United Breweries Ltd (NSE: UBL) Q4 2025 Earnings Call dated May. 08, 2025
Corporate Participants:
Unidentified Speaker
Jorn Kersten — Chief Finance Officer
Vivek Gupta — Managing Director & Chief Executive Officer
Analysts:
Unidentified Participant
Latika Chopra — Analyst
Harit Kapoor — Analyst
Jaykumar Doshi — Analyst
Dhiraj Mistry — Analyst
Vanshika Gupta — Analyst
Presentation:
operator
Ladies and Gentlemen, good day and welcome to United Breweries Limited Q4 and FY25 earnings conference call. 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 the Star then zero on your touch tone phone. Please note that this conference is being recorded.
I now hand the conference over to Mr. John Kirsten, Chief Financial Officer. Thank you and over to you sir.
Jorn Kersten — Chief Finance Officer
Thank you. Hello everyone, thank you for joining this call. We are pleased to have you here to discuss the development of quarter four for the financial year. By means of an introduction, allow me to share some of the highlights on performance before I also hand over to Diet for some comments and then afterwards we’ll get into the Q and A. On the quarter we see a volume growth of 5% which is despite some temporary suspensions in Telangana which I think everyone is well aware of, as well as industry wide challenges from duty, structural changes in Karnataka, one of our biggest markets as well as the growth was predominantly coming from Andhra Pradesh, Uttar Pradesh, Maharashtra as well as Assam.
From a segment point of view we continue the story on premium growing our premium segment ahead of the market both for the quarter where we grew 74% as well as for the full year where the growth stands at 32% and within premium we are growing the first portfolio and is led by Kingfisher Ultra Ultramax as well as the Hanken Server brand. Moving to the P and L we see that net sales increased by 9% in the quarter which is roughly in line by the 10% growth that we see for the year which is basically the volume growth and the premiumization but also supported by price increases in multiple states.
And then if we look into our gross margin development for the quarter extended 32.1% and full year at 43% which of both improving versus last year which is good despite some of the short term margin pressure that we see ahead of the completion of our own capacity extension, so relying largely on growth coming from contracted parties. Last but not least, looking at the bottom line, we delivered 24% EBIT growth for the quarter which stands at 130 while we are still investment behind the brands as well as the organization and supply chain. As mentioned, we also invested ahead of the peak season which is the current quarter.
Now in the quarter we have to mention that we continue our journey as a category maker focusing on beer category growth and winning across all segments. We allocate Significant resources to develop our supply chain network, both with our partner network but also with investments into our own network where we announced in this quarter the new retail brewery which will be set up in the uk. In the quarter we see the annualized cost of reinvestment into our organization. That’s been a very conscious choice to drive a growth journey. And soon we’ll continue to invest behind the brands and in the quality of our deals.
And these are just a few of the pillars that continue to guide the strategy as we work towards long term sustainable growth in the market. And of course we’re aiming to long term improve on profitability as well as our capital efficiency.
I’m sure there will be questions, but before we address those, let me hand over to Vivek who will also share some of his comments on the development of the business.
Vivek Gupta — Managing Director & Chief Executive Officer
Yeah, thanks John and thank everyone for joining. I would say I think we’re quite satisfied with the results of this quarter and the progress because I think the last investor call I mentioned we had a rocky start to the year in January driven by almost full month. We could not sell anything in Karnataka because of the labor changes which was an industry issue but there was a big impact. And then in Telangana we made a commercial decision of suspending our supplies for good amount of the month, almost more than half of the month to do that.
So the largest volume market and largest profit market both were impacted in January which would have led to a lot of other challenges because in both these locations put together we have five duties and that impacts the cost and everything. But I would say that I’m very proud of the team who bounced back despite these challenges. And we ended up with the quarter at 5% body growth and 9% field growth but structurally much better output of where we were. We also announced this quarter our CapEx investment in up about our greenfield duty, I’m happy to inform you I think last week we got the final land what we needed.
