Som Distilleries & Breweries Ltd Management Discussions

1. Economy and Outlook

The global economic landscape for 2025, while showing signs of resilience, is characterized by continued moderation. According to the IMFs April 2025 World Economic Outlook, global GDP is anticipated to expand steadily, with projections indicating growth between 3.1% and 3.3%. This stability is supported by a gradual disinflation trend, with global headline inflation expected to ease. Despite this economic activity, growth remains moderate when compared to historical benchmarks, influenced by ongoing geopolitical pressures in various regions and challenges related to productivity growth.

The global outlook, while improving in some aspects, remains subject to various downside risks. Growth is set to underperform its 2010s average in a considerable number of economies, representing a significant portion of the global population. Downside risks continue, including the potential for increased geopolitical tensions, growing trade fragmentation, the possibility of interest rates remaining elevated for longer periods, and climate-related disruptions. However, it is significant that supply chains have largely recovered from previous disruptions, and shipping costs have returned to pre-pandemic levels, providing a more stable environment for global trade.

Central banks globally continue to manage monetary policies to address inflation, which, while declining, has not yet reached target levels in most major economies. Economic performance varies by region. The United States continues to demonstrate stable demand, supported by private consumption. Conversely, the Euro area faces slower growth, influenced by energy costs and consumer sentiment. In contrast, emerging markets, particularly India, are contributing substantially to global momentum. India is projected to achieve a considerable 7.0% GDP growth, supported by strong domestic consumption, ongoing structural reforms, and sustained government spending.

The efficiency of supply chain and distribution system is essential in the evolving global economic scenario. While global supply chains have largely recovered from recent disruptions and shipping costs have stabilized, the alcoholic beverage market continues to face potential challenges, including fluctuations in the cost of key ingredients and the imposition of higher taxes. The distribution network is adapting to changing consumer preferences, with significant growth observed across various channels. Supermarkets and hypermarkets remain primary distribution avenues, providing extensive product selections and competitive pricing. Concurrently, the expansion of online retail channels is transforming traditional methods, enabling more direct connections with consumers and offering increased convenience, particularly for Ready-to-Drink (RTD) beverages.

Looking ahead, the global economic landscape for 2025 and beyond indicates a continued focus on managing inflation and ensuring financial stability. While overall economic growth may remain moderate, emerging markets, especially India, are expected to contribute significantly to global momentum. These regions, characterized by increasing disposable incomes and evolving consumer tastes, present considerable opportunities for the alcoholic beverage industry. The ongoing shift towards premium products and convenient formats, coupled with a growing interest in health-conscious options, will continue to shape market dynamics.

Despite the overall economic uncertainty and the growing consumer focus on health and wellness, which influences consumption patterns, the alcoholic beverage industry continues to adapt through product innovation and strategic market expansion. The resolution of immediate financial sector risks and the potential for a faster decline in inflation could lead to a more accommodative monetary policy, further supporting economic activity and supporting a favourable environment for investment and growth in the coming years.

2. Indian Alcobev Industry

Indias alcoholic beverage sector continues to demonstrate robust growth, solidifying its position as one of the fastest- growing markets globally. By 2025, the market is projected to reach approximately USD 64.0 billion. India currently ranks as the third-largest alcoholic beverage market worldwide, after China and Russia, and has emerged as the second-largest spirits market globally. The industry is expected to maintain this strong trajectory, expanding at a compound annual growth rate (CAGR) of 11.3% in value and 14.5% in volume over the next five years, reaching FY 2028. Several factors are driving this significant expansion.

A growing population and an expanding middle class have led to higher disposable incomes, enabling a larger consumer base to explore premium alcoholic beverages. Additionally, Indias socio-cultural landscape is evolving, with increasing acceptance of alcohol consumption in social settings, particularly in urban and semi-urban regions. Rural markets, too, are witnessing rising alcohol consumption, further contributing to overall growth.

Regional trends in alcohol consumption highlight distinct preferences. Southern states have traditionally dominated the market, accounting for nearly half of total consumption, with Tamil Nadu and Karnataka leading in this segment. In contrast, northern and western regions exhibit a stronger inclination toward premium and luxury categories, with Delhi and Haryana at the forefront. Country liquor continues to hold popularity in parts of northern India, where it is primarily produced from grain ENA, while southern states see higher consumption of Indian-Made Foreign Liquor (IMFL), largely due to restrictions on country liquor.

