Jagatjit Industries Ltd, the maker of the Aristocrat brand of liquor, aims to achieve ₹820 crore in revenue and ₹26 crore in profit in the next fiscal year. Roshini Sanah Jaiswal, Promoter and Chief Restructuring Officer,said the company will focus on its new ethanol plant, premiumisation strategy, and reduction of debt to achieve these numbers.
In FY 2023, the company’s revenue from operations was at ₹623.8 crore with a net profit of ₹6.7 crore.
Addressing the stagnant margins, Jaiswal told businessline, “A portion of the contribution margin is being shared with the franchise owners since the company switched to a franchise model in 2018. Additionally, the significant commodity price increase last year had a major effect on the profits.”
Going ahead, it aims to make its grain-based ethanol manufacturing plant operational by June 2024, as it expects the plant to significantly contribute to the company’s revenues and profitability.
Jagatjit Industries is investing ₹210 crore to set up an ethanol plant in Hamira, Punjab, with a planned capacity of 200-kilo litre per day. Jaiswal said that the investment is lucrative as it is on a contract basis and the government is funding a part of it, with a loan that comes at about 6.5 per cent.
The company will undertake expansion into new markets in Uttar Pradesh, Kerala, and the Canteen Stores Departments. This development aims to widen its consumer base and further fuel its growth in the 22 states. It will also continue to deepen its presence in existing markets of Punjab, Andhra Pradesh, Telangana, and Assam, to name a few.
Premiumisation plan
For future growth, it is also betting big on premiumisation and plans to add more products to its premium portfolio. Jaiswal said that the premiumisation strategy will help in bumping up the margins significantly.
Jagatjit Industries will also further grow the export markets from 13 to 15 countries and set foot in Nigeria and Russia by making its products available through export. Jaiswal said, “These have been aspirational markets for us, which we have been trying to enter for the last two years, and we have finally found the right partner to do so. We believe these are going to be significant markets for us in terms of volume and size.” Currently, export markets cotribute to about 5 per cent of the total revenue.
However, its debt-to-equity ratio remains a concern for the company. Jaiswal said that the company plans to reduce the total debt by 50 per cent by liquidating one real estate asset. Although it wouldn’t be selling assets in Punjab, it will consider its assets in Delhi and Gurgaon. The cost of borrowing, albeit has come down from 11.75 per cent to 11 per cent, Jaiswal noted.
The company is also looking to raise funds from private equity players. Although it wouldn’t be selling controlling stakes, it looks to gain strategic growth, entry to markets, and inter-business intelligence from private equity.