So we are accelerating that buildup of our greenfield delivery at a very fast pace. We also made further design choices on how do we make this business more sustainable. We looked at each of the markets. We have put some design to win projects. One of these projects I know is shared in the investor presentation is about Maharashtra. It is one of the distributor market. But we never looked at our distribution network in depth. I was quite shocked to see that Almost there were 13 districts where we had zero distribution point or coverage. And so we looked at design and distribution network which is aimed to provide better service to retailers.
There are almost more than 20,000 Maharashtra and we think that the response time where if they order and they get net stability will move from around 62% to almost 95%. So we are really improving the service which really helps to build category and doing that. So those kind of design projects. We are doing this kind of work in two other states also which helps us to design to win. We also expanded our Amstel Grande into West Bengal. Very good early results. And as we talk we are actually launching in up on Amstel Brandy as well.
We did a lot of work on peak season planning during this quarter so our inventories were higher despite some disruptions. So all put together I think we ended up we had a very good quarter. We are really looking, we are middle of the season, almost half the season is gone. But we feel confident that some of the choices we have made are going to be in line with the long term aspirations. The big worry part in this whole is the increase in consumer prices and duties. I think we have seen the impact of that on the category like Telangana took 15%, 20% price increase of consumer Karnataka we have still had a duty increase and now again there is conversation happening on that.
So I think that we think that affordability is the biggest threat to growth of this category. But we are working very closely with the government regulators to give data to really have a voice so that there’s more sustainability on this industry. And there are states where we’re doing extremely well. There are states where the category is down and there are states where we are working hard in. So overall I think we are in a good shape from an organization perspective I would say we continue to invest in building a very strong talent pool and very strong capability and that is completely on track.
Yesterday we announced that our supply chain director, Vikt Dillon, who has been in India for almost two years, two and a half years and very experienced, he’s moving back to Amsterdam in August and we are actually getting a top talent to replace him who has been a viewer throughout his career and worked in Hennecom from 2013. What the market’s like. Haiti, Congo. He’s Italian and he’s right now looking after Caribbean business and he’ll be coming back here. So he continues to work on the talent plan as well to do that. So with this I hand over to the moderator if you have any questions.
Questions and Answers:
operator
Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their touchtone telephone if you wish to withdraw Yourself from the question queue you may press star and two participants are requested to use handset while asking a question. Participants are requested to limit the questions to two per participant. If you have a follow up question please fall back on the queue for further questions. Ladies and gentlemen, we will wait for a moment while the question queue assembles.
The first question is from the line of Krishnan from Nirolbang Institutional equities.
Please go ahead.
Unidentified Participant
Yeah, my first question is regarding Telangana. You had mentioned last time that there was a 15% price increase that you obtained. You were also. You also stated that there is a further pricing grades that you expect quote unquote shortly. A has that price increase come through and if not when do you expect that? That’s my first question on Telangana.
Vivek Gupta
Yeah. No see you know we just got the pricing only in February 15th. When I say, you know very soon I think it has to go to the government pricing committee and all. So I don’t know the timing of that and there’s no notification that has come. But I’m not expecting any pricing in the next few months because it goes through a process. You know it is a pricing committee which needs to be there. But our conversation with the government is completely on that. It is important that they understand that we are still not out of the web completely on this front.
And also the recent price increase for consumers is also impacting category growth. So we also have to see the data in the next couple of months how the QIA category performs in Telangana overall and then we will go back with a comprehensive proposal which actually they would like to see how their revenue increases. We would like to see how our viability of our business increases. So it’s still work in progress right now. The another focus in Telemana is to get the payment back. You know there is overdues. I think we did get a part of it but we are still not.
I think we are also working with the government and through the industry association so that the payments are regularized as per their commitment because especially in the season we don’t want to get back to a situation where the category is going. We are going and we are fetched on working capital if we don’t get the payment. So we’re working very closely with the finance department of the state and the stakeholders so that the things that you.
Unidentified Participant
Thanks. My second question is Karnataka. You had mentioned after the third quarter results part of the conference call that there was a 30 to 35% reduction. Jan versus Jan. You also mentioned in the presentation that there was a Decline in Karnataka for the quarter. Does that continue in the month month of April and the earlier part of May and if so what’s the extent of the decline?
