Honasa Consumer Ltd Management Discussions

Global Macroeconomic Landscape

The global economy in 2025 demonstrated a steady but uneven performance across regions, with real GDP growth reaching 3.4%1 This growth was supported . by better-than-expected performance in major economies such as the United States and China. Looking ahead, global growth is projected at around 3.1%1 in 2026, supported by resilient investment, steady technology-led demand and broadly accommodative financial conditions. Growth is expected to remain uneven across regions, even as the broader expansion stays on a steady footing.

In the United States, resilient consumer spending and steady investment in technology-related sectors were the primary growth drivers. Activity slowed sharply late in the year, when a federal government shutdown temporarily curtailed public expenditure, but the underlying momentum held and full-year growth came in at 2.1%.1 China held its pace at around 5.0%, supported by strong exports that offset relatively weak domestic demand. In the Euro area, growth improved to 1.4%, helped by higher government spending, most notably in Germany¹. Japan returned to growth, with output rebounding to 1.2%1 in the fourth quarter as private consumption and investment regained traction. Asia was once again the fastest-growing region: emerging and developing Asia expanded by 5.5%, led by India at 7.6% supported by robust domestic demand and strong exports across South and Southeast Asia.1

Global trade remained strong in 2025, particularly in technology-related products used for digital and AI investment. This benefitted several Asian economies, which serve as critical suppliers in these segments.

Persistent Global Inflation Environment

Global inflation stayed elevated through 2025, as the lingering effects of earlier supply disruptions and high input costs worked their way through economies. Headline inflation averaged around 4.1%1 for the year, driven by volatile energy and commodity prices and by solid demand in several markets.

Trajectories diverged sharply by region. In advanced economies, headline figures eased gradually, yet core inflation stayed sticky amid high services costs and tight labour markets. In the United States, inflation held above the central banks target, while in Japan it eased below 2%¹ for the first time since 2022. Emerging economies contended with higher inflation, compounded by currency depreciation and a heavy reliance on imported commodities, with strong external demand offering only a partial buffer. However, developing economies in the Asia-Pacific region were a relative bright spot: headline inflation stood at 3.5%2 in 2025, supported by stable food prices and steady policy, is nonetheless expected to rise to 4.6%2in 2026.

Consumer price indices across most regions moderated through 2024 and 2025 from their earlier peaks but stayed above pre-pandemic levels. The decline has been gradual, held back by resilient demand and elevated input costs, while overall financial conditions tightened modestly amid geopolitical tensions yet stayed easier than long-run norms.

Inflationary pressure has rebuilt in 2026 as geopolitical disruption returned to energy markets. The conflict in the

Middle East has pushed commodity prices sharply higher; overall commodity prices are expected to rise by around 16%³and energy prices by about 24% in 3 while disruption , along key routes such as the Strait of Hormuz, which carries a large share of global oil trade, has tightened supply further. Higher production and transport costs are feeding through sectors from food to chemicals to manufacturing, adding to global inflation and eroding purchasing power. Second-round effects are compounding these pressures. Businesses are passing on higher costs, and workers are seeking wage rises to meet higher living expenses; where inflation expectations are less firmly anchored, the risk of inflation persisting for longer grows. Market uncertainty has also lifted risk premia and tightened financial conditions, adding a further layer of caution for households and businesses alike.

Global headline inflation is expected to rise to around 4.4%⁴ in 2026 before easing to 3.7%4 in 2027, though core inflation, which excludes food and energy, is likely to stay elevated across major economies, pointing to persistent underlying pressure. Inflation should moderate gradually thereafter but stay above historical averages, with emerging economies more exposed in the near term. Rising commodity prices are expected to push developing-economy inflation to around 5.1%5 in 2026, higher than the previous year, as elevated import costs, currency movements and limited fiscal space weigh on both prices and growth.

Indian Economic Overview

Indias economy maintained strong momentum during

FY 25-26, despite an uncertain global environment, and was among the fastest-growing major economies in the world. Growth during the year was supported mainly by domestic consumption, public investment, and expansion across the services and manufacturing sectors.

Real and nominal GDP growth for FY 25-26 was estimated at 7.6% and 8.9%, while Gross Value Added (GVA) growth stood at 7.9%8. The economy entered the year on a relatively strong footing, supported by infrastructure spending, policy-led reforms, improving private sector participation, and healthy consumer demand.

Domestic consumption was the biggest support for economic growth. Private Final Consumption Expenditure grew by 7.0% during the year and accounted for 61.5% of GDP, the highest recorded since 2012⁸. Lower inflation, improving employment conditions, and stronger rural demand helped underpin household spending. Urban consumption also improved, aided by tax rationalisation measures and easing price pressures.

Investment activity held up well. Gross Fixed Capital Formation grew by 7.8% and has maintained nearly a 30% share of GDP for the past three years8 . Government-led capital expenditure was an important growth driver, particularly in roads, railways, logistics, and other infrastructure projects. Manufacturing activity also benefited from production-linked incentive schemes and improved industrial demand. Growth was broad-based across sectors. Agriculture and allied sectors grew by 3.1%8, supported by favourable monsoon conditions and better crop output. Manufacturing and construction growth stood at 6.2%8 while the services sector led overall economic , expansion with growth of 9.1%8 Services such as . financial activities, trade, transport, hospitality, and digital services performed strongly through the year.

Inflation moderated significantly against earlier periods, mainly on lower food and fuel prices. Average headline CPI inflation stayed below the RBIs 4% target for most of the year. The easing inflation environment gave the Reserve Bank of India room to support growth through monetary measures, with the repo rate reduced cumulatively by 125 basis points to 5.25%9. This helped improve liquidity conditions and supported credit growth across sectors. Indias banking and financial system also held steady during the year. On the external front, India was relatively stable despite global trade disruptions and geopolitical uncertainties. Strong services exports, stable foreign exchange reserves, and ongoing efforts to strengthen trade partnerships supported external sector stability. India also deepened its integration into global supply chains through trade agreements and manufacturing initiatives.

At the same time, global risks stay elevated. Geopolitical tensions in the Middle East, volatility in energy prices, and supply chain disruptions may add to logistics costs and inflation going forward. Even so, Indias strong domestic demand base, infrastructure expansion, digital adoption, and ongoing structural reforms are expected to support long-term economic growth and stability.

Financial

India recorded unusually low headline inflation through FY 25-26, with pressure building only towards the year end. The key takeaways:

Headline Inflation at a Multi-year Low — averaging

1.9% between April 2025 and February 2026, against 4.7% a year earlier, and below the

Reserve Bank of Indias 4% target for most of the year.

