Ladies and gentlemen, good day, and welcome to Radico Khaitan Q1 FY25 Earnings Conference Call, hosted by Dolat Capital. 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 star then zero on your touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Himanshu Shah from Dolat Capital. Thank you, and over to you, sir.
Thank you, Yusuf. Good afternoon, everyone. At this moment, we would like to thank Radico Khaitan management team for providing Dolat Capital with the opportunity to host the Q1 FY25 Earnings Call. We have with us the senior leadership team from Radico Khaitan, Mr. Abhishek Khaitan, MD and CEO, Mr. Amar Sinha, Chief Operating Officer, Mr. Dilip Banthiya, Chief Financial Officer, and Mr. Sanjeev Banga, President, International Business. I will now hand over the call to Mr. Abhishek Khaitan for his opening remarks. Over to you, sir.
Thank you, Himanshu. Good afternoon, ladies and gentlemen. Thank you for joining us on our Q1 FY25 results conference call. The fiscal year started on a positive note as we continue to deliver on our strategic roadmap. During Q1 FY25, we achieved strong premium volume growth despite a challenging operating environment. External factors such as lower consumption growth, concerns about ongoing food grain inflation, and volatile commodity prices did not deter us from delivering robust operating performance. Our commitment remains to a focused portfolio of premium brands driven by consumer aspirations. This is reflected in the strong prestige and above category volume growth of 14% year-on-year. P&A value growth was 19% during the same period. During the quarter, we launched Rampur Asava, Sangam World Malt, and Jaisalmer Gold Edition in India, enhancing the experience for connoisseurs of luxury brands.
We will expand the distribution of these brands throughout the year, including the Canteen Stores Department. Rampur Asava single malt is matured in American bourbon barrels and then meticulously finished in Indian red wine casks, which is the first time in the single malt history. Priced starting at INR 10,000 a bottle, it is currently available in seven states. Sangam World Malt Whisky was launched in the international markets last year. After its success in the global market and duty-free retail channels, we have launched it in India in Q1. Sangam is derived from the Hindi word meaning confluence, which symbolizes the seamless blend of Eastern tradition and Western whisky-making expertise. Our master blender traveled across the world to source premium malts from Europe and the New World to make this meticulous fusion.
It will be priced between INR 4,000-INR 7,500 a bottle, depending on the state of launch. Currently, Sangam is available in four states. Jaisalmer Gin currently holds a 50% market share in the luxury gin space in India. Building upon its success, we proudly launched a Gold Edition in India recently. This edition distinguishes itself with the inclusion of saffron, which is the world's most expensive spice. Of the total 18 botanicals used in the gin, 14 are sourced from four corners of India. It will be priced between INR 4,000-INR 7,000 a bottle, and presently it is available in three states. We are very proud and honored to be associated with the inaugural India House at the Paris 2024 Olympics, which has become a significant attraction for sports fans. We have been chosen as the exclusive alcoholic beverage partner.
With this alliance, we aim to showcase the richness, culture, and legacy of our nation and take India to the world. Magic Moments Vodka continued its growth momentum and recorded 1.9 million cases sale in Q1 FY25, and gross sales value of INR 300 crores for the current quarter. Today, it is the sixth-largest vodka brand globally. We have recently partnered with Saregama, India's leading music label, to launch an innovative new music series titled Magic Moments Music Studio. Comprising a total of 10 episodes, the series will be released weekly on Saregama Music YouTube channel. This platform will allow emerging artists to perform alongside renowned musicians such as Shaan, Kumar Sanu, Sophie Choudry , Nikhita Gandhi, et cetera.
Moving forward, we will invest in strengthening our brand portfolio through targeted marketing and the introduction of select new brands in the luxury and premium space. We remain confident in the medium to long-term potential of the Indian IMFL sector. With our strong luxury and premium brand, execution expertise, and extensive distribution network, Radico Khaitan is well positioned to capitalize on industry growth opportunities. As the year progresses, we expect the broader raw material basket to remain stable. Coupled with ongoing premiumization, we anticipate staying on track with our margin expansion trajectory. I would now like to hand over the call to our CFO for a detailed operational and financial review. Thank you, and over to you, Dilip.