Vivek Gupta
Yeah, I think there is. I cannot share the exact numbers of April with you but I would say that the decline is not to that extent. But there is a decline WG decline in the category which we have seen since the duries have increased and it has also driven primarily because the price of the economy there has actually gone up. Now on the other side as a company we are growing shares. But as I keep repeating, my role is not to only grow share, it is also to grow category. We are category makers, not category takers.
So on the share side we are doing well because the economy segment has slowed down. We did not take pricing on Kingfisher. We have a very strong program. We are sponsoring ipl. All of those things are there. But there is a real challenge on the category versus the previous year in karma.
Unidentified Participant
Thank you.
operator
Mr. Krishnan. Does that answer your question?
Unidentified Participant
Yes, it does. Thank you.
operator
Thank you. The next question is from the line of Latika Chopra from JP Morgan. Please go ahead.
Latika Chopra
Yeah, hi. Thanks for the opportunity. You know my first question was on demand trends. You know there are a lot of moving parts here. You just mentioned, you know, chatter on another round of tax increases in Karnataka. There’s been price increases in certain parts of the country and of course you know whether it has been also not exactly turning out to be hot in certain parts of the country. So in this backdrop, you know, what is your confidence of you know, sustaining, you know, mid to high single digit kind of a volume growth for your portfolio? That’s the first question.
Vivek Gupta
Yeah, I think it’s not all doom and gloom. There are states where we also do extremely well. Up is one good example where the policy, the excise policy has been progressive. They’ve added a number of outlets of beer. You could see the impact of that. The prices are more or less to do that. The actions we took in Assam continue to yield results. The work we are doing in our go to market and design choice is to better serve because all second time there is enough work to be done other than price on this category driving category and being there we have installed 2x number of fijis already.
So one of the things I talked to you about when we want to invest in cold beer. So we have markets where we are doing extremely well. Andhra is another example where. We actually. Did quite well in the hotel and continue to serve the market. And in fact one of the Reasons our gross margin was also impacted because we had to import a lot of volume beyond our view in under consumer demand there. So it’s a tale of two cities. Basically there is two halves. You have, we have states where we do extremely well. There are states where we are creating demand and there are states like Telangana Tanaka and in some cases where we have supply issues in certain states which, where we are the category is really struggling.
But I also believe it’s a cycle. We just have to continue to work with the regulators and the government and bring the impact of this. So I think I’m still confident that the level of growth we are delivering, all 6 to 7% volume growth we talk about is extremely possible.
Latika Chopra
Thank you for this. My second question was on gross margins. This was a good performance in the quarter. But I also wanted to understand how, how are you sensing inflation in some of your key raw materials, barley particularly because I think the current quarter probably is a key procurement quarter. Any thoughts on share of recycled glass bottles versus new glass bottles? How is that trending for you and potential for these gross margins to improve going forward? Thank you.
Jorn Kersten
Yeah, no, that’s a good question. And I think we keep a very close eye on gross margin development also from a future perspective. But long term we want that to of course develop in the right direction. There’s a couple of items you mentioned then. One of the challenges of course being that in India we cannot translate cost price increase into consumer pricing. Therefore we need to look at all angles to make sure that we drive sustainable margin development. You mentioned bottles. Over the last three quarters we’ve been able to improve our percentage of bottle injection.
So coming down versus the quarters before previous years. So that’s one thing where we definitely have a lot of focus on to make sure that we, that we take the right decisions also to balance that we see input costs also going up in other areas. So it remains a bit of a challenge. And the other thing which also plays a part here is that on our growth journey we’re investing behind capacity. But it means that while we’re expanding our own capacity we rely on think of partners to do which has on the bottom line delivered a similar profit margin wise in the way we account for has a negative impact.
So we’re happy with the current margin development but very cautious in terms of the outlook because there will be some short term pressure on the margins which means offsetting your items that I mentioned.
Latika Chopra
All right, Any specific color on barley costs? What I made out was your share of recycled bottles is increasing right
Jorn Kersten
yes. Not specifically on pricing. I think we had. It’s always a bit of a mixed slide, no significant impact.
