Good afternoon, ladies and gentlemen. I, Mahendra Kumar Sharma, Chairman of the company, extend a warm welcome to all of you at this 23rd Annual General Meeting of your company. I'm informed that the requisite quorum is present, and I therefore call this meeting to order. I hope you and everyone in your family are safe. Due to COVID-19 pandemic, social distancing norms, and considering the safety of the members, this meeting is being held through video conferencing pursuant to the circular issued by Ministry of Corporate Affairs and Securities and Exchange Board of India. The shareholders have been provided with the facility to participate in this meeting through video conferencing, other audio visual means, and vote on the items of business to be transacted at the AGM. I am participating in this AGM from Mumbai. I now introduce the other directors of the company participating in this meeting.
Ms. Hina Nagarajan, Managing Director and Chief Executive Officer of the company. She is participating from Bangalore. Mr. V.K. Viswanathan, Independent Director and Audit Committee Chairman, who is participating from Delhi. Dr. Indu Shahani, Independent Director and Chairperson of the Corporate Social Responsibility and Environmental, Social and Governance Committee and Nominations and Remuneration Committee, is participating from Mumbai. Mr. D. Sivanandhan, Independent Director and Stakeholders Relationship and General Committee Chairman, participating from Mumbai. Mr. Randall Ingber, Non-Executive Director, participating from Melbourne. Mr. Mark Sandys, Non-Executive Director, participating from Dublin. Mr. Pradeep Jain, Chief Financial Officer, participating from Bangalore. Mr. Mital Sanghvi, Company Secretary, participating from Mumbai. Mr. Rajeev Gupta, Independent Director, and Mr. John Kennedy, Non-Executive Director, expressed their inability to participate in this meeting owing to their prior commitments. We also have Mr. Dibyendu Majumder, Partner of PricewaterhouseCoopers, Chartered Accountants, LLP, our Statutory Auditor.
Mr. Sudhir V . Hulyalkar, our Secretarial Auditor and Scrutinizer for this meeting, all participating in this meeting through video conferencing from Bangalore. In the event of any interruption during the meeting, owing to any technical glitch at my end, I hereby authorize Ms. Hina Nagarajan, Managing Director, to preside over the meeting for the rest of this meeting or until I can resume. Since the AGM is being held electronically, physical attendance of the members is being dispensed with, and the requirement of appointment of proxy is not applicable. The statutory registers, as required by the Companies Act, 2013, have been made available electronically for inspection by the shareholders during the AGM. Since the notice of the meeting has already been circulated in advance to members, I take the notice of this meeting as read.
As the reports of the Statutory Auditor and Secretarial Auditor does not contain any qualification, I also take the same as read. Dear shareholders, now I would like to update you on the key financial performance metrics of your company, its strategic priorities, as well as initiatives undertaken towards corporate citizenship. During the year ended 31st March 2022, net sales income from operations of your company was up 18.9% and stood at INR 93,817 million. Net sales of the prestige and above segment increased 23.6% and stood at INR 68,050 million net of duties and taxes. Previous year, the corresponding number was INR 55,035 million. The prestige and above segment represented 72.5% of the total net sales and 53.9% of the total sale volume during the year.
As a result of our strategy and focus on executional excellence, our net sales increased by 18.9% during the year, mainly due to stronger consumer demand in the off-trade premiumization and recovery in the on-trade business. We saw an increase in net sales of our prestige and above segment at 23.6%. This is the highest ever growth rate for the portfolio and double the historical growth rates. In the backdrop of the pandemic that has served to underscore the importance of a healthy and sustainable world, your company's new mission statement takes a broader and more complete view to deliver long-term value to all stakeholders. We are confident of moving forward to the intrinsic strength of our product portfolio and operational agility. We aim to tap into market trends and new consumer cohorts to fuel our mission.
Our new mission is to be top performing CPG company in India, delivering sustained double-digit profitable top-line growth and long-term value creation to all our stakeholders. For this, we have been working on the following three pillars. One, portfolio reshape. Two, be an organization of the future. And three, thrive in society. Your company has been striving hard with a strong focus on premiumization and at the same time also trying to maximize value from brands in its popular segment. During the year, we made significant investment in our talent pipeline and progress towards a culture of inclusivity and shared values. I'm particularly pleased that nearly 28% in the leadership positions in the organization today are occupied by women. Last year, we launched Society 2030: Spirit of Progress, a new 10-year action plan on the role we will play in the society.
We have three goals that are built around the most material issues of our business context in India, driving ESG from grain to glass, moving India towards drink better, not more, and leading the inclusion and diversity. I do not want to take much of your time as all the other initiatives and achievements are stated in detail in the annual report already sent to you. I would now like to take you through certain points regarding participation in this meeting, which are as follows. Number one, the facility of participating at the meeting will be available to the members on first-come, first-served basis. Number two, all the shareholders participating in this meeting by default will be put on mute mode to avoid any background noise, disturbance, and to ensure seamless conduct of this meeting.
Number three. During the question and answer session, the name of the speaker shareholder will be announced, and the shareholder will be allowed to express his or her views on the performance of the company and ask questions. Number four. In order to provide equal opportunity to all the speaking shareholders, time slot of three minutes will be allotted to each shareholder to express their opinion, ask questions, and shareholders are requested to adhere to this timeline very strictly. Number five. The speaker shareholder is requested to click audio/video button while speaking. If the shareholder is unable to join and express his or her views, he or she is requested to put his video off and speak through the audio mode only.
Number six, if there is a connectivity problem at speaker shareholder's end, we'll ask the next speaker to join the meeting, and once the connectivity issue resumes normalcy, the previous speaker who has not been able to join owing to connectivity issue will be requested to come back to speak. Number seven, during the meeting, if any technical glitch is faced by any shareholder, he or she may get in touch with CDSL at the helpline numbers mentioned in page 21 of the Notice of the Annual General Meeting forming part of the annual report. Number eight, speaker shareholders are requested to minimize any background noise and recommend to use their earphones while speaking for better audibility. The entire proceeding will be recorded and made available at the website of the company, and live streaming of this meeting will also be cast on the CDSL website.
