THE RESILIENCE LAYER

RISK MANAGEMENT

In an increasingly complex and dynamic business environment, effective risk management is central to Dabur’s strategy for sustainable growth and value creation. Our approach is designed to anticipate emerging risks, protect earnings resilience and enable informed strategic choices across markets, brands and operations. By integrating risk assessment into strategy formulation, capital allocation and operational execution, we seek to safeguard stakeholder value while remaining agile in responding to external shifts. This disciplined, forward-looking framework supports continuity, strengthens resilience and underpins confidence in our long-term growth agenda.

RISK GOVERNANCE

The company has a risk governance framework with board level risk oversight. Dabur's Risk Governance framework is structured around a multi-tiered oversight mechanism, as depicted in the accompanying diagram. At the apex, the Board of Directors provides strategic supervision, supported by the Audit Committee and the Risk Management Committee, ensuring robust alignment with regulatory expectations and organisational priorities. Operational execution is driven by the Management Committee (MANCOM), the Chief Risk Officer, and dedicated Risk Coordinators, who institutionalise risk processes across business units. At the ground level, Zonal and Unit Heads, along with Process Owners, are responsible for continuous risk identification, assessment, and mitigation. The circular structure in the image highlights an integrated approach where risk identification flows upward from operational teams, and mitigation strategies cascade downward, ensuring a closed-loop system of accountability and responsiveness. This governance architecture enables Dabur to proactively manage uncertainties and safeguard sustainable business growth.

Operational Risk Ownership (first line): Front-line employees and dedicated operational roles including Unit Heads, Zonal Heads and Process Owners own and manage risks.

Risk Management and Compliance Oversight (second line): A dedicated Management committee (MANCOM) and Chief Risk Officer exists at the senior management and executive level which is responsible for setting control standards and oversees compliance with them.

Independent Audit Unit (third line): An internal audit function exists at Dabur that provides independent assurance on the effectiveness of risk management and compliance processes.

RISK MANAGEMENT PROCESS

Risk management is a core organisational discipline at Dabur, integrated across all levels of operations to strengthen resilience and support informed decision making. The Company systematically monitors a wide spectrum of potential risks and opportunities, including political, economic, regulatory, technological, environmental, climate related, public health, currency, and competitive factors. Risk identification begins at the business unit and departmental level, where functional teams assess their operating environment and escalate relevant risks for management oversight.

The Risk Coordinator plays a central role in facilitating coordination among corporate functions, business units, and zonal teams, ensuring consistent monitoring and timely recognition of emerging issues. Risks are categorised as Critical or Non-Critical, with High and Medium risks forming the Critical category and Low risks classified as Non-Critical. Assessment is carried out using a predefined Risk Variable Scale approved by the Risk Management Committee, evaluating risks based on likelihood and impact. The outcomes are plotted on a Risk Heat Map, providing a clear view of prioritisation areas and guiding the design of focused mitigation strategies.

RISK MANAGEMENT FRAMEWORK REVIEW

Dabur's risk management framework is subject to periodic internal and external evaluations to ensure that it remains comprehensive, relevant, and aligned with the Company’s risk profile. The scope of audits is designed in close alignment with the Risk Register, enabling a structured review of identified risks and the associated control environment. Independent Directors provide oversight by reviewing the risk management framework and the key risks presented through the governance structure.

The framework is also assessed by an independent third-party reviewer, providing an external perspective on the adequacy of processes, controls, and governance mechanisms. Key Risk Indicators (KRIs) are incorporated into business planning and monitored regularly through quarterly business reviews, supporting informed decision making and strengthening strategic oversight.

For additional details, stakeholders may refer to the Company’s Risk Management Policy. Please click here.

Some of the key risks identified by us for 2025-26 are represented in the following chart. Relevant mitigation measures have been devised and applied for each risk, depending on the gravity of impact and the likelihood of occurrence.

