Operator: Ladies and gentlemen, good day and welcome to the Tilaknagar Industries Limited's earnings conference call. As a reminder, all participants will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star then zero on your touch-tone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Siddharth Rangnekar from CDR India. Thank you, and over to you, sir.
Siddharth Rangnekar: Thank you. Good morning, everyone, and thank you for joining us on Tilaknagar Industries Limited's Q2 FY27 Earnings Conference Call. We are joined today by Chairman and Managing Director, Mr. Amit Dahanukar, Chief Strategy Officer, Ameya Deshpande, Deputy Chief Financial Officer of the company, Anil Singal, and General Manager Growth and Innovation, Sanaya Dahanukar. We shall commence with views from Mr. Dahanukar on the brief performance and financial highlights, followed by a commentary from Mr. Deshpande on the strategy going ahead. This will be followed by an interactive question-and-answer session.
Siddharth Rangnekar: Before we commence, I would like to state that certain statements made on today's call could be forward-looking in nature, and a disclaimer to this effect has been included in the results presentation that was shared with you earlier and which is also available on the stock exchange website. I would now like to request Mr. Dahanukar to make his opening remarks. Over to you, sir.
Amit Dahanukar: Good morning, everyone. Happy to have you all join us on this earnings call to discuss the Q2 FY27 results. I will provide an update on the current quarter's performance, which will be followed by Ameya taking you through the updates on our strategic investments, Imperial Blue integration, and guidance on future performance. Before I begin with the quarterly performance, there are a few key highlights I wanted to share. Firstly, both our flagship brands, Imperial Blue Whisky and Mansion House Brandy, have registered a robust secondary volume growth of 8.5% and 7.1% respectively in Q2 FY27 versus Q1 FY27. This has led to 100 bps market share increase for Imperial Blue and 70 bps market share increase for TI in prestige and above segment on quarter-on-quarter basis in Q2 FY27.
Amit Dahanukar: Imperial Blue market share rose in 17 states across India, with significant market share gains in Karnataka, Andhra Pradesh, Uttarakhand, Assam, and Rajasthan. We have continued to introduce Imperial Blue in newer markets by launching the brand in Kerala during October 2026. We will soon be launching the brand in Tamil Nadu as well. While these are smaller whisky markets, we are confident that our existing presence in these states will immensely benefit IB. We have leveraged Imperial Blue's distribution strength in Daman and Diu to relaunch Mansion House Brandy, and in Uttarakhand to launch Madiraa Rum. We have also introduced Imperial Black in Uttar Pradesh and Meghalaya during the quarter. In Q1, our overall volumes increased by 160% on year-on-year basis and 2% on quarter-on-quarter basis.
Amit Dahanukar: The quarterly growth was largely flattish on account of higher primary in Q1 FY27 in the states which had exited TSMA during Q4 FY26 and states which were planned for exit in June 2026. Moving to financial performance, the overall NSR moderated by 0.75% to INR 1,174 per case for Q2 FY27 from INR 1,183 per case in Q1 FY27, and increased by 3.2% from INR 1,138 per case in Q2 FY26. On a H1 basis, the NSR grew by 4.2% from INR 1,131 in H1 FY26 to INR 1,179 in H1 FY27. The slight reduction in NSR in Q2 was account of change in state mix and brand mix. However, we are confident of sustained growth in NSR going forward. The NSR growth will be driven by favorable state mix, price increases, and expected new launches FY28 onwards.
Amit Dahanukar: We witnessed a strong growth of 173% year-on-year basis to reach a net revenue of INR 1,035 crores during the quarter. Adjusted for subsidy, we recorded a growth of 172% to reach INR 1,033 crores. The ongoing geopolitical tensions have resulted in continued inflationary pressures across packaging inputs, particularly glass, resulting in a meaningful increase in packaging costs during the last two quarters. While exiting Q2 FY27, ENA prices have also started to show an inflationary trend with rising fuel and grain costs. Consequently, gross margins were under pressure. However, as committed in Q1, we have been working consistently on our cost optimization initiatives, which have shown positive results, helping us protect our margins. Adjusted for subsidy, we have achieved a gross profit of INR 432 crores in Q2 FY27 and a margin of 41.8% compared to 42.1% in Q1 FY27.
