Piccadily Agro Q4: Profit & EBITDA Up Multifold YoY | NDTV Profit - video Dailymotion

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00:00We have the management of Piccadilly Agro with us.

00:02We have Dharmendra Kumar Batra, who's

00:05the whole-time director at Piccadilly Agro.

00:07Welcome to NDTV Profits, sir.

00:10Thank you so much, Neeraj, for having me here.

00:13Yeah, so, sir, I'm Harsh.

00:15I have Neeraj alongside me as well.

00:17And we'll probably try and break down some updates

00:21from your company together.

00:22So, sir, first off, I want to try and understand

00:25with regard to the fundraising via QIP,

00:28what's the purpose of the fundraise?

00:31What are the plans going forward?

00:33So, as you see, we've got this huge surge in demand,

00:38which we are thankful for.

00:40But we were not expecting it.

00:41And so we make about 12,000 kales,

00:45that is 12,000 liters of malt every day.

00:47And that's quite a lot.

00:49That's one of the largest in the country.

00:51But the way the demand is coming,

00:53we think we will need much more capacity for that.

00:56And as you know, single malts don't mature

00:59like ENA or other products.

01:01You need a gestation period of five to seven years for it.

01:04So your capacity has to go up now

01:06so that the projections that we have

01:08for the next three to five years can be met.

01:11So we are doing a capacity expansion

01:13at the existing Indri plant.

01:15And there is a new plant coming up in Chhattisgarh

01:18where a malt expansion plan is also underway.

01:21And so what entails a malt expansion plan is,

01:25basically, you lay down liquid and barrels.

01:27So that is a huge capital cost.

01:29And most of this, the money which we are looking

01:33for expansion is for that purpose.

01:37Mr. Batra, good afternoon.

01:38Neeraj here.

01:39So what is the current capacity, Mr. Batra?

01:42And at what stages would the newer capacities

01:46come on stream, assuming

01:47that the fundraise exercise is successful?

01:50So we started this exercise

01:53before even the fundraise was announced.

01:56And the capacity in Indri will commence within this year.

02:00So we will be almost two and a half times

02:02the capacity we are within this year.

02:06And the next capacity will be installed next year.

02:08Okay.

02:09Which would take your capacity

02:11to what times of the current capacity, if you will?

02:15So we have 12,000 liters of malt every day today.

02:18Right.

02:19So it'll go up to 30,000 a day

02:22towards the end of the year, say September, October.

02:25And the new capacity coming in FY26

02:28takes it up to how much?

02:3060,000.

02:3160.

02:31Wow.

02:32So you're nearly going 5X your current capacity.

02:36Yes.

02:36And I think India, people, especially after COVID,

02:41kind of made up their mind

02:42that they want to maybe drink less, but drink better.

02:45So people are going for quality over quantity.

02:48Sure.

02:49So if you're drinking a whiskey made out of molasses,

02:52EMA, versus something which is made out of malt

02:56and it's been matured, is far superior.

02:58And I think people are now,

03:00they understand people are well-traveled in the country,

03:03much more education is there, and more disposable income.

03:06So we think this trend is going to carry on

03:08and we'll have a better year this year

03:10than we had the last year.

03:12And each year should be better than that.

03:14Sure.

03:15So Harsh, again, joining back.

03:16I want to try and break down.

03:18So the thousand crore would take care of

03:20pretty much all of the expansion?

03:23All the expansion.

03:24And so expansion is a very small part of this.

03:28And like the machinery and equipment

03:31is a very small part of this,

03:33but the barrel and the liquid expansion

03:35is the major part of this.

03:37Right.

03:38And just in terms of how this will help you scale better,

03:43how your margins will therefore evolve,

03:47what's the sense like with regard to FY25 overall?

03:51So we have a net profit margin this year

03:54of about 13% plus,

03:57which is, I think, healthier than most other

03:59Alcobev companies in the country.

04:01And I think it should marginally improve over the next year.

04:06But overall, because there will be products in the mix

04:09which are very high margin and medium and low margin.

04:12So when you balance that out,

04:1413 to 15% margin is what we're looking at.

04:19Okay.

04:20Mr. Batra, a couple of questions.

04:22Have you put out any formal guidance for,

04:25or if not a formal guidance,

04:27a formal view of what you reckon growth could be like

04:30for FY25 or FY24?

04:33Yes, we have put it out,

04:36but those are documents work in progress as we speak.

04:39So we just got the approval from the board yesterday,

04:42and we will be now with our consultants

04:45putting in the key numbers

04:46and then probably speaking to the capital market

04:50regarding that.

04:51Okay.

04:51So the formal guidance might come out

04:52in the next two or three days, maybe, if you will.

04:54That's correct.

04:55Something like that.

04:56Okay.

04:57But just to the question,

04:59you mentioned the net profit margins.

05:01The highlight amongst everything else

05:03was also the expansion in the operating profit margins.

05:05I believe 23% versus 5%.

05:07Is this the new normal?

05:09Would you believe you will be able to maintain

05:10an average of 20 to 23% for FY25?

