United Spirits fell 0.69% to Rs 803.70 at 14:45 IST on BSE, with the stock sliding on profit booking after 2-day 12.3% rally triggered by the company reporting strong sequential earnings in Q1 June 2012.
Meanwhile, the BSE Sensex was up 12.20 points or 0.07% to 17,248.38.
On BSE, 4.54 lakh shares were traded in the counter as against average daily volume of 4.88 lakh shares in the past two weeks.
The stock hit a high of Rs 825 and a low of Rs 794.10 so far during the day.
Shares of United Spirits (USL) rallied 12.3% in two trading sessions to settle at Rs 809.30 on Tuesday, 31 July 2012, from Rs 720.65 on 27 July 2012, after the company reported strong sequential earnings in Q1 June 2012 after market hours on Friday, 27 July 2012.
USL's net profit galloped 1348.05% to Rs 144.95 crore on 10.44% growth in net sales to Rs 2057.29 crore in Q1 June 2012 over Q4 March 2012.
USL said its spirit costs declined by approximately Rs 6/case from the average of FY 2012 and about Rs 12/case from second half of FY 2012. However, it was by Rs 4/case when compared to the comparable period of the previous fiscal. Unless state governments intervene in the process of trading in molasses and spirit, USL expects that the spirit prices will be benign in the current year, the company said a statement.
USL said the key markets of Tamil Nadu and West Bengal continued to dampen the company's performance during the quarter (Q1 June 2012). An artificially imposed constraint on USL volumes in Tamil Nadu, against the tide of consumer demand for the company's brands, saw USL volumes being restricted to about 70% of its capacity, the company said. While USL products in Tamil Nadu continue to fly off the shelves whenever they are available, this artificial embargo ensures that consumer demand is not satisfied in full and consumers in the state are having to make do with brands that were never their first choice, USL added. While things have partially improved from second half of FY 2012, they are nowhere close to utilizing the company's full capacity, USL said in a statement.
The West Bengal market too is slowly coming to terms with the sharp increase in duties and taxes imposed by the state government at the end of Q2 September 2011 which saw volumes dropping by as much as 50% in Q3 December 2011, the company said. Even in the quarter just ended (Q1 June 2012), volumes continue to be lower by 20% which was also the case in Q4 March 2012, USL said in a statement.
During the quarter, the company introduced a premium brandy offering -- Louis Vernont brandy in Kerala, a market with high brandy consumption. The quality of the blend and the overall product offering has resulted in the product flying off the shelves in Kerala market, the company added. This brand will progressively be launched in other high brandy consumption markets particularly in South India, USL said in a statement.
USL said the activities of the Emerging Markets division will be conducted through a wholly owned Singapore-based subsidiary of Whyte & Mackay, UK. Country specific teams have now been put in place into 4 identified markets to take the activity forward, USL said in a statement.
United Spirits is the largest spirits company in the world by volume.
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