Emami Ltd Management Discussions

Global Economic Overview

The global economys resilience came to the fore in CY 2024, as it navigated a turbulent economic landscape comprising geopolitical tensions, trade uncertainties and alteration in monetary policies. Global economic growth was 3.3% in CY 2024, with advanced economies facing significant challenges, while emerging markets continued to be key drivers of global expansion. Strong domestic demand, an uptick in foreign investments and a gradual recovery in global trade helped Emerging Markets and Developing Economies (EMDEs) to grow at an estimated rate of 4.3% in CY 2024.

Global inflationary pressure eased during CY 2024, with a decline to 5.7%. The decline is expected to be largely driven by stabilising energy and food prices and slight easing of supply chain disruptions. As inflationary pressures moderated, Central Banks around the world began easing monetary policies, which helped to improve business confidence and consumer spending. The Federal Reserve in December 2024, cut interest rates by 25 basis points, signalling progress towards price stability. Global trade volumes recovered in CY 2024, with an estimated increase of 3.4%. This was driven by strong export performance from the US, China and the East Asian economies. However, the recent implementation of tariffs by the US government poses a potential threat to the stability of global trade.

Outlook

The global economic outlook for CY 2025 and beyond remains cautiously optimistic, with global growth projected at 2.8% for CY 2025 and 3.0% for CY 2026¹. This growth is expected to be driven by resilient consumer demand, strategic policy measures and ongoing structural reforms.

Growth in advanced economies is projected to be modest at a rate of 1.4% in CY 2025. Emerging Market and Developing Economies (EMDEs) are expected to sustain their position as drivers of global growth, with a projected expansion rates of 3.7% in CY 2025 and 3.9% in CY 2026. The slowdown is expected to be more pronounced in countries most impacted by recent trade measures, such as China, which has experienced significant downgrades in its growth outlook.

Global inflation is expected to continue on its downward trajectory and is projected to reach 4.3% in CY 2025, with a further decline to 3.6% in CY 2026. Decline in inflation coupled with improved liquidity is expected to drive investments. Augmented business confidence and a favourable investment climate is expected to drive growth in both advanced and developing economies.

Indian Economic Overview

Indias economy sustained its robust performance in FY25, demonstrating resilience amid global uncertainties and emerged as one of the fastestgrowing major economies. The country has registered a GDP growth rate of 6.5%², primarily driven by strong domestic consumption, sustained government capital expenditure and steady growth in the construction, services, manufacturing and trade sectors.

Private consumption sustained its position as a key driver of growth, supported by a growing middle class, improved labour market conditions and rising urban demand. The Government has allocated 11.11 lakh crores towards capital expenditure in the Union Budget for FY25. This reflects the governments consistent emphasis on infrastructureled growth. Investment momentum was further fuelled by improved credit flow and rising investor confidence.

Over the course of the reporting year, inflationary pressure gradually eased with inflation declining to 3.34%³ in March 2025, the lowest in five years. This decline was largely attributed to a decline in food prices. Inflation remained within the Reserve Bank of Indias target, averaging around 4.1%⁴ during the latter part of the year. During the year under review, the Reserve Bank of India adjusted its monetary policy stance by implementing consecutive repo rate cuts, bring the rate down to 5.50%. This move is expected to augment liquidity and enhance credit flow in the market.

Indias external sector showed mixed trends. Exports grew marginally to $ 395.6 billion, while imports rose by 5.7% to $ 656.7 billion from April 2024 to February 2025. Crude oil import dependency increased to 88.2%, driven by rising energy needs, thereby heightening vulnerability to global price fluctuations⁵.

The Indian rupee, impacted by global currency trends and domestic demand, opened the year at 83.35 and closed at 85.46 against the US dollar on March 31,

2025, reflecting a moderate depreciation.

Outlook

India is poised to sustain its trajectory of growth, with a projected growth rate of 6.5% in FY26, significantly outpacing global and regional peers⁶. Despite the uncertainties and threats posed by global trade challenges, Indias robust domestic demand and government initiatives will continue to drive its economic momentum. Further, the government is closely monitoring the tariff scenario and is calibrating its response. Indias inflation rate is projected to remain stable in the range of 4.0% to 4.2% for FY26, aligning with the Reserve Bank of Indias target of 4%. This moderation in inflation provides the RBI with further room to implement rate cuts, which will augment economic growth and consumer spending. Inflation rates are expected to decline further if the current uncertainty regarding tariffs reaches clarity.

