GLOBUS SPIRITS LIMITED CORPORATE PRESENTATION SEPTEMBER 2015
SAFE HARBOR This presentation contains statements that contain “forward looking statements” including, but without limitation, statements relating to the implementation of strategic initiatives, and other statements relating to Globus Spirits’ future business developments and economic performance. While these forward looking statements indicate our assessment and future expectations concerning the development of our business, a number of risks, uncertainties and other unknown factors could cause actual developments and results to differ materially from our expectations. These factors include, but are not limited to, general market, macro-economic, governmental and regulatory trends, movements in currency exchange and interest rates, competitive pressures, technological developments, changes in the financial conditions of third parties dealing with us, legislative developments, and other key factors that could affect our business and financial performance. Globus Spirits Limited undertakes no obligation to publicly revise any forward looking statements to reflect future / likely events or circumstances . 2
LEADING SPIRITS COMPANY IN NORTH INDIA Unique e 360 ⁰ model l straddli dling g the entire re Established consumer business in North India alcohol l valu lue e chain • Pioneered IMIL branding, leading player in Rajasthan, Haryana and Delhi • Young IMFL portfolio of 3 mainstream brands IMIL IMIL Large, efficient manufacturing operations • Bottling for India’s Top 3 IMFL companies • Amongst the largest and most efficient grain- based distillery operations in India with ~ 90 360 360º mn bulk litres capacity Sustained performance led by strong growth in model Rajasthan Bottling Bottling IMFL IMFL • 13% CAGR (FY11-15) in revenues; D/E of 0.35x • 20 years of operational excellence, delivering CAGR of 20% in operating capacity in last 5 years Bulk Bulk Listed on Indian Stock Exchanges (BSE, NSE) 3
TABLE OF CONTENTS • Indian Alcobev Sector – A High Potential, High Growth Market • GSL, leading Spirits company • Growth strategy to be pan-India 360 ⁰ player • Financial overview • Shareholding and Board of Directors • Annexure 4
INDIAN ALCOBEV – AN ATTRACTIVE MARKET • 2 nd largest in the world by volumes, preceded only by China • 3 rd largest by value, Indian alcobev industry is estimated over $23bn • Per-capita consumption of double-digit growth driven by attractive demographics 14% CAGR in Per-capita a Con Consum umption Ample e Scope e to Grow Con Consis istentl tly Per capita (15+ years) alcohol consumption In Bulk litre Per capita (15+ years) alcohol consumption In Bulk litre (2011) 11.2 10.3 8.6 2.6 2.5 7.3 2.2 6.0 1.8 1.5 4.5 2.6 2007 2008 2009 2010 2011 Russia UK USA Brazil Thailand World India Source: WHO, as per latest year available
THREE MAIN SEGMENTS In beverage alcohol, IMFL is the largest segment followed by Beer & IMIL. Spirits industry comprises IMFL and IMIL. Beverage Alcohol Split in 2013 Mos ostly y bee beer r – 251mn mn cases es and Wine e – 2.4mn n cases es OTHERS IMIL 31% 31% 249mn cases es IMFL 311mn n cases es 38% Source: International Wine & Spirits Research (IWSR), Industry reports, Globus estimates
IMIL & IMFL: DIFFERENT SPIRITS MARKETS IMIL IMFL Lower income, SEC D,E segment, Consum umer r More affluent, SEC C+ segments Segment ~ 40% of population excl BPL ~ 11% CAGR** for households - HPI* ~ 14%+ CAGR for households - HPI >10 Segment Gro rowth between 6-10 (~SEC D) (SEC C+) Flavor dominated market, North - Whisky, East - Rum, Taste e Prefere renc nce varies with region South - Brandy & Rum Regulated shops, malls, restaurants, Regulated vends Poin int t of of Purc rchase bars Highly regulated: Distillery in state of Less restricted; Higher excise duties Exc xcis ise Contr trol sale, excise of Rs15 per PL of minimum of Rs40 per PL ~ 30% Alco cohol l Content 42.8% Min n Retail il Price Rs 30 per nip Rs 45 per nip (cheap brands) *Household Premium Index (HPI) :indicator of ‘Living Standard’ by Indian Readership Survey Source: IWSR for IMFL data, State excise and Four-S research for IMIL data **CAGR (Q4’10 – Q4’12);
IMFL DELIVERING A ROBUST PERFORMANCE IMFL Consumption in India in 2013 WHITE SPIRITS 4% OTHERS 1% Super Premium / Foreign Premium RUM 15% Prestige WHISKY BRANDY 56% 24% Regular Cheap / Medium Source: MotilalOswal Equity Research – classification for 2012 Premium segments are out-performing with volumes • IMFL volume growth at 7.3 .3% % (5-Year CAG AGR) R) of premium whisky up by 20%, super-premium • Driven by brandy (5-Year CAGR @ 14.6%) • Followed by whisky (5-Year CAGR @ 6.7%) whisky up by 21% and scotch whisky up by 23% (5 yr CAGR from 2009-2013).
