Radico Khaitan Ltd Management Discussions

Global Economy

The global economy demonstrated resilience in CY2025 despite heightened uncertainty arising from evolving trade policies and geopolitical developments. Growth was supported by supply chain adjustments to trade barriers, front-loading of exports to the United States ahead of tariff increases, and sustained investments in Artificial Intelligence (AI). According to IMF World Economic Outlook, global GDP expanded by 3.4% in CY2025, with Emerging Markets and Developing Economies (EMDEs) growing by 4.4% and Advanced Economies by 1.9%.

Entering CY2026, global activity remains broadly stable, supported by technology-led investment, policy support and accommodative financial conditions. However, renewed geopolitical tensions, including the conflict in the Middle East, have created fresh headwinds by disrupting energy markets, increasing commodity prices and tightening financial conditions. The IMF projects global growth to moderate to 3.1% in CY2026, before improving marginally to 3.2% in CY2027.

Growth trends continue to diverge across regions. Commodityimporting and low-income economies are facing cost pressures from elevated energy and food prices, while energy-exporting economies remain relatively better positioned. Downside risks persist from prolonged geopolitical tensions, trade fragmentation, volatility in commodity markets and the continued reconfiguration of global supply chains.

Global inflation, which had been moderating, is expected to rise temporarily due to energy price pressures and supply disruptions linked to geopolitical developments. Headline inflation is projected at 4.4% in CY2026 before easing to 3.7% in CY2027, remaining above pre-pandemic averages in several economies. The increase is largely driven by higher energy costs transmitting into transportation, food and broader input prices, with risks of secondary wage-price effects in select markets.

While central banks had begun easing policy in response to earlier disinflation trends, renewed inflationary pressures may delay the pace of further rate cuts. Advanced economies are expected to achieve a relatively smoother disinflation path, whereas emerging markets may experience a more gradual adjustment towards price stability.

Advanced economies are projected to grow at a subdued but stable pace, supported by resilient consumption and continued investment in productivity-enhancing technologies. However, growth remains constrained by tighter financial conditions, elevated public debt levels and geopolitical uncertainty.

Overall, while the global economy continues to exhibit resilience, the outlook remains subject to significant downside risks arising from prolonged geopolitical tensions, further fragmentation of global trade, disruptions to energy supply chains and sustained volatility in commodity markets. These factors, alongside limited fiscal flexibility in several major economies, could influence inflation dynamics, financial market conditions and the pace of global growth in the period ahead.

Source: IMF World Economic Outlook, April 2026

Indian Economy

Indias macroeconomic environment remained resilient during the year despite an uncertain global backdrop. The Indian economy is estimated to have grown by 7.7% during FY2026, underscoring the strength of domestic fundamentals. Economic activity continued to be supported by robust domestic demand, sustained government capital expenditure, easing inflationary pressures and supportive policy measures. However, external risks, including geopolitical tensions, global trade disruptions and volatility in international capital flows, continue to warrant close monitoring.

Growth was driven by ongoing investments in infrastructure development, digitalisation and manufacturing, alongside continued momentum in the services sector. Rural consumption also showed signs of gradual improvement, supported by favourable agricultural output and moderating price pressures. On the external front, services exports and remittance inflows continued to provide an important cushion against global uncertainties and external imbalances.

Inflation moderated during the year, supported by easing food prices, improved supply conditions and government measures aimed at containing price pressures, although inflation dynamics remained sensitive to global commodity trends and domestic supply developments. Stable financial conditions, comfortable foreign exchange reserves and the resilience of the banking and financial system further underscored the strength of Indias macroeconomic fundamentals.

Looking ahead, Indias economic outlook remains favourable, supported by strong domestic consumption, sustained public investment, improving private sector balance sheets and ongoing structural reforms. For FY2027, real GDP growth is projected at approximately 6.9%, while CPI inflation is expected to remain around 4.6%, although the inflation trajectory remains sensitive to movements in food and energy prices.

Growth is expected to be driven by resilient domestic demand, continued government capital expenditure, manufacturing and infrastructure development, and increasing formalisation of the economy. Indias structural strengths, including favourable demographics, rapid digitalisation and policy-led reforms, are expected to support sustainable long-term growth. Despite persistent global uncertainties, India remains well positioned to retain its status as one of the fastest-growing major economies in the world.

Source: Second Advance Estimates, the Ministry of Statistics and Programme Implementation (MoSPI) February 2026; RBI Monetary Policy, April 2026

Consumer Sector

India remained one of the fastest-growing major economies globally. This strong economic performance continues to provide a supportive backdrop for domestic consumption, which remains a key pillar of Indias economic expansion.

