Empee Distillery

In a market where most of the stocks were falling off the  cliff, Empee Distilleries was locked on the 10% upper circuit on news that it had  entered into a three year agreement with United Spirits for manufacture of Indian Made Foreign Liquor (IMFL) for distribution in Karnataka.  This will be done at its Kolar unit at Karnataka and the market is enthused that this tie-up will help boost the earnings.  The company is hoping that once this begins, it will be able to export its IMFL to East Asian countries.

The company has a 30th September year ending and for the nine months ended 30th June 2013, it did not have a very good earning. Its net profit, for the period fell 73% (YoY) at Rs.1.6 crore, a much sharper fall than the 8% decline in net sales at Rs.141 crore. Though the company has reduced its operating expenses, the huge interest outgo at Rs.6 crore v/s Rs.4 crore for the quarter dented the bottomline. The company is not expected to end the year on a higher note as till end of nine months, its net profit was at Rs.11 crore compared to Rs.23 crore posted for year ended 30/9/2012 – the gap is too much to be filled within one quarter.