Thank you, Abhishek. Thank you everyone for joining us on this call today. During the first quarter of FY25, we reported an IMFL volume of 7.07 million cases, representing a de-growth of 4% on year-on-year basis. Prestige and above category volume grew by 14.3%. In value terms, the Prestige and above category registered 19.1% growth. Prestige and above category account for 43.4% of IMFL volume, compared to 36.5% in quarter one of FY24. The percentage of P&A is higher due to the significant de-growth in the regular category. Improvement in IMFL realization is due to the combination of price increases and continued premiumization. Regular category volumes are impacted due to ongoing strategic rationalization of portfolio and certain state specific excise policy related issues.
Gross margin during the quarter was 41.5%, compared to 43.6% in quarter one of FY24, and 41% in quarter four of FY24. Gross margin was impacted on year-on-year basis due to the significant crude grain inflation. Grain price and inflation had a negative impact of 335 basis points on year-on-year basis on gross margin. On quarter-on-quarter basis, we have been able to sustain gross margin due to the ongoing premiumization and price increase in the IMFL business. On YOY basis, there was a 170 basis point impact due to price increase in Q1 of FY25 on our IMFL sales value. On quarter-on-quarter basis, impact of price increases was 55 basis points. Although prices of certain packing material have softened recently, we cautiously monitor the trend of grain and ENA where volatility persists.
We expect glass prices to see some moderation from Q2 onward. Increase in net debt over March 2024 is primarily due to the cyclical building up of inventory at the plant and higher receivables in certain states. Going forward, our focus will be on improving our profitability along with the cash flow generation and more efficient working capital management, resulting in debt reduction. We reiterate our commitment to be almost debt free by FY26, and thereafter focus on returning cash to the shareholder. With this, we will now open the line for Q&A. Thank you.
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 the 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. Ladies and gentlemen, we'll wait for a moment while the question queue assembles. First question is from the line of Abhijeet Kundu from Antique Stock Broking. Please go ahead.
Yeah. Hi, thanks. Thanks for the opportunity, and, congratulations on a great set of numbers. Primarily, your P&A has been growing extremely strong. So my question was on the, you know, ad expenses, selling and solution expenses, which has declined about 8% during the quarter, which has, in a way, aided your margins. What, what has been the thought process behind this? This, this could be a quarterly phenomenon, because one of your other competitors also has spent less on ad spends during the quarter, too, and which has aided their margin. So how should we think about it? What has it happened during the quarter? My first question was on that. Thank you. Hello?
So, I'll tell you what.
Yeah.
First of all, the ad spends that we have always guided would be in the area of 7% to 8% annually. The first quarter this year is an aberration. One, primarily because the first quarter industry growth has been muted. There were various delays in excise policies, and, buying and stock, stock sales were also low because of policy delays. So elections are also there. So we tried and rationalized the expenses based on the, volumes. But this will catch up in the quarters following the first.
Understood. So, other thing was, on the popular regular category, when do you see... One part has been because of your own strategic intent that you have, you know, there has been a moderation in the popular segment. But other than that, when do you see things improving in this segment? Because still it is a-
... you know, a sizable part of your portfolio, in terms of volume?
So regular, as we have guided earlier also, because we rationalize certain in certain states because of the low contribution and because of the input cost increase. Secondly, in this quarter particularly, there has been, as, Amar just mentioned, there has been delay in some state excise, where there was election. And in, Telangana also, the pipeline inventory and the debts are receivable are unchecked. However, we see we will be on a muted growth and overall we guided that 4% to 5% growth, which we aspire from the regular categories.
Okay. And in Telangana, what is the status of the receivables now? I mean, have they paid a major part of it or a good part of it is still remaining? What is the status? Because that also impacts volumes, right?
See, see, you're right. The payments in Telangana are coming on a lower pace. But payments are coming, that's most important. The government agrees that payments will be released to also build up their margins and their stock supplies. So I think we have been getting payments on a very frequent basis, and accordingly, we are supplying based on payments. This trend is likely to continue for some time.
Industry also is represented to the government on these aspects, and there is a regular interaction between the industry and the government. I think there will be improvement in future.
Understood. Thanks, thanks. That's it from my side. I will, you know, come back if I have any follow-ups. Thanks.
Thank you. Next question is from the line of Harit Kapoor from Investec. Please go ahead.
