Ravikumar Distilleries Ltd Management Discussions

GLOBAL ECONOMY

In CY2024, the global economy grew at 3.3% according to the International Monetary Funds (IMF) World Economic Outlook., showing resilience amid geopolitical tensions, trade fluctuations and shifting monetary policies. This growth occurred despite of uneven progress across different regions and sectors. Advanced economies grew modestly at 1.8%, while emerging markets and developing economies expanded more robustly at 4.3%. Headline inflation eased to 5.8% in CY2024 from 6.6% in CY2025, moving closer to central bank targets and triggering the initial round of interest rate cuts in several major economies.

Major central banks began shifting away from tight monetary policies as inflation eased, implementing gradual interest rate cuts to boost liquidity and stimulate private investment. However, the global trade landscape remains unstable, with recent tariff implementations creating significant challenges for businesses. In response, businesses are re-evaluating their pricing strategies to maintain competitiveness while protecting profit margins.

The forecast for nonfuel commodity prices remains largely stable, while inflation in advanced economies is expected to ease with a downward revision. However, the pace of decline varied across regions. Advanced economies made steady progress towards inflation targets, while emerging markets grappled with high inflation due to currency depreciation and persistent supply chain issues.

Indian economy

In FY 2025, the Indian economy grew by 6.5% and this growth was driven by a strong domestic consumption, favourable demographic profile, sustained drive towards digital transformation, healthy GST collections, rapid technological adoption across industries strategic policy initiatives undertaken by the Government of India to boost the manufacturing sector and strong focus on infrastructure investments.

The industrial sector grew by 6.2% in FY 2025, supported by strong growth in construction and essential services such as electricity, gas, water and other utilities. The services sector is also likely to perform well, with an estimated growth of 7.2%

However, GDP growth moderated to 6.5% year-on-year in FY2025, reflecting the combined impact of global economic headwinds and domestic challenges. Factors contributing to this slowdown include a decline in manufacturing output, elevated food inflation, tepid urban demand, limited job creation, widening trade deficits, and subdued private sector investment. Despite these hurdles, India remains on a stable growth trajectory, driven by robust manufacturing, diversifying services, increased infrastructure spending, and government-led initiatives promoting digitalisation, financial inclusion, and business-friendly reforms.

Industry structure and developments:

The Company is engaged in the business of manufacturing and trade of Indian Made Foreign Liquor (IMFL) under our own brand portfolio as well as under tie up arrangements with other companies. The IMFL comprises of Whisky, Brandy, Rum, Gin& Vodka. We started our initial capacity of 7,20,000 cases per annum and a bond capacity of 6300 cases of Excise Bonded warehouse. Presently our plant is having an installed capacity of 14,25,000 cases per annum and 12,250 cases of Excise Bonded warehouse.

Financial and Operational Performance:

During the year, the total Income from operations was Rs. 7790.22 lakhs compared to Rs.6599.83 lakhs in the previous year recording a net profit of Rs. 13.22 lakhs, as against the net loss of Rs. (194.45)Lakhs in the previous year.

Material changes between the periods from end of Financial Year to the date of Report:

There are no material changes between the periods from end of Financial Year to the date of Report.

Significant and material orders passed by the regulators or courts or tribunals impacting the going concern status and Companys operation in future:

There are no other significant and material order passed by the Regulator/Court/Tribunals impacting the going concern status and Companys operations in future.

Opportunity And Threat

Opportunity:

The Indian liquor industry is poised for growth in FY24 and beyond, driven by a combination of demographic shifts, urbanization trends, and rising income levels. This growth is fueled by the increasing preference for alcoholic beverages among the younger population, particularly millennials, who are drawn to beer for social gatherings and celebrations.

Threat:

Intense competition prevails in the segment, fuelled by the lucrative growth prospects of the industry

The industry also faces challenges such as regulatory hurdles, high taxation, and restrictions on advertising alcoholic beverages.

The Indian alcohol business is highly regulated, and each state has its own rules with respect to indirect taxes and duties, which can impact business operations. In addition, there are multiple regulatory considerations with respect to pricing, licensing, plant set-up, marketing & advertising and distribution. All these rules and regulations serve to create barriers to entry for both new and existing players.

