To last. Toughened to shine - Radico Khaitan
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Investor Presentation
September 2020
Toughened Spirited
to last. to shine.
Agenda
1. Industry dynamics 2
2. Company overview 5
3. Strategic direction 11
4. Financial performance 16
5. Branding & marketing 22
Investor Presentation | September 2020 1
Spirits Industry in India
Faced by challenges in the near term; long term dynamics remain intact
Sales of Spirits by Category (Volume) Sales of Spirits by Category (Value)
Industry Industry
3.6% 3.7% 6.1%
CAGR: 5.9% 77.1% 6.6% 76.2% CAGR: 5.7%
65.3% 64.2%
12.1% 12.6% 7.7% 8.4%
Whisky: Whisky:
5.4% 5.4%
2020: 19.5% 2024: 9.1% 8.8%
Brandy: 2020: 2024: Brandy:
284 356 6.5% 4.9%
19.0% Rs. 2,162 Rs. 3,053
million million
Rum: billion billion Rum:
cases cases
6.9% 8.1%
White White
Spirits: 6.5% Spirits: 7.9%
o Spirits sales in India is expected to be 284 million cases in CY2020 representing a decline of 15.3% over CY2019 due to ongoing pandemic scenario
o During 2020-24 period, IMFL sales value is expected to grow at a CAGR of 5.7% and sales volume at 5.9%
Vodka industry Super Premium
Premium Vodka
growth Vodka
60% 66%
indicates a
Overall
strong
premiumization 4.1% 5.1% 7.8% 2014 2019
trend
2014-19 volume growth Super-Premium and Premium Vodka
Source: Euromonitor International (May 2020)
Investor Presentation | September 2020 2
Spirits Industry in India
A highly regulated industry with complex structure
Market Structure Overview Pricing Control States
A business may apply for a license for a fee defined Arunachal, Assam, Goa,
Company has reasonable
Free / Open market by the state government subject to license Maharashtra, Meghalaya, Tripura,
independence over price increases
availability Uttar Pradesh
The license for sale of liquor is auctioned by the Company has to negotiate price
Auction market Government to the highest bidder on an annual increases with state appointed Chandigarh, Haryana, Punjab
basis based on an auction process distributors
Andhra Pradesh, Chhattisgarh,
The government is the wholesaler and/or
State owned / Delhi, Jharkhand, Karnataka,
distributor who purchases directly from a company. Strict control on pricing by the
Government Kerala, Madhya Pradesh,
Some states also have retail shops run by the state government
corporations Rajasthan, Tamil Nadu, Telangana,
government
West Bengal
Prohibition States where sales of liquor is prohibited Not applicable Bihar, Gujarat
Investor Presentation | September 2020 3
Spirits Industry in India
Online liquor sales – a new route to market opportunity
Online liquor sales
Punjab: Retailer- New Delhi: E-Token
managed home delivery service for store pickup
Maharashtra: E-Token
service for store pickup
& retailer-managed
home delivery
Home delivery permitted
o In context of the COVID-19 pandemic and to make-up for the loss of sales with consumers refraining from going for liquor purchase, many state governments
have now allowed home delivery of liquor
o Home delivery is made by retailers directly and also through agencies like food aggregators and standard technology platforms
o In long run, this may help in increasing industry revenues as many consumers, particularly women, are not comfortable going out to buy liquor from shops
Investor Presentation | September 2020 4
Company Overview
One of the largest and oldest spirit manufacturers in India
Strategically limiting
75 years of One of the largest
interstate taxes and
experience in spirits
1943 spirits making. One 165 manufacturers. 32 transport costs.
