VADILAL INDUSTRIES Q2 & H1FY18 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
Table of Contents Q2 & H1 FY18 Vadilal 1 3 Industries Financial Performance Overview Financial 2 4 Performance Outlook Trends 3
Q2 & H1 FY18 Financial Performance
Chairman’s Message Commenting on Q2 & H1 FY18 performance, Mr. Rajesh Gandhi, Chairman and Managing Director, Vadilal Industries Limited (VIL) said: “In H1FY18, we have reported 14% revenue growth*, which we believe is encouraging in the backdrop of changes in the operating environment. Domestic business revenues are up about 5% as GST implementation created some short-term impact on consumption patterns. We had to absorb some immediate costs as the 18% GST rate exceeded previously applicable VAT rates in some states. In addition, margins were impacted as cost of inputs remained high for the past few months. Our international business, that reaches several million customers from the global Indian diaspora, expanded revenues by 131% during H1 – with strong contribution from robust ice cream demand in the US – and now contributes 13.0% of overall revenues compared to 6.5% last year. We continue to expand our distribution in India by increasing the proliferation of deep freezers in existing/new regions. We are also aggressively expanding our brand presence across the US and some other global geographies to cater to rising demand for our wide range of high quality ice creams and processed foods. We have also expanded our marketing and distribution infrastructure in the US, an investment that should deliver long-term benefits to the business in term of volumes, realizations and margins. We have brought more cost discipline in our operations and all indirect expenses in India have remained largely stable during H1. We are focused on increasing process orientation within the business and are making cross- functional initiatives such as implementation of SAP in the distribution framework and the recent appointments of Deloitte and KPMG as statutory and internal auditors respectively. Leverage is expected to stay stable, however finance costs will go down due to improved credit ratings and induction of cheaper debt. Currently, we see the consumption environment stabilizing, milk prices have also been more benign, which will help us as we initiate procurement for the next season. We continue to invest in upgrading manufacturing capabilities with focus on quality and efficiency parameters. We are confident on building a strong business supported by a renowned brand which is well-accepted by consumers both in India and targeted overseas markets. ” 5 *consolidated revenues, net of excise duties
Financials – Q2 & H1 FY18 Performance Revenue 354.6 In H1, VIL showed 13% y-o-y growth (14% net of excise 313.8 duties) driven by 131% y-o-y higher revenues in exports business 111.9 111.8 International business has seen robust demand as we continue to expand distribution and products focused on Indian diaspora in the US and other geographies Q2 FY17 Q2 FY18 H1 FY17 H1 FY18 Domestic International 307.6 293.5 47.0 26.4 101.0 85.4 20.3 10.9 Q2 FY17 Q2 FY18 H1 FY17 H1 FY18 Q2 FY17 Q2 FY18 H1 FY17 H1 FY18 International segment includes Vadilal Industries (USA) Inc and Vadilal Cold Consolidated financials in Rs. Crore Storage ( Partnership Firm). 6
Financials – Q2 & H1 FY18 Performance EBITDA EBITDA margin was impacted by absorption of 58.0 GST-related increase in product costs in some states and 52.4 elevated raw material costs. Further, expansion initiatives in India and US/other global markets have been accelerated. 14.2 Continue to focus on debt rationalization: 6.0 Focus on reconstituting outstanding debt to o Q2 FY17 Q2 FY18 H1 FY17 H1 FY18 expand long tenure loans and reducing cost of debt Note – Revenues considered, net of excise duties Overall debt as on Sep 30 th 2017 was at Rs. 101 o PAT crore as compared to Rs. 97 crore as on Sep 30 th 2016 28.6 Finance costs in H1FY18 lower by 4% y-o-y at Rs. o 24.2 7.2 crore versus Rs. 7.5 crore in H1FY17 PAT stood at Rs.24.2 crore, lower by 15%, based on 5.0 near-term operating impact and higher growth (0.5) investments made by the company. Q2 FY17 Q2 FY18 H1 FY17 H1 FY18 -0.5 Consolidated financials in Rs. Crore 7
