S H Kelkar And Company Ltd · NSE:SHK
S H Kelkar And — Investor Presentation (December 2020)
50 slides from S H Kelkar And's investor presentation, Dec 15, 2020
Slide 1: Exchange submission cover letter
Keva December 15, 2020 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 Cod
Slide 2: S H Kelkar and Company Limited Investor Presentation December 2020
S H KELKAR AND COMPANY LIMITED INVESTOR PRESENTATION December 2020
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 52 CRISIL Manufacturing Creation & R&D Team consisting Locations Development Centers of 23 Perfumers, AA-/Stable 22 scientists and Credit Rating on long-term 7 Flavourists bank facilities `1,122 cr ~7% `123
Slide 8: Key Milestones
Key Milestones Market and Entities Creation and R&D Centre Manufacturing Facilities 1955 1979 1984 2000 2010 2013 2016 2018 • Establishment of the manufacturing • Expansion of • Incorporation of • Acquired 51% of Italy-based unit at Vapi PT SHK Keva Creative Flavours & Fragrance mfg. • Consolidation
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 Market Size (Rs. BN) High growth in FMCG Directly correlated to FMCG growth 82 Premiumization in Consumers are increasingly buying personal care sophisticated premium personal care products 55 Growth in ‘naturals’ Major shift in consumer preferences fro
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 Stringent Availability of regulatory key Ingredients 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 Acquired 100% of Italy-based Creative Focus on accelerating growth through acquisitions – constantly Flavours & Fragrances S.p.A (CFF) evaluating value accretive opportunities across key geographies Enables Keva to expand presence into
Slide 26: Strong Management Team
Strong Management Team Management Team – Best-in-class experience Mr. Kedar Ramesh Vaze Mr. B. Ramkrishnan Mr. Shrikant Mate Dr. Avani Mainkar Mr. Amit Gulati Whole time Director & Director Strategy EVP & Group CFO Chief Scientific Officer Chief Operating Officer Group CEO Mr. Anurag Yadava Mr. Luc
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: Management Comment
Management Comment Commenting on the performance, Mr. Kedar Vaze, Whole Time Director & CEO at SH Kelkar and Company Ltd. said: “I am pleased to share that we have delivered a robust performance during the quarter on the back of a healthy uptick in demand across the domestic and international market
Slide 30: Consolidated Summarized P&L Statement
Consolidated Summarized P&L Statement Y-o-Y Y-o-Y Particulars (Rs. crore) Q2 FY21 Q2 FY20 H1 FY21 H1 FY20 Change (%) Change (%) Revenues from Operations (Net of excise) 351.9 276.2 27% 543.3 547.7 -1% Other Operating Income 2.6 3.1 -16% 3.7 6.0 -37% Total Operating Income 354.5 279.3 27% 547.0 553.7
Slide 31: Consolidated Balance Sheet
Consolidated Balance Sheet EQUITY AND LIABILITIES CONSOLIDATED CONSOLIDATED ASSETS CONSOLIDATED CONSOLIDATED As at 30th September As at 31st March 2020 As at 30th Sept 2020 As at 31st March 2020 Particulars (Rs. Crore) Particulars (Rs. Crore) 2020 (Audited) (Audited) (Audited) (Audited) Equity ASSET
Slide 32: Key Developments
Key Developments Solid improvement in overall performance registered during the quarter The Company witnessed improved traction in terms of order enquiries and leads from new and existing large & mid-sized FMCG customers during the quarter. Business wins across domestic and international markets a
Slide 33: Key Developments
Key Developments Update on Creative Flavours and Fragrances On July 28, 2020, SHK concluded the full acquisition of CFF and accordingly SHK’s Q2 FY2021 results includes consolidation of CFF numbers w.e.f August 1, 2020 During the period under review, CFF delivered an encouraging performance on t
Slide 34: Q2FY2021 Financial and Operational Discussions (Y-o-Y)
