VADILALINDNSE15 February 2019

Vadilal Industries Limited has informed the Exchange regarding Investor Presentation

Vadilal Industries Limited

-------- ---

15 th February, 2019

To,

The National Stock Exchange ) f India Ltd . Exchange Plaza, Plot no. C/1, G Block, Bandra-Kurla Complex Bandra (El, Mumbai - 400 051

Department of Corporate Services, Bombay Stock Exchange Limited, 1st Floor, Rotunda Building, Dalal Street, Fort, Mumbai - 400 001.

Scrip Code No. VADILALIND-EQ=--______ --1._S_c_ri-'-p_C_o_d_e_:_S_1_9_1_S_6 __________ __

Dear Sir,

SUB: EARNING PRESENTATI N OF THE COMPANY FOR THIRD QUARTER AND NINE MONTHS FINANCIAL PERFORMANCE OF 2018-19.

With reference to the capti01ed subject, Pl ease find enclosed herewith Earning Presentation of the Company for the Quarter - 3 (01-10-2018 t o 31-12-2018) and Nine Months financial performance of 2018-19.

Kindly take the same on your r ecord.

Thanking you,

Yours faithfully, For VADILAL INDUSTRIES LlMI"'ED

RASHMI BHATT Company Secretary & Compliance Officer

Encl : As above

VADllAllNDUSTRIES LIMITED Reg. Office: Vadilal House, 53, Shri ~ ali Society, Nr. Navrangpura Railway Crossing, Navrangpura, Ahmedabad - 380009. Ph . NO!: 079-26564019-24. Email id:info@vadilalgroup.com Website: www.vadilalicecreams.com / www.vadilalgroup.com CIN No. : L91110GJ1982PLCO05169

VADILAL INDUSTRIES

Q3 & 9M FY19 Results Presentation

Disclaimer

Certain statements in this document may be forward-looking statements. Such forward- looking statements are subject to certain like regulatory risks and uncertainties, changes, local political or economic developments, and many other factors that could cause our actual results to differ materially from those contemplated by the relevant statements. Vadilal Industries will not be in any way responsible for any action taken based on such no obligation to publicly update these forward looking statements to reflect subsequent events or circumstances.

statements and

forward-looking

undertakes

Table of Contents

Q3 & 9M FY19 Financial Performance

Financial Performance Trends

Vadilal Industries Overview

Outlook

Q3 & 9M FY19 Financial Performance

Chairman’s Message

Commenting on Q3 & 9M FY19 performance, Mr. Rajesh Gandhi, Chairman and Managing Director, Vadilal Industries Limited s

“During Q3, we have delivered ~27% growth in revenues – including 12% growth in the domestic business and 71% growth in the international business that continues to expand rapidly from a low base. International revenues in the first nine months of FY19 constituted 24% of the business, compared to only 16% in FY18 when we started expanding aggressively in the US.

In India, we have continued to expand our distribution presence by adding POS deep freezers, in line with our ongoing commitment to growth. We have also opened up some new markets and territories, where we had previously been completely absent or had weak presence. Currently, we are present in 55,000 retail outlets in 26 states across the country.

International revenues contributed 35% to the turnover during Q3, and crossed the Rs. 100 crore milestone in the first nine months, driven by deeper proliferation of Vadilal ice creams and processed food products within the Indian diaspora in the US and other key markets. Based on the strong growth in demand, we are looking to penetrate deeper into these markets to address the gap in the availability of Indian products to the community. We are also exploring new overseas markets that provide the potential to replicate our success in the US.

Margins have continued to expand – gross margin increased to 50% in Q3 compared to 40% in the same quarter last year. On nine month basis, gross margin expanded from 43% to 49%. This was based on higher contribution from personalized packs to the domestic product mix, higher contribution from exports where per unit realizations are much higher and lower raw material costs. Having already closed key supply arrangements for the upcoming summer season, we have clear visibility of input costs and expect strong contribution from sales. While continuing to invest in teams that support our growth objectives, we have maintained strict discipline in terms of manufacturing efficiencies, operating cost structure and working capital, which reflects in EBITDA margin expansion. Flow down of these initiatives have resulted in profit after tax expanding from Rs. 15 crore to Rs. 40 crore in the first nine months of FY19. Another key achievement is the significantly lower loss in Q3, which is our seasonally weakest quarter – reflective of the increasing diversification in our business profile. Going forward, we see another good year in FY20 as we leverage the Vadilal brand for ongoing growth.”

Financials – Q3 & 9M FY19 Performance

Revenue

431.4

463.2

 In Q3 FY19 VIL revenues grew by 27% y-o-y driven by 12% y-o-y

growth in the domestic business

 Domestic business was driven by higher volumes

 International business revenues grew by 71% yoy

74.8

95.6

Q3 FY18 Q3 FY19 9M FY18 9M FY19

 International business witnessed robust demand as VIL continues to increase its distribution and expands product portfolio focused on Indian diaspora in the US and other geographies

Consolidated financials in Rs. Crore

International segment includes Vadilal Industries (USA) Inc.

