DIAMONDYD

Ref. No.: PSL/2023-24/CS/SE/17 Date: 28th May, 2023 To, To, Listing Department Corporate Relationship Department National Stock Exchange of India Limited BSE Limited Exchange Plaza, 5th Floor, P.J. Towers, Plot No. C/1, G Block, Dalal Street, Bandra Kurla Complex, Mumbai - 400 001 Bandra (E), Mumbai - 400 051 Security Code: 540724 Symbol: DIAMONDYD Security ID: DIAMONDYD Dear Sir/Madam, Subject:Investor Presentation for the quarter and year ended 31st March, 2023 Pursuant to Regulation 30 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, please find attached herewith Investor Presentation for the quarter and year ended 31st March, 2023. The aforesaid presentation is also available on the Company’s website www.yellowdiamond.in This is for your information and records. Thanking you, Yours faithfully, For Prataap Snacks Limited Om Prakash Pandey Company Secretary and Compliance Officer Encl.: As above Prataap Snacks Limited CIN: L15311MP2009PLC021746 Registered Office : Khasra No. 378/2, Nemawar Road, Near Makrand House, Palda, Indore, Madhya Pradesh - 452 020, India Telephone : 91-731-2439999 E-mail : info@yellowdiamond.in Website : www.yellowdiamond.in PRATAAP SNACKS LIMITED Q4 & FY23 Earnings Presentation 27 May 2023 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. Prataap Snacks Limited (PSL) 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. COMPANY AT A GLANCE Large, compounding market Market leadership Significant revenue scale INR 438 Bn market Market Leader in Rings, FY23 Revenue of INR ~ 16.5 Bn Growing at 14% CAGR(1) Top 2 in Extruded Snacks, 9-year revenue CAGR: 18%(2) Top 5 in Western Savoury Snacks Diverse product portfolio Nationwide manufacturing & Experienced Leadership Over 125 SKUs across Potato distribution footprint Founder-led management Chips, Extruded Snacks, 14 manufacturing facilities; team guided by an able Namkeen and Sweet Snacks Presence across ~2.2 Mn retail Board outlets Source: Nielsen. (1): As of 2023, CAGR for last 5 years. 4 (2): Revenue CAGR from FY14 to FY23. KEY MILESTONES 2018 2022 Forayed into Sweet Snacks 2003 2020 Completed 2012 Entered into 3P Contract Company 2006 Doubled the Manufacturing Converted 3P restructuring founded 2016 facility to owned ofdistribution Installed capacity of Potato at Kolkata -2 and Guwahati new in Bengaluru, pyramid Chulbuleplant at Chips plant at Indore Bengaluru-2 plant Karnataka Prakash Snacks commissioned Commissioned in Indore Acquired Avadh Snacks – facility in Kolkata for Commenced 3P a leading regional player Extruded Snacks manufacturing at in Gujarat Kanpur Concluded merger with Avadh Snacks 2019 2011 Commenced 3P Sequoia’s initial manufacturing at investment of 2014 2021 Hisar Rs. 620 mn Commissioned 2017 Launched Swiss 2004 PrataapSnacks Guwahati plant for Successful IPO – Rolls Expanded range in Set up a plant to Rings, Chulbule oversubscribed sweet snacks manufacture Launched Rings, and Pellets 47x; listed on Received approval through launch of Potato Chips in Namkeen and NSE & BSE on under PLI Scheme of Cup Cake, Tiffin Indore Wheels Introduction of Oct 5, 2017 Government of India Cake and Scoops Sandwich Cake Corporate development Category expansion Geographical expansion / Facility Addition 5 COMPANY EVOLUTION 2003 2023 Single Product Product Diverse Product Portfolio Potato Chips Single Market Presence Pan-India Presence Mumbai Single Facility 14 Facilities Facility Indore 7 Owned and 7 3P Facilities Snapshot of Recent Growth Rs. 446 Cr Revenue Rs. 1,653 Cr 2014 2023 40+ SKUs 125+ 3 Facilities Facilities 14 Facilities 9 yr Revenue CAGR – 18% despite Covid impact 6 DIVERSE PRODUCT PORTFOLIO Appealing to consumers and trade partners % of FY23 CATEGORIES PRODUCTS Revenue 58% Chulbule Rings