S H Kelkar And Company Ltd · NSE:SHK
S H Kelkar And — Investor Presentation (December 2018)
42 slides from S H Kelkar And's investor presentation, Dec 4, 2018
Slide 1: Intimation of investor meetings cover letter
Keva December 4, 2018 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
Slide 2: S H Kelkar and Company Limited Investor Presentation
Crafting Sensorial Delight S H Kelkar and Company Limited Largest Indian-origin Fragrance & Flavour Company Investor Presentation December 2018
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 1 3 5 Niche Financial Annexure Industry Highlights Who Our Key we are Business Highlights 2 4 6 3
Slide 5: Who We Are
Crafting Sensorial Delight Who We Are
Slide 6: Who We Are
Who We Are • Established 96 years back by SH Kelkar and VG Vaze Market • Leading Fragrance & Flavour company in India exporting to 52 countries Legacy Leadership • Global scale, state-of-the-art infrastructure • Leading domestic provider of Fragrance & Flavour to FMCGs Strong Excellent Management In
Slide 7: At a Glance
At a Glance 96 9,700+ 4,100+ 849 Years of Market Products Customers Employees Conviction ~12.1% ` 1,019 cr 7 4 8-year Sales CAGR Turnover – FY18 Manufacturing Creation & (FY2011-18) Locations Development Centres Shareholding Pattern 57% 20% 2% 5% 16% Promoters & Promoter Group FII / FPI MF Corporate
Slide 8: Niche Industry
Crafting Sensorial Delight Niche Industry
Slide 9: Global F&F Market & Key Characteristics
Global F&F Market & Key Characteristics Concentrated market FMCG & Innovation play • Consolidated Industry globally • FMCG companies greatly depend Market Size (US$ BN) on the reliability, quality of • 10 players control 79% of market service and the F&F company’s 31.5 share technical know-how 25.9
Slide 10: India's Favourable Dynamics Offer Huge Opportunities
India’s Favourable Dynamics Offer Huge Opportunities Globalization Rising young population Globalisation to further enhance and Population of 1.21 bn, growing 1.41% annually influence customer preferences Young population ~65% below 30 years age To bring in new product concepts and ideas G
Slide 11: 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 Premiumization in Growth in Increasing FMCG personal care ‘naturals’ segment consumption 82 Directly correlated Consumers are Major shift in All sub-segments 55 to FMCG growth increasingly buying consumer withi
Slide 12: F&F Industry - Strong Entry Barriers
F&F Industry - Strong Entry Barriers High customer acquisition time Established relationships with customers Sustained R&D efforts Availability of key Ingredients Stringent regulatory compliance 11
Slide 13: Our Business
Crafting Sensorial Delight Our Business
Slide 14: Diverse Customer Base backed with Leading Brands
Diverse Customer Base backed with Leading Brands Fragrance customers Flavours customers Over 4,100 customers including, Category Leader Brands in the portfolio - SHK, FMCG leaders, domestic companies, trade Keva and Cobra customers & global corporates Branded small pack products “Cobra” so
Slide 15: Client-Brief / Pitch Process
Client-Brief / Pitch Process Small yet potentially disruptive new players Branded entering markets – provide comprehensive small pack support on the back of rich experience customers Technical and Commercial requirement: o Understanding of customer insight for sensory and technical perspective Pro
Slide 16: 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 15
Slide 17: 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 Established Fine Fragrance Development Centre in Amsterdam o Strong ba
Slide 18: Strong Raw Material Sourcing Capabilities
Strong Raw Material Sourcing Capabilities Strategic investments in inventory – hedge against significant volatility in supply & price of key raw materials International Suppliers Library of Raw Materials: 1,200+ Domestic Suppliers Raw material sourcing nations 262 Indian Suppliers include Indonesia,
Slide 19: Growth ready manufacturing operations
Growth ready manufacturing operations Taihe, China M • Musk unit Anhui • Capacity: 400 TPA M Mumbai, Maharashtra M Barneveld, Netherlands • Unit I: Fragrance – Capacity: 5,400 TPA • One musk unit and one multi- • Unit II: Fragrance – Capacity: 6,600 TPA purpose unit. Milan, Italy M • Unit II: Flavou
Slide 20: Business Strategy
Business Strategy Continue growth in 3x3 Strategy Strengthen innovation market share platform to enhance product portfolio • Focus on retaining current domestic market • Strong focus on the three key regions of South leadership and enhancing market share Asia (through India), South East Asia (throug
Slide 21: Creating Value through Inorganic Growth
Creating Value through Inorganic Growth Focus on accelerating growth through acquisitions – Recent acquisitions constantly evaluating value accretive opportunities across key geographies Acquired 51% of Italy-based Creative Flavours & Fragrances S.p.A (CFF) o To strengthen global product offerings
Slide 22: Strong Management Team
Strong Management Team Management Team – Best-in-class experience Kedar Whole time Director & Group CEO Executive VP – Fragrance India Ramesh Pramod Ranked 26th in the ‘Dream Vaze Davray Companies To Work For’ by Times Exp. – 20+ Yrs Exp. – 40+ Yrs Ascent at World HRD Congress, February 2018, earl
Slide 23: Strong governance - Independent Board
Strong governance - Independent Board Board of Directors Promoter Directors Non Executive Directors Independent Directors Jairaj Manohar Ramesh Vaze Amit Dalmia Shrikant Oka Purandare Managing Director Director Independent Director Independent Director Kedar Vaze Sangeeta Kapiljit Whole time Directo
Slide 24: Financial Highlights
Crafting Sensorial Delight Financial Highlights
Slide 25: Consolidated Summarized P&L Statement
Consolidated Summarized P&L Statement Y-o-Y Y-o-Y Particulars (Rs. crore) Q2 FY19 Q2 FY18 H1 FY19 H1 FY18 Change (%) Change (%) Revenues from Operations 282.1 220.8 27.7% 518.1 454.8 13.9% (Sales excluding Excise & GST) Other Operating Income 1.4 0.4 282.5% 1.8 0.8 139.5% Total Operating Income 283.