Food Prices Drove the Decline — easing to near-zero by October 2025 on strong agricultural output, favourable weather, adequate cereal stocks and lower import duties on edible oils and pulses.

Wholesale Inflation is Equally Muted — at 0.4% for the year, against 2.3% in FY 2024-25, supported by softer food and fuel prices.

Core Inflation Held Higher — at 4.1% across the first three quarters, largely on rising gold and silver prices, with other components broadly stable.

CPI Rebased to 2024 — reducing the weight of food and beverages from around 46% to 37% of the basket in favour of services, housing and transport.

Pressure Returning in FY 26-27 — with Middle East energy and shipping disruption expected to lift headline inflation to around 4.9%, partly cushioned by fertiliser and cooking-gas subsidies and fuel-duty cuts, though energy imports and Gulf remittances remain points of exposure.

Outlook

India is expected to hold its place among the fastest-growing major economies in FY 26-27, though at a more moderate pace than the 7.6%¹⁰ real growth of FY 25-26 as cyclical momentum eases. According to the World Banks June 2026 report, Indias real GDP growth is projected at 6.5%¹¹ for FY 26-27. This narrow spread among institutional forecasts reflects differing assumptions on energy prices and external demand rather than any shift in the underlying growth story.

Domestic drivers are expected to carry the expansion. Private consumption, public capital expenditure and services-sector activity should stay the principal supports, aided by earlier tax rationalisation, softer borrowing costs and steady rural demand. Public investment in roads, railways and logistics, together with production-linked manufacturing incentives, is likely to sustain the investment cycle even as private demand shows early signs of cooling.

Inflation is set to rise from the multi-year lows of

FY 25-26.

The Reserve Bank projected average CPI inflation of 5.1%11 for FY 26-27, against the sub-2% readings of the previous year, driven mainly by energy and shipping-cost pressures linked to the West Asia conflict; the World Banks India Development Update placed the figure slightly lower, at about 4.9%.

With inflation projected to rise through the year and growth moderating, the Reserve Bank held the repo rate at 5.25%¹¹ at its June 2026 review and kept a neutral stance, having lowered the policy rate cumulatively by 125 basis points across the preceding easing cycle.

The principal risks to the outlook are external. Crude oil price volatility, geopolitical tension in West Asia, shifts in US tariff policy and softer global demand could weigh on exports, the import bill and headline inflation through the year. Against these, Indias domestic demand base, infrastructure programme, digital adoption and structural reforms are expected to underpin growth and keep the economy ahead of its global peers.

6.5%

Projected GDP growth rate of India in FY 26-27

Indian Retail Industry Market Landscape

Indias retail sector shows strong structural growth, supported by rising consumption, favourable demographics and rapid digital adoption. Valued at $1.12 Trillion in 2025, it is one of the fastest-growing retail markets globally and is undergoing a steady transformation across both traditional and modern formats. The sector contributes over 10% of Indias GDP and employs close to 8% of the national workforce, anchoring it firmly within the countrys growth story.

Consumption Growth Driving Retail Acceleration

India is solidifying its position as a leading retail investment destination, driven by a large, young consumer base, rising incomes, rapid urbanisation and expanding digital access. With the worlds second-largest population and a fast-growing middle class, the country offers significant long-term potential in organised retail, particularly across beauty and personal care, apparel and electronics.

Consumption is broadening and deepening at once. An estimated 155 million households are expected to

Demand spans food and beverages, personal and household care, apparel, footwear and accessories, furniture, toys and hobbies, and electronics and household appliances, distributed across supermarkets and hypermarkets, convenience stores, speciality stores and online platforms. Regionally, consumption is broadening from the metros into smaller cities and emerging urban centres, supported by rapid urbanisation, rising affluence, infrastructure development and growth across the technology and

IT sectors.

earn more than USD 9,500 a year by 2030, materially expanding discretionary spending power. Gen Z is emerging as the defining cohort, spending around USD 250 Billion directly in 2025, while Tier 2 and Tier

3 cities now generate over 60% of e-commerce transactions. Urbanisation, a growing female workforce and the steady organisation of purchase channels reinforce this shift towards branded, aspirational and quality-led buying.

Evolving Consumers Driving Retail Transformation

Evolving consumer preferences are reshaping the sector and creating opportunities for differentiation through new retail formats and rising demand for personalised and sustainable products. Rising disposable incomes, urbanisation and the emergence of a large middle-class population underpin these shifts, while a growing preference for branded products is accelerating the move towards organised retail. Private consumption, particularly across discretionary categories, is a key growth driver. Digital adoption is deepening this transformation. Rising smartphone usage, affordable internet access and widespread digital payments through UPI and mobile wallets have reshaped how consumers discover and buy. Social platforms such as Instagram, Facebook and WhatsApp increasingly shape purchase decisions through reviews and user-generated content, informing consumers and setting preferences well before purchase.

The Rise of E-retail

Indias e-retail market has scaled significantly, reaching approximately $65 66 Billion in GMV in

2025 and growing at a 19–21% CAGR over the past five years. Over the same five-year period, the shopper base has doubled to around 290 300 million annual active shoppers, while the seller ecosystem has tripled, with a large share emerging from Tier 2+ cities.

Gen Z now accounts for around 40–45% of e-retail shoppers, and Tier 2+ cities contribute nearly 50% of incremental orders.

Despite this scale, penetration is low at around 1.6% of GDP, against 4 4.5% in Indonesia and 13 14% in China, indicating substantial headroom. Shopper penetration stands at around 30% of internet users, well below China at 92% and the United States at 74%. With improving logistics, wider assortment and stronger delivery networks, retailers are increasingly able to serve Tier 2 and Tier 3 markets, widening reach further. The convenience of home delivery, flexible pricing and faster fulfilment is reshaping purchasing behaviour, reinforced by ongoing improvements in logistics infrastructure and expanding digital access.

Quick Commerce: A Structural Shift

A defining structural trend is the rise of quick commerce, now operating across more than 80 cities and growing at an estimated 70 80% CAGR, among the fastest globally. It has scaled to approximately $10 11 Billion in GMV, supported by high population density, lower manpower costs and relatively low online grocery adoption. Underpinning this is a rapidly built network of dark stores, the small neighbourhood fulfilment centres that serve online orders exclusively, which now number around 6,000 6,500 across Indian cities and are improving delivery economics in high-density urban markets. Since its emergence, e-grocery penetration has risen fivefold to around 1.5% of the total grocery market, reaching 6 7% in metro cities. Quick commerce mainly serves convenience-driven household needs, which account for 85 90% of GMV, while increasingly acting as a fulfilment channel for discretionary purchases.

Beauty and Personal Care records relatively high quick commerce penetration around 18% of the categorys online retail GMV flows through quick commerce, the second-highest of any category after grocery, reflecting a growing preference for faster, convenience-led purchasing.