Members are requested to refer to instructions provided in the notice and appearing on the video conference page for seamless participation through video conference. Before reading out the agenda items for the meeting, I wish to inform our shareholders that on page 24 and item number three of the explanatory statement forming part of the AGM notice, directorship details of mine have to be read as follows. He was chairman of the Board of Directors of ICICI Bank and was on the Board of prestigious companies such as Wipro, Asian Paints, and Nestlé. He's also a member of the Executive Board of the Indian School of Business. There are some typos there. As per the notice of the meeting, following items of agenda are to be considered at this meeting.
As ordinary business, adoption of audited financial statements, including consolidated financial statements for the financial year ended 31st March 2022 and the report of the directors and auditors thereon. The resolution reads as follows. Resolve that the audited financial statements, including consolidated financial statements of the company for the financial year ended 31st March 2022 and the report of the directors and auditors thereon be and are hereby adopted. Next item of the ordinary business is appointment of a director in place of Mr. Randall Ingber, DIN number 07529943, who retires by rotation and being eligible offers himself for reappointment. The resolution reads as follows.
Resolve that Mr. Randall Ingber, DIN 07529943, who retires by rotation and being eligible offers himself for reappointment be and is hereby reappointed as a director of the company. I now move on to the special business. Payment of commission to independent directors and non-executive directors. Approval under Section 180(1)(a) of the Companies Act, 2013. Part one, slump sale of the entire business undertaking associated with 32 brands of the company in the popular segment to Inbrew Beverages Private Limited, Inbrew. Two, grant of franchise in relation to 11 other brands of the company in the popular segment to Inbrew for a period of five years with an option for Inbrew, subject to certain specified conditions.
A, to convert the fixed term franchise arrangement into a franchise arrangement with perpetual rights renewed, and/or B, to acquire such brands. Before I invite members who have registered in advance to speak, I would like to now hand it over to Ms. Hina Nagarajan, Managing Director and Chief Executive Officer, to address a few queries received from section of investors on the proposed divestiture of, and franchising of select popular brands. Hina?
Thank you, Mr. M.K. Sharma. Good afternoon and a warm welcome to all shareholders attending today's meeting. Over the last few days, the company has received few queries from a section of the investors in relation to the proposed divestiture and franchising of select popular brands. Resolution number four of the AGM notice contains this proposal. The proposed resolution, as well as the explanatory statement circulated to the shareholders on the aforesaid proposal, is in conformity with the regulatory requirements. The query is largely pertaining to the process followed, whether a valuation report fairness opinion was obtained, and quantum of royalty under the fixed-term franchise agreement. On 1st August 2022, company had issued a statement and submitted to stock exchanges providing further context to the proposal covering the above aspects.
Some of the shareholders may wish to seek the same clarifications at today's AGM and hence let me respond for the benefit of all shareholders. Your company, under the guidance of its Board of Directors, has followed a robust process for nearly 18 months, which culminated in the signing of the documents in relation to the transaction with Inbrew, an unrelated third party. The process involved the company, through its financial advisors, Morgan Stanley, inviting interested parties to submit their respective proposals for the portfolio of popular brands. Following multiple discussions with several prospects, six parties initially submitted their non-binding offers. Subsequently, the shortlisted parties submitted their final proposals before Inbrew was finally selected by the company. In recommending the transaction to its stakeholders, the Board of Directors of the company took into consideration all alternatives for the portfolio.
After careful consideration, the offer proposed by Inbrew was strategically identified by the Board to be in the best interest of the company and all its stakeholders. The transaction is in line with the company's strategy to premiumize its portfolio to deliver long-term profitable growth. While there is no regulatory requirement to obtain a fairness opinion for the aforesaid transaction, as a good governance practice, a private fairness opinion from a leading global investment bank was obtained and presented to the audit committee and the Board of Directors as part of the approval process for the transaction. Insofar as the royalty is concerned, as mentioned in the AGM notice, the company will receive a commercially agreed royalty for a period of five years under the fixed-term franchise agreement. As part of its ongoing business activity, the company routinely executes such franchise arrangements from time to time.
The proposed royalty construct agreed with Inbrew under the fixed-term franchise agreement is in line with industry practices and similar to other arrangements previously executed by USL with other parties that are currently in force as well. The royalty paid by the franchisees, whether fixed or variable, as a percentage of the ex-distillery price, which we call EDP, generally is in the range of 5%-10% of the EDP, depending on the bottling economics of each geography. The royalty under the fixed-term franchise agreement with Inbrew is also in the same range and is of revenue nature. Accordingly, as also noted in the company's announcements to the stock exchanges on 27th May 2022, the fixed-term franchise agreement is in the normal course of the company's business and is therefore not considered material.
Over and above the fixed-term arrangement mentioned above, but not linked in any manner as far as the consideration is concerned, at any time during the term of the fixed-term franchise agreement, the franchisee, Inbrew, shall be entitled to convert the fixed-term franchise arrangement into one with perpetual rights to use by executing a long-term franchise agreement. The consideration payable towards the acquisition of such perpetual rights varies depending on the timing of the exercise of the option by Inbrew. As noted in the company's announcement to the stock exchanges on 27th May 2022, as well as the AGM notice, assuming that the long-term franchise agreement is executed at the end of the five-year term of the fixed-term franchise agreement, an amount aggregating to approximately INR 12,930 million will be payable by Inbrew towards the perpetual rights to use.
Unlike the royalty payable under the fixed-term franchise agreement, the consideration payable by Inbrew to acquire perpetual rights to use the franchise brands under the long-term franchise agreement is of capital nature. Since this arrangement is material and not in the normal course of the company's business, the company has duly disclosed this arrangement in the above-mentioned stock exchange announcement. With this, I would like to now hand over to Mr. M.K. Sharma, our Chairman.
Thank you, Hina. I now invite the following members who have registered in advance for speaking at the AGM. The queries will be answered collectively at the end to avoid repetitions. I once again request the shareholders to restrict their time limit to five minutes in order to give equal opportunity to all other shareholders. Number one shareholder who has registered with us is Mr. Hutokshi Sam Fateh.
