Associated Alcohols & Breweries Ltd Management Discussions

Global Economic Overview

Global growth is projected to stabilize at 2.7% annually over FY 2025-26, supported by declining inflation and monetary easing in both advanced and emerging market economies. Strengthening trade and investment are expected to drive a broad-based, moderate expansion. However, this recovery remains insufficient to fully offset the economic damage caused by recent successive global shocks—particularly in vulnerable economies. Long-term convergence in income levels between emerging markets and advanced economies continues to weaken, underscoring persistent structural challenges. Key downside risks include policy uncertainty, trade disruptions, geopolitical tensions, climate-related events, persistent inflation, and weak growth in major economies. On the upside, faster disinflation and stronger demand in large economies could boost global activity.

The global economy remains steady, though growth varies across countries. Global GDP growth in Q3 FY 2023-24 was 0.1 percentage point below October forecasts, due to weaker performance in parts of Asia and Europe. China grew 4.7% Y-O-Y, below expectations, as sluggish consumption offset gains in net exports. India saw a sharper-than-expected industrial slowdown. The eurozone remained subdued, with Germany lagging due to weak manufacturing and exports, despite rising consumption. Japans output dipped slightly from temporary supply issues. In contrast, the economic growth of the U.S. stayed strong at 2.7%, driven by robust consumer spending.

Key Events and Impacts Global Disinflation

Disinflation is progressing globally, though unevenly. Core inflation remains slightly above 2%, while nominal wage growth is moderating and labor markets are gradually stabilizing.

Inflation Patterns

Core goods inflation has eased to or below trend, but services inflation remains elevated—especially in the U.S. and eurozone. In some emerging economies, inflation remains high due to localized factors in regions like Europe and Latin America.

Monetary Policy Divergence

Central banks are cautious with rate cuts where inflation is sticky; some have resumed raising rates. Diverging monetary paths reflect differences in inflation, labor conditions, and currency pressures.

Financial Market Conditions

Global financial conditions remain broadly accommodative. U.S. equities have rallied on policy optimism, while emerging markets face tighter conditions due to a strong U.S. dollar and muted investor sentiment.

Policy and Geopolitical Risks

Economic policy uncertainty has surged amid electoral changes, stalled reforms, and political instability in parts of Asia and Europe. Geopolitical tensions and trade frictions continue to weigh on the global outlook.

Outlook

Global growth is projected at 3.3% in both 2025 and 2026—below the 2000-2019 average of 3.7%. While easing inflation and stronger performance in the U.S. support near-term stability, growth in other major economies remains subdued. Inflation is expected to continue declining, reaching 4.2% in 2025 and 3.5% in 2026, with advanced economies returning to target sooner than emerging markets. Risks remain tilted to the downside, with policy uncertainty and disinflation challenges posing key threats. Sustaining momentum will require careful policy balancing, fiscal prudence, and renewed focus on structural reforms and global cooperation.

(Sources: Global Economic Prospectus 2025, World Bank and World Economic Outlook, IMF)

Indian Economic Overview

India has retained its position at the forefront of the global economy amid persistent global headwinds and is projected to remain the fastest-growing major economy in the coming years. According to the April 2025 edition of the IMFs World Economic Outlook, India is expected to maintain a strong lead over both global and regional peers.

GDP Growth

Indias economy is projected to grow by 6.2% in 2025 and 6.3% in 2026, surpassing the performance of several major economies. In contrast, the IMF anticipates that global growth will remain subdued, underscoring Indias remarkable economic resilience and strength. The country is set to become the fourth-largest economy by the end of 2025, with nominal GDP projected to rise to $4,187.017 billion, overtaking Japans estimated $4,186.431 billion. This rapid growth is expected to push Indias GDP to $5,584.476 billion by 2028, on track to reach $6.5 trillion by FY 2028-29. Indias nominal GDP is projected to grow at a CAGR of approximately 11.4%, while real GDP is expected to expand at 6.4% between FY 2022-23 and FY 2028-29.

Domestic Consumption

Domestic consumption remains a key driver of Indias economic growth, accounting for a significant share of the countrys GDP. Private Final Consumption Expenditure (PFCE) as a share of GDP at current prices has risen from 60.3% in FY 2023-24 to an estimated 61.8% in FY 2024-25, helping to cushion the economy against global volatility. This strong consumption base is continuing to expand steadily, with overall spending expected to witness significant growth over the medium term, reflecting sustained momentum in demand and income levels. In

India, private consumption spans goods (food, lifestyle, home, pharmacy) and services (dining, education, healthcare). Its high share of GDP helps shield the country from global volatility and ensures that sustained growth fuels steady consumer demand.

