Suraj Industries Ltd Management Discussions

INDUSTRY STRUCTURE AND DEVELOPMENTS

India represents a dynamic and rapidly evolving market for alcoholic beverages, driven by favorable demographics, urbanization, and rising disposable incomes. With nearly 1.3 billion people, India boasts one of the youngest populations globally, with approximately 50% below the age of 25 and 65% below the age of 35, which strongly supports the upward trajectory in per capita alcohol consumption.

The alcohol industry contributes significantly to the national economy by generating employment, income, and promoting overall economic growth. The market is predominantly led by whisky, followed by beer and wine. The increasing number of working-age adults, shifting social norms, and changing consumer preferences have contributed to the expansion of alcohol consumption. Furthermore, a supportive regulatory environment and constructive government policies can further accelerate industry growth.

Despite the legal drinking age ranging between 18 to 25 across various states, the continued expansion of the middle class, greater purchasing power, and reduced cultural resistance to alcohol consumption underline the growth potential in the sector.

GLOBAL OUTLOOK - ALCOHOL SECTOR

Entering FY 2025, the global economy exhibited renewed optimism, supported by easing inflationary pressures and resilient consumer demand. According to the IMFs April 2025 World Economic Outlook, global GDP is projected to grow in the range of 3.1% to 3.3%. While advanced economies are expected to witness moderate growth amid tight monetary conditions, emerging markets?particularly India? are poised to lead the global economic momentum, backed by robust domestic consumption, ongoing structural reforms, and sustained government spending.

As global supply chains diversify and trade dynamics shift, emerging economies are becoming increasingly central to global recovery. These trends offer a favorable backdrop for the alcohol industry, particularly in high-growth markets like India, where evolving consumer preferences and rising disposable incomes continue to support long-term sectoral expansion.

The Indian Alcohol Market

According to the classification in India, the alcobev sector is structured as follows:

? Indian-Made Foreign Liquor (IMFL): Includes rum, brandy, whiskey, vodka, gin, etc.

? Beer: Both strong and mild variants, led by brands like Kingfisher.

? Wine: Comprising red, white, and rose, primarily consumed in urban middle-class segments. Maharashtra and Karnataka are key producers.

? Indian-Made Indian Liquor (IMIL) or Country Liquor: Locally consumed beverages such as Feni, Mahua, and others, popular in rural and regional markets.

Andhra Pradesh, Karnataka, Maharashtra, Telangana, Uttar Pradesh and West Bengal are among the principal consumer states. Alcohol Consumption in India

India continues to witness a steady rise in alcohol consumption, driven by favorable demographic trends, increasing urbanization, and evolving social attitudes. The countrys large and youthful population, with approximately 65% below the age of 35, presents a significant growth opportunity for the alco-bev industry. Changing lifestyles, rising disposable incomes, and a growing preference for branded and premium alcoholic beverages are reshaping consumer behavior across urban and semi-urban regions.

According to the National Family Health Survey-5 (2019-21), alcohol consumption remains higher in rural areas compared to urban areas, with notable regional variations. States such as Arunachal Pradesh, Telangana, and Sikkim record the highest levels of alcohol consumption, while others like Gujarat and Bihar enforce prohibition policies.

The country ranks among the top global consumers of alcohol by volume, particularly in segments like whisky and country liquor, underscoring the industrys resilience and potential. As socio-cultural norms continue to evolve and market access improves, the outlook for alcohol consumption in India remains robust.

This highlights significant regional disparities and cultural factors that shape consumption patterns.

OPPORTUNITY & THREATS, RISK & CONCERNS Opportunities and Threats:

> There is huge opportunity in the sale of potable liquor. The demand for potable liquor is showing a steady increase year on year.

> The Companys strong focus on understanding consumer preferences, product development and roll out capabilities.

> Long standing relationship with our customers.

> Low per capita consumption, rapid urbanization, favorable macroeconomics indicators, higher disposable incomes and evolving lifestyles bode well for the industry as a whole.

> The business of potable liquor is subject to policies of the State Governments as it is a State subject. There is always a threat of change in Government policies in terms of "Prohibition in consumption of Liquor" as imposed in States of Gujarat and Bihar.

> High competitive intensity due to inflationary pressures and other macroeconomics factors.