Wheels Pellets Scoops Puff Stix Extruded Snacks 23% Market Leader in Rings, Potato Chips Top 2 in Extruded Snacks, Top 5 in Western 16% Savoury Snacks Namkeen 3% Cookie Center Filled Choco Tiffin Sandwich Swiss Sweet Snacks -Cake Cup Cake Vanilla Cake Cake Cake Roll 7 BRANDING & MARKETING Brand seen to be energetic and vibrant Brand Philosophy Brand Ambassadors / Associations(1) Consumer oriented focus Providing value in multiple ways – great taste, high quality ingredients, vibrant packaging, reasonable price Brand tagline encapsulates the philosophy of delivering value to the customer (1) PSL had brand endorsement association with Salman Khan, Ben 10 and Chhota Bheem in past. 8 OPERATIONAL EXCELLENCE Powered by tech and automation Data Analytics Production Automation Sales Automation Experienced Sales Analytics department working Complete ERP Solution to manage State-of-the-art SFA being used to with advanced BI Tools production processes; Software guide sales team with assisted order deployed to manage grammage taking Profitability being regularly monitored and tracked during packing process To identify gaps in market and optimize at region as well as SKU level to enable decision Using advanced WMS software to sales routes through geotagging of making manage FG inventory outlets 9 ESTABLISHED MANUFACTURING NETWORK Reduced distribution costs; Improved time-to-market; Disciplined investment mindset North India STRATEGICALLY LOCATED (34% of rev.) MANUFACTURING Nationwide manufacturing 4 plants in Hisar, FACILITIES TO CATER TO Karnal, Kanpur, Patna footprint THE REGIONAL DEMAND • Optimised distribution cost • Faster time-to-market West India Leveraging mix of contracted (39% of rev.) East India and owned manufacturing 3 plants in (17% of rev.) Indore (2), Rajkot (1) 4 plants in • Disciplined investment Assam (2), approach: Scale-up after Kolkata (2) proving market viability South India (10% of rev.) 3 plants in Bengaluru (2), Facility Hyderabad (1) Note: Revenue by geography based on FY22. 10 OPTIMISED DISTRIBUTION MODEL Direct distribution model on a nationwide scale Shifted to a direct distribution model upon hitting OLD DIRECT DISTRIBUTION Prataap Prataap DISTRIBUTION critical scale MODEL MODEL • Decentralized manufacturing footprint allows us to supply directly to distributors Superstockist • Reduced distribution costs (realized ~3% improvement in EBITDA margin) Super / Sub Super / Sub Distributor Distributor Amongst one of very few Snacks food players in India with a pan-India distribution network • Supported by over 5,200 super/sub distributors Retailer Retailer reaching ~2.2M touchpoints across India • Ability to tap growth across all parts of India 11 OUR ESG APPROACH Cornerstones of doing good business • Actively working in accordance with Uniform Framework for Extended Producers Responsibility (EPR)issuedbytheMinistryofEnvironment,Forest,andClimateChange Waste management • We engage in mass collection for processing anddisposal of empty packets in collaboration with accreditedNGOsinseveralstates. • Wearealsoexploringdevelopmentanduseofrecyclablepackaginglaminatewithoursuppliers • Aligned to the strategy to combat climate change and transition to a low carbon economy, our aimis toreduceourcarbonfootprintandreduceourenergyconsumption • This will be realised through adopting solar energy in factories, increasing the use of non-fossil Clean energy fuels at manufacturing facilities, incorporating energy efficient building designs, implementing energyefficientdevicesandimplementingautomatedenergymanagementsolutions • Use of bio-mass briquettes for generatingheat for manufacturingprocess, currentlyrepresenting over45%offuelcost • Our newly-installed Effluent Treatment Plant (ETP) and Reverse Osmosis