Mcdowell & company Limited announces Q1 results, Revenue up 20%, EBIDTA up 1l7%, PBT up 212%

Today McDowell & Co. Ltd. announced excellent results for the first quarter of fiscal 2007. Profit before tax is up by 212% on a revenue increase of about 20%. Earnings before Interest, depreciation and tax, at Rs.77.5 crore for the quarter registered an increase of about 117% from the corresponding period of the previous year.

Reflective of the improved trading conditions, the Proforma aggregated results of the Companies being combined to form UNITED SPIRITS LIMITED also show a nearly 70% increase in EBIDTA to Rs.104.5 crore. Profits before tax for the combined entities stood at Rs.73 crore, an increase of 168% over the previous year.

The Company has initiated a drive to de-emphasize the less profitable second line brands with the intent of driving value rather than volume. This refocusing has helped McDowell & Company to record, a 7% increase in the volume of its profitable first line brands.

While the costs of the primary raw material, namely spirit, have come down from its peak price of a year ago, a slight upturn is visible in the prices of recent purchases. The Company has cushioned the impact of "Off Season" cost pushes through maintenance of judicious inventory levels.

There have been some changes to operational practices whereby the Company purchases finished goods manufactured at its contract manufacturing units for sale under its own invoices as opposed to the previous practice of capturing only the economic surplus. The practice has commenced selectively and will be extended wherever local legislation permits.

The quarter under review has seen the start of the Company’s international forays with two acquisitions.

To facilitate the entry into the high growth wine market in India and also to facilitate acquisition of distribution muscle in many potential overseas markets, the Company has acquired Bouvet Ladubay located in France. Bouvet, a company established in 1851, has an outstanding portfolio of Sparkling $ Still wines which are currently sold in USA, France, Germany, UK. etc.

The Bouvet wine will be progressively introduced into India both as Bottled in Origin packs as well as Bulk wines for domestic bottling. The Company will explore ways to leverage the existing Bouvet network in Europe for export of select varieties of its Indian products. The cost of the acquisition is approximately Euro 15 Million.

With the view to ensuring continuity of supply of Scotch at affordable prices to cater to the future growth, in India, the Company has decided to set up a Scotch maturation facility in Scotland. This will enable the Company to purchase fresh grain and malt spirits at economic prices and mature them in-house to suit the age profile required in India. These facilities are being set up on the grounds of a Company - McDowell & Co. (Scotland) Ltd., located in Perthshire, Scotland.

McDowell, the transferee company, has obtained the approval of the Karnataka High Court for the proposed merger / demerger involving the consolidation of the. operating Spirits companies, viz., Herbertsons Ltd., Triurnph Distillers & Vintners Ltd., Shaw Wallace Distilleries Ltd., Baramati Grape Industries Ltd and United Distillers India Ltd., with McDowell & Co Ltd., to form United Spirits Limited (USL). The expectation is that the final approvals with, respect to the transferor companies will be received shortly thereby paving the way for completion of the merger process by September 2006 and listing thereafter.

Source : Equity Bulls

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