Allied Blenders & Distillers Ltd Management Discussions

Economic Overview Global Economy Overview

CY2025 was marked by resilient global economic activity, notwithstanding moderate and uneven growth across regions. The year commenced with expectations of easing inflation and a more supportive interest rate environment; however, sentiment remained influenced by trade tensions, policy uncertainty and geopolitical developments. Notwithstanding these headwinds, global activity was supported by resilient services demand, improving financial conditions in certain markets and continued adjustment in trade and supply chains.

According to the International Monetary Fund World Economic Outlook, April 2026, global GDP growth was around 3.4% in CY2025, reflecting steady expansion amid a challenging external environment. Growth remained differentiated, with Advanced Economies growing by 1.9% and Emerging Markets and Developing Economies expanding by 4.4%. Inflation continued to moderate, although it remained above comfort levels in several markets, with global inflation estimated at 4.1%. Central banks, therefore, remained measured in their policy approach, balancing inflation management with the need to support growth.

A defining feature of CY2025 was the continued recalibration of global trade and supply chains. While logistics conditions improved relative to the disruption-led environment of prior years, businesses continued to review sourcing, manufacturing and investment decisions amid tariff actions, geopolitical fragmentation and shifting trade alignments. Consequently, trade flows remained functional and supply-side pressures eased in several sectors, although capital allocation and cross-border investment remained selective.

Outlook

The near-term global outlook remains cautiously constructive. Growth is expected to moderate in CY2026 before improving modestly in CY2027, with Emerging Economies projected to grow at 3.9% in CY2026 and 4.2% in CY2027, while Advanced Economies are expected to expand at 1.8% and 1.7%, respectively.

Improving financial conditions and a gradual recovery in global trade are expected to support growth. However, downside risks persist in the form of geopolitical tensions in the Middle East region, policy uncertainties and potential volatility in financial markets.

Indian Economy Overview

India remained among the fastest growing major economies in FY2025-26, supported by resilient domestic demand, sustained public investment and stable macroeconomic

conditions. According to the Ministry of Statistics and Programme Implementation, Indias real GDP growth was estimated at 7.6% in FY2025-26, reflecting the continued strength of the economy notwithstanding a challenging external environment.

Growth remained broad-based during the year, supported by consumption, government capital expenditure and a gradual improvement in private investment activity. Public capital expenditure continued to provide an important anchor to growth, while infrastructure development, healthy credit conditions and positive investment sentiment contributed to economic momentum.

Urban consumption remained resilient, while rural demand showed a gradual improvement during the year. Favourable demographics, increasing formalisation, continued digitalisation and sustained infrastructure investments further supported economic activity and reinforced Indias medium- term growth prospects.

Inflation remained within a manageable range during the year, with the Consumer Price Index (CPI) at 3.4%. The Reserve Bank of India maintained a calibrated policy approach, balancing inflation management with the objective of supporting growth and macroeconomic stability.

High-frequency indicators, including GST collections, PMI trends and digital transaction volumes, reflected continued economic momentum. Rising disposable incomes, urbanisation and aspirational consumption continued to shape Indias demand landscape, supporting growth across several consumer-facing sectors.

Outlook

The Indian economy is expected to maintain a steady growth trajectory, supported by resilient consumption, continued government expenditure and an improving private investment cycle. Real GDP growth is projected in the range of 6.8% to 7.2% for FY2026-27.

Rising disposable incomes and evolving consumer preferences are expected to continue supporting premiumisation trends across categories. Investment activity is also expected to remain supportive, underpinned by the Governments continued infrastructure focus and public capital expenditure allocation of ^12.2 trillion for FY2026-27.

While external uncertainties and inflationary pressures warrant continued vigilance, Indias strong macroeconomic fundamentals position it well to sustain long-term growth.

Industry Overview Global AlcoBev Industry

The global alcoholic beverages (AlcoBev) industry is witnessing steady and resilient growth, underpinned by evolving

consumer behaviour. As outlined in the IWSR Beverage Alcohol Drivers 2026 report, growth opportunities continue to be evident across categories and channels. Consumer engagement with on-premise occasions remains relatively robust across key markets, reinforcing the relevance of bars, restaurants and social venues as important touchpoints for brand discovery, trial and premium experiences.