Segment-wise or Product-wise performance:

Company operates in only one segment i.e. liquor business, hence the above point is not applicable to the Company.

Business Outlook:

The Indian alcohol market has been flourishing since the early 2000s. After recording strong growth between 7-12% annually until 2011, the industry faced a slowdown due to heavy import duties, varying state excise taxes, and political instability during election seasons. Amajor dip was witnessed in 2013 when spirits volume fell by 2-3%.

Since then, the industry has rebounded. As of 2025, the Indian alcohol market is valued at around USD 56-60 billion, and is projected to reach USD 100-114 billion by 2030-32, growing at a steady 6-8% CAGR. It forms a vital part of Indias USD 150+ billion beverage sector (excluding milk and milk products).

While whisky is the single largest spirits category at a pan-India level, regional markets such as Pondicherry, Tamil Nadu, Andhra Pradesh, and Kerala are dominated by brandy, which accounts for a significant share of spirits consumption. In fact, brandy represents over 45% of IMFL volumes in South India, making it the most widely consumed category in these regions. Rum continues to enjoy stable demand in certain coastal and defence-linked markets, while vodka, gin, and craft spirits are seeing steady urban growth.

Consumers are increasingly drawn to quality and premium products, supported by rising disposable incomes, urbanisation, and evolving social habits. The influence of social drinking and growing participation of women in alcohol consumption are also reshaping demand. With Indias youth comprising nearly 65% of the population, overall consumption is set to remain strong. Brandy maintains its leadership in the South, while beer remains the drink of choice for younger consumers.

The Indian beer market, worth around USD 14 billion in 2023, is projected to reach USD 26 billion by 2030, led by premium lagers and craft brews. The wine category, though small (~ USD 400 million in 2024), is expanding rapidly at 12% CAGR, supported by rising urban acceptance and domestic production in Nashik and Solapur. Ready-to-Drink (RTD) beverages are also gaining traction, recording double-digit growth as consumers experiment with new formats.

Challenges persist in the form of high taxes, fragmented state regulations, restrictions on advertising and demand sensitivity to household income levels. Nevertheless, as the economy expands, the alcohol sector continues to gain traction.

One of the most notable trends is the premiumisation of spirits. Premium and super-premium segments are growing faster than the overall industry especially in categories like brandy Indian single malts, and premium rum.The southern markets, in particular, are witnessing a strong shift towards higher-end brandy labels, creating opportunities for us to consolidate brand leadership.

While whisky leads nationally, the southern Indian market remains brandy-driven, complemented by steady demand for rum and beer.The premiumisation wave, beer expansion, and growing wine culture are reshaping the industry, ensuring strong growth for spirits producers well into the next decade.

RISKS AND CONCERNS:

Government regulations affect the Indian Liquor industry introducing structural rigidities. Apart from the high level taxes and levies regulations pertaining to licensing creation or expanding of brewing / distillery and bottling capacities, manufacturing process (grain based and molasses based distribution and advertising impinge on the industry. Further liquor being a state subject, every state has different regulations (including those on distribution and tax rate for the industry apart from restrictions as well as levies on the inter-state movement of liquor.

In addition Government is introducing some new licenses for new business entrants which poses a competition risk for the Companys product.

Future Outlook:

During current year, your Company will try to improve the performance with applying optimistic efforts.

Internal Control Systems and their adequacy:

The Managing Director / Whole Time Director certification provided in the report discusses the adequacy of our internal control systems and procedures

Development in Human Resource /Industrial Relations (including number of persons employed)

The most important asset of the Company is its Human Resources.

Number of persons employed :54 employees as on 31st March 2025.

Cautionary Statements:

Statements in the Management Discussion and Analysis describing the Company s objectives,projections,estimates,expectation may be forward looking statements within the meaning of applicable securities laws and regulations. Actual results could differ materially from those expressed or implied.

Details of significant changes fie. change of 25% or more as compared to the immediately previous financial year) in key financial ratios, along with detailed explanations therefor, including not included in Management discussion and analysis report

As given in the notes to accounts.

Details of any change in Return on Net Worth as compared to the immediately previous financial year along with a detailed explanation thereto

As given in the notes to accounts.