Varun Beverages Ltd

Dear Stakeholders, It gives me immense pleasure to present the 30^th Annual Report of Varun Beverages Limited (VBL).

Ravi Jaipuria

Promoter & Non-Executive Chairman

Overview of the year

We are delighted to share that CY 2024 has been a year of healthy operational and financial performance for VBL. Our revenue growth was supported by organic volume expansion, improved product mix, and contributions from recent acquisitions. India volumes grew 11.4%, reflecting the strength of our distribution network and operational execution during a dynamic market environment. Our international business also maintained strong momentum, with particularly encouraging results from the African markets following the successful integration of BevCo in South Africa and the commissioning of our Democratic Republic of Congo (DRC) facility. Consolidated volumes increased by 23.2%, largely led by new territories resulting in consolidated revenues increase by 24.7%, EBITDA growth of 30.5%, and PAT growth of 25.3% for the year.

Throughout the year, we focused on expanding our manufacturing footprint and improving our on-ground execution capabilities. The commissioning of multiple greenfield facilities across India and Africa, along with strategic partnerships to diversify our portfolio into snacks and value-added beverages, reflects our commitment to capitalizing on emerging consumer trends. Additionally, we took steps to further strengthen our international presence by signing share purchase agreements to acquire PepsiCo's business in

Tanzania and Ghana, subject to regulatory and other approvals. Integration of these acquisitions, along with our operations in South Africa, shall strengthen our presence in key international markets.

Strengthening growth capabilities

CY 2024 was marked by significant progress in expanding our manufacturing footprint to meet growing demand across key markets. In India, we commissioned three new greenfield facilities in Supa (Maharashtra), Gorakhpur (Uttar Pradesh), and Khordha (Odisha). These state-of-the-art plants have enhanced our capacity to cater to the increasing demand in under-penetrated markets.

Internationally, our Democratic Republic of Congo (DRC) facility became operational and rapidly scaled to 100% utilization within months. This remarkable performance has reinforced our belief in the untapped potential of the region, and we are now preparing for backward integration and the commissioning of a second facility to strengthen our operations further.

Furthermore, a key aspect of our growth strategy is the continuous expansion and enhancement of our distribution network and chilling infrastructure. Strengthening these areas is crucial for deepening our presence in both established and under-penetrated markets. These strategic investments reflect our proactive approach to capturing growth opportunities and ensuring we are well-prepared to meet future demand.

Expanding partnership with PepsiCo

During the year, we deepened our collaboration with PepsiCo, venturing into new segments and geographies to diversify and grow our product portfolio. In CY 2024, we entered into an Exclusive Snacks Appointment Agreement to manufacture and package Cheetos in Morocco by May 2025. Building on this momentum, we signed another exclusive snacks franchising appointment for "Simba Munchiez" in Zimbabwe and Zambia, with distribution starting in February 2025, and manufacturing set to commence by October 2025 and April 2026, respectively. Our expansion into the snacks market in these three countries marks a key milestone in enhancing our portfolio and leveraging synergies with our existing infrastructure.

Accelerating growth in international markets

CY 2024 was a year of remarkable progress in strengthening our presence in the African market. A key milestone was the successful integration of The Beverage Company Proprietary Limited (BevCo) in South Africa, enhancing our operational capabilities and accelerating growth across the continent. This acquisition enabled the Company to consolidate its presence in franchised territories in South Africa, Lesotho, and Eswatini, while also securing distribution rights in Namibia, Botswana, Mozambique, and Madagascar. Building on this momentum, we further expanded our footprint through strategic acquisitions in key African regions.

We also entered into share purchase agreements to acquire PepsiCo's business in Tanzania and Ghana, subject to regulatory and other approvals. This includes 100% stake in SBC Beverages Tanzania Limited (SBCT), a market leader with five manufacturing facilities. SBCT's strong operational infrastructure and diverse product portfolio, including PepsiCo brands and its own energy drink, Supa Komando, position us to effectively address the growing consumer demand in East Africa.