Key Events and Impacts

Economic Reforms and Investment Climate

Key reforms such as the rollout of the Goods and Services Tax (GST) in 2017 and corporate tax reductions in 2019 have streamlined the regulatory landscape, boosted investor confidence and fostered economic activity. Strategic initiatives like Make in India, increased public capital expenditure, and PLI schemes have further reinforced Indias investment appeal. An increase in the level of tax-free income directly contributes to a rise in disposable income, thereby enhancing consumers purchasing power. This surge in disposable income is likely to stimulate greater expenditure on a variety of goods and services, including discretionary items such as alcoholic beverages. As a result, the consumption of such products may experience a proportional increase, reflecting the broader trend of heightened consumer spending.

Sectoral Momentum

A surge in the manufacturing and construction sectors, supported by strong domestic demand, has propelled industrial output and infrastructure development. These sectors continue to be central to Indias economic momentum.

Geopolitical Tailwinds and Global Realignment

Global supply chain diversification and geopolitical shifts, particularly the U.S.-China trade tensions, have positioned India as an increasingly attractive alternative for global manufacturing and investment.

Rural and Infrastructure Push

Robust agricultural performance, improving rural consumption, and steady government spending on infrastructure, especially on roads, highways, and ports, are further strengthening domestic economic activity.

Manufacturing Gaining Traction

Manufacturing is emerging as a key growth driver in India, led by strong performance in automotive, engineering, chemicals, pharmaceuticals, and consumer durables. It contributed 14% to GDP in the last financial year and is expected to rise to 21-22% over the next five years.

Rising Incomes Driving Aspirational Consumption

With a growing number of middle- and high-income households and rising per capita income, demand for discretionary products is set to increase. The World Economic Forum estimates high and upper-middle- income groups will double from 25% in 2019 to 50% by 2030. Higher disposable income is fueling spending on non-essential categories, lifestyle upgrades, and premium products. Urbanization, a tech boom, and social media influence are further accelerating demand for aspirational and tech-driven consumption.

Outlook

Income tax cuts, the expansion of Indias service sector and tech industry, along with an above-normal monsoon and lower food inflation, are expected to benefit domestic growth. Furthermore, the shifting of manufacturing investments from China to India, led by companies like Apple, reinforces Indias position as a growing hub for global production.

(Sources: Press Information Bureau, DD News, BBC, Financial Express, Fortune India)

Global Alcoholic Beverages Industry Overview

Market Size and Growth

The global alcoholic beverages market was valued at approximately $1.7 trillion in 2024. It is expected to grow at a CAGR of 3.2% from 2025 to 2034, reaching about $2.4 trillion by 2034. Key trends driving this growth include strong demand for premium spirits, rising popularity of ready-to-drink (RTD) alcoholic beverages, increasing focus on sustainability, and the introduction of unique new flavors.

Regional Insights

The Asia-Pacific region is poised to become a key market for alcoholic beverages, driven by a growing middle- class population with a preference for premium and imported products.

Meanwhile, North America and Europe are projected to experience a steady growth in demand for alcoholic beverages. Additionally, the strong cultural acceptance of alcohol consumption as a social activity in these regions continues to support market expansion.

Market Segmentation

The market is segmented by product type, distribution channel, packaging, alcohol content, flavor, and end-user:

Product Types: Spirits, wine, whisky, vodka, rum, gin, tequila, brandy, and others.

Distribution Channels: Off-trade (supermarkets, liquor stores, online retail) and on-trade (bars, pubs, restaurants, hotels).

Packaging: Bottles, cans, tetra packs, and others.

Alcohol Content: Low-, medium-, and high-alcohol- content beverages.

End-Users: Household and commercial.

Key Trends and Drivers Growth of E-commerce

Online platforms are expanding access to a wide variety of alcoholic beverages, enabling consumers to shop conveniently from the comfort of their own homes.

Digital Engagement

Social media and digital marketing are key tools for brand promotion, product discovery, and fostering customer loyalty.

Sustainability Focus

Consumers are increasingly favoring brands that prioritize environmental responsibility, creating demand for organic wines and sustainable practices.