unit at Indore plant ishelpingtorecycletheusedwater fromproductionunitswhichisthenreused Water Conservation • Thishasledtoinitialsavingsin overallwaterconsumption • Wealsoaimto minimiseourfreshwaterrequirementsthroughourrainwaterharvestinginitiative. To reduce freshwater consumption by 20% at Indore plant by March 2024 To utilise 25% of total power consumption from SolarEnergy and other non-conventional energy by March 2024 12 STRONG ‘VALUE-FOR-MONEY’ BRAND Appealing to customers across socio-demographic profiles CATEGORIES CHILDREN YOUTH ADULTS/FAMILY Rings, Kurves, Puff, Stix Chulbule Extruded Snacks Pellets Potato Chips Potato Chips Namkeen Namkeen Sweet Snacks Sweet Snacks Targeting value for money segment 13 Guided by an Accomplished Board Mr. Arvind Mehta Bharat Singh Mr. V.T. Bharadwaj Chairman & Executive Non-executive Nominee Director Independent Director Director (Additional) Mr. Amit Kumat Anisha Motwani Vineet Kumar Kapila Managing Director and CEO Independent Director Independent Director Mr. Apoorva Kumat Executive Director Chetan Kumar Mathur Independent Director (Operations) PSL has high standards of Corporate Governance and sound internal control policies 14 ESSENTIAL FLAVOURS: Growth Strategies and Financial Progress STRATEGIC INITIATIVES Executing on a clear roadmap for robust and disciplined growth TOP LINE GROWTH Expand Namkeen Disciplined Product Range Selling & Drive mix of Footprint Innovation and larger packs ~44% of snacks industry (but Geographical Expansion Increase range selling and currently contributes to Drive SKU Expansion in core volumes of larger pack sizes around 16% of our categories and continue to revenue(1)) add touchpoints in distribution network BOTTOM-LINE & CASH FLOW FOCUS Direct Distribution Levers to Improve Margins Working Capital Model & Channel Product portfolio pruning, Improvement optimization improving productivity, Seeking efficiencies to Reducing distribution costs reduction in operational costs unlock cashflows and and time-to-market and overheads improve returns Source: Nielsen. (1): Based on FY23 Revenue. 16 MEASURES TO ENHANCE PROFITABILITY AND RETURNS Bottom slicing Compression of distribution structure • Reasons for lesser volumes being identified, • PSL has implemented direct distribution and levers are worked on to improve them across all regions, ahead of schedule • Indirect expenses are being saved by • This results in savings through lower trade discontinuing less popular products margins and freight optimization Capacity expansion Establishing hubs across India • Selective capacity expansion in target • PSL has established hubs in all the markets manufacturing facilities • Leveraging opportunity from PLI scheme to • These hubs will have the entire product range enhance presence in high-potential and cater to proximate markets in order to underpenetrated markets optimise distribution with cost efficiency 17 ROBUST REVENUE GROWTH Consistent execution track record TOTAL REVENUE (INR Mn) COVID DISRUPTION 16,529 Avadh 13,938 13,966 Acquisition 1,688 11,706 11,711 10,174 8,940 7,572 5,493 12,250 4,460 FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21 FY22 FY23 18 EBITDA MARGIN RECOVERY On the back of recent stabilization of volatile raw material prices EBITDA MARGIN (%) 5 year (FY16-FY20) average EBITDA margin was 6.9%. In FY22-23, margin was impacted by: Covid period: supply 7.6% chain & raw material 6.9% • Inflationary trends in the overall environment affected cost inflation consumer demand 5.5% • Sharp increases in raw material prices, especially palm oil 4.7% 4.8% & packaging Margin pressure was countered by: • Compression in the overall distribution structure • Process improvements through automation efforts, portfolio pruning