Vadilal Industries Limited has informed the Exchange regarding Investor Presentation

VADILAL INDUSTRIES FY19 & Q1FY20 Results Presentation Disclaimer Certain statements in this document may be forward-looking statements. Such forward-looking statements are subject to certain risks and uncertainties, like regulatory 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 forward-looking statements. Vadilal Industries will not be in any way responsible for any action taken based on such statements and undertakes no obligation to publicly update these forward looking statements to reflect subsequent events or circumstances. 2 1 2 3 4 Table of Contents 3 Financial Performance Financial Performance Trends Vadilal Industries Overview Outlook FY19 & Q1FY20 Financial Performance Management’s Message 5 “During FY19, we have delivered 3% growth in reported revenues. However, adjusted for changes in billing methodology in domestic sales, consolidated revenue growth is 13%. Domestic revenues declined by 7% on reported basis but increased by 3% on adjusted, like-to-like comparison basis. Domestic business saw weakness in Q4 due to exceptionally severe weather conditions that extended the winter till the end of March this year and impacted the consumption of ice cream in many of our core markets. International revenues continued to deliver encouraging expansion to cross the $ 20 million milestone, on the back of 54% revenue growth during FY19. International business is now over 25% of revenues and growth is driven by strong demand for our high quality ice creams and other products within the sizeable Indian diaspora community in the U.S. and some other geographies. We have already committed distribution investments in multiple locations in the U.S. that allow us widespread access to the sizeable Indian diaspora in key target markets. Gross margin expanded by over 600 basis points last year on the back of volume growth, benign raw material prices and larger contribution from international operations, where realizations are significantly higher. Cost of people resources increased significantly last year, with a large contribution from U.S. operations that now have a base of over 50 employees. However, we have kept a tight control on other operating expenses that remained almost unchanged. As a result, EBITDA margin increased by almost 400 basis points and profit after tax more than doubled. We have started FY20 with double digit growth in the summer season and 25% revenue expansion in international business. Based on our raw material purchase and inventory position, we have visibility of stable costs covered till Q2. As milk prices are at higher levels now, we will look to increasing prices in the second half of the year. We continue to incur regular capital expenditure and expect to spend Rs. 30-35 crore during the year. We also expect to deliver double digit growth with higher contribution from international business leading to margin expansion.” Commenting on the performance, Mr. Rajesh Gandhi, Director, Vadilal Industries Limited Abridged Profit and Loss Statement Consolidated Q1FY20 Q1FY19 Q4FY19 Q4FY18 FY19 FY18 Revenue 260.9 231.1 13% 114.7 127.1 -10% 577.9 558.6 3% Gross Profit 127.5 111.3 15% 53.1 58.8 -10% 282.9 246.0 15% EBITDA 67.8 57.6 18% -0.02 9.5 -100.2% 82.8 59.3 39.8% EBITDA Margins 26.0% 24.9% +105 BPS -0.01% 7.4% 14.3% 10.6% +372 BPS Depreciation 6.0 4.3 38% 4.4 3.5 27% 16.9 16.1 5% Interest 4.2 3.5 22% 4.3 4.8 -11% 14.1 15.3 -8% PBT 57.6 49.8 16% -6.5 3.1 -313% 51.9 27.8 86% PAT 37.7 32.4 16% -6.4 0.8 -893% 33.4 15.7 113% 6 Consolidated financials in Rs. Crore Financials – FY19 & Q1FY20 Performance 7 Consolidated financials in Rs. Crore In FY19 VIL revenues grew by 3% y-o-y and in Q1FY20 it grew by 13% y-o-y In FY19 Domestic business declined by 7% y-o-y owing due to severe weather conditions/extended winter towards the end of the year; Domestic business increased by 3% on adjusted, like-to-like comparison basis. International business revenues grew by 54% y-o-y In Q1FY20 revenues from Domestic business grew by 10% y-o-y and International grew by 25% y-o-y International segment includes Vadilal Industries (USA) Inc. 231.1 260.9 558.6 577.9 Q1FY19Q1FY20FY18FY19Revenue 192.0 211.9 462.1 429.2 Q1FY19Q1FY20FY18FY19Domestic 39.1 49.0 96.5 148.7 Q1FY19Q1FY20FY18FY19International Financials – FY19 & Q1FY20 Performance 8 EBITDA margin in FY19 increased by ~400 basis and in Q1FY20 it increased by ~105 bps on account of tight control on operating expenses and focus on efficiency Continue to focus on rationalization of debt: oReconstituted outstanding debt to increase long tenure loans and reduced cost of debt oOverall debt as on March 31st 2019 was stable at Rs. 160.1 crore as against Rs. 161.8 crore on March 31st 2018 oFinance costs in FY19 declined by 8% but in Q1FY20 it increased by 22% y-o-y due to impact from Ind AS 116 PAT in FY19 more than doubled at 113% and in Q1FY20 it grew by 16% y-o-y Consolidated financials in Rs. Crore Note – Revenues considered, net of excise duties 57.6 67.8 54.4 65.9 Q1FY19Q1FY20FY18FY19EBITDA 32.4 37.7 15.7 33.4 Q1FY19Q1FY20FY18FY19PAT Financials Performance Trends Financials Performance Trends 10 406.3 449.7 482.2 558.6 577.9 FY15FY16FY17FY18FY19Revenue (Rs. cr) 361.8 413.5 428.0 462.1 429.2 FY15FY16FY17FY18FY19Domestic 44.5 36.2 54.2 96.5 148.7 FY15FY16FY17FY18FY19International Consolidated financials in Rs. Crore Financials Performance Trends 