Radico Khaitan Management Discussions


Global Economy Overview

Global economy continued to face challenges during the year including severe inflationary pressure, geopolitical tensions, and the resurgence of COVID-19 in China. Global growth slowed in CY2022 to 3.4% from 6.3% in CY2021. However, the growth was stronger in the second half of CY2022 which was attributable to domestic developments like stronger-than-expected private consumption and investment amid tight labour markets and the ongoing fiscal support. On the supply side, easing bottlenecks and declining transportation costs reduced pressures on input prices and allowed for a rebound in previously constrained sectors, such as automotive.

Advanced economies expanded by 2.7% in CY2022 and are expected to witness 1.3% growth in CY2023 and 1.4% in CY2024. Emerging market and developing economies which expanded 4.0% in CY2022 are expected to grow at 3.9% in CY2023 and 4.2% in CY2024 led by strong performance in India and China. About 84% of the countries are expected to have lower headline inflation in CY2023 than in CY2022. Global inflation is set to fall from 8.7% in CY2022 to 7.0% in CY2023 and 4.9% in CY2024.

Global growth is estimated at 2.8% in CY2023 and 3.0% in CY2024 reflecting the actions taken by the central bank to fight inflation and mitigate the risks posed by geopolitical tensions. The decline in growth in CY2023 from CY2022 is due to the advanced economies. In the emerging market and developing economies, growth is estimated to have bottomed out in CY2022. Growth is expected to pick up in China with the full reopening in CY2023. The expected pickup in CY2024 in both groups of economies reflects gradual recovery from the e_ects of the geopolitical issues and subsiding inflation.

Source: IMF April 2023 – World Economic Outlook

Indian Economy Overview

Despite global headwinds, the Indian economy remained resilient and one of the fastest-growing economies in FY2023, driven by strong domestic consumption and relatively less exposure to international trade flows. As per the National Statistics O_ce (NSO), the Indian GDP growth in FY2023 is estimated at 7.2% as compared to 9.1% in FY2022. This growth has been supported by robust private consumption, export stimulus, increased investment demand due to public capex, and strengthened bank and corporate balance sheets, which have provided a demand stimulus to industrial growth.

The Indian governments implementation of an inflation-targeting framework helped to control the inflationary pressure in the country. Retail inflation slipped to a 16-month low of 5.66% in March 2023, slightly below the

In FY2024, the Indian economy is expected to continue to be the fastest growing economy in the World. As per RBI, the Indian GDP growth is estimated at 6.5% in FY2024.

RBIs upper tolerance level of 6%. During FY2023, the RBI hiked repo rates to 6.25% keeping inflation in check. FY2023 witnessed high services exports, moderation in oil prices, and the fall in import-intensive consumption demand. This has aided the expectations of a fall in current account deficit in FY2023 and FY2024 further aided by robust revenue collections. This has also led to expectations of a strengthening of the Indian rupee in the near future. Easing of global inflationary pressure led by falling international commodity prices and strong government measures are expected to aid economic growth in India.

In FY2024, the Indian economy is expected to continue to be the fastest growing economy in the World. As per RBI, the Indian GDP growth is estimated at 6.5% in FY2024. The inflation trajectory in India is likely be determined by extreme weather conditions like heatwaves and the possibility of an El Ni?o year, volatility in international commodity prices and pass-through of input costs to end consumers. Inflation is expected to moderate in FY2024 and is likely to remain at 5-6%, with risks evenly balanced. According to RBI data, Consumer Confidence in India is steadily improving though it shows that the consumer continues to be pessimistic. Employment generation is also improving as is reflected in the declining urban unemployment rate and in the faster net registration in Employee Provident Fund.

Source: IMF, RBI, World Bank


The rise in the middle class is one of the key drivers of growth in the Indian consumer sector. Another reason is the proliferation of the internet and digital literacy. Consumers today are far more informed, discerning, aspirational and demanding. Consumer markets are changing dynamically in the face of continuous disruption. The new-age technologies are transforming the consumer sector and bringing several opportunities for the consumers, trade and brands. With e-commerce and digitisation of transactions, consumers are moving seamlessly between online and o_ine trade channels. Even traditional players are reinventing their business models to not only stay competitive but also capitalise on the opportunities which were not otherwise available in the pre-internet era.