and better average realisation • Long term contracts to mitigate fluctuations in input (0.5%) prices FY16-20 FY21-22 Q1 FY23 Q2 FY23 Q3 FY23 Q4 FY23* Average Average With these initiatives, the potential range for margin is superior to pre-COVID levels *Adjusted EBITDA represents EBITDA excluding reversal of Production Linked Incentive of Rs. 112.9 million 19 OVERCOMING COST PRESSURES UNDERTOOK MULTIPLE INITATIVES TO OVERCOME SHARP RISE IN INPUT PRICES EBITDA MARGIN(%) There was sharp inflation in RM prices during the period compared to the average during FY16-FY20 RM/PM Price Increase from FY16-20(avg) to Q4 FY23 In addition to RM prices inflation there has been a significant increase in costs of Power and Fuel as well as overheads Despite these pressures, the company has demonstrated ability +60% Palm Oil to improve EBITDA margin using the following levers: • Compressed distribution structure and channel optimization +3% • Process reengineering and cost optimization measures Laminate • Driven better sales realization through a mix of reduction in trade margin and rationalization of grammages +38% Corn These initiatives have enabled the company to substantially recoup the impact of RM price inflation by structurally elevating the margin performance *Adjusted EBITDA represents EBITDA excluding reversal of Production Linked Incentive of Rs. 112.9 million 20 APPROVAL UNDER PERFORMANCE LINKED INCENTIVE (‘PLI’) SCHEME The minimum CAGR for sales for calculating the incentive is 10% with the maximum cap of The benefit isavailable Received approval under PLI 13% CAGR for eligible products including growth in scheme of the Government of The base year for calculating India under ‘Ready to Eat’ •From FY 21-22 to FY 24-25, Avadh sales the PLI benefit on- segment incremental sale is FY 19-20 the incentive rate for eligible for the first 4 years and FY 21- products is 7.5% on the The investment commitment 22 and FY 22-23 for the fifth incremental sales over base aggregates to ~ Rs.105 crore, All products are covered and sixth years respectively year sales of which PSL has already under the PLI scheme except •The incentive for FY 25-26 is invested Rs. 59 crores with forPotato Chips 6.75% and FY 26-27 is 6% purchase orders issued for calculated on the the balance amount incremental sales over base year sales 21 OUR LONG-TERM TARGET OPERATING MODEL CONSISTENT PROFITABILITY CAPITAL GROWTH CENTRIC EFFICIENCY ~15% >10% 15–20% Revenue growth EBITDA margin RoCE (faster than industry) 22 PROOF OF THE PUDDING: Q4 FY23 Performance Update OPERATIONAL OVERVIEW • Delivered continued momentum in top-line on the back of steady demand Reported strong growth of 19% across key geographies • Substantial increase in touchpoints over the last 12 months as well as YoY in sales in FY23 optimizing of existing network through better efficiency has helped the company to deliver strong double-digit growth • There has been moderation in key raw materials such as Palm oil along with slight improvement in cost of packing materials Reported EBITDA margin • This moderation, coupled with the structural improvement undertaken by the (adjusted for PLI reversal) of company towards an enriched margin profile has resulted in improvement in EBITDA margin by 620 bps YoY from 1.4% in Q4 FY22 to 7.6% in Q4 FY23 7.6% in Q4 FY23 • This is the highest EBITDA margin reported in the last 12 quarters Promising outlook for top-line • On the back of improved economic activity and slight cooling of inflation, consumer demand is expected to improve going forward and profitability on the basis • Maintaining an optimistic outlook for both revenue growth and enhanced of resilient demand and profitability easing of input prices 24 MD & CEO’s Message “We have ended