Beer Industry

The beer market in India has evolved significantly, driven by a growing preference for this beverage among younger consumers, particularly millennials. This demographic is increasingly opting for beer during celebrations, social gatherings, and leisure activities. Beer currently represents approximately 42% of total alcohol consumption in India, surpassing the global average of one-third, according to the World Health Organization (WHO). IMARC Group forecasts a CAGR of 6.72% from 2025 to 2033, with revenues growing from INR 444.6 billion (2024) to INR 802.5 billion (2033)

The beer segment in India is predominantly composed of strong lagers, with alcohol content between 6.0% and 8.0%, which accounts for more than 80% of total beer consumed. High-alcohol-content beers are gaining traction, as consumers increasingly associate higher alcohol levels with premium offerings, assuming superior taste and quality. The rise of craft breweries, which emphasize small-batch, high-quality beer, is also driving demand for higher ABV beers. Craft beer culture is flourishing, with significant investment from large-scale companies, further driving the consumption of premium beers across major cities like Bangalore, Mumbai, and Delhi.

IMFL Industry

The IMFL sector remains the largest segment of the Indian alcoholic beverage market, both in terms of volume and value. The IMFL market, which includes whisky, rum, and other spirits, is projects to achieve volumes of approximately 520 million cases by FY2028, reflecting a CAGR of around 5.7%. This represents a strong recovery, surpassing pre-pandemic levels, and highlights the resilience of the market. The IMFL industry has been supported by increasing disposable incomes, which have led to a shift from country liquor to premium IMFL products.

Urbanization and changing consumer preferences are supporting the shift toward more sophisticated and premium products within the IMFL sector. Consumers are increasingly opting for higher-quality whisky, with a marked shift toward the prestige, premium, and luxury segments. This trend is particularly noticeable in southern states, where IMFL whisky consumption is highest, driven by the ban on country liquor. The five southern states, Andhra Pradesh, Kerala, Telangana, Karnataka and Tamil Nadu, collectively account for over 50% of the total IMFL consumption in India. The shift toward IMFL, particularly whisky, has further gained momentum as consumer tastes evolve and disposable incomes rise.

Industry Drivers and Future Outlook

The Indian Alcobev industry is driven by multiple dynamics, with key growth drivers including increasing urbanization, higher disposable incomes, and a growing preference for premium beverages. As consumer tastes continue to evolve, premiumisation has emerged as a dominant trend, with rising demand for high-end spirits, craft beers, and specialty liquors. The trend toward premiumisation is not limited to urban regions; even smaller towns and rural areas are increasing an increase in consumption of premium products, supported by improving access to distribution networks and retail channels.

Government policies have also played a significant role in supporting industry growth. Several states have introduced favourable reforms, including simplified excise policies and licensing procedures for microbreweries, which have encouraged the establishment and expansion of local brewing operations. The governments focus on generating revenue from alcohol excise duties ensures a stable regulatory environment, further boosting market confidence.

The future outlook for the Indian Alcobev sector remains positive, with continued growth in both volume and value. However, challenges such as regulatory complexities, excise duties, and social stigma in certain regions could pose hurdles to the markets progress. Despite these challenges, the increasing popularity of premium and craft alcoholic beverages, coupled with the expansion of consumption in untapped rural areas, suggests that the industry will continue to thrive.

The industry is likely to see further consolidation, with large- scale players investing in microbreweries and craft breweries, thus enhancing their market presence. As the sector adapts to evolving consumer preferences and market dynamics, the Indian Alcobev industry is expected to remain a key contributor to the global alcoholic beverage market.

3. Demand Drivers for the Alcobev Industry

The alcoholic beverages industry in India is continuing its upward trajectory, with several critical factors driving growth. These demand drivers are not only influencing the market in the short term but also positioning the industry for continued expansion over the coming years.

1. Urbanization and Demographic Shifts

Indias accelerating pace of urbanization is reshaping consumption dynamics, expanding the addressable consumer base for alcoholic beverages. The migration from rural to urban centres exposes individuals to a broader spectrum of premium offerings and modern retail ecosystems, thereby enhancing accessibility and driving category penetration.

2. Rising Disposable Incomes

The sustained growth in purchasing power, particularly among the burgeoning middle class, is a critical determinant of premiumization within the Alcobev sector. As household incomes rise, consumers are exhibiting a marked propensity to allocate higher discretionary spending toward superior- quality and innovative beverages.

3. Evolving Consumer Preferences

Indian consumers are transitioning toward more nuanced and experiential drinking preferences. The appetite for premium spirits, craft beers, and ready-to-drink (RTD) cocktails is gaining momentum, particularly among younger cohorts who value novelty, authenticity, and craftsmanship—stimulating continuous product innovation across the value chain.