The operating environment during the year became more challenging driven by geopolitical issues and supply side constraints which led to unprecedented inflation in energy, food and commodity prices. This had a significant impact on consumption as to manage their budgets, consumers reduced consumption volumes and prioritised essentials over discretionary, particularly in rural India. Modern trade and e-commerce supported the growth in urban areas. Despite near term consumption pressure, there are early signs of moderating inflation, improving consumer confidence and increase in government spending which should support demand revival and drive consumption in the future.


India is the third largest and one of the fastest growing alcoholic beverages markets globally. This growth is attributed to various factors, including rapid urbanisation, evolving consumer preferences, burgeoning middle-class population with increased purchasing power and a more aware younger consumer profile. While there have been challenges with respect to supply chains and global inflation, the industry is capitalising on the opportunities that are emerging.

The rise in in-home consumption of alcohol might have been forced by the pandemic, but it marked the growth of consumers exploring new drinks and flavours even when they moved to out-of-home consumption again. However, since the lockdown restrictions have been lifted, the sales have risen to pre-pandemic levels in bars and restaurants. Today, premiumisation and expansion in the out-of-home segment are driving the growth. Another significant change led by the pandemic is that consumers have become more health-conscious and now prefer quality drinks, even if it comes at a higher cost. CY2022 saw momentum strengthen further particularly in the premium space as consumers continue to seek better brands. Rising penetration of the internet and influence of social media further bolstered the trend. As a shift towards premium spirits, there has been a strong surge in the demand for high end whiskies including scotches and single malts. Single Malt whiskies in India have grown by 45% and Blended Scotch by 11% in CY2022.

Source: Euromonitor

The rising popularity of quality products is evident as craft production from gin extends its influence into several other categories. Many emergent categories, including agave-based spirits, liqueurs, hard seltzers and cider are witnessing increasing acceptance. Growth in these categories is not limited to imports. Young entrepreneurs are launching and building brands, helping to alter perceptions about the quality of local products and this trend is expected to sustain. An apt example is the increase in demand from new-age drinkers of many home-grown gin brands. Brands are also experimenting and innovating to build the category and sustain the momentum.

IMFL sales touched all-time high in CY2022 growing 12.5% to 371 million cases as compared to CY2021. The growth was the sharpest in premium products as consumers are increasingly experimenting. Traditionally, brown spirits which include whisky, brandy, and dark rum, have been major contributors, accounting for more than 90% of overall IMFL sales volume. During CY2022, whisky constituted the largest segment with 64.0% of the sales volume and 70.8% of value. White spirits such as vodka and gin accounted for 3.3% of the total IMFL volume and 7.6% of value in CY2022 indicating a strong trend towards premiumisation.

While the growth in the industry was strong, operating profits were significantly impacted due to the unprecedented inflation across commodities including glass bottles, ENA and other packaging materials.


As a_ordability improves, social barriers are relaxed, the lifestyle changes and the adoption of prudent marketing and brand innovation by brand owners, IMFL sales are expected to continue the growth trajectory. Being one of the largest and fastest growing spirits markets, coupled with a large population of people entering the drinking age every year, India is poised for a long term, sustainable premium spirits growth.

Over the last year, persistent input cost pressures impacting profit margins for most players have led to serious discussions between state bodies and industry representatives, primarily about pricing. Several states have already accorded price hikes resulting in mitigating cost push to a certain extent.

According to Euromonitor International, IMFL volumes are expected to touch 489 million cases in CY2027. During the CY2023-2027 period, IMFL sales volume is expected to grow at a CAGR of 5.7%. During the same period, the IMFL industry value is expected to grow by 7.0%. The white spirits industry is expected to perform better during the same period with volume growth of 7.7% and value growth of 14.1%.


Overall growth in domestic consumption

Favourable demographics with a growing youth population, expanding middle class, prevalence of eating out culture, and increased acceptability of social drinking are driving growth of alcohol consumption in India. Rural and semi-urban regions are also witnessing robust growth. By CY2030, as the working population surpasses 1 billion, coupled with changing lifestyles and the breakdown of social barriers to consumption of alcohol, alcobev industry is expected to witness significant rise. ICRIER has also forecast that by 2030, 50% of Indian drinkers will continue to buy more products in the same category of alcoholic beverages, while 26% will trade up to higher-end brands, and 24% will migrate to di_erent alcohol categories, showing that the market is continuing to evolve.


