Yes, we’ve seen good listings come in. The growth outlook for the industry is strong. So, what kind of revenue and EBITDA growth do you expect in the next two to three years?
Ramakrishnan Ramaswamy: The industry growth expectation is around 9% and we will be in line with that, especially in the mass premium and other segments. So, we will be mid-teens in the premium segment and low-teens in the mass premium segment.
Also, just want to understand in terms of overall EBITDA margin what is your target for EBITDA for FY25 and FY26 because your EBITDA margin in the last three years is obviously in the range of 7% to 9%. So, what’s the estimate there?
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Ramakrishnan Ramaswamy: EBITDA margin has historically been around 9%. It fell to around 7% as a result of covid and then increased the cost of materials, especially glass bottles and ENA. Post COGS prices have recovered and as a result EBITDA margins will be in line with peers in the medium term and immediately we should be around the early teens.
Also, certainly wanted to understand the raw material inflation trend as it is a concern for the industry, but would you say that the raw material price pressures are behind you now and can we actually see a downward trend from here?
Ramakrishnan Ramaswamy: This has been the trend for the last two quarters and we see it continuing for some time to come and should benefit all industry players including us.
Another thing I also wanted to talk about is as a contribution to the total revenue pie, whiskey contributes about 96% to your top line. What are you doing in terms of expanding this category or looking to expand other categories?
Ramakrishnan Ramaswamy: Whiskey has dominated the industry, with nearly 65% of the IMFL business being whiskey. So, we will continue our leadership there. At the same time, we are looking at other opportunities such as gin, rum and other items that will contribute significant amount at a future date.
What if you could elaborate in terms of how much you are expecting from these new categories and what kind of income potential this will add for you?
Ramakrishnan Ramaswamy: It will be hard to say at this point, but whiskey will certainly contribute to being an important factor in what is currently about 97% that will continue to be there. But in other segments we will see a niche where ever there is a growth opportunity for us, we will enter that segment and focus on that and continue to grow with the segment there.
I understand from your fresh issue of 720 crores that it will be for repayment of debt. What about your expansion plans and how will it improve your debt profile? Can you give us a little more clarity on the debt component?
Ramakrishnan Ramaswamy: The primary purpose of the issue is to repay existing debt in the books that we will incur and on balance it is available for growth capital. So, we are looking at some sort of backward integration that will happen in the next maybe 18 to 24 months and that will also contribute to EBITDA.
Just want to understand what geographic locations you’re looking at? Are you planning to expand further beyond Telangana and UP?
Ramakrishnan Ramaswamy: See, at the moment we produce about 30% of ENA in-house. So, the remaining 70% is outsourced by us. So, we will see huge consumption centers where we can get into backward integration. So, it is still at the drawing board stage. We will look into it and do what is necessary in the next quarter and then implement it in the next 18 to 24 months.
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