[PPT] - Heritage Foods Limited Financial Results Q4FY16 Hyderabad, 23 rd May PowerPoint Presentation

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Heritage Foods Limited

Financial Results – Q4FY16

Hyderabad, 23rd May 2016

External Presentation

Stock Code: BSE: 519552 NSE: HERITGFOOD REUTERS: HEFI.BO / HEFI.NS BLOOMBERG: HTFL IN

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Dairy Industry in Limelight

2013 2014 2015 Nestle invests in Indocon Agro. Hatsun Agro has acquired Jyothi Dairy. Le Groupe Lactalis acquires Tirumala Milk Products. Prabhat Dairy, a milk and dairy products company, gets listed on the Stock Exchanges. Bring Home Health & Happiness A decade back PE investment in Dairy Industry was 2%.

94% Dairy Industry, 6%

PE Investment :

50 100 150 200 2000 2015 2020 78 146 185

Milk production (MT)

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Segment-wise Turnover in FY16

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Dairy 71.95% Retail 23.71% Agri 3.89% Bakery 0.33% Renewable Energy 0.12%

Turnover(%)

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Key Highlights

Crossed Rs 23,000 Mn Turnover mark in FY16 at Rs 23,806 Mn. Contribution from VAD products is 21%

f Dairy

Turnover. EBITDA losses in Retail down from Rs 138 Mn in FY14 to Rs 43 Mn in FY16. Number of Retail stores crossed 100 mark in FY16 at 110 stores. Dairy EBITDA crossed Rs 1000 Mn mark in FY16 at Rs 1,372 Mn. Bring Home Health & Happiness

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Key Financial Highlights - Dairy

Industry Positioning –

No. 1 in AP and

Telangana, with in top 3 brands in South India. Revenue of Rs. 17,688 Mn in FY16 and Rs. 4,598 Mn in Q4FY16. Strong ROCE of 54% in FY16 and 14% in Q4FY16. EBITDA of Rs. 1,372 Mn in FY16 and Rs. 349 Mn in Q4FY16. Bring Home Health & Happiness

1219 1137 879 1372 8.58% 7.43% 5.65% 7.76% 7.60% 6.77% 3.68% 5.97%

1 2 3 4 5 6 7 8 9 10 200 400 600 800 1000 1200 1400 1600 FY13 FY14 FY15 FY16

EBITDA(Rs Mn) EBITDA Margin % PBT Margin %

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Key Financial Highlights - Retail

Appointed KPMG to scout for Strategic Investors.

No. of stores at

110, up by 20%. Revenue of Rs. 5,829 Mn in FY16 and Rs. 1,659 Mn in Q4FY16. Total Carpet Area at 3.90 lakh sq. ft up by 15%. Bring Home Health & Happiness

166 217 212 256 338 390 1113 1040 1101 1195 1160 1158

950 1000 1050 1100 1150 1200 1250 50 100 150 200 250 300 350 400 450 FY11 FY12 FY13 FY14 FY15 FY16

Total Carpet Area('000 Sqft) Average Stores Sales (Rs/Sqft/month)

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Milk Collection and Processing

Aggregators Bulk Coolers: 92 Chilling Plants: 143 Processing Plants: 14 Vehicles: 1410 Agents: 5750 Household Serviced Daily: 11,25,000

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Relations with farmers

Facilitating High Quality feed. Arranging Cattle Insurance. Operating Mobile Veterinary Clinics. Certificate in Dairy Farming. Facilitating Loans from Banks. Creating Farmers Welfare Fund. Bring Home Health & Happiness

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Liquid Milk Processing

FY16 FY15

11.36 9.69

FY16 FY15

30.90 31.79

FY16 FY15

36.55 37.21

Q4FY16 Q4FY15

11.87 10.76

Q4FY16 Q4FY15

30.95 32.72

Q4FY16 Q4FY15

36.28 37.91

Milk Collection (llpd) Milk Procurement cost per liter (Rs) Selling price per liter (Rs) Bring Home Health & Happiness

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Value Add Products

JV with European Partner by Dec’16. To offer entire range of Value Added Products. Bring Home Health & Happiness

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200 400 600 800 1000 1200 Q1FY16 Q2FY16 Q3FY16 Q4FY16 1093.00 883.00 785.00 954.00

Turnover (Rs in Mn)

1000 2000 3000 4000 FY14 FY15 FY16 2280.00 3042.10 3716.00

Turnover (Rs in Mn)

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Changing Lifestyle

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90 100 110 120 130 2001 2011 102.86 121.06

