VADILAL INDUSTRIES Q1 FY18 Results Presentation
Disclaimer Certain statements in this document may be forward-looking statements. Such forward-looking statements are subject to certain risks and uncertainties, like regulatory changes, local political or economic developments, and many other factors that could cause our actual results to differ materially from those contemplated by the relevant forward-looking statements. Vadilal Industries will not be in any way responsible for any action taken based on such statements and undertakes no obligation to publicly update these forward looking statements to reflect subsequent events or circumstances. 2 \ 28
Table of Contents 04 Q1 FY18 Financial Performance 10 Financial Performance Trends 15 Vadilal Industries Overview 25 Outlook 3 \ 28
Q1 FY18 Performance
Chairman’s Message Commenting on Q1FY18 performance, Mr. Rajesh Gandhi, Chairman and Managing Director, Vadilal Industries Limited (VIL) said: “During Q1, we have reported revenue growth of 20%. This includes one time additional, GST-related shipments to Vadilal Enterprises Limited at the end of the quarter. Net of these shipments, the business delivered about 10% growth. Domestic business trajectory was normal, bearing some impact of slower consumption growth trend seen over the past year. Revenue contribution from exports – that expanded from 7.2% to 9.5% in 2016-17 – further witnessed y-on-y growth of 56% in Q1. Exports growth was driven by 308% increase in US subsidiary sales to $1.7 million in Q1. We are leveraging existing ice cream manufacturing facilities and retailer relationships, initially established for packaged foods business, to create this growth opportunity. We see US sales make a much larger contribution to the business over the next few years as the Indian diaspora, an affluent community of over three million people, shows strong acceptance of our high quality products. Going forward, we will continue to drive growth initiatives across markets; raw material prices that have remained at higher levels this year may be expected to rationalize; and margin expansion will be driven by our continued focus on personalized ice cream packs and higher contribution from ice cream exports. ” 5 \ 28
Financials – Q1 FY18 Performance Revenue • In Q1FY18, Revenues have improved by 20.3% y-o-y 242.9 growth on account of 56% y-o-y higher revenues in 201.9 Export business driven by 300% ice cream volume growth. Revenues also include, GST-related shipments to • Vadilal Enterprises at the end of the quarter. Q1 FY17 Q1 FY18 Domestic Exports + USA 23.1 219.8 14.7 187.2 Q1 FY17 Q1 FY18 Q1 FY17 Q1 FY18 Consolidated financials in Rs. Crore 6 \ 28
Financials – Q1 FY18 Performance EBITDA 46.4 • Operating margins for the quarter were impacted by higher input costs. 43.8 – Input costs based on milk prices are expected to increase based on the recent uptrend. Q1 FY17 Q1 FY18 – Undertook an 3.5% price increase in the domestic market to counter increasing costs – Building and expanding distribution channel across the lucrative export markets. PAT • Continue to focus on debt rationalization. Overall 24.7 debt as on June 30 th 2017 was at Rs. 102.8 crore as compared to 153.4 crore at March 31 st 2017 23.7 • PAT for FY17 increased by 4.6% y-o-y on account higher contribution from the Export market. Q1 FY17 Q1 FY18 Consolidated financials in Rs. Crore 7 \ 28
Marketing initiatives – Thrust towards Premiumization • Parineeti Chopra has been appointed brand ambassador for Vadilal over three years. • Unveiled new products endorsed by the brand ambassador, with the expanded range being evaluated on an ongoing basis. 8 \ 28
Financials Performance Trends
Financials Performance Trends Revenue 491.7 461.7 406.3 367.3 323.6 FY13 FY14 FY15 FY16 FY17 Ice Cream Processed Foods 438.7 404.8 73.9 341.7 65.8 60.2 294.0 54.6 265.5 50.4 FY13 FY14 FY15 FY16 FY17 FY13 FY14 FY15 FY16 FY17 Consolidated financials in Rs. cr 10 \ 28
Financials Performance Trends EBITDA 80 59.4 58.8 60 45.8 44.1 41.7 Consumer behavior is transitioning with 40 increasing acceptance for western desserts. With 20 improving consumer sentiment and stable input 0 costs VIL is likely to maintain its growth FY13 FY14 FY15 FY16 FY17 trajectory. VIL is now reaping benefits of substantial PAT investments in capacity, technology, brand and 18.7 20.0 distribution. 14.8 15.0 As volumes enhance, existing capacity gets 10.0 utilized more efficiently and margins which were 5.0 2.4 5.0 2.3 depressed in the past are improving. 0.0 FY13 FY14 FY15 FY16 FY17 Consolidated financials in Rs. cr 11 \ 28