Amit Dahanukar: Excluding the impact of inflationary pressures, the margin would have been higher, closer to 44%. EBITDA stood at INR 148 crores for Q2 FY27, clocking a growth of 146% year-on-year and a margin of 14.3%. Adjusted for subsidy, the EBITDA grew by 143% to INR 146 crores and a 14.1% margin on the combined business. Excluding the impact of inflationary pressures, the margin would have been approximately 16.5%. A&P reinvestment rates increased by 61 bps in Q2 FY27 versus Q1 FY27 on the back of strong ATL and BTL execution drives ahead of the festive season. PAT adjusted for exceptional items and acquisition-related amortization stood at INR 68 crores for Q2 FY27, clocking a growth of 30% year-on-year and a margin of 6.6%. Adjusted for subsidy, the PAT grew by 26% to reach INR 66 crores and a 6.4% margin on the combined business.
Amit Dahanukar: Excluding the impact of inflationary pressures and subsidy, the margin would have been approximately 9%. We have incurred an exceptional expense to the tune of INR 11 crores during Q2 FY27, predominantly on account of TSMA fees and integration-related expenses. As on 30 September 2026, our gross debt stood at INR 2,202 crores and net debt stood at INR 2,074 crores. There is a slight reduction in net debt levels as compared to June 2026. I want to reassure you that our target is to take the net debt in March 2027 to below March 2026 levels. I wanted to reiterate that our focus going forward will be divided into four parts. One, continue our journey to generate and fulfill demand for our brands to deliver a double-digit volume growth over a two to three-year period.
Amit Dahanukar: Two, optimize packaging, processes, and supply chain, and reap benefits of operating leverage and economies of scale, helping us achieve an EBITDA margin of 16% to 18% on combined business. Three, focus on efficient capital deployment, disciplined debt management, and working capital investments, facilitating the reduction of net debt to EBITDA below 1x by FY29. Four, ride on the pan-India distribution strength of Imperial Blue and Mansion House franchises to expand TI's luxury and premium portfolio, including strategic investment brands. We have consistently focused on our brand communications and have made impactful strides during the current quarter. On the proud occasion of Independence Day, we had two great outcomes. Firstly, Mansion House Brandy and Monarch Legacy Edition Brandy were showcased in Times Square, New York City for 72 hours with 2,500-plus plays and 1.2 million-plus visitors.
Amit Dahanukar: Secondly, TI launched its first ATL campaign for Imperial Blue packaged drinking water under "Because Men Will Be Men," which continues with its central theme of humor. We have been continuing our strong execution on the BTL front with special packs across key markets ahead of the festive season. The overall policy and regulatory environment continue to see encouraging developments in Q2 FY27. Karnataka, on the back of the recent progressive excise policy reforms, has witnessed strong growth in the prestige and above category, with significant benefits for both Imperial Blue Whisky and Mansion House Brandy. Additionally, Mansion House Brandy emerged as the highest-selling brandy in Karnataka in September 2026. During Q2, Imperial Blue Whisky recorded its highest-ever quarterly volumes in the state, with market shares crossing 40%, a massive 900 bps increase on a quarter-on-quarter basis.
Amit Dahanukar: Further, there are early signals of reform in Tamil Nadu, the largest brandy market in India. Mansion House Reserve Brandy has seen 25% quarter-on-quarter volume growth, with 50% year-on-year volume growth in September 2026, emerging as the highest volume month ever. We are now very confident that TI, the largest P&A brandy player in India, will be one of the biggest beneficiaries of any reform which takes place in Tamil Nadu. Lastly, I wanted to update you on the super-premium and luxury side of the business housed within House of TI. During the quarter, we have made a strategic investment in Black Tiger Distilleries, the makers of Bodega Suprema No. 5, a 100% Blue Weber Agave Tequila. We have also expanded the presence of our luxury brands, Monarch Legacy Edition Brandy, Seven Islands Pure Malt Whisky, and Samsara Gin, owned by SSL, in Assam during the quarter.
Amit Dahanukar: We are extremely optimistic on our luxury play, both organic and through our strategic investments. I will now hand over to Ameya to take you through our investment in Bodega, integration of Imperial Blue, and provide guidance on the future performance.