The online retail mix is expected to evolve meaningfully, with quick commerce projected to lift its share of online retail GMV to nearly 25 30% by FY 29-30, even as traditional horizontal e-commerce gradually cedes share. Value commerce platforms are also expected to hold a meaningful presence, supported by rising demand from price-conscious consumers in Tier

2 and Tier 3 markets, where branded products are expected to grow their share within value commerce from around 6% in FY 25-26 to 25% by FY 30P.

Towards Organised and Omnichannel Retail

While traditional e-retail still accounts for over

80% of the market, the wider structure is gradually shifting towards organised retail, with supermarkets and hypermarkets steadily gaining share from unorganised formats. This transition is supported by liberalised foreign direct investment norms, supportive government policy and evolving expectations around branded products and quality assurance. Within the overall split, offline retail accounts for the large majority of sales, while online retail is scaling rapidly, expected to roughly double its share from around 7% of total retail in 2025 to nearly 14% by 2030 as digital access, logistics and fulfilment networks mature. E-retail journeys are becoming more targeted and deterministic, supported by improved personalisation and advertising relevance. Alongside this, the rise of value retail and premiumisation, together with the emergence of direct-to-consumer brands and new-age business models, is reshaping the competitive landscape. Sustainability is also emerging as a priority, with retailers adopting biodegradable, recyclable and reusable packaging, responsibly sourced supply chains and circular-economy practices such as recycling schemes, buy-back programmes and refurbishment to reduce waste and extend product lifecycles.

Rising Internet and Smartphone Penetration

Affordable data and expanding device access continue to bring new consumers online, broadening the addressable market across urban and emerging regions.

Convenience and Personalisation

Home delivery, faster fulfilment and tailored assortments are reshaping expectations, with quick commerce setting new benchmarks for immediacy.

Favourable Demographics

A large, young and digitally native population, with Gen Z increasingly influential, is expanding participation across categories and formats.

Rising Incomes and Discretionary Spending

Growing per-capita income, approaching the $4,000 inflection point for discretionary consumption, is elevating spending intensity.

Omnichannel and New Retail Formats

Integration of physical and digital channels is delivering seamless experiences, blending discovery, replenishment and routine purchase across touchpoints.

Digital Payments Infrastructure

UPI, mobile wallets and seamless checkout have removed friction from online and offline transactions, accelerating formalisation and repeat purchases.

Technology and AI Integration

Data-driven tools, artificial intelligence and generative AI are improving operational efficiency and reshaping discovery as consumer journeys shift from traditional search-and-browse towards more intuitive describe-and-get interactions.

E-commerce Expansion into Tier 2 and Tier 3

Improving logistics and wider product availability are unlocking demand beyond the metros, now the primary source of incremental orders.

Brand Consciousness and Premiumisation

Rising trust in branded products and appetite for elevated formats are supporting the shift towards organised retail and higher-value purchases.

Policy and Conscious Consumption

GST reforms, income tax relief and higher MSPs are supporting demand, while rising awareness drives interest in sustainable, cruelty-free and locally produced products.

Key Growth Enablers in the Retail Industry

Outlook

The outlook for Indias retail sector is positive, supported by strong macroeconomic fundamentals and sustained consumption growth. In the near term, geopolitical conditions in the Middle East are an external risk, mainly affecting freight costs, energy prices and global trade flows. Export-linked pressures are already visible, with Indias exports to key Gulf markets such as the UAE and Saudi Arabia weakening amid regional disruption, and overall exports declining in March 2026. Rising uncertainty across critical maritime routes such as the Strait of Hormuz and the Red Sea has added to freight costs and transit times, pressuring supply chains and working-capital cycles.

These disruptions are amplifying cost pressures across retail-linked sectors dependent on global sourcing, including apparel, footwear, electronics and household goods, feeding gradually into retail pricing and constraining margin flexibility for organised players. Energy price volatility adds a further layer, given its direct bearing on transportation, warehousing and last-mile logistics.

Despite these challenges, the underlying demand outlook is strong. India is strengthening its position as a major global consumption engine, with the sector expected to play a central role in economic expansion. Retail is projected to reach around $ 1.9 Trillion by 2030 at a ~10% CAGR, with online retail nearly doubling its share of the mix. Consumption and discretionary spending have already rebounded, and e-retail reflects this recovery: the market grew 19 21% in 2025, with momentum lifting to 22 24% in the second half and holding into Q1 2026 at 23 25%. E-retail is expected to sustain over

20% CAGR and reach 10–12% of total retail spend by 2030, supported by rising digital adoption, improving logistics and higher spend per shopper as per-capita GDP crosses $4,000. Policy support through GST reforms, income-tax relief, favourable monsoons and higher MSPs should further strengthen consumption, alongside sustained growth in value retail and premiumisation.

Indian FMCG Industry

Indias Fast-Moving Consumer Goods sector entered FY 25-26 on a resilient footing, with growth increasingly led by volumes, premiumisation and a rapidly digitising path to purchase. Spanning food and beverages, personal and home care, and healthcare, FMCG is a cornerstone of both urban and rural consumption and one of the countrys largest contributors to employment and formalisation.

Valued at around $142 Billion in 2025 and growing at a CAGR of roughly 8%, the sector is on track to reach approximately $210 Billion by 2030. It draws strength from favourable demographics, rising incomes, deepening digital penetration and steady formalisation. The Beauty and Personal Care (BPC) segment was valued at around $23 Billion in FY 24-25, and remains the fastest-growing sub-segment of the FMCG market. Growth is being driven by premiumisation and rising demand for ingredient-led, high-efficacy products, with the category projected to reach roughly $40 Billion by 2030 at a CAGR of about 12%. These shifts align closely with Honasa Consumers digital-first, innovation-led strategy, which concentrates on high-growth categories and evolving consumer needs.

A Resilient, Value-led Market

The sectors growth engine has rebalanced. Rural India outpaced urban markets for several consecutive quarters, with rural volume growth of around 8% comfortably ahead of urban markets, supported by favourable harvests, government initiatives and rising incomes. Urban demand, which contributes close to 62% of FMCG revenue, recovered gradually, aided by easing inflation, income-tax relief and improved consumer sentiment. Semi-urban and rural regions now account for roughly half of total rural FMCG spending, narrowing the historical urban rural gap and broadening the base of consumption. Volume growth moderated from the highs of the previous year, but the underlying demand picture held steady, with pricing and premiumisation supporting value growth.