Eco-Friendly Packaging

Companies are adopting sustainable materials such as recycled paper, cardboard, and plastics to reduce carbon emissions and improve brand image. The shift is driven by concerns over the massive environmental impact of traditional packaging.

Rise of Canned Cocktails

Ready-to-drink (RTD) alcoholic beverages, particularly canned cocktails, are gaining traction due to their convenience, portability, and affordability, especially among younger and lower-income consumers.

Competitive Advantage Through Responsibility

Brands that transparently communicate their sustainability efforts and offer eco-conscious products are better positioned to attract loyal, value-driven customers.

Alcohol Distribution Model

Alcohol distribution models vary globally, shaped by market dynamics, consumer preferences, and local regulations. The most prevalent is the three-tier system- producers, distributors, and retailers-ensuring regulatory compliance while reaching diverse consumer groups. Producers such as breweries and distilleries supply distributors, who in turn sell to retailers like bars, stores, and restaurants. Alongside this, direct-to-consumer (DTC) models, including e-commerce and craft/specialty networks, are gaining traction for their high margins and convenience.

At-Home Consumption

Alcohol consumption habits are evolving, with a growing shift from out-of-home to at-home drinking. While bars and restaurants once dominated, the pandemic sparked a rise in home gatherings, a trend reinforced by changing lifestyles. Premiumization is also driving consumers, especially higher-income groups, to trade up to costlier options for at-home use. In many markets, drinking at home serves both as a lifestyle choice and a way to economize while staying connected to premium brands. Though on-premise consumption is rebounding, at-home drinking continues to gain ground globally.

(Sources: Statista, Expert Market Research)

Indian Alcoholic Beverages Industry Structure and Development

The Indian alcoholic beverages industry is structured around production, distribution, and retail, with a significant focus on Indian Made Foreign Liquor (IMFL) and Indian Made Indian Liquor (IMIL). The industry is highly regulated at the state level, impacting production, distribution, and marketing. Key players include manufacturers such as United Spirits, Radico Khaitan and Pernod Ricard India. The Indian market is increasingly shifting towards premiumization, with consumers displaying a growing preference for higher-end products such as malt whisky. This trend reflects a broader shift in consumer preferences, driven by rising disposable income, changing lifestyles, and a greater demand for premium and niche alcoholic beverages.

Key Segments

Indian Made Foreign Liquor (IMFL)

Dominated by spirits like whisky, rum, and beer, catering to a broader consumer base.

Indian made Indian Liquor (IMIL)

Primarily caters to the low-income segment in rural areas.

Value Chain Input Suppliers

Provide raw materials like grains, fruits, and sugarcane for alcohol production.

Producers/Manufacturers

Engaged in brewing, distilling, blending, bottling, and packaging.

Distributors and Wholesalers

Connect producers with vendors, handling storage and transportation.

Retail Vendors

Include on-premise (pubs, restaurants) and off-premise (retail shops) outlets that sell to consumers.

Input Suppliers/Contractors

Provide machinery, equipment, services, and manpower.

Regulatory Landscape State-Specific Regulations

Each state regulates alcohol production and distribution, influencing industry dynamics.

Licenses and Permits

Required for manufacturing, bottling, storage, distribution, and retail.

Distribution Control

States may control distribution through government- owned entities or allow private distributors.

Excise Duties

High inter-state duties can lead to manufacturing units in various states.

Marketing Restrictions

Advertising restrictions, particularly above-the-line (ATL) advertising, limit marketing efforts.

Trends

The Indian alcoholic beverages market is experiencing growth driven by rising incomes, urbanization, and changing consumer preferences.

Online Sales

Some states have eased restrictions on online liquor sales, while others remain restrictive.

Craft Spirits

There is a growing trend towards homegrown craft spirits, providing new opportunities.

Shift in Consumption

The Indian market is experiencing a shift from traditional IMFL to more premium and international brands.

Revenue and Growth High Revenue Generation

The Indian government generates substantial revenue through liquor sales.

Market Expansion

The Indian alcoholic beverages market is projected to continue expanding at a CAGR of around 6% to 11% by value and volume.

In essence, the Indian alcoholic beverages industry is a dynamic and regulated market with a complex value chain, diverse players, and evolving trends.

Indian Alcoholic Beverages Market Overview

Market Size and Growth

In 2024, Indias alcoholic beverages industry was estimated at approximately $64.19 billion. With a projected compound annual growth rate (CAGR) of 6.7%, the market is expected to expand significantly, reaching around $115.27 billion by 2034. Among various segments, spirits such as whisky, vodka, and rum are anticipated to lead the growth, with the segment projected to reach a value of $50.55 billion by 2034. India continues to solidify its position as one of the largest consumers of whisky globally, accounting for over 48% of the worlds total whisky consumption.