Ameya Deshpande: Thank you, and a very warm welcome to everyone joining us today. During Q2 FY27, we made a strategic investment in Black Tiger Distilleries, the makers of Bodega Suprema No. 5, a 100% Blue Weber Agave Tequila bottled in Jalisco, Mexico. We are very excited about our maiden foray into tequila, a category growing at 60% CAGR over the last 5 years. Bodega is plugging the gap at an accessible luxury price point. It is already available in 4 markets, that is Maharashtra, Karnataka, Goa, and Delhi. We have agreed to invest INR 22 crores for a 30% stake in the company over 2 tranches, INR 6 crores, which has already been invested, and another INR 16 crores will be invested in the next 12 months. This investment also includes a strategic partnership with PFA, a Mexico-based family-owned tequila manufacturer, and Mansha Group, one of India's leading alcohol distributors.
Ameya Deshpande: Our strategic investment approach continues to be opportunity-led and disciplined, with capital allocation based on the strategic attractiveness of an opportunity and long-term profitability in mind. We look at brands and businesses with strong consumer propositions, differentiated liquid, attractive growth potential, and the ability to scale through our distribution and operating platform. Our goal is to build a stronger, more diversified, and increasingly premium-focused spirits company. On the IB integration front, I am happy to inform you that the states which transitioned out of TSMA under TI operations have been stabilized, marking another step towards successful integration. The last remaining state will also be transitioned towards end of financial year 2027. As a result, exceptional costs relating to the transition have significantly reduced during Q2 FY27 and will continue at the same levels over the next 2 quarters.
Ameya Deshpande: I would now like to provide some guidance on the combined business going forward. We maintain our guidance for FY27 to achieving a high single-digit to low double-digit volume growth for the combined business. Beyond FY27, including new launches planned for FY28 onwards, we maintain our volume growth guidance of mid-teens and revenue guidance of mid-to-high teens over the next couple of years. In terms of margins, we expect the consolidated EBITDA margins to reach 16% to 18% for the combined business by FY29, with upward bias on the range.
Ameya Deshpande: While the margins in H1 FY27 have been under pressure, we are confident that we will be able to deliver the margin expansion on the back of our premiumization journey, cost optimization initiatives, supply chain efficiencies, and operating leverage. As guided in the past as well, we expect the net debt-to-EBITDA ratio going below one time by March 2029. With that, I would now request the operator to open the call for Q&A.
Operator: Thank you very much, sir. Ladies and gentlemen, we will now begin with the question-and-answer session. Anyone who wishes to ask questions may please press star and 1 on their touchphones. If you wish to withdraw yourself from the question queue, you may press star and 2. Participants are requested to use only handsets while asking a question. We will wait for a moment while the question queue assembles. The first question is from the line of Avneesh Roy from Nuvama. Please go ahead.
Abneesh Roy: Yeah, thanks. My first question is a bit structural. One is, of course, on the overall sector. If I see the white spirits is growing much faster, numbers for Radico and even United Spirits now speak for themselves, extremely explosive growth. So in your core markets of South India, for example, and for your legacy brand, I am sure again there the white spirit growth will be much faster than the brown spirit. So if you could comment how much is the market growth in your calculation in the four core markets for the white spirits versus your business? Second quick question on the industry is, you mentioned some initial reforms in Tamil Nadu have started, and you mentioned some numbers which look very good quarter-on-quarter and year-over-year. If you could confirm those numbers, and is it for Tamil Nadu? That is the first question.
Ameya Deshpande: Avneesh, the white spirits, the major markets have, they have largely been UP, Maharashtra, and Rajasthan. White spirits as a category is not very large in the South India where we are operating, but nevertheless, it has been growing over there itself. But the large markets are the ones which I had specified. Coming to your second question in terms of the regulatory changes in Tamil Nadu, yes, certain ordering changes have been made which have affected us positively in terms of orders being received on depletion. So some changes at ground level have been made, which has helped us increase our tertiary sales from the outlets.
Abneesh Roy: Can you repeat those numbers? That is for Tamil Nadu, right? Those numbers?
Ameya Deshpande: Yeah, yeah. That is for Tamil Nadu. This is for Mansion House Reserve Brandy, grown at 25% on a quarter-on-quarter basis and 50% on a year-on-year basis in September.