Mr. Hutoxhi has not joined yet the meeting. Can we move to the next speaker shareholder?
Next speaker shareholder is Mascarenhas, Mrs. Mascarenhas.
Mrs. C.E. Mascarenhas, request you to unmute yourself.
Yeah. Can you hear me, ma'am?
Yes, ma'am, you are audible. Please proceed.
I'm visible also.
Yeah, you are very much audible.
M.K. Sharma. Hello.
Hello.
Respected Chairman, Mr. M.K. Sharma, MD and CEO, Hina Nagarajan, members of the board members, my fellow shareholders attending this virtual meet. I am Mrs. C.E. Mascarenhas. I'm speaking from Mumbai, Wadala. First of all, I thank the Company Secretary, Mr. Mital Sanghvi, and his team for sending me an annual report and also registering me as a speaker at my request, and also giving me this Zoom platform to speak along with the video. Thank you so much. Now, our revenues are up, PBT, PAT up, but due to past losses, no dividend could be declared. My question, when will we come to the dividend list? Next is congratulations for all the awards and accolades received during the year in very difficult conditions. I also appreciate the CSR work done to the society and also ESG initiatives taken by our company.
Here, I would like to know whether we have gone for ESG rating, and if so, which agency and what is our rating score? My queries, sir. Why so many brands are sold as slump sales? Some of them are very popular, like Men's Club, Romanov, White Mischief. Now, the proceeds which come, where will it be invested or will it be invested for bringing down our losses? Now, on page 12, Johnnie Walker photo is given. Johnnie Walker, I think black label is put. Whatever it is, red, black, green and gold and blue and all. Is this, all these, Johnnie Walkers, different colors are manufactured here or they are manufactured abroad and only sold here? Please speak. Which is our most popular brand where our market share is the highest and also we get a good margin?
We are supposed to be number one spirit company. Who is our next main competitor in the listed segment? How much of the percentage of the total sales is online? What will the amount mean? How much the amount will we get of the royalty for five years under the franchisee agreement? What will be the total amount? Like the workings must have been done by the team. What will be the total amount which we'll get as royalty under the franchisee agreement? Will this be used for bringing down our losses? Why I say after two years, this is the 23rd AGM. After two years we will be celebrating silver jubilee.
By that time, will all our losses be wiped off so that you can go to the next 25 years with profit? You know. With this, I support all the resolutions. I wish my company all the best. May it grow in leaps and bounds. Above all, I wish the Diageo, you and the Diageo team best of health. Thank you very much. May God bless. Namaskar.
Thank you. Guys, now I request Mr. Kaushik Shahukar.
Moderator, is Mr. Kaushik Shahukar in the queue?
Yes, Mr. Kaushik is there.
I'm audible?
Good afternoon, Mr. Kaushik. You are audible. Please proceed now.
Thank you. Good afternoon, everyone. First off, I would like to thank the Board of Directors for giving me opportunity again to speak in this forum. Many of you would remember me from the conversation in the past, so I will keep both my ask and introduction on brief. I hope I'm clearly audible.
You are. Thank you.
Thank you. Myself, Kaushik Shahukar, a qualified and practicing chartered accountant from Mumbai. I have been suffering from dystonia, which has rendered 65% of my body paralyzed, impacting my right hand, my right leg, and speech. While I have not let that come in my way of becoming a chartered accountant and practicing, I do request your support in helping me continue to be self-reliant. I hope I'm clearly audible till now.
You are.
Thank you. I was optimistic after our conversation we had last year about me working for our organization on certification work, including Form 15CB. However, nothing has progressed since. While I understand things may have not progressed due to pandemic situation last year, I do request, I do hope that after our conversation today, our organization will start engaging me in this area as soon as possible. Once again, thank you for the opportunity to speak today, and I hope to see a positive movement forward with my ask. I support all the resolution. Also request you to please provide reply for the ask. Thanks. Thank you so much.
Thank you. The next speaker is Mr. Mohit Thirugnana Sambandam.
Mr. Mohit, request you to unmute yourself and proceed.
Chairman, sir, audible?
Yes, you are very much audible. Please proceed further.
Yes. Yes, Chairman, sir. I have only few questions. What about next year's AGM, whether it can be a virtual AGM or a physical AGM? Even if it's physical AGM, kindly help us, the people from outside Bengaluru can also attend this AGM. My next question, what about the dividend plans? Since our company is like a debt-free company, so how we are going to address the dividend? Since the company is also generating more cash, is there any chance of buybacks? Another question is that in the news there the rumor is coming that Diageo is going to deal with our shares. Is that true? My next question is the agreement which we signed for selling our premium brands to a company.
Sir, how it is going to help our company to grow in future? Regarding the CSR. Sir, what our companies are going to do in CSR? Even alcoholic is good, but the chronic alcoholic is bad. Whether our CSR is going to work on that? That's all, Chairman, sir, my questions.
Thank you. Thank you, Mr. Sambandan. The next speaker is Mr. Sadananda Shastri.
Mr. Sadananda Shastri, request you to unmute yourself and proceed.
Am I audible?
Yes, you are.
Hello.
Yeah. Mr. Shastri, you are audible.
Good afternoon, sir. I am Sadananda Shastri from Bangalore. My number is 11702201. Coming to the report, page number three. In managing director's message, it is talked about the reshaping of products, but nothing is said about the reshaping of the picture of accumulated loss. What is your next plan to bring the accumulated net results to positive? Secondly, you have also not touched about how the company is prepared to face competitions. Next, as far as innovations are concerned, Singapore people are preparing beer from urine and sewage water, which would be cheaper one. What is the company's comment about it? Page number 25. It seems company is giving a wrong information to shareholders and investors.