At the same time, younger legal-drinking-age consumers are showing a rising preference for moderation-oriented choices, including low-alcohol alternatives and flavour-led offerings. This reflects a broader shift towards more mindful consumption, particularly among younger cohorts, while not detracting from the long-term importance of premium and experience-led occasions.

Regional Trends

- Mature markets such as North America and Europe are characterised by stable consumption, with growth primarily driven by premiumisation and value expansion.

- Emerging markets across Asia, Africa and Latin America are experiencing volume led growth, supported by rising incomes, urbanisation and expanding consumer bases, alongside a gradual shift toward premium segments.

Within the broader AlcoBev landscape, spirits continue to remain a strategically important category, supported by premiumisation, innovation and evolving consumption occasions. Whisky retains a strong position across markets, while categories such as gin, vodka and flavoured spirits continue to benefit from experimentation, cocktail culture and occasion-led demand. Overall, premium and super premium segments continue to outpace broader industry growth, reflecting the ongoing structural shift from volume-led to value-led consumption.

Indian AlcoBev Industry

India remains one of the most attractive beverage alcohol markets globally, supported by favourable demographics, rising disposable incomes, urbanisation and evolving consumer preferences. Growth continues to be supported by expanding consumption occasions and a structural premiumisation trend.

The Indian spirits industry is increasingly transitioning from a volume-led market to a value-led market, supported by premiumisation across price segments, rising aspirational consumption and a growing preference for branded, better- quality offerings. This shift is contributing to improved realisations and stronger profitability potential for organised companies. Evolving consumer discovery patterns and increasing digital engagement are also reshaping brand visibility and accelerating adoption across urban markets.

Notwithstanding these growth drivers, the Indian AlcoBev industry continues to operate within a highly regulated framework, with alcohol remaining a state subject. Variations in state excise policies, taxation structures and distribution models continue to influence pricing, route-to-market strategies and margin outcomes.

Taken together, favourable demographics, low per capita consumption, an expanding legal-drinking-age population, rising disposable incomes and increasing global acceptance of Indian spirits continue to support a constructive long-term outlook for the industry. Policy developments during the year were also broadly supportive of the sector and are expected to contribute to the long-term development of the Indian Alcobev market.

Opportunities and Threats Opportunities

The Indian AlcoBev industry continues to offer growth opportunities, supported by favourable demographics, rising disposable incomes, urbanisation and evolving consumer preferences. Key opportunities for the sector are set out below:

- Premiumisation: Continued premiumisation across price segments remains a key opportunity for the industry. As consumers increasingly prefer branded and better- quality offerings, companies with strong portfolios and disciplined brand investment are better placed to benefit from the shift towards value-led growth.

- Expansion in emerging markets: Rising aspirations, improving affordability and increasing acceptance of premium products in Tier 2 cities and other emerging markets create opportunities to deepen distribution and widen portfolio reach.

- Evolving consumption occasions: Changing lifestyles and urban social occasions continue to support demand across categories, particularly for brands that remain relevant across consumer segments and drinking occasions.

- Portfolio diversification: Demand for flavoured offerings, low-alcohol alternatives, mixers and emerging categories creates opportunities for portfolio expansion, particularly among younger legal-drinking-age consumers in urban markets.

- Premium consumption occasions: Growth in social and premium consumption occasions continues to support differentiated offerings, particularly in on-premise and urban consumption environments.

- Supportive policy developments: Select policy

measures and trade-related developments may improve operating conditions, support product competitiveness and contribute to the long-term development of the organised spirits market.

Threats

- Input cost volatility and supply chain pressures: Key

inputs such as Extra Neutral Alcohol (ENA), glass, grains and packaging materials remain vulnerable to inflationary trends, agricultural variability and supply disruptions. This may affect cost structures and necessitate calibrated pricing actions.

- Evolving consumer preferences: Rapid shifts in

consumer preferences, including increased interest in premium, flavoured and low-alcohol offerings, require continuous investment in brand building, innovation and portfolio management. Delayed adaptation may affect competitiveness.

- Regulatory and taxation complexity: The industry operates under state-level regulatory framework, with

Industry Segmentation and Category Dynamics

variations in pricing, taxation, distribution and licensing. These differences can affect affordability of the consumers, route-to-market execution and profitability.