Yeah, good afternoon, congrats on good results. I just had two or three questions. One was, you know, on the external issues, you know, elections, certain state issues, certain delay in excise policies, in your best estimate, you know, what would have been the quantum of volume that you or industry lost on account of this, on account of these fluctuations in the quarter? Just trying to understand what could have been steady state growth, you know, had some of these things not happened.
3% to 4%.
Yeah, that's right.
I think it would be like... It's only suggesting it, but I think it should be close to about 3% to 4%.
Okay. Okay. Okay, got it. All right. The second thing was on pricing. You know, Dilip, you mentioned 175 basis points on pricing on a YOY basis. Given that the policies, this time were a bit, later in the year, later during the quarter also because of the, elections, do you expect the 175 bits, to be higher as the quarters progress, or to be let's say, 1.5% to 2% kind of range for the year, in your opinion?
On quarter-on-quarter basis, I said sequentially it was 55%, but the impact of the price increase on annual basis, YOY basis, is 170 basis points. We expect the price increase for the whole year to remain between 150 to 170 basis points.
Got it. Any more states left for pricing in this year, or you think that's largely done with most of the policies through now?
Some are considering it, and you will come to know soon. There are some Southern, big states which are going to give it.
Yeah, we are hoping it will happen so sooner than later.
Yeah.
Got it. Got it. And last, you know, on the CapEx side, obviously the large CapEx is now done with, but if you could just give us a sense on now what is steady state for from this year onwards, how are you looking at CapEx?
After the major CapEx, our maintenance CapEx and some CapEx from the brand, this thing will be ranging between INR 70 crore-INR 80 crore annually.
Which will be reflected in this year as well, right? Like 25 should be-
This year there will be left out CapEx of the major project, which will be INR 80-90 crores, and then maintenance CapEx of INR 60-70 crores.
Okay, so 150 this year, and then it goes to 70, 80 something?
Yeah. Then it will be INR 670 crores approximately.
Got it. Got it. Okay, super. That's it for me. Thank you.
Thank you. Next question is from the line of Vishal Gupta from HDFC Securities. Please go ahead.
Yeah. Hi, ABK team. Congrats on a good set of numbers. Three questions from my side. First is on there was a news article stating that it be restricting surrogate advertising for liquor brands. So in case you heard from industry body, if you can elaborate more on this, because since we are creating a lot of new brands, how it will impact us? That is my first question.
So, thank you for this question. See, it's like this, that first of all, we must state that the government has not said that you cannot advertise. Actually, they are talking about advertisement of surrogate brands, which the objective is to prevent misleading ads. However, the government is talking about brand extensions, which can be advertised with the same brand name. You must have a revenue model for it, which is quite justified and logical. So as far as Radico is concerned, we feel that we will respect the law of the land. We are geared up to follow the guidelines that we are being sensitized with, and we'll follow that.
Secondly, this will also result in companies that are bigger and organized to adopt more innovative and creative marketing on the ground. So where the consumer actually interfaces, and it results in impulsive buying, we will be able to showcase some of our brands more creatively, and I think it's fine with us. It will not impact us negatively. We will be able to handle it proactively.
Got it. Got it. And sir, second question about non-IMFL. So, in the last call, you highlighted that, annual sales will be around INR 15 billion-INR 15.5 billion in FY25. Going forward in the coming years, because we'll be capturing using this, the product coming out from here. So how we see sales in coming years 2026, 2027 for non-IMFL segment?
So the non-IMFL segment is basically we are utilizing our Sitapur greenfield facility now for 90% and all that. So the non-IMFL segment growth, which has been there because of the growth, growth effect and all that, and from Q3 onwards, that growth will be in line with the industry. And there we see because of the base effect going out in the consumer and UPML 6%-7% growth and otherwise in the alcohol. So it will be in the range of 10%-15%. Right now, it is 50-50% because of the base impact.
10%-15% growth will be there in 2026, 2027 you're highlighting?
'2026, '2027?
Yeah. On a non-IMFL segment.
In consumer... See, I'll tell you what, the state policy actually states that there should be a 7%-8% growth in the lower segments, and I think we will grow in line with the Excise Policy structure, which is about 7-8%.
Okay. Okay, okay. So last question is on, I think a lot of states have come out with budget, state budgets during this, I think maybe during the quarter or maybe 2Q. So any of the states you see drastic increase in taxation in any specific state, and what is the action plan you're taking, where you're allowed to take price increase and some, and certain states will be dependent upon the government? I just wanted your thought on this.
