S H Kelkar And Company Ltd · NSE:SHK
S H Kelkar And — Investor Presentation (July 2021)
50 slides from S H Kelkar And's investor presentation, Jul 13, 2021
Slide 1: Cover letter to stock exchanges
July 13, 2021 To To The Manager The Manager The Department of Corporate Services The Listing Department BSE Limited National Stock Exchange of India Limited Floor 25, P. J. Towers, Exchange Plaza, Bandra Kurla Complex, Dalal Street, Mumbai – 400 001 Bandra (East), Mumbai – 400 051 Scrip Code: 539450
Slide 2: S H Kelkar and Company Limited Investor Presentation July 2021
S H KELKAR AND COMPANY LIMITED INVESTOR PRESENTATION July 2021
Slide 3: Disclaimer
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-lo
Slide 4: Contents
Contents WHO WE ARE NICHE INDUSTRY OUR BUSINESS FINANCIAL HIGHLIGHTS KEY HIGHLIGHTS ANNEXURE 3
Slide 5: We are Keva
We are Keva A century of expertise in Fragrances, Flavours & Aromatic Ingredients 4
Slide 6: We have a rich history, we blend heritage with modernity
LEGACY • Established 96 years back by SH Kelkar and VG Vaze • Leading Fragrance & Flavour company in India exporting to 85 countries MARKET LEADERSHIP • One of the largest Indian F&F companies in revenues • Largest domestic fragrance producer in India STRONG MANAGEMENT We have a rich history, we ble
Slide 7: At a Glance
At a Glance 96 9,700+ 4,100+ ~850 Years of Market Products Customers Employees Conviction 9 5 49 CRISIL Manufacturing Locations Creation & Development Centers R&D Team consisting of 20 Perfumers, AA-/Stable 22 scientists and 7 Flavourists Credit Rating on long-term bank facilities `1,345 cr ~8% `193
Slide 8: Key Milestones
Key Milestones Market and Entities Creation and R&D Centre Manufacturing Facilities 1955 1979 1984 2007 2012 2014 2017 2019 • Established a Creation and • Establishment of • Investment in MP • Commercialization Development Center (CDC) in the manufacturing • Expansion of • Investment by Plant – Vapi
Slide 9: Niche Industry
NICHE INDUSTRY 8
Slide 10: Global F&F Market & Key Characteristics
Global F&F Market & Key Characteristics Concentrated market FMCG & Innovation play Consolidated Industry globally FMCG companies greatly depend on the reliability, quality of service and 10 players control 79% of market share the F&F company’s technical know-how Top 4 control 58% of the mark
Slide 11: India's Favourable Dynamics Offer Huge Opportunities
India’s Favourable Dynamics Offer Huge Opportunities GLOBALIZATION Globalization to further enhance and influence customer preferences To bring in new product concepts and ideas into Indian markets URBANIZATION Urbanization in India drives growth especially in the processed food industry Urbanizatio
Slide 12: Indian F&F Market To Outpace Global F&F Growth
Indian F&F Market To Outpace Global F&F Growth High growth in FMCG Directly correlated to FMCG growth Market Size (USD bn) Premiumization in Consumers are increasingly buying personal care sophisticated premium personal care products 3.3 Growth in ‘naturals’ Major shift in consumer preferences from
Slide 13: F&F Industry - Strong Entry Barriers
F&F INDUSTRY- STRONG ENTRY BARRIERS High customer Established acquisition relationships time with customers Sustained R&D efforts Availability of Stringent key Ingredients regulatory compliance 12
Slide 14: Our Business
OUR BUSINESS 13
Slide 15: Diverse Customer Base Backed with Leading Brands