4. Social Acceptance and Changing Attitudes

Societal attitudes toward alcohol consumption are undergoing a paradigm shift, with increased normalization across diverse social strata. This cultural evolution is not only altering consumption behaviors but also amplifying demand across multiple consumption occasions, from convivial gatherings to in-home indulgence.

5. Young and Expanding Consumer Base

The young population in India, particularly younger target audience, is proving to be a significant driver for the alcobev sector. These younger consumers, who are more adventurous and brand-conscious, are increasingly adopting new drinking experiences. As a result, they are creating new trends and driving the demand for premium and craft beverages.

6. Out-of-Home Consumption Growth

The rapid expansion of the out-of-home (OOH) consumption segment, including bars, restaurants, and pubs, is one of the most significant contributors to industry growth. As more Indians dine out and seek social experiences, the demand for alcoholic beverages in these venues is accelerating, thus supporting the overall market growth.

7. Tourism and Hospitality Expansion

The resurgence of domestic tourism coupled with a steady inflow of international travellers has invigorated beverage sales within the hospitality value chain. Upscale hotels, resorts, and destination bars are witnessing heightened demand, particularly for premium and bespoke offerings.

8. Technological Advancements in Distribution

Advancements in supply chain logistics and the integration of omnichannel retailing are enhancing market reach. The expansion of both online and offline sales channels is ensuring that alcoholic beverages are more accessible to consumers, particularly in remote and underserved areas.

The Indian Alcobev industry stands at the cusp of remarkable expansion, propelled by demographic realignment, increasing disposable incomes, and the evolution of consumer preferences. In an environment characterized by rapid change, sustained success will hinge on the industrys ability to innovate, embrace premiumization, and adapt to shifting cultural and social dynamics.

As emerging consumer cohorts and diversified segments reshape the competitive landscape, companies that remain agile, data-driven, and attuned to evolving market trends will be best positioned to capture growth. The future of the Indian Alcobev sector is not only promising but also transformative—rewarding players who can deliver differentiated, aspirational, and experience-driven offerings.

4. Business Overview

Som Distilleries & Breweries Limited (SDBL), headquartered in

Bhopal, Madhya Pradesh, is a leading player in Indias alcoholic beverage industry, with a well-established presence across both beer and Indian Made Foreign Liquor (IMFL) segments. The companys integrated operations encompass beer production, blending, and bottling of spirits, enabling it to offer a diversified portfolio that caters to a wide spectrum of consumer preferences across price points and categories.

Diverse Product Portfolio

SDBLs product mix includes a range of beer, whisky, rum, brandy, and vodka, addressing the growing demand across mainstream, premium, and super-premium segments. The companys flagship beer brands—Hunter, Black Fort, and Power Cool—have each surpassed 1 million cases in annual sales, underscoring their strong market penetration and enduring consumer appeal.

Innovation and Product Differentiation

Innovation forms a cornerstone of SDBLs growth strategy. A notable achievement in this regard is the introduction of Woodpecker Beer, Indias first twist-cap Beer: This innovation eliminates the need for a bottle opener, providing consumers with convenience and a hassle-free experience. The beer is available in two variants, the mild Woodpecker Glide and the strong Woodpecker Crest, and is crafted using a blend of imported two-row barley, Indian malts, and German hops. The company continues to drive innovation through the launch of seasonal variants, premium formats, and Ready-to-Drink (RTD) offerings, including Hunter Pint Beer, designed to capture emerging consumption trends and experiential drinking occasions.

Strategic Market Positioning

SDBL holds a unique competitive advantage as the only publicly listed company in India engaged in both beer production and IMFL manufacturing. This dual-segment presence mitigates seasonal demand fluctuations and enhances marketing synergies, enabling the company to optimize its distribution networks and achieve higher operational efficiency. The ability to leverage cross-category expertise strengthens its resilience in a highly competitive and regulated market environment.

Growth and Expansion Initiatives

Aligned with its long-term growth vision, SDBL is actively expanding its geographic footprint and product offerings to tap into high-potential markets, including Tier-II and Tier-III cities, where premiumization and consumption growth are accelerating. The company continues to invest in capacity enhancement, brand-building initiatives, and supply chain modernization to meet rising demand and sustain its leadership position in the Alcobev sector.

Commitment to Value Creation

With a strong emphasis on brand loyalty, innovation, and operational excellence, Som Distilleries & Breweries Limited is committed to delivering superior value to consumers, partners, and stakeholders. The companys ability to anticipate market trends, respond to evolving consumer preferences, and maintain strategic agility positions it as a formidable force in Indias dynamic alcoholic beverage industry.

