely a craft gin.

Nirav Seksaria — Root Capital — Analyst

Okay.

Tushar Bhandari — Whole Time Director

So this is a completely craft gin and made in small batches and which will have botanicals, which will be imported and it’ll be a combination of everything.

Nirav Seksaria — Root Capital — Analyst

Okay. Thank you so much, sir. All the best for future products.

Tushar Bhandari — Whole Time Director

Thanks.

Nirav Seksaria — Root Capital — Analyst

Thank you. The next question is from the line of Rahil Shah, Individual investor. Please go ahead.

Rahil Shah — Individual investor — Analyst

Hello, hi. Good afternoon to the management. So sir, I just wanted to understand in terms of your revenues, we’ve seen quite a jump from FY ’22 to ’23. So I just want to ask you how do you feel about FY ’24? How do you see this number is shaping up given all your launches, strategies, which you are working on? And then in turn, how will the margins also shape up? I’m sorry if I’m repeating it, but I just want your view given how will the raw material prices be. How do you feel about the market? If you can just explain it again? Thank you.

Ankit Agarwal — Chief Financial Officer

Yeah, hi. So as far as growth in the revenue terms are concerned, we are targeting a double-digit growth number in the FY ’24. And we are very hopeful and we’re positive that we’ll be able to achieve that. As far as margin is concerned, we are expecting the price to remain at an elevated level in the terms, but based on our processed engineering and we improving our efficiencies, we are confident that we will be able to touch the double-digit margin in the next year.

Rahil Shah — Individual investor — Analyst

You mean we’ll be able to end ’24 in double-digits?

Ankit Agarwal — Chief Financial Officer

Yes, yes, we will.

Rahil Shah — Individual investor — Analyst

Okay. And so what are your plans for geographic expansion, like which…

Operator

Sorry to interrupt you, Rahil. Can I request you to speak a little louder, please?

Rahil Shah — Individual investor — Analyst

Am I audible now?

Tushar Bhandari — Whole Time Director

Yeah.

Rahil Shah — Individual investor — Analyst

Yeah. So I was just asking you about your geographical expansion, [Indecipherable] highest revenues. [Indecipherable] How does it work?

Tushar Bhandari — Whole Time Director

So basically, we are expanding to other states as well. So we are already present in five states at present. And this year, we are planning to expand to West Bengal, Odisha and Goa.

Rahil Shah — Individual investor — Analyst

Okay. And so which products like what made you decide to enter this regions?

Tushar Bhandari — Whole Time Director

So basically, the — and a couple of factors which we look into it. And apart from because we have put a senior executive on our Board, so he was there with UFL for last 20 to 25 years and he joined the Board. So he guide us which state to enter. And then we see couple of factors is that the category which we’re planning to enter, what is the market, what is the profitability, what is the — which products we should enter and what is the payment term, how things are shaping in that market. So after looking into all that, we take a call. And in that also, we have a strategic outlook is that we do not — basically, we do not direct go and do capital investment and buy out a unit or setup up a unit there.

What we do is that first we try to send it from our location. The advantage to us is that we are based out of Madhya Pradesh. We have almost heart of India. So across India, we can set it at a reasonable cost. So initially, we start sending the goods from our location. And then once the volume starts picking up, we do manufacturing tie up at that particular location and then manufacture from that location and send the EMA from here. So that’s the strategy we follow.

Rahil Shah — Individual investor — Analyst

Okay. And so the growth for next year will be combination of both, right, volume and value?

Tushar Bhandari — Whole Time Director

Definitely.

Rahil Shah — Individual investor — Analyst

Okay, sir. Thank you and all the best.

Tushar Bhandari — Whole Time Director

Plus next year ethanol — in this financial year, the ethanol production will also add to the Board.

Rahil Shah — Individual investor — Analyst

Right. Okay. Wonderful. Thank you, sir.

Operator

[Operator Instructions] The next follow-up question is from the line of Harsh Shah from Dimensional Securities. Please go ahead.

Harsh Shah — Dimensional Securities — Analyst

Hi, thank you for the follow-up. So if I look at your IMFL licensed business, the volume has grown quite significantly, almost 83% growth for this year. What is the reason behind such huge growth in that segment?