Five own and 28
Year of of the most Million litres Operates three Bottling
Incorporation units contract bottling units
recognized IMFL distilleries and one
spread across the
brands in India joint venture
country
Consistently
Strong distribution
network. Sale
29% increasing Prestige FY2020
75,000 FY2020 & Above brand Net Revenue
With EBITDA margin
Retailers
through over 75,000
retail and 8,000 on
Premium
volume
contribution to total 24.3 of 15.2%
IMFL volumes; (Rs. billion)
premise outlets share 49.5% in value terms
Investor Presentation | September 2020 5
Brand Portfolio
Broad choice for consumers with focus on premium brands
MRP Whisky Rum Brandy Vodka Gin Ready to Drink
Luxury
> Rs. 4,000
Semi Luxury
Rs. 1,000 – 1,500
Super Premium
Rs. 700 – 1,000
Semi-Premium /
Premium
Rs. 500 – 700
Deluxe
Rs. 400 – 500
Regular
Rs. 300 – 400
Ready to Drink
Rs. 100 – 150
Investor Presentation | September 2020 6
Global Presence
Significant progress in building the brand equity in the overseas markets
Exports
5%
FY2020
Sales Split
by
Geography
Domestic
95%
Exports to over 85 countries across the world
Investor Presentation | September 2020 7
Manufacturing and Distribution Platform
Consumer centric go-to-market strategy
Pan India manufacturing platform to cater to customer needs
Location Distilleries Molasses Grain Malt Total
Strategically located manufacturing
units in two of the largest sugarcane Capacity (million litres)
producing states
Rampur 3 75.0 27.0 7.5 109.5
Aurangabad 2 40.0 15.0 0.0 55.0
Total 5 115.0 42.0 7.5 164.5
Robust region wise and channel wise sales and distribution
network
Sells through over 75,000 retail outlets and over 8,000 on premise
outlets
Apart from wholesalers, a total of around 350 employees divided into
Contract Bottling Units (28) four zones, each headed by regional profit center head
Own Bottling Units (5) Responsible for sales planning, production planning, sale monitoring
and market share analysis
Distilleries (5)
Supported by regional marketing services head for implementing
Printing Unit (1) various marketing and trade promotion schemes
Investor Presentation | September 2020 8
Senior Management
Experienced management team with in-depth industry experience
Key Executives Background
Dr. Lalit Khaitan, Chairman & Managing Director
• Has over 50 years of industry experience
• He is on the managing committee of a number of associations, including the PHD Chamber of Commerce and Industry, the Associated Chamber of Commerce
and Industry of India, All India Distillers Association, Uttar Pradesh Distillers Association and Confederation of Indian Industry
• Received the lifetime achievement award by the Confederation of Indian Alcoholic Beverage Companies in 2005 and by Alcobev in 2008. Most recently been
awarded the ‘Legend of the Industry’ at Spiritz 2014
Abhishek Khaitan, Managing Director
• Has over 25 years of industry experience
• Started the IMFL division of the Company and has played an instrumental role in the brand creation journey of the Company
• Was named the ‘Top Entrepreneur of the Year’ by Inspirit in 2008
• Also received the Inspirit 2014 ‘Young Entrepreneur of the Year’ Award
K. P. Singh, Director – Production
• Has over 45 years of industry experience and has been with the Company for over three decades
• He is also the Occupier (as defined under the Factories Act) of the Company’s factory in Rampur, Uttar Pradesh
Investor Presentation | September 2020 9Senior Management
Experienced management team with in-depth industry experience
Key Executives Background
Dilip. K. Banthiya, Chief Financial Officer
• Has over 35 years of in corporate finance, treasury, international finance and corporate mergers and acquisitions
• Invited to the CFO100 Roll of Honour 2012 in recognition of excellence
• Has been associated with various professional bodies and committees
Amar Sinha, Chief Operating Officer