Capacity (In million cases)	SDBL (Bhopal)	Woodpecker (Karnataka)	SDBOPL (Odisha)	Total Capacity
Beer	15.2	14.0	9.0	38.2
IMFL	0.6	2.7	0.6	3.9

 

BEER Portfolio

• Hunter Refreshing Strong Premium Beer

• Black Fort Super Strong Beer

 

• Black Fort Lager Premium Beer

• Woodpecker Lager Beer

• Power Cool Beer

• Legend Beer

IMFL

• Pentagon Gold Edition Whisky

• Milestone Blue Whisky

• Legend Premium Whisky

• Mahavat Passionately Crafted Whisky

RUM

• Pentagon XO Premium Rum

• Black Fort XXX Matured Rum

Vodka

• White Fox Triple Distilled Vodka

• White Fox Triple Distilled Vodka Naughty Green Apple

• White Fox Triple Distilled Vodka Naughty Orange

Brandy

• Legend Rare Brandy

• Milestone VSOP Brandy

RTD

• White Fox Refresh Cosmo Cranberry Vodka Mixed Ready to Drink

• White Fox Refresh Tangy Lemon Vodka Mixed Ready to Drink

• White Fox Refresh Naughty Orange Vodka Mixed Ready to Drink

• White Fox Refresh Wild Passion Fruit Vodka Mixed Ready to Drink

5. Threats and Concerns

The Alcoholic Beverages industry in India continues to navigate a challenging landscape, with several external and internal factors posing potential risks to business operations and growth:

1. Regulatory Challenges

The alcoholic beverages industry faces a highly complex and fragmented regulatory environment. In India, alcohol laws differ significantly from state to state, creating inefficiencies and hindrances for manufacturers and distributors. This disparity in regulations, ranging from production licenses to sales restrictions can lead to delays in market penetration and increased operational costs. Although there have been efforts to streamline regulations, such as digitization of licensing processes and simplifying the supply chain, the absence of a uniform policy remains a significant challenge. Companies must continuously adapt to shifting regulations and invest in compliance to avoid disruptions.

2. Shifting Consumer Preferences

As Indias economy evolves, so do consumer demands, particularly with the younger demographic leaning towards premium and craft beverages. There is also a rising trend towards low-alcohol and non-alcoholic options, influenced by health-conscious attitudes. The shift in consumer preferences towards premium products is evident in the growing popularity of international spirits, craft beers, and innovative blends. However, businesses in the Alcobev sector must continuously invest in research and development to meet these new demands, as consumer loyalty to traditional products declines. Companies must be agile and responsive to stay competitive in an increasingly diverse market.

3. High Taxation and Regulatory Burden

The Alcobev industry continues to face significant tax burdens, with the complex tax system in India intensifying operational challenges. State-wise variation in excise duties and taxes increases the cost of production and reduces profit margins. For instance, high taxes on beer, relative to spirits, add to its pricing challenges. The absence of a uniform Goods and Services Tax (GST) on the final product, despite the GST being applicable to raw materials, further impacts the industrys financial efficiency. The inability to claim input tax credits for raw materials like barley and glass bottles, due to the current taxation structure, reduces the sectors competitiveness. Advocacy for a more streamlined tax regime and the introduction of GST on finished products could alleviate some of these pressures.

4. Distribution Inefficiencies

The fragmented distribution network remains a persistent challenge in Indias Alcobev industry. While larger companies may have the resources to develop effective distribution channels, smaller and medium-sized players struggle to maintain consistent reach across the diverse Indian market. Moreover, delays and inefficiencies in distribution affect product availability, limiting market potential. Although certain states, such as Madhya Pradesh, have taken steps to improve distribution efficiency through digitized systems and auto-renewal of licenses, these efforts remain inconsistent across regions. To remain competitive, companies must invest in strengthening their distribution networks and collaborate with local partners to optimize logistics and supply chain operations.

5. Competitive Pressures

The Alcobev sector in India is marked by intense competition, with both domestic and international players competing for market share. Established brands dominate the market, making it difficult for new entrants to secure a position. The competition is intense, not only in terms of product offerings but also in marketing and branding. Companies must differentiate themselves through superior product quality, innovative branding, and effective marketing strategies. As a result, businesses in the Alcobev space need to focus on continuous innovation to remain relevant and capture consumer attention. Differentiating through unique flavours, packaging, and marketing campaigns is crucial to standing out in a crowded marketplace.