States are proactively looking at increasing the revenue, and some of the states which have had-
Some West Bengal impact, but the price increase. Yeah.
So I'll tell you what, there are certain states that are looking at price changes, and they are also considering simultaneously the requests of the companies to give them a price hike. So both will go hand in hand, and there are some states which are in the northeastern states, some in West Bengal, which are likely to see this trend.
In fact, there are a few southern states which are planning to rationalize their duties. So if that happens, it is very good for the industry. So I think if the governments are now quite proactive and they feel that if it's highly taxed, then, you know, it leads to lesser sales, etc. So in fact, they are talking of duty rationalization, few states.
Got it. Which is a very good sign for the industry.
Super. Super. So just last question on the margin front. I think last quarter you highlighted, you're targeting 15 margins by end of FY26. So that holds right, 15-16% margin by FY26 margins?
Yeah, of course.
Got it. Got it. Great, sir. Thank you and wishing you all the best for future quarters.
Thank you.
Before we move to the next question, a reminder to the participants, to ask a question, you may press star and one. Next question is from the line of Mr. Himanshu Shah from Dolat Capital. Please go ahead, sir.
Hello?
Yes, carry on, Himanshu.
Yeah. Hi. Thanks for the opportunity. Just a couple of questions. One, in the past few quarters back, you had indicated that you will be looking for launching one more whiskey in the upper prestige segments. Are those plans still on? And, by when do we expect to launch that particular whiskey?
So first of all, Himanshu, as you are aware, we have launched four luxury products just in the last 30 days, and these products are what we are going to focus on in the near future. However, the new products that we have spoken about in the past are also on the drawing board, and sooner than later, and when the time is appropriate, you will get to hear from us on them.
Okay, sure. Thank you, sir. That's very, very helpful. And that should largely fill the gap in the portfolio, or we would have any further gaps in the portfolio from a positioning perspective, especially in the whiskey segment?
Yes. So, Himanshu, first of all, that will fill the current gap that there is. But if you look at the trend of Radico, now we have started creating segments by launching products in the luxury segment. So we are the ones who are creating gaps for others-
...And, there's a small one which we are talking about, which we will fill up in the times ahead.
No, sir, thanks. That's very helpful. Secondly, sir, are we seeing any increased competitive intensity from regional or national players in the P&A segment and then, and even in the luxury segment? Because we are seeing a lot of new brands coming up, in, in this space. So-
Mm.
Is that creating any kind of headwinds or that we should be careful of?
See, I'll tell you, there, there are two situations. One, regional players are introducing new brands in PNA and below, below actually, not in PNA. PNA upwards, only organized companies are, creating brands and, we are ahead of others. As far as, others creating, the regional players creating, brands in the luxury segment is concerned, it's today non-- it's a non-issue right now, and, we're not, we're not too worried about it.
Okay, sure. Thanks. And last question, just on raw material basket. Well, actually you have already provided color, but some more granular color if you can provide maybe on broken rice, because that has seen significant inflation. And now the elections are over. I think FCI is also sitting with significant rice. So, are we envisaging any kind of softening taking place, and why hasn't it taken place till now in the broken rice prices?
So actually, Manish, so, these prices, which had risen up to INR 28,000 or so of the broken rice and all that, has seen some softening in April and middle of May. But after the government has taken one decision of increasing the MSP, again, the sentiment went toward the little price increase and all that. And since it is a non-season, government is also having stocks with FCI, which is much more than what they require, even for distribution in PDI and all that. But still the decision on FCI rice is awaited. If there is some allocation for the ethanol in the FCI rice, I think sentiment will further come down.
What we see with kharif crop being strong and the monsoon in the country is good and all that, we still feel that these prices are the peak and war should be over, but let's hope. We can't predict it.
Got you. And so, what would be the inflation in glass bottle prices or distillation, both on a YOY and QOQ basis?
Earlier, last year, we had seen a steep inflation, and it was to the tune of something around INR 9,000-INR 10,000 per ton. Right? And it was twice the increase has been there, but after that, the gas price and the other input cost price has also come down. So some softening from Q2 onwards, we can see in this.
Okay, and what kind of softening, sir, we are looking at?
Some corrections. It's for me to speak is not the thing, but there's some corrections will take place in Q2 itself.
Got it, sir. Thank you. That's it from my side.