Diverse Customer Base Backed with Leading Brands Brands 3,600+ 500+ Fragrance customers Flavours customers Over 4,100 customers including, Category Leader Brands in the portfolio - SHK, Keva − FMCG leaders, domestic companies, trade and Cobra customers & global corporates Branded small pack
Slide 16: Our Business
Our Business Fragrance & Flavours product applications across domestic, local, multinational FMCG players, pharmaceutical manufacturers, dairy industry, beverages manufacturers, bakeries amongst others Fragrance – Product Basket Flavour – Product Basket Personal Wash (Toilet Soap, Shower Gel, Hair C
Slide 17: Keva's Winning Edge
Keva’s Winning Edge Branded Perceived as a consultant by upcoming entrepreneurs and SMEs small pack customer Reliable partner to small-size entrepreneurs to service customized product needs Ability to address higher off-take requirements at a short notice Domestic Factors influencing FMCG players Cu
Slide 18: Client-brief / Pitch Process
Client-brief / Pitch Process Technical and Commercial requirement: Understanding of customer insight for Branded Domestic International customer sensory and technical perspective small pack FMCG base / MNC customers players FMCG companies New Product / Product Library / Market Research: Developm
Slide 19: Strong R&D Capabilities
Strong R&D Capabilities Focus on creative and consumer-centric research activities R&D centre in Mulund recognised by the Government of India’s Department of Science and Industrial Research Only company of Indian origin to file patents in field of Fragrance and Novel Aroma Molecules 18
Slide 20: Creation & Development Centers
Creation & Development Centers Creation & Development centers (CDCs) – works in collaboration with customers, as an extended R&D arm Strong and dedicated team of perfumers, flavourists, evaluators and application executives 22 Scientists 5 Creation and Development Centers in India, Singapore, Es
Slide 21: Strong Raw Material Sourcing Capabilities (1)
Strong Raw Material Sourcing Capabilities (1) Strategic investments in inventory - hedge against significant volatility in supply & price of key raw materials 46% 54% International Suppliers Domestic Suppliers Library of Raw material sourcing Raw Materials: 262 Indian Suppliers nations include Indon
Slide 22: Strong Raw Material Sourcing Capabilities (2)
Strong Raw Material Sourcing Capabilities (2) 4 broad categories of key raw materials, where Counterbalancing Raw materials - ability to alternate between a set of raw materials in each category contributes 25-30% to RM mix Overview of RM crisis (FY2018-FY2020) Unprecedented RM crisis impacted the g
Slide 23: Growth Ready Manufacturing Operations
Growth Ready Manufacturing Operations Operates 9 state-of-the-art manufacturing facilities in India and abroad India Mumbai, Maharashtra - Fragrance Unit I 5,400 Adequate production capacity in place to support sustainable growth, going ahead Mumbai, Maharashtra - Fragrance Unit II 6,600 Mumbai,
Slide 24: Business Strategy
Business Strategy CONTINUE GROWTH IN ENHANCE PRODUCT SUPPLY CHAIN LEVERAGING R&D MARKET SHARE PORTFOLIO 3I-3C STRATEGY OPTIMIZATION CAPABILITIES Focus on retaining Launch of new product Strong focus on the Strengthening sales Strategy to leverage current domestic categories based on three
Slide 25: Creating Value Through Inorganic Growth
Creating Value Through Inorganic Growth Recent Acquisitions In April 2021, the Company acquired 70% equity stake of Nova Fragranze S.r.l. (Nova) through wholly-owned subsidiaries - Keva Italy and CFF Focus on accelerating growth through acquisitions – constantly evaluating value accretive opportun