6. Geopolitical and Economic Uncertainty

Geopolitical developments and economic shifts globally can have a profound impact on the Alcobev industry. International trade policies, import/export tariffs, and changes in foreign exchange rates can disrupt supply chains, especially for companies that rely on imported ingredients and packaging materials. Additionally, geopolitical tensions and the shifting global economic landscape create uncertainties for businesses that operate in international markets. Companies must closely monitor these external risks and adjust their strategies accordingly to mitigate potential disruptions. The ongoing discussions around Free Trade Agreements (FTAs) may present opportunities, but companies should be cautious of the fluctuating global trade environment.

7. Rising Input Costs and Margin Pressures

The rising cost of raw materials, such as barley, sugar, glass bottles, and Extra Neutral Alcohol (ENA), continues to strain profit margins for Alcobev producers. Barley, a key agricultural commodity, is subject to price volatility, driven by factors such as climatic conditions and global supply chain disruptions. Additionally, the rising cost of energy and packaging materials further impacts the cost structure. Given the highly competitive nature of the industry and the lack of pricing flexibility in certain segments due to state- imposed maximum retail prices (MRPs), it becomes difficult for companies to pass on these higher costs to consumers. This combination of rising input costs and limited ability to adjust retail prices worsens margin pressures, threatening profitability.

8. Health and Wellness Trends

As awareness around health and wellness increases, consumer preferences are shifting towards healthier, lower- calorie, and alcohol-free alternatives. This growing focus on wellness, accelerated by the global pandemic, presents a challenge for the Alcobev industry, which must adapt to these changing preferences. Alcoholic beverages that cater to the growing demand for low-alcohol, sugar-free, or organic options are seeing higher consumer interest. To stay competitive, companies need to innovate and offer products that align with the wellness movement, such as low-alcohol beers, organic wines, and health-focused spirits.

9. Environmental Sustainability

Environmental sustainability is becoming an increasingly important concern for the Alcobev industry. The production process, including water usage, energy consumption, and waste management, generates significant environmental impact. As consumers and regulators place greater emphasis on sustainability, companies are expected to adopt greener practices, such as water conservation, renewable energy sources, and waste reduction. Additionally, packaging waste, particularly plastic bottles and glass, poses an environmental challenge. The industry must respond to these concerns by investing in sustainable practices and adopting environmentally friendly technologies. Embracing sustainability will not only enhance brand reputation but also ensure compliance with evolving environmental regulations.

The Alcobev industry in India faces multiple external and internal risks, including regulatory complexities, evolving consumer demands, high taxes, distribution inefficiencies, and intense competition. Addressing these challenges requires a proactive and adaptive approach. Companies must focus on continuous innovation, enhance distribution capabilities, advocate for regulatory reforms, and invest in sustainable practices to ensure long-term success. A strategic and informed response to these threats will help businesses navigate an increasingly dynamic and competitive environment.

6. Performance Review

In FY2025, our company delivered exceptional performance and achieved remarkable financial growth. The annual volume surged to 234 lakh cases, reflecting a growth of 10.0% from the previous fiscal year. This growth highlights the sustained consumer demand for our Strong Operational and Financial Performance in FY2025.

FY2025 was a landmark year for the Company, characterized by robust operational execution, strategic capacity expansion, and exceptional financial performance. Our annual sales volume reached 234 lakh cases, representing a 10.0% year-on-year growth, driven by sustained consumer demand and effective market strategies tailored to evolving preferences. This growth underscores the strength of our diversified product portfolio and the success of our distribution and brand-building initiatives.

Strategic Capacity Expansion and Infrastructure Development

Significant operational milestones were achieved during the year to reinforce our long-term growth trajectory:

Greenfield Project in Uttar Pradesh: Construction commenced on a state-of-the-art greenfield facility in Farrukhabad, Uttar Pradesh, with a planned investment of ^600 crore. Once operational, this facility will have an installed capacity of 10 lakh cases of beer per month and will also house an integrated distillery unit, enhancing our product mix and market reach.

Odisha Plant Expansion: We successfully completed the capacity expansion at our Odisha facility, scaling production from 60 lakh cases to 90 lakh cases annually. This enhancement will enable deeper penetration in key markets and strengthen supply chain efficiency across eastern India.

These strategic investments will significantly augment production capabilities, improve operating leverage, and support the Companys vision for sustainable growth.

Financial Highlights

FY2025 demonstrated strong financial resilience and profitability improvement:

• Total Income: Increased to Rs 14,474 million, registering a 13% year-on-year growth, driven by higher volumes and favourable product mix.

