Slide 1: F19 Full Year Results Roadshow
F19 FULL YEAR RESULTS ROADSHOW 3 JUNE 2019
Slide 2: Anand Kripalu, MD & CEO
ANAND KRIPALU MANAGING DIRECTOR & CHIEF EXECUTIVE OFFICER
Slide 3: What we will cover today
WHAT WE WILL COVER TODAY FY19 REVIEW PROGRESS AGAINST STRATEGY F19 FINANCIAL PERFORMANCE CONFIDENCE IN THE FUTURE 3
Slide 4: What we will cover today
WHAT WE WILL COVER TODAY FY19 REVIEW PROGRESS AGAINST STRATEGY F19 FINANCIAL PERFORMANCE CONFIDENCE IN THE FUTURE 4
Slide 5: We have the leading portfolio across price points
WE HAVE THE LEADING PORTFOLIO ACROSS PRICE POINTS Consumer Focus brands prices* Luxury >Rs.2000 Premium Rs.900‐2000 Prestige Rs.350‐900 Popular <Rs.350 *Average consumer prices in India, 750ml bottle 5
Slide 6: F19 in a nutshell
F19 IN A NUTSHELL Net sales +10% Prestige & Above net sales +15% Gross margin 48.8%; +21bps EBITDA margin 14.3%; +175 bps Interest costs ‐18% Profit after tax 659 Cr; +17% * Gross margin for F18 has undergone a change due to a reclassification to maintain conformity – please refer to Annexure in Pre
Slide 7: FY19 external recognition highlights
FY19 ‐ EXTERNAL RECOGNITION HIGHLIGHTS Corporate Governance Rating Finance Leadership Awards ICRA assigned a Corporate Excellence Award Corporate Sanjeev Churiwala named CFO Governance Rating USL received Dun & Bradstreet of the year, FMCG category, of CGR2, reinforcing 2019 Award for Corporate ICAI
Slide 8: What we will cover today
WHAT WE WILL COVER TODAY FY19 REVIEW PROGRESS AGAINST STRATEGY F19 FINANCIAL PERFORMANCE CONFIDENCE IN THE FUTURE 8
Slide 9: Our five strategic priorities
OUR FIVE STRATEGIC PRIORITIES To be one of the best performing, most trusted and respected consumer products companies in India 5 Strategic Priorities Strengthen Drive Evolve route to Corporate Winning & accelerate productivity to consumer citizenship organization core brands invest in growth 9
Slide 10: Our five strategic priorities
OUR FIVE STRATEGIC PRIORITIES To be one of the best performing, most trusted and respected consumer products companies in India 5 Strategic Priorities Strengthen Drive Evolve route to Corporate Winning & accelerate productivity to consumer citizenship organization core brands invest in growth 10
Slide 11: Playing into India's top passion points
Strengthen & accelerate core brands PLAYING INTO INDIA’S TOP PASSION POINTS Music Food Cricket 11
Slide 12: Bringing passion point alive through purpose-led marketing
Strengthen & accelerate core brands BRINGING PASSION POINT ALIVE THROUGH PURPOSE‐LED MARKETING #challengeaccepted campaign RCB app Coa ch 12
Slide 13: Leveraging our extensive Scotch portfolio
Strengthen & accelerate core brands LEVERAGING OUR EXTENSIVE SCOTCH PORTFOLIO OUR PORTFOLIO F19 SCOTCH NET SALES GROWTH (%) 46% Bottled in Origin (BIO) 28% 18% Overall Bottled in Origin Bottled in India Bottled In India (BII) 13
Slide 14: Bringing category vibrancy through innovation
Strengthen & accelerate core brands BRINGING CATEGORY VIBRANCY THROUGH INNOVATION RE‐RECRUIT RECRUIT DISRUPT through new variants through new propositions through untapped categories 14
Slide 15: Making Scotch hip: recruiting new consumers
Strengthen & accelerate core brands MAKING SCOTCH HIP: RECRUITING NEW CONSUMERS 15
Slide 16: Our five strategic priorities
OUR FIVE STRATEGIC PRIORITIES To be one of the best performing, most trusted and respected consumer products companies in India 5 Strategic Priorities Strengthen Drive Evolve route to Corporate Winning & accelerate productivity to consumer citizenship organization core brands invest in growth 16
Slide 17: Multi-pronged approach: Affluent, Middle, Aspiring India
Evolve route to consumer MULTI‐PRONGED APPROACH AFFLUENT INDIA MIDDLE INDIA ASPIRING INDIA Unique experiences, Leverage outlets to build brand Focus on retained states, Weddings & Banquets equity support franchisees 17
Slide 18: Enabling the multipronged approach
