Jagatjit Industries Ltd Management Discussions

Economic Overview

The global economy during FY 2025-26 remained resilient despite continued geopolitical uncertainties, supply chain realignments, fluctuating commodity prices and evolving trade policies across major economies. While inflationary pressures moderated in several developed markets, growth remained uneven across regions owing to higher borrowing costs and trade-related uncertainties. Emerging economies continued to drive global economic activity, supported by strong domestic consumption and investment-led growth.

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

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

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

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

India continued to be among the fastest-growing major economies, supported by robust domestic demand, government-led infrastructure spending, a favourable monsoon, and continued policy reforms. The countrys economic fundamentals remained strong with sustained investments in manufacturing, services, renewable energy and digital infrastructure. The governments continued focus on ethanol blending, energy security and rural development created significant opportunities for sectors linked to agriculture, food processing and distillation.

On the external front, India advanced its trade engagement through agreements with key partners including the United Kingdom, the United States and the European Union, aimed at enhancing market access and strengthening trade linkages. These agreements are at various stages of engagement. In particular, India-UK FTA was a landmark one, aimed at reducing tariffs, expanding market access

and deepening economic cooperation.

Looking ahead, Indias long-term growth prospects remain favourable, supported by demographic advantages, urbanisation, increased consumer spending, and a strong policy push towards sustainable and energy-efficient industries. While external uncertainties and inflationary pressures warrant continued vigilance, Indias strong macroeconomic fundamentals position it well to sustain long term growth.

Industry Overview

The global alcoholic beverages (AlcoBev) industry is witnessing steady and resilient growth, underpinned by evolving consumer behaviour. As outlined in the IWSR Beverage Alcohol Drivers 2026 report, growth opportunities continue to be evident across categories and channels. Consumer engagement with on-premise occasions remains relatively robust across key markets, reinforcing the relevance of bars, restaurants and social venues as important touchpoints for brand discovery, trial and premium experiences.

The Indian AlcoBev industry continues to offer growth opportunities, supported by favourable demographics, rising disposable incomes, urbanisation and evolving consumer preferences. While whisky continues to dominate industry volumes, categories such as gin and vodka are also seeing increasing acceptance, particularly within premium and urban segments.

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

The India ethanol market size was valued at USD 3.43 Billion in 2025 and is projected to reach USD 11.78 Billion by 2034, exhibiting a CAGR of 13.95% during the forecast period 20262034. The Ethanol Blending Programme (EBP), the E20 fuel mandate, the National Biofuel Policy, and rising sugar surplus are powering India ethanol market growth. Bio-ethanol leads with 87.6% share in 2025, while denatured grades represent 81.3% of demand. North India dominates regionally with 31.5% share in 2025.

Looking ahead, the Indian alcoholic beverages market is expected to maintain steady long-term growth through 2035, supported by favourable demographic and socio-economic trends, rising consumption capacity driven by younger population, rising incomes, normalisation of alcohol, premiumisation, and fast-growing repertoire, and the desire for experimentation, supported by continued innovation across product categories. However, the market continues to operate within a complex regulatory environment characterised by state-level variations in taxation, licensing and retail policies, which will also remain a key factor influencing industry structure and future growth.

Bio-ethanol dominates with an 87.6% share in 2025, drawn from sugarcane molasses, surplus sugar, damaged grains, and maize. Synthetic ethanol retains 12.4%, mainly serving industrial and pharmaceutical applications. Denatured ethanol commands 81.3% share, driven by fuel-blending offtake by oil marketing companies (OMCs), while undenatured grades support beverage and laboratory uses.