Digital Commerce Reshaping the Sector

Digital commerce has become a defining force. Online FMCG sales, which crossed $6 Billion in FY 24-25, are growing at over 30% a year and are expected to reach around 11% of total FMCG sales by 2030, led by direct-to-consumer models, deeper digital penetration and higher purchase frequency. Within this, quick commerce has emerged as the fastest-scaling channel: FMCG companies have reported sharp increases in sales through the channel, which now handles the majority of e-grocery orders and is driving convenience-led and impulse purchases across metros and larger towns. E-commerce salience is highest in the southern and metropolitan markets, where penetration has reached the mid-to-high teens, and festive-period demand has repeatedly underlined the channels growing importance.

Premiumisation and D2C Disruption

Two structural shifts are reshaping the competitive landscape. Premiumisation is gaining ground, with premium products now accounting for close to a third of FMCG sales as consumers trade up across categories, and, notably, premium consumption is rising fastest in rural markets, where average premium spend has compounded in double digits over the past five years.

In parallel, established players are increasingly buying their way into new capability rather than building it: around two-thirds of FMCG acquisitions between FY 2020-21 and FY 2024-25 involved direct-to-consumer brands. The pace of new launches has also accelerated sharply, up nearly 1.8 times in the year to May 2025, though only a small fraction achieved meaningful penetration, underlining how difficult it has become to build scale in a crowded market. Together, these shifts are pushing established players towards faster innovation, sharper portfolios and deeper engagement with younger, digitally native consumers.

Beauty and Personal Care: The Fastest-growing Sub-segment

Within FMCG, Beauty and Personal Care is the fastest-growing sub-segment. Valued at around USD 23 Billion in FY 2024-25 and growing at roughly 12% a year, it is projected to reach USD 40 Billion by 2030, which would make India the fourth-largest BPC market globally. Premiumisation, ingredient-led formulations, dermatologist-backed positioning and a rapidly digitising, younger consumer base set the pace themes explored in detail in the section that follows.

Key Growth Enablers in the Retail Industry

Strong Demand beyond the Metros

Tier 2, 3 and 4 towns and rural India are now the primary engines of volume growth, supported by rising incomes, better access and the narrowing of the urban rural gap.

Premiumisation and Conscious

Consumption

Consumers are trading up across categories and favouring health- led, sustainable and ingredient- transparent products, lifting value growth.

Economic Stability and Consumer

Confidence

Easing inflation, income-tax relief and stable rural incomes are underpinning demand and supporting a gradual urban recovery.

Resilience of Regional

Manufacturers

Smaller and regional players continue to capture share in emerging categories, keeping the market competitive and locally relevant.

Indian Beauty and Personal Care Industry

Beauty and Personal Care is the fastest-growing sub segment within Indias FMCG landscape. Valued at around $23 Billion in FY 24-25 and growing at roughly

12% a year, it is projected to reach $40 Billion by 2030, which would make India the fourth-largest BPC market globally, behind only the United States, China and Japan. The category has evolved well beyond basic hygiene and grooming to encompass lifestyle, wellness and self-care, with purchases increasingly tied to personal identity, self-expression and aspiration Growth is underpinned by rising disposable incomes, deepening urbanisation and higher discretionary spending across metros and emerging cities, reinforced by a young, digitally native and globally aware consumer base. Greater awareness of the drawbacks of chemical-led formulations has also lifted demand for natural, organic and ingredient-transparent products, with a large majority of consumers now treating clean formulations and proven efficacy as decisive purchase criteria.

Source: Redseer, Indias USD Bn Beauty & Personal Care Market (_ __).

Global Precedents: Where Digital Shifts Have Reshaped Beauty Markets

Indias beauty market is following a path that has already played out in several larger markets. Across the United States, China and Indonesia, three forces, the rise of e-commerce, the shift of media to digital platforms and the emergence of creator-led social proof, converged over the past six years. In each case, as e-commerce took a materially larger share of total retail, the beneficiaries were not the incumbent multinationals but a new generation of home-grown, digital-first brands.

Market	E-commerce share of retail	Share gained by insurgent brands	Leading home-grown brands
United States	11% (2019) 16% (2025)	+2,200 bps	Rare Beauty, The Ordinary, e.l.f.
China	35% (2019) 47% (2025)	+1,700 bps	Proya, Winona, Perfect Diary
Indonesia	13% (2019) 32% (2025)	+1,500 bps	Wardah, Scarlett, Somethinc
India	7% (2025) 14% (2030)	The Opportunity Ahead?

Sources: Redseer; Nielsen

The pattern is consistent. Digital channels lowered the cost of reaching a national audience, removing the distribution moat that had long protected scale players; digital media let brands speak to specific consumer segments rather than broadcast to all; and creator-led endorsement supplied the credibility that once required years of mass media investment.

Brands built natively for this environment, fast on innovation, fluent in content and close to the consumer compounded share quickly, typically in categories where they addressed a need the incumbents had overlooked.

India sits earlier on this curve. E-commerce accounts for around 7% of retail today and is expected to roughly

Digital Transformation and E-commerce

Online channels, quick commerce and D2C models are expanding reach and purchase frequency, reshaping distribution and the path to purchase.

Smart Distribution and Omnichannel Integration

Salesforce automation, distributor- management systems and integrated online–offline networks are improving availability, data flow and efficiency.

Policy Support and Infrastructure Production-Linked Incentive schemes, GST reforms and rural infrastructure investment are strengthening manufacturing and market access

Competition and D2C Disruption

Digital-first brands are accelerating innovation and forcing incumbents to sharpen portfolios, pricing and consumer engagement.

double its share by the start of the next decade, which means the structural shift that reshaped competitive positions in these markets is still in its early stages here. The sections that follow set out the forces already reshaping Indian beauty, premiumisation and the shift to efficacy, the rise of Gen Z and Gen Alpha, and the rapid scaling of digital and quick commerce, each of which will determine how that shift plays out and who captures the value it creates.

Premiumisation and the Shift to Efficacy

Premiumisation is the categorys defining trend.

Indian consumers are increasingly gravitating towards solution-orientated, high-efficacy and sensorial products, favouring brands that offer clean formulations, ingredient transparency and an elevated experience. A clear shift from transactional to experiential consumption is underway, driven by greater awareness of global beauty standards, the influence of social media and a rising desire for personalisation. This has given rise to new subcategories such as derma-cosmetics, hybrid skincare-makeup and wellness-infused solutions. Skincare and suncare lead the category, reflecting heightened awareness of pollution and UV exposure, while natural and organic positioning commands a substantial share of demand. Science-backed and dermatologist-led propositions are moving to the centre of the market, and the luxury segment is expanding steadily; its share is expected to rise from around 11% to 13% between 2025 and 2029 as Indian consumer look for premium products. Demand for Ingredient-led formulations is building further on Indias traditional-wellness heritage, adding a distinctive dimension to premiumisation.

