Globus Spirits Ltd Management Discussions

2. I ndustry Overview

I ndias spirits market stands among the most and high-potential globally, fuelled by rising disposable incomes, evolving social attitudes, and growing demand for premium offerings. As of 2024, Indias alcohol industry is valued at USD 64.19 billion and is projected to reach USD 115.27 billion by 2034, growing at a CAGR of 6.7%. The spirits segment-led by whisky, vodka, and rum-is expected to contribute USD 50.55 billion by 2034. (Source: Expert Market Research Insights) The momentum is driven by premiumisation and product innovation, with consumers increasingly gravitating towards craft spirits, flavoured variants, and high-end whiskies. To cater to these shifts, companies are focusing on unique, locally relevant offerings that blend global trends with regional preferences.

1 R . ising disposable incomes

I ndias middle class, expanding at an annual rate about 6.3% and projected to represent 38% of the population by 2031 and 60% by 2047, is moving beyond mainstream spirits toward premium and super-premium options.

2 P . remiumisation & craft appeal

T here is growing demand for small-batch, crafted spirits-especially in whisky, gin, and rum - as consumers gravitate toward "quiet luxury" and products with origin stories.

3 Y . outh-driven consumption

With a median age of 29, India gains 10–12 million new legal drinkers each year. Younger consumers are fuelling demand for upscale experiences, craft cocktails, and premium labels.

4 C . hanging social norms & gender diversity

Social drinking is becoming more accepted, especially among women and urban millennials, widening the consumer base and encouraging product innovation.

5 P . olicy support & FDI

I nitiatives like Make in India, relaxed import and upcoming FTAs (e.g., with the UK) are attracting investments-like Pernod Ricards €200 million malt distillery-and improving ease of doing business.

1 P . remium & super-premium growth

Consumers, especially in metros, are upgrading to luxury spirits and premium Indian gins, drawn by exclusivity and artisanal value.

2 R . ise of craft spirits

L ocal craft brands are gaining innovative flavour profiles and strong storytelling.

3 R . TD (Ready-to-Drink) popularity

Urban consumers are embracing RTD cocktails and spirit mixers for their convenience and variety, especially among younger age groups.

4 N . o- & Low-Alcohol (NoLo) segment

Health-conscious drinkers are driving interest in low-ABV and alcohol-free spirits, reflecting global mindful drinking trends.

5. D igital & e-commerce expansion

With traditional advertising restricted, brands are tapping into social media, influencer marketing, and online sales platforms to engage digitally native audiences and drive growth.

I ndias alcoholic beverage sector is undergoing transformation, shifting from mass-produced staples to premium, craft, and heritage-driven products. Despite regulatory hurdles and moderating volume growth, value growth remains robust. For brands, the future lies in offering high-quality, innovative, and culturally resonant spirits that appeal to a new generation of consumers. For FY2025, ICRA expects the Indian alcoholic beverages (alcobev) industry to register volume growth of approximately 4–5%, driven by increasing urbanisation, rising disposable incomes, and favourable demographics.

2.2 E thanol Industry withI ndias ethanol industry is undergoing rapid expansion, underpinned by the governments strong commitment to reducing fossil fuel dependence and addressing climate change. At the heart of this transformation is a national push to integrate ethanol as a key component of the countrys energy mix.

The government has introduced progressive policies, including the National Biofuel Policy and the Ethanol Blending Programme (EBP), to scale up ethanol production and accelerate its adoption in the transport sector. These initiatives are designed to support Indias broader climate goals while enhancing energy self-reliance.

Indias ethanol production predominantly relies on sugarcane-the primary feedstock-leveraging a robust agro-industrial ecosystem in states such as Maharashtra, Uttar Pradesh, and Karnataka. The sector also benefits from a network of small and mid-sized producers who utilize alternate feedstocks such as corn and grain-based raw materials, supporting diversification and rural a value addition.