Indias consumption landscape continues to evolve, supported by rising incomes, favourable demographics, increasing urbanisation and rapid digital adoption. Indias per capita income, now estimated at around US$ 2,500, along with improving employment conditions, is strengthening the underlying consumption base. Consumer demand is increasingly reflecting higher aspirations, greater brand consciousness and a shift towards convenience- led and experience-oriented categories.

As income levels improve, consumption patterns are gradually moving beyond necessities towards premium products, branded offerings and lifestyle-led spending. Categories such as dining, travel, entertainment, wellness, personal care and digital services are witnessing stronger consumer engagement, supported by an expanding middle class and rising urban affluence.

Digitalisation is playing an important role in reshaping consumption behaviour. Wider internet access, smartphone penetration, e-commerce, quick commerce and digital payment platforms have improved product discovery, accessibility and convenience across consumer segments. These trends are enabling brands to engage consumers more directly and expand reach beyond traditional urban markets.

At the same time, Indias consumption market continues to reflect a dual-track structure, with premiumisation gaining momentum in

urban and higher-income segments, while value consciousness remains important in rural and lower-income households. Overall, rising aspirations, increasing formalisation, improving income levels and evolving consumer preferences continue to support Indias long-term consumption growth story.

Spirits Industry in India

The Indian spirits industry is undergoing a structural evolution, supported by rising disposable incomes, favourable demographics, increasing social acceptance and a clear shift towards premium and quality-led consumption. Consumers are moving beyond traditional choices, with growing preference for brands that offer authenticity, craftsmanship, provenance and distinctive experiences.

According to Euromonitor International, Indian IMFL (Indian Made Foreign Liquor) industry grew by 3.9% in volume terms in CY2025, reaching 416 Million, 9-litre cases. The industrys 6.3% value growth continued to reflect the ongoing premiumisation trend across categories. White spirits, including vodka and gin, recorded a strong 19.2% year-on-year growth in volume and 21.8% growth in value, making them among the fastest-growing segments in the Indian alcobev market.

Premiumisation continues to be one of the strongest trends shaping the industry. Younger legal-drinking-age consumers are entering the category with a greater preference for quality, experimentation and brand-led experiences rather than volume- led consumption. This is creating a more discerning consumer base that is willing to trade up to premium and luxury offerings across categories. Smaller pack sizes, including 60 ml, 90 ml and 180 ml formats, are further driving trial by making higher-end brands accessible at more approachable price points.

Changing social behaviour is expanding the relevance of spirits in modern consumption occasions. Social, professional and family gatherings, along with the growth of hotels, restaurants, bars and experiential venues, are making consumption more occasion-led and socially integrated. In urban markets, premium brand choices are increasingly associated with taste, lifestyle and status, supporting sustained uptrading across consumer segments.

Cocktail culture is gaining momentum, supported by the expansion of premium bars, casual dining formats, nightlife, experiential hospitality and at-home social occasions. New consumers, including women, are increasingly engaging with spirits through cocktails, flavoured offerings and curated experiences rather than only traditional serves. This is encouraging experimentation across white spirits, flavoured variants, craft offerings and contemporary whisky serves.

White spirits, particularly vodka, are emerging as important beneficiaries of Indias evolving consumption landscape. The category is gaining relevance as consumers increasingly participate in cocktail-led, flavour-led and mixed-drink occasions across on-trade venues and at-home social settings. Vodkas versatility, smoother taste profile and ease of mixing make it an accessible entry point for new consumers, while also enabling brands to build premium propositions around purity, origin, ingredients, filtration, packaging and lifestyle-led positioning.

Vodka continued to gain share within the Indian spirits market, with its volume share increasing from 3.4% in CY2024 to 3.9% in CY2025 and its value share rising from 8.7% to 10.0% during the same period. Despite this progress, the category remains significantly underpenetrated compared to global markets, indicating substantial headroom for long-term growth. In addition, vodka offers favourable category economics due to its shorter production cycle, lower working capital requirements and strong premiumisation potential. As India bridges the gap with global drinking trends, vodka and other white spirits are expected to benefit from rising experimentation, expanding nightlife and dining culture, increasing acceptance beyond metropolitan markets and growing demand for contemporary, high-margin premium offerings.

Innovation and localisation are also becoming important drivers of consumer engagement. Products that combine global quality cues with Indian tastes, ingredients and cultural identity are finding increasing acceptance, as consumers seek spirits that are contemporary yet locally relevant. Vodka, given its versatility and mixability, is especially well placed to benefit from flavour-led experimentation, cocktail culture and at-home social occasions.

