Sula Vineyards Ltd (NSE: SULA) Q3 2026 Earnings Call dated Feb. 09, 2026
Corporate Participants:
Mandar Kapse — Head of Investor Relations
Rajeev Samant — Managing Director & Chief Executive Officer
Abhishek Kapoor — Chief Financial Officer
Analysts:
Unidentified Participant
Gunit Singh — Analyst
Madhur Rathi — Analyst
Presentation:
operator
Ladies and gentlemen, good day and welcome to Sula Vineyards Q3 and 9 months FY26 earnings conference call. As a reminder, all participants line will be in listen only mode and there will be an opportunity for you to ask question after the presentation concludes. Should you need assistance during this 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 over the conference to Mr. Mandar Kapse, head Investor relations. Thank you. And over to you sir.
Mandar Kapse — Head of Investor Relations
Yes. Good afternoon everyone. On behalf of the management team at Sula, I would like to welcome you all to the Q3 and 9 and FY26 earnings calls. Today on the call from the management team, we have with US founder and CEO, Mr. Rajiv Samanth and CFO, Mr. Abhishek Kapoor. They will take us to the Q3 performance and answer your questions. As always, we’ll kick off today’s call with Rajiv sharing his thoughts on the operating environment as well as the global performance. This will be followed by Abhishek taking us through the financial highlights for the quarter post which we’ll open the forum for Q and A.
Before we proceed, I’d just like to draw your attention to the safe harbor statement regarding the forward looking statements. Please note that various factors may cause actual outcomes to differ materially from those projected. With that, I now invite Rajiv to commence today’s call.
Rajeev Samant — Managing Director & Chief Executive Officer
Thank you, Mandar. Good afternoon everyone. Thank you all for joining us today for our Q3 FY26 earnings call. I trust you have had a chance to review our Q3 press release and presentation which is available on our website and the exchanges. It was clearly a challenging quarter and probably the toughest quarter since listing from both a revenue and profitability standpoint. During the quarter, we took a tactical. Decision to undertake destocking in Karnataka, our second largest market, with the objective of right sizing channel inventory in these markets. And strengthening our working capital position. Demand in Karnataka has been subdued through. This fiscal year and given the uncertain near term outlook in that market, we. Took this difficult but very conscious call to destock. Significantly, following this action, we believe we. Are now at a comfortable level in terms of stocks across markets across the country. So we do not anticipate any further material destocking going ahead. Importantly, to give some visibility here, excluding the destocking impact, our revenue in the. Third quarter was largely in line with. Q3 of last year. While this decision to destock weighed on. Our Q3 performance, we are confident that this was the right strategic step that positions us for healthier and more sustainable growth in Karnataka as consumer demand normalizes in FY27. Encouragingly, in Maharashtra, our largest market, we. Have seen demand recovery and a return. To consistent growth in the past few months. You would recall that about 6 to 12 months ago Maharashtra was the sluggish market for us. But now I’m happy to say that we are back to consistent single digit growth in this market. Across Maharashtra. In Telangana too, our third largest state. We returned to growth as guided in the last couple of earnings calls following. The conclusion of the license renewal process. With the route to market disruption now. Behind us, we expect to see good growth in Telangana in Q4 as well. As in FY27 as the license renewal. Will be in place for a couple of years, so no disruption seen in FY27 in this important market. Additionally, we saw healthy double digit growth. In other markets like up, Rajasthan, Goa and especially CST which are some of our key markets outside our top three markets. CST in particular continues to perform well delivering double digit growth in Q3 supported by increased wine listings. And I’m very happy to report that. On a nine month basis, sales to. CSD are up nearly 40% year on year, reinforcing the strength of this important channel. Coming now to our portfolio mix, the. Share of our elite and premium wines stood steady at 80% during the quarter. And within this our Source range continues to be a standout performer, delivering strong double digit growth in Q3, successfully building on the solid momentum from H1. So strong double digit growth in the nine months as well over last year. Driven by this traction, the Source is increasingly becoming a more significant contributor to our business with its share within own brands rising 250 basis points from 8.5% last year to 11% now in Q3. So now looking at a double digit. Share and I would say that a far higher share in terms of profitability. We further strengthened the Source portfolio. We are sort of doubling down on our focus on this portfolio because it. Has such great traction with our consumers. By launching an exciting new white wine. The Source Chardonnay last month in January. And in parallel, our efforts are underway to expand the rollout of the entire. Source range across more states to support. Sustained momentum going ahead. We expect this strong traction in the Source to continue in Q4 and into FY27 even with the impending duty reduction on EU wines looming up ahead. Before moving on to our wine tourism. Performance, I would just like to touch. On our market share. Very pleased