Slide 26: Strong Management Team
Strong Management Team Management Team – Best-in-class experience Mr. Kedar Ramesh Vaze Mr. Shrikant Mate Dr. Avani Mainkar Mr. Amit Gulati Whole time Director & EVP & Group CFO Chief Scientific Officer Chief Operating Officer Group CEO Mr. Anurag Yadava Ms. Medha Tawde Ms. Anuradha Sansar Mr. Burkh
Slide 27: Board of Directors
Board of Directors Board of Directors Promoter Directors Non-Executive Directors Independent Directors Mr. Ramesh Vaze Mr. Amit Dalmia Mr. Jairaj Purandare Mr. Dalip Sehgal Non-Executive Chairman Non-Executive Director Independent Director Independent Director Mr. Kedar Vaze Ms. Sangeeta Singh Mr. M
Slide 28: Financial Highlights
FINANCIAL HIGHLIGHTS 27
Slide 29: Consolidated Summarized P&L Statement
Consolidated Summarized P&L Statement Y-o-Y Y-o-Y Particulars (Rs. crore) Q4 FY21 Q4 FY20 FY21 FY20 Change (%) Change (%) Revenue from Operations 396.5 269.8 47.0% 1,315.1 1,105.1 19.0% Sales 376.0 269.8 39.4% 1,260.0 1,105.1 14.0% Sales - Contract Manufacturing 20.5 - - 55.1 - - Other Operating Inc
Slide 30: Consolidated Balance Sheet
Consolidated Balance Sheet EQUITY AND LIABILITIES CONSOLIDATED CONSOLIDATED ASSETS CONSOLIDATED CONSOLIDATED As at 31st March 2021 As at 31st March 2020 As at 31st March 2021 As at 31st March 2020 Particulars (Rs. Crore) Particulars (Rs. Crore) (Audited) (Audited) (Audited) (Audited) Equity ASSETS E
Slide 31: Key Developments
Key Developments Acquisition of Nova Fragranze S.r.l. (Nova) SH Kelkar’s wholly-owned subsidiaries - Keva Italy and CFF - entered into an agreement for acquisition of 70% equity stake of Nova − The acquisition has been completed and is effective from April 01, 2021 Incorporated in the year 1992,
Slide 32: Key Developments
Key Developments Exclusive distributor for Isobionics Santalol in India SH Kelkar has become the exclusive distributor for Isobionics Santalol in India The new fragrance ingredient is the first joint product from BASF and Isobionics and is now available for the Indian market through SHK The ne
Slide 33: Financial and Operational Discussions (Y-o-Y)
Financial and Operational Discussions (Y-o-Y) Q4 FY21 Revenues from operations stood at Rs. 396.5 crore, higher by 47.0% Y-o-Y; FY21 Revenues from operations up 19.0% Y-o-Y to Rs. 1,315.1 crore During the quarter, the Company witnessed normalization in demand and enquiries in domestic and internat
Slide 34: Fragrance Division
Fragrance Division The Company saw improved wins from existing and new large and mid-sized FMCG customers in the domestic markets Q4 Q4 Y-o-Y Y-o-Y Particulars (Rs. crore) FY21 FY20 In addition, normalisation in demand across FY21 FY20 (%) (%) domestic and international markets assisted 363.5 24
Slide 35: Flavour Division
Flavour Division The segment witnessed steady offtake in domestic and European markets during the Q4 Q4 Y-o-Y Y-o-Y quarter Particulars (Rs. crore) FY21 FY20 Margins during the year remained at healthy FY21 FY20 (%) (%) levels Revenues from Operations 33.0 29.7 11.2% 111.8 107.0 4.5% While mar
Slide 36: CFF Performance
CFF Performance CFF – Abridged P&L Statement CFF delivered a robust performance on the Quarter ending back of increasing demand and volume off- Particulars as a % of Sales March 31, 2021 take in the Italian and other European Sales – Core Fragrance 47.0 markets Sales – Contract Manufacturing 20.5
Slide 37: Robust Historical Financial Trend