It is said that in the profile of director, Mr. V.K. Viswanathan, he's the current chairman of Bosch Limited. On third, I have attended the Bosch meeting AGM that Mr. Viswanathan was not on the chairman's chair. Please clarify, sir. Page number 31, Board's report. Even in pandemic period, company's performance is good. That is making a profit of INR 8,106 million. Ultimate result is loss, which is bad. Company has to make good the accumulated loss to the extent of INR 10,642 million. How do the company make it good? Now, here reshaping is required to make the negative results to positive. Page number 49. Out of 13 subsidiaries, item five and 12 are giving a big negative results. It seems that losses made by subsidiaries is making way to accumulation of loss.
What are your efforts to turn this back on track? Page number 77. Net amount of INR 5,013 million more drained out in foreign exchange fluctuation. Does it help to boost your revenue? Page number 196, consolidated balance sheet. Last year investment was shown nil. What reason made the company to invest INR 2,221 million all of a sudden? Secondly, in trade receivables, credit impairments are imminent. Loss allowances are increasing more. What steps are you taking to restrict further more loss allowances? Thank you very much, sir. See you next year.
Thank you, Mr. Shastri. The next speaker is Mr. Shashikant Gajanand Marathe.
Mr. Shashikant has not joined the meeting yet. Can we move to the next speaker shareholder?
Mr. Mahesh Kumar Bubna is the next speaker.
Mr. Mahesh, request you.
Yes.
To unmute yourself and proceed.
Yes. Very good afternoon. Respected Chairman, Board of Directors, Company Secretary, CFO, all other dignitaries, as well as my colleague shareholders.
शर्मा साहब पहचान रहे हैं। शर्मा साहब महेश कुमार Bubna।
Thank you.
याद है Brooke Bond Lipton merger के time हम लोग थे। 5th May 1996 याद आया।
बिल्कुल बिल्कुल।
भूल गए। इतने लंबे समय के बाद में हम लोग मिल रहे हैं। तो अब यह तो मेहरबानी है कि छाबरिया साहब और अपने यह विजय मल्ल्या साहब के चलते इतना बड़ा company आज Diageo को मिला है। इसमें कितनी कंपनियों का योगदान रहा है। कितनी कंपनियों को merge किया गया है। मैं तो Manu Chhabria के time से ही इस company में आता रहा था और मल्ल्या साहब से तब से ही तो जब से बेंगलुरु में आ गई थी company उसके बाद से मेरा meeting attend करना मुश्किल हो गया था। मैं तो अभी तीन साल से करीब बेंगलुरु में ही हूं। अभी बेंगलुरु से ही बात कर रहा हूं। सबसे पहले तो थोड़ा आपको तकलीफ लगेगी और हमारे MD madam को chairman statement में कहीं पर date नहीं है.
MD statement में भी date नहीं है। 100 साल बाद में भी समझेंगे तो आज उसी date में ही। date तो होना जरूरी है। कोई letter, कोई message कुछ भी हो तो उसमें date होना बहुत जरूरी है। तो यह चीज का ख्याल रखिएगा हमेशा कि अब आपका account sign हुआ है 27 मई को तो chairman statement उसके बाद में हुआ ना। उसके पहले हुआ कब हुआ है वो तो मालूम होना चाहिए ना। अब बढ़ते हैं आगे। 23rd AGM है। इसके पहले तो जब merger हुई और यह सब नाम change हुआ है तो बहुत पुरानी company तो वह साल भी आप लोग को लिखना चाहिए कि total कितना साल पुरानी company है। In total length of the company's life is there तो उससे हम लोगों को भी मालूम हो कि कितनी लंबी age की company हम लोग माने.
अब next आते हैं अपने Board of Directors report में तो company की अवस्था तो बहुत खराब हो गई. एक तो इतना loss फिर carry forward loss और earning per share अपना हुआ है ₹10.59 लेकिन loss इतना जो हुआ है वह बहुत ही ज्यादा है। आज देखिए बिना dividend के company चलाना बहुत मुश्किल होता है। इतनी बड़ी company international company और इतना बड़ा loss हो। ऐसा तो कभी छाबरिया साहब के time में और विजय मल्ल्या साहब के time में नहीं हुआ। मैं विजय मल्ल्या साहब को 82 से जानता हूँ। 80 से जानता था। जब Carew, Phipson की meeting हुआ करती थी Park Hotel, नोएडा में। मेरे बहुत close में थे। दोनों ही जन थे। बहुत close में हम लोग। तो हम लोग personally बात किया करते थे तो अब बहुत दुख लगता है।
ऐसा उनके साथ भी हुआ। life में इतने loyal आदमी थे और छाबरिया साहब तो ठीक है। उनका तो death हो गया था और मल्ल्या साहब के साथ में जो हम लोग को भी खराब लगता है क्योंकि हम लोग इतने बरसों तक एक साथ उनके chairmanship में meeting करते आ रहे थे। अब बढ़ते हैं management discussion analysis report की तरफ। Page number 46 सब यह figure आप लोगों ने जो दिया है crores में दिया है। सारी annual report में आप लोग million लिखे हैं तो यहां पर यह सारा figure जो है यह crores में क्यों दिया है?
Abhi nayi government guideline ke hisaab se as per the new government guideline you must have to give figure in either in lakhs or in millions to have a similarity with the international companies. This must be not in crores. Yeh aapke because your foreign director are also there so if I will speak in the Hindi they will not understand. Now I will speak in English. Sir this indicates that share prices at INR 888 while last year it was INR 556. When share prices are so high and company will not pay dividend for consecutive three years then the category in the stock market will come down and the reputation of the company will come down. Better at least we must have to produce something for the shareholder benefit.
Because suppose a person purchasing at a INR 900 per share and in the after the year he will not get a single penny as anything dividend as interest. Why will he invest in this company. Sir, we having 13 companies and associates all are built by Mr. Vijay Mallya which was also with this company a large number of this company and a lot of this lands belongs to it which was also mentioned in this annual report.
If we will have to enhance our this productivity and we will export to the other countries because the U.S. is the major participant in the breweries. If we will have to compete with America and other European countries, then we can able to have a macroeconomic this production as well as saving, and we can able to give a proper result. This spirit is very consumable around the world. If you go to Hong Kong, Singapore, Germany, Britain, everywhere. America is the largest consumer of this. We will have to enhance our this export to all these countries throughout the world. Then we can able to achieve a higher growth, higher production, economical cost down and better result.