FY23 with sales of Rs. 16,417.1 million, higher by 19% YoY. We are pleased to report our second successive year of strong revenue growth after covid disruption elevating us to our highest ever annual revenue. This has been achieved by expansion of our average distribution reach by nearly 1.6 lakh outlets over the last financial year to 21.8 lakh outlets (Source: Nielsen) across the country. Revenues in the fourth quarter have been impacted by softer consumer demand due to sustained inflationary pressures and sluggish rural activities. As a result, we couldn’t meet the threshold revenue required to qualify for the Commenting on production-linked incentive this year. Hence, PLI recognised on an accrual basis in Q1 to Q3 this year has been Q4 & FY23 reversed in Q4, impacting the reported EBITDA. performance, Mr. Amit Kumat Managing The silver lining has been the improvement in EBITDA margin (adjusted for PLI reversal). Adjusted EBITDA of Rs. 301.9 Director & CEO, million in Q4 FY23 was higher by 511% YoY and the margin has improved by 620 basis points from 1.4% in Q4FY22 to PrataapSnacks Limited said: 7.6% in Q4FY23, which is the highest in the last 12 quarters. This improvement has been driven by our compressed distribution structure, cost optimization measures and cooling of input prices, setting the tone for an improved margin performance in the next fiscal year.” He added, “We are optimistic of continuing the pace of revenue growth in the backdrop of increasing economic activity coupled with slowing inflation, which should combine to serve up a favourable backdrop for consumer 25 demand in the year ahead.” ABRIDGED P&L STATEMENT Y-o-Y Y-o-Y (INR Mn) Q4 FY’23 Q4 FY’22 FY’23 FY’22 Change (%) Change (%) Sales/Income from operations 3,979.1 3,584.9 11% 16,417.1 13,831.0 19% Other operating Income (112.8) 29.7 NA 112.2 135.2 (17%) Total Income from Operations 3,866.3 3,614.6 7% 16,529.3 13,966.2 18% Raw Material Cost 2,648.7 2,735.8 (3%) 11,920.3 10,369.3 15% Gross Profit 1,217.5 878.8 39% 4,609.0 3,596.9 28% Gross Margins 31.5% 24.3% +720 Bps 27.9% 25.8% +210. Bps Adjusted EBITDA* 301.9 49.4 283% 624.3 583.1 7% Adjusted EBITDA margin* 7.6% 1.4% + 620 Bps 3.8% 4.2% (40 Bps) Depreciation 152.8 139.1 10% 621.3 537.7 16% Interest 14.2 20.2 (30%) 65.5 67.2 (3%) Exceptional item - (0.8) NA - 139.4 NA Profit after tax 216.1 (29.5) NA 202.9 29.1 597% Diluted EPS (Rs) 9.1 (1.3) NA 8.51 1.24 586% 1 *Adjusted EBITDA is excluding reversal of Production-Linked Incentive of Rs. 112.9 Mn for Q4 FY23. 2. Consolidated financials, in rs. Million except as stated. 26 Balance Sheet YoY YoY (INRm) March 2023 March 2022 (INRm) March 2023 March 2022 change change Closing cash and cash 219.0 189.9 15% Payables 1,038.1 901.4 15% equivalents Fixed Deposit with Banks 385.1 695.9 -45% Other current liabilities 288.0 192.3 50% Inventory 1,352.8 1,446.2 -6% Other financial liabilities 266.8 529.1 -50% Receivables 139.9 165.7 -16% Short term debt 30.0 300.8 -90% Other current assets 374.5 111.9 235% Current liabilities 1,622.9 1,923.7 -16% Total current assets 2,471.3 2,609.6 -5% Lease liabilities 392.7 357.2 10% Fixed assets 5,450.3 5,190.9 5% Other liabilities 258.0 292.9 -12% RoU 506.4 447.6 13% Deferred tax liabilities 80.3 256.1 -69% Other assets 688.2 824.3 -17% Non-current liabilities 731.0 906.2 -19% Total assets 9,116.1 9,072.5 0.5% Equity 6,762.2 6,242.5 8% Total equity + liabilities 9,116.1 9,072.5 0.5% 27 Cash Flow Statement (INRm) FY23 FY22 YoY change Reported EBITDA 624.3 583.1 7% Commentary Noncash items in P&L 6.1 -53.3 -111% • Significant improvement in cash Change in WC 224.1 -22.0 -1120% generation in FY23 supported by further efficiencies in working capital Income tax paid -57.8 -50.3 15% management Cash From