The countrys investment climate remains strong, supported by rising private investments, favourable financing conditions and a rapidly expanding middleclass population. The recent revision in tax slabs is expected to further enhance disposable incomes, especially among the urban populace. This will result in higher consumption expenditure, fuelling economic activity in urban India. Overall, the economy is strategically positioned for sustained growth and is poised to play an even bigger role in the global landscape.

Indias FastMoving Consumer Goods (FMCG) sector

Indias FastMoving Consumer Goods (FMCG) industry showed dynamic growth on the back of evolving consumer behaviour, expanding discretionary income and rising urban population. The industry is expected to grow 7%9% by revenue in FY25 and reach an estimated

$ 132 billion⁷. This growth momentum is expected to be fuelled by the widened accessibility of ecommerce channels, rising rural penetration and a shifting emphasis towards conveniencedriven consumption. Rural markets, which contribute approximately 40% of the overall FMCG revenue have shown resilience. These markets are witnessing a recovery in volumes, with consumption exceeding that of urban markets in recent quarters. This recovery has been aided by favourable monsoon conditions and an uptick in agricultural productivity. Conversely, the urban segment, which contributes around 60% of the sectors revenue, has been impacted by elevated levels of inflation, heightened interest rates and subdued wage growth. The rising demand of packaged food and personal care products is propelling the growth of the FMCG industry. In addition, this demand highlights the shifting lifestyle of consumers and a growing brand consciousness. A growing emphasis on convenience, particularly timeefficient solutions have emerged as catalysts for retail expansion. New generation retail channels such as quick commerce is accelerating now making up over a third of ecommerce sales. This trend is expected to continue in the years ahead.

The mass FMCG segment has been considerably affected by severe food inflation and heightened competition among local and regional players. Despite the presence of these products in the rural regions, rising inflationary pressure have cut consumption to a significant degree. Notwithstanding these challenges, the FMCG sector remains key to the Indian economy, contributing approximately 3% to the countrys GDP and providing employment to nearly three million people.⁸

Outlook

Despite facing turbulence, the FMCG sector is poised for a positive turnaround in the years ahead. The sector is starting to exhibit signs of recovery after experiencing subdued growth due to high inflation, weak urban demand and the escalating cost of raw materials. Key factors, such as easing inflationary pressures and a gradual recovery in demand contribute to an optimistic outlook, hinting a potential rebound in the FMCG sector.⁹ Indias economic trajectory is also playing a crucial role in shaping the outlook for the FMCG industry in India. India is set to become the thirdlargest economy by 2028, with consumption remaining a vital contributor and exceeding 50% of the GDP. This economic growth will serve as a strong tailwind for the FMCG sector, driven by the rising aspirations of Indias middle class and the increasing purchasing power. Rural demand, traditionally a significant driver of the FMCG market, is expected to show a marked improvement, supported by favourable monsoon conditions in FY26. Further, the tax benefits announced in the Union Budget will offer additional support to consumers.

Opportunities

Government Schemes and Digitisation

Initiatives such as ‘Make in India and ‘Atmanirbhar Bharat are encouraging domestic manufacturing and reducing the countrys reliance on imports. These programmes are actively supporting the growth of the Indian FMCG sector by encouraging local production and incentivising manufacturers. By implementing these measures, the programmes are promoting a selfreliant and strong manufacturing landscape. Expedited digitisation of the value chain is reshaping the operations of the FMCG companies. Integration of data analytics, AIdriven demand forecasting and automated supply chains are augmenting efficiency and responsiveness.

Increasing Disposable Income

Steady economic growth coupled with rising middleclass aspirations and augmented discretionary spending has led to a shift in consumer preferences towards branded, valueadded and premium products. Higher disposable income also leads to increased spending on lifestyleoriented categories such as personal care, wellness and packaged foods.

Increasing Urbanisation

Rapid urbanisation and lifestyle changes are reshaping consumption patterns. With more people residing in cities and urban centres, demand for convenient, ready to use products are on the rise. Greater brand awareness and digital connectivity among urban consumers are paving the way to targeted marketing, direct to consumer models and omnichannel strategies.