Latika Chopra
All right, thank you so much.
operator
Thank you. The next question is on the line of Hareet Kapoor from Investec. Please go ahead. Hello, Mr. Hareet, your line has been unmuted. Please go ahead with your question.
Harit Kapoor
Yeah, can you hear me?
operator
Yes, sir.
Harit Kapoor
Okay. So yeah, I just had a couple of questions. You know, just wanted to get a sense now where are we as far as, you know, the share of premium and the portfolio is concerned? We’ve got. You had two years of fantastic growth on that part of the business. I know it is a slow move up in terms of mix and when do we believe that scale benefits as well as benefits of RM etc. Start to really show up in an improved margin profile which kind of positively benefits the portfolio? That’s my first question. On margins or premium?
Vivek Gupta
Yes. No thanks. I think last year you’re right. In 2024, our premium business grew almost 34% for the full year. And we continue to see the momentum of the premium business. I think a lot of it is driven by the choice we made on localizing premium production in many, many locations. And also we looking at our portfolio to really do that during this period we also had some disruptions like the labor disruptions in Karnataka and all of those things we put together. But having said that, I think our premium business is in the right track.
Our expiration is to grow even faster. So I’m not happy with 30, 35% growth because our shares are still mid single digit and growing. And we know that for the last five quarters the premium business is growing and premium is still today 17, 18% of the market. So we have a Plan to hit 25 share of premiums for which we have to further accelerate premium. And when we accelerate premium we have to put lot many new bottles as you know, because that’s how the equation works. We have done a lot of good work on collecting old bottles.
Last couple of quarters back we talked about getting lot of operating discipline there working from choice which is helping us. But this has also helped us to balance because we are also putting a lot of new models on premium in the mix to do that. So it is a plan. Structurally we are getting the right way on the premium portfolio as we are making those choices. But the focus on premium will remain growth for the next few, I would say years, not only quarter because we really need to keep hitting 35, 40% growth year on year on premium so that we actually Reach a respectable share on premium.
And I think based on the consumer response as we are making availability, better execution, better programs, we are very confident it will happen. So we feel good about it. And then you know that once the return bottles start coming in, then the margin profile will improve.
Harit Kapoor
Fantastic. The second thing was on preparedness for summer last quarter years we had certain supply chain led challenges. I think few months back you also spoke of a lot of efforts we have gone into making sure that some of those blocks don’t occur again. We just wanted to know one and a half months broadly through the peak. Summer. How is your execution in your mind panned out? Do we expect some positive offshoots of some of the supply chain unlocks which you would have done showing up in this time somehow?
Vivek Gupta
Actually absolutely. I think I feel pretty good that we had a plan. But if you ask me how did we execute that plan? I think seven out of 10. But if we didn’t have a plan, we would have been 3 out of 10. So. But definitely I would say that both of those plans definitely helped us. We could feel that momentum and the share growth what we are seeing in our business right now. Having said that, we also had a couple of setbacks very early on. One was around bottle supplies because you know that the bottle industry went through a lot of changes, especially with some of the key big suppliers, they merged and some of the acquisitions come through. So we had a little bit of glitch there which we are trying to manage, you know, in the whole part.
And other than that also, you know, the second big challenge we learned was the government warehouses where we are having in the corporation markets. While we increased our supplies and planning. In many cases government states were not able to increase their depots or execute their warehouses. So we had situations where a lot of trucks were standing outside the depots for many number of days. Not because we were not planned well, it was just because we placed in the government depot did not increase proportionately where the category is going. So all these are part of learning.
That’s why I call it 7 out of 10. So not only on the issues like the right taxation, we now also go back and work in the activity of what is the right network design, especially for the corporation market where government depots are there. Because if the beer category is going to grow and we are going to really leave that category growth, it needs space, it needs to do that. So states like Rajasthan, we face a challenge where depots are not there. We face some challenges in some of the other categories growing and we can give it to them because it was not growing as fast a year back and two years back. And it takes time to build infrastructure. So I think these are all learning. But these also become opportunities for next year.
Harit Kapoor
Fantastic. Fantastic. Those are my questions. Come back for me. Thank you. Thank you.
operator
Thank you. The next question is from the line of Avinish Kumar from Nuama. Please go ahead.
