Ladies and gentlemen, good day, and welcome to the Tilaknagar Industries Limited’s Earnings Conference Call. I now hand the conference over to Mr. Siddharth Rangnekar from CDR India. Thank you, and over to you, sir.

Thank you. Good morning, everyone, and thank you for joining us on Tilaknagar Industries Limited's Q1 FY27 Earnings Conference Call. We are joined today by Chairman and Managing Director, Mr. Amit Dahanukar, Chief Strategy Officer, Mr. Ameya Deshpande, Chief Financial Officer, Mr. Rajesh Choudhary, and General Manager - Growth and Innovation, Ms. Sanaya Dahanukar. We shall commence with views from Mr. Dahanukar on the brief performance and financial highlights, followed by commentary by Mr. Deshpande on the strategy going ahead. This shall be followed by an interactive question-and-answer session. Before we commence, I would like to state that certain statements made on today's call could be forward-looking in nature, and a disclaimer to this effect has been included in the results presentation that was shared with you earlier and which is also available on the stock exchange website. I would now like to request Mr. Dahanukar to make his opening remarks. Over to you, sir.

Good morning, everyone. Happy to have you all join us on this earnings call to discuss the Q1 FY27 results. I will provide an update on the current quarter's performance, which will be followed by Ameya taking you through the updates on Imperial Blue integration and guidance on future performance. Before I begin with the quarterly performance, there are a few achievements I wanted to highlight. Firstly, we achieved the highest ever monthly volume of 3.4 million cases in June'26 with Imperial Blue emerging as the largest selling Deluxe Whisky.

Secondly, Tilaknagar maintained its position as the largest P&A player in India amongst domestic companies and the third largest overall. In our stronghold region of South India, Tilaknagar is the largest P&A player overall with 40% market share, ex-Tamil Nadu. In fact, in the state of Telangana, Tilaknagar emerged as the largest IMFL player overall in the month of June. As promised, we have delivered on our guidance to introduce Imperial Blue in newer markets by reintroducing the brand in Delhi during July'26. We have high hopes for the brand in Delhi and are committed to taking it back to its historical legacy and beyond. In Q1, our overall volumes increased by 172% on a YoY basis and 9% on a QoQ basis. The quarterly growth was led primarily by IB, which increased by 18% to reach 5.4 million cases. On a YoY basis, MHB has grown by 7%. We have achieved this growth despite some disruptions in the month of April. Now moving over to the financial performance. The overall NSR increased by 1.5% to Rs. 1,183 per case for Q1 FY27 from Rs. 1,166 per case in Q4 FY26 and by 5.3% from Rs. 1,123 per case in Q1 FY26. We witnessed a strong growth of 166% YoY basis to reach a net revenue of Rs. 1,046 crore during the quarter. Adjusted for subsidy, we recorded a growth of 189% to reach Rs. 1,026 crore. The ongoing geopolitical tensions led to inflationary pressures across packaging inputs, particularly glass, resulting in a meaningful increase in packaging costs during the quarter. Consequently, gross margins were under pressure. However, these pressures were partly offset by softened ENA prices. Adjusted for subsidy, we have achieved a gross profit of Rs. 432 crore in Q1 FY27 and a margin of 42.1% compared to 45.2% in Q4 FY26. Excluding the impact of inflationary pressures, the margin would have been higher, closer to 44.5%. EBITDA stood at Rs. 169 crore for Q1 FY27, clocking a growth of 79% YoY and margin of 16.1%. Adjusted for subsidy, the EBITDA grew by 166% to reach Rs. 148 crore and a 14.5% margin on the combined business. Excluding the impact of inflationary pressures, the margin would have been approximately 17%. Looking ahead, we remain confident of improving upon the 15.5% baseline EBITDA margin achieved in Q4 FY26. PAT adjusted for exceptional items and acquisition-related amortization stood at Rs. 96 crore for Q1 FY27, clocking a growth of 9% YoY and margin of 9.4%. Adjusted