Regional Insights

Indias alcoholic beverages sector presents significant untapped potential in international markets, with products such as gin, wine, and rum steadily gaining global recognition, according to the Agricultural and Processed Food Products Export Development Authority (APEDA). The country aims to scale up alcoholic beverage exports from Rs 3,162.21 crore ($370.5 million) to Rs 8,535 crore ($1 billion) by 2030, driven by deeper engagement with global markets rather than relying solely on domestic consumption. Despite its strong domestic production, India currently ranks 40^th worldwide in alcoholic beverage exports.

Market Segmentation

Spirits such as whisky, vodka, and rum are among the key segments driving growth within Indias alcoholic beverages industry. Other product categories gaining recognition internationally include gin, wine, and rum.

Key Trends and Drivers

Global demand for Indian spirits is on the rise, creating promising opportunities for growth. The Agricultural and Processed Food Export Development Authority (APEDA) aims to promote Indian alcoholic and nonalcoholic beverages in international markets, with a target of generating $1 billion in export revenue over the next few years. As part of the Make in India initiative, APEDA is actively working to expand the presence of Indian spirits in key global markets. International expansion is expected to enhance product standards and strengthen global branding. India is also close to finalizing a mutual recognition agreement with Australia for organic products, including organic wine. Efforts to boost value addition, reduce post-harvest losses, and improve processing in agricultural value chains will support increased exports of alcoholic beverages. These initiatives are set to augment farmer incomes, generate valuable foreign exchange, and reaffirm the sectors potential as a high-value contributor to Indias economy.

Premiumization

Premiumization is now a key growth driver across all segments of Indias alco-beverage sector. While earlier growth was led by volume in the popular segment, the market has shifted toward value-led growth in premium and luxury categories over the past decade.

This trend spans the entire value chain, including new product launches, premium retail branding, and targeted marketing. Rising disposable income, and global exposure are encouraging consumers to upgrade, with millennials particularly influenced by social media and aspirational lifestyles.

New Age Distribution Channels

The pandemic accelerated the adoption of new sales formats such as home delivery and limited e-commerce. These offer convenience, especially for women, and can expand industry reach given Indias limited retail footprint. Home delivery, introduced during lockdowns to manage crowds and support revenues, has strong longterm potential.

Changing Social Norms

Alcohol consumption in India is becoming more socially accepted due to global exposure, economic growth, and a youthful population. This shift is visible across age groups and genders. Drinking is increasingly part of family gatherings, social events, and professional settings, particularly in metros and Tier 1 cities. The trend is moving from binge drinking to more responsible, social occasions.

Supportive Excise Policies

Several states are implementing excise policies that enhance customer experience and drive revenue. This includes setting up modern outlets in high-traffic areas such as malls and airports. States are also streamlining tax structures to encourage higher sales and recover lost revenue, creating a more business-friendly environment for the alco-beverage sector.

(Sources: Economic Times, IBEF, Press Information Bureau, ET Retail)

Indian Made Foreign Liquor Segment Overview

The Indian Made Foreign Liquor (IMFL) segment saw strong double-digit growth in both revenue and volume. Licensed IMFL volumes grew steadily year-on-year, outperforming industry trends. Premium and prestige brands now contribute a growing share of proprietary IMFL sales, with a clear target to reach half of the mix in the coming years. Poised for strong growth, the IMFL segment is supported by deeper collaboration with contract manufacturing partners and expanded brand presence across new states. The ongoing shift towards premiumization is expected to enhance average price realization per case, contributing to a projected CAGR of 16.2%, reaching Rs 515 crore. Additionally, growth is bolstered by the launch of new private-label products.

(Source: Ventura, AABL)

Indian Made Indian Liquor Segment Overview

The Indian Made Indian Liquor (IMIL) segment is projected to witness modest growth, with volumes expected to rise at a CAGR of 2.7% and reach approximately 4.1 million cases by FY 2026-27. While volume growth is expected to remain limited, revenue is forecasted to increase at a CAGR of 10.7%, reaching around Rs 260 crore, primarily driven by improved realizations. Growth momentum is likely to moderate post-FY 2024-25 due to a gradual shift in consumer preferences away from low-cost, lower- quality country liquor.