Flavours and formats inspired by local preferences reflect the growing potential of "Indian-ness” in the spirits market, where brands that blend international standards with local cultural resonance are able to build stronger consumer connect.

Indian whisky is also benefiting from this premiumisation journey. Indian single malts, premium Indian whiskies and quality-led blends are raising consumer expectations and strengthening the credibility of Indian-made premium spirits. As consumers become more informed and experimental, provenance, craftsmanship, maturation, packaging and storytelling are playing a larger role in brand preference, enabling domestic premium spirits to compete more meaningfully with imported alternatives.

The retail landscape is gradually transforming, with larger and more modern liquor outlets offering wider product assortments, improved visibility and a better shopping experience. These formats are supporting brand discovery, particularly in premium categories, and are helping shift the consumer journey from a purely transactional purchase to a more informed and experience-led selection. Travel retail and duty-free channels are also becoming more relevant as Indian outbound travel expands, increasing consumer exposure to global brands and international retail formats.

The regulatory environment is showing progressive signs across several key states. Uttar Pradesh has improved retail efficiency through composite shops, premium retail formats, digital licensing, e-lottery mechanisms and technology-led supply-chain monitoring. Andhra Pradesh has adopted a more market-oriented structure through private retail participation and measures aimed at supporting price parity and the hospitality channel. Karnataka has introduced a more rationalised duty framework linked to alcohol content, with fewer slabs and improved transparency. Together, these reforms are supporting ease of doing business,

stronger compliance, better product availability and a more consumer-friendly shopping experience.

Overall, the Indian IMFL industry remains well positioned for sustained long-term growth. While market dynamics continue to vary across states, the broader direction remains positive. Growth is expected to be driven by rising aspirations, urbanisation, increasing disposable incomes, premiumisation, innovation, cocktail-led consumption, modern retail formats and the continued expansion of hospitality channels. Premium and luxury segments are likely to continue outpacing mass-market growth over the medium to long term.

The Indian Spirits Industry Outlook

The Indian spirits industry is expected to sustain steady, broad-based growth, supported by rising incomes, favourable demographics, premiumisation and an improving regulatory environment. Several states are taking steps to simplify licensing, modernise retail formats and strengthen distribution efficiency, contributing to a more supportive and transparent operating landscape.

Premiumisation remains a key structural driver, with consumers steadily shifting towards higher-quality offerings across categories. According to Euromonitor International, IMFL volumes in India are projected to reach 493 Million 9-litre cases by CY2030, implying a 3.5% CAGR over CY2026-CY2030, while value is expected to grow at a stronger 6.9% CAGR, reflecting sustained upgrading and higher consumer spending per case.

White spirits, particularly vodka and gin, are expected to remain among the faster-growing segments of the Indian alcobev market, supported by rising cocktail culture, flavour-led experimentation and growing preference for premium offerings among younger urban consumers. The segment is projected to grow at 9.5% CAGR in volume and 15.9% CAGR in value, reflecting continued premiumisation and higher consumer spending within the category. Despite this momentum, white spirits continue to account for a relatively small share of the Indian market compared to global consumption patterns, indicating significant headroom for long-term expansion.

On the supply side, moderating inflation and easing input costs, particularly for grains and Extra Neutral Alcohol (ENA), are expected to support operating efficiency and margin stability. However, the evolving situation in West Asia warrants close monitoring, given its potential impact on energy prices, logistics costs and broader commodity markets. Beyond near-term supply-side considerations, the broader industry outlook remains constructive, supported by improving retail infrastructure, increasing consumer engagement through digital channels, evolving discovery-led purchase behaviour and a sustained shift towards premiumisation.

Company Overview

Radico Khaitan Limited, formerly known as Rampur Distillery & Chemicals Company, is among the oldest and largest alcohol manufacturing companies in India. Established in 1943, the Company started its operations as a bulk spirits supplier and gradually evolved into a leading branded liquor manufacturer known for innovation, quality and craftsmanship. With a diverse portfolio featuring 20+ established brands, the Company has transformed its market presence through high-quality, organic growth. The Company operates two state-of-the-art distillery campuses at Rampur and Sitapur in Uttar Pradesh, along with a joint venture distillery facility in Aurangabad, Maharashtra. In addition, it has an extensive network of company-owned and contract bottling units across India.

The Company is recognised for its strong focus on innovation, research and development and customer-centricity. It remains among the few Indian companies to have developed its entire brand portfolio organically through in-house capabilities. It continues to focus on premiumisation while maintaining business adaptability in a changing market environment.