Financials Performance Trends – Balance Sheet Networth Debt Other Non-Current Liabilities Liabilities 145.8 205.0 127.1 180.2 113.1 113.5 151.5 148.3 21.6 20.6 16.5 15.2 FY14 FY15 FY16 FY17 FY14 FY15 FY16 FY17 FY14 FY15 FY16 FY17 Other Non-Current Net Fixed Assets Net Current Assets Assets 86.2 232.3 231.4 75.6 Assets 69.0 15.1 14.8 56.6 14.3 226.1 11.9 225.1 FY14 FY15 FY16 FY17 FY14 FY15 FY16 FY17 FY14 FY15 FY16 FY17 Consolidated financials in Rs. cr 12 \ 28
Financials Performance Trends – Cash Flows Operating Cash flow Free Cash Flow 51.8 62.2 56.6 41.3 51.7 23.0 28.5 9.4 FY14 FY15 FY16 FY17 FY14 FY15 FY16 FY17 Inventory up by Rs.30 crore • • Interest down by Rs.5 crore to Rs. 15.5 crore in FY17 • Capex up by Rs.10 crore y-o-y Standalone financials in Rs. cr 13 \ 28
Vadilal Industries Overview
Overview • Currently managed by fourth • Top 3 ice-cream brand in the • Leadership in Gujarat, Rajasthan, generation promoter family country, 150+ flavors UP, Uttarakhand, Haryana and Chandigarh • Selected India’s most trusted ice • 300 SKU’s of cones, candies, bars, cream brand in 2013 and 2014 by ice lollies, cups, family packs, the Brand Trust Report economy packs • 16 states, 61 CNF’s, over 1200 • Products reach 45 countries distributors, 290 distribution across four continents vehicles, 45,000 +retail outlets • 50% contribution from exports in processed foods segment 15 \ 28
Indian Ice Cream Market Ice cream is transitioning Transition from seasonal Increased disposable Consumers receptive to from periphery to to year-long incomes and spending on high quality mainstream, from consumption discretionary spending products that meet their occasional indulgence to driving secular demand rising aspirations snacking option growth Changing Evolving Growing Premiumization demand perceptions affordability trends patterns Shift from limited Local brands competing India’s current annual Rapid expansion of retail portfolios of traditional with international per capita consumption network leading to products to innovative, players, leading to of 400 ml vs 2.3 liters product availability and global-standard offerings market expansion world average, Chinese convenience consumption is 20X India’s Innovative Expanding Significant Nationwide product customer headroom for retail expansion development choices growth 16 \ 28
Vadilal: Growth Strategies Retail Investments New Product Development Brand Building • 5,000 new sales Initiatives Geographical outlets planned in • Constantly FY18 Expansion innovating to roll • 100 more out new products in • Seen as one of the distributors ice cream segment most trusted ice expected to be cream and leading • Expanding Targeting • added in FY18 food brand in India footprint in North expansion of and East regions of Investments in new • market share in • Undertaken India technologies premium/super- campaigns to premium segment strengthen social • New production media presence facility expected in East India Rural marketing • initiatives Expanding • distribution footprint in tier 3/4 cities and rural markets 17 \ 28
Ice Creams - Brands Portfolio 18 \ 28
Processed Foods Business • Global business selling to 45 countries in four continents Strong distribution to Indian diaspora, being further developed • with new product launches • Expanded export markets from 12 SKU’s supplied to seven countries in 1991 to 300+ SKU’s to 45 countries currently • Expanded domestic market from 18 SKU’s sold in Gujarat in 2000 to 75+ SKU’s available in five Indian states currently – Vadilal Quick Treat brand has expanded presence to Maharashtra/Mumbai • Aggressively expanding frozen food line, exited from low margin, mango pulp business 19 \ 28
Processed Foods - Brands Portfolio Processed foods products are • marketed under the brand name ‘Quick Treat’ Portfolio includes frozen • vegetables, ready-to-eat/ready- to-serve frozen snacks, Indian breads and curries • Positioned to assist Indian kitchens with traditional home cooking 20 \ 28
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