to say that in the. First nine months of FY26 we gained significant market share in the elite and premium wine segment across corporation markets for which we get industry data including Karnataka and Telangana. Turning over to wine tourism now, very pleased to say that we delivered robust. Year on year growth of 34% over. Last year Q3, marking yet another record quarter. The strong performance of our wine tourism. Business, in which I would say that we are leaders in Asia, definitely has helped offset the weakness in own brands during the quarter. The strong growth in Q3 was powered. By the healthy double digit growth in. Footfalls which increased more than 15% year on year and the opening of our third resort, the Haven by Sula. And this is not far from our. Original Source, our tasting room and beyond. This is particularly heartening because after a dip in footfalls last year, we are once again seeing strong traction during this all important festive and wedding season. So looks like people are coming back. Perhaps people have started going maybe abroad. A little bit more, you know, Thailand. Vietnam, but very happy to see a. Very strong comeback for domestic travelers back to our campuses. And I think that this really reflects on the strength of our vineyard centric. Guest experience and our team’s warm hospitality and is a tribute to all the hard work we’ve done over these past couple years to continue to improve the attractiveness of the experience, to continuously add new features, new rooms, new bars and places to enjoy our wines. Coming to our new resort, the haven. We added 30 quays in October under phase one, followed by 20 additional keys in December in phase two. And this phase two in particular was delivered three months ahead of schedule. I think that in the last earnings. Call I had said that we would be adding 30 rooms in Q3, but. Instead, and again a tribute to our. Hospitality team, we have added 50 keys. With this expansion, our total room capacity has increased by nearly 50% to 154keys as compared to 104keys last year. At the same time, the new resort. Has seen strong acceptance already. Even with the significant addition of rooms, our Q3 occupancy has remained stable at around 80% which is pretty much the same as Q3. Last year. In fact, the Source and Beyond resorts saw higher occupancy. If you stripped out the Haven, which. Only started in the beginning in the. Middle of the quarter in Q3, occupancy. At the Source resort, I’m very pleased to say increased 500 basis points versus last year, while occupancy at beyond was. Higher by 200 basis points. And source is sitting just below 90% occupancy. So very strong performance. Excluding the Haven, our occupancy stood at about 85%. Further, some milestones. I am pleased to note that the. Christmas 2025 weekend we set a record. For highest ever single day revenue and footfall. And then in even More good news, Q4 has also started on a strong. Note with the Republic Day long weekend. Topping the Christmas weekend record. Once again, we set our highest ever. Single day revenue and footfalls January 25, on the 25th of January. So overall, wine tourism continues to surge. And continues to be a very meaningful growth engine for us. A very unique offering, I would say. Across Asia we continue to be the. Most visited vineyard in the world. And you know, with a 17% growth. Footfall in Q3, I don’t see that. Record being challenged anytime soon. And the share in our total revenue has risen by 350 basis points year over year to over 11% in Q3. And that gives a good idea about. The direction in which it’s heading. Given this strong momentum and favorable outlook, we are decisively doubling down on investing in this segment. In fact, we project that over the. Next two years a lion’s share of our total capex will be allocated to wine tourism. And it would be the way we see it. We have some projects lined up, a big jump from any previous year. In line with this strategy, we have. New projects in sight which we hope. To give more color on pretty soon for expanding our resort footprint. And we are looking to add once. Again close to 50% more rooms in the next couple of years. So watch this space. A quick word on Sula Fest 2026 that was held just couple weekends back. The event was once again a standout success and it is our second sold out SULA Fest in a row. And in fact we sold a lot. More tickets this year. We had a lot less complimentary entries. That’s one of our strategies than the previous year. So the attend event was once again. Attended by over 10,000 participants and it. Included strong performances by leading artists, well. Known artists, King and Nuclear, among others. And you know this SULA Fest offers. A platform, a unique platform for SULA. To build deeper engagement with wine enthusiasts. You know, something that will stand us in very good stead even when duties come down on the EU wines in the fta. This is something that nobody else has. And nobody else is likely to have. For a long time. So speaking about the fta, I’d like. To give you an update. In the recent India EU fta you. All must have seen the press release. That we recently uploaded. Just to reiterate, the reduction in import duties is applicable only to wines priced above a minimum Import price of 2.5 Euros per 70 ML bottle CIF. The same level of duty applies also. To bulk wine. Imports. Below this €2.50 threshold will continue to. Attract the existing 150% duty. Drawing parallels with the India Australia FTA where duty reductions were phased in gradually. Over a decade, we expect a similar. Calibrated approach for European wines. The first duty reduction to 75% is. Expected