Radico Khaitan is also a leading supplier of branded IMFL products to the Canteen Stores Department (CSD), a segment characterised by high entry barriers due to stringent brand registration requirements. In addition, the Company exports its products to over 100 countries, providing it with a wide global presence. Radico Khaitan remains committed to sustainability as a core business priority.

Diverse Product Range

The Company has built a well-recognised IMFL portfolio across whisky, brandy, rum, vodka and gin, with a strong presence across both established and emerging categories. Notably, eight

of its brands achieved annual sales exceeding one million cases, reflecting the strength and scale of the portfolio.

During FY2026, the Company continued to advance its premiumisation strategy through focused innovation and portfolio expansion. New launches during the year included Rampur 1943 Virasat Indian Single Malt, The Spirit of Kashmyr Luxury Vodka, 1965 Spirit of Victory Espresso Coffee Rum, Magic Moments Flavours of India (Alphonso Mango, Jamun SpicyMint, Thandai), Rampur Indian Single Malt Jugalbandi #7 and #8, and Morpheus Rare Luxury Whisky. The launch of Rampur 1943 Virasat Single Malt and The Spirit of Kashmyr Luxury Vodka marked an important milestone in the Companys journey of building world-class luxury Indian spirits, while the broader launch pipeline reflected deep consumer insights and a disciplined approach to innovation.

The Prestige & Above category delivered strong growth in FY2026, with volumes increasing by 28.5% to 16.7 Million cases. In line with the Companys strategic focus on premiumisation, Prestige & Above brands contributed approximately 46% of total IMFL volumes and 70% of IMFL value sales during the year.

Magic Moments Vodka continued its strong trajectory, growing 21% in volume to 8.6 Million cases and achieving around ?1,500 Crore in sales value, further strengthening its leadership in the vodka category. Royal Ranthambore Whisky delivered robust growth of over 50%, supported by strong demand across both civil and CSD channels. After Dark Whisky recorded over 60% growth and crossed 3.1 Million cases, while 8PM Premium Black Whisky, supported by its refreshed packaging, began gaining strong traction and is expected to be an important contributor to premium volume growth going forward.

The Companys luxury and semi-luxury portfolio also continued to gain momentum, contributing approximately 11% of branded

IMFL value in FY2026, translating into revenues of around ?475 Crore. This portfolio includes premium offerings such as Rampur Indian Single Malt, Jaisalmer Indian Craft Gin, Sangam World Malt, Kohinoor Dark Rum, The Spirit of Kashmyr Luxury Vodka and Royal Ranthambore Whisky.

Supported by rising consumer aspirations, expanding presence across premium on-trade and off-trade channels, and increasing global interest in Indian-origin spirits, the luxury and semi-luxury portfolio remains well positioned for sustained growth. The Company expects this segment to scale further and is targeting growth of around 25% in FY2027.

Production Capabilities

Radico Khaitan operates ten distilleries: Six in Rampur (Uttar Pradesh), one in Sitapur (Uttar Pradesh), and three in Aurangabad (Maharashtra), the latter a 36% joint venture. The Company has a total production capacity of 323 Million litres. The Companys capacity is supported by a network of 42 bottling units across the country, including five owned facilities, six operating under royalty agreements, and 31 under tie-up or lease contracts. The Company has dedicated glass bottle printing units at three locations to support the growth of Magic Moments Vodka, ensuring consistency and high quality. Furthermore, Radico Khaitan also has PET bottle manufacturing facilities in Uttarakhand and Telangana, producing 700 Million bottles every year.

The Companys extensive manufacturing network effectively meets consumer demand while minimising interstate taxes and transport costs. Continuous efforts are directed at improving productivity and product quality across our manufacturing platform.

Extensive Distribution Network

Radico Khaitan has established a significant nationwide sales and distribution network, supported by efficient supply chain management. Reaching over 100,000 retail outlets and 10,000 on-premises locations, our 300+ personnel are organised into four zones, each under a regional profit centre head for streamlined operations. This widespread distribution network and sophisticated systems ensure consistent product availability across various channels and regions.

Performance Overview

Operational Excellence

The Companys performance was driven by its premium and luxury-focused portfolio, supported by a favourable raw material environment and strong operating leverage. During the year, the Company crossed two key milestones, with net revenue exceeding ?6,000 Crore and EBITDA crossing ?1,000 Crore. These achievements reflect the sustainability of our business model, the strength of our brands, the investments we have made over the years, and the growing scale of our premium and luxury portfolio.

The improvement in operating performance resulted in meaningful margin expansion and a sharp rise in return ratios. This marks a clear inflection point in improving the sustainability and predictability of earnings.