Unidentified Participant
Yeah, thanks. I have two questions. My first question is on the Maharashtra distribution changes which you are doing. So the question there is essentially is this something new for the deer industry in India? In the mass end premium end clearly will be more urban focused. So there it is easy to do. So the benefits of this will be more from a working capital for the distributors or it will be more that the stockouts which were happening. Those will get addressed. And any sense on the stock outs, if you can mention that’s the first question.
Vivek Gupta
Yeah, I would say I think we designed this whole deal from a pure customer point of view. And coming customer as a retailer. That is the store getting the best service in the distribution models. Right. And the service measure are if they’re placing an order, will they get the delivery within 24 hours? Are they getting good fresh goods? Are they able to get access to all the range? Are we closer to the market? So this was a complete network design exercise that where do we need distributors, where do we need distribution points? Where do we need how do we serve the retailers better? How do we make sure that the execution in the store is there? So the design was made keeping end customer in mind rather than a distributor part.
Now the benefits are going to be all of it, whatever you said, better availability. Because in many cases we are expanding the distributor warehouse space. In many cases distributors are opening up multiple distribution points so that they can store it. Now all that needs excise regulatory approval. Some is this, some is it is also about making sure that there is better discipline in the market in execution. So I don’t know that it’s the first in the beer industry. But I definitely think that the quality of work which has happened is quite intense. It is quite world class.
What we see in terms of quality of data at a store level, quality of execution and what we are going to monitor. And we will be able to reach 100% of the stores in Maharashtra and every. And we know it’s a market which has a good gross margin also. So we can actually invest in developing the market. And in parallel we are also continuously recommending to the government to reduce the gap between beer and spirit and Taxation and even reduce taxing of beer because has not grown significantly in the last few years. So we are feeling good about it on what we’ve done.
Unidentified Participant
Sure. Thanks. Two follow ups here. One is which are the two other states where you are doing this and eventually will it be fair to expect that medium long term pan India this will happen. And in terms of cooler placement in Maharashtra, what percentage is there currently and will you target here also say the 100% which you mentioned?
Vivek Gupta
Yeah. On the cooler placement. Apologies, I don’t have the exact number. I can come back to you. I don’t think that target is 100% solar placement in Maharashtra. I think we’ll be around 50% solar placement in the next couple of years which will be much higher than 8 to 10% or 10% we have today because it will take a lot of time. Yes, we are doing this work in other states. I can’t tell you right now. We have to keep something for the next possible call also. But yes we are doing and some of it is a little bit confidential and competitive because there’s a lot of work redesign work we are doing.
But in Maharashtra we have completed good work in terms of defining a distributor, defining the points, the execution. I think already the people are in place in the stores so we wanted to share it. But yes, this will happen at least in four states this year. And the idea is to get this playbook and go to all India. So we are picking one distributor market which is Maharashtra, one corporation market which will be one thing, one wholesale market and one corporation market led by corporations. So we’re using a different architect of markets. Create a playbook, have an execution model so that for next year and year after we keep expanding it.
Unidentified Participant
Sure. My second and last question is in terms of innovations and new brand launches we have seen sharp scale up in the last 18 months. So specific question is in the states where Amstel and say Heineken Silver etc have been launched, could you share is this creation of a new new revenue generator for you more market share gains? How exactly has this panned out and any learnings, any. Any things you can improve in terms of execution based on the launch which has happened till now?
Vivek Gupta
Yes. No, I think we are feeling very good about both Henneco Silver and Amstel Grande. I would say Hennecom Silver we had a challenge of producing only in couple of states and we got approval to produce in Karnataka last year and we are expanding Hennington Silver in Karnataka again in some markets like Goa, Henkel Silver is very Palatable business now and doing and actually when I look at our plans I think we are actually growing high Double Digital, Hennepin as a brand and Hennepin Silver is growing in leaps and bounds where we are doing so great product, great acceptance.