North India leads regionally at 31.5% share in 2025, followed by West India at 27.2%, South India at 23.6%, and East India at 17.7%. The India ethanol market outlook remains strongly positive as E20 fuel rolls out nationally, 2G bio-ethanol commercializes, and flex- fuel vehicle adoption accelerates. [Source : https:// www.imarcaroup.com/india-ethanol-market ]

The India Extra Neutral Alcohol (ENA) market size was valued at INR 1 09.0 Billion in 2025 and is projected to reach INR 147.7 Billion by 2034, exhibiting a CAGR of 3.33% during the forecast period 20262034. The India ENA market growth is propelled by rising IMFL and premium spirits consumption, steady pharmaceutical and flavour-fragrance demand, surplus sugarcane availability, and supportive policies under Indias Ethanol Blending Programme. Alcoholic beverages dominate at 62.8% share in 2025, while Punjab leads state-level production at 18.7% and Andhra Pradesh & Telangana leads consumption at 17.9%. [Source: https:// www.imarcgroup.com/extra-neutral-alcohol-market-india ]

Business Overview

Jagatjit Industries Limited [Jagatjit or the Company), established in 1944, in the State of Punjab is one of Indias prominent integrated alcoholic beverages companies with a rich heritage spanning more than eight decades.

Building on a strong foundation of more than eight decades, Jagatjits unwavering commitment to quality and local craftsmanship has resulted in remarkable achievements and delighted millions of customers. Its business comprises of manufacturing and sale of, Indian Made Foreign Liquor (IMFL), Country Liquor (CL), Ethanol, Extra Neutral Alcohol (ENA), Cereal Extract (MEX) and Malt Spirit etc. The Company has a rich IMFL product portfolio including Whiskies (Blended with Scotch), Gin, Rum, Brandy and Vodka.

With the commencement of commercial production at its 200 KLPD grain-based ethanol plant, the Company is well-positioned to drive significant growth in both revenue and profitability. While remaining firmly committed to its core Indian Made Foreign Liquor (IMFL) and Country Liquor (CL) businesses, the Company is strategically expanding its presence across new domestic markets and international geographies to unlock additional growth opportunities. Simultaneously, continued investments in the premiumization of its IMFL portfolio are enhancing brand equity and strengthening its competitive position in higher-value segments. Collectively, these strategic initiatives are expected to create longterm value, capitalize on emerging market opportunities, and support the Companys sustainable growth trajectory.

Operational Overview

A) Liquor

The Companys core business is focused on the manufacturing, distribution, and sale of Indian Made Foreign Liquor (IMFL) brands, offering superior quality products at accessible price points. During the Financial Year 2025-26, the Company sold 3.43 million cases of IMFL, reflecting its strong market presence and the continued trust of consumers. In addition, the Company operates country liquor units in Punjab and Rajasthan, recording sales volumes of approximately 1.85 million cases during the year. The Company also continues to leverage its Extra Neutral Alcohol (ENA) production capacity to meet the growing demand from both internal operations and third-party customers, thereby enhancing operational efficiency and supporting revenue growth.

B) Ethanol

During the year the Company started commercial production at its 200 KLPD grain-based ethanol plant. The Ethanol Plant is a cornerstone of Jagatjits growth strategy, aligning with Indias increasing focus on green energy and the ethanol blending program.

C) Cereal Extract and Malt Spirit

The Company produces Cereal Extracts for its own requirements and also for sale in open market. The Company has also increased production and sales of Malt Spirit, the demand for which is growing rapidly owing to the exponential growth of the Indian Malt Spirit market.

D) International Brand Portfolio

Jagatjits international IMFL portfolio caters to a diverse consumer base across multiple price segments. In line with its strategy to strengthen its global presence, the Company continues to introduce new blends, enhance product packaging, and expand its geographic reach. Backed by a strong portfolio, growing market presence, and focused brandbuilding initiatives, Jagatjit is well-positioned to increase its share in overseas markets and drive sustainable growth in its export business over the coming years.

E) Others

Jagatjit owns a prime commercial property at Ashoka Estate, Connaught Place, New Delhi, comprising two floors with an area of approximately 23,000 sq. ft., which is currently leased on a long-term basis.

During FY 2025-26, the Company successfully monetized its Gurugram property, comprising approximately 200,000 sq. ft. of built-up area spread across 4 acres of land. The proceeds from the sale were utilized towards the partial prepayment of the term loan availed from IndusInd Bank, resulting in a significant reduction in the Companys debt obligations, strengthening its financial position and lowering finance costs.

Financial Review

During FY 2025-26, Jagatjits total income (including income from services and other sources) stood at 475.85 Crores, as compared to 670.34 Crores registering a decline 29.01 % with the previous year.