Sir, coming to the corporate governance report, 96 page, this company's promoter is holding 57% approximately shareholding. I seen in the next column, bank financial institution, government, et cetera, is holding 30.41%. If you see the public resident individuals, 10.07%. As per the new guidelines by the government of India, Ministry of Corporate Affairs, minimum public shareholding must be 25%. It is not as per the government guidelines. You have to think that, we should not have to surpass the law of land. Maybe it is a foreign company, but, as per, this company is, registered in our, country and the law of land should not be violated. The Indian public should be benefited properly.
When the company will come in a huge profitability, the maximum promoter will be benefited, not Indian public. Think that this should be rescheduled so that the minimum 25% shareholding must be achieved. If you see on page number 170. Today, I will not take much more time because it is a first introductory with you and all other directors. I'm just summing up with one, two points. Sir, I seen on 117 in balance sheet that trade receivables. This is the maximum figure I seen in the balance sheet, that trade receivable are so high, this INR 23,021 million. Last year was, it was so high, INR 21,601 million. This money has blocked without any production, any interest, any profitability.
Why our team is doing to not recover this money to re-rolling our this.
Mahesh.
Fund.
Request you to conclude your.
Hello? What happened, sir?
Mr. Mahesh, you are audible. Request you to conclude your speech.
I'm not, huh? I'm not audible?
Sir, you are audible. I request you to conclude your speech.
Keep patience.
You overshot your time, sir.
Mr. Sharma knows very well. Keep patience very well. Since morning, two, three meeting I skipped, I've not attended. I having the value. I am also a company law practitioner for last 45-50 years at high court level. Mr. Sharma knows me very well. Don't try to teach.
Mr. Bubna, please come back to the topic. I think.
Yes.
This is for everyone.
I am in the topic.
Yeah. Please conclude.
My mind should not be disturbed. You see, we having a very less financial cost. Borrowing also very less. If you this trade receivable should be collected and it should be paid off the borrowing, then it can be a debt-free company. Better you can do this debt-free company and the category of the company in the share market should also be changed. Sir, I am not going to take much more time. I told you that this with this remark, I sum up my this all these comments. Next year I will come with proper and other shareholders also said that this meeting should be keep on online. Because now everything are going on internet-based. Government is saying that every transaction should also be on internet-based. Everything will be internet-based.
In abroad also, all meetings are on internet-based. When India already started, it must be kept in online. This is my humble request. I think that Ministry of Corporate Affairs will also be interested to extend this scheme. Three or four days earlier, I seen that Supreme Court also directed that all high court stop the physical meeting and all this hearing will be started on the virtual meeting. Government is much more interested to come with all internet-based. Infosys report the
We note your suggestion, Mr.
Dual meeting. This is my humble request.
We note your suggestion.
At the virtual meeting, we can enable any person, even your foreign partner can also be able to join. All the shareholder from 52% shareholder can also join through virtual meeting.
Thank you, Mr. Bubna. We have noted the suggestion.
Thank you all for having.
Please conclude.
Okay, thank you.
We have noted your suggestion.
Thank you. Jai Hind.
Thank you. Thank you very much. The next speaker is Mr. A.B. Bhesania.
Mr. Bisania, request you to unmute yourself and ask your question.
Chairman, sir, can you hear me?
Very clearly, sir.
Okay. Sir, I'm Aspi Bhesania from Bombay. Thanks for giving me an opportunity to talk. Sir, this is the first time I'm talking. Thanks to video conferencing. I would like you to continue with that hybrid meeting from next year also. Sir, your results were very good, but first quarter, why the results are bad compared to quarter-on-quarter? Whereas year-on-year they are quite good. So why is it bad compared to the fourth quarter of last year? Thank you very much and all the best for the future. Sir, one more thing. Delhi there was a problem of that Delhi government. So how has it affected us? Thank you very much. All the best.
Thank you. Thank you, Mr. Bhesania. Next speaker is Mr. P.S. Krishnan.
Mr. P.S. Krishnan, request you to unmute yourself and proceed.
Thank you very much. Just want to reconfirm you're able to hear me.
Yes.
Yes, we are.
All right. Thank you and good day to the USL Board and management team. I do have a bunch of questions, and I've also shared the questions much in advance with the company secretarial team. My first query is, you know, as part of our portfolio restructuring plan, post-restructuring, I anticipate that our sales and EBITDA are likely to go down by about INR 1,300 crores and about INR 195 crores respectively. I know that through our focus on premium portfolio, we would look at further margin expansion. Is there also thinking behind growing the top line and EBITDA to the same level? Or the focus will be solely on margin expansion through premiumization.
If there is a focus on top line growth on the same level as pre-restructuring, what according to the board and management team are the specific product portfolio product drivers? What kind of milestones and timelines would you commit to achieve such a pre-restructuring top-line growth? My second query is exports from India also part of your forward plan? If yes, what kind of margins are you targeting for export sales? USL has also been guiding for a double-digit growth around 15% EBITDA margins. What will be the margin improvement post-restructuring and what kind of margins ROCE, ROE would USL be targeting in FY 2024 and more specifically in FY 2025, given that the restructuring and premiumization should result in significant margin expansion.
Is there a possibility that we can look at a 20%+ EBITDA and a much higher ROCE and ROE? You're also spoken about newer launches and brand extensions in the upper prestige and on the introduction of international brand from Diageo's stable. Is there some information available that you can share with us at this point of time? Our Q1 FY 2023 results was quite disappointing given that we had a complete normalcy, a great normalcy for the quarter, but we had a subdued sales and EBITDA. I can understand that raw material prices and inflation have resulted in margin pressures. What steps are we as a management team taking to drive sales in the next few quarters as well as drive the margin expansion?