Slide 26: Key Developments
Key Developments Formal inauguration of aroma ingredients manufacturing facility at Mahad, Maharashtra during the quarter The state-of-the-art facility will manufacture Tonalid and other key raw materials used in the fragrance industry With a total installed capacity of 1,200 MTPA, the facility
Slide 27: Fragrance Division
Fragrance Division Net Revenue & Operating Profit 66 Fragrance division delivered healthy growth in H1 68 assisted by robust revival in Q2 37 Domestic Fragrance business reported solid 31 465 performance of 24% in H1; while overseas 397 revenues grew by 3% 254 194 Surge in raw material costs i
Slide 28: Flavour Division
Flavour Division Net Revenue & Operating Profit 11 6 Flavour division reported a subdued performance during the period –domestic revenues came in 2 4 58 lower by 20% in H1 as a result of supply-side 53 disruptions which led to increased pricing 28 pressures in the domestic market 27 Operating pr
Slide 29: Robust Historical Financial Trend
Robust Historical Financial Trend Total Operating Income EBITDA 189 177 981 1,025 160 925 145 835 132 761 EBITDA Margin 19.0% 15.8% 17.1% 17.9% 18.0% FY14 FY15 FY16 FY17 FY18 FY14 FY15 FY16 FY17 FY18 PAT Return on Net Worth & Return on Capital 105 Employed (%) 93 RONW ROCE 79 73 64 22.7% 21.0% 21.0%
Slide 30: Balance Sheet Snapshot – As on September 30, 2018
Balance Sheet Snapshot – As on September 30, 2018 Networth Fixed Assets Cash & Investments Net Debt 29 Note: Figures in Rs. crore
Slide 31: Cash Flow Snapshot
Cash Flow Snapshot H1 Particulars (Rs. crore) FY14 FY15 FY16 FY17 FY18 FY19 Cash flow from Operations 32.1 61.7 86.4 102.3 103.3 41.6 Cash flow from investing activities -63.7 -17.3 -22.4 -96.0 -220.6 -95.1 Net -31.6 44.4 64.0 6.3 -117.3 -53.5 Note: Cash and cash equivalent includes investments in m
Slide 32: Strong Payout Policy
Strong Payout Policy Dividend Declared (Rs cr) 26 25 25 15 15 Committed to rewarding shareholders Maintained healthy payout ratio % PAT 19% 23% 33% 24% 27% FY14 FY15 FY16 FY17 FY18 31
Slide 33: Financial Snapshot
Financial Snapshot Particulars (Rs. crore) FY14 FY15 FY16 FY17 FY18 EBITDA margin (%) 19.0 15.8 17.1 17.9 18.0 PAT Margin (%) 10.4 7.7 7.8 10.6 8.8 Debt to Equity 0.4 0.5 0.1 0.1 0.2 Return on Networth (%) 18.3 13.5 13.9 14.3 13.8 Return on Capital Employed (%) 21.0 17.6 21.0 22.7 20.2 Notes: 1. Ret
Slide 34: Key Highlights
Crafting Sensorial Delight Key Highlights
Slide 35: Growth Levers
Growth Levers High operating leverage Expand Branded small pack To drive profitability leading to portfolio better return ratios Focus on increasing branded sales in the Fragrance division by introducing new products Consolidation opportunity in Balance Sheet to further the fragmented Flavours stren
Slide 36: Summary
Summary Established Market Leadership Favorable Industry Dynamics Strong Entry Barriers Growth Ready Experienced Promoters and Management 35
Slide 37: Annexure
Crafting Sensorial Delight Annexure
Slide 38: Key Market Statistics
Key Market Statistics Key Market Statistics As on Oct 31, 2018 Top Public Shareholders BSE/NSE Ticker 539450 / SHK MORGAN STANLEY CMP (Rs.) 168 MONDRIAN INVESTMENT Market Cap (Rs. Crore) 2,434 NEUBERGER BERMAN Number of outstanding shares (Crore) 14.46 STEWART INVESTORS Face Value 10.00 STICHTING DE
Slide 39: Corporate Social Responsibility
Corporate Social Responsibility Recognizes its role and responsibility to deliver superior and sustainable value to customers, business partners, employees and communities SHK has been contributing for the cause of economically, socially and physically challenged groups to support their sustaina
Slide 40: Corporate Structure
Corporate Structure Keva Fragrances Pvt. Ltd S H Kelkar and Company Limited Keva Flavours Pvt. Ltd. Domestic Keva Chemicals Pvt. Ltd. Saiba Industries Pvt. Ltd. Keva UK Ltd. (UK) PFW Aroma Chemicals B.V. (SHK - 84%, KFG 16%) (Netherlands). Keva Fragrance Industries Pte. Ltd. PT SHK Keva Indonesia (I
Slide 41: About Us
About Us S H Kelkar and Company Limited (SHK) is the largest Indian-origin Fragrance & For further information please contact: Flavour Company in India. It has a long standing reputation in the fragrance industry developed in 96 years of experience. Its fragrance products and Ms Deepti Chandratre in
Slide 42: Thank You
Crafting Sensorial Delight Thank You
S H Kelkar and Company — Investor Presentation (December 2018) on 6ix