to happen as per our government. As per the Commerce Ministry, around a year from now and then. We expect that it would reach its final duty level within something like seven to 10 years from the first duty reduction. these levels, an imported European wine with a cif price of 2 Euro 50 and 75% duty would typically retail at about 1700 rupees MRP in Maharashtra, which is the largest market for imported wines. Now, it could differ a little bit. Here or there, but this is pretty much where we expect it to land. So we therefore believe the framework is well balanced. Of course, we might have preferred a. Slightly higher mip, that’s the truth. But the way it’s turned out, it continues to give some protection to over 95% of our portfolio which is priced below 1600 rupees MRP in Maharashtra. Just to give some more perspective, only. Two of our 50 plus owned wines. Our Rasa Cabernet Sauvignon and Rasa Syrah. Are today priced above INR 1600 per bottle. These two wines represent about 1% of our sales volume and 4% of our sales value. We started preparing for possible concessions in. This FTA a year back and accordingly. We targeted and have made significant headway. In ramping up listings for RAFA and the Source in the last 12 months. The source in particular, in line with. Its double digit growth, also strong double digit growth listings. When I say listings, I’m talking also specifically about institutions where you have the visibility. We are extremely well represented today with. This range in wine shops, but in institutions where the process typically takes longer. You know, and you have to persuade. The buyer to list the wines. It’s been a tremendous performance. Strong, strong double digit growth in listings for the Source, which has really caught. The attention of buyers for institutions as well as wine consumers across the country. So this puts us in a very. Strong position once duties come down. And we will continue to put emphasis on expanding these listings further over the next one year. Until those until the Market opens. Just to add here the source range. Which has seen a significant double digit. Increase this year, retails at a price range of INR 1100-1500 per bottle. Maharashtra MRP therefore slotting in very well below the Aspect aforementioned. Expected MRP of INR 1700 per bottle for the EU wines at Euros 250. There has been some amount of doom. Saying you can say around the FTAs but you know there’s a strong silver lining to this as well. With these imported wines coming in for sure it will bring a lot more excitement and expand the Indian wine market and I hope we will finally, working. Together, go beyond the 1% threshold of. Total Alphabet consumption in India here. I hark back to a year ago when we were summoned by the Commerce Ministry and informed that duties would come. Down significant significantly in our fta with the EU. Just to put in perspective, it’s come down around 40% when you convert the. Currency compared to the Australia FTA. And just to also further give color. Australia has MFN status which means this. Lower price, this lower minimum price will also. Be applicable to Australian wines. In fact most FTAs are being signed. With this MFN clause. Just to make it clear at that time it was a little bit scary. The prospect, I must say. But you know I note that in. That one year Euro has appreciated by 20% against the rupee and that puts. Us today, I would say in a much less. Scary position, a much more comfortable position. We would have hoped for a slightly higher mip, but I do believe that our government has managed to come up with a balanced outcome and I must say that I look forward, we look forward to working together with our European. Counterparts when these wines come in to develop the Indian wine market together. The past 18 months have been challenging. For SULA and the Indian wine industry and in fact the overall wine market in India with multiple headwinds impacting performance. But that said, we believe that impact. On our revenue and margins has bottomed out in Q3. I am feeling a lot better about. The future and expect a much improved performance in own brands from Q4 Q4 onwards as demand conditions, the way we see it seem to be improving markedly across most key markets. Further, our wine tourism business is well. Positioned for strong growth led by sustained footfall, traction and contribution from our third resort, the Haven and new expansion projects which we will give more color on at a later date. Taking it all together. Overall we are optimistic about a healthy recovery going forward. Lastly, I am mindful of the fact that I did give some cautiously optimistic. Guidance in the past. However, based on what we are seeing on the ground today, we feel materially more confident about prospects this time around. With that, thank you. I would now like to call on. Our CFO Abhishek Kapoor to take you through our financial performance in greater detail. Over to you AK
Abhishek Kapoor — Chief Financial Officer
thank you Rajiv. And good afternoon everyone. Following the overview of our operating performance and strategic initiatives by Rajiv, I’ll walk you through the financial highlights for Q3 FY26. First, talking about the revenue performance as Rajiv highlighted, our Q3 revenues were significantly impacted by a one time tactical destocking undertaken in Karnataka. This was a conscious step to recalibrate channel inventories and preserve working capital in the context of subdued demand in the state of Karnataka during the first nine months of this fiscal. Given that Karnataka is our second biggest market, the one time destocking exercise had a material impact in Q3.