• Has over 33 years of experience of heading reputable Indian and multinational FMCG companies and in the field of sales & marketing
• Prior to joining Radico in April 2017, he was the Executive Director at Wave Industries
• Has also served Shaw Wallace where his last position was MD and CEO
• He has also served in leadership positions at White & Mackay India, BDA Ltd (now ABD) and Playwin, among others
Sanjeev Banga, President – International Business
• Has over 30 years of industry experience
• Previously worked with Seagram India, Nestle India, Kohinoor Foods, Mason and Summers Alcobev, and Godfrey Phillips India
• Joined Radico Khaitan in 2008
Investor Presentation | September 2020 10Strategic Roadmap
Focus on building brands and driving a profitable growth
Innovation and brand building Premium growth Strong cash flow generation and deleveraging
• Established track record: Magic Moments • Growth driven by Prestige & Above category • Focused on a profitable growth driven by
vodka, Morpheus brandy brands Prestige & Above category brands
• New launches: 8PM Premium Black whisky, • Strong premiumization focus with over 12.5% • Ongoing debt reduction
Jaisalmer Indian Craft gin, Rampur Indian volume growth since FY2016
Single Malt, Morpheus Blue brandy, 1965 The • Target to have no borrowings by end of
Spirit of Victory rum, Electra ready to drink, • Prestige & Above category contribute to FY2022
Pluton Bay rum, Regal Talon whisky 29.0% of IMFL volumes and 49.5% of the IMFL
value sales during FY2020 • Improved profitability margins and return
ratios
Consumer centric go-to-market strategy
Human resource development
Investor Presentation | September 2020 11Innovation and Brand Building
Twelve brands launched in the last decade, eleven are in premium categories
Started the After creating Launched
branded IMFL brands in high Jaisalmer, a luxury
division and volume regular Indian craft gin,
launched its first categories, launched Launched Launched two Launched Rampur 8PM Premium
brand 8 PM Whisky; the first product in After Dark, a new flavors of Indian Single Malt Black whisky and
Became a the semi premium premium Magic luxury whisky and Morpheus Blue
millionaire brand in category, Magic category Moments Regal Talons Semi super premium
first year of launch Moments Vodka whisky Verve Vodka Deluxe whisky brandy
1997 2002 2006 2009 2011 2012 2014 2015 2016 2017 2018
Launched Old Launched Launched Magic Launched Launched Pluton
Admiral Brandy Morpheus Super Moments Verve, ELECTRA, a Bay Premium Rum
in the regular Premium a super premium premium ready and 1965 The
category; Brandy; vodka followed to drink product Spirit of Victory
Became one of Magic Moments by flavors of Premium Rum
the leading became a Verve
brands in CSD millionaire brand
One of the few companies in India to have developed its entire brand portfolio organically with in house capabilities
Four millionaire brands – 8 PM Whisky, Contessa Rum, Old Admiral Brandy and Magic Moments Vodka
Investor Presentation | September 2020 12Innovation and Brand Building
Track record of developing successful brands
Magic Moments family of vodka leads the Indian vodka industry with over 60% market share
4.5
4.0 Magic
Magic Moments
3.5 Moments Vodka Magic
Volume (mn cases)
Vodka flavours Moments
3.0 became a
launched launched Verve
2.5 millionaire launched
brand
2.0
1.5 Verve launched
Electra
in new premium
1.0 Verve launched
packaging
0.5 flavours
launched
0.0
FY2006 FY2007 FY2008 FY2009 FY2010 FY2011 FY2012 FY2013 FY2014 FY2015 FY2016 FY2017 FY2018 FY2019 FY2020
Change of Indian consumer preference towards global vodka consumption pattern represents significant growth opportunity
5% 1% 35%
Radico Khaitan’s Magic Moments vodka has over 60% market share
8% 77%
The Millionaire Club ranked Magic Moments as the 11th largest vodka
28%
globally
9% India Global
spirits spirits Market share of vodka (in value terms) in the global spirits industry is about