• Segment Revenue:

- Beer: ^ 12781.15 million 88% of total revenue, from 92.8% in FY2024

- IMFL: ^1196.71 million (12% of total revenue)

• Realization per Case:

- Beer: ^545

- IMFL: Rs 1,046

• EBITDA: Rs 1,807 million, reflecting 16% growth over the previous year, supported by improved operational efficiencies and cost optimization initiatives.\

• Net Profit: Rs 1,045 million, with a net profit margin of 7.2%, demonstrating enhanced profitability and disciplined financial management.

This strong performance was driven by an optimal pack mix and brand mix strategy, supported by targeted marketing efforts and premiumization initiatives.

Outlook and Strategic Priorities

Looking ahead, the Company remains committed to:

• Accelerating capacity additions to meet rising demand.

• Driving innovation and premiumization across product segments.

• Expanding distribution networks and digital engagement platforms.

• Strengthening cost efficiency through automation and process optimization.

With these initiatives, the Company is well-positioned to capture emerging opportunities, reinforce market leadership, and deliver sustained value creation for all stakeholders.

7. Liquidity

As of 31st March 2025, total debt was Rs. 1,710 million, with cash and cash equivalents of Rs. 200 million, resulting in a net debt of Rs. 1,510 million. The Gross Debt to Equity ratio stood at 0.26x. The Net Debt to EBITDA ratio stood at 0.63x

8. Major Corporate Developments Product Performance:

- Power Cool secured its position as the second most popular beer in Karnataka, highlighting its growing brand equity in a competitive market.

- The IMFL portfolio delivered an exceptional performance with volumes rising nearly 70.0% during April and May 2025, driven by strong demand and effective distribution strategies.

- The newly launched Legend strong beer brand contributed significantly to volume, with 19.2 lakh cases sold in FY2025.

Capacity Expansion

- A greenfield project with a total outlay of Rs. 600 crore was initiated in Farrukhabad, Uttar Pradesh. The facility, spread across 40 acres, will include brewery, distillery, and advanced packaging operations with an annual capacity of over 12 million beer cases.

- Capacity expansion at the Odisha plant was successfully completed in Q4 FY25, enhancing production capabilities to support regional demand.

Operational Achievements:

- Dispatches from the Bhopal facility rose by over 32.0% in April 2025, reflecting strong seasonal demand and operational agility.

- SOM became the second-largest beer company in Jharkhand, capturing a 22.0% market share. o IMFL realization improved to Rs. 991 per case in Q4 FY25, indicating stronger premiumization and product mix optimization

9. Business Strategy

Portfolio Diversification

The Company continues to maintain a strategic focus on the strong beer segment, where flagship brands such as Hunter and Power Cool remain category leaders. With the rising momentum in premiumization, the Company is deepening its presence among aspirational consumers through limited-edition variants and newer packaging formats that enhance brand appeal. The launch of Legend has further strengthened the Companys ability to address evolving consumer preferences in the high- strength beer category.

To ensure broader market reach, the product portfolio is structured to cover multiple price points and regional tastes. This allows the Company to connect with varied consumer demographics and retain relevance in an increasingly competitive landscape. The Company is also steadily growing its IMFL portfolio, creating additional opportunities for future growth

Geographic Expansion and Capacity Planning

An integrated pan-India expansion strategy is in place, backed by operational investments in new markets and manufacturing infrastructure. The ongoing construction of a greenfield plant in Uttar Pradesh is expected to significantly enhance supply chain agility and support demand in North and Central India.

The Odisha plant capacity enhancement and increased distribution in southern markets such as Tamil Nadu reinforce the Companys commitment to geographic de-risking and consistent volume growth across regions.

Cost Management and Margin Improvement

The Company remains focused on disciplined cost management and sustained margin enhancement despite our increased use of new glass bottles.

To mitigate these challenges, the Company has adopted a multipronged approach that includes strategic sourcing, vendor consolidation, and long-term procurement contracts to secure price stability. Operational efficiencies are being enhanced through process optimization, automation initiatives, and improved asset utilization across manufacturing facilities.

Looking ahead, the anticipated softening of raw material prices, combined with higher operating leverage from capacity expansion and volume growth, is expected to drive significant improvement in gross margins over the medium term.

Future Outlook

The Company remains committed to sustaining its growth momentum through a balanced approach of capacity expansion, innovation, and digital transformation.

Strategic investments are being directed towards:

• New Manufacturing Assets: Enhancing production capabilities to meet rising demand and strengthen regional presence.