Operating Activities 796.7 457.5 74% • Despite CAPEX deployment as per PLI Capex -819.6 -312.4 162% commitment, made repayment of Interest paid -14.8 -16.0 -7% short-term borrowing and declared dividend Interest received 42.2 47.7 -11% Free Cashflows 4.4 176.7 -97% • Strong balance sheet with cash position (Cash & Cash Equivalents + Debt raised / (paid) -270.0 198.5 -236% Bank Balance incl. Bank FDs) of Dividend paid -11.7 -11.7 0% INR 604.10 Mn Others 306.4 -291.4 -205% Net cash generated 29.1 72.0 -60% Opening cash and cash equivalents 189.9 117.8 61% Closing cash and cash equivalents 219.0 189.9 15% 28 FINANCIALS – Q4 & FY’23 PERFORMANCE Sales / Income from Gross Profit Operations (INR Mn) (INR Mn) 4,609 16,417 Gross Profit 13,966 Gross margin 3,597 1,218 28% 26% 879 3,979 3,615 32% 24% Q4 FY22 Q4 FY23 FY22 FY23 Q4 FY22 Q4 FY23 FY22 FY23 • Reported strong double-digit growth in Income from revenue on a YoY basis in FY23 Gross margin • Direct distribution initiative and better price • operations Achieved highest ever annual revenue in FY23 realization aided by moderation in input • Revenue growth has been driven by expansion stood at 32% in grew by 19% in prices have enabled the company to of average distribution reach by nearly 1.6 lakh Q4 FY23 expand the gross margin profile FY23 outlets over the last financial year to 21.8 lakh outlets (Source: Nielsen) across the country. 29 FINANCIALS – Q4 & FY’23 PERFORMANCE Adj. EBITDA (INR Mn) PAT (INR Mn) 624 583 PAT Adj. EBITDA 216 PAT margin 203 Adj. EBITDA margin 302 5.6% 29 7.6% 49 4.2% 3.8% 1.2% -0.8% 0.2% 1.4% -30 Q4 FY22 Q4 FY23 FY22 FY23 Q4 FY22 Q4 FY23 FY22 FY23 • Initiatives to improve margins combined with softening of prices of key raw Adj. EBITDA • The improvement in EBITDA has resulted in materials/packing materials aided better PAT margin improved PAT performance margin stood margin performance stood at 1.2% in • PAT was aided by reversal of deferred tax at 7.6% in Q4 • Adj. EBITDA margin of 7.6% is the highest in amounting to Rs. 194 Mn on account of FY23 the last 12 quarters FY23 Avadh merger • Negative EBITDA in Q1 FY23 has impacted the average EBITDA margin for the full year 30 FINANCIALS – Q4 & FY’23 PERFORMANCE Cash profit Cash EPS (INR Mn) (INR Mn) 824 34.5 706 29.6 369 15.5 109 4.6 Q4 FY22 Q4 FY23 FY22 FY23 Q4 FY22 Q4 FY23 FY22 FY23 • The Company follows a conservative Resumed • Cash profit in Q4 FY23 is over 3x of Cash EPS accounting policy and is amortizing cash profit in Q4 FY22 generating intangible assets of Avadh Snacks • This has been supported by the rebounds healthy levels tax adjusted of Rs. 193 Mn on strongly • A lateral benefit has been contained tax of Cash Profit account of Avadh merger outflow Note: Cash Profit = PAT + Depreciation 31 Favourable Demographics Supporting Industry Growth India Population Trend Total Organized Snacks Food Market Size ~43,800 (MIllions) Crores (FY23) Potato Chips 1,456 1,468 1,444 1,418 1,431 23% 1,405 1,392 1,379 1,368 1,339 1,326 Namkeen 44% Extruded Snacks 16% 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 Source:Statista April 2022 Bridge (Random Extrusions+Gathiya) Source: Nielsen 17% India GDP Growth Consumer spending in India (%) (Rs. Billion) 6.3 7.5 8.0 8.3 6.8 6.5 8.9 7.5 23,216 4.0 21,662 21,217 21,604 19,483 17,963 17,836 14,612 -6.6 FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21 FY22 FY23# Jan-20 Jul-20 Oct-20 Jan-21 Mar-21 Jul-21 Dec-21 Jan-22 Source:NSO Second Advance Estimates as on 28th Feb 2022 Source: Statista, March 2022 33 #SPF report by RBI dated 8th April, 2022) Sumit Sharma Prataap Snacks Ltd THANK Email: cfo@yellowdiamond.in YOU! Mayank Vaswani / Mit Shah CDR India Tel: +91 98209 40953 / +91 99201 68314 Email: mayank@cdr-india.com / mit@cdr-india.com