Tushar Bhandari — Whole Time Director

So if you see not only IMFL, if we talk about, the growth has been across in the manufacturing and the value-added product category. We use IMFL licensed brand and in our proprietary brand. So both in annual segment. So IMFL proprietary brand, our own brands have increased — sales have increased by around 70% and IMFL licensed brand has increased — sales increased by around 53%. And IMFL sale has increased by 92%. So the company is completely focused on the manufacturing and sale of its own brand and that has helped us to increase the sales. And our expansion to other territories also has helped us to increase the sales and the volume.

Harsh Shah — Dimensional Securities — Analyst

Sir, IMFL proprietary I believe that expansion of territory would have worked there, but in case of license,d I believe we are only in Madhya Pradesh, right?

Tushar Bhandari — Whole Time Director

Yes. So in that IMFL license and what we’ve been trying to do is the aggressive marketing and agrressive strategy as we phase on aggressive strategies and aggressive tie ups, which has helped us to increase this. And plus the market has also increased because last year the government reduced the duty and reduced the price in this particular category and the market is also increasing there.

Harsh Shah — Dimensional Securities — Analyst

Okay. So when you say you went for aggressive marketing, were the costs incurred by you or was it done by the parent company, the license was that…

Tushar Bhandari — Whole Time Director

[Indecipherable]

Harsh Shah — Dimensional Securities — Analyst

Sorry, done by?

Tushar Bhandari — Whole Time Director

Associates.

Harsh Shah — Dimensional Securities — Analyst

Okay. Then I appreciate that color. Okay. And in case of IMFL proprietary, if we bifurcate the growth of 70% into how much would have been organic volume growth and how much could have come from geographic expansion, can you put any number to back?

Tushar Bhandari — Whole Time Director

So the 70% increase in RSL our brand. Around 50% has come from geographical growth and 20% has come from Madhya Pradesh.

Harsh Shah — Dimensional Securities — Analyst

Okay. And out of the INR106 of IMFL proprietary, how much would be from the top three markets?

Tushar Bhandari — Whole Time Director

So IMFL proprietary, I’ll say INR106 crores, approximately INR80 crores, INR85 crores would be from top three markets.

Harsh Shah — Dimensional Securities — Analyst

Okay. Thank you. Mostly will be from Kerala, right, in IMFL prop?

Tushar Bhandari — Whole Time Director

Kerala and Madhya Pradesh.

Harsh Shah — Dimensional Securities — Analyst

Okay. Kerala and Madhya Pradesh. So I mean, we were making quite good inroads in Kerala. You had mentioned that you were among the top five players. So what is the kind of traction out there now because since we have made it among the top five, so what is the strategy there over next five years the market is huge. Where do you aim to be in that market because since we have got that entry, that selling point?

Tushar Bhandari — Whole Time Director

Next two to three years plan, our plan is to be amongst the top two or top three players. And in that, we also plan to launch premium brands. And now our focus has been in that market also to increase the sales of our premium products along with the regular sale of other products as well.

Harsh Shah — Dimensional Securities — Analyst

Okay. And do you have a manufacturing plant in Kerala as of yet?

Tushar Bhandari — Whole Time Director

So right now, we have two bottle manufacturing — we have tied up with two bottling manufacturing unit in Kerala. And they are doing job work for us. So they are doing white labeling for us. So now we might — we look out for manufacturing unit in Kerala. But we believe in asset light model and expanding and concentrating on the sale rather than concentrating on and giving time to manufacturing.

Harsh Shah — Dimensional Securities — Analyst

Okay, makes sense. And when you spoke about double-digit growth, were you referring the volume growth or sales, sir? Because as it is that when you take the realization hike of…

Tushar Bhandari — Whole Time Director

Double-digit EBITDA we are seeing. Double-digit EBITDA will be achieved. And as terms of top line growth, double-digits.

Harsh Shah — Dimensional Securities — Analyst

That would be revenue, I mean, volume plus pricing growth or only volume growth of double-digit?

Tushar Bhandari — Whole Time Director

Volume growth.

Harsh Shah — Dimensional Securities — Analyst

Volume growth, okay. Helpful. Thank you. Thank you so much.

Operator

[Operator Instructions] Next follow-up question is from the line of Rajnish Bhairav, Individual Investor. Please go ahead.

Rajnish Bhairav — Individual Investor — Analyst

Yeah. So I have follow-up question on the ethanol orders because you said that volume growth will be on the double-digit because I think it should — it can only come from ethanol only.

Tushar Bhandari — Whole Time Director

No, no. So see, basically apart from ethanol, we would expect 20% growth in our top line apart from ethanol.

Rajnish Bhairav — Individual Investor — Analyst

Apart from — so ethanol will be addition to that growth.