Population Growth with growing Urban Population(Crs)

20,000 40,000 60,000 80,000 2005 2014 24,143 74,380

Per Capita Income(Rs)

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Geographical Spread

States

Ave. Milk

Procurement LPD Milk Sales LPD

Andhra Pradesh 615,521 196,554 Telangana 159,601 269,657 Tamil Nadu 181,755 144,818 Karnataka 16,393 117,184 Maharashtra 88,368 57,487 Kerala

11,351

Odisha

10,696

Haryana/Delhi

13,941

Rajasthan 74,105

Total

1,135,744 821,688

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Geographical Spread

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States Ice Cream LPD Curd Kgs/day

Andhra Pradesh 1,867 81,373 Telangana 2,972 37,391 Tamil Nadu 715 28,764 Karnataka 373 23,147 Maharashtra 618 185 Kerala

762

Odisha 205 2,803 Haryana/Delhi

2,417

Rajasthan

Total

6,750 176,842

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Geographical Presence

1 plant 1 plant 1 plant 1 plant 10 plants

6. Pamarru

Yendagandi (Via), Pamarru East Godavari Dist, AP.

7. Bayyavaram

Bayyavaram Village, Kasimkota Mandal, Vishakhapatnam Dist, AP.

8. Bobbili

Mettavalasa Village, Bobbili Mandal, Vizianagaram Dist., AP.

9. Narketpally

Cherugattu Village, Narketpally, Nalgonda, AP.

10. Uppal

C-10, Road No: 7, IDA Uppal, Hyderabad – 500039.

11. Vadamadurai,

Morepatti Village, Dindigul Dist., Tamil Nadu – 624802.

12. Bangalore

Yadavanhalli Village, Bangalore(South), Karnataka – 562107.

13. Sangvi

Vijayanagar Sangvi, Satara Dist., Maharashtra.

14. Rai

Sonepat, Haryana.

1. Main Dairy Plant - Gokul

Kasipentla Village, Chittoor Dist., AP – 517112.

2. Chittoor

Sundarajapuram Village, E.R Palli Post, G.D Nellore Mandal, Chittoor Dist., AP – 517125.

3. B. Kotha Kota

Beerangai Village, Sankarapuram (Post)

B. Kotha Kota Mandal,

Chittoor Dist., AP – 517370.

4. Bhattiprolu

Battiprolu Village & Mandal Guntur Dist., AP – 522256.

5. Kalluru

Korlagudem (V), Kalluru (M), Khammam Dist., AP.

Production Plants :

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Financial Highlights(Segment-wise)

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Particulars (Rs. in Mn) Q4FY16 Q4FY15 YOY % Turnover (incl. other op. income) Dairy 4,597.60 4,040.30 13.79 Retail 1,658.60 1,347.20 23.11 Agri 262.20 202.20 29.67 Bakery 19.80 18.00 10.00 Renewable Energy 9.70 7.80 24.36 Total 6,547.90 5,615.50 16.60 Less: Inter SR 220.80 175.30 25.96 Net Turnover 6,327.10 5,440.20 16.30 EBITDA Dairy 348.50 283.00 23.14 Retail 39.10 32.00 22.19 Agri 4.30 1.70 152.94 Bakery (0.80) 0.70 (214.29) Renewable Energy 7.30 4.90 48.98 Total 398.40 322.40 23.57 PBT Dairy 269.50 203.30 32.56 Retail 6.50 (2.10) (409.52) Agri (2.10) (4.40) (52.27) Bakery (3.00) (1.20) 150.00 Renewable Energy 2.80 (0.50) (660.00) Total 273.70 195.20 40.22 Dairy Margins EBITDA 7.58% 7.00% 8.29 PBT 5.86% 5.03% 16.50

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Financial Highlights(Segment-wise)

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Particulars (Rs. in Mn) FY16 FY15 FY14 FY13 Turnover (incl. other op. income) Dairy 17,688.00 15,558.60 13,281.90 12,686.20 Retail 5,828.60 4,939.70 3,779.30 3,265.70 Agri 956.80 840.00 678.30 399.40 Bakery 81.20 58.90 36.60 40.60 Renewable Energy 30.40 25.70 7.70

Total

24,585.10 21,422.90 17,783.90 1,639.90 Less: Inter SR 779.20 693.20 563.50 373.80 Net Turnover 23,805.80 20,729.70 17,220.40 16,018.10 EBITDA Dairy 1,372.00 878.70 1,136.70 1,218.60 Retail (42.90) (23.10) (138.20) (167.60) Agri 12.70 10.30 (7.40) (6.60) Bakery 2.10 (0.20) (4.90) (10.20) Renewable Energy 20.80 15.20 0.30