Financials – Q3FY19 & 9MFY19 Performance

EBITDA

82.9

44.9

 EBITDA margin for the quarter were higher by ~1408 bps on account of higher volumes, lower input costs and focus on efficiencies

-7.5

3.9

 Continue to focus on rationalization of debt:

Q3 FY18 Q3 FY19 9M FY18 9M FY19

o Reconstituted outstanding debt to increase long

Note – Revenues considered, net of excise duties

PAT

tenure loans and reduced cost of debt

o Overall debt as on Dec 31st 2018 was lower at Rs. 144 crore as against Rs. 166 crore on Dec 31st 2017

39.8

Finance costs in Q3FY19 lower by 1% y-o-y at Rs. 3.25 crore versus Rs. 3.29 crore in Q3FY18

-9.4

-2.5

14.9

Q3 FY18 Q3 FY19 9M FY18 9M FY19

Consolidated financials in Rs. Crore

 PAT for the quarter improved to Rs. -2.5 crore as

compared to a loss of Rs. -9.4 crore in Q3FY18

Financials Performance Trends

Revenue (Rs. cr)

323.6

367.3

406.3

449.7

482.2

550.3

FY13

FY14

FY15

FY16

FY17

FY18

Domestic

International

288.7

318.7

361.8

413.5

428.0

464.6

85.7

34.9

48.6

44.5

36.2

54.2

FY13

FY14

FY15

FY16

FY17

FY18

FY13

FY14

FY15

FY16

FY17

FY18

Consolidated financials in Rs. Crore

Financials Performance Trends

EBITDA

59.4

60.2

54.4

 Longer term, consumer behavior is transitioning with

increasing acceptance for western desserts.

44.1

41.7

42.6

FY13 FY14 FY15 FY16 FY17 FY18

PAT

19.1

15.7

14.8

5.0

2.3

2.4

FY13 FY14 FY15 FY16 FY17 FY18

Consolidated financials in Rs. Crore

o Domestic business growth, temporarily impacted by recent changes in operating environment and to consumption historical trends

spending,

reverting

is now

o Continued focus on developing domestic business and lower input costs expected to drive growth

 Will

continue

invest

in production

capacity,

technology, brand and distribution

 As volumes enhance, existing capacity gets utilized more efficiently and margins, which were depressed in the past, are improving

Financials Performance Trends – Balance Sheet

Networth

175.6

161.1

113.1 113.5

127.1

Debt

Other Non-Current Liabilities

205.0

180.2

148.3 154.3 159.8

26.6

29.0

15.2

16.5

20.6

FY14 FY15 FY16 FY17 FY18

Net Fixed Assets

232.3 226.1 225.1

Other Non-Current Assets

255.5 264.0

14.8

15.1

14.3

13.3

10.7

Net Current Assets

86.2

69.0

56.6

75.8

87.1

s e i t i l i

b a i L

s t e s s A

FY14 FY15 FY16 FY17 FY18

Consolidated financials in Rs. Crore

Financials Performance Trends – Cash Flows

Operating Cash Flow

Free Cash Flows

56.6

51.7

62.2

51.8

41.3

26.0

23.0

FY14 FY15 FY16 FY17 FY18

7.1

1.4

 Estimated capex for FY 19 at ~ Rs. 35 crore

Consolidated financials in Rs. Crore

Vadilal Industries Overview

Overview

111-year old, established ice cream brand

Currently managed by fourth generation promoter family

Selected India‟s most trusted ice cream brand in 2013 and 2014 by the Brand Trust Report

Largest range of ice creams of any company in India

Top 3 ice-cream brand in the country, 150+ flavors

~300 SKU‟s of cones, candies, bars, ice lollies, cups, family packs, economy packs

Second largest ice cream manufacturer in India by volume

Leadership in key markets – Gujarat, Rajasthan, UP, Uttarakhand, Haryana and Chandigarh

Strong distribution network in North, West and East India

16 states, 61 CNF‟s, over 1200 distributors, 290 distribution vehicles, 50,000 +retail outlets

Expanding global business presence

Products reach 45 countries across four continents – key markets include US, Canada, UK, Middle East, Australia and New Zealand

Exporting processed food products, ice- creams and frozen desserts

Vadilal: Growth Strategies

Geographical Expansion

Retail Investments

New Product Development

 Expanding footprint in North and East

 10,000 new sales outlets planned in

regions of India

FY19

 New production facility expected in

 100 more distributors expected to

East India

be added in FY19

 Expanding distribution footprint in tier

 Investments in new technologies

3/4 cities and rural markets

 Constantly innovating to roll out new products in domestic and global markets

 Targeting expansion of market

share in premium/super-premium segment

Brand Building Initiatives

Global Expansion

 Seen as one of the most trusted ice cream and leading processed foods brand in India

