S H Kelkar and Company Limited Largest Indian-origin Fragrance & Flavour company Investor Presentation February 2016
Disclaimer Certain statements and opinions with respect to the anticipated future performance of SHK in the presentation (“forward -looking statements”), which reflect various assumptions concerning the strategies, objectives and anticipated results may or may not prove to be correct. Such forward-looking statements involve a number of risks, uncertainties and assumptions which could cause actual results or events to differ materially from those expressed or implied by the forward-looking statements. These include, among other factors, changes in economic, political, regulatory, business or other market conditions. Such forward- looking statements only speak as at the date the presentation is provided to the recipient and SHK is not under any obligation to update or revise such forward-looking statements to reflect new events or circumstances. No representation or warranty (whether express or implied) is given in respect of any information in this presentation or that this presentation is suitable for the recipient’s purposes. The delivery of this presentation does not imply that the information herein is correct as at any time subsequent to the date hereof and SHK has no obligation whatsoever to update any of the information or the conclusions contained herein or to correct any inaccuracies which may become apparent subsequent to the date hereof. 1
Contents 1 Who we are 2 Our Business 3 Sustainable Value Creation 4 Q3 & 9M FY2016 Results Overview 5 Key Highlights 2
Who We Are S H Kelkar and Company Limited Market Excellent Strong Legacy Leadership Infrastructure Management • Established 90 years back • One of the largest Indian • Global scale, state-of-the-art • Private Equity investment by by SH Kelkar and VG Vaze F&F companies by sales, infrastructure Blackstone • Leading Fragrance & • Leading domestic provider of • Broad- based board, with ~12% market share Flavour company in India (2013) Fragrance & Flavour to Professional management & • Largest domestic exporting to 52 countries FMCGs leadership team fragrance producer in India with a ~20.5% market share 3
Who We Are Products 9,700+ Employees Customers 758 4,100+ Current Shareholding Pattern Others 21.7% Sales CAGR Perfumers / Flavourists (2011-15) / Scientists ~16% Credit Rating 12 / 2 / 18 Promoters & CRISIL A/Positive Promoter Group 56.7% Blackstone 21.6% Creation & Turnover – FY15 Development Centres Rs. 837 crore 5 Manufacturing Locations 4 4
Key Milestones • Consolidation of promoter’s Establishment of the Establishment of the export oriented manufacturing unit at Vapi Keva Fragrances Private Limited shareholding • Acquisition & Integration of PFW Market and 2012 1955 1979 1980 1984 2010 Entities • Incorporated as Incorporation of Keva Investment by Blackstone • S.H. Kelkar & Co. Flavours Acquisition of SAIBA Industries Limited Establishment of additional R&D Centre at Mulund Expansion of Research Centre at Mulund Creation and R&D 1960 1981 2000 2012 Centre Expansion of Fragrances Centre Establishment of R&D Centre in Mulund at Mulund Expansion of Fragrance mfg. Investment in MP Establishment of manufacturing Plant - Vapi facility at Mulund for EOU facilities at Mulund Manufacturing 1960 1984 1994 2007 2014 Facilities New, long term, fragrance & flavour Expansion of Fragrance mfg. Mfg. facility at Vashivali facility at Mulund 5
Contents 1 Who we are 2 Our Business 3 Sustainable Value Creation 4 Q3 & 9M FY2016 Results Overview 5 Key Highlights 6
Our Business Fragrances Business Flavours Business • Used by FMCG companies in personal wash, fabric care, skin care and hair care products; production of fine Fragrances Product • Used in production by bakeries, pharmaceutical and F&F Blends Applications manufacturers, dairy industry and beverages manufacturers • Fragrance Ingredients used in production of F&F • National and Multi-national FMCG players • National and Multi-national FMCG players • Fragrance and Flavour Blends Customer • Fragrance and Flavour Blends Mix • Direct consumers • Regional and local manufacturers • Fragrances and Flavours companies • Manufacturing plants located at Raigad and Mumbai in Maharashtra Geographic • Manufacturing plant located at Raigad in Maharashtra Presence • Manufacturing plants located at Vapi in Gujarat and Barneveld in Netherlands • Long standing relationships with several customers • Increasing demand for ready-to-eat food products, fortified Sales juices and milk products • Innovations and new product development by FMCG players Drivers • High growth in FMCG industry to boost demand • Strong presence in Branded Small Pack segment Key • • MNCs: Givaudan, Firmenich, Symrise, IFF MNCs: IFF, Givuadan, Symrise, Firmenich Competitors 7