Ansel Grande is in two markets right now, Maharashtra, Mumbai and West Bengal. We are expanding to up this week. The initial thing is there. We are very encouraged with the initial trials and repeats especially on the premium brand and investment mall. We already reached almost 4 to 5 share of that premium category so it’s helping to grow shares but it is also helping to grow our revenue because it’s a paid up story. It’s a premiumization. I think on your execution learning it is just state by state game, getting labels registered, production, making sure we have people model especially in the dark market because as you know you cannot advertise and talk about how the product is better than what you already what is available.
So a lot of it depends on in store execution and distribution. So it’s a slower buildup than what I would like. But we are working creative ways to make sure that the Zima is actually tied with product. But we are extremely happy with both the launches and our focus is on the phase where we have launched. We do a very good job then we go to the next stage and the next stage.
Unidentified Participant
So thanks, that’s all from my side. Thank you.
operator
Thank you. The next question is from the line of Jay Doshi from Kotak. Please go ahead.
Jaykumar Doshi
Hi. Thanks for the opportunity. We think around, you know, last summer if I remember correctly your bottle recovery rate was about 65% or maybe a little lower than that. What you know, how, what if you could talk about the progress you’ve made over the last three, four quarters and what should be the expectation for this summer in terms of bottle recovery rate. And second is if you can give us some idea of, you know, for the new bottles, you know, whether you what is the nature of contracts you have and do you have visibility at a full year level of the inflation and you know any outlook or color you can give there.
Jorn Kersten
Thank you for the question. Very straightforward. On the bottom returns we’ve improved by approximately 300 basis points. So we’re happy with that. And as Vivek mentioned, a lot of operational improvements that are going on and that will continue to happen as we see it across India. We see pockets where things move better and there’s still opportunities to continue to do so. And as we continue to expand the portfolio also mentioned by Vivek, we’ll Continue to have a challenge on this because with building the category it also means that we’re looking at our consumers and future consumers, which means that we want to attract new consumers into the category with new innovative products which in many cases also lead to new bottles.
So it’s something that we continuously balance and where we also closely connect with our suppliers. I won’t go specifically into contracts, but we are running a key supplier program which also involves multi suppliers, one of our main partners. So we’re looking into building longer term strategic partnerships with many suppliers of which also better suppliers.
Jaykumar Doshi
Okay, thank you. Actually, I think there is some, you know, maybe you’re away from the speaker, whatever, but we’re not able to sort of get, get the message clearly. Anyway, I will go back and revisit the transcript. Second question is, you know, in this quarter there’s a significant, you know, if I look at March quarter gross revenues versus December quarter gross revenues, it’s broadly flat. You know, the excise component has declined 13% and net sales, you know, on a QOQ basis is up 16%. So normally we don’t look at quarter on quarter but very surprised to see the trend of, you know, sharp decline in excise.
So if you could explain us, you know, what is the change in the state mix that has resulted into this? And my last question is at a full year level, receivable days have increased by about 23%. Receivables have increased by 23% versus 10% increase in net sales, so. Or maybe even lower increase in net sales. So some updates on, you know, what is the situation of collections from the state where we had problems and you know, is it getting better or the problem still sort of remains.
Jorn Kersten
Yep. Thank you. And I hope I am audible, I move a bit closer to the speaker.
Jaykumar Doshi
It is, thank you.
Jorn Kersten
Ah, okay. Very good. Oh yeah, of course. Yeah, that’s actually, that’s an accounting impact from a change in VP where the excise is no longer part of our P and L because we are no longer liable for paying the excise. There’s a change in for paying excise and nothing else but that. And that’s the full change in RPML in terms of the difference between net sales and gross revenue. So that’s one on the receivables. Yeah, we see two main items which is one, we’re still in effective to there if we compare it versus last year in terms of the aging of the inventory, sorry, the aging of the receivables.
And secondly we see also an increase in preparing For Seabee where we grow more inventory in the corporation markets which leads to a temporary increase in our receivables because the collection happens only after we dispatch further into the market. So we did expect also a temporary peach on the sheet which we also expect to recover. Overall I think as mentioned earlier the conversation with Telangana remains ongoing and it’s our main priority now after we’ve got the first pricing to make sure that we also recover the cash. I think we can say that we are in a better space than where we were a quarter ago.