11 Longer term, consumer behavior is transitioning with increasing acceptance for western desserts. oDomestic business growth, temporarily impacted by recent changes in operating environment and consumption spending, is now reverting to historical trends oContinued focus on developing domestic business and lower input costs expected to drive growth Will continue to 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 42.6 59.4 60.2 54.4 65.9 FY15FY16FY17FY18FY19EBITDA 2.4 14.8 19.1 15.7 33.4 FY15FY16FY17FY18FY19PAT Consolidated financials in Rs. Crore Financials Performance Trends – Balance Sheet 12 Liabilities Assets 113.5 127.1 160.8 175.3 207.0 FY15FY16FY17FY18FY19Networth 180.2 148.3 154.3 161.8 160.1 FY15FY16FY17FY18FY19Debt 16.5 20.6 26.6 29.4 31.1 FY15FY16FY17FY18FY19Other Non-Current Liabilities 226.1 225.1 255.0 264 280.5 FY15FY16FY17FY18FY19Net Fixed Assets 15.1 14.3 10.7 13.3 14.9 FY15FY16FY17FY18FY19Other Non-Current Assets 69.0 56.6 75.6 89.5 103.4 FY15FY16FY17FY18FY19Net Current Assets Consolidated financials in Rs. Crore Financials Performance Trends – Cash Flows 13 51.7 62.2 28.5 30 53.4 FY15FY16FY17FY18FY19Operating Cash Flow 41.3 51.8 7.1 1.4 24.7 FY15FY16FY17FY18FY19Free Cash Flows Estimated capex for FY 20 at ~ Rs. 30 crore Consolidated financials in Rs. Crore Vadilal Industries Overview Overview 15 Currently managed by fourth generation promoter family Selected India’s most trusted ice cream brand in 2013 and 2014 by the Brand Trust Report 111-year old, established ice cream brand Top 3 ice-cream brand in the country, 150+ flavors ~300 SKU’s of cones, candies, bars, ice lollies, cups, family packs, economy packs Largest range of ice creams of any company in India Leadership in key markets – Gujarat, Rajasthan, UP, Uttarakhand, Haryana and Chandigarh Second largest ice cream manufacturer in India by volume 16 states, 61 CNF’s, over 1200 distributors, 290 distribution vehicles, 50,000 +retail outlets Strong distribution network in North, West and East India 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 Expanding global business presence Vadilal: Growth Strategies 16 Geographical Expansion Expanding footprint in North and East regions of India New production facility expected in East India Expanding distribution footprint in tier 3/4 cities and rural markets Brand Building Initiatives 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 Retail Investments 10,000 new sales outlets planned in FY20 100 more distributors expected to be added in FY19 Investments in new technologies Constantly innovating to roll out new products in domestic and global markets Targeting expansion of market share in premium/super-premium segment New Product Development Global Expansion 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 17 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 18 Evolving perceptions Changing demand patterns Growing affordability Premiumization trends Innovative product development Expanding customer choices Significant headroom for growth Nationwide retail expansion Rapid expansion of retail network and improved availability of power leading further expanding demand Consumers receptive to spending on high quality products that meet their rising aspirations India’s current annual per capita consumption of 400 ml vs 2.3 liters world average, Chinese consumption is 20X India’s Increased disposable incomes and discretionary spending driving secular demand growth Local brands competing with international players, leading to market expansion Transition from seasonal to year-long consumption Shift from limited portfolios of traditional products to innovative, global-standard offerings Ice cream is transitioning from periphery to mainstream, from occasional indulgence to snacking option Growing International Presence 19 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 20 Latent demand for quality Indian products driving strong volume growth in US ice cream sales 50-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 21 Production Facilities 22 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 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 Deep Domestic Distribution Presence 23 Production Facilities Bareilly Pundhra Dharampur States Distributor 1 Uttar Pradesh 252 2 Gujarat 169 3 Rajasthan 163 4 Madhya Pradesh 122 5 Bihar 77 6 West Bengal 66 7 Jharkhand 63 8 Punjab 55 9 Uttarakhand 49 10 Haryana 46 11 Orissa 46 12 Jammu & Kashmir 36 13 Delhi 34 14 Himachal Pradesh 32 15 Assam 13 16 Chandigarh 7 Distribution network comprises of over 55,000 retailers, over 1,240 large distributors, 63 CNFs, 290 distribution vehicles and almost 300 SKUs. Adopted franchisee route to further increase market 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 15 1 4 13 3 2 7 12 5 6 14 8 10 11 9 16 Awards and Accreditations 24 Outlook Planned Initiatives 26 Focus on higher value products and more sales contribution from individualized packs 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 Leveraging surplus generated by operations to rationalize/ restructure debt and improve working capital management Augmenting distribution management system that will allow micro-control over ROI from each business area and point of sale unit Contact Us Kalpit Gandhi Vadilal Industries Ltd Tel: +79-30921200 Email: kalpit@vadilalgroup.com Shiv Muttoo / Karl Kolah CDR India Tel: 98335 57572 / +91 22 6645 1220 Email: shiv@cdr-india.com karl@cdr-india.com Thank You