Shares of United Spirits, the maker of Black Dog whiskey, tumbled as much as 5.6% on Wednesday after the liquor company reported a 28% drop in its net profit.

The Diageo-owned company's stock fell 5.6% to ₹770 apiece on the National Stock Exchange (NSE).

Net profit of the Johnny Walker whiskey maker slumped 28% to ₹214 crore during the third quarter of FY23 compared with ₹295 crore in the corresponding period last fiscal.

Profit was dragged down by rising input costs. Gross margin of the company stood at 40.6%, down 438 basis points versus last year, driven by input cost inflation both for glass and extra neutral alcohol (ENA).

EBITDA declined to ₹368 crore in the quarter ended December 31, 2022, down 12.38% year-on-year and EBITDA margin stood at 13.2%, down 332 basis points, primarily driven by inflation-led gross margin contraction.

The Bengaluru-based scotch maker's total income fell to ₹6,631 crore in the third quarter of FY23 as against ₹8,917 crore in the year-ago period.

"We delivered a good quarter in an extremely volatile environment carefully navigating through Route to Market changes & input commodity cost inflation," says Hina Nagarajan, Managing Director & CEO, United Spirits.

"The Board of Directors have approved a multi-year supply chain agility programme. The programme is expected to strengthen our end-to-end supply chain thereby making it fit for the future," Nagarajan adds.

"Looking ahead, in the shorter term, we do expect inflationary headwinds to continue. However, we remain optimistic about the medium to longer term business prospects & our ability to harness growth opportunities with sharpened focus and our reshaped portfolio. We remain confident in our strategy to create an organization of the future and thereby deliver value to all our stakeholders in a sustainable and consistent manner," says Nagarajan.

The board also approved the sale of its entire shareholding held in its wholly-owned subsidiary Sovereign Distilleries Limited. “The Company has entered into a definitive agreement for sale of its entire shareholding in its wholly owned subsidiary Sovereign Distilleries Limited (“SDL”), to Mr. Girish Jain and Mr. M. Sukumar, the sole proprietor of Sri Lakshya Traders (collectively “Buyers”) for consideration of INR 32 crore,” it says in a separate stock exchange filing.

The board also approved the appointment of Pradeep Jain, chief financial officer of the company, as an additional director and whole-time director of the company effective 1st February 2023 for a period of five years.

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