Although value and low-price offerings continue to dominate consumption, both international and domestic players appreciate that even modest gains in India translate into significant advances within the global context, and lockdowns have certainly accelerated existing trends. The recent growth in the spirits industry has been driven by premiumisation.

The trend of premiumisation is prominent throughout the value chain, including the launch of new products, the branding of shelf space in retail outlets, and the Companys outreach to its customers through multiple marketing initiatives. Rising disposable income, evolving consumer preferences, rise in aspirational values, growing social media a_uence, social acceptability and growth in fine dining culture have played a crucial role in premiumisation trend gaining traction. Indians travelling abroad also contribute to the premiumisation of the alcoholic beverage sector.

Growing in-home consumption

While alcohol consumption in the past suffered abundant social stigma, Covid-19 pandemic changed consumer lifestyle and led to acceptance of alcohol consumption at home. So much so that home drinking has become more prevalent post pandemic as it is a greater value proposition as compared to drinking in restaurants, hotels, pubs, bars, etc. With the growing popularity of house parties and alcohol being served at small social gatherings, in-house consumption is witnessing a steady rise.

Experimenting consumers

Consumers are becoming more open to experimenting with new categories and tastes in alcohol, especially the new-age consumers. The constant search for novelty in the drink has taken precedence, with flavoured vodka or gin being preferred over the conventional drink. There is an increase in the use of cocktail mixers, and consumers are more inclined to experiment with di_erent mixers to improve the taste of their drinks.


Urbanisation will remain a key driver of consumption, particularly among younger consumers. The pandemic threatened to reverse this, with some young workers moving to smaller cities, towns and the countryside. Although, there is gradual return to urban workplaces, the picture is quite piecemeal. Tracking and responding to these changes will be crucial, especially for beer and RTD demand.


Radico Khaitan Limited (hereafter referred to as "Radico Khaitan" or the Company) is one of the largest and oldest spirit manufacturers in India. Previously known as ‘Rampur Distillery Company, it started operations in 1943. With a strong focus on developing brands, building scale and driving a profitable growth, the Company has successfully transformed itself from being a bulk spirits supplier and bottler for other manufacturers to one of Indias most esteemed IMFL brands.

The Company forayed into the IMFL space in 1998, with the introduction of 8PM Whisky. The focus in the first decade (1998-2006) of operations was to develop strong manufacturing capabilities and establish pan-India presence. With its determination, the Company managed to clock sales volume of over 10 million cases. In the next decade, the Company commenced its premiumisation journey with the launch of Magic Moments Vodka. It became the best-selling vodka in India and one of the largest globally. In 2016, the Company took the premiumisation trajectory to the next level with the launch of its first luxury brand, Rampur Indian Single Malt Whisky. While the Company continues to focus on premiumisation, it is concentrating on managing the business with agility and driving backward integration e_ciencies.

During the last decade and a half, the Company has successfully built a strong and growing premium product portfolio driven by consumer preferences with over 15 new brand launches. Radico Khaitan remains focussed on innovation, R&D and consumer centricity. The Company is well-known as one of the few companies in the country to have developed its entire brand portfolio organically with in-house capabilities.

Diverse product offerings

The Company has developed well recognised brands across various categories and segments of IMFL industry consisting of whisky, brandy, rum, and white spirits. The Companys brand portfolio includes After Dark Whisky, Contessa Rum, Jaisalmer Indian Craft Gin, Magic Moments Vodka, Magic Moments Verve Vodka, Magic Moments Dazzle Vodka (Gold & Silver), Morpheus Brandy and Morpheus Blue Brandy, Old Admiral Brandy, Rampur Indian Single Malt Whisky, Royal Ranthambore Heritage Collection-Royal Crafted Whisky, 1965 The Spirit of Victory Premium XXX Rum, 1965 The Spirit of Victory Lemon Dash Premium Flavored Rum, 8PM Premium Black Whisky and 8PM Whisky. Currently, the Company has seven millionaire brands which are Morpheus Super Premium Brandy, 1965 Spirit of Victory Premium Rum, 8PM Premium Black Whisky, 8PM Whisky, Contessa Rum, Old Admiral Brandy, and Magic Moments Vodka.

