Associated Alcohols Q2 profit drops 41% as costs outpace sales

Associated Alcohols & Breweries Limited reported standalone net profit of Rs 8.32 crore for the quarter ended 30 September 2026, down 41% from Rs 14.01 crore a year earlier, despite revenue from operations rising 8% to Rs 276.96 crore. Total expenses increased 12% to Rs 267.67 crore, reducing profit before tax to Rs 11.33 crore.

Why did Associated Alcohols’ Q2 profit fall despite revenue growth?

Associated Alcohols’ Q2 profit fell because its total expenses increased faster than its total income in the quarter ended 30 September 2026. Revenue from operations rose from Rs 256.93 crore in the quarter ended 30 September 2025 to Rs 276.96 crore, while total income, including other income, increased from Rs 257.98 crore to Rs 279.00 crore.

Total expenses rose from Rs 239.53 crore to Rs 267.67 crore over the same period, exceeding the Rs 21.02 crore rise in total income. Profit before tax consequently declined 39% to Rs 11.33 crore from Rs 18.44 crore, while tax expense fell to Rs 3.01 crore from Rs 4.43 crore. Net profit declined to Rs 8.32 crore from Rs 14.01 crore.

Which expenses increased most in Associated Alcohols’ Q2?

Associated Alcohols’ cost of materials consumed increased by Rs 43.77 crore year on year to Rs 200.39 crore in Q2, the largest increase among reported expense lines. The material-cost increase was more than twice the Rs 20.03 crore increase in revenue from operations during the quarter ended 30 September 2026.

Other expenses rose by Rs 10.65 crore to Rs 46.22 crore, and employee benefits expense increased by Rs 3.23 crore to Rs 16.20 crore. Depreciation and amortisation increased to Rs 7.08 crore from Rs 5.66 crore, finance cost rose to Rs 1.62 crore from Rs 0.96 crore, and excise duty increased to Rs 5.31 crore from Rs 3.09 crore.

A favourable inventory movement partly offset those increases. Associated Alcohols reported a Rs 27.43 crore reduction in the expense line for changes in inventories of finished goods and work-in-progress, compared with an expense of Rs 6.81 crore in the September 2025 quarter. Power and fuel expense nevertheless rose to Rs 18.27 crore from Rs 17.85 crore.

How did Associated Alcohols’ two operating segments perform in Q2?

Associated Alcohols’ Potable Alcohols Division increased Q2 revenue 14% to Rs 200.62 crore from Rs 175.89 crore, while its segment result declined to Rs 15.94 crore from Rs 19.25 crore. The division’s revenue was also below Rs 219.16 crore reported in the immediately preceding quarter ended 30 June 2026.

The Ethanol Division reported Q2 revenue of Rs 84.73 crore, down from Rs 88.01 crore a year earlier, and recorded a segment loss of Rs 2.15 crore. This compared with segment profit of Rs 1.58 crore in the September 2025 quarter and a loss of Rs 8.37 crore in the June 2026 quarter.

Inter-segment revenue was Rs 8.40 crore in Q2, compared with Rs 6.97 crore a year earlier, resulting in total reported revenue from operations of Rs 276.96 crore. After finance cost of Rs 1.62 crore and unallocable net expense of Rs 0.84 crore, standalone profit before tax was Rs 11.33 crore.

How did Associated Alcohols perform in the half year ended September 2026?

Associated Alcohols reported standalone revenue from operations of Rs 563.26 crore for the half year ended 30 September 2026, up 7% from Rs 527.13 crore in the corresponding prior-year half. Net profit, however, declined 30% to Rs 26.24 crore from Rs 37.67 crore, while profit before tax fell to Rs 35.47 crore from Rs 50.22 crore.

The first-half cost pattern reflected the Q2 outcome. Cost of materials consumed increased to Rs 364.28 crore from Rs 305.57 crore, employee benefits expense rose to Rs 32.01 crore from Rs 26.03 crore, and other expenses increased to Rs 87.87 crore from Rs 74.71 crore. Depreciation and amortisation reached Rs 14.15 crore, compared with Rs 11.27 crore.

Basic earnings per share, not annualised, fell to Rs 13.07 for the half year from Rs 20.69 a year earlier. Q2 basic earnings per share was Rs 4.17, compared with Rs 7.69 in the quarter ended 30 September 2025, while paid-up equity share capital was Rs 20.08 crore at 30 September 2026.

What do Associated Alcohols’ balance sheet and cash flows show?

Associated Alcohols reported standalone total assets of Rs 909.36 crore at 30 September 2026, compared with Rs 855.87 crore at 31 March 2026. Non-current assets increased to Rs 581.36 crore from Rs 531.04 crore, including property, plant and equipment of Rs 404.09 crore and capital work-in-progress of Rs 29.45 crore.

Current assets were Rs 328.02 crore at 30 September 2026, compared with Rs 324.83 crore at 31 March 2026. Inventories increased to Rs 166.46 crore from Rs 157.15 crore, and trade receivables rose to Rs 64.81 crore from Rs 42.44 crore. Cash and cash equivalents were Rs 10.62 crore, compared with Rs 10.81 crore at the March year-end.

Net cash generated from operating activities was Rs 88.32 crore in the half year ended 30 September 2026. Investing activities used Rs 66.10 crore, including Rs 49.06 crore for property, plant, equipment, capital work-in-progress and capital advances, plus Rs 12.50 crore invested in a subsidiary. Financing activities used Rs 22.41 crore, resulting in a Rs 0.19 crore decrease in cash and cash equivalents.

What disclosed developments should Associated Alcohols investors watch next?

Associated Alcohols disclosed receipt of 75% allotment monies of Rs 32.74 crore from share warrants. The funds are designated for loans to or investments in wholly owned subsidiary Associated Alcohols and Breweries (Awadh) Limited to establish a bottling-cum-distillery unit in Uttar Pradesh, and were held in a liquid fund with a scheduled commercial bank at 30 September 2026.

The company also finalised capital allocation for its acquisition of SDF Industries Limited, which became a wholly owned subsidiary on 13 May 2026. Associated Alcohols recorded an investment in the subsidiary of Rs 12.50 crore, representing fresh equity infused to obtain control, while further funds used to settle legacy obligations were classified as inter-company loans at amortised cost.

A Competition Commission of India matter remains pending before the Supreme Court after the Madhya Pradesh High Court dismissed related writ petitions on 17 September 2026. Associated Alcohols stated that it did not anticipate a material adverse financial impact at that stage. The Board also approved the proposed reappointment of Tushar Bhandari as whole-time director for a further three years, subject to member approval through postal ballot.

Conclusion

Associated Alcohols increased standalone Q2 revenue by 8% to Rs 276.96 crore and first-half revenue by 7% to Rs 563.26 crore, but earnings declined as expenses increased more rapidly. Q2 net profit fell 41% to Rs 8.32 crore, while half-year net profit declined 30% to Rs 26.24 crore, with materials consumed rising to Rs 200.39 crore in Q2.

The next disclosed items to watch are deployment of the Rs 32.74 crore warrant proceeds toward the Uttar Pradesh bottling-cum-distillery plan, progress in integrating SDF Industries Limited after its 13 May 2026 acquisition, and the pending Supreme Court matter concerning Competition Commission of India jurisdiction.