Key Drivers

Rising Disposable Income

Increasing income levels in rural and semi-urban areas are supporting marginal growth in the IMIL segment.

State-Level Encouragement

Many state governments continue to support IMIL, given its substantial contribution to state excise revenues. Stable pricing and favorable policies ensure accessibility and sustained revenue generation.

Enhanced Product Quality

The transition from rectified spirits to Extra Neutral Alcohol (ENA) in production has significantly improved IMILs quality. Additionally, better packaging, branding initiatives, and the introduction of tetra packs in select states have strengthened consumer trust and loyalty.

(Source: Ventura, AABL)

Indian Extra Neutral Alcohol Market Overview

The Extra Neutral Alcohol (ENA) market in India reached a size of Rs 105.4 billion in 2024 and is projected to grow to Rs 144.6 billion by 2033, registering a CAGR of 3.40% from 2025 to 2033, according to IMARC Group.

Key Drivers

Expanding Production Base

The increasing number of distilleries and microbreweries is supporting the steady growth of the ENA market.

Rising Brand Collaborations

Collaborations among alcoholic beverage brands are boosting demand for ENA as a shared input across product lines.

Shifting Consumption Patterns

The growing trend of social drinking, especially among millennials with rising disposable incomes and evolving lifestyle preferences, is significantly boosting the consumption of spirits such as whisky, vodka, and rum, all of which depend on ENA as a core ingredient.

Regulatory Push for Quality

Government regulations mandating the use of high-quality ENA in liquor production are prompting manufacturers to adopt standard-compliant formulations.

Crackdown on Illicit Alcohol

Ongoing regulatory efforts to curb the sale of illicit alcohol are further strengthening demand for premium-grade ENA across Indias alcobev industry.

(Source: IMARC Group)

Growth Drivers for Indian Alcoholic Beverages Market

The Indian alcoholic beverages market in 2025 is undergoing significant transformation, driven by evolving consumer preferences, premiumization, rising health consciousness, and modernization of the retail landscape.

Demand for Craft and Premium Beverages

The growing popularity of craft and premium alcoholic beverages is fueled by urbanization and rising disposable incomes, particularly among millennials and Gen Z consumers. These younger demographics are increasingly choosing high-quality, specialty drinks such as premium wine, and artisanal spirits, showing a willingness to pay more for unique flavors and experiential offerings.

Innovation and Product Launches

Major brands are responding to shifting preferences by launching innovative products and campaigns aimed at affluent consumers. A key example is United Breweries launch of Kingfisher Flavours—Lemon Masala and Mango Berry Twist—in March 2025. These products blend Indian street culture with contemporary tastes and are being promoted through premium experiential events in Goa and Daman, with plans to expand into metro cities.

Health-Conscious Consumption

There is increasing consumer inclination toward healthconscious alcoholic beverages, especially among urban populations. This includes low-alcohol, low-calorie, and sugar-free options such as hard seltzers, and organic wines—often made with natural ingredients, antioxidants, or functional additives.

Retail Modernization and E-Commerce

The retail landscape is evolving with the rise of modern trade formats and gradual e-commerce liberalization in states such as Maharashtra, West Bengal, and Odisha, where online ordering and home delivery of alcohol are permitted. Organized retail outlets—supermarkets, hypermarkets, and specialty liquor stores—are enhancing visibility and consumer access to premium products.

Experiential and Branded Spaces

Exclusive brand outlets and tasting rooms are gaining popularity in urban centers, offering curated experiences that reflect changing consumer tastes. These trends are driving investment in branding, packaging innovation, and digital marketing strategies.

Wider Access and Distribution Expansion

With improved accessibility and expanding distribution networks across Tier 1 and Tier 2 cities, the Indian alcoholic beverages market is well-positioned for sustained growth and diversification.

(Source: IMARC Group)

Sustainability Shaping the Alcohol Industry

Sustainability has emerged as a central focus in the alcoholic beverages industry in 2025. Over 60% of leading companies have adopted eco-friendly practices, including recyclable packaging, water-saving technologies, and the use of renewable energy in production.

Drivers of Sustainable Transformation Environmental Awareness

Rising awareness of climate change is shaping consumer preferences, motivating brands to actively reduce their carbon footprints. This shift is encouraging the adoption of environmentally responsible production methods across the industry.