05:15So, you know, in the sense that if we have a 30% growth,

05:20and we lose maybe a percentage or two,

05:22I don't think that'll make a difference

05:24in the larger scheme of things.

05:25Yeah, I agree, I agree.

05:26So I mean, I'm not stuck to a number,

05:27but say circa 20% is an average

05:30that you reckon you can maintain.

05:32We should be able to,

05:33because most of the products which we have now

05:35and which are in the pipeline

05:38are all premium or super premium products.

05:41And the company decided about four years ago

05:43that there's a lot of pressure on the cheaper products

05:47where the volumes are huge,

05:49but the market pressures and the inflation

05:52was affecting it very badly.

05:53And we decided that we would discontinue that segment

05:56and concentrate only on the premium segment

05:59and the luxury segment.

06:00Got it.

06:01So I have one more question on that

06:02because twice in this conversation with us,

06:03you've spoken about the product pipeline.

06:05We know Indri's been rocking,

06:08it's been a great performer for you.

06:10What else is coming out?

06:12Is it largely a whiskey-based newer segments coming in?

06:15What else?

06:16We do have a few products in that category,

06:19but what we are coming,

06:21what we've launched towards the end of last year

06:23is Kamikara.

06:25That's a pure cane juice rum.

06:27And we are very bullish about that

06:28because as you know,

06:30from Kashmir to Kanyakumari,

06:31India grows sugar cane.

06:33And if you were to look out in the market,

06:36we don't have a good rum in the market today.

06:38There is zero rums from us.

06:41We have a lovely old monk that we have nostalgia about,

06:44but a good quality rum,

06:45which is made from sugar cane juice,

06:47which is, so a sugar cane juice rum

06:49is more akin to a cognac

06:52because they're both considered fruits.

06:54So if you will drink a four or five-year-old

06:56cane juice rum matured properly

06:58and a cognac VSOP,

07:00you would get similar taste.

07:02So that is a market which is very strong down South.

07:06And the North drinks more rum,

07:08the South drinks more cognac,

07:10like brandy and those products.

07:13And we are looking at an expansion in that segment

07:15and to upgrade the drinker of the rums,

07:18which are at the level of a 300 to 500 price point

07:22to take them to a 1,000 to 1,500 price point.

07:26Right.

07:26You've spoken about 30% growth

07:31and giving away maybe one to 2% margin.

07:34I'm just quoting you here.

07:35Just doing the rough math,

07:37it looks like you're nearly gonna double

07:39in terms of your top line,

07:40if this is the trajectory at which you're going,

07:43just in terms of both capacity as well as pricing.

07:45You won't get a commitment from me on that,

07:47but yeah, we would like to go that way.

07:50Sure.

07:50And therefore, likely next year,

07:55at least the math seems to suggest that you'll double.

07:58I'm just trying to think harsh

07:59and I'd love to get Mr. Bhadra's comment on this.

08:02Again, no formal guidance here,

08:04but if Mr. Bhadra does what he's done in quarter four

08:08for the rest of FY25,

08:10then doubling PAT is also an understatement.

08:14Yeah, you're gonna more than double PAT.

08:15So, I mean, typically around 800 crore

08:19is the top line currently.

08:20Might go to 1,500 as per just the capacity increases.

08:24And we're not asking for confirmation,

08:26but of course, no, no, no, we're just chatting here.

08:29There is one correction to be done here.

08:32So when we do a capacity expansion in any industry,

08:35what happens is you start to get results the same year.

08:38But in malt production,

08:40we start to get our results a little later.

08:42So it'll be two to five year projections

08:44that would be, so what I make today and lay down,

08:47we cannot be bottled.

08:48So we follow the norm,

08:51which has been followed by Whiskey World over,

08:53that we mature a whiskey for minimum three years

08:55before it can be called a malt, a single malt.

08:58And so you need that gestation period for sure.

09:02Okay.

09:03Okay, so yeah, that kind of thing.

09:04I have one final question really,

09:07and this is off numbers, Mr. Batra,

09:09but Indian whiskey, Indian gin,

09:11Indian alcohol at large seems to have come of age.

09:15Indri is of course the standout,

09:17but the clutch of others are doing well too,

09:19across companies.

09:20You reckon global acceptance of this is picking up

09:23and therefore, my question is,

09:26would the balance of your sales

09:29over the course of the next five years,

09:32tilt more in favor of what is happening in exports

09:35versus what the share would be right now?

09:37Definitely.

09:38So that's what our plan is in the next five years.

09:41We want to have a larger share of export

09:43than the Indian market.

09:44So the Indian market is great

09:46and there's only so much that it can consume, right?

09:48In that segment.

09:50But if you see the US,

09:52which is one of my primary markets after India,

09:54is one of my largest consumers

09:55and the demand there has,

09:58I've not been able to meet the demand this year.

10:00And so we are looking to build this capacity

10:02also with the vision that, you know,

10:03the exports will increase many fold.

Piccadily Agro Q4: Profit & EBITDA Up Multifold YoY | NDTV Profit

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