for subsidy, the PAT grew by 52% to reach Rs. 76 crore and a 7.4% margin on the combined business. Excluding the impact of inflationary pressures and subsidy, the margin would have been approximately 10%. We incurred an exceptional expense to the tune of Rs. 30 crore during Q1 FY27, predominantly on account of TSMA fees and integration-related expenses. As on 30th June 2026, our gross debt stood at Rs. 2,241 crore and net debt stood at Rs. 2,100 crore. The increase in net debt is primarily on account of complete working capital cycle investment. However, I want to reassure you that our target is to take the net debt in March '27 to approximately Rs. 1,700 crore. I wanted to reiterate that our focus going forward will be divided into 4 parts: 1. Continue our journey to generate and fulfil demands for our brands to deliver a double-digit volume growth 2. Optimize packaging, processes and supply chain and reap benefits of operating leverage and economies of scale, helping us achieve an EBITDA margin of 16%-18% on combined business in the next 2 years 3. Focus on efficient capital deployment, disciplined debt management and working capital investments, facilitating the reduction of net debt-to-EBITDA below 1.0x by FY29 4. Ride on the pan-India distribution strength of Imperial Blue and Mansion House franchises to expand TI's luxury and premium portfolio, including SSL On the brand front, our priorities have been clear, increase trade and consumer engagements for Imperial Blue. We have successfully carried out new activations in 28,000 outlets during Q1 with consistent on-ground communications. Lastly, I wanted to update on the Super Premium and Luxury side of the business housed within House of TI. We have expanded the presence of our Luxury brands, Monarch Legacy Edition Brandy, Seven Islands Pure Malt Whisky and Samsara Gin owned by Spaceman Spirits in West Bengal during the quarter. SSL has more than doubled their sales in Q1 FY27 v/s Q1 FY26, demonstrating strong market for craft spirits in India. The growth is led by Samsara Pink and the new launches with Indian flavors, Jamun & Pink Salt and Raw Mango & Jalapeno. SSL has also launched a ready-to-pour drink in the fast-growing agave and tequila space called House:Pour Picante towards end of Q1.

During the quarter, we also doubled down on our investment in Bartisans by increasing our stake from 36.2% to 41.5%. The proceeds from this investment will be used to expand within the quick commerce segment, product and packaging innovation and for collaborative launches with TI. We are extremely optimistic on our luxury play, both organic and through our strategic investments. I will now hand over to Ameya to take you through the integration of Imperial Blue and provide guidance on the future performance.

Thank you, and a very warm welcome to everyone joining us today. On the post-acquisition integration front, I am happy to inform you that we have additionally transitioned from 2 more states, taking the tally to 90% of the IB business being successfully transitioned into Tilaknagar operated units. Now only 1 state remains under TSMA, and we expect to transition them over the course of the next few quarters with an outer date of March 2027. I would now like to provide some guidance on the combined business going forward. We maintain our guidance for FY27 of achieving a high single-digit to low double- digit volume growth for the combined business. We are upgrading the guidance beyond FY27, including new launches planned from FY28 onwards. We expect an annual volume growth in mid-teens over the next couple of years, and our revenues are expected to grow at least by ~300 basis points higher than the volume growth. In terms of margins, we expect the consolidated EBITDA margins to reach 16%-18% for the combined business by FY29 with upward bias on the range. For FY27, we expect our margin to improve from the base of 15.5% set in Q4 FY26. As guided in the past as well, we expect the net debt-to-EBITDA ratio going below 1.0x by March’29. Lastly, I would like to explain a small change that we have made in the NSR calculation. While calculating the NSR, we have now reduced cash discounts, breakages and wastages. This change is limited to the NSR calculation only, and there is no change in reported net revenues in the current or past quarters. The NSR for the current quarter was Rs. 1,183 per case compared to Rs. 1,166 per case in Q4 FY26. With that, I would now request the operator to open the call for Q&A.

Thank you. We will now begin with the question-and-answer session. The first question comes from the line of Abneesh Roy with Nuvama Wealth Management. Please go ahead.

Thank you. I have two questions. First is on the IB overall scale-up. Specific question was, if you could tell us which states are seeing more traction and where there are more challenges? And specific question was also on Karnataka. In Karnataka clearly all the liquor companies are highlighting good recovery post the reforms. If you could tell us how has the competition shaped up for IB in that market? My sense is there will be a lot of changes in terms of the pricing given there is a lot of flexibility, number of slabs are also reduced. So, if you could update on the Karnataka also? That is my first question.