Critical Risks

Through our enterprise-wide risk management framework, we identify and closely track critical risks that could influence our strategy, business continuity and long-term value creation. These risks are reviewed on an ongoing basis and addressed through proactive mitigation measures, helping us remain resilient, agile and well-positioned for sustainable growth.
Type of Risk	Mitigation Strategies	Capitals Impacted
Compliance & Regulatory Risks: Dabur operates in an evolving regulatory environment, where changes in interpretation and enforcement may impact operations and financial outcomes. Emerging norms such as FSSAI’s HFSS (High fat, Sugar & Salt) regulations could influence product formulations, labelling and marketing practices, while Access and Benefit Sharing (ABS) obligations related to biodiversity may lead to additional financial commitments. The Company is also addressing certain legacy matters where outcomes remain subject to legal interpretation. In addition, contingent liabilities relating to excise, GST and sales tax – primarily arising from product classification differences - continue to pose potential financial exposure through tax demands, interest and penalties.	Through proactive regulatory engagement and strong legal oversight, Dabur continues to mitigate potential risks. The Company has also initiated legal proceedings wherever appropriate and has secured interim relief in select matters.
Inflation Risk: Ongoing geopolitical tensions, particularly in the Middle East, have heightened volatility across global supply chains, impacting the availability and pricing of key raw materials and packaging inputs. Disruptions in trade routes, energy markets and logistics networks can lead to cost escalations and supply uncertainties. Sustained increases in input costs may exert pressure on operating margins and necessitate calibrated pricing actions, which, in turn, could influence consumer demand in a competitive market environment.	Agile sourcing and pricing to manage volatility Strategic commodity buying to cushion inflation Calibrated price increases in select products Strengthened backward integration for key inputs Continuous cost optimisation across operations Increased localisation to reduce import dependence
Reputational Risk: In an always-on, digitally connected world, brand perceptions can evolve rapidly. The growing influence of social media amplifies the speed and scale at which information - accurate or otherwise – can spread. This exposes the Company to risks arising from misinformation, activist-led narratives, or heightened public scrutiny of leadership viewpoints, brand associations and marketing campaigns. Such situations can escalate quickly, potentially impacting consumer trust, brand equity and, in certain cases, demand for our products.	Real-time social listening and early risk detection Rapid, transparent response protocols Strong governance over brand communication and partnerships Clear guidelines for leadership and spokesperson engagement Proactive stakeholder communication and fact-based clarifications Continuous brand trust building through consistent, responsible messaging Regular reporting and review of reputational risks at senior management levels Maintaining high product quality standards to uphold consumer trust Ensuring accuracy and responsibility in product claims and advertising
Supply Chain Traceability Risk: As a company built on the promise of natural purity, ensuring end-to-end traceability across complex, multilayered supply chains remains a critical focus area, particularly in categories such as honey, where sourcing involves a wide network of beekeepers and aggregators. Variability in sourcing practices, risks of adulteration and evolving regulatory scrutiny pose potential challenges to product integrity and brand trust. Any gaps in traceability or quality assurance could impact consumer confidence and expose the Company to reputational and regulatory risks.	Strengthening our sourcing protocols End-to-end traceability and supplier mapping initiated Stringent quality testing and audit protocols Direct beekeeper engagement and controlled sourcing Advanced testing for purity and authenticity
Technology, data privacy and AI Risk: As Dabur advances its digital and AI-led transformation, risks around data security and privacy continue to intensify. Increased handling of Personally Identifiable Information (PII) and Sensitive Personal Data (SPD) across multiple touchpoints heightens exposure to regulatory and reputational risks in case of lapses in governance or cybersecurity. The use of AI tools further introduces risks of unintended data exposure, including potential leakage of confidential or proprietary information through unsecured inputs, outputs or third-party platforms.	Strong AI governance and usage protocols Role-based access controls for sensitive data Training and clear employee guidelines on AI and data usage Use of secure, enterprise-approved AI platforms only Layered cybersecurity and data protection systems Continuous monitoring and compliance audits Public privacy notice on Dabur's corporate website Robust privacy framework aligned with applicable regulations Cyber liability insurance to manage residual risk exposure
Climate Change Risk: Climate change presents a dual challenge to Dabur’s business. Increasingly unpredictable weather patterns - such as erratic rainfall and shifting seasonal cycles – can disrupt demand patterns for seasonal products, leading to potential volatility in topline performance. At the same time, changing climatic conditions may affect the availability and quality of critical herbs, particularly those sourced from high-altitude and tropical regions. Any disruption in the supply of these key inputs could impact production continuity and, in turn, affect product availability and sales.	Advanced weather analytics to improve demand forecasting Portfolio diversification beyond seasondependent categories and markets Tighter demand planning and inventory management cycles Driving year-round relevance through new formats and usage occasions Targeted promotions to sustain demand during off-season periods Strengthened herb availability through plantations, contract farming and alternative sourcing
Human Capital Risk: In an increasingly competitive and rapidly evolving talent landscape, attracting and retaining skilled professionals remains critical to sustaining Dabur’s growth momentum. Shifts in workforce expectations, rising demand for specialised capabilities and changing career aspirations can create challenges in building and retaining a futureready workforce. Any gaps in talent availability or higher attrition in key roles could impact execution agility and organisational continuity.	Strong employer brand to attract highquality talent Focus on capability building and continuous learning Structured leadership development and succession planning Competitive rewards and performance linked incentives High-engagement culture with regular feedback mechanisms Employee well-being and inclusive workplace initiatives
Strategic & Growth Risk: Sustaining growth in a dynamic and competitive marketplace requires continuous expansion across channels and strategic portfolio strengthening. Dabur faces risks related to channel growth, where evolving consumer preferences, the rapid rise of modern trade and e-commerce, and shifting distribution dynamics may impact sales momentum if not addressed effectively. In parallel, the Company actively evaluates merger and acquisition opportunities to accelerate growth and enter new adjacencies. However, such initiatives carry inherent risks around valuation, integration, cultural alignment and synergies realisation. Any challenges in executing these strategies could impact growth outcomes and value creation.	Strengthened distribution across channels and formats Accelerated digital and e-commerce capabilities Continuous expansion into high-growth geographies Disciplined M&A evaluation and due diligence frameworks Structured integration playbooks for acquired businesses Clear synergy tracking and performance monitoring