Abneesh Roy: And just some calculation or some numbers you have in mind that if reasonable reforms have Sector reforms can be very different types and very difficult to crystal. But some current X volumes, say, in Tamil Nadu, how much can be realistic in the next 2 to 3 years? Because 2 to 3 years, I am sure reforms will 100% happen, there is no doubt. But assuming slight basic reforms, what kind of volumes you can expect in 2 to 3 years, Tamil Nadu?
Ameya Deshpande: Avneesh, again, as you have correctly pointed out, it is difficult to have a crystal ball in terms of how regulatory changes will pan out. I would just go on to mention that at our peak in Tamil Nadu, we sold around 3 million cases of prestige and above brandy, mainly Mansion House.
Abneesh Roy: What is the current ARR from Q2?
Ameya Deshpande: Currently you are looking at less than half a million.
Abneesh Roy: Understood. Last question. Are you happy with the IB comments and your core business?
Operator: Mr. Roy, I am sorry to interrupt you.
Abneesh Roy: Yeah.
Operator: Sir, I would request you to kindly rejoin the queue for follow-ups, please. We have other participants.
Abneesh Roy: I asked only one question.
Operator: I am sorry, sir, there is a long queue. We will have to take other participants. We will have to give them chance, sir. I would request you to kindly rejoin the queue. Thank you. We will take the next question from the line of Sanjay Manyal from DAM Capital. Please go ahead.
Sanjay Manyal: Hi, sir. Sir, just on this Imperial Blue part, I think your run rate was, say, around 2 million cases in May and June, and this seems to be sort of not at the same run rate in Q2. So how do we see Imperial Blue for the full year? Well, means if I just see that run rate of 2 million, then ideally we should have been closer to 20, 24 million cases. Do you think that number can be achievable?
Ameya Deshpande: Well, Sanjay, see, the thing is that while we did do 2 million cases in May and June, we are very close to those numbers even in Q2, right? There is good level of seasonality that comes in Q2 with loads of festivals in the north of India where drinking is not that prevalent at that point in time, right? So from that perspective, we still stick to our earlier guidance that we had provided of double-digit growth in IB business for the entire year of FY27. We do not see any risk on that number.
Sanjay Manyal: Okay. Maybe if you can give some sort of a color on the fact that if you have launched some of your existing earlier brands or the premium brands in the territory where Imperial Blue was strong or what kinds of benefit you have already got from the large distribution network sort of you have built after the acquisition?
Ameya Deshpande: So it's early days. I think one introduction which we did of Madiraa Rum in Uttarakhand on the back of the Imperial Blue distribution. In Q3 and Q4, of course, we'll roll out our luxury portfolio from House of TI in many of the northern states where Imperial Blue is widely distributed.
Sanjay Manyal: Okay. Maybe just last one on the ENA part. You mentioned the ENA has been inflationary. How do you think what exactly lies ahead, say, currently from the ethanol blending perspective, I think the current year has been pretty bad because of the lower sugarcane production as well as lower maize production. So how do you think the ENA probably would be impacted by that? Can this be like very extended period of high inflation in the ENA?
Ameya Deshpande: So, difficult to say long term in terms of what the trends could be, but ENA prices in Q1 and Q2 were subdued. But the exit rates now have significantly increased, and we have seen the grain prices as well harden. So, we expect that ENA would be on elevated side in the near term. We are expecting elevated ENA prices in the short term.
Sanjay Manyal: Right, sir. Thanks, and I will come back in queue.
Operator: Thank you. A request to all the participants to kindly limit their questions to two or three per participant. Should you have follow-up questions, please rejoin the queue. We will take the next question from Manan Lahoti from Jefferies. Please go ahead.
Manan Lahoti: Yeah, hello. Am I audible?
Operator: Yes, you are. Please proceed.
Manan Lahoti: Yeah. I have just one question. Could you just quantify the impact of raw material inflation or West Asia crisis? How much has the impact been on gross margins?
Ameya Deshpande: So, see, it has been around 2.5%. Now, the way we are looking at this is pre-West Asia crisis. Compared to Q4, the kind of impact that you are looking at is more like 2.5%. On a net basis, you can consider around INR 25 crores on a quarterly basis in Q1 as well as Q2.