Recent product launches have witnessed encouraging early traction, reflecting strong consumer insights and a disciplined approach towards innovation. The broader premium portfolio continued to scale across key markets, supported by stronger execution and increasing consumer demand. The Company achieved widespread growth across its premium brands through enhanced operational execution. This multi-category expansion is strengthening brand equity while ensuring the portfolio remains stable and reliable.

Financial Scorecard

Particulars	FY2026	FY2025	Y-o-Y Change
Gross Sales	20,976.4	17,098.5	22.7%
Net Sales	6,050.4	4,851.2	24.7%
Gross Profit	2,740.9	2,077.3	31.9%
EBITDA	1,018.5	668.4	52.4%
Profit Before Tax (PBT)	803.3	464.6	72.9%
Total Comprehensive Income	600.3	341.2	75.9%

Key Financial Ratios

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Particulars	FY2026	FY2025	Y-o-Y Change
Debtors Turnover (days) (on Gross Sales basis)	23	(10.5)%
Inventory Turnover (days) (on Gross Sales basis)	22	23	(0.5)%
Creditor Turnover (days) (on Gross Sales basis)	35	34	1.7%
Interest Coverage Ratio (x)	13.54	7.28	85.8%
Current Ratio (x)	1.92	1.63	17.5%
Debt Equity Ratio (x)	0.10	0.23	(56.4)%
EBITDA Margin (%)	16.8%	13.8%	305 bps
Total Comprehensive Income Margin (%)	9.9%	7.0%	289 bps
Return on Equity (%)	20.2%	13.5%	674 bps
Return on Capital Employed (%)	25.1%	16.4%	866 bps

Human Resource

At Radico Khaitan, our people remain central to sustainable growth and business excellence. The Company fosters a high- performance culture anchored in quality, innovation, operational discipline and the creation of world-class premium and luxury brands. Guided by its core values of respect for people, customer focus, innovation, quality and excellence, Radico Khaitan encourages agility, independent thinking, continuous improvement and a global outlook.

Strategic Human Capital Management

Human capital is a critical enabler of the Companys growth strategy. The Human Resources function works closely with business teams to align talent priorities with evolving organisational needs. Through structured recruitment, capabilitybuilding initiatives, data-led workforce planning and agile talent management practices, the Company is strengthening a resilient and future-ready organisation. HR continues to play a strategic role in supporting Radico Khaitans broader transformation and long-term value creation agenda.

Performance Excellence and Leadership Development

The Companys performance management framework is designed to promote accountability, meritocracy and leadership readiness. Anchored in a Management by Objectives approach and supported by a 9-Box Talent Matrix, the framework enables objective performance evaluation, talent segmentation and succession planning.

High-potential employees are assessed through Assessment and Development Centres, enabling tailored development pathways and leadership interventions. Internal talent mobility remains a priority, with internal candidates actively considered for suitable roles and leadership opportunities, reinforcing Radico Khaitans positioning as a long-term career organisation.

Learning and development remains a key pillar of the people strategy, particularly in line with the Companys premiumisation journey. Training programmes during the year focused on premium brand-selling capabilities, operational excellence, quality systems, leadership development and awareness of new-age skills, including digital and AI-led tools. Emphasis was placed on enabling sales teams to act as brand ambassadors and strengthen brand advocacy. During FY2026, employees received an average of ten hours of learning and development interventions, with 40% of programmes delivered by internal faculty.

The Companys strengthening performance and capabilitybuilding framework was also reflected in improved employee sentiment and employer-brand perception on platforms such as AmbitionBox, including in areas such as work satisfaction, work- life balance and job security. Campus engagement initiatives further helped showcase Radico Khaitans culture and career proposition to future talent.

Operational Excellence, Quality and Innovation

Quality, safety and operational efficiency remain central to the Companys manufacturing philosophy. Across its production facilities, compliance with recognised standards, including FSSAI, HACCP and ISO certifications, is supported by operational excellence practices such as Total Productive Maintenance, 5S and Kaizen. Continuous capability enhancement in quality management, problem-solving and root-cause analysis reinforces a culture of continuous improvement and operational discipline. Innovation also remains deeply embedded in the organisation, with employees encouraged to contribute ideas for new products, packaging improvements and process excellence. Innovation hubs and employee suggestion schemes help channel these ideas into focused initiatives while recognising contributions across functions.

Diversity, Equity and Inclusion

Radico Khaitan is committed to building a diverse, equitable and inclusive workplace where individuals are empowered to realise their full potential. The Company promotes equal opportunity, respect and inclusion through gender-neutral recruitment practices, maternity benefits, gender-sensitisation programmes and support during personal challenges. During the year, the number of women employees increased by 11% over the previous year, including greater participation in operational roles. The Companys broader CSR and community partnerships further reinforce its commitment to inclusion, womens empowerment and social development.