But it remains a high priority to make sure that we recover it for the other markets. We do expect that as we see recover that peak in the sensors over the next couple of weeks and months.
Jaykumar Doshi
Thank you and wish you the very best for financial year 26.
Jorn Kersten
Thank you.
operator
Thank you. The next question is from the line of Dheeraj Mistry from ICICI Securities. Please go ahead.
Dhiraj Mistry
Yeah. Hi. Good afternoon sir. So first question is regarding capex. So when do we expect that the up CAPEX would be done and when it would be materially contributing to the volume numbers? And what would be the capacity of this plant?
Vivek Gupta
I think the beauty is going to take two years minimum to build. So without that we cannot count on extra volumes. And we already shared there is a range of capacities we are looking at from 1.5 million to 3 million, 3.5 million. So depending on the demand at that point of time the policies we can be modular and we have already started investing that capex. As I said we already got approval for the land so and we had to make some deposits. We already started placing some orders, working on working with architectures and also so the work is. Work is built on but it will take minimum two years to complete the project.
Dhiraj Mistry
Got it. So the reason why I’m asking is that during the peak summer season we have seen multiple times there is a capacity constraint which we face. And given that now the summer season has been going on, what would be the constraint because of the capacity and whether it would multi easily restrict the volume growth in the current quarter.
Vivek Gupta
There is some restriction in some states. There is a concern. I also talked about reduction in demand because of, you know, excise duties increase and pricing increase as well. So we are balancing. We are also transferring stock from one state to another which has an impact on margin. But we are taking this call. We’re also strengthening our partnership with our partners, contract manufacturers. I think as Yaun said that as we increase that volumes while the profitability looks very similar. But there is an Impact on the margin. So we are making all those calls? Yes. Do we have supply issues in few states? I would say yes.
Yes. I would say yes. We did be planning but there are a couple of things. But as I said we end up much better shape than the last year. But as the trends on the category growth normalizes, we’ll continue to invest capex tools into more capacities and we are making a lot of strategy calls which you will hear sooner about those calls as well.
Jorn Kersten
And if I can add something here, as you mentioned earlier on that it’s about the network design which consists of many different pieces, part of which is investing in capacity extension, partnering up with network partners, as well as planning, logistics and warehousing, etc. So we’re working on all these pieces to make sure that while we are building capacity we will be able to supply the market. So it’s a consistent trade off where we also look at margins versus growth again to really build the category. So we would continue to make these trade offs also when our own capacity becomes unstream and it’s a conversation that we have if we look across the whole of India, there’s still excess capacity.
So it is really a matter of deciding what is the trade off between maybe incurring lower margins on the short term but really growing the volume so that at the moment that we get capacity on stream, we can also benefit from the margin extension. So trade off will be part of our continuous business for the short term, but also for the long term.
Dhiraj Mistry
Yeah, that’s a lot. Thank you. And second question related to that, what would be our current capacity in terms of sector liters and what can we expect in a capex for next 2 to 3 years period?
Jorn Kersten
Sorry, could you repeat that question?
Dhiraj Mistry
Yeah. So what would be our current capacity in terms of hectolitres and what would be the CAPEX over next two to three years?
Vivek Gupta
Yeah, I think, look, as I said we are adding more capacity so. And the current hectare liter capacity is a function of the capacity on in our own view and the negotiating capacity with the contact viewers. So I cannot give you the exact numbers because it’s easy for me to give you numbers but there is also commercial context attached to it. But it is safer to say our CapEx investment rate is going up in multiples versus the previous years. So we already announced a massive investment in up. We already talked about making capex investment in Aburi’s.
We are already. I don’t know if you share with you. We are already setting up a can line in Maharashtra in one of the duries which will be ready by the next season which will give us a significant leverage on our can volumes as well. So that is another capex investment we have made. We are investing capex in poolers which is the last capex investment. So I can only say that the capex investment is going to grow in multiple and we just need to do a better job of execution and making sure the momentum business continues to happen.
Anything you want to add there?