Radico Khaitan is also one of the largest providers of branded IMFL to Canteen Stores Department (CSD). The business has significant entry barriers with stringent conditions for brand registration with CSD. The Company has made significant progress in building brand equity in the overseas markets with exports to over 100 countries across the world, providing it access to global scale.

In FY2023, Prestige & Above category brands saw robust growth of 19.8% clocking volume sales of 9.35 Million cases. During the year, two brands crossed the one million cases mark, a testimony to the superior quality of products and the Companys focus and determination.

Significant backward

The Company has three distilleries in Rampur (Uttar Pradesh) and three in Aurangabad (Maharashtra) which is a 36% joint venture. The Company has a total owned capacity of 217 million litres and operates 41 bottling units (5 owned, 8 royalty and 28 contracted) spread across the country. This strong manufacturing platform enables it to better cater to consumer needs and strategically limit interstate taxes and transport costs. The Company constantly strives to enhance productivity and product excellence across its manufacturing platform.

During the year, the Company successfully commissioned the dual feed plant at Rampur, Uttar Pradesh to cater to the growing requirement of high-quality grain-based ENA for its premium products. This plant will use both molasses and grain as feed stock. Rampur dual feed plant will result in de-bottlenecking and e_ciency improvement of the existing facilities. The Rampur campus will be self-su_cient on its captive power requirement using biomass. The Company also commenced bottling operations at Sitapur, marking the successful completion of the first phase of the greenfield project. It positions the Company strongly to capitalise on the future growth opportunities in the branded business.

Robust distribution network

The Company has established a strong sales and distribution pan India network with an e_cient supply chain management. The Company sells through over 75,000 retail and 8,000 on premise outlets. In addition to wholesalers, the Company has organised its 300+ personnel, into four zones with each zone being led by a regional profit centre head. The Company can thus ensure product availability across channels and geographies due to its sophisticated and e_cient distribution system.


Standalone Performance ( Crore)

FY2023 FY2022 YoY % change
Gross Sales 12,743.9 12,470.5 2.2%
Net Sales 3,142.8 2,868.0 9.6%
Gross Profit 1,314.9 1,290.6 1.9%
EBITDA 358.2 402.6 (11.1)%
Profit Before Tax 274.8 335.3 (18.0)%
Total Comprehensive Income 202.6 252.5 (19.8)%


Key Financial Ratios

FY2023 FY2022 YoY % change
Debtors Turnover (days) (on gross sales basis) 23 21 6.4%
Inventory Turnover (days) (on COGS plus excise duty) 20 17 19.4%
Creditors Turnover (days) (on COGS) 51 58 (11.4)%
Interest Coverage ratio (x) 13.4 26.6 (49.5)%
Current ratio (x) 1.73 2.46 (29.9)%
Debt equity ratio (x) 0.32 0.10 238.7%
EBITDA margin (%) 11.4% 14.0% (264) bps
Total comprehensive income margin (%)td> 6.4% 8.8% (236) bps
Return on average equity (%) 9.9% 13.4% (265) bps
Return on average capital employed (%) 10.2% 15.5% (345) bps

During FY2023, the Company continued to focus on working capital improvement and strong cash flow generation. However, commodity inflation had a strong bearing on the Companys profitability, particularly in the non-IMFL business. The adverse economic situation resulted in a decline in profitability and return ratios. Furthermore, due to the capital expenditure on a new greenfield distillery and dual feed plant at Rampur, there has been an increase in working capital.


Type of Risk

Nature of Risk Risk Mitigation Factors / Measures

Macroeconomic Scenario

Slowdown in global economic growth due to the pandemic and ongoing geopolitical tensions may lead to reduction in disposable income The Company is well positioned to tackle short-term macroeconomic challenges due to its robust business model, a vast premium product portfolio, pan-India distribution

Risk Trend:

of the consumer and slowdown in the IMFL industry which may a_ect the Companys financial performance adversely network and a strong balance sheet. The Company is poised to continue to grow faster than the industry, increasing its market share in the future.
The Companys rich experience and decades of presence has exposed it to several macroeconomic cycles, making it well prepared to face unforeseen challenges.

