Dear Shareholders,
The macro environment in FY2023 was marked by raw material volatility
and inflationary pressures triggered largely by the continuing geopolitical tensions. Amid
these challenges, the Indian alcohol beverages industry showed remarkable resilience to
post strong growth. The easing
Covid situation led to a significant demand revival during the year.
Further aided by the growing premiumisation trend, this boosted industry performance.
Radico Khaitan was quick to harness the emerging demand to post a
robust performance. Our strong premiumisation focus, coupled with our deep consumer
understanding and centricity, helped us in posting performance excellence. We successfully
delivered a broad-based, premium volume growth across our product portfolio and
geographies, despite the overall challenging operating environment.
Our sustained investment behind our core brands, agile supply chain,
and robust distribution network helped us drive growth in the Prestige & Above
category volumes, which registered 17% year-on-year growth on a very high base. Our strong
premiumisation focus led to a growth of over 150% compared to the pre-pandemic levels in
the Prestige
& Above brands, resulting in sustainable improvement in the
realisation per case. The complexities and challenges of the external environment failed
to dampen our spirits and we continued to move actively forward towards the accomplishment
of our targets.
I would like to take a moment here to thank all of you for your
sustained confidence and support in our onward journey. As a mark of our gratefulness and
in line with our strategy of maintaining a balance between delivering returns to
shareholders and preserving funds for growth capital, we propose a consistent dividend of
3.00 per share.
I am also grateful to our dedicated teams, without whose commitment and
hard work we would not have succeeded in staying on course with our growth and expansion
plans. I assure all of you that we shall continue to keep your best interests at heart
going forward.
Celebrating our Premiumisation Journey
Our performance for FY2023 was not an one-o_ achievement but the
cumulative demonstration of our deep-rooted strengths and strategic focus, coupled with a
sharp agility which helped us capitalise on our brand equity. It is a testimony of our
sustained focus on innovation and our deepening consumer connect. The launch of new
products and the fact that two more of our brands achieved a million case sales stand out
as some of the landmark feats during the year in our quest to drive greater premiumisation
in the IMFL industry.
I am happy to share that the alcobev business, both in the domestic and
international markets, is seeing a marked shift towards premium products, thus driving
greater demand for luxury brands. Our strong, industry-leading position in the premium and
luxury categories lends us a powerful edge, and is helping us make huge strides in our
premiumisation journey. Our premium brands growth is very strong, particularly in luxury
brands such as Jaisalmer Indian Craft Gin and Rampur Indian Single Malt.
Scaling to Grow
Keeping pace with the evolving macro trends, we, at Radico Khaitan,
centred our e_orts on augmenting our capacities and capabilities during the year. Our
focus was on adding scale to our brand and value proposition through strategic investments
in the key areas driving future growth.
Besides the conversion of the Rampur distillery into a dual-feed plant,
we have also expanded our bottling capacities by commencing bottling operations at
Sitapur. The commercial operations of the distillery will start in FY2024, and will push
the growth of our IMFL, Country Liquor and UPML business in Uttar Pradesh. The
availability of additional grain-based ENA, post the successful completion of our Sitapur
distillery, will further help us to e_ectively harness the future growth opportunities in
the branded business. We have also expanded our craft gin production capacity to three
times.
Expansion of our premium brand portfolio, investments in technology and
automation, and enhancement of operational excellence, along with dynamic financial
management, will be the key areas of our focus to steer long-term sustained business
growth.
Focussing on Sustainability
We are strong proponents of the idea that sustainable business growth
necessitates an unwavering commitment to sustainability. Our programmes are carefully
designed to drive social and economic progress within the society. Our primary focus is on
enhancing community development, improving livelihoods, promoting education and
healthcare, including preventive healthcare measures, and safeguarding environmental
sustainability.
Our strong focus on water conservation is manifest in the rainwater
harvesting and ground level recharging initiatives undertaken at our plants. We have
integrated sustainability into our future roadmap and will continue to work closely with
the communities around our units to ensure the realisation of our sustainability targets.
Way forward
With the long-term dynamics in the Indian IMFL industry showing
attractive growth opportunities, we are confident that we have the right strategies to
deliver a balanced growth and value creation in the coming years. We remain committed to
our long-term strategy of focussing on premiumisation, managing our business with agility,
and driving backward integration e_ciencies. While the raw material scenario still remains
volatile, we have seen early signs of stability in certain commodities. Furthermore, we
have recently received price increases in the non-IMFL business in the state of UP, which
will hold us in good stead in the next fiscal year.
We shall continue to focus on strengthening our premium brand portfolio
through robust go-to-market strategies. Our aim is to target premium growth, proactively
execute our new projects, and work towards making Radico Khaitan a future-ready
organisation.
Warm regards,
Lalit Khaitan
Chairman & Managing Director