Tushar Bhandari — Whole Time Director

Yeah.

Rajnish Bhairav — Individual Investor — Analyst

Okay. And how are the margins between IMIL and IMFL?

Tushar Bhandari — Whole Time Director

So margin between IMFL and IMIL is that in IMIL, the margin is around 10% and then IMFL margin is around 15%.

Rajnish Bhairav — Individual Investor — Analyst

15%. And like you said, you are looking for alternative like PET bottling. So are you trying to backward integrate for PET bottlings also?

Tushar Bhandari — Whole Time Director

So we already have a backward integration of PET bottle plant. We already have our own plant for which we are making PET bottles and we are trying to introduce PET bottles in our IMFL product category also.

Rajnish Bhairav — Individual Investor — Analyst

And there is no ban from the government for using the PET bottles?

Tushar Bhandari — Whole Time Director

No, no, it’s recyclable.

Rajnish Bhairav — Individual Investor — Analyst

That is ban in Maharashtra?

Tushar Bhandari — Whole Time Director

No, no, sir, it’s not ban in Maharashtra also. So government has [Indecipherable] ahead and added a social responsibility to the company that whatever PET bottle they’re introducing, they have to recycle that.

Rajnish Bhairav — Individual Investor — Analyst

Okay. And the second question is regarding your franchise with USL. So I think it is going to expire in 2025.

Tushar Bhandari — Whole Time Director

No. It is already — it will expire next month and it’s been renewed for three years.

Rajnish Bhairav — Individual Investor — Analyst

Okay. And how much royalty payment is due to the USL?

Tushar Bhandari — Whole Time Director

So royalty payments to the USL is still to be finalized, sir.

Rajnish Bhairav — Individual Investor — Analyst

So will it increase from this year or it will remain at the same levels?

Tushar Bhandari — Whole Time Director

No. It will be at the same level or slightly down.

Rajnish Bhairav — Individual Investor — Analyst

Okay. And how much of that percentage of your volume like of your revenue it would be?

Tushar Bhandari — Whole Time Director

So that, sir, once it’s finalized, we will disclose.

Rajnish Bhairav — Individual Investor — Analyst

As of now, how much is that?

Tushar Bhandari — Whole Time Director

So right now, it’s round about around INR70 lakhs per month.

Rajnish Bhairav — Individual Investor — Analyst

INR70 lakhs per month, okay. And is this irrespective of the volume how much you do?

Tushar Bhandari — Whole Time Director

Yeah, irrespective of the volume.

Rajnish Bhairav — Individual Investor — Analyst

Okay. And recently, I’ve seen that your — the credit rating has been withdrawn by CRISIL. So what was the reason for that?

Ankit Agarwal — Chief Financial Officer

No. So no, it’s not withdrawn. So we have shifted to CRISIL. So CRISIL is doing our credit rating and in fact, we have upgraded our credit rating to A plus. So earlier it was lower. So it’s not withdrawn. KR [Phonetic] has withdrawn the credit rating because it was a earlier credit rating agency.

Rajnish Bhairav — Individual Investor — Analyst

Okay. Understood.

Tushar Bhandari — Whole Time Director

We’ve got a higher rating now.

Rajnish Bhairav — Individual Investor — Analyst

Thank you. Okay. That’s good to know.

Operator

Thank you. Next question is from the line of Imran from Longbow India Capital Advisors. Please go ahead.

Imran Khan — Longbow India Capital Advisors — Analyst

Hi. Key opportunity. I hope I’m audible to everyone. Sir, my question is on raw material. Sorry, I first of all joined the call little late, so maybe my question would be a repitation. You can skip it if already answered. I wanted to understand inflation in this quarter compared to last quarter in your grain prices and the other raw material prices, if you can talk about it?

Ankit Agarwal — Chief Financial Officer

So we have seen in a substantial increase in the price of rice and glass because it is hard in this quarter on a quarter-on-quarter basis. So rice has gone up by approximately 8% from previous quarter and the glass bottles we have a hit of around 12% on quarter-on-quarter basis. So these are the two items that are hard. All other materials are in line with the previous quarter.

Imran Khan — Longbow India Capital Advisors — Analyst

Can you share the maybe per quintal cost this quarter versus last quarter and how it is shaping up in the current quarter?