Revenues in Karnataka declined by around 21 crore compared to Q3 last year. Excluding this impact, Q3 revenues were broadly in line with the prior year. Encouragingly, our key markets Other key markets performed well. Telangana, our third largest market, recovered strongly in Q3 and delivered double digit growth following the conclusion of license renewal process. We expect this momentum in Telangana to continue going forward as well. Beyond our top three markets, we recorded healthy double digit growth in several states including Uttar Pradesh, Rajasthan, Goa as well as in the CSG channel to name a few. From a portfolio perspective, the elite and premium segments within own brands remain stable at approximately 80% of the mix.
The source range, as Rajiv alluded to earlier, continues to deliver strong double digit growth in Q3, making yet another consecutive quarter of robust performance. Before moving to wine tourism, let me briefly touch upon our nine month performance. For the first nine months of this fiscal, revenue stood at 454 crore representing a year on year decline of 5%. Excluding the one time with unwinding benefit which we took in quarter one of the last fiscal our brand revenues own brand revenues declined by 7% over the same period. That said, there are two clear bright spots in our own brand performance this fiscal.
First, the source range delivered strong momentum on a nine month basis, growing 23%. Y o y with revenues increasing from 32 crore to 40 crore. Its share within our own brands has now crossed 10%, underlining its increasing relevance within our own portfolio. Second, our performance in the CSV channel has been particularly strong. Our first nine months CSV revenues grew nearly 40% year on year driven by increased wine listings. We continue to work towards expanding our presence further in this channel. On wine tourism, the business delivered an exceptional performance in Q3 with revenues growing 34% year on year following a solid 15% growth in first half.
This growth was driven by a 17% increase in football, improved occupancy across our existing rooms and while maintaining ARRS with the launch of our new resort the Haven Baisula. During the quarter we added a total of 50 rooms, around 30 rooms in October and additional 20 rooms in December. The new resort has seen encouraging traction right from the launch, achieving an occupancy of 63% in the very first month. Our other two resorts also reported improved occupancy during the quarter. The source saw occupancy increase from 83% last year to 88% this year and beyond improved from 78% to 88.
As Rajiv mentioned earlier, we achieved a new milestone in Q3, recording our highest ever single day revenue and footfalls on 26 December during the Christmas weekend. Importantly, this momentum has continued into quarter four. For the first nine months of FY26, wine tourism revenues stood at 49 crore representing a 22% year on year growth compared to 40 crore last year. Moving on to profitability, gross margins contracted by 270 basis points year on year. This contraction was driven primarily by an adverse state mix led by lower contribution from Karnataka which is one of our high margin markets.
Karnataka’s share to our total own brands revenue declined by approximately 900 basis points year on year from 20% to 11% in Q3 FY26. I would also like to highlight the impact on margins from change in route to market for sourcing wine for our wine tourism business has now been fully tapered off. As a reminder, we implemented this change in quarter three of the last financial year, transitioning from an intercompany sourcing model to sourcing through an external distributor. Since this impact is now part of the base, we do not expect it to to have any further bearing on the margins going forward.
On the cost side, we continued to exercise tight control over operating costs. With the exception of other expenses which increased by 13% year on year, all other cost heads recorded a reduction compared to last year. The increase in these other expenses was attributable to the initial operationalization costs associated with the launch of our new resort, the Haven Biosolar. It is important to note that the Haven was operational for only part of the quarter with 30 rooms launched in October and 20 becoming operational in December as Q3 represented a partial operating period we expect better operating leverage and closer alignment of cost to revenues as the resort moves into a full quarter of operations and occupancies ramp up during towards the normalized level.
The impact of new labor code during the quarter was not material as our existing compensation structures were largely already largely compliant with the revised requirements. As a result of the revenue decline and adverse geographic mix, EBITDA for The quarter declined to 32 crore from 53 crore in the corresponding period last year representing a 40% year on year decline and an 800 basis points contraction in margins. For the first nine months of the year EBITDA stood at 76 crore compared to 110 crore last year which is excluding one time WIP’s unwinding benefit reflecting a year on year decline of 30% and a 650 basis point contraction in margins.
Depreciation increased in quarter three reflecting the higher capex undertaken last year as well as the haven’s lease expenses which is classified as right to use in line with the accounting requirements. That said, the bulk of our planned investments are now behind us. Capex in FY26 and FY27 is expected to moderate to 20 to 25 crore levels annually which is less than half of around 60 crore which was incurred in last financial year. During the quarter we also recognized a one time exceptional charge of 1.70 crores relating to impairment of certain yacht brands acquired in 2021.