Deepening Rural distribution

RuralIndiaisincreasinglycontributingtotheoverallFMCG growth. Widening distribution networks in these regions remains a key priority and presents a vital opportunity to FMCG companies. The focus is shifting from simply expanding into more rural areas to deepening market penetration within them, with an emphasis on ensuring consistent product availability and strong brand visibility, even in remote and underserved markets.

Portfolio Premiumisation

Consumers are inclining towards premium, healthconscious and valueadded products. Heightened health awareness, aspirational shifts in lifestyle and elevated disposable income among the urban middle class are the key drivers of this trend. Products that offer superior quality, functional benefits and differentiated experiences are gaining traction.

Regulatory Compliance and Quality Control

The FMCG companies must adhere to stringent regulatory standards involving food safety, product labelling, environmental standards and advertising norms. Compliance failure can lead to penalties, product recalls and reputational damage.

Supply Chain Disruption

The FMCG sector is highly dependent on a complex supply chain that includes raw material sourcing, manufacturing, packaging and last mile delivery. Disruptions caused by geopolitical events, climate change, inflationary pressures, or transportation bottlenecks can severely impact production cycles, product availability and product costs.

Economic Uncertainty

Prolonged economic slowdown or persistently high interest rates may constrain household spending, especially in rural and semiurban regions. Additionally, external factors such as global trade tensions and currency fluctuations can influence importexport dynamics and alter cost structures.

Company Overview

Emami Limited, founded in 1974, is a leading and widely recognised name in Indias personal care and healthcare space.TheCompanyisbuiltonthebeliefthathighquality, innovative products rooted in Indian tradition could be made accessible to every household. Today, Emami has grown into one of the fastest growing FMCG companies in India. With its products available in over 70 countries, Emami continues to strengthen its global footprint. Its diverse product portfolio spanning over 550 offerings includes widely recognised names, such as Navratna, BoroPlus, Zandu, Kesh King, Dermicool and Smart And Handsome. Driven by a passion for innovation and excellence, the Company continues to maintain a strong focus on research and development, manufacturing excellence and highest standards of quality.

With a legacy of ayurvedic knowledge and modern innovation, Emami continues to enrich lives and create value for consumers across the globe.

Our Key Brands

Business Performance

Key Brand Performance

Navratna and Dermicool Range grew by 18%

Navratna Cool Oil increased its volume market share by 40 bps with a share of 67.5%

Navratna Cool Talc and Dermicool increased their volume market share by 140 bps, achieving a combined share of 40.8%

BoroPlus Range grew by 14%

Antiseptic Cream increased its volume market share by 30 bps with a share of 60.1%

Relaunched BoroPlus Soft with new packaging during the year

Zandu Healthcare Range grew by 12%

Pain Management Range grew by 1%

Male Grooming Range declined by 4%

Rebranded Fair And Handsome as "Smart And Handsome" during the year

Smart And Handsome Creams increased Volume Market Share by 390 bps with a share of 74.0%

Kesh King range declined by 9%

Kesh King Oil maintained its leadership with a volume market share of 29.2%

Strategic subsidiaries (The Man Company and Brillare Science) declined by 5%

Achieved sales growth of 4x since FY21

Acquired 100% stake in The Man Company

MAT Dec24

Operations

In FY25, the Company streamlined its operations through consolidation of factories, overheads reduction and enhancement of capacity utilisation. Key steps included production line optimisation, quality check automation and close monitoring of machine performance. Strong focus on quality is maintained through advanced systems such as high end automated defect detection, laser coding and clean air flushing, along with standardised SOPs and continuous employee training. Seasonal demand is managed through preassembled stock, while cost efficiency is driven by strategic procurement, vendor partnerships and eauctions.

For more details refer to page 103 of the report.