Illicit and unorganised market competition: The

continued presence of illicit and unregulated alcohol in certain markets creates pricing distortions, affects organised industry revenues and can dilute consumer trust in formal categories.

The Indian IMFL market continues to be predominantly driven by spirits, with whisky accounting for the largest share, followed by vodka, rum and gin. Category dynamics remain influenced by price segments, consumption occasions, regional preferences and premiumisation trends.

Category	Category Characteristics	Key Demand Drivers
Whisky	Largest and most established category, with a strong presence across Mass Premium, prestige and premium segments	Brand equity, extensive distribution and premiumisation
Vodka	Fast-growing category with increasing acceptance in urban and premium consumption occasions	Experimentation, younger consumers and cocktail culture
Rum	Historically mass-driven category with concentration in select markets and consumption occasions	Seasonal demand and strong category positions in select states
Gin	Emerging premium category with increasing acceptance in urban markets	Premiumisation, experimentation and premium consumption occasions

While whisky continues to dominate industry volumes, categories such as gin and vodka are also seeing increasing acceptance, particularly within premium and urban segments.

Value vs Volume Shift

The industry is gradually transitioning from a volume-led model to a value-led model, with premium and luxury segments continuing to outpace mass categories. This structural shift reflects changing consumer preferences, improving quality perceptions and a growing preference for branded offerings across price points.

Segment	Characteristics	Industry Trend
Mass Premium	High volume, price-sensitive segment	Stable to low single digit growth volumes with trading up in certain regions from lower price point category
Prestige & Semi Premium	Largest category with power brands catering to consumers	Value growth led by continued premiumisation
Premium	Higher price points with brand driven consumption	Continued momentum supported by premiumisation
Super-Premium to Luxury	Niche, experience led consumption	High-margin segment supported by aspirational demand

Company Overview

Allied Blenders & Distillers Limited (ABDL /the Company) is a leading company in Indias Indian Made Foreign Liquor (IMFL) industry, with a strong leadership position in the whisky segment. The Company has built a diversified portfolio across Mass Premium, prestige and premium categories, supported by established brand equity and an extensive distribution network. ABDL is one of the leading spirits companies in India and has a growing international presence across 36 countries.

ABDL is well positioned to capitalise on the ongoing premiumisation trend in the Indian AlcoBev market. While maintaining leadership in high volume segments through flagship brands, the Company is strengthening its presence in prestige and premium categories, enabling a balanced portfolio across price points. Its continued focus on brand building, product innovation and market expansion supports its transition toward a value-led growth model.

The Company caters to a diverse and evolving consumer base, ranging from value conscious consumers in Mass Premium segments to aspirational and premium consumers in higher price categories. Its strong presence across urban and semi-urban markets, coupled with deep market penetration, enables ABDL to address a broad spectrum of consumption occasions and preferences at scale.

ABDL operates an extensive pan India manufacturing and distribution network comprising a mix of owned and partner facilities. The Companys well established supply chain and distribution ecosystem enable efficient market access, optimised logistics and consistent product availability across key markets.

ABDL continues to strengthen backward integration, enhance route-to-market efficiency and expanding its presence across high-growth regions in India and overseas.

Product Segment

ABDLs portfolio is strategically structured across price segments, balancing volume leadership with value-led growth. The Company operates across Mass Premium and Prestige & Above (P&A) segments, with a focused approach toward premiumisation and margin expansion.

1. Mass Premium Segment

The Mass Premium segment remains a core pillar of ABDLs portfolio and continues to be an important contributor to volumes, cash flows and operating profitability. Anchored by flagship brand Officers Choice Whisky, the segment benefits from strong brand recall, deep distribution reach and a well-established consumer franchise across key markets. ABDLs focus in this segment remains centred on sustaining leadership through disciplined pricing, calibrated innovation, strengthened market execution and consumer relevance, while preserving margin discipline. The segment also plays an important strategic role in supporting the Companys balanced portfolio approach, enabling ABDL to participate meaningfully in large consumption pools even as it advances its broader premiumisation agenda.