This impairment was taken following the pruning of our yacht portfolio and discontinuation of select varietals. Interest costs for the quarter increased by 4% year on year reflecting higher average debt level. Encouragingly, our net Debt declined sequentially by 36 crore from 319 crore to close December as compared to 355 crore as of September 2025. This reduction was driven by lower capex and the WIP payout released by the government in quarter three. Our debt to EBITDA remains comfortable at approximately three times on a trailing twelve month basis. We expect to further reduce the debt by end of March supported by improved inventory levels and continued moderation in CapEx.
On WIP. Outstanding receivables stood at 85 crore as of December compared to 72 crore at the end of March. We accrued 37 crore during the quarter and received payouts of 24 crore in the first half of this fiscal heartening. To note, we have also received a WIP government release of around 10 crore in February 2026 which will further take this outstanding balance down to below 80 crores looking ahead, we expect own brands to return to growth over the next couple of quarters. As Rajiv mentioned earlier, demand conditions have improved across all key markets. We also expect wine tourism to sustain its strong momentum, providing additional support to our performance in quarter four and the coming fiscal.
Overall, we expect margins to improve and gradually revert towards normalized levels. Going forward with that, I would now request the operator to open the floor for questions and answers. Thank you.
Questions and Answers:
operator
Thank you very much, sir. We will now begin the question and answer session. Anyone who wishes to ask a question may press Star and one on their Touchstone telephone. If you wish to remove yourself from the question queue, you may press star and 2. Participants are requested to use handsets while asking a question. Ladies and gentlemen, in order to ensure that the management is able to address questions from all the participants in this conference, please restrict your question to two per participant. Should you have a follow up question, please rejoin the queue. Ladies and gentlemen, we will wait for a moment while the question queue assembles.
The first question is from the line of Madhur Rathi from Counter Cyclical Investments. Please go ahead. Not audible. Mr. Madhurati, please proceed with your questions. Whereas there is no response from this participant, can we move forward with another question?
Rajeev Samant
Yes please.
operator
The next question is from the line of Vidish, an individual investor. Please go ahead.
Unidentified Participant
Oh hi. Am I audible?
Rajeev Samant
Yes.
Unidentified Participant
Yeah. So I had a question on one of the announcement or statement that you gave around a couple of quarters back in which we told like we plan to foray into spirits. So just wanted to take your opinion. Like are we venturing into it? And why I am asking is in alcohol industry biggest limiting factor is that there is no advertisement. But we do have so much footfall in our resorts which can be a positive to introduce any kind of flavors or anything. Just wanted to get your opinion. Are we thinking in that direction?
Rajeev Samant
It’s a good question. We have taken a good look at. Some opportunities that have come our way. I must be very frank that we have not looked very strongly at starting. Our own Greenfield brand, but there have. Been certain opportunities that have come our way. However, sort of heightened valuation expectations from founders and promoters are always things that get in the way. So we continue to look and we continue to be open and we are in sort of continuous discussions now as. In terms of using our resorts also as a place to sort of popularize spirit brands. I should note that wine has a. Very special status in Maharashtra. There’s a very liberal regime when it comes to wine as compared to spirits. So if we were to start serving. Spirits at some of our resorts, we would come into a very different category. So that’s something that we really have to consider. However, having said that, your point makes, it does make sense. It’s very pertinent. You know, for us, it’s not only our resorts, which of course is, it could make sense if we could do it. It’s also our distribution today, you know. We are one of the few companies. Not one of the giants who has such strong distribution across the country. So anything that we are distributing would of course already have an advantage compared to some of the smaller craft spirit companies for whom distribution is possibly their most major challenge.
Unidentified Participant
Thank you. That was the only question.
operator
Thank you. Ladies and gentlemen, to ask a question, please press star and one now. Participants who wish to ask a question may press star and one at this time. The next question is from the line of Gunit Singh from CCIP. Please go ahead.
Gunit Singh
Hi, sir. Thank you for this opportunity. So most of the wine drinkers have, I mean, aligned drinking wine with having some aspirational value. And when it comes to Indian taste, I mean, if there’s a brand which is available at the same price as an Indian brand, which is European or French, so I mean, we would choose that. That’s the general sense. So I mean, what kind of impact would this FTA have? And do you think the, the points that are made are fair according to you? And have you done a scenario analysis for price compression or drop in volumes once the duties, say, fall to 50% and when they fall to 20, 30%.