Financials Performance Trends – Balance Sheet Networth Debt Other Non-Current Liabilities 184.7 Liabilities 151.5 145.8 29.3 101.2 21.6 Mar 17 Sep 17 Mar 17 Sep 17 Mar 17 Sep 17 Net Fixed Assets Other Non-Current Net Current Assets Assets 256.8 75.6 11.9 48.6 Assets 9.8 231.4 Mar 17 Sep 17 Mar 17 Sep 17 Mar 17 Sep 17 Consolidated financials in Rs. Crore 8
Financials Performance Trends
Financials Performance Trends Revenue (Rs. cr) 491.7 461.7 406.3 367.3 323.6 FY13 FY14 FY15 FY16 FY17 Domestic International 48.6 450.0 44.5 425.5 41.7 361.8 36.2 34.9 318.7 288.7 FY13 FY14 FY15 FY16 FY17 FY13 FY14 FY15 FY16 FY17 Consolidated financials in Rs. Crore 10
Financials Performance Trends EBITDA Longer term, consumer behavior is transitioning with 59.4 58.8 increasing acceptance for western desserts. 45.8 44.1 41.7 Domestic business growth temporarily impacted by o recent changes in operating environment and consumption spending Continued focus on developing domestic business FY13 FY14 FY15 FY16 FY17 o and lower input costs expected to drive growth Will continue to invest in production capacity, PAT technology, brand and distribution. 18.7 As volumes enhance, existing capacity gets utilized more 14.8 efficiently and margins, which were depressed in the past, are improving. 5.0 2.4 2.3 FY13 FY14 FY15 FY16 FY17 Consolidated financials in Rs. Crore 11
Financials Performance Trends – Balance Sheet Networth Debt Other Non-Current Liabilities Liabilities 145.8 205.0 127.1 180.2 21.6 113.1 113.5 20.6 151.5 148.3 16.5 15.2 FY14 FY15 FY16 FY17 FY14 FY15 FY16 FY17 FY14 FY15 FY16 FY17 Net Fixed Assets Other Non-Current Net Current Assets Assets 86.2 232.3 231.4 75.6 69.0 15.1 14.8 14.3 56.6 Assets 11.9 226.1 225.1 FY14 FY15 FY16 FY17 FY14 FY15 FY16 FY17 FY14 FY15 FY16 FY17 Consolidated financials in Rs. Crore 12
Financials Performance Trends – Cash Flows Operating Cash Flow Free Cash Flows 51.8 62.2 56.6 41.3 51.7 23.0 28.5 9.4 FY14 FY15 FY16 FY17 FY14 FY15 FY16 FY17 Inventories increased by ~Rs. 30 crore in FY17 based on production for summer season demand Interest down by Rs.5 crore to Rs. 15.5 crore in FY17 Capex increased by Rs.10 crore y-o-y Consolidated financials in Rs. Crore 13
Vadilal Industries Overview
Overview Second Largest range Strong 111-year old, largest ice Expanding of ice creams distribution established cream global of any network in ice cream manufacturer business company in North, West brand in India by presence India and East India volume Currently Top 3 ice-cream Leadership in key 16 states, 61 Products reach 45 managed by brand in the markets – Gujarat, CNF‟s, over 1200 countries across four fourth generation country, 150+ Rajasthan, UP , distributors, 290 continents – key promoter family flavors Uttarakhand, distribution markets include US, Haryana and vehicles, 45,000 Canada, UK, Middle Chandigarh +retail outlets East, Australia and Selected India‟s 300 SKU‟s of New Zealand most trusted ice cones, candies, cream brand in bars, ice lollies, 2013 and 2014 cups, family packs, Exporting processed by the Brand Trust economy packs food products, ice- Report creams and frozen desserts 15
Vadilal: Growth Strategies Geographical Expansion Retail Investments New Product Development Expanding footprint in North and East 10,000 new sales outlets planned in Constantly innovating to roll out new regions of India FY18 products in domestic and global markets New production facility expected in 100 more distributors expected to East India be added in FY18 Targeting expansion of market share in premium/super-premium Expanding distribution footprint in tier Investments in new technologies segment 3/4 cities and rural markets Brand Building Initiatives Global Expansion Seen as one of the most trusted ice Leveraging frozen foods channels to cream and leading processed foods expand ice cream exports globally brand in India Strong distribution to Indian Undertaken campaigns to strengthen diaspora who have displayed social media presence affinity for the brand and differentiated products offerings Rural marketing initiatives 16
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