Indian winemaker Sula Vineyards' Q4 profit slips on mounting expenses

Sula Vineyards SULA, India's biggest wine maker by revenue, reported a 5% drop in fourth-quarter profit on Wednesday, as mounting expenses overshadowed steady demand for its premium brands such as Rasa and Dindori.

The Mumbai-headquartered company's consolidated net profit fell to 135.5 million rupees ($1.6 million) in January-March from 142.4 million rupees a year ago.

Rapid growth of restaurants and increasing incomes have nudged India's rising well-to-do young crowd towards wine consumption.

Sula's revenue rose nearly 10% to 1.32 billion rupees in the quarter on a 14% jump in wine sales.

However, the cost of raw materials, which include grapes, sugar and yeast, surged nearly 9% to 888.8 million rupees, hurting its profit.

The winemaker's earnings before interest, tax, depreciation and amortization margin contracted to 25.3% from 26.4% a year ago.

The company's wine tourism segment grew more than 31%.

"Wine tourism is a top priority and we are expanding fast," CEO Rajeev Samant said in a statement.

Sula recommended a final dividend of 4.50 rupees per share. Its shares closed up 1% ahead of results.

($1 = 83.4700 Indian rupees)