Leveraging Local Biodiversity

Indias rich biodiversity presents a unique advantage for crafting distinctive spirits. Many brands are exploring regional botanicals in the creation of artisanal gins and using indigenous grains for unique whisky formulations. This approach reduces import reliance and reinforces the local identity of their products.

Ethical Consumer Appeal

Homegrown spirit brands are placing greater emphasis on premium beverages that reflect regional authenticity. This strategy resonates with ethically conscious consumers and enhances brand loyalty, while also promoting environmental responsibility.

(Source: Economic Times)

Company Overview

Associated Alcohols & Breweries Limited (AABL) is a leading name in Indias liquor industry, operating one of the countrys largest integrated manufacturing facilities at a single location. The Company has a strong presence across the entire liquor value chain, encompassing Indian Made Foreign Liquor (IMFL) — Proprietary and Licensed, Indian Made Indian Liquor (IMIL), Extra Neutral Alcohol (ENA), and Ethanol.

AABLs operational strength is backed by robust manufacturing capabilities, including an ENA production capacity of 45 million liters per annum (MLPA) and an Ethanol manufacturing capacity of 40 MLPA. The facility houses 41 bottling lines, with a collective annual bottling capacity of 16 million cases.

AABL also boasts a portfolio of 14 proprietary brands, which reflects its focus on product development, premiumization, and consumer-centric innovation. This strategic positioning enables the Company to cater to a diverse consumer base while maintaining a competitive edge in both traditional and emerging segments of the alcoholic beverages industry.

Also, please refer to the earlier business section of the annual report for more details.

Discussion on Financial Performance with Respect to Operational Performance

Revenue Growth

The Company recorded a significant revenue growth of approximately 44.3%, with net revenue reaching Rs 1096.58 crore in FY 2024-25 compared to Rs 759.80 crore in FY 2023-24. This growth reflects strong performance across key segments.

Operating EBITDA

Operating EBITDA is recorded at 128.10 crore in FY 202425, compared to 76.73 crore in FY 2023-24.

Profit Before Tax (PBT)

PBT increased by 60.5%, rising from Rs 68.29 crore in FY 2023-24 to Rs 109.65 crore in FY 2024-25.

Finance Cost

Finance costs rose to Rs 5.69 crore in FY 2024-25 compared to Rs 3.67 crore in FY 2023-24.

Depreciation

Depreciation expense stood at Rs 17.44 crore in FY 2024-25, marginally up from Rs 14.40 crore in FY 2023-24.

Tax Expense

The Company incurred a tax expense of Rs 28.19 crore in FY 2024-25, up from Rs 17.66 crore in the previous year.

Net Profit

Net profit for the year grew by 60.9% to Rs 81.46 crore from Rs 50.62 crore in FY 2024-25, reflecting continued operational efficiencies and revenue growth.

Earnings Per Share (EPS)

Basic and diluted EPS stood at Rs 45 and Rs 43, respectively, for FY 2024-25, compared to Rs 28 in the previous fiscal year.

Dividend

The Board of Directors of the Holding Company has recommended a dividend of Rs 2 per equity share (20% of the face value of Rs 10 each), aggregating to Rs 3.61 crores for the year, consistent with the previous years payout.

Net Worth

As of 31^st March 2025, the Companys net worth increased to Rs 520.29 crore, up from Rs 422.85 crore a year earlier, indicating strong financial health and sustained value creation.

In preparation of financial statements, accounting treatment has been same as per prevailing accounting standards.

Segment-Wise Performance Potable Alcohol Division

Revenue of potable alcohol for FY 2024-25 is Rs 596.31 crore (Rs 494.50 crore in FY 2023-24)

Ethanol Division

Revenue of ethanol for FY 2024-25 is Rs 247.82 crore (Rs 42.78 crore in FY 2023-24*)

*AABLs ethanol plant was commissioned in January 2024

Free Cash

Free cash stood at Rs 1.07 crore as on 31^st March 2025.

Details of significant changes in key financial ratios:

Ratios		FY 2024-25	FY 2023-24	Change	Remarks
Net Profit Margin	%	7.4%	6.6%	12%	An increase in sales realization and operation efficiency measures have resulted in an increase in the ratio.
Operating Profit Margin	%	12.1%	11.3%	7%	An increase in sales realization and operation efficiency measures have resulted in an increase in the ratio.
Debtors Turnover	Times	29.5	28.6	3%	Increase in sales against average debtors has resulted in an improvement in the ratio.
Inventory Turnover	Times	5.45	4.54	20%	Ratio increased, as lower average inventory managed against consumption.
Debt Equity Ratio	%	0.19	0.25	-23%	Debt reduced and Equity improvement resulted in a decrease in the D/E ratio.
Current Ratio	Times	1.68	1.74	-3%	No significant change.
Interest Coverage Ratio	Times	23.3	23.5	-1%	No significant change.
Return on Net Worth	%	16%	12%	31%	Increase in Net Profit resulted in an increase in Return on Net Worth.