• Brand Development: Building stronger consumer connect through targeted marketing and differentiated brand propositions.

• Automation and Digital Efficiencies: Leveraging advanced technologies for process automation, data-driven decisionmaking, and improved supply chain agility.

• Talent and Capability Building: Attracting and developing skilled talent to support the Companys ambitious growth trajectory.

A strong emphasis on consumer-centric innovation and distribution excellence will continue to be the cornerstone of the Companys strategy. Ongoing evaluation of product performance and deep consumer insight mapping ensure that our portfolio remains relevant and competitive in an evolving market landscape. This proactive approach positions the Company to deliver sustainable growth and long-term value creation for all stakeholders.

10. Human Resources

At SOM, people are recognized as the most valuable asset and the driving force behind our sustained growth and operational excellence. The Companys philosophy is deeply rooted in fostering a high-performance culture characterized by collaboration, accountability, continuous learning, and innovation.

We believe that an engaged, empowered, and skilled workforce is essential to achieving long-term business success. To this end, our Human Resources (HR) strategy is designed to attract, retain, and develop top talent while creating an environment where individuals can thrive both professionally and personally.

Building a High-Performance Culture

Our culture emphasizes collaboration, ownership, and shared responsibility for success. This is supported through:

• Structured performance management systems that align individual goals with business objectives.

• Recognition and reward mechanisms to celebrate high performers and foster motivation across levels.

• Cross-functional collaboration to encourage knowledge sharing and innovation.

Talent Acquisition & Development

SOM continues to focus on strategic talent acquisition, ensuring that we bring in individuals with the right mix of skills, values, and adaptability. Beyond hiring, we invest heavily in continuous capability building, including:

• Induction and onboarding programs for seamless integration of new employees.

• Skill-building initiatives tailored for both technical and leadership competencies.

• Leadership development programs that prepare high- potential employees for future leadership roles.

Our learning ecosystem combines classroom training, on-

the-job learning, and digital modules, ensuring flexibility and

scalability across diverse locations and functions.

Employee Engagement & Well-being

To maintain a motivated and engaged workforce, the Company undertakes employee engagement initiatives such as:

• Team-building workshops and cultural programs to enhance collaboration and inclusion.

• Periodic surveys to capture employee sentiment and feedback for actionable improvements.

• Wellness programs that include physical health, mental well-being, and financial awareness.

Our policies are employee-centric and feedback-driven, reviewed regularly to stay aligned with evolving workforce expectations while reinforcing transparency, fairness, and trust.

Diversity, Equity & Inclusion (DEI)

We are committed to equal opportunity principles in recruitment, learning, and career progression, irrespective of gender, age, ethnicity, religion, or background. Our DEI framework seeks to create a workplace that values different perspectives, thereby fostering innovation and better decisionmaking.

Safety & Industrial Relations

Safety remains a non-negotiable priority at SOM. Comprehensive health and safety policies are implemented across all operations, including regular training, audits, and emergency preparedness drills.

The strong and transparent relationship between management and employees has ensured harmonious industrial relations, resulting in zero disruptions to operations during the year.

Workforce Snapshot (as of March 31, 2025)

• Total Employees: 494 across functions, geographies, and roles.

• Average Tenure: [35 years], reflecting strong employee loyalty and retention.

Looking Ahead

SOM remains committed to strengthening its people-first approach. Our focus areas for the coming years include:

• Advanced digital learning platforms for scalable skill development.

• Expanded leadership pipelines through structured mentoring programs.

• Enhanced employee well-being frameworks addressing holistic health and work-life integration.

Our unwavering commitment ensures that employees derive pride, purpose, and growth from their association with SOM, while contributing meaningfully to our business objectives and organizational vision.

11. Internal Control Systems & Their Adequacy

We have implemented a robust and structured internal control system designed to ensure operational efficiency, safeguard assets, and uphold compliance with all applicable laws, regulations, and internal policies. This framework facilitates informed decision-making, mitigates business and operational risks, and ensures transparency and integrity in financial as well as operational reporting.

A key element of this system is the comprehensive internal audit mechanism, which covers all critical functions across our three manufacturing plants. These audits are conducted periodically by independent professionals to assess the adequacy and effectiveness of controls, compliance adherence, and operational efficiency at each facility. Special attention is given to areas involving inventory management, procurement, production processes, and statutory compliance to identify and address potential vulnerabilities.