Research and Development

The Companys R&D strategy integrates Ayurveda with modern science to develop efficacious, sustainable and consumerrelevant products across both healthcare and personal care divisions. The division draws on the expertise of 137 scientists and field experts, focussing on evidencebased innovation. The R&D division has completed 12 clinical trials in FY25 and has initiated several others in collaboration with premier institutions like AIIMS and NIMHANS. The Company places significant emphasis on sustainable practises and conservation of endangered herbs. The adoption of DNA fingerprinting of raw herbs, novel drug delivery platforms and biotechnological tools ensures highquality formulations. Innovations such as the Dermicool Soap highlight breakthrough formulation technologies, which are backed by extensive consumer trials. The CADE team has contributed with costeffective innovations, patent filings, WHO GMP certifications and global research recognition. The Company is resolute in its approach of providing futureready, personalised solutions rooted in ecoconscious technologies, aiming to meet the health and wellness expectations of modern consumers while ensuring compliance, affordability and performance excellence.

For more details refer to page 114 of the report.

Sales and Distribution

The Companys core distribution strength lies in its extensive general trade network which contributes to the majority of its overall business. The distribution is further bolstered by modern trade, ecommerce and canteen stores department. With the retail landscape increasingly embracing the omnichannel approach, Emami is aligning its pricing, visibility and product assortment to cater to evolving consumer behaviour, especially among the younger demographic. The Company continues to maintain its focus on the rural areas of key states through local marts and a tailored product assortment, which matches the regional demand. Stable pricing and improved margins helped strengthen modern trade partnerships. Systemic simplification and enhanced distributor engagement remain key priorities, with a strong emphasis on increasing product visibility and driving consumer engagement at the point of sale. Driving digital transformation by automating key business processes, with a strong focus on finance has enhanced datadriven decision making. Continuous capability enhancement ensures that Emamis teams are equipped for modern trade and omnichannel growth.

For more details refer to page 133 of the report.

Raw Material Management

The Company adopts a holistic approach for procurement, focusing on quality, cost efficiency, supply assurance and sustainability. Strategic sourcing ensures prompt material availability, supported by robust supplier onboarding, regular reviews and strong vendor partnerships. Cost is managed through forward contracts,shouldcostmodels,designtovalueinitiatives, alternate vendor development initiative and eauctions. Waste is minimised through targeted interventions and preventive systems like ‘pigging. Responsible sourcing is ensured through vendor assessments aligned with sustainability goals. Emami emphasises local procurement to enhance resilience, reduce transportation load and lower environmental impact.

For more details refer to page 104 of the report.

Information Technology

The Company has implemented several key IT initiatives to advance its digital transformation. It has migrated its entire IT footprint to the cloud, with core applications including SAP and the dealer management system now operating on Microsoft Azure, resulting in faster deployment and fewer performance issues. Cybersecurity has been enhanced through cloudbased antivirus solutions, monitoring systems and strict internal policies, significantly reducing critical audit observations. The Company upgraded outdated enduser devices and modernised network infrastructure in 90% of its locations to boost efficiency and security. Business processes in finance and ecommerce have been automated using Robotic Process Automation, with internal capabilities being developed to run multiple projects. The Company also progressed in analytics through a sales command centre, visual analytics and AI/MLpowered product recommendation engines. It is diligently exploring AI and GenAI tools in collaboration with partners.

For more details refer to page 119 of the report.

International Business Performance

Emami Limited has established a strong international presence, operating in over 70 countries worldwide. The Company focuses on delivering premium products tailored to the local market needs. Key regions include the Middle East, Africa, South and Southeast Asia and Europe. The international business is supported by regional offices and localised sales and manufacturing models. Despite several macroeconomic headwinds and geopolitical challenges, especially in Bangladesh and Egypt, the Companys international business exhibited resilience and achieved a moderate growth rate of 5 % in FY25 in Constant Currency Terms. Entry in new markets of Iraq, Mongolia and China augmented Emamis geographical footprint. Emamis international business contributes 17% to the overall revenue. Emami is prioritising the top 15 countries that currently contribute nearly 80% of the international revenues, ensuring sharper focus and deeper market penetration. The Company balances localisation with brand consistency, as evident from successful initiatives like the rebranding of ‘Fair And Handsome to ‘Smart And Handsome and the rapid expansion of the Creme21 range. Emamis international business relies on a mix of modern trade, general trade and growing ecommerce. Currently, 80% of the Companys overseas production is conducted outside India.

For more details refer to page 68 of the report.