 Undertaken campaigns to strengthen

social media presence

 Rural marketing initiatives

 Leveraging frozen foods channels to expand ice cream exports globally

 Strong distribution to Indian

diaspora who have displayed affinity for the brand and differentiated products offerings

Ice Creams - Brands Portfolio

 Largest range of ice creams of any company in India

 300 SKU‟s of cones, candies, bars, ice lollies, cups, family packs, economy packs

 Constantly innovating to roll out new products in ice cream segment

Indian Ice Cream Market

Evolving perceptions

Innovative product development

Ice cream is transitioning from periphery to mainstream, from occasional indulgence to snacking option

Shift from limited portfolios of traditional products to innovative, global-standard offerings

Changing demand patterns

Expanding customer choices

Transition from seasonal to year-long consumption

Local brands competing with international players, leading to market expansion

Growing affordability

Significant headroom for growth

Increased disposable incomes and discretionary spending driving secular demand growth

India‟s current annual per capita consumption of 400 ml vs 2.3 liters world average, Chinese consumption is 20X India‟s

Premiumization trends

Nationwide retail expansion

Consumers receptive to spending on high quality products that meet their rising aspirations

Rapid expansion of retail network and improved availability of power leading further expanding demand

Marketing initiatives – Thrust towards Premiumization

 Parineeti Chopra associated as ambassador for Vadilal

brand till 2018 season.

 Unveiled new products endorsed by

the brand ambassador, with the expanded range being evaluated on an ongoing basis.

Growing International Presence

 Exporting ice-creams, frozen desserts and processed

food products

 Key markets – US, Canada, UK, Kuwait, Qatar, Bahrain,

UAE, Singapore, Australia, New Zealand

 Focused on Indian diaspora globally and adhering to

international food standards

 Two decades of experience selling frozen foods

globally being leveraged to expand ice cream exports

Robust Expansion in U.S. market

 Latent demand for quality Indian products driving strong

volume growth in US ice cream sales

 35-member team reaching 40 plus US states and ~70% of

local Indian diaspora

 Deriving significant benefit from the existing processed

foods distribution network in the US

 Expanding product base within existing categories, launched

new categories such as Indian Mithai and Paneer

International Product Portfolio

Production Facilities

 Capacity expanded from 270,000 liters per day to 380,000 liters per day over the past few years

 Current production on automated processes “untouched by hand”, manual intervention only at packaging stage

 Focused production lines for international standard manufacturing for exports

 No major capital expenditure anticipated

on capacity enhancement

Facilities

Capacity

Production

Certification

Bareilly, Uttar Pradesh

150,000 liters per day

Ice cream

ISO-22000:2005

Dharampur, Gujarat

33,000 kgs per day

Processed foods

ISO-22000:2005 and BRC : Issue 6

Pundhra, Gujarat

230,000 liters per day

Ice cream

ISO-22000:2005 and BRC : Issue 6

Deep Domestic Distribution Presence

Bareilly

Pundhra

Dharampur

States

Distributor

1 Gujarat 2 Uttar Pradesh 3 Madhya Pradesh 4 Rajasthan 5 West Bengal 6 Delhi 7 Bihar 8 Himachal Pradesh 9 Punjab 10 Uttarakhand 11 Haryana 12 Jharkhand 13 Orissa 14 Chandigarh 15 Chhattisgarh

200 185 150 138 89 63 58 58 51 48 44 41 37 36 18

Distribution network comprises of over 55,000 retailers, over 1,200 large distributors, 63 CNFs, 290 distribution vehicles and almost 300 SKUs.

Adopted franchisee route to increase market further penetration and established 85 ice cream parlors under „HAPPINEZZ‟ brand name

Access to the largest fleet of refrigerated vehicles in India, backed by an expanding distribution network

Production Facilities

Awards and Accreditations

Outlook

Planned Initiatives

Deep penetration in US market, targeting expanded presence in other geographies that are home to large Indian populations

Accelerating new product development both for domestic and international markets and improving production processes

Aggressive expansion of sales generating assets/cold supply chain – annual planned addition of ~10,000 deep freezers

Focus on higher value products and more sales contribution from individualized packs

Augmenting distribution management system that will allow micro-control over ROI from each business area and point of sale unit

Leveraging surplus generated by operations to rationalize/ restructure debt and improve working capital management

Kalpit Gandhi

Vadilal Industries Ltd

Tel: +79-30921200

Email: kalpit@vadilalgroup.com

Shiv Muttoo / Karl Kolah

CDR India

Tel: +91 22 6645 1207 / 1220

Email: shiv@cdr-india.com karl@cdr-india.com

Thank You

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