Similarly, our acquisition of SBC Beverages Ghana Limited (SBCG) will solidify our footprint in West Africa.

Sustainability Initiatives

At VBL, sustainability is a cornerstone of our strategy. This year, we furthered our commitment to environmental stewardship by broadening the scope of initiatives like PET recycling, PET light-weighting, energy-efficient manufacturing, increasing renewable energy contribution and water conservation. A key focus is achieving a "net positive" water balance by replenishing more water than we use through conservation, recycling, and groundwater recharge projects, thereby ensuring a positive impact on water resources. These efforts align with PepsiCo's global PEP+ objectives, reinforcing our shared commitment to a sustainable future.

Through these strategic initiatives, we have established a clear roadmap for long-term sustainability. As part of this commitment, we have set ambitious Net-Zero targets, officially validated by the Science Based Targets initiative (SBTi), aiming to achieve net-zero greenhouse gas emissions across our entire value chain by 2050.

Additionally, our dedication to environmental stewardship has earned us a spot on the prestigious

CDP A List based on the 2024 CDP scores: • A for Climate • A- for Water Security

This recognition underscores our commitment to sustainable practices and our ongoing efforts to drive meaningful change. We continue to integrate environmentally responsible practices across our operations, minimizing our footprint while delivering value to stakeholders. Sustainability remains central to our growth, enabling us to make a lasting impact in the communities and regions we serve.

QIP issue

In November 2024, we successfully raised 75,000 Million through a Qualified Institutional Placement (QIP). Over 13.27 crore equity shares were allotted at an issue price of 565 per share. This significant capital raise demonstrates the trust and confidence of investors in the Company's strategic direction and long-term potential.

The proceeds from this QIP have strengthened our financial position and provided the flexibility to pursue our ambitious growth plans. These funds will support our expansion into new geographies, strategic acquisitions, and further investment in enhancing our operational capabilities.

Dividend & share-split

At VBL, managing our business efficiently for the benefit of all stakeholders is a cornerstone of our philosophy. A critical element in delivering value to our shareholders and securing their long-term confidence is through a consistent and transparent return of capital. In alignment with this approach, our Board of Directors established a formal dividend distribution policy following the Company's listing in November 2016.

To broaden our shareholder base and increase the accessibility of our shares to a diverse range of investors, we have sub-divided/split the existing equity shares of VBL. Each equity share, previously with a face value of 5 and fully paid-up, was sub-divided/split into two equity shares each having a new face value of 2.

During the year under review, the Board of Directors in their meeting held on July 30, 2024 declared an interim dividend of 1.25 per Equity Share (face value of 5/- per Equity Share) to the eligible equity shareholders of the Company. Further, the Board of Directors have also recommended a final dividend of 0.50 per Equity Share (face value of 2/- per Equity Share) for the Current Year 2024.

Message to stakeholders

As we reflect on another year of significant achievements, I extend my heartfelt gratitude to all our stakeholders for their trust and support. Your confidence in VBL has been instrumental in driving our success.

As we move forward, we remain focused on strengthening our market position, leveraging growth opportunities in both domestic and international markets, and maintaining our commitment to sustainable practices. Our dedication to innovation, strategic expansion, and sustainability continues to guide our journey.

As we navigate dynamic market environments, we stay focused on delivering sustainable growth and value while upholding our standards of excellence. We look forward to a future of continued success and shared prosperity.

Vote of thanks

We express our deepest appreciation to our shareholders, investors, bankers, and creditors for their support and belief in our vision. A special thanks to our dedicated employees, whose tireless efforts and commitment have been instrumental in our achievements. We are also immensely grateful to our Board of Directors for their guidance and strategic insights, helping steer the Company towards new opportunities and sustained growth. Your collective contributions have been invaluable in our journey, and we look forward to your continued partnership.