Gen Z and Gen Alpha at the Centre

Millennials and Gen Z together account for over half of Indias population and are now the dominant BPC consumer cohorts, digitally native, globally aware and far more experimental than earlier generations. Their behaviour is shaped by a blend of aspiration, values and convenience: they seek brands that look good, work well and stand for something meaningful. Gen Z are expected to contribute nearly 50% of BPC spending by 2030, supported by rising womens workforce participation and growing discretionary incomes. Consumption is becoming more individual-centric, with members of the same household developing distinct product preferences, exemplified by the rapid adoption of suncare.

Purchase decisions are also increasingly researched rather than habitual, with around 85% of consumers comparing products across brands before buying, placing a premium on ingredient transparency, credible reviews and content-led discovery.

Six triggers increasingly shape beauty consumption among these cohorts:

Fast-paced Trends

Unique formats and Instagrammable packaging turn products into must-have items with short discovery-to- purchase cycles.

Story-worthy Brands

Compelling narratives, from inclusivity to longevity and efficacy, resonate deeply and drive loyalty.

Personalisation and Awareness

Individual-centric needs and rising ingredient literacy are expanding usage occasions and basket sizes.

Status Signalling

Consumers are willing to pay a premium for brands that offer exclusivity and social currency.

Peer Recommendations

The rise of micro-influencers has made peer-driven, credible endorsements a trusted source of inspiration.

Aspiration-led Premiumisation

Consumers trade up for quality, efficacy and sensorial experience, with claims and transparency central to choice.

Digital and Quick Commerce as Growth Engines

Digital channels are the categorys primary growth engine. Online BPC has expanded rapidly, its share of category spend rising over recent years, and is forecast to exceed one-third of total category sales by 2030. Availability across online platforms, general trade, modern retail and D2C is improving accessibility across geographies, while quick commerce has scaled from around 2% of online BPC demand in 2022 to roughly 18% in 2025 in terms of GMV, reshaping expectations around speed and convenience and establishing beauty as the second-largest quick commerce category after grocery. Social platforms such as YouTube and Instagram drive discovery and education, with a marked and sustained preference for regional-language content, and D2C models are gaining particular traction for considered, non-daily purchases.

Emerging Frontiers: Mens Personal Care, Oral Care and Actives

Category expansion is opening new frontiers. Men are moving well beyond basic hygiene into comprehensive personal care, adopting cleansers, moisturisers, serums and masks that target specific concerns such as acne, ageing and sun protection. Oral care is gaining salience, with demand for natural and organic toothpastes, mouthwashes and whitening solutions rising as consumers become better educated through digital channels. Across these frontiers, premiumisation and science-led expectations are accelerating innovation in multi-benefit skincare. Rising demand for ingredient-first, high-efficacy products is pushing R&D teams towards advanced formulation science and

AI-enabled tools, allowing them to develop and launch products faster without compromising on efficacy.

A Consumer in Transition

The Indian BPC consumer has changed markedly across every dimension of the purchase journey, from who buys to what they value to how they discover and where they shop.

	Traditional Indian Market	Current Indian Market
Gender Roles	A sharp divide between mens and womens products: around 20% of men used fragrances and deodorants versus 7% of women, and 20% of women used cosmetics versus 7% of men.	The gap is narrowing, with adoption rising across categories and brands launching dedicated mens grooming ranges.
Product Preference	Demand centred on care, hair and skincare, with a marked preference for natural and organic formulations.	Premium brands are rising; the luxury share is expected to grow from 11% to 13% (2025 2029). Digital platforms lead.
Information Sources	Awareness was dominated by TV, family and friends, with media communication largely in Hindi (54%) and English (16%).	YouTube and Instagram influencers drive awareness, with a strong preference for regional- language content.
Shopping Channels	Purchases spread across malls ( 40%) and local shops ( 37%) alongside early online adoption.	A decisive shift to modern trade and online, with quick-commerce gaining traction.
Consumer Engagement	Limited pre-purchase interaction and minimal personalisation.	High engagement via AI skin diagnostics, virtual consultations and personalised recommendations – around 83% of consumers are willing to use such services.

Business Performance Review

FY 25-26 was the year we sharpened the business around the categories and partitions where we hold a clear right to win, brought our flagship brand back to growth, rebuilt our offline engine on a more direct and durable foundation, and scaled our fastest-growing brand in the actives space while strengthening its profitability. What emerged was not a single turning point but four connected stories, each following the same pattern: disciplined reinvention translating into visible resilience. Together they describe a company that has become more focused and better positioned for the decade ahead.

Focused Approach to	Hero-led Focus and Direct Reach
Category Leadership	Drive Mamaearths Return to Growth
Restructured Offline Distribution to Power the Next Decade of Growth	The Derma Co: Compounding aCategory Leader

Story 1

Focused Approach to Category Leadership

Indias beauty and personal care market is vast and fragmented, more than a hundred distinct partitions spread across some twenty categories, each defined by a specific consumer concern, ingredient and price point. In FY 25-26, we made a decisive choice about where to compete, moving from broad participation towards the partitions where we hold a clear right to win. Rather than spreading investment thinly, we directed close to 90% of our brand investment towards seven focus categories: face cleansers, shampoos, sunscreens, moisturisers, face serums, baby care and lipsticks. The enabler was a partition-led way of operating: we distinguished clearly between partitions where we already lead, such as Face Cleanser ? Glow and Shampoo ? Hair Fall, and those where we are actively building share, such as Shampoo ? Dandruff, letting us allocate resources with precision and measure progress where category battles are genuinely won. Anchored by hero products that consistently outperformed their parent brands, our focus categories grew around 30% over the year and now contribute close to 80% of revenue. For Honasa, focus is not a limitation but the discipline that turns finite resources into category leadership. For more details, refer to the Stories of the Year section on page 28.

Story 2

Hero-led Focus and Direct Reach Drive Mamaearths Return toGrowth

Mamaearth, the first brand in our House of Brands, returned to growth in FY 25-26 after a period of transition, rebuilt on clearer foundations. The renewal rested on two deliberate choices. First, we concentrated the brand on hero products and focus categories: face cleansers, shampoos, sunscreens, moisturisers, lipsticks and baby care, rather than a broad range. Specific products consistently outgrew the brand overall: Rice Face Wash and Ubtan Face Wash in the glow partition, and Rosemary and Onion shampoo variants in the hair fall partition. Mamaearth Rice Face Wash joined Ubtan and Vitamin C in the 100 Crores net sales club. Second, we stabilised general trade distribution through a more direct, distributor-led model, steadying retail execution and improving channel availability. Consumer equity held firm through the transition, with e-commerce, quick commerce and modern trade continuing to grow as the engine beneath was rebuilt.