On Karnataka post price reduction, we have seen a good uptake in our volumes since the price reduction has taken place. And our market shares also have significantly improved in the operating segment.

The other question was in which states you have seen more traction in IB because clearly, there was a lot of opportunity given it was underinvested last few years. So, which states you are seeing more challenges versus the company average and where you are seeing more traction also?

Broadly, when we have taken over the business, what the market share was at the time of exit, we have seen improvement in all states. Of course, the improvement would have been varying magnitudes. But without exception, we have seen improvement in market shares post-acquisition compared to the 3 months average at exit.

Okay. Improvement I understand, obviously, there will be improvement.

Improvement in market share.

Yes. But relative basis, which states have been easier, which states it is more work to do versus average? See, everything will be better, I understand because clearly, your overall aggression and your local connect, etc. will be faster. But I wanted to understand which states are doing better? Which states are not doing better versus your national average?

So, without getting into the flavor of individual states, Abneesh, I would say that South on the whole has been an easier and more seamless transition for us given our size and scale even before the acquisition. Improvements over there perhaps

have been better than some of the other regions. But even in the North and the East, we have seen improvements. And also West, in Maharashtra, we have increased our market share.

Abneesh, again, like Mr. Dahanukar mentioned, we would not get into details of the states. But needless to say, in each of the 4 regions, we have expanded our market share over what we actually got it when we acquired the business.

Sure. My last question is on the specific comment you made on Delhi. So, Delhi, clearly, you have launched IB again. I wanted to understand peak market share or peak size in Delhi for IB. And when do you see that getting achieved? And second on North India and other parts of South India, is the team scale up done or still in terms of team and network there is work to do, given you were a South- focused company earlier, but now with IB being done pan-India, I wanted to understand team's overall depth and network depth? Are you happy with current level of performance in those markets?

The team scale up, Abneesh, has been totally completed. I think pre acquisition, our strength was approximately 350 people. As on March 31, it was 850+ people. So, the scale-up has been completed across India with particularly most of the additions came they were feet on ground in terms of the sales operation because obviously, we were well covered in the South. But we have added capability across North, West, Central and East India, both in terms of sales and in terms of manufacturing footprint as well. So that has already been completed. Delhi, I think at the peak, the volume of Imperial Blue would have been 0.5 million cases, and we expect that within the next 12 to 18 months, we should be seeing those levels.

And this 0.5 million would have been 3 years back?

It would have been perhaps slightly more than that.

Okay. Understood. Thank you. That is it from my side.

2019-20.

Pre-COVID, okay.

Hi, thanks for taking my question. My first question pertains to like when we say Odisha, Punjab, Uttarakhand and Karnataka were impacted, is it only for IB or the entire portfolio? And I also wanted to check on like what are the reasons in Odisha, Punjab and Uttarakhand?

See, Nitin, when it comes to the question, yes, it was predominantly for IB itself because we have mentioned over there that these were TSMA-related issues, TSMA was only relevant for IB. So those were the challenges that we had. I would not get into the details of what each of these challenges were. But yes, these are TSMA related.

I was of the view that if there is any market-related challenge, but if it is TSMA then it is fine. Second question is like how we are planning in IB price segment where other brands have strengthened formulation and another brand is looking to grow at a faster scale, like ICONiQ White 50% growth for this year and McDowell's also like increasing the scotch and targeting this segment. Do you see any sort of increased trade spending on the ground? That is the first thing. And second, how is the growth for the industry in this low Prestige segment, like where we also want to sort of expand IB's presence? Thank you.

I think this competitive intensity, which you have mentioned that is absolutely correct. I think this segment after a long time is seeing the activity. One of the reasons why this segment has perhaps not grown at a high rate has been because of inactivity of the leading players. But we are seeing a lot of activity by all participants in this category, which should be helpful for the overall category growth. Let us not forget there is a large volume of regular range products and country liquor, which is sitting just below our price points. So, activations and marketing activities in this particular segment will only help in growing the segment. And of course, let us keep in mind also that we, as a company, also are increasing our A&SP reinvestment rates. We will also be active in this segment. As I had mentioned during my opening remarks, we have activations now present in more than 28,000 outlets across the country. We have also become very active.