So what is your take on this?
Rajeev Samant
So I’ll answer your first question first, which is that you feel that a. Lot of consumers would move towards imports. Doubtless you’re correct in that. I do feel, however, that given our brand saliency and the fact that there are also a lot of wine drinkers out there, like a lot of other today’s spirit drinkers who are very happy also to choose a well made Indian wine. But we are definitely very aware of the fact that once these wines do come in, as we said, at a price point of around 1700 and above, definitely they will gain traction. So we have to work harder on our quality, on our branding, on our offers. You know, we cannot sit and wait for this to happen.
And that is something that I did try to address in my speech right now in terms of the scenario planning. Look, please remember this is one year off. We have a year to start to. Plan scenarios and all that. I think more important for me to. Try to Then to MAP impact is. To work out how we’re going to lessen that impact and make sure that we remain strong and relevant even after the duties come down. That is what we are already working on very strongly in terms of, you know, giving, modeling what the impact is likely to be. I think we might work on that a little bit further down the road.
Gunit Singh
Thanks. So what percentage of our sales for the nine months are in the price range of say 450 to around 800 and above? 800.
Rajeev Samant
So I can give you a number for above 800. That is our premium range. I think it’s 750 and above. 750 and above is 80% of our sale. And I did point out that above. 1600 MRP is about well in 4% by value and that’s across the country. So it’s about 4% by. Well that’s Maharashtra MRP. I mean let’s get that state. We are talking about Maharashtra mrp. When you go to other states, some. More of our brands go into that. But these two brands of ours, these two wines of ours, Rasa Cabernet and. Rasa Syrah in Maharashtra are above 1600 rupees. So that would come squarely into contention with these imports. And please remember one thing, I must. Point out that today also you can. Get plenty of imported wines starting at, you know, if you go to your. Wine store today, you’re going to get an offer. If you buy two or more wines, you will get offers at 1300 and 1400 rupees. So it’s not that right now we’re sitting at price points above 2,000 rupees. Many wines are imported wines are already available at a far lower price point. What I’m talking about really is the. Two Euro 50 wines that are going to come. But today you have wines coming in. At €1 a bottle. Just to put it in perspective. And SULA is holding its own apart from, I would say there’s one imported brand, Jacob’s Creek, which has gotten a lot of traction across the country. However, the latest reports that we have seen there shows a decline, a significant decline in those sales. You know, SULA stands head and shoulders above the pack of imported wines that are available quite cheaply across the country even today. So let me make that clear.
Gunit Singh
Got it, sir. Point taken. So even at the price point above 800, say, I mean the, the imported wines that would be coming in after the fta, they would be priced about import wines will be available at about thousand or eight hundred rupees. So our competition would say straight away, go up even in this segment of, say, 8002000 MRP. So are we planning to reenter the imported wine distribution business or pivot towards accommodating, I mean, the inflow of wines rather than competing with them or. I mean, what are your thoughts on this?
Rajeev Samant
Yes, yes. So we are planning to start rebuilding our portfolio. But I want to point out that conditions have not changed so far much. Since we took a decision five years. Ago during COVID coming out of COVID and just before we went public to start to withdraw from this segment. It still remains a very unprofitable business. Today across India, you have a plethora of importers. You have new importers coming on board all the time. You have a big change in the structure of the market over the last couple years when some of the big retailers in the north, north especially, and people call the bonders, they started importing their own brands. So the market has become very fragmented and there is not a lot of profit in it at the moment.
In fact, it is unprofitable on the whole right now. So we will proceed cautiously. However, having said that, I think you can safely bet that by the time these wines come in, yes, we will. Have a beefed up import portfolio. We need to do that. We need to satisfy the market. We have the best wine distribution and. Salesforce, bar none, in India. And hence it makes a lot of sense for us to start to get into this with some strong brands that could hold their own. Thank you. Let’s move on.
Gunit Singh
So in this last question, I think. We will have to move on to. Give others a chance. Thank you.
operator
Thank you. The next question is from the line of Siddhant from Goodwill. Please proceed.
Unidentified Participant
Yeah, hi. My question was about the domestic pricing competition. Has that reduced.