Jagatjits beverages segment clocked gross revenue of [net of excise] 205.07 Crores, as compared to 373.80 Crores during the previous year, Its food segment clocked revenue of 17.25 Crores, as compared to 104.58 Crores during the previous year and New Ethanol Division has clocked revenue of 19.03 Crores during the previous year.

Amount [ Crores]

	FY 25-26	FY 24-25
Total Income	475.85	670.34
Material Consumption	176.43	337.43
Excise Duty	110.32	150.75
Staff Costs	49.59	71.02
Others	74.95	96.90
EBITDA	64.56	14.24
Finance Cost	36.16	28.02
Depreciation	18.22	9.27
Profit before tax and exceptional items	10.18	[23.05]
Exceptional items: Income	0	0
Profit Before Tax	10.18	[23.05]
Tax	0.01	0
Profit/[Loss] After Tax from continuing operations	10.17	[23.05]
Profit After Tax from discontinuing operations	[0.11]	[0.23]
Other Comprehensive Income/ [Loss]	0.42	0.08
Total comprehensive Profit After Tax	10.48	[23.20]

The total raw material cost decreased to 176.43 Crores, as compared to 337.43 Crores during the previous year, Excise duty decreased to 110.32 Crores, as compared to 1 50.75 Crores during the previous year, Employee costs decreased to 49.59 Crores, as compared to 71.02 Crores during the previous year due to decrease in turnover. The Company earned an EBITDA of 64.56 Crores, as compared to an EBITDA of 14.24 Crores during the previous year.

Jagatjit earned a profit before taxation of 10.18 Crores considering the profit of 95.30 Crores from the sale of Gurugram Property which was not of operational nature, as compared to loss before taxation of 23.05 Crores during the previous year. The total comprehensive Income after tax during the year was 10.48 Crores, as compared to a comprehensive loss of 23.20 Crores during the previous year.

KEY FINANCIAL RATIOS

Particulars	2025-26	2024-25	Justification/ Remarks for significant changes
Debtors Turnover Ratio [in times]	11.75	18.48	Decrease in sales as compared to previous year.
Inventory Turnover Ratio [in times]	3.39	5.87
Interest Coverage Ratio	1.78	0.34
Current Ratio	0.52	0.60
Debt Equity Ratio	5.70	7.56
Operating Profit Margin %	[6.45]	0.77	Decrease in sales as compared to previous year.
Net Profit Margin %	2.76	[3.62]	Net Profit includes profit on sale of Investment property
Return on Net Worth	-	-	N.A.

Outlook

At Jagatjit, it is a continuous endeavour to modernize technology and upgradation of facilities as way to future growth of the business. The Company is on the path of focusing on the increased productivity, upgradation of manufacturing facilities, optimisation of cost for providing value to its customers and stake holders. It is a multifaceted endeavour to take care long term interest of all stakeholders including society. The Company is working hard to streamline and invest in high contribution brands, develop international markets, and optimize its workings for long term benefit of all.

With a strong portfolio of heritage brands, a growing premium product basket, increasing consumer preference for quality offerings, and a robust distribution network, Jagatjit expects to remain strategically positioned to capitalize on evolving market opportunities and drive sustainable long-term brand value creation.

Risks & Concerns

Given the challenging and dynamic environment of operations, your company is committed to manage risk for accomplishment of its goals. The Company has established risk management systems to identify, monitor and mitigate business risks. Management periodically reviews risk mitigation measures and internal controls to ensure effective governance and operational resilience.

Risk is an integral and unavoidable component of business. Though risks cannot be eliminated, an effective risk management program ensures that risks are reduced, avoided, mitigated or shared. Following are the identified key business risks of the Company:

Nature of Risk	Risk description	Mitigation Measure(s)
Regulatory risk	Jagatjit operates in a sector which is highly exposed to the risk of changing regulations.	Jagatjit closely monitors the regulatory environment and prepares for any foreseeable changes. In addition, its team of expert and experienced professionals ensures prompt and appropriate measures to meet the changes in regulatory framework. At all times, the Company ensures strict adherence to laws and policies.
Inflation and cost of production risk	Jagatjit like other companies is part of Indian economy and is facing risk of inflation and high fluctuation in commodity prices.	The Companys long-standing relationship with most suppliers ensures steady availability of raw materials at competitive prices. It is also striving to reduce costs by value engineering in dry and wet goods and by using standardized packaging material in all segment of business.
Innovation risk	Innovation is ensuring sustainable growth in a market where there are restrictions on advertisement of alcohol.	The Company is always looking to innovate and renovate to provide high-quality products to its customers at affordable rates.
Economic risk	The performance of the Company is dependent on robust consumption, led by rising income levels. This in turn is dependent on robust economic growth, cost of inputs, labour costs and on the basis of disposable income.	The Company is focused on driving agility and responsiveness across the value chain. Jagatjit has its presence in several international markets. A good presence in international markets reduces dependence on domestic consumption.
Credit Risk	Credit risk is the risk of loss that may arise on outstanding financial instruments if a counterparty defaults on its obligations.	The Companys exposure to credit risk arises majorly from loan, advances, trade and other receivables. The Company management reviews trade receivables/ advances on periodic basis and take necessary mitigative measures, wherever required.
Liquidity Risk	Liquidity risk is the risk that the Company will face in meeting its obligations associated with its financial liabilities.	The Companys approach in managing liquidity is to ensure that it will have sufficient funds to meet its liabilities as and when arises under normal and stressed conditions.

Internal Controls

The Company has sound internal financial controls (IFC) systems, which facilitates orderly and efficient conduct of its business including adherence to Companys policies, safeguarding of its assets, prevention and detection of frauds and errors, accuracy and completeness of the accounting records and timely preparation of reliable financial information. The internal control system facilitates optimum utilisation of available resources to ensure the protection of interest of all the stakeholders.

The Companys policies, guidelines and procedures are designed keeping in mind the nature, size and complexity of its business environment and operations. The Company maintains a proper and adequate system of internal controls which provides for automatic checks and balances. Its resilience and focus is driven to a large extent by its strong internal control systems for financial reporting, supported by a strong set of Management Information Systems.

Jagatjit has well established internal control mechanism supported by internal audit carried out by professional firms which helps in ensuring strict adherence to policies, safeguarding of its assets and timely preparation of financial statements, documents and reports.

Human Resources

During the financial year ended on 31 st March 2026, the Company continued to prioritize the development and well-being of its human capital, recognizing employees as a key pillar of sustainable growth. The Company is committed to foster a workplace culture that empowers our teams, supports career progression, and strengthens high levels of engagement across all levels.

Jagatjit nurtures a dynamic, growth-oriented culture with a strong ambition to create premium and luxury brands anchored in quality and innovation. Our people practices are guided by core values - teamwork, result oriented, ownership and technology savvy - brought to life through behaviours that promote global thinking, local execution, calculated risk-taking, and performance excellence.

At Jagatjit, we are committed to sustainable work practices and a transparent work culture which helps in attracting and retaining the talented people in the industry. The Company continues to focus on employee core connect, engagement, learning and development to build a workplace that is safe engaging and productive. Employees are presented with various learning opportunities to enhance career growth.

I

The Company believes that its human resources are the key enablers for the growth of the Company and, therefore, an important asset. Taking this into account, the Company continues to invest in developing its human capital and establishing its brands in the market to attract and retain the best talent. The Company believes that the quality of the employees is the key to its success and is committed to equip them with skills, enabling them to seamlessly evolve with ongoing technological advancements. Jagatjit boasts of well-defined HR policies which ensure alignment of personal goals with professional growth. As on 31 st March, 2026 its human capital stands at around 1014 employees, including permanent factory workmen. Employee relations during the period under review continued to be healthy, cordial and harmonious at all levels and the Company is committed to maintaining good relations with the employees.

Cautionary statement

Statements in the Management Discussion and Analysis Report describing the Companys objectives, projections, estimates and expectations may be forward-looking statements within the meaning of applicable securities laws and regulations. Actual results could differ materially from those expressed or implied. Important factors that could make a difference to the Companys operations include economic conditions affecting demand/supply and price conditions in the domestic and overseas markets in which the Company operates, changes in the Government regulations, tax laws and other statutes and incidental factors.