A related question to that is what is our outlook for raw material prices and what are our margins likely to be are our margins likely to be under pressure for the next 2-3 quarters as well? My next query is close to 70% of our sales are from markets where governments regulate pricing. A few states are also experimenting differential excise on beer and spirits, and this in my view, can potentially be negative for spirits. What is our board and management's view on this? Should you see this as a threat, how does the management plan to work around this, differential excise rates? My last two queries relates to the Royal Challengers Sports. Is there a plan for delisting, in the future for RCB?
My last query is how will the funds received for RCB from the IPL auction be used? That's it from my end. Thank you very much.
Thank you, Mr. Krishnan. Next speaker is Mr. Ramesh Shankar Gola.
Mr. Ramesh, request you to unmute yourself and proceed with your question.
Okay.
You're audible now. Please proceed.
Namaste, Sharmaji. Very good evening, Chairmanji.
Good evening.
Thank you, sir. Sir, jo hamara company ka jo brands is, very attract to people and very powerful, sir.
Any new brands is manufacturing in these days, sir? Please tell me. Sir, ye profitability बहुत अच्छा से बढ़ने के लिए हम क्या-क्या करना, क्या steps ले रहे हैं। इसके बारे में बोल दीजिए। Coming in two years, what is the roadmap sir? उसके बारे में भी बोल दीजिए। और इसके साथ जो खर्चा वो कम करना है sir. Why because profit ज्यादा नहीं है तो full loss में है तो हमें क्या करना है? खर्चा कम करना है sir। वो करें तो थोड़ा ये जो बचने वाला जो बचता है, जो loss होने का थोड़ा, current.
Current year ये साल का कैसा रहता है, आने वाला साल का कितना रहेगा उसके बारे में बोल दीजिए। और जो हमारा जो export करने वाला कितना clients है हमारे पास। Last year से ये year थोड़ा बड़ा या ना बड़ा वो भी बोल दीजिए। जो India में हमारा clients कितना आदमी है। और आप ये company क्या कुछ ये corona का time पे, क्या steps ले रहा लोगों को अच्छी भलाई के लिए, health के लिए। वो भी बोल दीजिए sir. Second sir, वो dividend आप announce करें तो बहुत अच्छा रहता sir। इतना साल से हम देख रहे हैं वो dividend के लिए। जो investor को finally रखने वाले को.
Sir, there is some bandwidth issue. Mr. Ramesh, there is some bandwidth issue. Can you try switching off your camera and speak? Mr. Ramesh, can you try turning off your camera and speak?
Mr. Ramesh, please go ahead.
One minute please.
I think we have lost him.
Till then we can move to the next speaker shareholder. We can try again with him.
Next speaker, Mr. Abhishek J.
Mr. Abhishek, request you to unmute yourself and proceed.
Can you hear me, sir? Can you hear me, madam? Am I audible right now?
Yes, you are audible. Please proceed.
My name is Abhishek, shareholder of the company. My DP ID is 9301637 and client ID is 41359155. First of all, I congratulate the management on the eve of Annual General Body, 23rd Annual General Body Meeting. Trust all is well with you and your family in this challenging situation. Our company deserves much more respect than the current market cap. After completing more than a decade of successful operations, profitability, dividend history and becoming one of the strongest brand in our respective segments. I would like to know how our business has been impacted in these past three years of this COVID time. The coronavirus and the subsequent lockdowns have left virtually no industry untouched after the COVID.
Whether any employees have been sacked, hired, salary cut in percentage, if any, I would like to know from you, sir. Whether any salary cut was being taken by the management during the pandemic time, I would like to know from you, sir. I would request the management to kindly take part in conference call quarterly presentations and meeting with global investors on a regular basis. I would request the management to kindly arrange for a factory visit for the investor fraternity as and when the management feels that it is advisable for the management to take the investor fraternity to the factory. Coming to resolution number, sir in a e-voting platform. Coming to resolution number four, we can see that there is a slump sale being conducted by the company.
If you can give us some detailed elaboration on which are the 19 companies. It is around mentioned that 32 brands associated and you are giving Inbrew Beverages Private Limited and grant the franchise of 11 other brands. Which are the other brands? If you can just give us some detail on this fourth resolution, it will be helpful for the investor fraternity, sir. I would request you to kindly enlighten us on this particular resolution, sir. Nothing much to ask, sir. Hope to see you in the physical AGM next year. Kindly take care of the health.
Thank you, Abhishek. Thank you. The next speaker is Mrs. Chandiramani Rekha Mohan.
Mrs. Chandiramani is not joined the meeting. Can we take Mr. Rakesh who was not able to speak earlier?
Mr. Ramesh, right?
Sorry, Mr. Ramesh. My bad.
Yeah.
Mr. Ramesh, can you try again unmuting yourself and speak? Mr. Ramesh, request you to accept the unmute request sent by the moderator.
Yes, one minute. Okay. Hello?
Hello. Yes, Mr. Ramesh.
Yeah, go ahead, Mr. Ramesh.
Mr. Ramesh, can you speak? Can you hear us?
Mr. Ramesh, are you able to hear us?
I think we lost him.
Moderator looks like.
We lost the connection with Mr. Ramesh again.
Okay. In which case we are done with all the registered shareholders. Before I call upon the managing director and CFO to respond to these queries, I thought there were some questions on CSR and the major activities that the company undertakes. We'll play a small video to appraise the members of the CSR activities of the company, at the end of which Hina and Mr. Pradeep Jain would answer the questions that have been raised. Can we have the video, please?
We have successfully rolled out our Society 2030: Spirit of Progress strategy. This year, all our projects have created positive impact and value for our stakeholders. One of the must-dos of our Society 2030 strategy is to promote positive drinking with our consumers. This year, we have successfully executed projects on drink better, not more, special focus on curbing underage drinking and promoting moderation.
We are committed to inclusion and diversity. This year we have received overwhelming response for our Learning for Life Livelihood and Hospitality Skills programming.
Pioneer going to glass sustainability. We have successfully embarked on a journey to preserve water for life, accelerate to a low carbon world and become sustainable by design.
