Earnings Presentation Reinventing the GRM Brand Cultivating the future of rice exports H1 FY2019 www.grmrice.com
The GRM Brand today • A leading exporter of rice to the Gulf region, with a majority of exports concentrated in this region Moving towards the next phase of • Exporting high quality traditional basmati varieties of rice to US, UK and growth… other European countries • Launched own brands during FY2018 which are sold at large retailers like ASDA (Walmart UK) andT.J. Morris in the UK • Less than 10% of Revenues come fromValue Added Products Redefined Value Reinventing the Business Proposition Integrated • Diversifying from traditional basmati rice offerings to high margin own brands, specialized and value added Business Model products Niche Product • Targeting value added and ready to eat health Market products in Europe where there is significant demand for such products Increasing Market Traction • Focus on supplying specialized / rare rice varieties and health oriented ready to eat products with signature Enhanced R&D recipes Capabilities 2
Table of Contents Contents Page No. Q2 & H1 FY2019 Performance Highlights 4 – 6 GRM Overseas: At a Glance 7 - 11 Financial Performance 12 – 14 www.grmrice.com 3
Q2 & H1 FY2019 Performance Highlights T otal Revenue (INR Mn.) EBITDA (INR Mn.) PAT (INR Mn.) 28 58 1,468 47 1,391 13 Q2 FY2018 Q2 FY2019 Q2 FY2018 Q2 FY2019 Q2 FY2018 Q2 FY2019 T otal Revenue (INR Mn.) EBITDA (INR Mn.) PAT (INR Mn.) 4,737 138 106 45 4,162 41 H1 FY2018 H1 FY2019 H1 FY2018 H1 FY2019 H1 FY2018 H1 FY2019 Building momentum for the next phase of our growth story… www.grmrice.com 4
Q2 & H1 FY2019 Profit & Loss Q2 Q2 H1 H1 (INR Million) Comments FY2019 FY2018 Y -o-Y % FY2019 FY2018 Y -o-Y % T otal Income from Operations 1,468.3 1,390.6 5.6% 4,162.3 4,737.2 (12.1)% Sales were impacted due to restriction on exports in one of the EBITDA 57.9 46.7 23.9% 138.4 105.7 30.9% key markets in the Middle East EBITDA Margin 3.9% 3.4% 3.3% 2.2% Improvement in EBIDTA margin was EBIT 55.2 41.8 31.9% 130.6 96.0 36.1% attributable to effective cost control EBIT Margin 3.8% 3.0% 3.1% 2.0% measures Finance Cost 9.7 23.6 (59.1)% 48.7 36.0 35.0% PBT 45.5 18.2 149.8% 82.0 59.9 36.8% Effective Tax Rate was higher during the period due to consolidation of PBT Margin 3.1% 1.3% 2.0% 1.3% UK subsidiary’s loss Tax 17.8 5.5 223.0% 36.7 18.5 98.4% PAT 27.7 12.7 118.1% 45.3 41.4 9.2% The growth in PAT was largely PAT Margin 1.9% 0.9% 1.1% 0.9% attributable to decrease in Finance Costs by 59%YoY Basic EPS 7.52 3.45 117.7% 12.27 11.23 9.3% www.grmrice.com 5
Q2 FY2019 Updates GRM Overseas has partnered with TESCO and is set to expand its presence in the UK TESCO is UK’s largest grocery store chain Instrumental in GRM Presence at strengthening 220 TESCO GRM’s presence stores in the UK Market Sales at TESCO Himalaya River expected to drive available in 5 kg revenue & 10 kg variants growth Focused on growth in the UK Market and building brand value www.grmrice.com 6
GRM Overseas: At a Glance A Wealth of Export Oriented Global Standards Experience Stringent proactive quality Around 90% of our Revenues Over 40 years in the Rice control procedures in place are generated from exports to business with a legacy of which are in accordance with the Middle East; we are also supplying products of the International requirements focused on exports to US & highest quality UK Diversified Basket Robust Financial Moving up the Performance Value Chain of Rice Products Focused on high quality value A variety of rice offerings Revenues of INR 9,442 mn in added offerings such as catering to a mix of consumer FY2018, an increase of 60% branded rice varieties, preferences basmati, specialised YoY, Net Profit of INR 119 branded basmati, organic rice products and value added mn, growth of 112% YoY. products and ready-to-eat products “GRM has always believed in delivering the best. We are constantly focused on raising the standards…” www.grmrice.com 7
Product Portfolio Market Segment Product Offerings Key Customers Basmati Red Rice, Black Rice, Smoked Rice, Specialised Folk rice varieties Targeting speciality stores across Europe. Organic Rice, Rice based ready to eat health Value Added Increasing customer preferences for health products and Retorts food products in European markets. Strategically moving towards more value add products www.grmrice.com 8