Evolve route to consumer ENABLING THE MULTIPRONGED APPROACH Affluent India Middle India Aspiring India • Dedicated team driving joint • Clear outlet execution • Dedicated teams driving business planning with top standards distribution in retained states 1300 Key Accounts • Customized activations at
Slide 19: Our five strategic priorities
OUR FIVE STRATEGIC PRIORITIES To be one of the best performing, most trusted and respected consumer products companies in India 5 Strategic Priorities Strengthen Drive Evolve route to Corporate Winning & accelerate productivity to consumer citizenship organization core brands invest in growth 19
Slide 20: Productivity is now embedded in our organization
Driving productivity PRODUCTIVITY IS NOW EMBEDDED IN OUR ORGANIZATION F19 Net Revenue • Efficient commercial spends Management Gross margin • Positive price/mix from P&A growth improvement • Rate and feature optimization +21bps COGS • Manufacturing footprint optimisation • Efficiency in agency and p
Slide 21: Our five strategic priorities
OUR FIVE STRATEGIC PRIORITIES To be one of the best performing, most trusted and respected consumer products companies in India 5 Strategic Priorities Strengthen Drive Evolve route to Corporate Winning & accelerate productivity to consumer citizenship organization core brands invest in growth 21
Slide 22: Corporate citizenship
Corporate citizenship CORPORATE CITIZENSHIP Shape regulatory environment Relatively modest ED hikes Partner with regulators on policy reform Change reputation of industry Alcohol in Society: Road safety, underage consumption Building thriving communities: Project SHE 22
Slide 23: Alcohol in society: road safety program
ALCOHOL IN SOCIETY: ROAD SAFETY PROGRAM Expanding regional reach for Road Safety Program Road Safety Week with local universities 23
Slide 24: Building thriving communities
BUILDING THRIVING COMMUNITIES Women empowerment: Health & Sanitation Water replenishment Women Self Help Group who produce and market sanitary napkins Pond excavation work done in Udaipur, Rajasthan increasing the to improve sanitation and create livelihood at Alwar, Rajasthan storing capacity by 41
Slide 25: Our five strategic priorities
OUR FIVE STRATEGIC PRIORITIES To be one of the best performing, most trusted and respected consumer products companies in India 5 Strategic Priorities Strengthen Drive Evolve route to Corporate Winning & accelerate productivity to consumer citizenship organization core brands invest in growth 25
Slide 26: Building a future ready organisation
Winning organization BUILDING A FUTURE READY ORGANISATION Attracting and developing talent Enhancing diversity
Slide 27: Sharing our message on diversity
Winning organization SHARING OUR MESSAGE ON DIVERSITY
Slide 28: Building a future ready organisation
Winning organization BUILDING A FUTURE READY ORGANISATION Attracting and developing talent Enhancing diversity Driving Simplification Building a high performance culture
Slide 29: What we will cover today
WHAT WE WILL COVER TODAY FY19 REVIEW PROGRESS AGAINST STRATEGY F19 FINANCIAL PERFORMANCE CONFIDENCE IN THE FUTURE 29
Slide 30: Sanjeev Churiwala, Executive Director & CFO
SANJEEV CHURIWALA EXECUTIVE DIRECTOR & CHIEF FINANCIAL OFFICER 3 JUNE 201930
Slide 31: F19 in a nutshell
F19 IN A NUTSHELL Net sales +10% Prestige & Above net sales +15% Gross margin 48.8%; +21bps EBITDA margin 14.3%; +175 bps Interest costs ‐18% Profit after tax 659 Cr; +17% * Gross margin for F18 has undergone a change due to a reclassification to maintain conformity – please refer to Annexure in Pre
Slide 32: Net sales grew double-digit, with P&A segment growing faster
NET SALES GREW DOUBLE‐DIGIT, WITH P&A SEGMENT GROWING FASTER Reported net sales up 9.9% 413 8,981 Rs Crore 439 8,170 (41) Underlying* net sales up 10.5% F18 FY Operating model Volume Price/mix F19 FY Reported changes Reported Reported net sales % Underlying* net sales % FY19 FY19 Prestige & Above 15