The findings from these audits are systematically documented and presented to the Audit Committee. The Committee closely monitors the implementation of corrective actions and recommends further enhancements to strengthen control systems. This process ensures that internal controls remain dynamic, adaptive, and aligned with the Companys strategic objectives.

Additionally, controls are specifically designed to prevent unauthorized use of assets, maintain accurate and timely records, and ensure full compliance with regulatory requirements, including environmental and safety standards at all plants. Statutory Auditors conduct limited reviews in accordance with listing regulations, and their reports are evaluated by the Audit Committee and shared with relevant regulatory authorities for complete transparency.

Our internal control framework undergoes continuous review and refinement to meet evolving business requirements and regulatory expectations. By integrating plant-level audits, centralized oversight, and technology-driven monitoring, we reinforce our commitment to operational excellence, governance, and long-term sustainability.

12. Corporate Social Responsibility

Corporate Social Responsibility (CSR) is an integral part of the Companys value system and business conduct. The CSR framework is designed to create long-term positive impact by addressing critical areas such as education, healthcare, poverty alleviation, and environmental sustainability. We remain committed to inclusive development, ensuring its initiatives are aligned with the needs of the communities it operates in.

A structured policy guides the Companys CSR efforts, enabling targeted interventions that uplift underserved segments while fostering partnerships with local stakeholders. These initiatives aim to improve quality of life and promote environmental stewardship, health awareness, and access to learning opportunities.

The Company believes that sustained engagement and accountability are key to driving meaningful change. All CSR activities are monitored by the CSR Committee, constituted in accordance with Section 135 of the Companies Act, 2013. The Annual Report on CSR activities, as mandated under Sections 134 and 135 of the Companies Act, 2013, read with applicable Rules, forms part of the annexure to this Report.

13. Information Technology (IT)

Technology continues to play a strong role in supporting business agility, operational integration, and strategic decisionmaking across the Company. A strong IT framework enables seamless connectivity across manufacturing units, depots, and distribution channels, facilitating real-time coordination and enhanced responsiveness to market dynamics.

Our Digitization initiatives remain central to improving customer engagement and internal efficiencies. The ERP system deployed across operations ensures standardized processes, strengthens supply chain performance, and elevates quality monitoring. Business-critical data and analytics generated from the platform support faster, more informed decision-making across functions.

Regular investments in IT upgrades, automation, and cybersecurity strengthens the Companys digital infrastructure and ensure scalability in line with growth plans. Enhanced digital collaboration with channel partners and distributors improves service delivery and optimizes communication across the value chain.

By aligning technology with core operational priorities, the Company continues to create a competitive edge while ensuring secure, efficient, and future-ready systems that support sustainable growth.

14. Supply Chain Management

A well-integrated and responsive supply chain remains pivotal to ensuring uninterrupted operations and timely product availability. Our supply chain strategy is anchored on efficiency, agility, and cost optimization, enabling seamless coordination from sourcing to distribution.

We leverage advanced demand forecasting tools and realtime inventory management systems to align production with market needs, minimize waste, and avoid stock imbalances. Strategic sourcing initiatives, driven through dedicated centres of excellence, strengthen vendor relationships and enhance procurement efficiency, even in volatile economic conditions.

Logistics optimization remains a core focus, ensuring on-time deliveries while reducing transit costs and enhancing service reliability. The supply chain framework also incorporates robust sustainability and compliance measures, reinforcing our commitment to ethical and responsible business practices.

We foster strong partnerships with suppliers and channel partners, enabling operational resilience and responsiveness to dynamic market conditions. Continued investments in digital technologies and process enhancements position our supply chain as a critical driver of long-term growth and customer satisfaction.

Encouraging the Local Ecosystem

In line with our inclusive growth philosophy, we actively engage with local suppliers promoting regional economic development and job creation. By prioritizing local sourcing wherever feasible, we reduce lead times, strengthen community relationships, and contribute to building a self-reliant and sustainable ecosystem. This approach not only supports local businesses but also enhances supply chain agility and resilience.

15. Cautionary Statement

Statements in the Management Discussion and Analysis describing the Companys objectives, expectations, predictions and assumptions may be forward looking within the meaning of applicable Securities Laws and Regulations. Actual results may differ materially from those expressed herein, due to uncertainties related to the business model. Important factors that could influence the Companys operations include global and domestic economic conditions affecting demand, supply, price conditions, change in Governments regulations, tax regimes, other statutes and other factors such as litigation and industrial relations. The risk related information provided is not exhaustive and is for information purposes only. Readers are advised to refer to related disclosures in the Companys regulatory filings and exercise individual judgement in assessing risks associated with the Company.