Employee Wellbeing and Engagement

Employee wellbeing remains fundamental to long-term organisational success. The Companys wellbeing framework covers physical, mental and financial wellness through initiatives such as gym facilities, yoga programmes, preventive health check-ups, mental wellness awareness and employee support programmes. Financial wellbeing is supported through performance-linked incentives, employee stock option programmes, comprehensive insurance coverage, life insurance

and retirement benefit schemes, including provident fund, gratuity and superannuation. The Company also nurtures a vibrant workplace culture through celebrations of team achievements, cultural traditions and important employee milestones, strengthening engagement and belonging.

Digital Transformation and Future-Ready Workforce

As part of its transformation journey, Radico Khaitan continues to invest in digital technologies that enhance employee experience, organisational effectiveness and data-driven decision-making. AI- enabled tools, digital learning initiatives and process automation are improving agility, productivity and efficiency across the organisation.

These initiatives are enabling the Company to build future-ready capabilities, accelerate learning and prepare its workforce for evolving business requirements. As Radico Khaitan continues its growth journey, it remains committed to empowering its people, strengthening its culture and building a high-performing organisation capable of delivering sustainable value for all stakeholders.

Information Technology

At Radico Khaitan, technology is a key enabler of business transformation, operational efficiency and data-led decisionmaking. The Companys digital transformation philosophy, Digital Sutra, goes beyond technology implementation and brings together people, processes and data into a unified enterprise framework. It is designed to improve visibility, strengthen resilience and enable intelligent decision-making across the organisation.

Digital Sutra: Building a Future-Ready Enterprise

Digital Sutra represents Radico Khaitans strategic journey towards becoming a more agile, intelligent and data-driven enterprise. The programme is being implemented in phases, beginning with the creation of a modern digital core and progressing towards advanced analytics, artificial intelligence and intelligent automation.

Phase I: ERP Modernisation

During the first phase, the Company successfully modernised its core technology landscape through the implementation of SAP S/4HANA. This marked a significant milestone in the transformation journey by creating a unified digital backbone across the enterprise. The SAP digital core has helped establish a single source of truth, enhance process standardisation, improve governance and enable faster access to real-time business information. The ERP modernisation has also strengthened operational efficiency and scalability, providing the foundation required to support future business growth, innovation and enterprise-wide digital integration.

Phase II: Digital Drive

With the SAP S/4HANA foundation in place, the Company has entered the next phase of its transformation journey. This phase focuses on converting enterprise data into actionable business intelligence through analytics, artificial intelligence and automation. Radico Khaitan is strengthening its data- driven capabilities through centralised data platforms, executive dashboards and self-service analytics. These tools are enabling

decision-makers across functions to access timely insights, improve agility and move from retrospective reporting towards predictive and proactive decision-making.

A key pillar of this phase is the deployment of AI and machinelearning-led business intelligence solutions. Initiatives under development include industry sales intelligence, sales prediction models, advanced sales analytics, pricing predictability tools and conversational AI-based executive insights. These capabilities are expected to improve forecasting accuracy, strengthen commercial planning, enhance pricing decisions and provide deeper visibility into customer behaviour, product performance, channel effectiveness and market dynamics.

Advanced analytics is also being embedded into critical business processes such as Sales and Operations Planning, demand forecasting, supply chain optimisation, inventory planning and financial management. By combining SAP data with AIled insights, the Company is building a more responsive and resilient operating model focused on efficiency, service levels and business performance.

Digital Trust and Cyber Resilience

As the digital ecosystem expands, cybersecurity remains a strategic priority. The Company continues to invest in advanced endpoint protection, Security Operations Centre capabilities, vulnerability management and threat intelligence to strengthen its security posture, protect enterprise data and ensure business continuity.

The Road Ahead

Digital Sutra has evolved from an ERP modernisation programme into a broader business transformation platform. With SAP S/4HANA establishing the digital core, the Company is now focused on building a Digital Intelligence Platform powered by data, analytics and AI.

By combining a modern ERP backbone with predictive intelligence, intelligent automation and real-time decision-support tools, Radico Khaitan is strengthening its ability to operate with greater agility, efficiency and resilience, while preparing the organisation for the next phase of growth.

Supply Chain Management

At Radico Khaitan, supply chain management is a strategic enabler of business performance, cost efficiency and operational resilience. The Companys supply chain strategy is anchored in efficient sourcing, cost optimisation, strong supplier partnerships, risk mitigation and alignment with evolving business priorities. As the Company scales its premium and luxury portfolio, the supply chain function plays a critical role in ensuring agility, product availability, quality consistency and speed-to-market.