Non-Critical Risks Beyond critical risks, Dabur also keeps a close watch on a broader set of non-critical risks. While these may not be immediately material, they can influence operational efficiency, stakeholder confidence and long-term resilience. By reviewing these risks regularly, we aim to spot early signals, take timely action and stay ahead of potential challenges.
Type of Risk	Mitigation Strategies	Capitals Impacted
Supply Chain & Raw Material Availability Risk: Ensuring consistent availability and quality of key raw materials – particularly medicinal plants and honey – remains challenging due to a fragmented supply base, limited traceability and tightening regulatory standards. In addition, dependence on single-source suppliers, including select third-party vendors, may create concentration risks, exposing the Company to potential supply disruptions, pricing volatility and operational bottlenecks. For honey, evolving global supply dynamics, trade policies, regulatory actions and producer-led activism add further uncertainty to procurement. These factors can impact supply continuity, production planning, cost efficiency and, ultimately, business performance.	Structured procurement through auctions and RFQ processes Backward integration driven by biodiversity initiatives Development of viable raw material substitutes Adequate inventory buffers to ensure supply continuity Development of alternate sourcing for key packaging materials Quarterly vendor reviews to onboard additional suppliers Reduced dependency through diversified sourcing strategies Strengthened oversight and risk management of third-party vendors Continuous evaluation of supplier reliability and performance
Operational Resilience and Safety Risk: Ensuring safe and uninterrupted operations across manufacturing facilities remains critical to Dabur’s business continuity. Fire incidents, in particular, pose significant risks, including potential harm to people, damage to assets and inventory, and disruption to production. In addition, unforeseen events can impact supply continuity and execution stability. Such incidents may lead to financial losses, affect product availability and challenge stakeholder confidence.	Comprehensive insurance cover for assets and inventory External fire safety audits with high closure of identified gaps Regular follow-up audits with ongoing tracking and quarterly reporting Valid fire NOCs across plants, monitored by Corporate EHS and Manufacturing leadership Continuous safety training and permit system compliance Regular fire and emergency mock drills across all shifts Strong business continuity and emergency response planning Recognition programmes to reinforce a culture of safety excellence
Counterfeit Products Risk: The proliferation of counterfeit and look-alike products, particularly in rural and wholesale markets, remains an ongoing challenge for the FMCG sector. Such spurious products not only erode genuine sales and margin realisation but also dilute brand trust built over decades. While quantification remains difficult, the presence of counterfeits can impact channel partner confidence and the morale of frontline sales teams, in addition to posing reputational risks.	Continuous market surveillance and intelligence gathering Swift legal action against counterfeiters Distinctive packaging and authentication features Strong distributor and retailer engagement Consumer awareness and education initiatives Collaboration with enforcement agencies
Changing Consumer Preferences Risk: Consumer preferences are evolving rapidly, particularly among new-age consumers who increasingly seek modern formats, digital-first engagement and purpose-led brands. Traditional product formats and legacy perceptions may face reduced relevance if not continuously refreshed to align with changing lifestyles, wellness expectations and consumption habits. Failure to anticipate or respond effectively to these shifts could impact brand salience, slow down adoption in younger cohorts and influence longterm growth trajectories.	Continuous innovation across formats and product categories Strengthening digital-first and youth-centric engagement Expanding into premium and contemporary product segments Leveraging consumer insights for faster trend adoption Enhancing brand relevance through purposeled positioning Driving modern trade and e-commerce channel growth
Product Governance & Safety Risk: As Dabur continues to innovate and broaden its portfolio, ensuring consistent product quality and safety across all offerings remains of paramount importance. Evolving consumer expectations and stricter regulatory standards heighten the need for robust quality controls and compliance frameworks. Increased consumer awareness and digital amplification may also drive higher customer complaints, which, if not addressed promptly, can impact brand trust. Any gaps in product governance could lead to regulatory scrutiny, reputational impact and financial exposure.	Robust quality assurance and multi-level testing protocols Centralised product governance and compliance oversight Strengthened supplier quality audits and controls Proactive consumer feedback and grievance resolution systems Continuous monitoring of regulatory requirements and standards Ongoing training to reinforce quality and safety culture
Sustainability & ESG Risk: Water availability remains a key operational risk, with certain facilities located in water-stressed regions. Disruptions – particularly for water-intensive processes like juice and Pishti production – could impact production continuity and supply stability. At the same time, limited visibility over environmental footprints across the value chain may pose challenges in managing ESG performance and meeting evolving regulatory and stakeholder expectations.	Water stewardship programmes in high-risk locations Increased water recycling and reuse across operations Continuous monitoring and optimisation of water usage Investments in water-efficient technologies and processes Community partnerships to promote responsible water use Emerged a Water Positive Enterprise in 2025–26 Strengthened ESG data tracking and disclosure systems ESG assessment of suppliers across RMPM, 3P and freight vendors Capacity-building support to suppliers on emissions, human rights and OHS
Packaging & Environmental Compliance Risk: Evolving regulatory frameworks around plastic packaging are increasing the complexity of compliance for FMCG companies. New requirements on sustainability, recyclability and extended producer responsibility (EPR) place additional obligations on packaging design, sourcing and waste management practices. Non-compliance or delays in adapting to the new regulations could lead to financial penalties, operational disruptions and reputational impact. As environmental standards continue to tighten, navigating this shifting landscape remains critical to ensuring both regulatory adherence and long-term sustainable growth.	Transition to recyclable, reusable and sustainable packaging formats Robust EPR compliance and waste management systems Strict adherence to evolving regulatory requirements and compliance frameworks Continuous monitoring of regulatory changes and timely implementation Close collaboration with packaging suppliers for compliance readiness Investments in packaging innovation and material optimisation Strengthened ESG tracking, reporting and disclosure mechanisms