Manan Lahoti: Okay, that is all. Thank you.
Operator: Thank you. The next question is from the line of Mehul Desai from JM Financial. Please go ahead.
Mehul Desai: Yeah. Hi, sir. My first question is on the brandy side. You did allude to primary versus secondary gap in IB. What is the reason for primary versus secondary gap in brandy? This gap should reduce or go away from H2. Also, if you can talk about how things are shaping up competitively in brandy, especially in AP, Telangana, and Karnataka, your key markets, given that there are a lot of competitors. I mean, Radico is talking about brandy, ABD suddenly talked about brandy in last 1 or 2 quarters, and we have seen United Spirits now also talking about brandy and bringing it into their P&A segment. How are you looking at your brandy segment growth? If you can just explain this primary versus secondary gap in brandy.
Ameya Deshpande: Yeah. See, the thing is that we do expect that over the course of an entire year, the primary and secondary converge into each other. See, the thing is that a lot of it also has to do with the fact that it depends on the shipments or the dispatches which are happening towards the latter part of the quarter as well, which may impact your in-days reported primary versus the actual secondary that has taken place. So, it is predominantly on account of that. But like I mentioned, do expect convergence over the course of the entire year. Now, with regards to the brandy business, or rather the brandy industry down south, as we have already mentioned, we have seen significant increase in market share in Karnataka.
Ameya Deshpande: So, Karnataka has been a big lighthouse market for us when it comes to brandy as well as Imperial Blue as such. In terms of Telangana and Andhra, we are already at a pretty massive scale in both these states. So, from that perspective, we have been able to retain market share, or rather, we are enjoying similar market shares as what we used to do. But I think just one thing that I do want to bring out over here is that, yes, there have been new players which have come in Andhra and Telangana, but they have been more on the popular and below side. So, at our relevant price points, to be very frank, we are still maintaining market shares.
Mehul Desai: Got it. Amit, the question was because, since your guidance is for the volume growth for the combined business for FY27 is high single to low double-digit growth. I understand IB, you will be comfortably reaching that low double-digit number. X of IB business, you are still confident of, because that X of IB business also has to do high single-digit kind of number for your full-year guidance to reach there. So, you are confident on that part?
Ameya Deshpande: On the existing business, Mehul, frankly, we are looking at a single-digit growth, mid to high single-digit kind of growth on the existing business. Frankly, we are fairly confident. On the lower end, there is absolutely no doubt. On the higher end of, or rather, higher single-digit growth, there are a few things that we are working on which could potentially help us achieve the upper end of the guidance as well.
Mehul Desai: Understood. Got it. Second question is especially on the growth and EBITDA margin, from a second half perspective. I think you mentioned that you expect margin expansion. That guidance was, are you saying you will expand from first half margins, or you are saying it from a year-on-year basis? Just clarification on that. Also, on this UK FTA-related noise which is happening, what is the initial comment that you have?
Ameya Deshpande: Sure. On the guidance bit, when we say that we expect expansion, we are referring to against H1 of FY26. Essentially on account of operating leverage as well as certain other state mix changes and all, we do expect margins to expand. Obviously, this is under the assumption that there is no significant further inflationary pressures that come in. While smaller inflationary pressures are something that we will cover through cost optimization initiatives, but anything large the way we saw towards the latter part of Q4 or beginning of Q1, obviously could potentially impact margins for FY27. The reason I say that is because FY28 onwards, we will have further launches that will come in, so at more premium price points. So we are fairly confident of expanding margins going forward, FY28 onwards, on a year-on-year basis as well.
Mehul Desai: Got it.
Ameya Deshpande: On the UK FTA bit, right?
Mehul Desai: Yeah.
Ameya Deshpande: Mehul, see, frankly, we have already made the requisite disclosure to the stock exchanges regarding this matter. Since Imperial Blue became a part of Tilaknagar Industries in December 2025, we have consistently classified our scotch imports under the same HSN code that we are billing even today. Having said that, we are working with the industry bodies as well as the relevant government authorities to get an early resolution, and we will provide you any further visibility or clarity on that once we have the same.
Mehul Desai: Sure. Last, if you can update on Samsara's performance in the H1. How is Samsara doing? That is the last question.