Rising Inflation

Supply chain disruption or limited/ unavailability of raw materials leads to inflationary pressure impacting the Long-standing relationship with a diversified base of suppliers, coupled with ongoing tracking of global and regional commodity

Risk Trend:

Companys earnings.

prices on a monthly basis enables the Company to e_ectively manage its raw material requirement at competitive prices. Premiumisation of the portfolio has enabled the Company to mitigate the impact of price volatility on margins. In addition, with a view to adding value and making its o_erings more sustainable, the Company has undertaken a company-wide, product-wide value engineering exercise aiding to reduce margin pressure. With several State Governments allowing price increases, the Company is in a better position to alleviate raw material pricing pressure. Industry-level representations are being made to other states as well.

Regulatory Environment

Liquor industry being a state subject, is highly regulated in India. Each state has its own regulations governing the manufacture and sale of spirits. The Company has around 80 years of experience in manufacturing liquor and over 25 years in IMFL business. Thus, it is well-versed with all applicable laws and

Risk Trend:

Business operations are complex with several challenges like di_erential duties on manufacturing setup, separate state-wise compliance norms and taxation and restrictions on direct advertising. Industry is also subject to di_erent licensing terms for producing, storage and distribution of liquor. The Company has to ensure strict adherence to all applicable rules and regulations by di_erent state governments and any e_ected changes. Non-compliance can adversely impact business operations.

regulations across almost all states of India. To e_ectively comply with all applicable laws and regulations, the Company has a well-defined code of business conduct and supporting policies. The legal and compliance team ensures strict adherence to all applicable rules and regulations.

Type of Risk

Nature of Risk Risk Mitigation Factors / Measures

Competition Intensity

Lucrative growth prospects of the Indian liquor industry may lead to increase in competitive intensity from both international and The Company boasts of a wide product portfolio spanning across price points o_ering superior quality and value for money proposition. The Company has also

Risk Trend:

domestic players. established robust pan-India distribution network with strong brand equity. This coupled with strong entry barriers for new foreign players to establish business in India,
enables the Company to develop a strong moat and stay ahead of competition.

Consumer Preferences

The Company faces the risk of a change in consumer preferences towards alcohol consumption which may impact volume growth. Constant customer engagement with various online and o_ine platforms enables the Company to understand evolving consumer behaviour and preferences. The Company

Risk Trend:

closely monitors consumption patterns and changing preferences to enable e_ective product innovation. Brand launch is based on a rigorous exercise of consumer and industry research spanning 15-18 months. The research is based on identifying the right type of blend, packaging, market positioning, and other important aspects influencing consumer acceptance.

Information and Cyber Security

Growing salience of technology has given rise to increased threat of loss of information and cyber security. Any breach may result in loss of sensitive Radico Khaitan has a robust IT system that enable the Company to tackle the growing cyber security threats, and protect sensitive data from unauthorised access and leakage.

Risk Trend:

information, business interruptions, potential fines, reputational damage, etc.

Human Capital

Human capital being one of the important pillars of growth, it is imperative for the Company to attract The Company fosters a culture of learning, innovation, and collaboration. HR policies are aimed at progressive human resource

Risk Trend:

and retain the right talent to ensure strategic business growth. management. The Company provides an inclusive work culture and su_cient growth and learning opportunities to all employees alike. High employee engagement, reward and recognition and in-house progression opportunities enable the Company to have a high retention rate.

Climate Change

Growing importance of climate change and associated regulatory actions to reduce environmental impact may Radico Khaitan gives due importance to sustainability in its course of operations. Its environmental strategy is aimed at

Risk Trend:

disrupt the Companys operations. reducing its carbon footprint and making the processes and products more sustainable and environmentally friendly.


Strategic Human Resource Management enhances interdependence within an organisation, fostering the pursuit of common goals. At Radico Khaitan, HR plays a pivotal role in elevating organisational awareness, cultivating the value of human resources, and driving productivity and innovation to meet customer needs more e_ectively. Among other things, Human Resource Management in Radico Khaitan also focussed to the following areas during the year:

Planning of human resources needs of the organisation in view of the green and brownfield projects undertaken during the year.