2. Prestige and Above Segment

The Prestige and Above segment is central to ABDLs premiumisation journey and remains a key driver of value-led growth. The segment is anchored by the Companys three millionaire brands in the whisky category-Officers Choice Blue, Sterling Reserve B7 and ICONiQ White Whisky-which together provide ABDL with strong participation across large and fastgrowing consumer price points. The Company is also strengthening its premium portfolio through brands such as Sterling Reserve B10, Srishti Whisky and Kyron Brandy, while selectively expanding into adjacent categories and channels to enhance mix and realisations. In the super-premium and luxury space, ABDL is building a unique portfolio through ABD Maestro Private Limited its super-premium to luxury portfolio subsidiary for accelerating participation in high value, higher-margin segments across whisky, gin, vodka, rum and brandy. Together, these portfolios position ABDL to participate meaningfully in Indias evolving premium consumption landscape while supporting long-term margin expansion.

International Operations

ABDL has established a growing international footprint across 36 countries spanning key global markets, supported by an export led strategy and increasing global acceptance of Indian spirits.

The Company focuses on scaling core brands in high potential markets while selectively expanding its premium portfolio to address evolving global preferences.

ABDL continues to strengthen its international business through disciplined market prioritisation, strategic distributor partnerships and portfolio expansion, ensuring sustainable growth across geographies.

From an operational perspective, the Company adopts an integrated approach to its export business, with centralised oversight and consolidation of international operations and financial performance. This framework enhances visibility, enables efficient resource allocation and ensures alignment with the overall business strategy.

Manufacturing Backbone

ABDLs manufacturing backbone comprises an extensive pan India network of production facilities, enabling efficient servicing of geographically diverse markets. The Company utilises a mix of owned and partner facilities to ensure operational flexibility, scalability and cost efficiency.

The Companys manufacturing ecosystem is strategically aligned with the distribution footprint, ensuring proximity to key consumption centres, optimised logistics and consistent product availability across regions.

The Company has further strengthened its capabilities through backward integration across key inputs and processes, enhancing control over quality, supply continuity and cost structures. This integrated approach supports greater operational resilience and margin enhancement.

Please refer to page 18 for pan India manufacturing footprint

Robust Financial Performance

On a consolidated basis, Income from Operations increased by 11.5% to 3,949 Crores, while EBITDA reached a record high of 568 Crores, registering a growth of 25.8% over FY25. EBITDA margins expanded by 163 basis points to 14.4%, reflecting the benefits of favourable product mix, operating leverage and the early gains from our backward integration initiatives. Gross margins improved to 45.6%, aided by disciplined state-brand-SKU mix optimisation and packaging cost efficiencies.

Our Profit After Tax stood at 220 Crores during FY26, while operating cash flow generation improved significantly to 362 Crores, supported by strong profitability and sustained working capital discipline. Reflecting a robust financial position, the Board has recommended a dividend of 270%, equivalent to 5.4 per equity share.

Further Strengthening of the Balance Sheet

Our disciplined financial management and improving profitability profile further enhanced the balance sheet during FY26, even as we progressed through a strategic capex cycle. At a consolidated level, Net Debt to EBITDA remained at 1.7x as of March 31, 2026, comfortably within our stated framework of below 2.0x, while Net Debt to Equity stood at 0.6x.

At the same time, Return on Capital Employed stood at 19.7% in FY26, reflecting higher profitability and improved capital productivity. Importantly, we funded our strategic investments through a balanced combination of internal accruals and calibrated leverage. The strength of our balance sheet provides us with the flexibility to invest in premiumisation, backward integration and portfolio expansion opportunities as we move ahead.

Outlook

ABDL remains focused on advancing its transformation journey through premiumisation, backward integration and disciplined execution. The Company will continue to strengthen its portfolio across segments, scale its premium-to-luxury play through ABD Maestro and deepen its presence in priority domestic and international markets. In parallel, ABDL is enhancing supply-chain resilience and operating efficiencies through strategic investments in backward integration related to key raw materials and packaging. With a sharper focus on consumer relevance, brand building, innovation and capital discipline, the Company is building a more agile, resilient and value-accretive business. ABDL believes these strategic priorities, supported by stronger governance and execution capabilities, position it well to deliver sustainable long-term growth, margin improvement and overall enhancing value for all the shareholders.

Please refer to page 30 for Transformation Journey.