Business Outlook

• The Company has commenced commercial production at its 130 KLPD ethanol plant in Barwaha, Madhya Pradesh, supporting revenue diversification and aligning with the governments Ethanol Blending Program (EBP).

• The Company is strengthening strategic partnerships with major industry players like Diageo and Inbrew, driving sustained demand and business stability.

• AABL is focusing on value-added and proprietary brands, targeting margin-accretive segments for long-term profitability.

• AABL is capable of producing ENA from varied feedstocks, ensuring operational flexibility and resilience.

• The Company is implementing hedging strategies to mitigate raw material price fluctuations and safeguard margins.

Opportunities and Threats Opportunities

Premiumization Across Segments

The Indian alcobev market has shifted from volume- led growth to value-driven demand, with consumers increasingly opting for prestige, premium, and luxury offerings. Rising disposable incomes, urbanization, global exposure, and social media influence are fueling this shift.

Emergence of New Sales Channels

Post the pandemic, home delivery and e-commerce for alcohol have gained traction due to their convenience and potential to improve accessibility, especially for women.

While still evolving, these channels present significant growth opportunities with effective regulatory support.

Rise in In-Home Consumption

Drinking at home has become more common, allowing consumers to enjoy premium beverages at lower costs compared to bars and restaurants, thus boosting demand for high-end products.

On-Trade Influence on Premiumization

Bars, restaurants, and hotels play a key role in introducing new flavors and experiences, often leading to retail demand. As consumers prioritize quality over quantity in social settings, on-trade channels are becoming engines of premium growth.

Changing Social Norms

Social acceptance of alcohol consumption is increasing across age groups and genders. Urbanization, rising incomes, and evolving lifestyles have normalized social drinking, especially among young adults and working women.

Supportive Excise Reforms

Several states are revising excise policies to improve customer experience and optimize revenues. Initiatives include allowing retail outlets in malls and airports, reducing tax disparities, and encouraging formalization of the market.

(Source: Wright Research)

Threats

Expanding Prohibition and Regulatory Uncertainty

Increasing adoption of prohibition policies in states like Bihar, Nagaland, and Mizoram restricts legal sales and market access. Ongoing policy shifts—such as potential bans in Jammu and Kashmir—create an unstable business environment, limiting long-term planning and investment.

High Taxation and Government Price Controls

Elevated excise duties and rigid state-controlled pricing structures reduce profit margins and limit pricing flexibility for both domestic and international brands. This weakens the industrys ability to absorb cost increases or introduce premium pricing strategies.

Inconsistent Licensing Policies Across States

Uneven policies—such as Karnatakas bar license restrictions—lead to forced closures, reduced retail presence, and declining sales, particularly in high- consumption urban centers. This unpredictability hampers growth and affects job creation in related sectors.

Restrictions on Advertising and Surrogate Branding

The proposed 2024 regulations aim to curb surrogate advertising—such as promoting bottled water or soda under liquor brand names—and may prohibit celebrity endorsements altogether. These changes could substantially restrict the marketing reach of major alcohol brands, particularly those that rely on indirect promotional avenues.

Inflation-Driven Increase in Raw Material Costs

Rising input costs—especially for ENA and packaging materials—are squeezing margins across segments. For companies unable to pass on these costs due to price controls, this puts profitability under sustained pressure.

Growing Competition from Global Liquor Brands

International players are expanding their portfolios and presence in India, capturing market share in the premium and mid-segments. Domestic brands face difficulty competing on product innovation, marketing, and distribution scale.

Fragmented Regulatory Environment due to GST Exclusion

The absence of liquor in the GST framework results in varying state-level tax structures, making inter-state expansion as complex as entering foreign markets. This leads to inconsistent pricing and supply chain inefficiencies.

Illicit Liquor Trade in Prohibited States

State-wide bans have led to the rise of black markets, undermining legal businesses and posing health and safety risks. The resulting loss in legitimate sales reduces investor confidence and discourages formal sector participation.