Yes. Thank you. This is quite helpful. My last question pertains to your margin. So, like we wanted to recover to 15.5% EBITDA margin. How soon we can expect that to be achieved? Like this packaging material inflation impact we are seeing. So, what is your view? How long it will continue?

See, when we say that we want to increase our margins beyond the base of 15.5%, we are assuming that inflation is status quo as such. But having said so, in Q3 and

Q4 is when you will see significant uptick in margins because from a seasonality perspective, those are the largest quarters from a saliency. Q2, you should be looking at margins in a similar range, but this would be on account of incremental A&SP reinvestments as well.

Okay. Thank you. And it would be great if you can sort of help us understand how are you planning for next 3-4 years? We are in the early stage where we got a national brand. And looking at the past of other domestic players, like they have been entering the premium space, plus they are also strengthening their back end. Any thoughts what you can offer? I guess the near term, the focus will be more on the IB stability and then you will go for that. But any thoughts if you can offer, that would be great. Thank you.

Currently, as we have given in our earlier narratives also, this year will be focused on the IB integration and increasing the width and distribution of our existing products. Going forward, of course, there are a few vacant spaces in our portfolio, and we would be looking at new launches in the next 12 to 36 months to complete our portfolio. And with the new launches in place, we expect the volume growth to be in mid-double digit. We will have a CAGR of mid-teens till FY29. Broadly, I think the company is pointed in the right direction. And on the back of this distribution, of course, we will be introducing our premium products as well. Our own House of TI products, which is the Monarch Legacy Edition Brandy and Seven Islands Pure Malt Whisky. We also have the extensive Spaceman Spirits portfolio, which we are taking to new markets as well. In terms of our Luxury and Super Premium offerings also, our portfolio is fairly complete, and we have the distribution infrastructure now, which we will leverage.

Nitin, in terms of growth, the way to look at this is that you will have the existing business, including IB, where we will continue to gain market share. While we have done a reasonable job over the past 7 months with IB within our fold in terms of market share gains, that will only continue going forward. Along with that, like Mr. Dahanukar mentioned, you will have a significant focus being put by us on the super-premium portfolio as well. And as we have also reiterated in our presentation as well, we have revised our guidance upwards in terms of volumes on account of the new launches that we will be undertaking FY28 onwards.

Thank you. The next question comes from the line of Heer Gogri with Choice Equities. Please go ahead.

Hello, thank you for the opportunity. I wanted to ask what should we expect the run rate for IB volume going forward on a QoQ basis?

For the full year, it will be a double-digit growth. I think when we acquired the business, it was around 21.5 million cases. So clearly, we expect that we would end the year with a double-digit volume growth for Imperial Blue.

Okay. And what is the NSR for IB for this quarter?

We do not give a bifurcated NSR, Heer. It will be a combined NSR that we are providing.

Okay. And one last question would be, are you expecting any price rise from Telangana and any expectation on that front?

Price rise from Telangana, we are expecting because now it has been 3 years since the earlier price increase was given. We are in active discussions. The industry is engaged with the government, and we do expect price increase to happen soon.

And in terms of quantifying what the impact of this price increase would be, it would be in the range of 150-200 basis points incremental impact on margins, on an annualized basis.

Okay, got it.

The next question comes from the line of Vijay Jangir with Systematix Group. Please go ahead.

Hello. Thank you, sir. Thank for the opportunity. Sir, on Prag Distillery, we were expecting around Rs. 100 million annual savings. Are there any cost savings reflecting in Q1 FY27 margin? And what is the current utilization rate for the Prag Distillery?

Yes. So, you have not seen the entire benefit of the bottling coming into Prag Distilleries, but what is already baked into the numbers would be to the tune of around 60%-70%.

Currently, Vijay, the MML category from what we understand, the industry is hovering in that 6-7 lakh cases per month region, there has not been a significant movement as it happens in these volumes over the past few months. Most specifically for us, we have been expanding market share in the state. I will speak more from our perspective. IB has done fairly well in the state in the past few months. We keep inching our market shares in the state in the relevant price point.

Okay, sir. Yes, that is it from our side. Thank you, sir.

The next question comes from the line of Vaibhav Gupta with Bowhead India Fund. Please go ahead.

