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The country’s largest alcohol beverage company United Spirits Ltd (USL) on Monday reported standalone net loss of Rs 55.56 crore for first quarter of 2014-15 ended June 30, 2014, as compared with net profit of Rs 118.13 crore a year earlier on the back of exceptional losses.

Net sales declined 12.69 per cent to Rs 1,905.98 crore during the quarter, as against Rs 2,147.88 crore for the same period of the previous financial year.

This was a function of excise duty deductions on the company’s total income from operations.Excise duty deduction in the first quarter was Rs 3,126.10 crore which reduced the net sales income substantially. Following the excise cut, total income from operations declined 3.59 per cent to Rs 5,035.08 crore as compared to Rs 5,222.80 crore a year earlier.

Operating profit halved to Rs 145 crore from Rs 291 crore during the same period and margins slipped 600 basis points to 7.5 per cent from 13.5 per cent year-on-year, USL said in a filing to the BSE.

50% net worth erosion
The board of directors of USL approved reporting to the Board of Industrial and Financial Reconstruction (BIFR), the fact that its accumulated losses at the end of 2013-2014 have resulted in erosion of more than 50 per cent of the company’s net worth in the preceding four financial years.

AGM on November 29
The board of USL has approved the convening of an extraordinary general meeting on or prior to November 29, 2014 to discuss the net worth erosion issue.

The board also approved in-principle the sale of the Malkaigiri unit of the company and has authorised the management to explore options in this regard and approach the board for its approval with the proposed plan for the sale.

The board also gave in-principle approval for the sale of the Palakkad unit of the company and has authorised the management to explore options in this regard.