“The Tough” thy say, “gets going, when the going gets tough”. One look at the current figures that Kolkata based Pincon Spirits and one cannot but agree more with the ditty. For, at a time when the economy has gone into a tailspin and corporates across the board are gasping to stay afloat, Pincon has not only maintained it growth spurt, but has also posted numbers that will be termed impressive, even in the best of times.
Pincon’s gross revenue for the third quarter of FY 17 is up 31 percent, when compared to the numbers it posted in Q3 ’16. In Rupee terms that a jump from INR 237.41 crores to INR 311.90 crores. Demonetisation be damned! This has, in turn, translated into a whopping 52 percent jump in the PAT – which is up from INR 6.16 crores to INR 9.34 crores.
Following demonetisation, market watchers had unanimously predicted that alcohol beverage revenues will be decimated. So how did the company pull off this near impossible feat? Smiles Monoranjan Ray, the CMD of Pincon Spirit, “we had taken a three-pronged approach to meet the challenges of the market’s dynamism. We value added our product mix, deepened our market penetration and strengthened our distribution system. The result is for everyone to see.”
There is more to what the soft-spoken swashbuckler is saying – as market experts point out, Pincon’s home run can be attributed to its very smart move of stressing on (and dominating) the sub Rs. 100 product category, where the real growth and the mindboggling numbers are. While 51 percent of its sales had come from this category in Q3 FY16, this time around, it has gone up to a massive 60%. Cheers to that!
It has, the savvy entrepreneur that it is, has also ensured that its finished inventory has gone down to 68 days of Turnover in the current quarter as opposed to the 71 days in the comparable quarter in the previous year. In plain speak that means more savings, less headaches and an obvious reflection in the Balance Sheet. To put things in the right perspective, one also must remember the fact that Pincon is the Nation’s largest country spirits company, which literally means a lot of savings in three days.
But this is just the beginning. While company sources are tight lipped about the coming quarters, the market is agog. If the grapevine is to be belied, Pincon is ideally suited to take full advantage to the impending upswing in the demand for its key products. The shrewd move of investing on a captive logistics division has also started paying off as it goes about deepening its penetration and easing out the distribution bottlenecks. What is more, experts opine, the true reflection of the hike in the product prices will only come in the subsequent quarters, which they hasten to add, will be accompanied by the customary fireworks. And by the way, Pincon is currently in the process of rightsizing its Balance Sheet, something that will naturally add further punch to the fire-waters it sells.
However, there is another reason for Pincon to raise its glass in a toast. The Bengal Government’s assuming of Alcobev distribution control, experts are unanimous, will put the Company’s bottom line on steroids. For one, its working capital cycles will shrink substantially. Secondly it will deal a body blow to the illicit liquor trade and finally, hep broaden the organised market with all its attendant benefits accruing to Pincon.
But that is not all that there is. In another extremely logical move, the Company has just announced that it has taken over five retail outlets in Kolkata’s prime locations. Alcohol industry stalwarts are sitting up in their bar stools to watch how this move by the market shaker plays out even as the company tries to mark its presence in the entire space from distillation, through distribution to consumption.
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Now the Million Dollar question. At current rates, is Pincon a good buy? Looks good to me, any comments, experts?