As of February 2025, India has achieved 19% ethanol blending in gasoline, with the country on track to reach the 20% blending milestone ahead of the October target, according to Prime Minister Narendra Modis address at India Energy Week. This milestone marks a major step toward meeting the governments vision for clean energy and energy independence.

1 S . urging vehicle demand

With rising disposable incomes and a growing middle class, India is set to become the worlds third-largest passenger vehicle market by 2025. More vehicles mean greater fuel demand, creating a strong case for ethanol as a mainstream alternative.

2 Biofuel awareness and sustainability goals .

Environmental consciousness is rising, and ethanol-being a clean, renewable fuel-is gaining traction as a sustainable substitute for conventional petrol, especially among policymakers and urban consumers.

3 C . ost competitiveness

E thanol production is increasingly cost-effective, particularly with government incentives. The rollout of E20 fuel is expected to save nearly _30,000 crore in foreign exchange annually by reducing oil imports.

4 E . nergy security

A robust ethanol ecosystem enhances Indias energy independence, insulating the country from volatile global crude prices and supply disruptions.

5 B . oost to the rural economy

E thanol production has a direct, positive rural livelihoods by strengthening agricultural value chains and creating steady demand for sugarcane, maize, and other crops. This, in turn, garners strong policy and public support.

W ith a clear policy roadmap, growing fuel and strong socio-economic incentives, Indias ethanol industry is poised for sustained long-term growth. The push toward 20% ethanol blending not only contributes to environmental goals but also unlocks opportunities for agro-industrial integration, rural development, and cleaner transportation-positioning India as a future-ready biofuel leader on the global stage.

3. C ompany Overview

T he Company operates across multiple segments price points, leveraging well-integrated operations to uphold stringent quality standards and drive cost efficiency. Over the years, it has steadily expanded its presence across the entire alcohol value chain.

A fully integrated 360-degree business model—From Source to Sip—enables complete backward integration, ensuring oversight, consistency, and excellence at every stage of production. Evolving into a consumer-centric organization, Globus Spirits has strategically diversified its raw material mix to reduce dependence on any single input. Today, the Company operates five state-of-the-art distilleries across five states, positioning itself among Indias largest grain-based distillery companies, with a total manufacturing capacity of approximately 301 million litres.

The Manufacturing segment comprises Extra Neutral Alcohol (ENA), Ethanol, Franchisee Bottling, and Byproducts. The Consumer segment includes products across Regular & Others and Prestige & Above categories.

4. B usiness Segments

1. Manu facturing Business

T he Manufacturing segment of Globus Spirits forms the backbone of our operations, encompassing the production and sale of Extra Neutral Alcohol, Ethanol, and a variety of co-products. Our five distilleries are strategically located across high-productivity raw material zones in

India, ensuring operational efficiency, raw material security, and cost optimisation. Operational expansion remained a key priority, with a new bottling line commissioned in April 2024 in the state of Uttar Pradesh. This strategic expansion will be further supported by planned capital expenditure for setting up a 100 KLPD distillation facility, designed to be fungible between molasses and grain. Scheduled for impact on completion by Q3 FY26. Also, a Malt plant of 2KLPD was commissioned in April 2025 in Rajasthan.

2 024-25 performance

I n 2024-25, the segment reported net revenue of _15,423 million. Key initiatives undertaken during the year, including improved input flexibility, enhancements in maize processing, and the reinstatement of the FCI rice procurement policy in Q4 likely to reduce volatility going ahead and is expected to support a more balanced raw material supply-demand scenario in the near term. This was partially reflected in Q4FY25 as the EBITDA per litre for the manufacturing segment improved to Rs 3 from Rs 0.9 in Q3FY25. The full impact is likely in FY26, subject to raw material price movement. For Fiscal 2025, bulk alcohol sales for your Company and were ~188 million bulk litres as compared to ~208 million bulk litres in Fiscal 2024, the capacity utilisation was at 74%. The bulk realisations at ~_ 71 per litre in Fiscal 2025 as against ~_ 63 per litre in Fiscal 2024.

