Prataap Snacks Ltd. · NSE:DIAMONDYD
Prataap Snacks — Investor & Analyst Meet 2019
44 slides from Prataap Snacks's conference presentation, Sep 24, 2019
Slide 1: Exchange filing cover letter
Ref No.: PSL/2019-20/CS/SE/45 Date: 24" September, 2019 To, To, Listing Department Corporate Relationship Department National Stock Exchange of India Limited BSE Limited Exchange Plaza, 5" Floor P.J. Towers, Plot No. C/1, G Block Dalal Street Bandra Kurla Complex Mumbai- 400 001 Bandra ( E), Mumbai
Slide 2: Prataap Snacks Limited Investor & Analyst Meet 2019
INV PRATAAP SNACKS LIMITED ESTOR & ANALYST M a ET 2019
Slide 3: Disclaimer
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 ma
Slide 4: Agenda
1 2 3 4 5 6 7 8 Agenda Industry Company Financial Governance Acquisition Sweet Creating Key Overview Overview Overview of Avadh Snacks Value for Takeaways Snacks Shareholders 4 7 15 19 25 29 35 42 3
Slide 5: 1. Industry Overview
1. Industry Overview 4
Slide 6: Favourable demographics supporting Industry growth
Favourable demographics supporting Industry growth POPULATION TREND (BILLIONS) INDIA’S ANNUAL CONSUMER 1.397 1.411 EXPENDITURE (RS. TRILLION) 1.352 1.366 1.380 101 110 1.324 1.338 80 84 90 1.293 1.310 71 75 1.263 1.278 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2012 2013 2014 2015 2016 2
Slide 7: Salty Snacks – poised for strong growth
Salty Snacks – poised for strong growth ORGANISED MARKET TO GROW AT A CAGR OF 14.3% OVER 5 YEARS 43,000 ORGANISED SNACK MARKET BY TYPE 22,000 OF CATEGORIES 8,700 Others 2% 2010 2016 2021 Namkeen & Source: PSL Annual Report, 2018-19 Chips Traditional 30% 36% EXTRUDED SNACKS TO POST THE HIGHEST GROWTH
Slide 8: 2. Company Overview
2. Company Overview 7
Slide 9: Prataap Snacks at a Glance
Prataap Snacks at a Glance Over More than SKUs Manufacturing packets sold 5 year revenue Facilities* per day CAGR Over Reach of over Retail In Rings Super Stockists Distributors Touchpoints 8 *(5 Inhouse plants and 9 contract manufacturing units)
Slide 10: Key Milestones
Key Milestones Entered into 3P Contract Manufacturing Sequoia’s initial Doubled the Guwahati new plant in Karjat & investment of Rs. Installed capacity of Potato commissioned Kashipur Prakash Snacks 620 mn Chulbule Chips plant at incorporated. Prataap Snacks Introduction of plant at Indore from Conv
Slide 11: Comprehensive Presence Across Key Product Categories
Comprehensive Presence Across Key Product Categories CHIPS EXTRUDED SNACKS (SHAPED) Sweet Snacks, 2% EXTRUDED SNACKS (RANDOM) NAMKEEN Potato Namkeen & Chips, 28% Pallets, 23% Percentage of Consolidated FY19 Sales PELLET SWEET SNACKS Extruded Snacks (S + R), 47% 10
Slide 12: Diverse Product Portfolio
Diverse Product Portfolio YUM CAKE, RINGS, KURVES PELLET NAMKEEN & POTATO CHIPS CHULBULE NAMKEEN CUP CAKE, & PUFF SNACKS FRYUMS COOKIE CAKE Potato based Rice grit & Corn grit Gram based Wheat based Cake Namkeen snack Corn grit based snack SKUs: 22 SKUs: 4 variations and Fryums SK
Slide 13: Track Record of Innovation
Track Record of Innovation Launched Nachos, and Launched Launched Kurves Cup Cake in Yum Cake, Introduction Launched chocolate Cookie of Seven Yum-Pie, a and vanilla Cake and variety of flavor in Wonders Choco sweet snacks, Q1FY20 range of Vanilla Introduction under Rich Cake healthier Feast of Yood
Slide 14: Pan India Presence – Source of supply closer to market
Pan India Presence – Source of supply closer to market Strategically located Manufacturing facilities to cater the regional demand No. of Facilities Products 1 Hissar 1 – Contract Facility Extruded Snacks, Pellets, Chulbule No. of Facilities Products Kashipur 1 - Contract Facility Chips, Namkeen, Pe
Slide 15: 3. Financial Overview
3. Financial Overview 14
Slide 16: Track Record of Robust Growth
Track Record of Robust Growth REVENUE CAGR: 21.9% EBITDA CAGR: 33.0% 11,815 869 832 10,264 8,981 7,571 565 5,591 422 343 FY15 FY16 FY17 FY18 FY19 FY15 FY16 FY17 FY18 FY19 PAT CAGR: 52.7% CASH PROFIT CAGR: 37.0% 442 446 823 746 274 448 460 206 255 99 FY15 FY16 FY17 FY18 FY19 FY15 FY16 FY17 FY18 FY19