Our Recipe for Success Procurement Processing Distribution Channels • Strong relationships with local farming • Factory equipped with three milling • Sales & distribution offices in the UK & communities plants, each with a capacity of 20 tons USA per hour with shipping capacities located at Mundhra port • Access to best quality of produce • Network of 8 distributors and agents in the Middle East • Labs include moisture meters, labde- • Generally procurement undertaken huskers, electronic Vernier Calipers, with spot payments, no long term • Network of 668 supermarket stores precision electronic weighing scales, contracts and 103 ethnic stores in UK paddy separators and lab-polishers • Partnered with Certified Grower • Strong focus on quality control Group consisting of 956 farmers, with farming area of 1881 Hac., and certification of NPOP+NOP • Homegrown ERP systems in place to enable traceability of product from the shelf to the farm, essential for • Major procurement season during stringent western markets October to December every year Best in class procurement and processing facilities with a global distribution network www.grmrice.com 9
Recent Launches Objective: T o bring natural foods grown locally by farmers who do not use chemicals to affect the product yield • • Target Market: The fast growing health conscious population in particularly Europe / USA / Australia Strategically moving towards more value add products www.grmrice.com 10
Key Highlights • Achieved a new milestone in our 40 year history in FY 2018 by starting supply of own branded products to European retailers Our customers currently include ASDA (Walmart UK), T.J. Morris and B&M in the UK; Albert Heign in Holland and Metro in o Poland GRM has recently entered into an agreement with TESCO UK to place its own brand of basmati rice ‘Himalaya River’ in o TESCO UK stores. Starting September 2018, ‘Himalaya River’ basmati rice will be available in 5kg and 10 kg pouches in around 220 TESCO stores across the UK Our Recent Launches include Tanush, Tanoush, 1121 Cream Sella and Gianna which are premium basmati rice offerings geared at • the fast growing health conscious population in particularly Europe / USA / Australia • Expanded exports to more than 25 new countries. • T echnology tie up with a leading organic products company to develop specialized organic food products Launching value added products and expanding business to new countries to drive future growth www.grmrice.com 11
Financial Trends EBITDA (INR Mn.) Revenue (INR Mn.) 3.7% 9,442 4.2% 4.0% 3.4% 3.3% 5,912 5,684 2.2% 4,737 4,162 3,557 240 142 202 350 106 138 2015 2016 2017 2018 H1FY2018 H1FY2019 2015 2016 2017 2018 H1FY2018 H1FY2019 EBITDA EBITDA Margin Basic EPS PAT (INR Mn.) 32.13 1.3% 1.1% 0.9% 0.9% 0.8% 15.14 0.6% 56 12.38 12.27 119 11.23 46 45 41 5.56 21 2015 2016 2017 2018 H1FY2018 H1FY2019 2015 2016 2017 2018 H1FY2018 H1FY2019 PAT PAT Margin www.grmrice.com 12
Key Ratios Continuous focus on enhancing shareholder’s return... Interest Coverage (x) ROE % ROCE % 22.3% 25.3% 2.7x 2.7x 20.0% 2.2x 18.9% 1.9x 16.4% 11.6% 13.3% 6.0% FY2017 FY2018 H1 H1 FY2017 FY2018 H1 H1 FY2017 FY2018 H1 H1 FY2018 FY2019 FY2018 FY2019 FY2018 FY2019 During the year, management continued its focus on penetrating new markets with value added products Steady improvement in return ratios www.grmrice.com 13
Key Balance Sheet Items T otal Shareholders' Funds (INR Mn.) 563 518 421 (INR Million) H1FY2019 FY2018 FY2017 365 344 299 Short Term Debt 13 2,335 1,496 Long Term Debt 610 583 484 T otal Debt 623 2,918 1,980 2014 2015 2016 2017 2018 H1FY2019 Cash and Cash Equivalents 35 11 18 Net Debt 587 2,907 1,963 Return on Equity (ROE) % 25.3% T otal Shareholder Equity 563 518 421 16.4% 16.2% 14.2% 14.2% Net Debt to Equity (x) 1.0x 5.6x 4.7x 5.8% Interest Coverage Ratio (x) 2.7x 2.2x 1.9x 2014 2015 2016 2017 2018 H1FY2019 www.grmrice.com 14 Note – ROE % for H1FY2019 on an annualized basis
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