20 September, 2017
The Supreme Court, in a verdict late a year ago, had banned the sale of alcohol in outlets within 500 metres of national and state highways from April.
As of 09:58 BST, Diageo's share price had given up 2.18 percent to 2,441.50p, underperforming the broader United Kingdom market, with the benchmark FTSE 100 index now standing 0.01 percent lower at 7,274.48 points.
"Improved marketing, innovation, and commercial execution" during the group's last financial year has "continued to strengthen" the business, which is "well set up" to deliver in line with its ambitions.
"We expect the H1 organic net sales growth rate will be impacted by the later timing of Chinese New Year and by the expected impact of the highway ban in India", chief executive Ivan Menezes said ahead of the company's annual general meeting (AGM).
Menezes outlined ongoing investment projects the drinks firm is involved in, including up-weighting its "investment behind US Spirits and scotch", which is likely to have a positive effect on operating margins in H2.
Although Diageo said it was trading in line with expectations, investors were spooked by the impact that a ban on alcohol sales near highways in India will have on the group's performance.
Despite its concerns about Indian sales and Chinese New Year, Diageo stood by its target for sales growth in the mid-single digits and an improvement in its organic operating margin of 175 basis points over the three years to June 2019.