Jorn Kersten
No, I think again it is a trade off between investing in commercial capex to really grow the demand and make sure that we serve consumers as also from sourcing and where we also balance to really service the trends that we see. So I think we have mentioned plans and we see if there’s momentum on plants so we need to make sure that we are ready to supply that. So we’ll continue to do that as we move along.
Dhiraj Mistry
Got it, Got it. And sir last question is related to price hike. So other than Telangana is there any state where we are expecting price high or likely to already taken price?
Vivek Gupta
We have taken pricing in few markets. You know Rajasthan there has been a price increase which has been effective April we have taken in Orica the price increase up. We have taken a pricing in up. So there are few markets where the pricing has happened. We also at the same time we’re also investing in the business like in Karmatka we did not take a price increase increase on fixed strong despite the due increase last time. So we are balancing our investment choices here. But yes there have been few states where we got the prices.
Dhiraj Mistry
If possible can you quantify that?
Vivek Gupta
Quantify in terms of like we can track that in the next quarter but right now I may have the numbers with me. If you see our volume versus the price mix has been 4% we grew 5% and price mix has been 4% we’re hoping to maintain that for next few quarters at least.
Jorn Kersten
If you look at the current quarter there it’s quite a good balance between volume growth and the contribution from price mix on net sales. And like Zvek mentioned we go case by case and state by state where we see how do we best serve the consumer and grow the category. So it will be again here a balanced trade of where do we take. Pricing and where do we invest in. The market very much.
Also speaking to the earlier comments around the importance of affordability and that we really want to be the category maker which means that we need to keep a very close eye on what consumer wants and needs while also safeguarding our margin. So it’s going to be a case by case decision. Overall, our aim is to maintain sort of a similar trajectory with the balance between volume growth and contributions from pricing. Mix
Dhiraj Mistry
noted. Thank you. That’s it from icic.
operator
Thank you. The next question is from the line of Anshika Gupta from JRK Stockbroking. Please go ahead.
Vanshika Gupta
Yeah, hi. Thanks for the opportunity. I just have one question. I know we’ve spoken about CapEx being multiple. You know we’re doing it in the brewery, in cans, in coolers. So I just wondered if we could quantify that in numbers over two to three years. What is the capex that we’re investing in? And we plan to use debt to finance some of this capex. If it is substantial, that will be the follow up.
Jorn Kersten
Yeah, I’m not going to comment exactly on the capex numbers. I think it’s been a continuous conversations we had also in east coast where it’s been highlighted that over the previous years we were falling slightly behind in terms of capex of looking at the percentage of. So that’s where this comes in, where we plan to significantly increase and also make sure that we have the restructuring in place to make sure that we’re able to finance that.
I think over the past year we’ve also learned a lot from the situation in Telangana and looking at how does that work for our cash flow similar to planning the question that we had earlier on receivables. I think these are all things that have happened now but continue to be part of this market for the years to come. So that means that if we also want to invest, which is clearly part of the plan, that we need to make sure that we have the structure in place to be able to do so.
Vanshika Gupta
Got it. Thank you.
operator
Thank you ladies and gentlemen. That was the last question for today’s conference call. I now hand the conference over to Mr. Vivek Gupta for closing comments.
Vivek Gupta
Thank you for the engagement and thank you for the questions. As I summarize, I think we feel good that the choices we made of being category makers, both premium and mainstream, winning in all stores, making sure we leverage our beauty network, we drive cost mindset and we really have a winning culture. I think we are all we pick, we are on the right track. I think this is the sixth consecutive quarter of growth on the business. Our premium business is doing extremely well. We are building design capabilities which help us to win in future years.
Not only tactical volumes. And I feel pretty good that I’m hoping this momentum will continue. We will continue to engage with the government and set up governments in every state to make sure we keep bringing the thought leadership on how do we grow the category. We need to do a lot more work on backward integration with our vendors, suppliers as we capture growth market by market. There are also volatilities in the market which we don’t know how they will impact and how they will pay. I would say that UDL is much better geared to meet the category growth and the momentum.
So thank you for your support and thank you for all your questions.
operator
Thank you. With that, we conclude today’s conference call. Thank you for joining us. And you may now disconnect your lines. Thank you.