Rajeev Samant
That continues very unfortunately to be today, really the pain point. So the pain point today is not from imports. You know, the Australia FDA really. In fact, Australian wine imports have declined. Precipitously over the past year or so. So today the pain point is, I would say, almost unscrupulous. And I always use the term unsustainable. Unfortunately, it seems to sustain longer than it should discounting by other domestic wine players. And we just, we have very little visibility on how long they can last out because it is very clear that some of these players are continuously having to pump in more funds into their companies. And I just question how long this. Scenario is going to last at this point. They are also ceasing to be as. Much of a factor. However, given As I told you, our market share continues to rise smartly in elite and premium. Probably the most pain is felt in the cheaper wine segment where our market share has come down compared to a few years ago. And we have, you know, we have sort of voluntarily been stepping back here because there you have, you know, 100. Producers and if Bogo was not enough. That is buy one, get one. Today most of them we are in. A scenario of buy one, get two.
Unidentified Participant
Okay, that’s understood. Wow. The second question was on the grape harvest. You know, there were some reports about a lot of damage around the. So how will that affect us and how is our crop been doing?
Rajeev Samant
Yes, very good question. This year the grape harvest is looking quite a bit less than in years past for us.
Rajeev Samant
For Sula, that is. That’s not such a bad thing this year, I must say. I really, having said that, you know, our hearts go out to our grape growers. It’s a very difficult year for them. You know, we had a six month. Monsoon almost this year. I think you say we started early in May and went all the way, extended till November. So a lot of damage to especially in plots that were pruned early. But that damage is much more in table grapes where the price has soared. It’s double of or triple of what it was a year ago. And so, you know, wines costing sort of less than typically less than 700 rupees, those are going to be hit. Not just ours, but everybody else and. Some of them more than us because. We have other avenues and I think. You’Re going to see a little bit. Of a shrinkage in supply of those. Wines in the market. However, wines above 800 rupees, I would like to assure you no impact on our supply. We’ve got plenty of wine. We were carrying, as you are all. Aware at last March also a pretty decent quantity of bulk wine. So we are well supplied for the year to come. If anything, to us it’s been a cash flow benefit because a lot of the grapes that could have come in, in fact we didn’t need this year. So the harvest that’s come into balance is of four. Far better scenario for sula. Oh, okay. And just one last question. Could you explain the breakup of how to €50? That is complicated. You will have to do some of the build up yourself. But you, you add on a 150% or 75%. Sorry, old habits. 75% customs duty. And then you have to get into, remember 25 states, 25 different value chains leading to 25 different MRPs or RRPs. So very difficult to this thing. But you can figure in 12, 13% distributor margin, 20 or 22% VAT. I think we have in Maharashtra, you. Know, 15, 20% retailer margin and then a big fat chunk that you have. To keep for what are called schemes, which is selling and distribution expenses in the market. Where today pretty much if the way it’s working is that on every three. Bottles of imported wine you got to. Give at least one bottle free. So that’s the scheme that’s going on right now. And if you’re not giving that, the retailer is not going to pick up your wine no matter how desirable the brand may be.
Unidentified Participant
Okay, understood. Thank you so much.
operator
Thank you. The next question is from the line of Madhur Rathi from Countercyclical Investments. Please proceed, sir.
Madhur Rathi
So I’m trying to understand, Rajiv, that like the Maharaj government came out with Maharashtra made liquor category. So let’s say in the fullness of time, after five, seven years, once the import duties on imported wines from Europe come down significantly to 20, 30%. So can the state government, to protect the interest of domestic wineries and domestic grape farmers, can the state government put a differential VAT on imported wines or it has to be the same for each category.
Rajeev Samant
They can put something known as an additional excise duty which is already there in place. So surely the state government, you know, and the state government is always looking for winning ways to boost revenue to pay for very much needed social programs. And so it’s entirely possible that down. The road state governments could do that. Having said that, I must make it very clear that we are not in discussions with any state government to do it currently or anything like that. Our industry is not. But it is entirely possible. A
Madhur Rathi
nd Rajiv, secondly, can you tell us about the WIPs? I mean are we getting that VAT refund subsidiary in Maharashtra or like how is it or. And what is the expected inflow in the coming quarters?
Rajeev Samant
So it is, you know, in place at this point until March 28th. The inflow has been unfortunately a little bit slower than expected. You know, I think in Maharashtra there is a constraint on funds. You have certain schemes that are dear. To the government and which do require a lot of. So every single, I would say scheme of this kind, industrial support and other, many other schemes, all of them the inflow over the past one year has been throttled back. Having said that, it continues. It’s, you know, it’s little bit, it’s. Rather than a gush, it’s more little. Bit more than a trickle, but it does continue. We are happy to say that GRs are coming out. I think AK gives some color on it. We would certainly have wished for it to be coming in a little bit faster. But it continues to flow, but not. At a big flow. Yeah.