Slide 17: Strong Financial Position
Strong Financial Position DEBT EQUITY RATIO NET TANGIBLE ASSET 0.28 TURNOVER (X) 0.24 0.18 3.8 3.9 4.0 3.6 3.0 0.03 0.01 FY15 FY16 FY17 FY18 FY19 FY15 FY16 FY17 FY18 FY19 Working capital CASH CONVERSION RATIO 9 10 332% 9 6 8 Average: 137.8% 52 48 46 48 53 10 Payable days 190% 16 18 3 25 158% 152% Re
Slide 18: Impact of Avadh Acquisition & AS 116
Impact of Avadh Acquisition & AS 116 Rs. mn Cash PAT 4% 10% 48.8 Avadh 446.4 Acquisition – 495.3 441.8 823 746 Amortization of Goodwill FY19 FY19 FY18 FY19 FY18 24% 8.4 38% 24.43 AS 116 Impact 129.3 Avadh 96.5 103.9 Acquisition – 249 Amortization of 180 Goodwill Q1 FY20 Q1 FY20 Q1 FY19 Q1 FY20 Q1 FY
Slide 19: 4. Governance
4. Governance 18
Slide 20: Governance is an Area of Deep Focus
Governance is an Area of Deep Focus Independent Board comprising reputed professionals and investors representative Professional management with number of years of relevant experience Robust internal controls and processes No related party transactions, except dividend and remuneration Global best p
Slide 21: Guided by an Accomplished Board
Guided by an Accomplished Board Arvind Mehta Chairman & Executive Director Over 30 years of experience in real estate business along with over 16 years in the snacks Vineet Kumar Kapila food industry and in the financing business Independent Director Ex-COO (RPC North of United Spirits) & earlier Mr
Slide 22: Helmed by a Professional Management Team
Helmed by a Professional Management Team Mr. Arvind Mehta Over 30 years of experience in real estate business along with over 16 years in the Chairman & Executive snacks food industry and in the financing business Director Corporate functions Mr. Amit Kumat Managing Director and Chief Over 23 years
Slide 23: Helmed by a Professional Management Team
Helmed by a Professional Management Team He holds bachelor degree in Science (Economics). He has over 27 years of Mr. Subhashis Basu experience in the FMCG industry and worked with Parle, PepsiCo India and Mother Chief Operating Officer Dairy Corporate functions Mr. Subhash Bhatt He holds bachelor d
Slide 24: Helmed by a Professional Management Team
Helmed by a Professional Management Team Mr. Awadh B. Singh He holds bachelor degree in Science. He has over 31 years of experience in the General Manager Sales - FMCG industry and worked with Prakash Snacks and Hello Agro East Corporate functions Mr. Mahesh Purohit He holds bachelor degree in Comme
Slide 25: Robust Controls and Protocols
Robust Controls and Protocols Sound Internal Controls Robust Practices & Protocols SAP (S4 Hana) as ERP Global best practices in Strong Management reporting and compliance and regulatory tracking system protocols No related party transactions, except dividend and Remuneration 24
Slide 26: 5. Acquisition of Avadh Snacks
5. Acquisition of Avadh Snacks 25
Slide 27: About Avadh
About Avadh Product Portfolio Fastest growing and Namkeen Fryums fourth largest snacks player in Gujarat ~6% market share in Gujarat, one of the largest market 25.1% CAGR over the past 3 years Key Products: Bhavnagri Gathiya, Sada Key Products: Tomato Cup, Salted reffil, Mamra, Papdi Gathiya, Chavan
Slide 28: Rationale behind Avadh Acquisition
Rationale behind Avadh Acquisition Prataap Snacks acquired 80% equity stake in Avadh Snacks for Rs.148 Crore in October, 2018 with a ‘call’ option to buy remaining stake Existing Yellow Diamond product portfolio complements Avadh’s regional product portfolio of Namkeen and Fryums The acquisition ena
Slide 29: Unique Business model & Expansion plans
Unique Business model & Expansion plans Business Model Expansion plans Avadh has a Unique Business model •Super Value Player offering higher Expected to be value for Money to consumers. Increasing capacity of commissioned by Rajkot facility by 50%. Oct 2019 Pan India Direct Distribution model expans
Slide 30: 6. Sweet Snacks