industry industry 35% compared to only 5% in India
(by value) (by value)
14% Changing consumption patterns and consumer preference represent
23% significant growth opportunity for already a market leader, Radico Khaitan
Source: Euromonitor International (May 2020), Industry research
Investor Presentation | September 2020 13Innovation and Brand Building
Track record of developing successful brands
Morpheus leads the super premium brandy segment with 56% 8PM Premium Black whisky has established its mark within a
market share short span after its launch
• Morpheus, India’s largest selling premium
brandy, crafted by our master blenders to
• 8PM Premium Black - India’s new premium whisky,
challenge traditional brandy tenets
achieving the perfect balance of strength &
• Named after the Greek God of Dreams, it smoothness
provides an exotic experience to the premium
• Made with the finest quality grain, this whisky is the
brandy lovers. Its goblet packaging and brand
epitome of lavishness and quality drinking
positioning have helped create a niche
• Won Gold at the Global Monde Selection Awards in
• After the success of Morpheus, the Company
the calendar years 2019 and 2020
launched Morpheus Super Premium brandy in
2018
1.0 1.0 Targeting
million cases
0.8 0.8 volume
Volumes (mn cases)
Volumes (mn cases)
Targeting
0.6 0.6
million
cases
0.4 volume 0.4
0.2 0.2
0.0 0.0
FY2010 FY2012 FY2014 FY2016 FY2018 FY2020 FY2019 FY2020
Investor Presentation | September 2020 14Innovation and Brand Building
Track record of developing successful brands
Rampur Indian Single Malt testifies the Company’s innovation 8PM Premium Black whisky has established its mark within a
and R&D strengths short span after its launch
• Rampur Single Malt is a luxury brand that is • A triple-distilled neutral grain spirit, re-distilled
manufactured at our plant in Rampur (UP) in a traditional copper pot still; the recipe is
• It is aged to perfection in the foothills of the handcrafted in a time-honored way
Himalayas and is called the Kohinoor of • Derived from the ancient Indian knowledge of
single malts herbs; retaining the classic gin flavor of
• It has drawn global recognition for its juniper berries, a refreshing twist has been
smoothness, taste and quality within a very added with hand-picked Indian botanicals
short time since its launch in FY2017, with • Of the 11 botanicals used in the distillation, 7
expressions priced between US $70 and US have been sourced from all four corners of
$1400 India
• The Company has made investment in the malt capacity expansion to • Won Grand Gold at the Global Monde Selection Awards in the calendar
cater to the demand for this product year 2020
• The Rampur Double Cask expression was awarded with the ‘Best World • Rated as the Best Gin produced out of Asia in 2019 at The Gin Guide
Whisky Gold Medal 2020’ by The Fifty Best, New York Awards, the most respected honor for Gin in the world
• Rampur Select won Gold Medal at the San Francisco World Spirits • Gold Medal By The Fifty Best New York 2020 Scored 95 points in
Competition in 2017 Ultimate Spirits Challenge 2020
• Whisky Advocate Magazine ranked it among the Top 20 Whiskies of the
World at 5th position
Investor Presentation | September 2020 15Historical Financial Trend
Strong premiumization focus with over 12.5% growth since FY2016
Prestige & Above brands (Million cases) Total volumes (Million cases)
24.30
7.05 21.61
6.12 19.50
5.05 18.19 18.26
4.40 4.75
FY2016 FY2017 FY2018 FY2019 FY2020 FY2016 FY2017 FY2018 FY2019 FY2020
Regular & Others brands (Million cases) Prestige & Above volume as % of Total volumes
28% 29%
26% 26%
17.25 24%
14.45 15.48
13.79 13.51
FY2016 FY2017 FY2018 FY2019 FY2020 FY2016 FY2017 FY2018 FY2019 FY2020
Investor Presentation | September 2020 16Historical Financial Trend
Consistent revenue growth with robust profitability
Net Sales (Rs. Million) EBITDA (Rs. Million) and Margin (%)
16.7% 15.2%