• Expansion efforts remained on track, with the new bottling unit in Uttar Pradesh commencing operations in April 2024, and the accompanying greenfield distillery expected to be completed in Q3 2025-26, a multi-feed distillery of 100 KLPD

• Strategic growth projects, including corn oil extraction in West Bengal

• Strengthen our diversified manufacturing platform, not relying on any single grain as input

2. C onsumer Business

T he Consumer Business at Globus Spirits Limited represents the growth engine of our transformation journey, comprising a diverse portfolio of 22 brands across the Regular, Prestige, and Luxury segments. With operations spanning seven strategically selected states, the business now addresses a cumulative market potential of nearly 100 million cases, offering significant room for further growth.

2 024-25 performance

I n 2024-25,Prestigethe & Above portfolio delivered exceptional performance, reflecting strong brand equity and successful execution of our premiumisation strategy. The segment achieved net revenue of _1,293 million, a remarkable 186% increase year-on-year, with sales volume reaching 0.91 million cases, up 140% from 2023-24. Key product launches - Doaab, Terai (Litchis

& Mulberries), Seventh Heaven, and Brothers & Co. - played a vital role in expanding our premium offerings and strengthening consumer connect.

A notable milestone during the year was our successful entry into the Single Malt category. Our offering received global recognition, winning at the prestigious Icons of Whisky International Awards, selected from over 550 global entrants, affirming our commitment to quality and innovation in the premium spirits space.

The Regular & Others segment continued to anchor the portfolio, generating net revenue of _8,643 million, marking a 17% year-on-year growth. Sales volume rose to 15.80 million cases, a 12% increase compared to the previous year, demonstrating consistent demand across core markets such as Rajasthan and Uttar Pradesh.

L ooking ahead, we expect the Consumer Business continue its upward trajectory, driven by:

• Regular & Others: The Company has recently entered the Uttar Pradesh market in this segment, with contributions expected to commence from FY26 onwards.

• Regular & Others: Pleased to report that the growth trajectory for this segment remains strong, supported by a price increase of ~4 in April24, followed by another 4.35% in April25 in the state of Rajasthan and an upward revision in prices in Uttar Pradesh, effective April 1, 2025.

• Prestige & Above: Deeper penetration in existing and new geographies

• Prestige & Above: Consumer-led innovation, Increased focus on premium and differentiated offerings.

Together, these efforts will accelerate our shift toward a more brand-led, consumer-centric portfolio, paving the way for sustained value creation.

5. F inancial Review (Standalone)

6. E nvironmental Compliance

A t the heart of our operations lies a strong commitment to sustainable development. As a zero-wastewater to discharge company, we continuously adopt and implement environmentally responsible practices to minimize our ecological footprint.

We have undertaken several initiatives, particularly in our expanded capacity, to ensure compliance with environmental norms and enhance sustainability:

• T owards Zero Discharge: We are actively progressing toward complete elimination of air and water discharge, in line with our zero-waste philosophy.

• Installation of ESPs: Electrostatic precipitators (ESPs) have been installed to effectively reduce particulate emissions and ensure air discharges remain within permissible limits.

• CO_ Recovery and Utilization: Carbon dioxide generated during fermentation is fully captured, purified, and sold to industrial buyers - including soft drink manufacturers - thereby reducing greenhouse gas emissions.

• Effluent and By-product Management: o Spent Grain: All spent grain is processed and sold as nutritious cattle feed, ensuring beneficial reuse. o Fly Ash and Ash Disposal: These are safely disposed of through landfilling or brick manufacturing, supporting a circular waste economy.

T hrough these efforts, your company its dedication to environmental stewardship, operational efficiency, and compliance with evolving environmental standards.

Y our Company has implemented a

Zero Liquid Discharge (ZLD) system to ensure that no wastewater is released into the environment. This is achieved through a closed-loop process that maximizes reuse and converts waste into value-added products. The key steps involved are:

1 S . eparation of Spent Grain

Spent wash generated from the distillation process is passed through specialized equipment to separate solid spent grain from the liquid component.