The result was a return to teens growth and renewed value-share gains in core categories, reinforced by independent blind testing, where its gel face-cleanser and shampoo chassis scored well ahead of leading international brands. Mamaearths recovery was one of our biggest wins for the year. Consumer love strengthened across every metric tracked. On Kantars offline brand tracker, Mamaearth posted strong YoY gains in Brand Power, taking it to its highest level in three years. This translated into market presence: NielsenIQ data showed a 6.5% value market share in face cleansers, with Share Among Handlers (SAH), its share within stocked outlets, at 10.6%, showing that consumers chose Mamaearth well ahead of its overall market presence wherever it reached the shelf. In shampoo, a 2.3% market share sat alongside a 4.5% SAH, reinforcing the same story.

For more details, refer to the Stories of the Year section on page 30.

Story 3

Restructured Offline Distribution to Power the Next Decade ofGrowth

Offline distribution is the muscle that will power our next decade of growth, and in FY 25-26 we stabilised it. The core change was structural: we moved our general trade network from a super-stockist-led model to a more direct, distributor-led one, so that direct distribution now contributes close to 80% of general trade billing, up from roughly a quarter two years earlier. This shift was enabled by tier-1 distributors with genuine reach, a sharper focus on secondary sales and coverage rather than primary billing alone, and a technology layer of distributor-management and sales-force-automation systems that brought real-time, SKU-level inventory visibility and AI-based guidance for the field force. The effect was a healthier, more transparent operation: distributor inventory settled to around 30 days, and our direct coverage through distributors expanded to ~1.2 Lakh outlets billed directly, taking total reach, direct and indirect combined, to more than 2.7 Lakhs FMCG outlets. General trade responded, returning to secondary-sales growth above 20% YoY. In modern trade, consistent brand strength and excellent execution drove very strong offtakes, growing by 25%+ YoY. Because these channels carry favourable economics, scaling them strengthened both the reach and the profitability of the overall business.

For more details, refer to the Stories of the Year section on page 32.

Story 4

The Derma Co: Compounding a Category Leader

The Derma Co was built on a conviction that Indian consumers were ready for skincare grounded in ingredients and evidence rather than promises, a belief that made it an early leader in active-led skincare. In FY 25-26, that leadership widened into genuine scale. Growth through the year was rapid and broad-based: alongside its founding strengths in sunscreen and serums, where it held its position as Indias No. 1 sunscreen brand as per Euromonitor, the brand built a third 100 Crores-plus category in face cleansers and extended its active-led approach into haircare. The enablers were deliberate category and channel expansion, pushing beyond its online heartland with a measured offline rollout that reached a 100 Crores annual run rate offline, complementing its long-held online leadership. Crucially, this scale did not come at the cost of economics: the brand sustained a double-digit EBITDA profile even as revenue reached a 750 Crores-plus run rate, proving that rapid growth and disciplined profitability can advance together. The Derma Co is our focus thesis made real, a brand that chose its categories with conviction, scaled them quickly and broadly, and turned profitable while doing so. For more details, refer to the Stories of the Year section on page 34.

Winning in Our Chosen Categories

Our seven focus categories: face cleansers, shampoos, sunscreens, moisturisers, face serums, baby care and lipsticks now contribute over 80% of our revenue, up around 500 basis points YoY. Within each, we operate at the level of partitions: distinct pockets of demand defined by a specific consumer concern such as Face Cleanser ? Glow or Shampoo ? Hair Fall. This focus-category ? partition approach lets us concentrate our brands and hero products where we hold a genuine right to win so that in every category we carry a clear position today and a defined ambition for the years ahead.

For more details, refer to Story 01 on page 29

Face Cleansers

Industry Size: 14,000 15,000 Crores

Industry CAGR: 6–8%

Face cleansers are among our strongest categories, where we hold a healthy online share and are building towards a top-three national position. NielsenIQ places our all-India urban value share at 6.5% and our share among handling outlets at 10.6% the distance between the two measures the headroom that opens up as our distribution deepens. The category is anchored by Mamaearths Ubtan Face Wash and Rice Face Wash in the glow partition, where Rice Face Wash crossed 120 crore during the year to become the clearest break-out product in our portfolio, while Tea Tree Face Wash gives us a position in oil control that we are still building. The Derma Cos 2% Sali-Cinamide Anti-Acne Face Wash leads in acne partition and has made face cleansers The Derma Cos third-largest category. The Kantar Brand Health Track ranked Mamaearth first online and third offline in face cleansers through the year. The category itself is premiumising steadily: the masstige segment has lifted its share of offline urban facewash value from around 24% to close to 39% over three years, turning a basic hygiene step into a considered skincare ritual.

Sunscreens

Industry Size: 4,500 5,500 Crores

Industry CAGR: 15%+

Sunscreens are among our largest and fastest-growing categories, reflecting rising awareness of daily, preventive protection. We hold a leading online position, led by The Derma Co, whose 1% Hyaluronic Sunscreen Aqua Gel and its companion actives span gel-based textures suited to Indian conditions. During the year we widened the range across skin types, with dedicated variants for oily, dry and normal skin, so that a single proposition now serves distinct consumer needs. Aqualogica extended the category with an in vivo tested formulation carrying Indias first Anti-Pollution Factor, and the year also marked our entry into mens skincare through Reginald Men, a brand strong in sunscreen-led grooming, timed to a segment at a clear inflection, with search interest in mens skincare roughly doubling over the past four years. Sun protection is moving from occasional use to daily essential: sun care accounts for just over 6% of Indian skincare against close to 11% in the United States and Korea.

Estimates based on GMV

Moisturisers

Industry Size: 5,000 6,000 Crores

Industry CAGR: 15%+

Moisturisers are gaining relevance as routines shift towards lightweight, hydration-led formats. We have built a full portfolio across the category and are working towards a top-five national position, Mamaearth through the Rice Oil-free

Face Moisturiser and Beetroot Hydraful Light Moisturising Cream; The Derma Co through the

5% Nia-Ceramide Daily Hydrating Moisturiser; and Aqualogica through the Illuminate+ Hydra Gel Moisturiser. The format shift is the opportunity: lightweight moisturisers are growing around three times faster than legacy creams, which were built for colder conditions, and gel and oil-free textures designed for Indian weather are where the category is expanding.