Thank you. Next question is from the line of Prolin Nandu from Edelweiss Public Alternatives. Please go ahead.
Yeah. Hi, hi, team. Thank you for taking my question. I'm sorry I joined the call a bit late, but Abhishek Ji, you know, I have a slightly longer term question, right? So we have, you know, come to an end to our very large CapEx plan of backward integration, both at Rampur and at Sitapur. When we started, this CapEx plan, we had a certain IRR for this project in mind. As we stand today, how different is that IRR expectation going ahead, on those projects that, you know, we have incurred CapEx for? And, also we had a number of around, you know, INR 180-INR 200 odd crores of saving, due to backward integration over the period of time.
When do we think we will be able to achieve that number?
So when we envisaged this project, it was for us, a very, very strategic project. It was not for commodity, it was for our branded business. And since we are having a strong growth in our P&A category and the grain facilities and all that, we are almost at the neck for utilization and distributing to our tier units and all that. So keeping in view last 10 years, we did not do any CapEx on distillation. And keeping in mind the growth story of India and prestige and above, and especially the premium luxury and semi-luxury, we wanted our own alcohol to be there. So this was taken that time. So first of all, this is a long-term for us, not for the IRR of the commodity, but for a strong backward integration for our main branded business.
Second point is, that time, if we say that we thought that even in commodity, till the time we fill up our own consumption and captive consumption by our brands in UPML and IMFL, we will fetch a revenue and that will give us a IRR on 16%-17% on capital. But right now, it is something around 7%-8%. I think these are aberrations in this thing, which has not been there for many past many years. But for some time, we have to limit it, and when the situation again come back to normalcy, I think 12%-15% kind of IRR for the fill-up arrangement of the commodity will be fine. But the major objective of the CapEx was to carry strongly our branded alcohol.
As far as the other CapEx, which is also part of the large CapEx, is the malt capacity increase. There it is very much our strategic this thing that we want to go strong on malt because of success of Rampur and seven expansions of Rampur. Globally, in India, we are also doing great. Last year also, we tripled our volume, and this year again, we will see 25%-30% jump in our last year volume on the Rampur listing. So maturation capacity is also being increased. That will give very strong bandwidth and bottom line to the company in future. So malt maturation and malt production is another CapEx which is for long-term growth strategy point of view.
No, I appreciate that. I mean, I understand that this was for long-term, you know, in terms of sourcing our own ENA for our own ENA sales. But having said that, you know, again, I mean, I've been tracking this company for quite some time now, so this might sound as if, you know, these are repetitive questions. But if you look at some of the larger players who have a very large, you know, share in ENA as well, they still, you know, depend on external ENA for their ENA, you know, alcohol as well.
So is it something very specific to the kind of alcohol that we make, kind of brands that we make, which has, you know, which requires a backward integration, and I mean, some of our peers not wanting that backward integration? Anything on that, sir?
So first of all, yes, you are right. But the point is, it makes a lot of strategic sense for us to create our own alcohol. And you see a market share on the widespread, which is based mainly on account of the quality of alcohol, extra neutral alcohol, which we use. And throughout India, we use our own alcohol rather than taking from anybody else. And that is, that is reflected in 60%+ market share in the whole vodka family, right from INR 200-INR 300 vodka to INR 10,000 vodka, our market share is 60%, and that reflects. Again, we have been able to create a craft gin. One of the reason is, again, our own alcohol, which is very, very superior quality.
Third thing is, that as far as the competition is concerned, competition is also shown their intent, that they want an integrated backward facilities. Two of the large competition have already announced that. And looking into the government very aggressive plan on ethanol, biofuel and all that, everybody wants their raw material security.
Sure, sir.
That's a large player of 30 million and growing by 15% plus. We want our raw material security for next 5 to 10 years.
I understand that. So that's it from my side. Thanks a lot, and all the best.
Thank you. Participants, to ask a question, you may press star and one. Ladies and gentlemen, anyone who wishes to ask a question may press star and one on the touchtone telephone. We have our next follow-up question from the line of Abhijeet Kundu from Antique Stock Broking. Please go ahead.
Thanks for the follow-up. Actually, you know, this is a follow-up on one of the questions asked by one of the participants. But when we look at your-
Your voice is very... Actually, you can speak near to the mic.
Yeah.
Can hear you more clearer.
Can you hear me now? Can you hear me now?