Significant Revenue Loss for States from Prohibition

States like Bihar have faced massive losses (e.g., over Rs 40,000 crore in 7 years) due to prohibition, raising concerns about the long-term viability and economic trade-offs of such policies.

(Source: ET Retail)

Risk and Concerns Input Cost Inflation Risk

Fluctuations in the supply and pricing of the Companys primary inputs, including key grains, coal, glass bottles and PET resin, pose a potential risk to operations. Any disruption or cost increase in these essential materials could elevate production expenses and adversely impact profit margins.

Mitigation Strategy: To mitigate these risks, the Company has developed long-term relationships with its suppliers to ensure a continuous supply of raw materials. Wherever possible, strategic long-term contracts are in place for all major inputs. These measures help stabilize costs and minimize the impact of price volatility on operations.

Competition Risk

The Company operates in a competitive market, where market pressures may affect overall growth and earnings.

Mitigation Strategy: To address this risk, the Company maintains a diverse product portfolio and focuses on continuous innovation. By leveraging deep insights into consumer preferences, along with an extensive distribution network and strategically located manufacturing facilities, the Company is well positioned for sustained growth in a competitive alcobev market.

Regulatory Risk

The Company conducts its operations within a highly regulated industry characterized by continually evolving marketing regulations and product duties.

Mitigation Strategy: The Company has diversified its business portfolio to include the production and sale of ENA, IMIL, IMFL, licensed brands, and contract manufacturing for Diageo-USL. This broad revenue base reduces reliance on any single market segment. With over four decades of industry experience, the Company has successfully navigated various market cycles, demonstrating the leadership teams ability to manage regulatory challenges effectively.

Cybersecurity Risk

The Companys dependence on various software for daily operations exposes it to risks, including unauthorized access through hacking or virus attacks, which could result in financial loss.

Mitigation Strategy: To mitigate cybersecurity risks, the Company has implemented a comprehensive strategy that includes deploying firewall systems to protect against external threats. It ensures the use of genuine software applications, conducts regular hardware updates, maintains up-to-date antivirus solutions, and provides ongoing employee training on cybersecurity best practices. Furthermore, the Company has established a disaster recovery mechanism and a Digital Rights Management system to enhance resilience and safeguard its digital infrastructure from cyber threats.

Material Developments in Human Resources

The Company recognizes the crucial role its employees play in driving business success. AABL prioritizes maintaining a skilled workforce and has fostered a culture that supports employee retention and performance through effective personnel management, development initiatives, productivity improvements, and rewards programs. The Human Resources (HR) team comprises diverse professionals from various generations and backgrounds, bringing a wealth of experience and a strong commitment to continuous learning. The Company remains dedicated to nurturing employee capabilities by providing the necessary tools to succeed in a dynamic industry and adapt to future challenges. Its industrial facilities operate smoothly without labor unions, ensuring uninterrupted operations and minimal disruption, a result of HR policies that promote high employee satisfaction, sustained motivation, and strong retention.

As of 31^st March 2025, the Company employs 1,350 individuals, including permanent staff and contract labor, supporting its efficiency and growth objectives.

Internal Control Systems and Their Adequacy

The Company maintains a robust internal control policy aligned with its scale and operational requirements, overseen by the Board of Directors. This policy aims to ensure management efficiency, measurability, and compliance with applicable laws and regulations while safeguarding the reliability of accounting and management information and protecting the Companys assets. The Board ensures the sufficiency, effectiveness, and implementation of these controls to swiftly identify and manage operational, compliance-related, economic, and financial risks, thereby supporting the Companys overall operational integrity and strategic objectives.

Cautionary Statement

The statements provided in this section regarding AABL encompass the Companys objectives, projections, expectations, and estimations, which may be classified as forward-looking statements according to applicable securities laws and regulations. It is important to acknowledge that these statements are inherently subject to various risks and uncertainties, including but not limited to regulatory changes, local political or economic developments, and other factors that could potentially lead to differences between the actual results and the expectations expressed in these forward-looking statements. AABL assumes no obligation to publicly update or revise these statements to reflect subsequent events or circumstances. Therefore, stakeholders are advised not to base their decisions solely on these forward-looking statements, recognizing the inherent uncertainties involved.

FOR AND ON BEHALF OF THE BOARD	Prasann Kumar Kedia
	Managing Director
	DIN: 00738754
	Anshuman Kedia
Place: Indore	Whole-Time Director & CEO
Date: 26.04.2025	DIN: 07702629