We have successfully rolled out our Society 2030: Spirit of Progress strategy. This year, all our projects have created positive impact and value for our stakeholders. One of the must-dos of our Society 2030 strategy is to promote positive drinking with our consumers. This year we have successfully executed projects on drink better, not more. Special focus on curbing underage drinking and promoting moderation.
My name is Yash Badal. In 2014, I had an accident, car accident, very dangerous car accident. I am thankful that today.
We are committed to inclusion and diversity. This year we have received overwhelming response for our Learning for Life, a business and hospitality skills program.
Good afternoon once again. Just to address all the questions that we have received. I'll start by talking about. There was a question received on ESG rating and which agency do we follow. We mainly look at Sustainalytics. Diageo has progressed. USL has progressed quite a bit in the last one year. Our score used to be more than 25, which is medium risk. Over the course of the year, we have actually come down to 22, and our target is to go below 20, which is low risk. We are working very actively to make sure that our organization progresses in the coming year on this. The next question was about Johnnie Walker and are any Johnnie Walker variants manufactured in India.
Actually, Johnnie Walker is geographically marked, so it has to be manufactured in Scotland, so we import it. We import all the Johnnie Walker variants from Scotland. The next question was on our CSR program. You did see the video. We are doing very powerful programs on wrong side of the road on anti-drink driving. Act Smart India, which is our program to tackle underage drinking. We also work with regional transport offices to educate people who come to apply for licenses so that they take a test to understand the risks of drink driving before they are issued a license. We have a program called Learning for Life, where we train people in hospitality skills, and more than 900 people are training right now with us, with more than 50% women in the program.
We do this every year. During the pandemic, we also pledged to support the government. Diageo, along with our parents, committed INR 45 crore to supplement the public health infrastructure in India. We adopted a one district, one state approach within this, where we donated medical equipment, oxygen generating plants, oxygen cylinders, oxygen tanks to augment the government infrastructure. This program is continuing to do very well. That's on our CSR programs.
Yeah. Hina, you can, if you can address how is the company prepared for competition and the new launches of brands.
I would say that there is a number of questions that have come on growth and how are we prepared for that. I would say our active portfolio management, adding more margin-accretive brands through renovation and innovation, dialing up our growth on prestige and above portfolio. The conclusion of the strategic review of the popular brands all prepares us very well to tap into the premiumization trend that is happening in the country. We have huge growth potential in India, and our brand offering it at every price point, coupled with the very meaningful renovations and innovations that we have launched recently, are helping us to capture the marketplace opportunity.
If we look at all our renovations, Signature, which is a very important renovation based on sustainability, number one, which was renowned McDowell's No.1, which was renovated a year and a half ago. If we look at our new launch, Royal Challenge American Pride, which taps into a new cohort of consumers, which is young drinkers, women drinkers, and if we look at the investments we are making in our existing brands, the renovation of Black Dog, which has done very well, the tie-up with Heston Blumenthal for Black & White whisky. These are based on very solid consumer insights. They are really addressing the new consumer needs, and these are helping us play very competitively in the market. We are very confident that with this transformative renovation and innovation and understanding of consumers, we will be able to deliver our guidance of double-digit top-line profitable growth.
Yeah. Hina, 2-3 shareholders asked about our exports business, so if you can brief on the exports.
I would say that we are already exporting our key brands, McDowell's No.1, Signature Whisky, Royal Challenge already are being exported. Our recent foray into craft with Epitome Reserve and Godawan is really meant to take our made-in-India brands to the global world and really popularize the Indian brands. We are continuing to work on developing such offerings and our recent investment in NAO Spirits, which taps into the two craft gin brands of Hapusa and Greater Than. This also helps us to take more and more brands to the outside world. We have a very strong export program in place.
Yeah. Thank you, Hina. Hina, there were some questions around the media articles around the Delhi RTM, if you can just.
The situation in Delhi is still evolving. Currently, we are guessing what will happen. I mean, all we know is that the Delhi Government's Corporation is expected to start running the retail vends from September first, and there will be no private players in the segment. With 100% corporation shops, we do expect that the local players' participation will increase in the market. However, as the policy evolves and progresses, we will be in a position to really gauge the impact. At this point in time, it is an evolving situation.
Thank you, Hina.
Yeah.
There was a question around RCB delisting and what will we do with the proceeds as the new media auction.
RCB is not a listed entity, so there's no question of delisting it. As far as the cash utilization is concerned, first of all, RCB has a loan on its books that they will repay with the cash. As the cash starts becoming surplus, we are already looking at strategically how we will evolve RCB to the next growth level. That work is underway by the team.
Super. Thank you, Hina. I'll take the next round of, you know, questions which the shareholders had asked. I think the most common question that was asked around around when we will wipe out our accumulated losses and when do we come back to dividend distribution. Both the questions are intrinsically linked with each other. The shareholders will observe from the annual report that in the last financial year, we have reduced our accumulated losses by almost INR 800 crore. With roughly INR 1,000 crore of accumulated losses that sit on our balance sheet as on 31st March 2022, we expect over the next 4-5 quarters, we should be in a position to wipe that out completely.
Over the next 2-3 quarters, we will be issuing out a proper dividend distribution policy for our shareholders. The second question was, I'm responding to Mr. Kaushik Shahukar's question. First of all, very, very admirable, Mr. Shahukar, the kind of resilience you have shown, not letting your disabilities come in the way of your professional achievements. We are proud to have a shareholder like you. Please do forward your resume to our company secretarial department. We have a very, very strict process of identifying our service providers, and we will definitely consider that. Okay. The next question was around the losses made by subsidiaries.
I do want to share that, you know, quite a few of our subsidiaries are non-operating. The management has historically, you know, communicated an intent that we do want to wind down these subsidiaries over a period of time. Some of the subsidiaries, you know, we are awaiting some regulatory approvals, but very clearly, we are on our roadmap to wind down some of the subsidiaries. The operating subsidiaries, RCB, has continued to improve its performance year-over-year. Hina mentioned about that we are already thinking of what the next growth curve for that will be. Pioneer Distilleries have also shown sequential improvement in its performance.