Madhur Rathi
And lastly Rajiv, what is the average price of the one case that we sell in Maharashtra, Karnataka and outside?
Rajeev Samant
We don’t have that off the top of our things. But the basic price would be higher. In Maharashtra and Karnataka, lower outside. I’m sorry that I don’t have the. You know, whether it’s. We can connect back with you mother. You know, you can send us your query by email and we can get back to you.
Madhur Rathi
Sure. Thank you and best of luck.
Rajeev Samant
Thank you.
Madhur Rathi
Thank you.
operator
Thank you. The next question is from the line of Pranav from Rare Enterprises. Please proceed.
Unidentified Participant
Hi sir, thanks a lot. Can you hear me?
Rajeev Samant
Yeah.
Unidentified Participant
Yes, yes sir. Just one, one question that though we are talking about competition. What is the real quality of 2.5 or 2.5 Euro wine as compared to say majority of our current portfolio? That is one. And second is that we have actually if I Remember correctly in 2022, I think our RASA carbonate soignon one gold medal at I think Sovereign Masters in UK. Right. So that is I think first wine from India to do so.
Rajeev Samant
Yes. And only.
Unidentified Participant
Yes, yes. But that doesn’t seem to appear on your website or anywhere. And why not launch a 10,000 plus wine just to make a mark and then.
Rajeev Samant
Okay, okay.
Unidentified Participant
That benefit, have that benefit for whole portfolio rather than fighting this competition of 2.$5 or 2.5.
Rajeev Samant
Yes, yes, sir. Yeah. Okay. I will address your first question that how will the quality be? Listen, the quality will be good even. At 2, 2 Euro 50. It’s the quality and the competition is going to be quite decent. But I would say to you that. Probably these wines would be of, I would say comparable to our source quality. That’s a good way to put it. Which today is, you know, for us here between 1100 and 1500 rupees. As I said earlier, these wines are. Going to start off being more like 1700 rupees. And remember that’s at the lowest price point exactly of 2.5 Euro. But so that is the thing. Okay, we. I take your point about the Cabernet Sauvignon also. Take a look. And you’re right about that. You know, I would say that at this point, you know, when you go above 2,000 rupees a bottle, say retail. Price point, consumption Drops massively. So while your point about making, and you know, many people are, why don’t you do a five thousand and ten thousand rupee wine? You know, you’d be counting the sale. In bottles, not in cases you’d have to handle sell that, you know, and. I, I’m firmly of that belief that really you. We’ve always said let’s make wines of good, decent quality and affordable for the consumer. That’s always been our mantra. So we don’t have our sights set on a 10,000 rupee wine right now. Maybe that will come in the future, in due course. But at this point I think that. We have to, we have to up our quality. We have to hold, we will probably. Have to hold on price increases for. Our wines that cost say more than 1300 rupees. And in any case, in the last one year we’ve been going very slow in terms of price increases. I think that it should not skimp. Our bottle, our price increases on wines below say 1100 rupees, which still is. The bulk of our sale, but above. That now we will have to be more cautious in terms of price increase and give even better quality in the bottle and make sure that we are. Available across the board everywhere you go.
Unidentified Participant
Right, right. So just, just related to these two questions only. I am not saying that that wine will have a great volume, but it’s like, you know, Volkswagen has some rub off of Audi, right? So that’s, that’s, that says a lot about the brand itself. It’s not definitely you will not get that kind of volume. And second point is, if at 2.5 dollars or 2.5 Euro, if they can match our higher range of wines, is there any problem in grapes or soil or our manufacturing process that their cost in such high geographies is so low for such good wines?
Rajeev Samant
You must remember we are competing against countries that have been making wine for. A thousand years and have had a tradition of, you know, of the best. Quality wine for over a century in that, you know, we are a pretty young wine producing country. Plus unfortunately the industry has not developed. In the way that it should have. You don’t have enough quality producers like Sula in India today, you know, pushing each other to improve even better and even faster. So no, I would not say that intrinsically that, you know, anything is superior or inferior. But I would say that they have. Far more experience to have come to. The place where they, where they’ve come today. So understood. Thank you.
operator
Thank you ladies and gentlemen. That was the last question for today. I now hand over the conference to management for closing comments. Over to you.
Mandar Kapse
Yeah. Thanks, everyone, for joining us today. Is there any further queries, please feel. Free to reach out on our investor. Relations contact number or investor relations id. That’s it for today. Thanks once again. Bye. Thank you. Thank you.
operator
Thank you on behalf of Surah Vineyards. That concludes this conference. Thank you for joining us. And you may now disconnect your lines. Thank you.