Quantitative and Qualitative Disclosures About Market Risk

ABDLs risk management framework extends to financial and market-related exposures that could affect earnings, cash flows and business continuity. These risks are monitored through defined ownership, periodic reviews and appropriate control measures, with oversight from senior management and the Board.

Market Risk: The Company is exposed to movements in interest rates, foreign exchange rates, inflation and other macroeconomic factors that may influence input costs, pricing, demand and profitability. These exposures are assessed and are monitored through disciplined financial planning, periodic reviews and timely management action.

Interest Rate Risk: Interest rate movements may affect borrowing costs and returns on surplus funds. ABDL manages this exposure through prudent treasury practices, an appropriate mix of funding sources and regular monitoring of interest rate trends to support informed borrowing decisions.

Foreign Currency Risk: The Company is exposed to currency fluctuations arising from imports of raw materials, packaging components, capital goods and export transactions. This exposure is monitored through regular review of currency positions and market movements, with suitable actions taken to mitigate adverse impact on costs and realisations.

Inflation Risk: Inflation in raw materials, packaging, freight and other operating inputs can exert pressure on margins. ABDL addresses this through cost optimisation, sourcing discipline, productivity initiatives and calibrated pricing actions, while continuously monitoring changes in the cost environment.

Credit Risk: Credit risk arises primarily from trade receivables and the placement of surplus funds with banks and financial institutions. The Company manages this risk through defined credit policies, customer evaluation, credit limits, ongoing

monitoring of receivables and application of expected credit loss principles. Counterparty exposure on deposits and other instruments is managed by dealing with reputable institutions and maintaining prudent oversight. Where exposure is concentrated in specific markets or customer segments, it is subject to closer review to support timely collection and disciplined risk mitigation.

Liquidity Risk: Liquidity risk is the risk of being unable to meet financial obligations as they fall due. ABDL manages this through cash flow planning, regular review of working capital, disciplined receivables management and access to appropriate banking lines, helping maintain adequate liquidity for operations and growth.

Regulatory Risk: The alcoholic beverages industry operates within a complex and evolving regulatory environment, including changes in state excise policies, taxation, licensing requirements and route-to-market structures. ABDL manages this risk through continuous monitoring of regulatory developments, compliance controls, cross-functional review and timely business response.

Cybersecurity and Data Protection Risk: As digital systems become more integral to operations, the Company remains exposed to cybersecurity and data protection risks. ABDL addresses these through strengthening IT controls, monitoring critical systems, enhancing employee awareness and building response capabilities to reduce the potential for operational disruption, data loss and reputational impact.

Please refer to page 46 for more details on Enterprise Risk Management and market risks.

Internal Control Systems and Their Adequacy

The Company has an adequate system of internal controls in place, supported by documented policies and procedures covering all financial and operating functions. These controls are designed to provide a reasonable assurance regarding the maintenance of proper accounting controls, reliability of financial reporting, monitoring of operations, safeguarding of assets from unauthorised use or losses and compliance with regulations. The Company continues to align its processes and controls with global best practices.

There were no changes in internal control over financial reporting during the period covered by this Annual Report that materially affected, or are reasonably likely to materially affect, internal control over financial reporting. During FY26, the Company assessed the effectiveness of the internal control over financial reporting and concluded that the internal control over financial reporting as of March 31, 2026, was effective.

Material Developments in Human Resources / Industrial Relations Front, Including the Number of People Employed

During the financial year FY26, the Company continued to prioritise the development and wellbeing of its human capital, recognising employees as a key driver of sustainable growth. People remain central to how the Company builds, operates, and grows. The Company remains committed to fostering a

workplace culture that empowers employees, supports career progression, and sustains high levels of engagement across all levels of the organization.

Human Resources Initiatives

- Capability development remained a key strategic focus as ABDL advanced its transition into a more diversified spirits company. The Company proactively addressed evolving role expectations, particularly in light of increasing internal mobility and the Companys growing premium portfolio.

During the year, structured capability-building sessions were conducted for the Sales team, with a specific focus on strengthening their ability to effectively position and sell the premium range of products. These sessions emphasized product knowledge, customer engagement, and value-based selling techniques to support the premiumisation strategy.

Further, dedicated leadership development e-learning interventions were rolled out for first-time managers to equip them with essential people management and decision-making skills. These programmes focused on building foundational leadership competencies, including team management, performance coaching, and communication effectiveness, thereby strengthening the organisations leadership pipeline.