Ameya Deshpande: Yeah, Samsara has grown by 50% in the H1 compared to last year. It is important to note that SSL has largely skewed H2 compared to H1. H1 would be contributing approximately 35% of the overall yearly business compared to 65 in H2.
Mehul Desai: Yeah. Great. Thank you so much, Amitav.
Operator: Thank you. The next question is from the line of Karan Kamdar from Choice Institutional Equities. Please go ahead.
Karan Kamdar: Good morning. Thank you for the opportunity. I wanted to know what is our pricing strategy across the states, and how do we see escalations rolling in quarter on quarter? Like, how long would it take to sort of have an effective price increase to combat inflation at least?
Ameya Deshpande: Many of the eastern states, we have already taken a price increase in the northeast, like states like Assam, Meghalaya. I think we are underway in Arunachal Pradesh as well. The south states is something which we are discussing actively with the governments in two of the large states, Telangana and Andhra Pradesh, for a price increase. It would take some time before the increase, the inflation is passed on to the consumer.
Karan Kamdar: Any timeline on that, like a year or two quarters or one quarter? What do you expect when you sort of see the margins normalizing?
Ameya Deshpande: I think it's very difficult to actually guide towards at what intervals will we see these kind of price hikes, right? But the underlying assumption over here is that given the fact that we have a pan-India play across 28 plus markets, what does happen is that you would expect a price increase in at least a couple of states every year, right? So that is where the entire price mix kind of guidance comes from of 200 odd basis points. But to be very frank, it's very difficult to guide you in terms of which states will undergo a price increase and when.
Karan Kamdar: Got it. My second question is that you say there was inflationary pressures. Also, there was a lower subsidy this quarter. I think, could you give some breakdown in terms of what was the impact of the subsidy and what was the impact of inflationary pressure on the consolidated profits, and what kind of subsidies are we expecting?
Ameya Deshpande: No, I think let me take the last one first, because we cannot be guiding on what are the subsidies that we would be expecting. We have never guided that, and frankly, it is difficult for us to do that, right? We will leave it at that. In terms of the subsidy, if you look at Q1, we received a subsidy income of around INR 20 crores for the quarter. In Q2, we received around INR 2 crores for the quarter. Whenever we talk about EBITDA margins, right, we talk about adjusted EBITDA margins. In any case, the impact on adjusted EBITDA margins is independent of my subsidy levels. The entire impact of 250 basis points that we have, or INR 25 crores that we have spoken about, is a net inflationary impact, keeping subsidy aside.
Karan Kamdar: Okay, got it. Thanks. I will get back in the queue.
Operator: Thank you. The next question is from the line of Nitin from HDFC Securities. Please go ahead.
[Analyst] (HDFC Securities): Yeah. Hi, thank you. Thanks for taking my question. My first question pertains to, will you be able to quantify the benefit we are getting from UK FTA? Also just wanted to check on, like, how much of the benefit we are baked in in 16% to 18% guidance for FY29?
Ameya Deshpande: With respect to UK FTA, the kind of benefits that we have taken as a part of the upper end of the margin guidance of 18% is approximately 100 basis points on a consolidated basis on a full year perspective.
[Analyst] (HDFC Securities): Sure, thank you. For Q2, will you be able to sort of give some insights around how much of the benefit we have got? This will help us understand the gross margin a bit.
Ameya Deshpande: Yeah, there are no benefits on account of UK FTA in Q2 because we are sitting with stock, with inventory.
[Analyst] (HDFC Securities): Are we going to get the benefit from Q3?
Ameya Deshpande: No, like I mentioned, Nitin, in the earlier question that one of your colleagues asked with regards to the existing situation, I will not add anything more beyond that.
[Analyst] (HDFC Securities): Okay, sure. Lastly, second question is pertaining to your gross margin. Would you be able to highlight what are the measures we are taking to improve gross margin or negate the ENA inflation?
Ameya Deshpande: Yeah, so like we have done over the past 2 quarters, right? To negate this inflationary impact, we very firmly there is a lot of work that has been done on the supply chain optimization front, be it in the form of increasing the market bottle utilization rates and all of that. Frankly, we will continue working on the cost optimization initiatives and are hopeful of mitigating any further pressures as well on the back of these optimizations.