Hi, sir. Thanks for taking my question. Sir, I wanted to understand how big would be Tamil Nadu market for us? And if there is a route to market change, how it would impact us?

Currently, the Tamil Nadu business is not very large for us. I think annualized, it would be less than 0.5 million cases. But let us keep in mind that Tamil Nadu is the largest brandy market in India, approximately probably 50-odd million cases of brandy sold in Tamil Nadu. We are waiting and watching in terms of what could be the policy changes, which may happen post the new government, which is in place in Tamil Nadu. If they allow imports or if there is some move to open up the market further, we could be potentially big beneficiaries of the same.

Understood, sir. That is all from my side.

The next question comes from the line of Sucrit Patil with Eyesight Fintrade. Please go ahead.

Good afternoon to the team. I have two questions. The first question for Mr. Amit Dahanukar is, beyond the regular outlook that you have given, I just want to understand what are the top 2-3 execution priorities you are focusing on in the next few quarters? And alongside that, what do you see as the biggest risk in consumer demand shift or competitive pressures? And how are you preparing to manage them whilst strengthening the company's position in the alcobev industry? That is the first question. I will ask my second question after this.

I think one of the execution priorities was the successful integration, which is already behind us. I think as I had mentioned earlier in my opening remarks and added by Ameya that the sales integration was completed by February and 90% of the manufacturing integration has been completed by April. Given the scale of the

business which the company has acquired, I would say that the team has executed very well to complete this integration less than about 4 months after acquiring the business. The immediate priorities are in terms of widening and deepening the distribution of Imperial Blue and reinvesting in A&SP so that our market shares can climb. And post takeover of the business, as I had mentioned earlier also, we have seen improvements across states, in terms of improvement in the market share, and we would only hope that this would now continue in the coming quarters. And the third priority is with the distribution network which we have, we will concentrate on our Luxury business as well. I think that is a long-term priority for us in terms of building the portfolio of the Luxury business and the new launches.

My second question to Mr. Rajesh is, again, from a financial point of view, what key risk or challenges do you anticipate in the coming quarters? And what specific measures are being taken to manage margins, cash flow and balance sheet strength, especially in areas like raw material cost volatility, receivables and regulatory compliance? Thank you.

The inflation is something that is to be watched out. And obviously, we have called out that in the Q1, it has some impact. But having said that, there are several mitigating factors that we have, including the price increase in various states and the ongoing discussions that we are having in a few more states to get a price increase, and that will help us to mitigate the impact of the raw material increase.

I would like to add to what Rajesh mentioned, I think the term debt, which the company has of ~Rs. 2,000 crore that has been structured where majority of the payments, almost 80% of the payments are happening in years 5 and 6, which is giving us adequate cushion in terms of the repayment structure with the moratorium in the first 2 years. But that said, I think the net debt currently stands at Rs. 2,100 crore for Q1. And we have a clear target that by March 31, FY27, net debt should be around Rs. 1,700 crore. So, there is a clear intent of reducing debt by approximately Rs. 400 crore in this financial year.

And I just wanted to add one point on the inflation front as well. So along with the multiple mitigating factors that are there, one other very important and critical one is the supply chain optimization. We have identified in the past and also communicated the same on our earnings calls in terms of what is the kind of benefit that we see from our supply chain optimization activities. All of these will essentially lead to a scenario where we will expand our margins on the acquired business between 250-

400 basis points irrespective. And when it comes to our consolidated business, we would be expanding our margins by approximately 250-odd basis points.

Thank you and best wishes.

Thank you. Ladies and gentlemen, we will take that as the last question for today. I would now like to hand the conference over to the management for the closing remarks.

Thank you all for joining us on today's call and for your continued interest in Tilaknagar Industries. We are pleased with the strong start to FY27 and the significant progress we have made in the integration of Imperial Blue. As we move into the next phase of our journey, our focus will be on driving sustainable growth, strengthening our premium portfolio and leveraging our expanded pan-India distribution network. We remain confident in the long-term opportunities ahead and appreciate your continued trust and support. We look forward to updating you on our progress in the coming quarters. Thank you once again for your time and have a great day. Disclaimer: This is a transcription and may contain transcription errors. The document has been edited for clarity. The Company takes no responsibility of such errors, although an effort has been made to maintain a high level of accuracy.