Face Serums

Industry Size: 3,500 4,500 Crores

Industry CAGR: 20%+

Face serums are one of our fastest-growing categories. The category is predominantly online, where we lead, and we are focused on building national leadership from that base. The Derma Co leads with the 2% Kojic Acid Face Serum, while Dr Sheths extends into prestige actives through formulations such as the Argireline

& Copper Peptide BTox Serum. Offline, we are expanding the category through The Derma Cos best-selling serums, which travel well into premium beauty counters and chemist outlets. Serumisation is reshaping Indian skincare: serums account for around 7% of skincare here against 20% in Korea, with large headroom to grow as consumers move towards products that solve a specific problem.

Shampoos

Industry Size: 10,000 13,000 Crores

Industry CAGR: 4–6%

Haircare holds an important place in the portfolio, driven by demand for problem-solution formulations and specialised hair wellness. We are building across the partitions that carry the most weight in the category, hair fall, where

Mamaearths Rosemary and Onion ranges already give us a position, and anti-dandruff, a large partition we are actively building. BBLUNT strengthens the premium end through its Intense

Moisture and Hair Fall Control ranges, and The Derma Co extends its active-led approach with the Peptide-Stem Cell Hair Fall Control and Triple Actives Anti-Dandruff shampoos. In offline, NielsenIQ places our all-India urban value share at 2.3% and our share among handlers at 4.5%. The category is premiumising around targeted solutions.

Lipsticks

Industry Size: 3,500 4,000 Crores

Industry CAGR: 10%+

Colour cosmetics carry healthy momentum with younger consumers, and we are steadily expanding our presence, led by Stazes Gloss Lock 2-in-1 Liquid Lipstick, Indias first transfer-proof gloss, lightweight and long-wearing, and Mamaearths Luxe Matte Long Stay Lipstick. The category is being reshaped by earlier adoption and more frequent use as more women enter the workforce; the online share is expected to account for half the category in future.

Baby Care

Industry Size: 2,000-2,500 Crores

(excluding diapers and wipes) Industry CAGR: 7%+

Baby care holds an important place within the Mamaearth portfolio, which enjoys strong brand equity and leadership in the online segment and aims to be among the top three players nationally. Building on its positioning around safe, gentle care, Mamaearth launched the Dermasoft Baby Range, developed under paediatric-dermatology guidance, alongside established bestsellers such as the Milky Soft Head to Toe Wash. Parents are increasingly selecting on ingredient transparency and dermatological validation rather than familiarity alone, which favours brands built on demonstrable safety.

Industry Estimates based on GMV

The Capabilities that Compound

Winning in these categories rests on a set of capabilities we have built deliberately over the years and, in FY 25-26, sharpened further: an omnichannel distribution engine now anchored on a more direct foundation, an innovation and R&D function turning consumer insight into differentiated formulations, and a marketing playbook that builds brands with precision. This year we doubled down on each, refining rather than rebuilding, to make these strengths compound into a durable advantage.

Omnichannel Distribution Network

Honasa Consumer Limited operates through an integrated omnichannel distribution framework, designed to ensure product availability across both digital and physical touchpoints. This approach supports consistent consumer engagement and improves brand accessibility across India. By balancing the extensive reach of online platforms with a structurally advanced offline network, the Company is positioned to capture demand across diverse purchase occasions.

98%

Pincodes serviced in FY26

Online Channels

The online distribution engine is a primary driver of new brand incubation and rapid category expansion. Our digital ecosystem, spanning brand-owned websites and leading e-commerce marketplaces, lets the Company reach over 98% of Indias pin codes and contributes 68% of overall revenue. During the year, the e-commerce channel held its momentum, delivering teens growth. Having identified quick commerce as a high-velocity fulfilment channel early, Honasa has established a significant first-mover advantage. This channel now contributes approximately 10% of total revenue and is the Companys fastest-growing channel.

Offline Channels

Offline is the muscle that will power Honasas next decade of growth, and FY 25-26 was the year it matured into a clear enabler for the business, with strong progress across every sub-channel. Our physical reach expanded to ~1.2 lakh outlets billed directly and a total reach of over 2,70,000 FMCG retail outlets, a 16%+ YoY increase in distribution penetration, with weighted distribution in the face cleanser and shampoo categories reaching around 50% as per

NielsenIQ. General trade returned to secondary-sales growth of over 20%+, restoring momentum to the network. Modern trade presence grew to more than 10,000 stores, delivering offtake growth of over 25%. Complementing these, the Group operates 140+ Exclusive Brand Outlets (EBOs), which serve as immersive touchpoints that deepen brand equity and offer personalised consumer consultations. Underpinning these achievements was a structural transition in general trade, a shift from a super-stockist-led model to a more direct, distributor-led one. Direct distribution now accounts for close to 80% of general trade billing, up from roughly a third two years earlier, with distributor inventory settling to around 30 days and easing working capital across the network. A technology layer of distributor-management and sales-force-automation systems brought real-time, SKU-level visibility and AI-based guidance for the field force. Because these channels carry favourable unit economics, scaling them on this steadier base lifted both the reach and the profitability of the overall business, turning one of our most demanding choices into a clear source of resilience.

Innovation and R&D

Innovation is how we win our chosen partitions. In FY 25-26 we held a clear bar, superiority, not parity, building formulations designed to beat leading global benchmarks in independent blind tests rather than merely match them. Development stayed tightly aligned to our focus categories and their partitions, concentrating novel actives and next-generation delivery systems where consumers feel the difference most. This edge is powered by our proprietary AI tools, FormulaOS, our formulation-intelligence engine, and Tesseract, our consumer-simulation engine, complemented by UCR and Prophet, which together turn a decade of consumer and formulation data into sharper decisions on what to build, and products engineered to perform better on the skin at a better cost. The result is a steady run of market-beating products, independently verified by agencies such as Twentify, across Categories.

For more details, refer to Innovation Capability section on page 38

6

Independent blind-test wins against leading global benchmarks in FY 25-26

Brand Building, Engagement and Marketing

We build brands that form deep, lasting connections with Indian consumers by aligning with their aspirations and needs. Our marketing framework prioritises long-term impact through data-driven precision, contextually relevant communication and an integrated omnichannel approach.

Aspirational and Personalised Communication

Our communication has moved towards more aspirational, enhancement-led messaging, tuned to engage Gen Z and Gen Alpha audiences.

Media and Content Strategy

Our media strategy ensures that we sustain visibility across digital and physical touchpoints.

Data-led Targeting — Advanced media-mix modelling helps us identify emerging trends early and concentrate close to 90% of investment behind our seven focus categories, which grew ~30% YoY, ahead of the broader business.

In-house Content Engine — Our internal creative teams produce platform-specific, vernacular content tuned to regional preferences, publishing 7,000+ pieces a month.

Credible Influencer Ecosystem and Strategic Partnerships

Influencer-led education remains central to how we build awareness and trust through peer-driven storytelling.