EMERGING RISKS Dabur also actively tracks emerging risks - early-stage developments that may not yet be material but could shape our business over time. By scanning external trends and internal signals, we seek to anticipate potential shifts early and respond in a timely, informed manner, strengthening long-term resilience and strategic agility.
Type of Risk	Changing Consumer Preferences	Data Privacy
Category	Societal	Technological
Description	Customers are increasingly opting for mindful food consumption, selecting products with improved nutritional value such as lower sugar, reduced sodium, and fewer calories. These choices support overall wellbeing and foster healthier lifestyles. The growing preference for nutritious options signals a positive shift toward a more health-conscious society.	Dabur faces risks related to the collection, storage, and management of Personally Identifiable Information (PII) and Sensitive Personal Data (SPD) across various interaction points within the organisation. This includes visitor management processes, digital customer engagement platforms, employee onboarding, recruitment systems, and interactions with third-party vendors. Without strong data governance practices, there is potential exposure to unauthorised access, data breaches, and regulatory non-compliance, which may result in reputational and legal consequences.
Impact	To align with the trend of mindful and healthoriented consumption, the organisation must enhance product nutrition profiles to meet regulatory expectations such as HFSS norms and achieve favourable nutrition ratings. Reformulating to reduce saturated fat, transfat, sugar, and sodium will be essential to maintaining market access and positioning the Company as a leader in health-oriented product offerings.	The Digital Personal Data Protection Act, 2023 introduces stringent obligations for data processors and fiduciaries. Non-compliance may lead to financial penalties and reputational damage. Organisations must demonstrate reasonable security safeguards to prevent data breaches.
Mitigating Actions	Dabur Research and Development Centre(DRDC) has implemented a strategic programme to enhance nutrition ratings across the product portfolio, supported by extensive consumer research on the impact of such ratings on purchasing decisions. A multi-phase sugar-reduction initiative has been successfully executed, achieving significant reduction in added sugars and reinforcing the organisation’s commitment to health-forward product innovation.	A comprehensive Privacy Notice has been implemented across all Dabur digital platforms to ensure visibility and adherence to privacy requirements. A robust cyber-liability insurance framework has been secured to strengthen preparedness for potential incidents. A structured privacy enhancement programme is underway to improve data governance, strengthen system controls, and reinforce compliance with applicable data protection regulations.

RISK CULTURE

Targeted actions are taken, wherever relevant, to strengthen early detection and responsiveness to potential risks, including the use of stress testing, scenario planning, and sensitivity analysis.
An enterprise level risk register is maintained to document identified risks and the corresponding mitigation measures.
Risks gathered from various functions and risk owners are analysed, measured, and prioritised through a bottom up approach to determine their significance at an enterprise level.