2 E . vaporation of Spent Wash

T he remaining lean spent wash is into a syrup using an integrated evaporator system, reducing its volume and preparing it for further processing.

3 B . lending with Spent Grain

T he concentrated syrup is mixed with the spent grain to form wet grain, which is a valuable by-product suitable for use as cattle feed.

4 D . rying for Enhanced Quality

T o improve shelf life and nutritional wet grain is further dried into powder form and sold as dried cattle feed, contributing to circular economy practices.

Through this integrated approach, the Company effectively eliminates liquid discharge while converting process waste into useful products, reaffirming its commitment to environmental responsibility and sustainable operations.

Y our Company follows a rigorous water strategy aligned with its commitment to sustainability and regulatory compliance. Through a combination of recycling, reuse, and efficient treatment, we have achieved zero water discharge across all streams, in line with Pollution Control Board requirements.

K ey measures include:

1 Closed-Loop Water Circulation .

All process water is re-circulated, with or without treatment, ensuring no discharge into the environment.

2 S . urplus Water Utilization

T reated surplus water is used for boiler feed and cooling tower make-up, minimizing freshwater consumption.

3 P . rocess Condensate Reuse

Condensate generated during processing is reused as boiler feed water, improving efficiency and reducing water demand.

4 E . vaporator Condensate Recovery

Condensate from the evaporation system is treated and reused within the production process.

5 C . ooling Water Recirculation

All cooling systems operate on closed-loop recirculation, eliminating water loss.

separated6 B . ottle Washing Water Reuse

Water used for bottle washing is treated and reused either in the process or for horticulture and landscaping.

Through these comprehensive initiatives, the Company the ensures optimal water conservation and reinforces its status as a zero-discharge facility.

G lobus continues to invest in research and development to enhance efficiency, sustainability, and product quality. Our technology-driven R&D initiatives focus on process optimization, waste valorization, and portfolio expansion:

We have adopted state-of-the-art technologies in our plant expansion to ensure maximum alcohol yield through improved conversion of starch and other raw materials. Ongoing R&D efforts include the use of next-generation enzymes and yeast strains to further elevate fermentation efficiency and output quality.

T o optimize energy usage and improve product quality, our upgraded distillation system employs a multi-pressure configuration. This innovation significantly reduces energy consumption while delivering alcohol that matches the highest national quality standards.

I n alignment with environmental and priorities, we treat waste as a value-generating resource. Our teams are exploring alternate markets and branding opportunities for spent grain in the cattle feed segment, ensuring optimal pricing and expanded reach.

L everaging high-quality alcohol production, expanding our portfolio in the premium potable alcohol segment. Continuous R&D supports the development of refined blends and new brands, allowing us to move up the value chain and strengthen our market presence.

Through these initiatives, Globus reinforces its commitment to innovation, quality excellence, and sustainable growth in the alcoholic beverages industry.

7. Ris k Management

G iven the dynamic nature of our business, we exposed to various risks such as raw material cost fluctuations, rising competition, regulatory changes at both central and state levels, shifts in supplier-distributor relationships, and labour shortages.

Our approach to risk management is proactive and systematic. Risks are regularly reviewed, and mitigation strategies are continuously developed and updated. To strengthen this framework, a dedicated Risk Management Committee has been established to formulate, implement, and monitor a comprehensive risk regulatory management plan—ensuring the company remains agile and resilient in the face of emerging challenges.

8. I nternal Control Systems

Y our Company has ensured that stringent and comprehensive controls are put in place to ensure the optimal and efficient utilization of resources and to ensure safety and protection of all assets from unauthorized use. An extensive programme of internal, external audits along we are with periodic reviews by the management is carried out to ensure compliance with the best practices.

9. Disclaimer

C ertain statements in this MDA may be forward looking within the meaning of applicable laws and regulations. Actual results may differ from those expressed or implied. Important developments that could affect the Companys operations include a downtrend in domestic industry, significant changes in the political environment, changes in tax laws & excise duties, litigation, and labour relation.