Total

1,364.70 880.80 986.50 1,034.30 PBT Dairy 1,056.80 573.10 898.80 964.60 Retail (178.20) (148.20) (231.90) (272.80) Agri (13.90) (16.60) (34.70) (37.60) Bakery (6.20) (8.50) (11.20) (17.70) Renewable Energy 1.40 (8.50) (8.90)

Total

859.80 391.40 612.10 636.50 Dairy Margins EBITDA 7.76% 5.65% 8.56% 9.61% PBT 5.97% 3.68% 6.77% 7.60%

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Dairy Financials

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FY16 FY15

17,688.0115,558.57

FY16 FY15

1,372.00 878.70

FY16 FY15

1,957.37 1,868.74

Q4FY16 Q4FY15

4,597.65 4,040.28

Q4FY16 Q4FY15

348.50 283.00

Q4FY16 Q4FY15

1,957.37 1,868.74

Turnover (Rs. in Mn) EBIDTA (Rs. in Mn) Capital Employed (Rs. in Mn)

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Product Categories

Pouch milk Pouch butter milk Pouch curd Ice-cream Cheese Paneer Cooking butter Ghee Cup Curd

Category 1 : Category 2 : Category 3 :

Flavored milk

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New Markets

Planning to acquire another plant on Mumbai Gujarat highway. Delhi market size is 65 lakh liter per day, Mumbai market size is 55 lakh liter per day. Has set up a 1,00,000 liter per day plant near Delhi. Mumbai Bring Home Health & Happiness

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Delhi

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Retail

No. of Stores

FY16 FY15 110 92

Q4FY16 Q4FY15 110 92

No. of Stores

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212 256 338 390 50 100 150 200 250 300 350 400 450 FY13 FY14 FY15 FY16

Total Sqft. ('000)

173
138
23
43
200
180
160
140
120
100
80
60
40
20

FY13 FY14 FY15 FY16

EBITDA (Rs in Mn)

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Key Metrics - Retail

Particulars FY16 FY15 YOY %

No. of stores

110 92 19.57 Total carpet area('000 sqft) 390 338 15.29

Avg. store sales(Rs/sqft/month)

1,158 1,160 (0.19) Revenue Break-up(Rs mn): Heritage Fresh Stores 4,920 4,232 16.28 Institutional, General Trade & Others 405 324 25.13 Other Operating Income 510 396 28.93 Total Revenue from Operations (Rs mn) 5,836 4,951 17.87 Total Gross Profit(Rs mn) 1,149 979 17.36 Gross margin(%) 19.69% 19.77% (0.39) Gross margin Heritage Fresh(%) 21.29% 21.24% 0.24 EBITDA at store level(Rs mn) 400 354 13.01 EBITDA margin(%) 6.85% 7.16% (4.12) Regional & Corporate Overheads 446 377 18.45 Overheads/sft/month 105 103 1.68 EBITDA(Rs mn) (43) (23) 86.96

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Key Metrics - Retail

Particulars Q4FY16 Q4FY15 YOY %

No. of stores

110 92 19.57 Total carpet area('000 sqft) 390 338 15.29

Avg. store sales(Rs/sqft/month)

1,162 1,113 4.40 Revenue Break-up(Rs mn): Heritage Fresh Stores 1,311 1,118 17.28 Institutional, General Trade & Others 158 94 68.19 Other Operating Income 198 149 32.96 Total Revenue from Operations (Rs mn) 1,667 1,361 22.50 Total Gross Profit(Rs mn) 357 296 20.92 Gross margin(%) 21.45% 21.73% (1.29) Gross margin Heritage Fresh(%) 23.73% 23.35% 1.64 EBITDA at store level(Rs mn) 155 128 20.88 EBITDA margin(%) 9.28% 9.40% (1.33) Regional & Corporate Overheads 116 96 20.54 Overheads/sft/month 102 95 7.31 EBITDA(Rs mn) 39 32 22.19

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Vision

Appointed M/s. KPMG as Advisor for induction of a suitable Strategic Partner/Investor for Retail Business. To achieve Rs 6000 crore turnover by 2020. To achieve PAT breakeven for Retail by FY17. To improve contribution of VAD products in Dairy business to 40%. Bring Home Health & Happiness

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