Ensuring availability of Human Resources within the budgeted cost and timelines.

Ensuring the right screening and selection processes are used for providing competent manpower and the leadership for the new projects.

A match between the candidates values and the Companys culture is verified in the selection process.

The Company fosters a growth-oriented work culture with a safe, productive and healthy environment that continually presents new challenges and consequently aids the learning process. Both individual and team e_orts are duly rewarded to recognise the importance of human capital. Radico Khaitans rewards system clearly outlines the employees expectations from the Company. Simultaneously, the Companys expectations from its employees are driven by the Budgeted Plans and the Performance Management System. Utilising established performance review practices based on mutually agreed-upon goals contributes to the successful achievement of objectives.

By grooming potential successors and providing them with relevant training and experiences, Radico Khaitan is preparing for the future. The Company has a strong successful succession planning where it nurtures a pipeline of capable leaders, fostering a culture of growth and stability within the organisation.

By fostering open communication and a shared vision, all members of Radico Khaitan are encouraged to actively participate and o_er their insights to drive improvements, bolster the Companys growth, and achieve positive outcomes. From day-to-day matters to critical strategic decisions, employees perspectives are sought and valued across all aspects of the business.

The Radico culture serves as the fundamental cornerstone of the organisations commitment to treating all employees with fairness, equality, and respect. It embodies a strong emphasis on fostering a workplace environment that values and celebrates diversity. The Company strives to create a culture where employees are not only aware of but also deeply sensitive to the richness that comes from individual di_erences, including but not limited to race, ethnicity, gender, age, religion, and abilities.

The Company extends a comprehensive range of benefits to its employees, prioritising their well-being and that of their families. Health insurance coverage is provided, encompassing medical insurance not only for employees but also for their parents. To offer a sense of security to employees families, term insurance is taken on behalf of the employees. Additionally, a Group Accident Insurance Scheme is in place to address unforeseen incidents. Preventive health checks are also covered, encouraging proactive health management and overall well-being. Promoting a healthy lifestyle, the Company invites professional coaches for gym sessions, yoga classes, sports training, and various wellness activities. The Company prioritises all necessary measures to ensure employees safety and well-being throughout their work tenure.

Radico Khaitan adopts a dual approach of thinking globally and acting locally, while emphasising collective decision-making with key stakeholders. Empowerment and micro-reviewing processes, coupled with extrinsic and intrinsic rewards for high performers, foster a culture of high involvement and commitment among employees. Radico Khaitan distinguishes itself due to its ability to e_ectively instil business objectives and core values in its employees consistently.


As a leading manufacturing organisation, Information Technology is a crucial pillar of growth in driving operational efficiency, innovation and overall business growth. Strong IT infrastructure provides the management team with diverse information and analytics, important to embrace appropriate technologies to synergise operations and to provide seamless integration across all business functions. The Company has been leveraging the use of data analytics for future growth. Throughout this year, we have focussed on leveraging the power of IT to enhance our processes and deliver value to our stakeholders.

Integration of Data Sources: The Company successfully connected and integrated data from various sources, such as SAP system, non-SAP systems, spreadsheets, databases and cloud platforms. This unified view of data enabled better data analysis and reporting. Also, it enabled users to access real-time data, ensuring that decisions are based on the latest information and to respond quickly to changing market conditions. The next phase will include predictive analytics capabilities to help forecast future trends and outcomes based on historical data, helping to make proactive decisions and anticipate market changes.

Manufacturing Execution System (MES): The Company is currently studying the e_ects of implementing MES for tracking, monitoring and optimising production processes on the shop floor for increased e_ciency and reduced production cycle times.

New CRM Software: The Company has completed evaluation of a new CRM software. This new tool will help to manage customer interactions, sales pipelines and marketing e_orts, ultimately leading to improved customer satisfaction and increased sales.

Cybersecurity: Measures were taken into consideration and email security was implemented to prevent organisation from email phishing attacks.

Cloud Computing and Data Storage: Migration to cloud-based platform is underway (S4Hana migration with RISE) for the benefits of scalability, accessibility and cost e_ectiveness.

The Company has been leveraging the use of data analytics for future growth. Throughout this year, we have focussed on leveraging the power of IT to enhance our processes and deliver value to our stakeholders.