Ankit Agarwal — Chief Financial Officer

See rice for the last quarter for Q4, it was around INR20,000 and currently it is around INR20,000, 21,000, which we are brokering for current quarter. And as far as glass goes, average cost of glass for the last quarter was around INR7. And we are expecting to remain in the same range in this quarter.

Imran Khan — Longbow India Capital Advisors — Analyst

So not any falls compared to last quarter, right? It’s almost similar or little higher.

Ankit Agarwal — Chief Financial Officer

Yeah. Currently rice price is on a little higher site. Glass bottle is on the same level, but we are expecting this should go now sometimes next month or next quarter.

Imran Khan — Longbow India Capital Advisors — Analyst

Right. And what do you think would be the reasons for this price increase? Is it because of this ethanol program, the demand of all of the sudden for the broken rice has gone up. This is the reason we are seeing the price or something else is contributing to it?

Ankit Agarwal — Chief Financial Officer

Two, three reason attached to it. First of all, you rightly mentioned is the ethanol, ethanol facilities. So there are many ethanol facility which are coming up. So certainly, the rice demand is going to increase. Point two this year, as we all know, we are expecting a below rainfall from the last year. So the price will be also gone up because of that also and the acreage will also be lower than the last year. So all those three factors we said and plus the government supplies also is the issue. So all these three, four regions which has pushed the rice prices in inflationary side.

Imran Khan — Longbow India Capital Advisors — Analyst

All right. Thank you for the answers. I’m done with my question.

Tushar Bhandari — Whole Time Director

Thank you.

Operator

[Operator Instructions] The next question is from the line of Nirav Seksaria from Living Root Capital. Please go ahead.

Nirav Seksaria — Root Capital — Analyst

Just to conclude, you have mentioned what is the marketing costs for the new brands coming on?

Tushar Bhandari — Whole Time Director

The marketing Cost, primarily the focus on marketing costs would be INR25 lakhs to INR30 lakhs.

Nirav Seksaria — Root Capital — Analyst

Okay. And then the overall market costs that you’re budgeting for the company for the year?

Tushar Bhandari — Whole Time Director

So overall marketing cost is not much for the company. So now as we are launching premium brand, so there is a slight marketing cost, which will keep on coming year-on-year or to promote these brands. And apart from that, as I said, that we primarily focus on the bottoms-up approach and we try and influence the shopkeepers and the retail salesmen to boost products and we try to incentivize them, so which is on a very nominal side.

Nirav Seksaria — Root Capital — Analyst

Do you think that will be included in the marketing cost of [Indecipherable].

Tushar Bhandari — Whole Time Director

See the INR25 lakhs is totally separate. That will be for promoting the premium brand, which we are launching. And apart from that to boost the sales and incentivize the salesmen,, that will be a very nominal cost.

Nirav Seksaria — Root Capital — Analyst

And that will overall for all the products including the premium brands.

Tushar Bhandari — Whole Time Director

Yeah.

Nirav Seksaria — Root Capital — Analyst

Okay. Thank you so much, sir. I’ve no further questions.

Operator

[Operator Instructions] The next question is from the line of Muthu Kumar from Fidelity Ventures. Please go ahead.

Muthu Kumar — Fidelity Ventures — Analyst

Good evening, sir. Thanks for the opportunity. In the last Q3…

Operator

Sorry to interrupt you. There’s lot of echo from your line, sir. May I request you to speak through the handset?

Muthu Kumar — Fidelity Ventures — Analyst

Yeah, in the last Q3 financial year ’23, you told the capex will be INR150 crores. I just want to know how much you have been deployed and is there any new capex plan for financial year ’24? Could you please give a color on that?

Ankit Agarwal — Chief Financial Officer

Yeah, hi. So we have deployed almost INR100 crores and we — so this is mainly for our ethanol plant and we are expecting another and INR10 cores to INR20 crores, which may go into the ethanol project. Apart from this, there is a new bottling line which is coming up and that will take-up another INR30 crores. So next year, we are expecting some around INR50 crores of outlay on the capex front.

Muthu Kumar — Fidelity Ventures — Analyst

Okay, sir, thank you. That’s it.

Operator

[Operator Instructions] As there are no further questions, I now hand the conference over to the management for closing comments.

Tushar Bhandari — Whole Time Director

I would like to thank you all for participating in this earnings conference call. I hope we answered your questions satisfactorily and at the same time offering insight into our business. For any further questions or want to know more about the company, please get in touch with our Investor Relationship Manager at of Valorem Advisors. Thank you, stay safe.

Operator

[Operator Closing Remarks]