Message from the chairman & Managing Director
India represents one of the largest global consumption hubs and there is no doubt aboutthe significant growth opportunities that the country presents due its current low percapita consumption. The middle class is expanding rapidly and the number of householdbelow poverty line is declining. The young Indian is very well informed aspirational andincreasingly becoming affluent. These are all the perfect ingredients for the long termgrowth of a consumer products company like Radico Khaitan.
In the near to medium term the current global health calamity has resulted in aneconomic crisis that is unprecedented. It has impacted millions of lives globally and hasbrought economies to near standstill as governments across the world imposed restrictionsto contain the outspread of COVID-19. After the stringent lock downs and other measuresthe number of new cases has started to decline in certain countries which had seen majoroutbreaks. Healthcare organisations across the globe are working at a remarkable pace todevelop vaccines which provides hope that this should all normalise soon. Swift policyactions undertaken by governments to protect and support businesses and individuals willnot only alleviate the severe pressure that the economy is facing but also pave the wayfor a smooth recovery.
The Indian economy was anyway under pressure during the first eleven months and theoutbreak of COVID-19 in March 2020 aggravated the situation. Despite this it isheartening to see that Radico Khaitan has closed the financial year FY2020 with aremarkable operational and financial performance. Despite the lock down during the laterpart of March 2020 we have delivered a robust double digit IMFL volume growth. This is areflection of our strong brand equity and consumer focused brand portfolio. Managementcontinues to make strategic and highly targeted investments in innovative marketing andproducts to gain market share. I am confident that we will continue to outperform theindustry and strengthen our market positioning in the years to come.
Majority of the businesses worldwide have faced disruptions and economic fallout.Therefore they are looking to diversify and derisk their supply chain and manufacturing.
After the COVID-19 pandemic India will have the opportunity to build an economy thatis more resilient diversified and attractive to the global OEMs. This is an opportunityto rebuild a truly Atmanirbhar Bharat or a self-dependent India.
These are uncertain times and it is difficult to predict the extent of this pandemictherefore we are being cautious in our approach. But at the same time we are veryoptimistic on the strength and resilience of our business model Indian economy and thehumanity as a whole. Once this is over we will step towards a healthier and brighterfuture.
Chairman & Managing Director ^
Message from the Managing Director
Radico Khaitan has continued the growth momentum during FY2020. Despite the ongoingeconomic crisis we delivered IMFL volume growth of 12.5% led by Prestige & Abovevolume growth of 15.2%. This has been made possible due to the all round efforts of eachof our employees the trust of our loyal consumers and our robust business model. Wecurrently have four millionaire brands and at least two more of our brands are approachingthe milestone of annual sales of a million case in the near to mid-term. I am also proudto report that the 8PM family of brands has crossed volume of 10 million cases duringFY2020.
Though COVID-19 pandemic has created an unprecedented situation it has also broughtsignificant learning opportunities to each one of us. This has enabled Radico Khaitan tointrospect our strategies and the resilience of the business model. We have developed andimplemented a company-wide policy framework on how things will change during the post-COVID era. Amidst this crisis we have prioritised the health and safety of our employeesand communities around us.
In the current scenario the Company has adopted a deliberate and prudent approachwhich is not very different from our long term strategy. First and foremost is the focuson strengthening our brand portfolio. We will continue to launch brands in the premiumcategory which will contribute to the future growth. Digital has always been an importantpart of our marketing strategy. We will reassess and refocus our A&SP strategy and webelieve that going forward the share of digital will increase even further. We are takinga conscious effort towards the review of each capex and cost line item. Particularly incontext of the COVID-19 scenario this will enable the Company to further optimize cashflows and make operations much leaner. Finally we are leveraging technology to drivetransformation in the work environment and support the workforce.
Although in the short term the spirits industry has faced significant challenges thelongterm dynamics of the industry remain intact. There are a number of factors that makeIndia one of the top markets for global spirits companies. These include growingdisposable incomes particularly with the younger Indian expansion of the middle-classincreasing rural consumption and dispersed urbanization greater acceptance of socialdrinking and a higher proportion of the young population entering the drinking age.
We entered the new financial year when the major global economies were shut down. Theimpact is widespread and the coming months are going to be very challenging. Consumers arelikely to hold back on discretionary spends with focus on health and hygiene potentiallyleading to future behaviour shifts. Going forward technology will take a centre stage forproviding convenience and enhanced experiences to consumers. Given the uncertain economicenvironment it difficult to predict how exactly is the consumer behaviour going to changein the longer term and its impact on business models.
Radico Khaitan has a strong brand equity and loyal consumer base. This will enable usto continue to gain market shares in the coming years. We continue to take necessary stepsto maintain our robust foundation and financial strength whilst at the same timedelivering differentiated consumer experience.