> Consumption degrowth due to inflationary pressures and other macroeconomic factor FINANCIAL PERFORMANCE

Standalone

During the financial year 2024-2025 under review, the total Revenue of the company was Rs. 3218.19 lakh as against Rs. 5176.53 lakh in the previous year and the net loss after tax was Rs. 72.11 Lakhs as compared to profit of Rs. 157.11 Lakhs in the previous financial year 2023-24.

Consolidated

During the financial year 2024-2025 under review, as per the Consolidated Financial Statements, the net profit is Rs. 402.76 Lakhs which includes share of profit of Associate company amounting to Rs 589.48 Lakhs as compared to profit of Rs. 445.90 Lakhs (inclusive of associates profit of Rs. 297.36 Lakhs) in the previous financial year.2023-24.

OUTLOOK

During the financial year 2024-25, the Company continued its operations in two distinct business verticals:

a) Liquor Business

The liquor business represents a key strategic focus area for the Company. The activities under this segment include:

??? Processing and Bottling of Rajasthan Made Liquor (RML): The Company undertakes contract manufacturing and bottling of RML for Rajasthan State Ganganagar Sugar Mills Limited (RSGSM), a Government of Rajasthan undertaking, which holds the exclusive wholesale rights for Country Liquor and RML in the state of Rajasthan.

??? Own Brand Manufacturing and Marketing: The Company also manufactures and sells of Country Liquor under its own

proprietary brands, thereby expanding its market presence and brand footprint in the state.

??? Expansion of Bottling Capacity: In line with its strategic growth initiatives, the Company commenced commercial production on May 24, 2024, on a new, fully-automated liquor bottling line at the premises of RSGSM, located Near Railway Station, Mandore, Jodhpur, Rajasthan-342006. This new facility has a bottling capacity of 2,200 cases per day, with each case consisting of 48 bottles of 180 ml. The enhanced infrastructure is expected to significantly boost operational efficiency and output volumes.

b) Trading Business

The Company is engaged in the trading of edible oils and related commodities, including but not limited to Palm Oil, Soybean Oil, Rice etc.. However, the company is now focusing on its Liquor vertical and is gradually coming out of the trading business.

M/S CARYA CHEMICALS & FERTILIZERS PRIVATE LIMITED - UNLISTED MATERIAL SUBSIDIARY COMPANY

The Company holds 85.75% equity stake in M/s Carya Chemicals & Fertilizers Private Limited ("CARYA"), as on the date of this Report.

CARYA has established a Bottling Plant for the manufacture of Indian Made Foreign Liquor (IMFL) and Country Liquor in Rajasthan. The plant is located at SP 1-2, RIICO Industrial Area, Guwadi & Majhari, Block Shahbad, District Baran, Rajasthan - 325217. CARYA has entered into Manufacturing tie up Agreement with M/s Allied Blenders & Distillers Ltd for bottling their reputed IMFL Brands in the unit.

Additionally, CARYA is in the process of setting up a grain-based distillery for the manufacture of Extra Neutral Alcohol (ENA), which will further strengthen its product portfolio and operational capabilities in the liquor. The Distillery unit is in advanced stage of construction.

RISKS AND CONCERNS

• The industry is exposed to multiple regulatory risks emanating from state taxes, adverse ruling from courts and changes in regulations with respect to pricing, licensing, working of operating facilities, manufacturing processes, marketing, advertising, and distribution.

• Further due to regulated nature of the industry, your Company is exposed to the restrictions by the state governments on production, movement and sale of spirits.

• Another concern emeges from the dependence on state governments to get price increases or changes. Margins may get severely impacted due to commodity cost inflation.

• Prohibition in certain states poses a threat to legitimate sales. The business of potable liquor is subject to policies of the State Governments as it is a State subject. There is always a threat of change in Government policies in terms of "Prohibition in consumption of Liquor" as imposed in States of Gujarat and Bihar.

CASH FLOW ANALYSIS

The Cash Flow Statement for the year under reference in terms of Regulation 34(2) of the (Listing Obligations and Disclosures Requirements) Regulations, 2015 is annexed with the Annual Accounts of the Company.