14.7%
11.3% 12.5%
16,518 16,799 18,228 20,969 24,270 1,861 2,101 2,674 3,492 3,682
FY2016 FY2017 FY2018 FY2019 FY2020 FY2016 FY2017 FY2018 FY2019 FY2020
Net Comprehensive Income (Rs. Million) and Margin (%) EPS (Rs.) and Dividend (%) Trend
100.0%
9.3% 60.0%
8.9% 50.0%
40.0% 40.0%
6.7%
4.3% 4.7%
718 793 1,219 1,873 2,248 5.52 6.02 9.26 14.10 17.05
FY2016 FY2017 FY2018 FY2019 FY2020 FY2016 FY2017 FY2018 FY2019 FY2020
Investor Presentation | September 2020 17Q1 FY2021 Highlights
Robust performance in context of the current environment; Expect normalcy from H2 FY2021
IMFL volumes (million cases) : Y-o-Y performance
Volume Volume
decline 10%: decline 43%
Early signs of during Q1
normalcy FY21
Volume
6.25
decline 29%:
Lock down
open in first
week
Volume 3.54
decline
100%:
No sales due
to lock down
Apr-19 May-19 Jun-19 Q1 FY2020 Apr-20 May-20 Jun-20 Q1 FY2021
Investor Presentation | September 2020 18Q1 FY2021 Highlights
Strong cash flow generation and net debt reduction of over ` 122 Crore in Q1 FY2021
Cumulative net debt reduction of ` 687 Crore since FY2016 coupled with higher working capital efficiency
61 Working Capital Days* 36
947
785
162
570
215
63 382
319
260
250
122
Mar-16 Mar-17 Mar-18 Mar-19 Mar-20 Jun-20
* Working Capital Days = (Trade Receivables + Inventories – Trade Payables) / Gross Revenue from Operations X 365
Investor Presentation | September 2020 19Q1 FY2021 Performance Overview
Q1 y-o-y
FY2021 FY2020 Growth (%)
Operational Performance (Million Cases)
Prestige & Above 1.05 1.99 (47.1)%
Regular & Others 2.48 4.27 (41.8)%
Total Volume 3.54 6.25 (43.5)%
Prestige & Above as % of Total 29.7% 31.8%
Financial Performance (Rs. Crore)
Revenue from Operations (Gross) 1,774.66 2,677.08 (33.7)%
Revenue from Operations (Net) 409.15 623.58 (34.4)%
Gross Profit 223.53 299.17 (25.3)%
Gross Margin (%) 54.6% 48.0%
EBITDA 75.23 100.12 (24.9)%
EBITDA Margin (%) 18.4% 16.1%
Total Comprehensive Income 43.65 54.56 (20.0)%
Total Comprehensive Income Margin (%) 10.7% 8.8%
Basic EPS (Rs.) 3.30 4.11 (19.6)%
Above financials are on Standalone basis
Investor Presentation | September 2020 20Q1 FY2021 Performance Overview
Q1 y-o-y
(Rs. Crore) FY2021 FY2020 Growth (%)
Revenue from Operations (Gross) 1,774.66 2,677.08 (33.7)%
Revenue from Operations (Net) 409.15 623.58 (34.4)%
Other Income 1.87 3.32 (43.7)%
Income from Operations 411.02 626.90 (34.4)%
Cost of Goods Sold 185.62 324.41 (42.8)%
Employee Benefit 38.72 42.11 (8.1)%
Selling & Distribution 49.44 79.76 (38.0)%
Depreciation 12.88 12.82 0.4%
Interest 6.57 7.38 (11.0)%
Other Operating Expenses 59.58 76.86 (22.5)%
Total Expenses 352.80 543.34 (35.1)%
Profit Before Exceptional Item & Tax 58.22 83.56 (30.3)%
Exceptional Item 0.00 (1.19)
Profit Before Tax 58.22 82.37 (29.3)%
Current Tax 15.06 30.88
Deferred Tax (0.91) (3.27)
Net Profit 44.07 54.77 (19.5)%
Net Income Margin (%) 10.8% 8.8%
Other Comprehensive Expenses / (Income) 0.42 0.20
Total Comprehensive Income 43.65 54.56 (20.0)%
Total Comprehensive Income Margin (%) 10.7% 8.8%
Investor Presentation | September 2020 21Branding & Marketing Investor Presentation | September 2020 22
Branding & Marketing Jaisalmer Indian Craft Gin Investor Presentation | September 2020 23
Branding & Marketing
Rampur Indian Single Malt Whisky
Rampur Indian Single Malt Whisky: Decades of Perfection
Takes forward the rich heritage of Rampur, a princely state of
British India and the 75 years of distillation expertise of Radico
Khaitan, the pioneers of legendary spirits in India. Aged in the
foothills of the Himalayas, Rampur is the Kohinoor of Single
Malts. The Rampur Indian Single Malt is presented in a
distinguished canister packaging. Treasured in a robust stout
bottle with a thick base, the overall appearance is of under-
stated luxury. The Rampur Indian Single Malt experience is
enhanced with the addition of a cork with sleeve and a hand
crafted silk pouch imparting a royal touch.