IMFL: ROBUST GROWTH AIDED BY PREMIUMISATION IMFL led by double-digi git gro rowt wth h in affluent population Households with HPI>20 growing above 20% Attractive Female drinkers on rise demographic hics Indian houses move towards premium products, exit cheaper brands Premiumi misation n Imported spirits are growing ~ 25% YoY and expected to reach 5mn cases by 2015 Increased accessibility and societal acceptance with Modernized growth of modern retail and hospitality distribut ution Newer offerings such as low alcohol beers, wines, achieve success in traditionally whisky led market Newer offe ferings Foreign companies expanding their portfolio White spirits, currently ~ 3% of total IMFL expected to grow fastest
IMIL: HEALTHY INDUSTRY VOLUMES • Large industry catering to lower income, which 229 215 198 184 comprises ~ 40% of 164 population Mn Cases FY09 FY0 FY10 FY1 FY1 FY11 FY1 FY12 FY1 FY13 • Dominated by fruit and herbal flavours, typical alcohol strength being 30% Haryana Bihar 23 mn cases, -4% CAGR 22 mn cases, 20% CAGR • Regional market with differences in local Rajast sthan n preferences 22 mn cases, 13% CAGR • Variance in penetration West est Bengal levels and local factors Madhya Pradesh 23 mn cases, 20% CAGR presenting at attractive Oris issa 21 mn cases, 6% CAGR 2 mn cases, 5% CAGR stat ate-specific opportuni unities s in East India Chhattis isgarh Maharash shtra - 38 mn 9 mn cases, 11% CAGR cases, 1% CAGR *3- Yr CAGR, based on latest data available
IMIL: BRANDING A GAME CHANGER Paradigm gm shift towards consumerism sm and b branding g fro from m commod oditized country y liquor ~ 41% of population belongs to SEC-D and SEC-E excluding the Siza zable consumer r BPL population base Consumer pull for branded products providing stickiness to Brandi ding on rise se sales volumes Quota systems being gradually reduced Evolv volving market Distribution systems being opened up structure re Move towards quality grain-based IMIL Move fro from m illicit, Health-conscious consumers with increasing income levels toddy shifting from local/ illegal liquor to IMIL ~ 77% of consumption goes unrecorded (average 2003-05), Conversi Co rsion fro from indicating scope for growth via conversion from unreported underre reported (Source: WHO, Adult (15+) per capita consumption)
TABLE OF CONTENTS • Indian Alcobev Sector – A High Potential, High Growth Market • GSL - Leading Spirits Company • Growth strategy to be pan-India 360 ⁰ player • Financial overview • Shareholding and Board of Directors • Annexure 12
EVOLVED FROM ‘ BULK ’ TO UNIQUE ‘ 360º ’ MODEL 2014-15 15 2013 • Entry into attractive East India market, beginning with IMIL in Bihar Raised • Launch of profitable value added by-product (DDGS) investment 2012 • Started construction in East India for greenfield projects from Templeton 2010-11 11 Merged with ADL Initiated 2009 expansion Launched Tie-up with plans in East Nimboo under Jagatjit for 2008 India IMIL Launched bottling Hannibal Tie-up with Launched Legendary 2000 Started bottling USL for Country in the rum for ABD India bottling Club in the segment Commenced Entered the 1996-99 99 whisky Operating bottling at Delhi IMIL segment capacity up Samalkha; market 1994-95 95 by 42.2mn Set-up 2 nd entered BL plant in Launched first Haryana’s IMIL Behror and IMFL brand Set-up market entered India’s first Rajasthan grain based IMIL distillery in market Samalkha (Haryana)
STRONG PERFORMANCE Robust revenue growth at ~ 13 13% CAGR (FY11-15), manufacturing and consumer revenue ratio at ~ 45:55 (average) in last five years Net Revenue e Break ak-up up Revenues in Rs Million MANUFACTURING - 29% REVENUE CAGR 5,857 • Domestic – 34.0 Mn Litres 5,017 4,965 4,891 • International – 12.8 Mn Litres • Third party bottling – 3.3 Mn Cases 3,545 33% 45% 56% 34% 54% CONSUMER • IMFL – 129K cases • IMIL – 8.6 Mn cases 44% 67% 55% 46% 66% FY11 FY12 FY13 FY14 FY15 Consumer Manufacturing
AMONGST THE LARGEST GRAIN DISTILLERS IN INDIA • State of the art manufacturing facilities in Rajasthan and Haryana, annual operating capacity of ~ 90 Mn Litres • Based on ‘multi - pressure’ distillation technology combined with ‘zero discharge’ and ‘integrated evaporation’ ensuring superior quality, higher energy efficiency and lower costs
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