- A high-performance culture was further reinforced through the introduction of strengthened appraisal frameworks and merit-based recognition programmes. The performance management approach was refined to shift focus from task-oriented assessments to outcome- driven evaluation, ensuring greater alignment with business impact and strategic objectives.

Additionally, targeted incentive schemes were introduced for the Sales team, with special quarterly incentives linked to business performance. These measures were designed to drive accountability, enhance motivation, and support sustained growth in line with organisational priorities.

Employee Engagement & Welfare

- Employee engagement efforts were sustained throughout the year through a range of initiatives, including wellness programmes, virtual town halls, and sports events, aimed at fostering a positive and inclusive work environment.

- Employee health and safety continued to remain a key priority, supported by regular health check-ups, comprehensive health insurance coverage, mental wellness programmes, and strengthened workplace safety protocols.

Industrial Relations

- The Company maintained stable industrial relations during the year with no significant operational disruptions.

- The Company continued to adhere to all applicable labour laws and regulatory requirements. It also proactively aligned its policies and practices with the new labour codes, ensuring full compliance and a smooth transition to the updated regulatory framework.

Workforce Strength

- As of March 31, 2026, the total number of employees was 938 compared to 907 as of March 31, 2025.

- The workforce comprises personnel across various functions, including Sales & Marketing, Manufacturing, Finance and other corporate functions.

Disclaimer

DISCLAIMER Certain statements in the Management Discussion and Analysis describing the Companys objectives, projections, estimates, expectations or predictions may be forward-looking statements within the meaning of applicable securities laws and regulations. Actual results could differ from those expressed or implied. Important factors that could make a difference to the Companys operations include raw material availability and prices, demand and pricing in the Companys principal markets, changes in Government regulations, tax regimes, economic developments within India and the countries in which the Company conducts business and other factors.

FINANCIAL RATIOS STANDALONE
Particulars	in lakhs 31 March 2026	in lakhs 31 March 2025
Equity share capital	5,594.20	5,594.20
Other equity	1,68,836.27	1,51,813.84
Total Equity	1,74,430.47	1,57,408.04
Gross Debt	1,12,587.66	89,382.41
Revenue from Operations (Net of Excise Duty)	3,88,015.03	3,51,969.02
Less: Cost of goods sold Gross profit	2,14,530.70 1,73,484.33	2,04,345.37 1,47,623.65
Add: Other income	2,873.60	2,143.99
Less: Employee benefit expense	20,033.99	16,831.74
Less: Other expenses	95,907.28	87,635.56
Profit before finance costs, depreciation and amortisation expenses, exceptional item and tax (EBIDTA)	60,416.67	45,300.34
Less: Depreciation and amortisation expenses	6,892.98	5,727.36
Profit before finance costs, exceptional item and tax	53,523.69	39,572.98
Less: Finance Cost	12,961.38	12,491.13
Profit before exceptional item and tax	40,562.31	27,081.85
Less: Exceptional item	284.75	-
Profit before tax	40,277.56	27,081.85
Tax expense	13,444.60	7,068.97
Profit after tax	26,832.96	20,012.88
Inventories	71,159.93	56,600.23
Trade receivables	1,76,884.48	1,74,671.44
Trade payables	77,082.58	60,134.32
i) Inventory Turnover Ratio (in days)	64	56
ii) Debtors Turnover Ratio* (in days)	85	68
iii) Payable Turnover Ratio (in days)	112	112
iv) Debt-Equity Ratio	0.65	0.57
v) Debt Service Coverage Ratio	2.37	2.50
vi) Return on Capital Employed Ratio
EBIT	53,523.69	39,572.98
Capital employed	2,76,222.40	2,35,723.97
Return on Capital Employed	19.4%	16.8%
vii) Net Profit Margin Ratio
PAT	26,832.96	20,012.88
Net Sales (net of excise)	3,88,015.03	3,51,969.02
Net Profit Margin	6.9%	5.7%
viii) EBITDA Margin Ratio
EBITDA	60,416.67	45,300.34
Net Sales (net of excise)	3,88,015.03	3,51,969.02
EBITDA Margin	15.6%	12.9%
* Variance of 26% is driven by delayed in realisation from customers