Robust Historical Financial Trend Total Operating Income EBITDA Margin (%) 1,322 1,114 17.9 18 19.3 981 1,025 1,048 14.9 14.8 177 189 160 166 259 FY17 FY18 FY19 FY20 FY21 FY17 FY18 FY19 FY20 FY21 PAT Margin (%) RONW ROCE 10.6 22.7% 9.8 20.2% 8.8 8.2 17.2% 6.3 13.5% 11.3% 17.9% 14.3% 13.8% 12.0% 10.0
Slide 38: Balance Sheet Snapshot – As on March 31, 2021
Balance Sheet Snapshot – As on March 31, 2021 955 797 139 380 Networth Fixed Assets Cash & Net Debt* Investments Note: 1) *The Company’s net debt position includes consolidation of CFF debt and payment of the second and final tranche of the CFF acquisition of ~Rs. 141 crore 2) All Figures in Rs. cro
Slide 39: Cash Flow Snapshot
Cash Flow Snapshot Particulars (Rs. crore) FY17 FY18 FY19 FY20 FY21 Net Cash flows from operating activities 102 103 77 205 195 Net Cash flow from investing activities -96 -221 -137 -40 -149 Net 6 -117 -60 165 46 Note: Cash Note: Cashand andcash equivalent cash includes equivalent investments includ
Slide 40: Key Financial Ratios
Key Financial Ratios Particulars (Rs. crore) FY17 FY18 FY19 FY20 FY21 EBITDA margin (%) 17.9 18.0 14.9 14.8 19.3 PAT Margin (%) 10.6 8.8 8.2 6.3 9.8 Debt to Equity 0.1 0.2 0.4 0.4 0.4 Return on Networth (%) 14.3 13.8 12.0 10.0 17.9 Return on Capital Employed (%) 22.7 20.2 13.5 11.3 17.2 Note: 1. Ret
Slide 41: Key Highlights
KEY HIGHLIGHTS la Vie Y ae Dee € A
Slide 42: Growth Levers
Growth Levers Enhanced product portfolio New products and launches across segments to fuel growth in the longer term Healthy Balance Sheet High operating leverage Notable Free Cash Flow generation To drive and prudent profitability leading management of to better return cash to further ratios streng
Slide 43: Summary
Summary ESTABLISHED FAVORABLE STRONG ENTRY GROWTH READY EXPERIENCED MARKET INDUSTRY BARRIERS PROMOTERS LEADERSHIP DYNAMICS AND MANAGEMENT 42
Slide 44: Annexure
ANNEXURE 43
Slide 45: Key Market Statistics
Key Market Statistics Key Market Statistics As on June 10, 2021 Break-up of Floating Stock (%) BSE/NSE Ticker 539450 / SHK CMP (Rs.) 156.9 Retail & Others Corporate 28% Market Cap (Rs. Crore) 2,217.3 Other Bodies Promoters 41% 2% 59% Number of outstanding shares (Crore) 14.13 MF 4% Face Value 10.00
Slide 46: Corporate Social Responsibility
Corporate Social Responsibility Initiated a plantation Set up Kelkar education program, which includes trust in 1979, which approximately 2,100 started Shri V.G. Vaze Australian teak wood trees, College of Arts, 1,000 pink pepper trees over Commerce and Science Recognizes its role and responsibili
Slide 47: Environment & Sustainability
Environment & Sustainability Various Environmental initiatives undertaken by SHK: Adherence to Structured efforts leading certification Rainwater Harvesting system at Vashivali Unit towards natural & applicable led to 50% reduction in raw water resource environmental consumption conservation legis
Slide 48: Keva Group
Keva Group S H Kelkar and Company Limited Domestic Foreign Creative Keva Europe Keva Fragrance Keva Fragrances Keva Flavours Keva UK Ltd. Flavours & Industries Pte. B.V. Pvt. Ltd Pvt. Ltd. (UK) Fragrance (CFF- Ltd. (Singapore) (Netherlands) Italy) Purandar Fine VN Creative PFW Aroma Keva Italy S.R.L
Slide 49: About Us
About Us S H Kelkar and Company Limited (SHK) is the largest Indian-origin Fragrance & Flavour For further information please contact: Company in India. It has a long-standing reputation in the fragrance industry developed in 96 years of experience. Its fragrance products and ingredients are used as
Slide 50: 49
49
S H Kelkar and Company — Investor Presentation (July 2021) on 6ix