[Analyst] (HDFC Securities): Just a last bit on this thing. Will it be different from the industry in terms of the optimization measure we are taking, or would we be in the similar lines how the industry is progressing?
Ameya Deshpande: So, see, to some extent, there is a slight difference for the simple reason that we are working with a new brand in the form of Imperial Blue, right? And we are working at multiple operational levels on that front. You will see some level of difference between the way we are working and the industry is working. Also, on account of the fact that the peers that you are referring to have some level of backward integration, right, in their business, while we do not. So, our optimization efforts or our efforts to protect margins are slightly different in some parts.
[Analyst] (HDFC Securities): Understood. This is really helpful. Thanks a lot and all the best.
Operator: Thank you. The next question is from the line of Mudit Daga from Moreland Holdings Private Limited. Please go ahead.
[Analyst] (Moreland Holdings Private Limited): Hi, thank you for taking my question. So, our operating cash flow for the half year was negative due to increase in inventory and receivables. So, what is our inventory and receivable days now, as against March 2026 on a gross sales basis, and what will be the normalized range and when could we reach there?
Ameya Deshpande: The thing is that compared to March 2026, the number of days has increased slightly, by around 5 odd days. What one needs to consider in this entire thing is that the Telangana overdues, Telangana is working on a 6-month overdue cycle. By March, I only had 4 months of Imperial Blue overdue sitting within the books. We had acquired Imperial Blue business on a zero receivable, zero payables basis, right? I do not think it is a like-to-like comparison that we would be making. As it stands today, you are looking at an annualized net working capital days on gross basis at around 65 days, right? This obviously is taken into account the overdues of Telangana of around INR 550 crores as well.
Ameya Deshpande: In terms of going forward, excluding the benefit of potentially getting the receivables over the next 12 to the overdues over the next 12 to 24 months, you should be looking at similar levels from a net working capital days perspective.
[Analyst] (Moreland Holdings Private Limited): Thank you. That is it from my side.
Operator: Thank you. The next question is from the line of Keyur Gogri from Choice Institutional Equities. Please go ahead.
Heer Gogri: Hello. Thank you for the opportunity. Wanted to ask, following the investment in Bodega, what is the company's roadmap for entering and scaling up the tequila portfolio?
Ameya Deshpande: So, see, we currently, our first state was Maharashtra, and stock has just been dispatched to the other three states that I mentioned in my opening remarks. It is still pretty early days, but we are seeing some reasonable retention ratios are pretty impressive in terms of repeat ordering from the customers. So, from that perspective, I think the business is expected to do well. I think it is a pretty interesting sweet price point as well, from the perspective of it being 100% Blue Weber Agave. There is no other significant brand at that affordable luxury price point in this liquid profile as such. So, we have some high expectations, and we are fairly confident that we should be able to drive a very strong tequila business out of India.
Heer Gogri: Okay. One more question is, what is the outlook for exceptional integration cost, the acquisition-related cost over the next quarter in ballpark number, and will we be seeing this in FY28 as well?
Ameya Deshpande: No, we will not be seeing any TSMA fees in FY28, and you should be expecting over the next two quarters around INR 10 to 11 crore on a quarterly basis. So similar levels as Q2, what you have seen in Q2, in Q3 and Q4 as well.
Heer Gogri: Okay. Thank you, Aniruddha.
Operator: Thank you. Ladies and gentlemen, we will take that as the last question for today. I will now hand the conference over to the management for closing remarks. Thank you, and over to you, sir.
Amit Dahanukar: Q2 of FY27 has been a quarter of continued progress for TI, with encouraging momentum across our brands and ongoing progress on the integration of Imperial Blue into our business. As we look ahead, our focus remains on executing our strategic priorities, strengthening our market position, expanding our pan-India presence, and accelerating our premiumization journey. We believe our portfolio, distribution reach, and clear strategic direction positions us well to capitalize on the opportunities ahead. Thank you for your continued interest and support. We look forward to updating you on our progress in the coming quarters as we continue to build TI into a leading pan-India premium-focused alcobev company.
Operator: Thank you very much, sir. On behalf of Tilaknagar Industries, that concludes this conference. We thank you for joining us, and you may now disconnect your lines. Thank you.