Key Financial Ratios

Ratio	FY 202425	FY 202324
ROE (on adjusted PAT) (%)	33.36	33.14
ROCE (on adjusted PAT)	32.63	32.13
(%)
Debt to Equity Ratio (in	0.02	0.03
times)
Interest Cover (in times)	96.73	80.26
Current Ratio (in times)	2.04	1.76
Debt service coverage	13.48	11.59
ratio (in times)
Net Profit (%) of sales	21.17	20.51
ROI (%)	8.65	5.98

 

Working Capital
	FY 202425	FY 202324
(No. of Days)
Trade receivables	43	51
Inventory	30	33
Trade payables	42	46
Other receivables	27	27
Net Working Capital	58	64

Human Resources

Emami firmly believes that its people are central to its success and employs a strong recruitment process to attract and retain top talent. By collaborating with reputed search agencies and recruitment partners, the Company adopts a ‘Talent Fit approach to bring in individuals who resonate with its culture and strategic objectives. Development centres, 360degree feedback and structured assessments play a key role in the selection and growth of employees. Internal job postings and management development programmes are also integral in the identification and grooming of future leaders.

A balanced workforce representation across demographics highlights the Companys focus on diversity and inclusivity. An opendoor policy ensures accessibility to leadership. Grievances are addressed with urgency. The Company prioritises safety through quarterly audits and implementation of stringent protocols across facilities. Initiatives like the Annual Award Ceremony, facilitates a culture of recognition, rewarding excellence in innovation, change and values.

Detailed information about the financials of the Company can be found on page 94 of the report.

On a standalone basis. The variance is on account of higher income generated on investments in the current financial year.

Total employee strength

For comprehensive understanding of the various human resource initiative and programmes of the Company, please refer to page 122 of the report.

Business Outlook

With a legacy of over five decades, Emami stands as a trusted name in the personal and healthcare segment. The Company continues to evolve with changing consumer dynamics, driven by a resolute focus on innovation, agility and strategic foresight. Emamis brand portfolio has consistently expanded its appeal across diverse demographics and geographies, backed by deep consumer insight. The Company is actively reinventing itself to meet the demands of a rapidly evolving consumer landscape.

The Companys product development is increasingly aimed at satisfying the aspirations of younger consumers, even as it maintains deep loyalty among its existing customer base. The Companys robust presence in rural and semiurban markets is also unlocking new avenues for growth. A future ready mindset is reflected in the Companys continued investments in R&D and technology. Emami also explores inorganic growth opportunities, making calculated acquisitions that complement its strengths while creating new revenue streams.

Risk Management

Emami follows a structured, companywide approach to risk management framework, with all employees encouraged to identify and address risks that impact the Company. The Risk Management Committee of the Company ensures that the executive management team is empowered with a risk management framework comprising policies, procedures and assessment methodologies. The Company focuses on ensuring that all risks are identified, assessed and managed to ensure not to affect growth.

For a comprehensive understanding of the risk management framework, please refer to page 84 of the report.

Internal Control Systems and Their Adequacy

TheCompanyhasarobustandstructuredinternalsystem of controls commensurate with its size, requirements and nature of operations. The internal regulatory structure is tailored to the Company, its business operations and each location. The Companys internal audit department conducts audits across manufacturing locations, offices and sales depots to assess the existence, adequacy and operation of financial and operating controls and ensures compliance with the Companies Act, 2013, SEBI (Listing Obligations & Disclosure Requirements) Regulations, 2015 and corporate policies.

The Internal Audit team carries out regular audit checks to ensure that adequate systems are in place and are effective. A summary of all significant findings, along with any follow up actions taken, is submitted to the Audit Committee for review. The Audit Committee reviews the comprehensiveness and effectiveness of the report and provides valuable suggestions and keeps the Board of Directors informed about major observations.

Cautionary Statements

Certain statements in the Management Discussion and Analysis section relating to the Companys objectives, expectations, projections, estimates and others may constitute forward looking statements under applicable laws and regulations. These statements are based on current assumptions and available information; however, actual results may differ materially from those expressed or implied due to factors beyond the Companys control.

Forward looking statements are subject to uncertainties and risks and do not guarantee future performance. Readers are advised not to place undue reliance on these statements. The Company undertakes no obligation to revise or update any forwardlooking statements in light of future events, new information, or developments, except as may be required by applicable law.