Q2FY2021 Financial and Operational Discussions (Y-o-Y) Revenues from operations stood at Rs. 351.9 crore as against Rs. 276.2 crore As the country moved to the un-lockdown phase, the Company witnessed a strong uptick in terms of order enquiries and leads across the fragrance and flavours segments,
Slide 35: Fragrance Division
As the country moved to the un-lockdown Fragrance Division phase, the Company witnessed encouraging pick-up in demand and improved business wins in the Fragrance division, which resulted in a healthy volume offtake in the domestic Q2 Q2 Y-o-Y H1 H1 Y-o-Y market Particulars (Rs. crore) FY21 FY20 (%
Slide 36: Flavour Division
Flavour Division The Company launched new product offerings within the Flavour category during the quarter, which saw strong acceptance in the domestic and international markets. This, Q2 Q2 Y-o-Y H1 H1 Y-o-Y in addition to improved recovery in the Particulars (Rs. crore) FY21 FY20 (%) FY21 FY20 (
Slide 37: CFF Performance
CFF Performance CFF – Abridged P&L Statement In the quarter, CFF delivered an improved Particulars Aug & Sep'20 as a % of Sales performance in its core fragrance division Sales – Core Fragrance 26.0 driven by increasing demand and volume off- take in the Italian market Sales – Contract Manufacturi
Slide 38: Robust Historical Financial Trend
Robust Historical Financial Trend Total Operating Income EBITDA Margin (%) 1,048 1,114 17.9 18 981 1,025 17.1 925 14.9 14.8 160 177 189 160 166 FY16 FY17 FY18 FY19 FY20 FY16 FY17 FY18 FY19 FY20 PAT Margin (%) RONW ROCE 10.6 22.7% 21.0% 20.2% 8.8 8.2 7.8 13.5% 11.3% 3.1 13.9% 14.3% 13.8% 12.0% 10.0%
Slide 39: Balance Sheet Snapshot – As on September 30, 2020
Balance Sheet Snapshot – As on September 30, 2020 892 617 99 454 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.
Slide 40: Cash Flow Snapshot
Cash Flow Snapshot Particulars (Rs. crore) FY16 FY17 FY18 FY19 FY20 H1FY21 Cash flow from Operations 86 102 103 77 205 173 Cash flow from investing activities -22 -96 -221 -137 -40 -15 Net 64 6 -117 -60 165 30 Note: Cashand Note: Cash and cash cash equivalent equivalent includes includes investments
Slide 41: Key Financial Ratios
Key Financial Ratios Particulars (Rs. crore) FY16 FY17 FY18 FY19 FY20 H1FY21 EBITDA margin (%) 17.1 17.9 18.0 14.9 14.9 20.2 PAT Margin (%) 7.8 10.6 8.8 8.2 6.4 12.3 Debt to Equity 0.1 0.1 0.2 0.4 0.4 0.5 Return on Networth (%) 13.9 14.3 13.8 12.0 10.0 21.2 Return on Capital Employed (%) 21.0 22.7 2
Slide 42: Key Highlights
KEY HIGHLIGHTS 41
Slide 43: 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 44: Summary
Summary ESTABLISHED FAVORABLE STRONG ENTRY GROWTH READY EXPERIENCED MARKET INDUSTRY BARRIERS PROMOTERS LEADERSHIP DYNAMICS AND MANAGEMENT 43
Slide 45: Annexure
ANNEXURE 44
Slide 46: Key Market Statistics
Key Market Statistics As on November 26, Break-up of Floating Stock (%) Key Market Statistics 2020 BSE/NSE Ticker 539450 / SHK CMP (Rs.) 126.4 Corporate Retail & Others Bodies 26% Market Cap (Rs. Crore) 1,785.6 Other 2% Promoters 40% 60% MF Number of outstanding shares (Crore) 14.13 4% FII / FPI 9%
Slide 47: Corporate Social Responsibility
Corporate Social Responsibility Recognizes its role and responsibility to deliver superior and Initiated a plantation Set up Kelkar education program, which includes trust in 1979, which sustainable value to customers, business partners, employees approximately 2,100 started Shri V.G. Vaze and com
Slide 48: Keva Group
Keva Group S H Kelkar and Company Limited Domestic Foreign Keva Fragrance Creative Flavours & Keva Fragrances Keva UK Ltd. (UK) Industries Pte. Ltd. Fragrance (CFF- Pvt. Ltd (Singapore) Italy) PFW Aroma Keva Europe B.V. Keva Flavours Pvt. VN Creative Ingredients B.V. (Netherlands) Ltd. Chemicals Pvt
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
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