6. Sweet Snacks 29
Slide 31: Sweet Snacks Industry – Size, Growth, Key Players
Sweet Snacks Industry – Size, Growth, Key Players Market Share by Region Organized Sweet Snacks (Cakes & pies): West is Rs.2,200-2,500 crore growing fast 20% now N Limited Highly under vegetarian penetrated options in category Cake 15% W Market E 50% Very few S Growing at national fast pace players
Slide 32: Sweet Snacks Portfolio
Sweet Snacks Portfolio Coming soon… Center Filled Choco Vanilla Cookie-Cake Yum Cake Tiffin Cake Layer Cake Cup Cake Cake SKU's - 3 SKU's - 2 SKU's - 1 SKU's - 1 Chunk Cake Layer of Target Target Target Target with fruit Sponge group - group - group - group - cuts cake with Youth and Youth
Slide 33: Sweet Snacks – Synergies in the Portfolio
Sweet Snacks – Synergies in the Portfolio Salty Snacks Sweet Snacks Price Points Rs.5,10,20,40,80 Rs.5 Gross Margin 28-32% 33-38% Volatility in RM prices Medium – High Low Freight Cost % of Revenue 7-8% 4-5% ENHANCED ROI IN THE DISTRIBUTION NETWORK Salty Snacks Sweet Snacks MRP Value on Vehicle 16,0
Slide 34: 7. Creating Value for Shareholders
7. Creating Value for Shareholders 33
Slide 35: Growth Pillar 1: Continued Growth in Salty Snacks
Growth Pillar 1: Continued Growth in Salty Snacks Deeper penetration in existing markets & territories Addressing regional tastes and preference Entering new to enhance markets and recall and territories repeat purchases Wider Addressing penetration of white spaces in retail touch pan-India points p
Slide 36: Growth Pillar 2: Growth in Avadh Portfolio
Growth Pillar 2: Growth in Avadh Portfolio Avadh plant capacity to Improving penetration and be increased by 100% touch points in Gujarat and • Phase I of 50% in neighboring markets capacity expansion expected to be completed by Oct 2019 Increasing market share in Gujarat. 35
Slide 37: Growth Pillar 3: Synergy for Yellow Diamond & Avadh
Growth Pillar 3: Synergy for Yellow Diamond & Avadh Avadh Snacks expertise in Gujarat enables Prataap Snacks to accelerate growth and deepen its presence in Gujarat, where it is keen to build a strong presence • Best selling and popular Yellow Diamond products to leverage Avadh network to cover Guja
Slide 38: Growth Pillar 4: Increase in products & Capacity for Sweet Snacks
Growth Pillar 4: Increase in products & Capacity for Sweet Snacks Initial product line for sweet snacks has been well accepted in present territories Sweet Snacks strategy focusing on our strengths Sweet Snacks product range to be taken across entire distribution network Recently commissioned two ad
Slide 39: Levers for Margin Improvement
Levers for Margin Improvement Raw material Leveraging Cost Rationalising Changing cost benefits of management trade margins product mix management scale initiatives Raw material and Decentralized 3P Growth in the Increasing Continuous efforts on Packing material facilities enables to Prata
Slide 40: Transforming into Asset Light Model
Transforming into Asset Light Model 4% 6% 13% 21% 24% Mar Mar Mar Mar Sep 2015 2017 2018 2019 2019 79% 76% 96% 94% 87% • Reduced capital cost • Improved asset turn & efficiency Ensuring Tight Control • Located close to key markets Benefits • Enables faster ramp up of capacity • Tie-ups post detailed
Slide 41: Rs 5 Price Point is and will be most important
Rs 5 Price Point is and will be most important Rs.5 price point is the largest market o It consists more than 50% market share of organized snack industry o The conversion from unorganized to organized happens mostly through Rs.5 o Even Rs.2 still as a relevant price point in the hinterland Prat
Slide 42: 8. Key Takeaways
8. Key Takeaways 41
Slide 43: Key Takeaways
Key Takeaways Packaged snacks is one of the few segments in FMCG showing strong growth tailwinds with significant potential for unorganised to organised shift Prataap has been amongst the fastest growing players in the packaged snacks industry over the last decade In addition to growth in core
Slide 44: Thank You
Thank You 43