Yeah, I can.
Better.
Better. Better.
Yeah. So when we, So essentially, it is a follow-up of one of the questions asked earlier by one of the participants. You know, when we look at your overall product portfolio, you have a very strong, you know, vodka portfolio, which spans across, you know, P&A and then the luxury segment as well. But in the whiskey segment, you have a very strong brand now, 8PM Black in the mid segment. But then, you know, there is this upper upper prestige, which you had alluded to last time, that you would come out with a product. But upper prestige and up to, you know, INR 2000 just below Royal Ranthambore, that segment in whiskey is remaining, and that has a good amount of volumes to believe.
Because your competitors, you know, the largest competitor has a very significant chunk of its their volumes coming from upper prestige segment, and which is. And they are they are also very profitable. So, is the work on that because your work in the luxury segment has been really excellent. Now that you have the, you know, the experience of coming out with very strong brand in the luxury segment, for you, coming out with a high quality upper prestige whiskey should not be a big, you know, task. So what's your thought process? By when we can expect something in this segment?
Because the INR 1,000-INR 2,000 in Maharashtra, so to say, that is a segment which is hitting up, you know, amongst the competitors, the two bigger MNCs.
... No, because, absolutely right. Like, if you see the history of Radico in the last 25 years, we will be the only company which has been able to launch 20 brands organically, out of which seven brands are millionaires. So we have mapped out the entire industry, and as far as whiskey goes, our 8PM Black is there, which we launched, which is doing very well. Second, we've also had the same, one whiskey, After Dark, which hopefully in the current year will become a million case brand. Then we attempted Royal Ranthambore, which is the first Indian whiskey at a Scotch price, and that brand also is growing by more than 50%. And that's gained a lot of traction. And in the luxury, Rampur is very well accepted with the consumer, and it's about INR 8,500 a bottle.
Now, we've launched After Dark at INR 10,000. As far as the segment what you are talking, as Amar also had told earlier, we have all the products there on the drawing board, and at the right time, we'll get it to the market.
Okay, sir. Understood. Thanks.
Thanks.
No timeline per se, you are giving, right? I mean, 4-8 years, whatever, that-
Right now, after the success of Jaisalmer and Rampur, this is the quarter where Radico has launched four luxury brands at one time into the domestic market. So our focus would be to consolidate that and grow the distribution for Rampur Asava, Jaisalmer Gold, Sangam World Malt, and 99 . So I think we need to do justice to the luxury at the moment.
Okay. So but, just one thing, I mean, these are excellent products, but, volumes and the market, for the upper prestige to the, the gap between the upper prestige and the luxury, that volume is also quite large. And, what, the way, you know, the upgrades are happening, and the premiumization, are happening even in the, in the middle to upper prestige is quite significant. I mean, so, that's why I'd asked that, you know, this is a segment where a lot of profit can be made and a lot of profit pool is there and a lot of volume pool is also there.
Yeah, as I said, you are absolutely right. So a lot of it's on the drawing board, and at the right time, you'll know about the launch.
Okay, sir. Thank you.
Thank you. Next question is from the line of Kushagra Kejriwal, an individual investor. Please go ahead.
Hello. Actually, I'm the investor, right. So I had to just get an idea about the relativity of food grain inflation and if it can affect the margins further. Food grain inflation. For further margin, what do you want to understand?
I think the food grain inflation, I think the worst is over, because already the rice price and also like in the one of the question, like, the government is sitting on a lot of stock of rice, which they need to dispose. So I think as far as the industry goes, I think we've seen the worst of the inflation, and I think now onwards, it will, it will be same or it will suffer.
Okay. Okay. Thank you, sir.
Thank you. As there are no further questions, I would now like to hand the conference over to the management for the closing comments.
So moving forward, we will continue to deliver a strong prestige and above volume growth, driven by our diverse brand portfolio. Secondly, we will further develop our luxury brand portfolio, which we see as a major contributor to our profitability. Furthermore, we are focused on ensuring that our investment operates as efficiently as possible. This will enable us to generate cash, repay debt, and return cash to the shareholders. We look forward to interacting with you on our next earnings call. In the meanwhile, if you have any queries or follow-up questions, please feel free to write to us. Thank you.
Thank you. On behalf of Dolat Capital, that concludes this conference. Thank you all for joining us, and you may now disconnect your lines.