Strategic Sourcing and Supplier Partnerships

The Company continues to strengthen backward integration and regional sourcing across key inputs such as Extra Neutral Alcohol, PET bottles, glass bottles, laminates and other packaging materials. "Make in India” remains a core pillar of the sourcing philosophy, helping reduce import dependence, shorten lead times, improve service levels and enhance resilience.

Radico Khaitan follows a customised strategic sourcing approach, moving beyond traditional procurement to develop category- specific solutions aligned with business needs and supplier capabilities. Strategic negotiations and collaborative partnerships have encouraged vendor-led investments in areas such as pocket packs, PET bottles, glass bottles and printing capabilities, creating mutual benefits for suppliers and the Company. Supplier relationship management remains a key focus, supported by systematic assessment of supplier performance, capabilities and alignment with long-term business requirements.

Commodity Monitoring and Cost Discipline

Active monitoring of commodity and raw material prices forms an important part of the procurement strategy. The Company follows a research-led and data-driven approach to track market trends, pricing indices, supplier dynamics and supply conditions across key input materials. These insights support timely purchase decisions, supplier diversification and stronger cost discipline, particularly during periods of commodity volatility. By combining market intelligence with internal consumption analytics, Radico Khaitan is able to improve procurement planning, strengthen negotiation outcomes and enhance overall cost competitiveness.

Regional Sourcing and Backward Integration

The Company continues to strengthen its regional sourcing and backward integration model. PET manufacturing capacity has been expanded in South India, enabling the Company to meet more than 90% of its PET requirements through internal plants across India. The enhancement of glass bottle printing facility in North India is expected to further strengthen regional supply for printed glass bottles, reduce logistics costs and support faster product availability. This regional supply model, supported by a centralised purchasing policy, is improving efficiency, resilience and responsiveness across the supply chain.

Sustainability and Responsible Sourcing

Sustainability is integral to the Companys procurement philosophy. Radico Khaitan evaluates sourcing decisions not only on cost and quality but also on environmental impact, ethical practices and social responsibility. The Company has initiated the use of recycled resin in PET packaging and currently uses approximately 30% recycled content in select plastic packaging applications, with an aim to progressively increase the use of recycled PET

The Company is also working on innovative packaging formats that optimise material usage while maintaining strong brand differentiation. These initiatives support cost efficiency, reduce pressure on natural resources and contribute to the Companys broader sustainability objectives.

Technology Integration and Digital Transformation

Technology integration continues to strengthen supply chain performance. SAP-based tools, dynamic MRP systems and digital planning platforms are improving demand forecasting, inventory control, procurement planning and operational visibility. These initiatives are helping improve forecast accuracy, optimise working capital and enhance service levels.

Risk Mitigation and Supply Chain Resilience

Building a resilient supply chain remains a strategic priority. The Company continues to localise procurement, strengthen regional supplier networks, adopt multi-sourcing strategies and maintain appropriate safety stocks for critical materials. The shift from imports to domestic sourcing for several packaging materials has reduced lead times by nearly a month and improved service reliability.

Through localisation, supplier diversification, backward integration, digital tools and contingency planning, Radico Khaitan is building a supply chain that is agile, cost-efficient and resilient, capable of supporting the Companys growth ambitions in a dynamic operating environment..

