Input costs of major raw materials like spirits
Well for starters take a look at the revenue accounts of
monday both the standalone company, and the consolidated statements. The company generates big revenues for sure, but shorn of the 'sin tax' element it is only half as big. It recorded gross sales of Rs 87.8 bn for the accounting year FY10, against Rs 71.1 bn in the preceding year, but excise taxes took away Rs 42.5 bn of this (Rs 33.6 bn). It also recorded a pretax profit of Rs 4.7 bn (Rs 4.6 bn). But the top line also shows receipts under three heads, which total up to Rs 4.6 bn (Rs 4.1 bn).These receipts are inclusive of an item called 'income arising from sale by manufacturers under tie up'.
It is not known whether there is any corresponding debit entry in the expense side to earn this income, or whether the company is merely accounting for the 'net income' after expenses. Assuming that it reflects the latter assumption, and if one nets off the pretax profit against this 'other income' then the company is scraping the nether regions of the barrel. This also implies that but for such abundant inputs of oxygen supply; it would be hard put for the company to make ends meet. (There was of course also a very well timed, and a very fortuitous one time 'other income' receipt of Rs 700 m, pertaining to the profit on sale of United Spirits shares held by Shaw Wallace. The latter merged into United Spirits in FY10.)
This lag in profits is inspite of the fact that production volumes of
monday Beverage Alcohol during the year were higher by 35% at 252 m litres. Sales of Beverage Alcohol cases were also higher by 13% at 61 m cases. Input costs of major raw materials like spirits and molasses were also well under control. But higher manufacturing costs, and interest costs, put paid to its hopes.
