UNITED SPIRITS SEES FRANCHISE INCOME SOBERING DOWN 40%

English brewer Diageo-controlled United Spirits, which has reported a massive loss in the June quarter, expects at least 40% decline in its franchise income this year due to the impact of the COVID-19 pandemic, and is focusing on direct home delivery to shore up margins.

As a way to help the franchisees, the maker of McDowell's whisky will jointly develop business plans to help them build more profitable business, the management told analysts.

The country's largest liquor maker reported a net loss of Rs 215 crore on Monday, against a net profit of Rs 181.7 crore a year ago due to a 46% plunge in its revenue at Rs 3,828.5 crore while expenses declined 41.61% to Rs 4,042 crore.

The company attributed the losses to zero retail sales in April due to the nationwide lockdown, setting aside Rs 75 crore as an exceptional item for ' Raise the Bar' initiative, and a Rs 40-crore loss from franchise income.

"We had taken a hit of over Rs 40 crore by way of franchise income loss. Instead of around Rs 50 crore in the March quarter, this revenue head is down to just about Rs 10 crore in June. Our annual average from this end is around Rs 160 crore," Sanjeev Churiwala, executive director and chief financial officer of Diageo India, told analysts in a post-earnings investor call.

He added that given the impact of the pandemic, as retail sales are still a far and few in many key markets, the company sees this revenue falling by at least 40% for the full year.