Radico Khaitans supply chain management strategy revolves around customer service, cost efficiency, operational excellence, and sustainability. Radico Khaitan continually strives to build flexibility and competitiveness in its supply chain by developing more suppliers in the system across all materials and logistics to ensure reliable volume deliveries at the right place in a timely and cost-e_ective manner.

Tracking Commodity Pricing: A key part of the Companys procurement strategy is to continually deepen its understanding of global commodity trends. It monitors commodity pricing trends to derive analytics to support procurement decisions. These e_orts have yielded a better understanding of the commodity and pricing index, which has not only helped to widen the supplier base but led to an improvement in the quality and timing of purchase decisions. The Company shall continue to leverage on the same.

Value Engineering: Radico Khaitan has set up a cross-functional team to identify various value-engineering opportunities to optimise raw material costs without compromising product quality. Enhanced common use of corrugated boxes to transport empty bottles and finished goods is a testimony to this approach. Our supply chain strategy is based on three key principles of Recycle, Reduce and Reuse. We have maximised sourcing of glass bottles from the region where suppliers use natural gas as fuel instead of fossil fuels, as used in other regions. Leveraging improved glass technology to produce glass bottles at lower weight is another example which has not only helped to optimise raw material cost but will also reduce pressure on depleting natural resources used in the manufacture of glass bottles. Weight optimisation is being done with polyethylene terephthalate (PET) bottles wherever the opportunity exists.

Collaboration and Supplier Partnerships: Radico Khaitan is working to identify key business partners and establish alliances across all key raw materials to create a collaborative approach to increase supply chain e_ciency. We have also focussed on sourcing from domestic suppliers and developing a more robust local supplier base.

Green Purchasing: Radico Khaitan enhanced the focus on buying goods with minimal environmental impact. This includes products produced using low emissions/ energy-e_cient, enhanced usage of old glass bottles, optimising the bottle weights as per product design. We also identified the ways of innovative branding without using intermediate packaging, which facilitated the removal of monocartons, and hence reducing the paper consumption. We shall continue to look for more green initiatives.

Multiple Sourcing: As part of the risk mitigation strategy, we have widened our supplier base specifically in glass, ENA and other raw materials. It not only reduces the risk of supply failure but also brings competition among business partners which leads to enhanced quality, service and lower prices.

Backward Integration: We have set up a new PET plant in south India as a part of our integrated supply chain. We are already sourcing high quality ENA for premium products from our own distillery and we are further increasing our capacity in order to support the integrated sourcing network, which will help in maintain quality sourcing.


The Company has an e_ective and reliable internal control system. In line with its business operations, Radico Khaitan has a well-planned internal control framework, which covers various aspects of governance, compliance, audit, control, and reporting. It ensured adherence to local statutory requirements for orderly and e_cient conduct of business, safeguarding of assets, detection and prevention of frauds and errors, adequacy and completeness of accounting records, and timely preparation of reliable financial information. The e_cacy of the internal checks and control system is validated by internal auditors and re-examined by the management.

A CEO and CFO Certificate, forming part of the Companys Corporate Governance Report, confirms the existence and e_ectiveness of internal controls and reiterates its responsibility to report deficiencies to the Audit Committee and rectify the same. The Company has appointed SCV & Co. LLP as its internal auditor, which submits quarterly reports to the Audit Committee that monitors and provides an e_ective supervision of the financial reporting process. The Company thus ensures accurate and timely disclosures with the highest level of transparency, integrity, and quality. It also confirms adequacy and e_ectiveness of internal control systems and suggests improvements as required.


The narrative in this Management Discussion and Analysis contains ‘forward-looking statements including, but not limited to, statements relating to implementation of strategic initiatives, future business developments and economic performance. While these forward-looking statements indicate our assessment and future expectations concerning the development of our business, numerous risks, uncertainties and other unknown factors could cause actual results to di_er materially from our expectations. These factors include, but are not limited to, general market, macro-economic, governmental, and regulatory trends, movements in currency exchange and interest rates, competitive pressures, technological developments, changes in financial conditions of third parties dealing with us, legislative developments, and other key factors that could a_ect our business and financial performance. Radico Khaitan undertakes no obligation to publicly revise any forward-looking statements to reflect future / likely events or circumstances.