Slide 33: Underlying volume growth of 5.4%
UNDERLYING* VOLUME GROWTH OF 5.4% Cases, mn Underlying* volume growth 5.4% 84 +11.8% (0.5)% 4.4 (0.2) 81.6 82 80 78.5 (1.1) 78 76 74 F18 FY Operating model Prestige & Above Popular F19 FY Reported changes Reported Reported volume % Underlying volume % Price Mix P&A 11.8 11.8 3.4 Popular (3.1) (0.5)
Slide 34: Consistent progress towards premiumisation
CONSISTENT PROGRESS TOWARDS PREMIUMISATION NET SALES BY SEGMENT (%) FY17 FY18 FY19 40% 35% 32% 58% 63% 66% Prestige & Above Popular * The total doesn’t add up to 100%; the rest is “Other lines of business” 34
Slide 35: EBITDA growth of 25%, EBITDA margin expansion of 175bps
EBITDA GROWTH OF 25%, EBITDA MARGIN EXPANSION OF 175BPS 12.6*% 21bps 9bps 56bps 90bps 14.3% 413 (71) (15) (68) Rs Crore 1,287 1,028 EBITDA margin up 175bps F18 FY Gross profit Marketing Staff costs Other F19 FY Reported spend overheads Reported Underlying EBITDA margin excluding the impact of operat
Slide 36: PAT growth of 17%
PAT GROWTH OF 17% 175bps (146)bps 4bps 82bps (41)bps (30)bps 6.9% 7.3% 260 (111) 48 (36) (54) (9) 659 562 Rs Crore F18 FY EBITDA Other income Depreciation Interest cost Exceptional Tax F19 FY Reported saving items Reported 36
Slide 37: Further deleveraging balance sheet
FURTHER DELEVERAGING BALANCE SHEET Net debt Interest Reduction of Rs. 676 Cr. Interest cost saving of Rs. 48Cr. 7.3% 7.6% Rs Crore 3,265 Rs Crore 268 220 2,589 F18 FY F19 FY F18 FY F19 FY 37
Slide 38: Continued focus on cash management
CONTINUED FOCUS ON CASH MANAGEMENT Rs. Crore 59 34 (27) (169) 321 (220) 86 (676) 1,287 (756) 112 51 Opening EBITDA Sale Working Other Sale of Investment Capex Interest Loan Tax paid Closing cash proceeds capital income subsidiary in expense repayment cash F18 of non movement (FSWL) subsidiary (gross
Slide 39: Further improvement in key financial indicators
FURTHER IMPROVEMENT IN KEY FINANCIAL INDICATORS Return on Capital Employed Debt‐Equity ratio Interest Coverage ratio 6 22% 2.1 19% 4 18% 1.3 3 0.8 F17 F18 F19 F17 F18 F19 F17 F18 F19 39
Slide 40: Creating value for our shareholders
CREATING VALUE FOR OUR SHAREHOLDERS EPS Rs/share Up 440% 9.1 7.7 # 2.3 1.7 F16 FY F17 FY F18 FY F19 FY * EPS has been retrospectively adjusted for the 1:5 stock split that became effective in F19 40
Slide 41: What we will cover today
WHAT WE WILL COVER TODAY FY19 REVIEW PROGRESS AGAINST STRATEGY F19 FINANCIAL PERFORMANCE CONFIDENCE IN THE FUTURE 41
Slide 42: Evolution of consumer landscape
EVOLUTION OF CONSUMER LANDSCAPE 2018: 7th largest economy 2030: 3rd largest economy (GDP Rs.190 lakh crores) (GDP Rs.700 lakh crores) 2005 2018 2030 Affluent Households by annual income (>Rs. 25 lakhs) 1% 3% 7% 7% 21% 44% Middle (Rs.2.5‐25 lakhs) 23% 33% 34% Aspiring 15% 69% 43% (<Rs.2.5 lakhs) # of
Slide 43: Growing per capita consumption and premiumization
GROWING PER CAPITA CONSUMPTION AND PREMIUMIZATION Alcohol consumption vs per capita income Spirits net sales (CAGR) Per capita consumption (liters of pure alcohol) +7% 17% Premium+ 9% Prestige India 2030 India Upper range 2023 Lower range Popular 1% 2017 2022 Per capita income ($) Source: David Turt
Slide 44: Consistent delivery across P&L
CONSISTENT DELIVERY ACROSS P&L Gross margin PAT margin 48.6% 48.8% 7.3% 6.9% 42.9% EBITDA margin 2.0% 14.3% F17 F18 F19 F17 F18 F19 12.6% 11.4% A&P (% of sales) EPS (Rs/share) 9.1 7.7 F17 F18 F19 9.6% 9.6% 7.8% 2.3 F17 F18 F19 F17 F18 F19 * Gross margin for F18 has undergone a change due to a reclas
Slide 45: Confidence in the future
CONFIDENCE IN THE FUTURE India continues to present an attractive market opportunity Consistent progress on our strategic priorities Transforming business to harness the future Medium Term Goal Grow topline by double digit and improve EBITDA margin to mid‐high teens 45
Slide 46: Thank you
THANK YOU