Risk and Mitigation

Impact	Mitigation Strategy
Ongoing global uncertainties, including geopolitical tensions and moderating economic growth, may impact consumer sentiment and discretionary spending. While Indias growth outlook remains favourable, any slowdown in demand could affect volume growth in the IMFL industry and adversely impact the Companys financial performance.	The Companys diversified portfolio across categories, price points and consumer occasions provides resilience against changes in demand conditions. Its premiumising mix, strong distribution network, robust balance sheet and disciplined cost management enables it to navigate macroeconomic uncertainty while sustaining long-term growth.
Volatility in the prices of key raw materials such as grain, ENA, glass, and packaging materials, coupled with potential supply chain disruptions, may increase production costs and exert pressure on margins.	The Company mitigates this risk through longstanding relationships with a diversified supplier base, continuous monitoring of commodity trends and strategic inventory planning for critical inputs. Backward integration, regional sourcing, value-engineering initiatives and cost optimisation measures further support input security and margin resilience. Premiumisation- led pricing power and proactive engagement with state authorities for price revisions help offset inflationary pressures and support margin stability.
The Indian alcobev industry operates within a highly regulated environment characterised by varying state-level laws, taxation structures, advertising restrictions, and licensing requirements. Regulatory changes or compliance lapses could disrupt operations, delay product movement, and impact profitability. Policy developments in states such as Andhra Pradesh and Maharashtra highlight the potential impact of state-level regulatory changes on industry dynamics.	The Company mitigates this risk through its diversified geographic presence, strong regulatory understanding, and robust compliance framework. A dedicated legal and compliance team continuously monitors policy developments, enabling timely adaptation and ensuring operational continuity.
The Indian IMFL market continues to attract strong interest from domestic and international players, increasing competition across categories, particularly in the premium and luxury segments. This may impact market share and pricing dynamics.	The Company leverages its strong brand portfolio, extensive distribution network, market insights, and experienced sales force to maintain a competitive edge. High entry barriers and the growing premiumisation opportunity further strengthen its market position and support sustainable growth.
Evolving consumer preferences, increasing health awareness, and changing lifestyle choices may influence consumption patterns. A gradual shift towards moderation or alternative beverages could impact demand for traditional alcoholic beverages over the long term.	The Company focuses on innovation and consumer-centric product development, supported by continuous engagement with consumers and data-driven analysis of consumption trends. A rigorous product development process ensures that new offerings remain aligned with evolving consumer expectations.
Increasing digitalisation of operations heightens exposure to cybersecurity threats. Data breaches, system disruptions, or cyberattacks could compromise sensitive information, impact business continuity, and damage brand reputation.	The Company has implemented a robust cybersecurity framework comprising advanced security protocols, regular system audits, technology upgrades, and employee awareness programmes. These measures strengthen cyber resilience, protect critical data, and support uninterrupted operations.
Attracting and retaining skilled talent remains critical in a competitive and evolving industry. High employee turnover could disrupt operations, affect productivity, and hinder the execution of strategic initiatives.	The Company fosters a progressive and inclusive work culture through employee engagement programmes, career development initiatives, competitive compensation structures, and robust rewards and recognition mechanisms. These efforts support talent retention and workforce stability.
Increasing environmental regulations, climate-related disruptions, and sustainability expectations may impact operations, supply chains, and resource availability	The Company integrates sustainability into its operations through energy-efficient technologies, responsible sourcing, waste management practices, and initiatives aimed at reducing its environmental footprint. These measures enhance resilience, support compliance, and align with stakeholder expectations.
As a consumer-facing organisation, the Companys success is closely linked to its brand reputation and consumer trust. Product quality issues, regulatory non-compliance, negative publicity, or inappropriate marketing practices could adversely affect brand perception.	The Company maintains stringent quality standards, adheres to responsible marketing practices, and actively monitors public sentiment and media coverage. Continuous consumer engagement and proactive reputation management help strengthen brand equity and mitigate reputational risks.

Internal Control Systems and Adequacy

The Company has a comprehensive internal control mechanism with adequate policies and procedures to ensure the orderly and efficient conduct of its business. This includes adherence to the Companys policies, safeguarding its assets, prevention and detection of fraud and errors, accuracy and completeness of the accounting records and timely preparation of reliable financial disclosures. Radico Khaitans internal control systems are commensurate with the nature of its business, as well as the size and complexity of its operations. The internal financial

controls concerning the Financial Statements are adequate. Internal auditors validate the effectiveness of the Companys internal controls, which management regularly re-examines. The CEO and CFO provide a certificate, included in the Corporate Governance Report, affirming the existence and effectiveness of internal controls. This certificate also includes a commitment to report and address any deficiencies to the Audit Committee. The Company has appointed Ernst & Young LLP and SCV & Co. LLP as its joint internal auditors for FY2026, who will submit their quarterly reports to the Audit Committee. The Audit Committee oversees the financial reporting process, ensuring transparency, integrity and quality. By maintaining a specified and delegated internal control system, the Company aims to provide accurate and timely disclosures while suggesting improvements as needed.

Cautionary Statement

The narrative within this Management Discussion and Analysis includes forward-looking statements relating to, among other things, the execution of strategic plans, future business developments and economic performance. While these statements reflect the Companys assessment and expectations for the future direction of its business, numerous risks, uncertainties and other unforeseen factors could cause actual outcomes to differ significantly from these expectations. These factors include, but are not limited to, general market, macroeconomic, governmental and regulatory trends, fluctuations in currency exchange and interest rates, competitive pressures, technological advancements, changes in the financial standing of third parties engaged with the Company, legislative changes and other significant factors that could influence the Companys business and financial results. Radico Khaitan undertakes no obligation to publicly update any forward-looking statements to reflect future or likely events or circumstances.