FINANCE COST

The financial charges for the year ended March 31, 2025 was Rs. 45.08 Lakhs. This is mainly on account of interest payable on the unsecured loans and vehicle loan taken by the company.

OTHER EQUITY (RESERVES AND SURPLUS)

As on March 31, 2025, the Reserves and Surplus in the Balance Sheet at Rs 4663.04 Lakh as compared to the balance of Rs. 3088.94 Lakhs during the previous Financial Year 2023-24.

EARNING PER SHARE

Earnings per share of the company is (0.49) as against the EPS of 1.24 in the previous year.

SIGNIFICANT CHANGES IN KEY FINANCIAL RATIOS

Ratios	2024-25	2023-24	Variation (in %)	Reason for change
Debtors Turnover	0.15	0.30	-50.31	Ratio improved due to reduction in trade receivables.
Inventory Turnover Ratio (in days)	51.10	75.02	-31.88	Due to a significant decrease in turnover while inventory remained relatively stable.
Interest Coverage Ratio	-1.10	3.12	-135.26%	Caused by operating losses and insufficient earnings to cover interest expenses.
Current Ratio	1.26	0.70	80.93	Improved due to a higher increase in current assets as compared to current liabilities.
Debt Equity Ratio	0.03	0.23	88.86	Improved due to repayment of debt and increase in shareholders eauitv.
Operating Profit Ratio (in %)	-1.68	6.29	-126.7	Declined due to reduced revenue and increased operating expenses.
Net Profit Margin (in %)	-2.46	3.04	- 180.9	Declined due to reduced revenue and increased operating expenses.

INTERNAL CONTROLS AND THEIR ADEQUACY

The Company has adequate Internal Control System, commensurate with the size, scale and complexity of its operations. The Internal Audit function is handled by an external firm of Chartered Accountants. The Internal Control Systems are regularly being reviewed by the Companys Internal Auditors with a view to evaluate the efficacy and adequacy of Internal Control Systems in the Company, its compliance with operating systems, accounting procedures and policies at all locations of the Company and to ensure that these are working properly and wherever required, are modified/ tighten to meet the fast changing business requirements.

The Audit Committee regularly interacts with the Internal Auditors, the Statutory Auditors and Senior Executives of the Company responsible for financial management and other affairs. The Audit Committee evaluates the internal control systems and checks and balances for continuous updation and improvements therein. The Audit Committee also regularly reviews and monitors the budgetary control system of the Company as well as the system for cost control, financial controls, accounting controls, physical verification, etc. The Audit Committee regularly observes that proper internal financial controls are in place including with reference to financial statements. During the year, such controls were reviewed, and no reportable material weakness was observed.

ENIVRONMENT AND SAFETY

Quality and Environment safety is of primary importance to the Company. It ensures that the quality control system remains robust and the products undergo strict quality checks.

HUMAN RESOURCES AND CORPORATE SOCIAL RESPONSIBILITY

Human capital is the most essential part of the Company. The Company keeps promoting a collaborative work environment where all the employees feel safe and a part of the Company. The Human Resources policies of the Company are aimed at attracting, nurturing and retaining talent in a constantly evolving business environment while ensuring trust, transparency and teamwork amongst its employees.

The Company recognizes the importance of human resources in realising its growth ambitions and believes in nurturing talent within the organization to take up leadership positions. During the year Company continued to maintain healthy and cordial relationship with its employees.

CAUTIONARY STATEMENT

Statements made in the Management Discussion and Analysis Report relating to the Companys objectives, projections, outlook, estimates, and expectations may constitute “forward-looking statements” within the meaning of applicable securities laws and regulations. These forward-looking statements are based on certain assumptions and expectations of future events, and actual results may materially differ from those expressed or implied.

Several factors may impact the Companys performance, including but not limited to changes in economic conditions affecting demand and supply, fluctuations in domestic and international prices, government policies and regulations, tax laws, legal proceedings, climatic conditions, and other incidental factors beyond the Companys control.

The Company does not undertake any obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise

	By Order of the Board
	For Suraj Industries Ltd
	Sd/-
	Sanjay Kumar Jain
	Chairperson of the Company
	(DIN: 01014176)
Date: July 28, 2025	Address: 263 , SFS, Hauz Khas
Place: New Delhi	New Delhi -110016