Craft beer maker Bira has been a poster boy for local mild alcoholic beverages. Over its five-year-long journey, the firm’s brands — Bira91, Bira Blond and White and Boom — have been claiming to corner a decent market share in the top 10 cities.
However, such claims look out of sync when one reads through its financial performance in FY19. Unlike the 5X growth in FY18, B9 Beverages’ growth in revenues has plateaued in FY19. Its revenues registered a mild growth of 15.4% to Rs 183 crore in the last fiscal year as compared to Rs 158.6 crore in FY18.
Meanwhile, the company’s losses doubled from Rs 101.8 crore in FY18 to Rs 202.2 crore in FY19. This is the second consecutive year when the beverage company has doubled its losses. Net cash outflow from operations also blew up by 46.4% to Rs 191 crore in FY19 from Rs 130 crore in FY18.
B9 Beverages which owns and operates the Bira91 brand sold products worth Rs 392.2 crore during FY19, growing 20.7% as compared to FY18 and collected Rs 210 crore in excise duty for the government.
Bira collected Rs 9.3 crore in non-operating finance income during FY19.
Going down the expense sheet, expenditure on employee benefits increased by 48% from Rs 39 crore in FY18 to Rs 57.7 crore in FY19. Finance costs and depreciation added another Rs 19.45 crore along with travel expenditure of Rs 10.3 crores. The total cost of transportation increased by 17.43% in FY19 to reach Rs 19 crore.
Surprisingly, the cost of raw materials consumed actually dropped around 9% to Rs 62.2 crore in FY19 from Rs 68.8 crore in FY18 even with increased sales. This can be attributed to the backlog of inventory left with the brewery in the previous fiscal and the gradual improvement in its operational efficiency.
Expenses on advertisement and promotion dropped 45.2% to Rs 2.3 crore in FY19 from Rs 4.2 crore in FY18 while expenditure on legal aid increased 2.2X to Rs 17.3 crore in FY19 from Rs 7.8 crore in FY18.
Bira recorded Unexplained Miscellaneous expenditure of Rs 164.7 crore which pushed the total expenses to Rs 394.5 crore in FY19 increasing by 50.3% from Rs 262.5 crore in FY18. Expenditure to earn per rupee of operating revenue increased by 30.3% to Rs 2.15 in FY19 from Rs 1.65 in FY18.
Entrackr’s queries sent to Ankur Jain about reasons behind the staggering miscellaneous expenditure didn’t elicit any immediate response. We will update the post as and when he responds.
Speaking to ET, Jain has attributed the firm’s sluggish growth to bottlenecks in the production capacity of the company. This could be a valid explanation but it also means that revenue in the ongoing fiscal should grow multifold as those breweries are operational now.
The Delhi-based company had issued shares to raise Rs 288.7 crore and borrowed another Rs 19 crore during the fiscal ended in March 2019 to fuel the expansion of its brewing capacity and manage working capital needs.
Will B9 Beverages be able to grow in FY20 as it did in FY 18? Let’s wait till it discloses the financial results of the ongoing fiscal.