Investor Presentation | September 2020 24Branding & Marketing
Magic Moments vodka and Magic Moments Flavours
Magic Moments Vodka: Zing up Life
A rage overnight, the enthralling taste of
Magic Moments not only set towns
buzzing but also unleashing the thirst of
making every moment grand.
Produced from finest grains, its triple
distilled process is a mark of absolute
purity that simply zings up life. The spirit
of Magic Moments can be celebrated with
various tantalizing flavors that take
excellence a notch up!
Investor Presentation | September 2020 25Branding & Marketing Magic Moments Verve Premium Vodka Investor Presentation | September 2020 26
Branding & Marketing Morpheus Blue and Morpheus Super Premium Brandy Investor Presentation | September 2020 27
Branding & Marketing 1965 The Spirit of Victory Premium Rum Investor Presentation | September 2020 28 28
Branding & Marketing
Regal Talon Whisky
Regal Talons Rare Generation Whisky:
Unbeatable Spirit
The finest blend that combines Indian grain
spirits with imported aged scotch malts to
deliver an exceptional smoothness. Regal Talons
has been especially made for those who believe
in conquering and always emerge as champions
at every step with their unbeatable spirit.
The fine taste of Regal Talons sets free the
spirit of passion & perfection and takes one to a
new level of supremacy. The smoothness of
this whisky rolls on the tongue like silk and lets
one savour it effortlessly, enjoying the finest
things in life
Investor Presentation | January 2020 29
29Branding & Marketing
Pluton Bay Rum
Pluton Bay Rare Exotic Rum:
Spirit of Adventure
A unique experience, with a perfect
blend of international design and
world-class packaging. Rare and
smooth taste, offering a premium
blend. A rich, full and spicy dark rum
with caramel and spice on the nose.
Smooth and medium-bodied rum. A
suitable and fine mixing rum if ever
there was one.
Investor Presentation | January 2020 30
30Branding & Marketing
After Dark Whisky
After Dark Fine grain whisky: One
life, many passions. Why wait?
Night has different connotations for
different people, it unfolds differently
and brings a unique world of desire,
adventure and excitement.
It’s where fun and action begins and
party never stop.
Investor Presentation | January 2020 31
31Branding & Marketing
8 PM Whisky
Investor Presentation | January 2020 32
32Branding & Marketing
Contessa Rum
Contessa XXX rum: For the Man
of Courage
Another millionaire brand from
Radico Khaitan’s straddle. This brand
has surpassed expectations and has
garnered strong foothold in the
Indian market. This rum truly reflects
the real meaning of courage and the
taste simply touches the right cords
and reflects true essence of bravery.
Investor Presentation | January 2020 33
33Branding & Marketing
Old Admiral Brandy
Old Admiral Brandy: For Real Men Only
Made specially for the men with pride, honour
and courage. The splendid taste of this
spectacular brandy celebrates the greatness
achieved and passion for all good things in
life. The classic taste perfectly blended with
rich sensation & enthralling aroma ensures
that it is savoured the way it is desired and
truly deserved.
Investor Presentation | January 2020 34
34Disclaimer This presentation contains statements that contain “forward looking statements” including, but without limitation, statements relating to the implementation of strategic initiatives, and other statements relating to Radico Khaitan’s future business developments and economic performance. While these forward looking statements indicate our assessment and future expectations concerning the development of our business, a number of risks, uncertainties and other unknown factors could cause actual developments and results to differ materially from our expectations. These factors include, but are not limited to, general market, macro-economic, governmental and regulatory trends, movements in currency exchange and interest rates, competitive pressures, technological developments, changes in the financial conditions of third parties dealing with us, legislative developments, and other key factors that could affect our business and financial performance. Radico Khaitan undertakes no obligation to publicly revise any forward looking statements to reflect future / likely events or circumstances. For further information, please contact: Saket Somani Vice President, Finance & Investor Relations somanis@radico.co.in +91 11 4097 5403 Investor Presentation | September 2020
Plot No. J-I, Block B-I,
Mohan Co-operative Industrial Area,
Mathura Road, New Delhi-110044
T: +91-11-40975400/5500
Fax: +91-11-41678841/42
CIN: L26941UP1983PLC027278
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