India’s TOP 500 Companies 2020

INDIA’S TOP 500 COMPANIES 2020 123 Experts’ View shares. Radico Khaitan’s strategy of slowly and steadily expanding a new brand’s market presence has been one of the key reasons behind the success of its brands. The Company’s premiumproduct portfolio is stronger than ever before. This coupled with an improved operating environment and stronger cash flow generation places us optimally to capitalise on the long-term attractive dynamics of the IMFL industry in India. What are some of the major challenges the company has faced in recent times? How has the company dealt with these challenges? Over the last year or so, the liquor industry has been under pressure. Even before the breakout of COVID-19 in March 2020, the economic environment in FY2020 was marred by slow economic activity and liquidity crunch. A significantly higher raw material pricing scenario deteriorated IMFL industry margins and further dampened business sentiment. During these challenging times, management continued to make strategic and highly targeted investments in innovative marketing and products to gain market share. How has Radico Khaitan responded to the disruption caused by the ongoing pandemic? What is your strategy to tide over this crisis? We entered the fiscal year 2021 in the backdrop of an extremely challenging macroeconomic scenario. There was no sale in the month of April and the first week of May when the lock down was partially lifted. During Q1 FY21, Radico Khaitan reported volume decline of 44% compared to industry de-growth of 51%. However, it is important to note that during May our volume decline was 29% and in June it was only 10%. In July 2020, our volumes have reached close to pre- COVID levels. In context of the current crisis, the Company has adopted a deliberate and prudent approach which is not very different from our long term strategy. First and foremost is focus on strengthening the brand portfolio. We will continue to launch brands in the premium category which will contribute to the future growth. Digital has always been an important part of our marketing strategy and we believe that going forward, the share of digital will increase even further. We are also reviewing each and every fixed cost. This will enable us to become leaner on our operations and cost structure. Finally, we are leveraging technology to drive transformation in the work environment and support the workforce. What role has the company played in terms of helping the country deal with the pandemic, whether in terms of its products, or otherwise? In a bid to contribute to the nation’s fight against COVID-19, we started manufacturing hand sanitizers. The Company has supplied its sanitizers to the primary health care authorities, government hospitals and police stations in the states of UP, Telangana, Hyderabad, Karnataka and Uttarakhand. Some of the other contributions made by us during these challenging times include donation of ` 1 Crore to the UP COVID Care Fund and ` 21 lakhs to COVID-19 relief fund through District Magistrate, Rampur. Furthermore, we have prioritized the health and safety of our employees. We have not deducted any salaries or reduced any head count. The Company has also implemented provisions such as flexible work hours and stress management counselling among others for the staff. What is the outlook of the Indian alcoholic beverages sector for the next 5 years, in your opinion? What is your company’s strategy for the next 3-5 years, in terms of expansion or diversification? Although in the short term, the spirits industry has faced significant challenges, the long-term dynamics of the industry remain intact. The factors that make India one of the top markets for global spirits companies include growing disposable incomes particularly with the younger Indian, expansion of the middle- class, increasing rural consumption and dispersed urbanization, greater acceptance of social drinking and a higher proportion of the young population entering the drinking age. Over 15 Million people are expected enter the drinking age every year which represents significant growth opportunities for the industry in the long term. Radico Khaitan continues to selectively launch new products in the premium category, enhance operating procedures and adopt various go-to-market strategies based on complex and rapidly evolving distribution channels. The Company’s objective has been to drive growth that is led by premium products and is profitable, sustainable and responsible. We expect to continue the growth moment that we have seen over the last few years and outperform the industry. Dun & Bradstreet