We expect that performance to improve in the coming year also. The next question was one of the shareholders had asked that there is an investment of INR 222 crore. This has to be interpreted very, very positively by our shareholders. We have become a debt-free company sometime around the third quarter of the financial year 2021-2022, and now we are beginning to generate surplus cash. The INR 222 crore of investments that you see in our balance sheet is the surplus cash that is sitting on our balance sheet as of the cutoff date. Like I said, over the next 4-5 quarters, as we wipe out our accumulated losses, we would want to start getting back into the dividend distribution.
There was a question from Mr. Bubna regarding the very high trade receivables of almost, you know, more than INR 2,000 crores. Mr. Bubna, we are very conscious of that. I do want to share that the receivable intensity of the alcohol beverage category in the country is very, very high. Because in a lot of places, we sell only to the state government, and the state government makes us invest in the inventory holdings, which gets captured in the receivables line, right? Therefore, we on a consistent basis continue to benchmark our performance with other players in the industry. All of us, you know, all the players have a very, very high receivables intensity.
I also want to add that, since we sell to the state government, the risk is absolutely sovereign and, we don't have any risk of losing, you know, of any bad debts on account of these, receivables. The next question was around, you know, around the construct of our top line and EBITDA, post the divestiture of the popular brands consequent to the strategic review. I think the question was that will the company focus only on the margin percentage or on the absolute top line and the EBITDA? Very clearly, the answer is both. Both are very, very important to us.
In our assessment, through the enhanced focus that this divestiture allows the organization for its prestige and above portfolio, over the next three to four years, we should be able to completely recoup the top line and the EBITDA loss that is happening as a result of this transaction, right? This will also allow us to deliver a sustained double-digit growth on the top line and our mid-to-high teens EBITDA margin guidance that we have provided. There was a question on the inflation outlook. Inflation, as you've seen, in the first quarter, as well as in the next few quarters, is going to remain in the double-digit range.
Therefore, yes, you know, we are looking at our 2-3 other mechanism, what is in our control in terms of productivity, pricing and mix management to counter it to our best efforts possible. The short answer is that, yes, inflation is high right now and will continue to remain in the double-digit range over the next couple of quarters. There was a question from Mr. Gola around the cost management. We have a very well-established productivity machine in our company. On an annualized basis, we typically target anything from 1.5%-2% of net sales as ongoing productivity year-on-year. During these troubled times and extremely high inflation, the outlook, management is trying to expand that range, right?
To an even higher number for the coming financial year, right? We are looking at all the you know all the lines of the P&L and across the value chain to extract efficiencies in these extremely inflationary conditions. I think with that we have answered all the questions. Hina, you have anything to add?
Well, I think there was only one other question on support provided to employees during COVID, and I thought that was quite important to address. We actually gave very comprehensive support to our employees during COVID, both on physical wellbeing, mental wellbeing, and we gave lots of medical coverage, so medical insurance was covering COVID hospitalization, domiciliary expenses. When this coverage got over, we provided additional medical coverage to our employees. We provided 14 days of additional leave if it was required during the COVID-19 period. Salary advances were provided to employees who really had medical emergencies at home. In the case of unfortunate loss of life, there was an ex gratia of one year's gross salary, which was given by the USL Employee Trust. We also ran free vaccination camps across all our offices and manufacturing facilities.
In cases where we could not run the vaccination camps, we actually gave vaccination reimbursement, and we mobilized the help of government agencies to help us vaccinate our employees. There was a lot of counseling support and well-being support throughout this period, which really helped our employees. I am very proud to say that that has actually helped your company deliver very high employee engagement results through our Your Voice survey. These are in excess of 80%-90% employee engagement, which is quite high compared to any internal or external benchmark.
Super. Thank you. Thank you, Hina. You know, Mital, just one of the shareholders, Mr. Bubna, had spoken about, you know, had made some recommendations that the Chairman's speech and the Managing Director's speech did not have the dates mentioned and the unit of measurement to be standardized across the annual report. Let's take those recommendations on record and, you know, we will want to implement. With that, you know, we have answered most of the queries. I will now hand it over back to the Chairman, Mr. M.K. Sharma.
Thank you, Hina and Pradeep. I think before I proceed further, I just wanted to draw the attention of the members to another typo which has happened in the report and accounts, and that has to do with the profile of Mr. Vishwanathan. He has been the past chairman of Bosch, and it has been wrongly mentioned that he is the chairman of Bosch. I request the members to correct that statement and read this as a corrigenda. With this, all the queries have been answered, and there are no other items to be transacted at this meeting. As regards the e-voting, in compliance with the provisions of the Companies Act, 2013, read with the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Company has provided e-voting facility to the members of the Company.
The e-voting commenced at 10:00 A.M. on August 6, 2022, and ended at 5:00 P.M. on August 8, 2022. Mr. Sudhir V. Hulyalkar, Company Secretary in practice, CP-6137, was appointed as the scrutinizer for scrutinizing the e-voting process, and he'll be submitting his report after considering the results of voting at this AGM. The members who did not cast their vote through the remote e-voting facility may now go onto the e-voting page of CDSL and cast their vote and as well as watch the proceedings of this AGM. The e-voting facility will remain open for 15 minutes from the conclusion of this AGM to enable members to cast their vote. Mr. Sudhir V. Hulyalkar, Company Secretary in practice, who has been appointed as scrutinizer for e-voting, shall supervise the voting and declare the results separately.
Combined results of the voting, both remote and e-voting and voting at this meeting on the above resolutions, will be announced within 48 hours from the conclusion of this meeting. The results, along with the scrutinizer's report, shall be placed on the website of the Company and will be intimated to the respective stock exchanges. Lastly, on behalf of the Board of Directors, I take this opportunity to thank all our stakeholders, notably our shareholders, employees, vendors, central and state governments, regulators, banks, and communities for their continued support and encouragement. I once again thank all the invitees who have participated in this meeting and sincerely wish you a safe and healthy life ahead. I now request scrutinizer Mr. Sudhir Hulyalkar to take over the proceedings of the meeting. Thank you. The Board members are now free to log off. Thank you.