Global F&F Market & Key Characteristics Concentrated market Increasing consolidation • Consolidated Industry • Large players continue to globally, with 12 players consolidate, for scale and controlling 83% of market differentiated product share and Top 4 controlling portfolio 57% of the market in CY13 • Top 10 companies in the Market Size (US$ BN) industry together accounted for nearly 80% of the industry sales in 2013, as 30 27.5 26.3 compared to 64% in 2000 25.2 23.9 25 22.9 22.0 21.8 20.0 20 15 10 5 FMCG & Innovation play Emerging market focus 0 2009 2010 2011 2012 2013 2014 2015 2016 • FMCG companies greatly • Emerging markets continuing depend on the reliability, to grow with premiumisation quality of service and the & broadening of product F&F company’s technical offerings know-how • Increasing disposable income • FMCG companies typically in world’s emerging markets have long term supply relationships with F&F partner Source : Nielsen Market Study on Fragrances and Flavours, March 2015 8
India’s F avourable Dynamics Offer Huge Opportunities Globalization Rising young population Population of 1.21 bn, Globalisation to further India – GDP Growth growing 1.41% annually enhance and influence Young population ~65% customer preferences below 30 years age To bring in new product Growing working women concepts and ideas into 7.5% 7.5% population to be large Indian markets consumer of FMCG products 7.3% Simon India Limited Urbanization Literacy & lifestyle 6.9% Increasing literacy levels Urbanization in India drives impacting consumer growth especially in the awareness and knowledge 2013 2014 2015 (P) 2016 (P) processed food industry Demand shift for better quality, Urbanization has increased innovative F&F products from 27.8% in 2001 to 31.2% Greater demand for packaged in 2011 and processed foods Rise of modern retail High growth in FMCG Rising disposable incomes Directly correlated to FMCG Rising disposable income, Increasing number of growth pivotal for F&F growth shopping malls and FMCG market is expected to India is witnessing complexes grow at a CAGR of ~14.7% continuous increase in Mall culture pick up in Tier 1 from 2012-2020 to reach disposable income, to be and Tier 2 cities across India US$ 37 BN US$ 1,808 bn in 2015 Source : International Monetary Fund, World Economic Outlook Database, July 2015 9
Indian F&F Market to Outpace Global F&F Growth Market Size ( Rs. crore) Indian F&F market to grow at ~10% vs ~5% of global market 5,000 4,562 (2013-16) 4,167 3,805 4,000 3,429 3,097 2,839 2,647 3,000 Indian market comprises of more than 1,000 players 2,000 1,000 0 Top 5 players control ~70% of 2010 2011 2012 2013 2014 2015 2016 Indian F&F industry Overall F&F Market Size Global MNC F&F houses have a market share of ~60% Fragrance (including Blend) Flavour 2,500 2,000 1,715 2,090 1,550 1,880 2,000 SHK is the largest Indian player 1,274 1,404 1,693 1,500 1,566 and closely competes with 1,500 Global MNCs 1,000 1,000 500 500 Numerous small firms mostly 0 0 cater to the unorganised market 2011 2012 2013 2014 2011 2012 2013 2014 Source : Nielsen Market Study on Fragrances and Flavours, March 2015 10
F&F Industry - Strong Entry Barriers High customer acquisition time Stringent regulatory Established relationships compliance with customers Availability of key Ingredients Sustained R&D efforts 11
Contents 1 Who we are 2 Our Business 3 Sustainable Value Creation 4 Q3 & 9M FY2016 Results Overview 5 Key Highlights 12
Perfect Mix of Products, Brands and customers Products Customers Comprehensive Wide breadth product library of spanning MNCs, fragrances, domestic companies ingredients flavours & trade customers & formulations Low customer Over 90 years of concentration F&F legacy Portfolio comprises of category leader brands Branded small packs sold directly to over 1,000 customers Brands 13
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