Scaling Collaborations — We executed approximately 4,000+ influencer collaborations during the year to build awareness and credibility.

Channel-specific Activations — Partnerships with platforms such as Zepto extended our reach into high-intent, convenience-led purchase moments.

Operational Overview

Supply Chain and Logistics

The Companys integrated supply chain remains central to its operational efficiency and growth. It operates across a multi-city network of 12 warehouses, both in-house and through strategic third-party partners, ensuring smooth fulfilment across consumers, distributors, modern trade, e-commerce and quick commerce platforms, and traditional retail nationwide. A central warehouse consolidates inventory and optimises dispatch, enhancing responsiveness across channels, while an integrated ERP and Order Management System streamline procurement and distribution and provide end-to-end inventory visibility. A major priority during FY 25-26 was stabilising the distribution backbone through direct distributor partnerships: by removing super-stockist layers from the General Trade model, the Company improved secondary-sales visibility and strengthened product availability across both urban and emerging markets. The supply chain also remained adaptive to shifting channel trends, with quick commerce now contributing about 10% of total revenue. To manage risks from global sourcing and input-cost volatility arising from Middle East tensions, the Company deepened its focus on local sourcing and supply-chain agility. Underpinning these efforts, advanced data science and machine-learning models continued to refine demand forecasting and replenishment, enabling the Company to adapt quickly to market changes and to meet evolving retail demands through its omni-channel distribution capability.

Technology

Technology is a foundation of the growth strategy, helping the Company use data to make business decisions and connect with consumers. In FY 25-26, the Company focused on using analytical tools to improve marketing and operations. The digital infrastructure connects R&D, supply chain and the consumer purchase journey. Key initiatives include using data science to identify new beauty trends, such as the rising demand for mens skincare. The Company also uses consumer tools such as AI-based skin diagnostics and virtual consultations to improve engagement, with 83% of consumers willing to use such services. In addition, Distributor Management Systems (DMS) and Sales Force Automation (SFA) let the business track general trade performance and distributor productivity in real time.

People and Culture

People are the engine behind the reinvention the Company drives. A team of over 3,400 brings together capabilities across brand-building, innovation, distribution and technology, working on a shared set of values, a builders mindset, consumer obsession, and a bias for speed and ownership. Through FY 25-26, the focus was on deepening capability rather than adding headcount: sharper role clarity, stronger leadership benches and structured learning to keep skills current in a fast-moving category. Diversity and internal mobility are central to how the Company builds its teams, supported by a young, entrepreneurial culture that gives people the room to take decisions and the accountability to see them through. This combination of seasoned leadership and first-principles thinking is what allows a House of Brands to move quickly while staying disciplined.

Governance

Honasa is built on ethical governance, with a seasoned Board of Directors and transparent oversight. Sound governance is essential to maintaining stakeholder confidence and supporting expansion. The Board has six members, 50% of them independent, ensuring balanced decision-making. Dedicated committees oversee key functions, such as the Audit Committee, which reviews financial reporting and internal controls every quarter. The Risk Management Committee tracks the risk framework and evaluates macroeconomic and industry risks. The Company works with a Big Four firm for statutory audits to maintain financial integrity.

Risk Management

Honasa uses a risk-management framework to identify and manage threats to business objectives. Middle

East conflicts have driven volatility in energy prices and logistics, and the Company manages this geopolitical and supply chain risk through sourcing diversification. The BPC sector is highly competitive, and the Company addresses this by focusing 90% of its investment on core categories. The Company also takes a disciplined approach to legal risks. A significant legal matter in the UAE was resolved in February 2026, with a previous award reduced from approximately AED 25 Million to AED 1.7 million.

ESG: Beauty with Purpose

Sustainability and social responsibility are part of our core values, guiding product development and community support. The Company is plastic-positive, recycling more plastic than it uses, with over 14,700 tonnes recycled so far. On its ninth anniversary,

Mamaearth launched the Goodness in the Air initiative to address air pollution in the Delhi-NCR region, deploying anti-smog guns across the area to help reduce particulate matter and improve air quality for residents. The initiative extends the brands broader purpose-led philosophy and complements its ongoing Plant Goodness programme. While the smog guns provided immediate intervention during peak pollution periods, the brand keeps its focus on long-term environmental health, having facilitated the plantation of over 11,00,000 trees to date. Across the brands, the Company drives social impact. The Derma Cos Young Scientists initiative provided practical science education to over 48,000 students. BBLUNTs Shine Academy has certified more than 18,000 women in hair styling to help them achieve financial independence. Aqualogicas Fresh Water for All campaign helped 1,500 rural households gain access to clean drinking water, while Dr Sheths Healthy India has completed over 48,500 health check-ups for underserved communities.

Financial Overview

FY 25-26 was a year of profitable growth, with the reinvention across brands and channels translating into stronger financial outcomes. Revenue from operations grew 19.9% to 2,4785 Million on a like-for-like basis1 led by the return to growth at Mamaearth, , the scaling of The Derma Co. to a 7,500 Million-plus annual revenue run rate, and the shift towards focus categories and hero products. Gross profit rose to 1,7641 Million, with gross margin of 71.2% on a like-for-like basis, aided by premiumisation and a favourable portfolio mix.

Operating leverage was the clearest signal of the turnaround: EBITDA increased over 237% to 2312 Million, while profit after tax rose over 175% to 2002 Million, taking the net margin to 8.1%. The Company generated 1,340 Million of cash from the business and continued to operate on a negative working-capital cycle.

Internal Controls and Their Adequacy

Honasa maintains an internal control framework commensurate with the size, scale and nature of its operations, designed to safeguard assets, prevent and detect fraud and error, ensure the accuracy and completeness of accounting records, and support the timely preparation of reliable financial information. Financial and operational processes run on an integrated ERP and Order Management System, complemented by Distributor Management and Sales Force Automation systems that give real-time, SKU-level visibility across the distribution network.

Internal financial controls over financial reporting are documented, periodically tested and reviewed for design and operating effectiveness. The Audit Committee reviews the financial reporting process, the adequacy of internal controls and the findings of the auditors each quarter, and statutory audits are conducted by a Big Four firm. Based on these reviews, the Board considers the Companys internal controls adequate and operating effectively for the year under review.

Cautionary Statement

This report contains forward-looking statements on the Companys objectives, projections, estimates and expectations. These statements are based on assumptions and information currently available to management and are subject to risks and uncertainties, including economic and geopolitical conditions, commodity and energy prices, demand patterns, competitive dynamics, and regulatory and tax developments that could cause actual results to differ materially from those expressed or implied.

Readers are cautioned not to place undue reliance on these statements. The Company undertakes no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise.