Globus Spirits Limited — Earnings Release 2019

Nov 5, 2018

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Q2FY19 Earnings Presentation

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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 developmentsandeconomic 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 materiallyfromourexpectations.

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.

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COMPANY HIGHLIGHTS

360°ALCOBEVPLAYER –Present across Distillery, IMIL, IMFL and Franchise Bottling

LARGESTGRAINBASEDDISTILLERSININDIA withcapacityof ~ 150million bulk liters

MANUFACTURINGEXCELLENCE – Stateoftheartmanufacturingfacilitieswith‘zerodischarge„and‘integratedevaporation„

ESTABLISHEDCONSUMERBUSINESSIN NORTHINDIA -44% contributionfromconsumer-facingIMIL(Q2FY19)

• #1private IMILcompanyinRajasthanwithmarketshareof29%

• 4[th] largest IMILcompanyin Haryanawith7%marketshare

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Strongestablishmentincore business,marchingtowardsgrowthin IMFL SEGMENT with “UNIBEV”

HEALTHY BALANCE SHEET – Debt-to-Equity Ratio of 0.61x in H1FY19

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AGENDA

Q2FY19Performance	Q2FY19Performance
Performance Highlights	5
Key Developments	6
Financials	7
Financial Performance	9

Annexure	Annexure
Company Overview	14
UNIBEV	22
Shareholding Pattern	24

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– Q2 FY19 PERFORMANCE HIGHLIGHTS

• Total Income (net of excise duty) stood at Rs.2,263mn in Q2FY19,11%growthRs.2,042against Q2FY18

Q2 FY19

Q2 FY18

11%

• EBITDAfor thequarterstood atRs.206mn

Total Income
(Net)

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Rs. 206 mn Rs. 204 mn
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EBITDA

• PATatRs.28mn comparedtoRs. 27mn in Q2FY18

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Rs. 28 mn Rs. 27 mn
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PAT

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KEY DEVELOPMENTS

• RecommencementofOperationsatBihar Facility

• Recommenced operations at the manufacturing plant located in Bihar w.e.f October 09, 2018; operations were discontinuedw.e.f financialyear2017-18due torestrictiononmanufactureof ENA inBihar

• Thecapacityof the facilityis 80 KLPD perday

• Companyto produceBulkAlcoholand Ethanolinthefacility

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• ParticipationinBids for EthanolTender

• EthanoltobemanufacturedinfacilitiesofHaryanaandBihar

• Theaveragepriceofethanol standat ~Rs.47.13 significantlyhigherthanprevailingENApricesinthesestates

• Unibev brands launched inTelangana and WestBengal

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• LaunchedGovernor„sReserve,OaktonandL„affaire inTelanganainSep„18

• WhiskiesGovernor„sReserve,Oakton launchedinWestBengalinsecondhalfofOct„18

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Q2 FY19: PROFIT & LOSS STATEMENT

									Standalone
Particulars (In Rs MN)	Q2 FY19	Q2 FY18	YoY (%)	Q1 FY19	QoQ	H1FY19	H1FY18	YoY	FY18
GrossRevenues	2491.51	2224.23	12.0%	2582.11	-3.5%	5073.61	4664.39	8.8%	9,322.1
Less-Excise duty	240.08	208.35	15.2%	267.05	-10.1%	507.12	324.83	56.1%	771.4
Net Revenuesfrom Operations	2251.43	2015.88	11.7%	2315.06	-2.7%	4566.49	4339.57	5.2%	8,550.7
Other Income	11.56	26.31	-56.1%	7.71	49.9%	19.27	37.23	-48.2%	54.0
Total Income	2262.99	2042.20	10.8%	2322.77	-2.6%	4585.76	4376.79	4.8%	8,604.7
Total Expenditure	2057.10	1838.26	11.9%	2051.18	0.3%	4108.27	3991.06	2.9%	7,856.0
Consumption of Material	1341.61	1176.96	14.0%	1362.71	-1.5%	2704.33	2684.81	0.7%	5,169.0
Employee Cost	63.60	57.32	11.0%	55.72	14.1%	119.32	111.73	6.8%	228.1
Other Expenditure	651.88	603.99	7.9%	632.74	3.0%	1284.62	1194.52	7.5%	2,458.9
EBITDA	205.89	203.93	1.0%	271.60	-24.2%	477.49	385.74	23.8%	748.7
Depreciation & Amortisation	91.27	93.77	-2.7%	90.11	1.3%	181.37	179.89	0.8%	361.9
EBIT	114.62	110.16	4.0%	181.49	-36.8%	296.12	205.85	43.8%	386.8
Finance Charges	70.82	68.27	3.7%	65.18	8.7%	136.00	139.24	-2.3%	271.4
PBT	43.80	41.89	4.6%	116.31	-62.3%	160.12	66.62	140.4%	115.4
Tax Expense (Current, Deferred Tax)	15.71	14.19	10.7%	40.90	-61.6%	56.61	23.23	143.6%	45.2
PAT (From ordinary activities)	28.10	27.71	1.4%	75.41	-62.7%	103.51	43.38	138.6%	70.2

Note : The Company has aligned its policy of Revenue Recognition with Ind AS 115 –“Revenue from contracts with Customers” pursuant to which it is no longer reporting ‘Income from Brand Franchisee„ separately in the revenues Consequent to these changes, there is no impact on the total equity and profit

Note: Tax expense -Deferred tax is net of Minimum Alternate tax credit of Rs. 9.41 Mn and Rs. 35.84 Mn for Q2FY19 & H1FY19

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Q2 FY19: KEY RATIOS

						Standalone
Key Ratios as a % of Total Revenue	Q2 FY19	Q2 FY18	Q1 FY19	H1FY19	H1FY18	FY18
EBITDA	9.1%	10.0%	11.7%	10.4%	8.8%	8.7%
PAT	1.2%	1.4%	3.2%	2.3%	1.0%	0.8%
TotalExpenditure	90.9%	90.0%	88.3%	89.6%	91.2%	91.3%
Rawmaterial	59.3%	57.6%	58.7%	59.0%	61.3%	60.1%
EmployeeCost	2.8%	2.8%	2.4%	2.6%	2.6%	2.7%
OtherExpenditure	28.8%	29.6%	27.2%	28.0%	27.3%	28.6%
Interest	3.1%	3.3%	2.8%	3.0%	3.2%	3.2%
Depreciation	4.0%	4.6%	3.9%	4.0%	4.1%	4.2%
OtherIncome	0.5%	1.3%	0.3%	0.4%	0.9%	0.6%

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- September 2018 Balance Sheet Highlights

Particulars (In Rs MN) Sep 2018 Mar 2018 Liabilities Shareholders„ Fund 3,897.62 3,793.65 Non-Current Liabilities 2,171.68 1,737.68 Long term borrowings 1,849.03 1,434.87 Deferred tax liabilities (Net) 279.58 258.69 Long-term provisions 17.05 16.98 Other Non-current liabilities 26.02 27.14 Current Liabilities 1,755.60 2,209.91 Short Term borrowings 208.52 785.71 Trade payables 1,052.98 961.96 Other financial liabilities 387.38 378.74 Other current liabilities 85.28 68.67 Current tax liabilities (net) 6.60 0.00 Short-term provisions 14.84 14.84 Total Liabilities 7,824.90 7,741.24		Particulars (In Rs MN) Sep 2018 Mar 2018
		Assets
		Net fixed assets 5,971.30 6,090.10
		Non-current investment 49.49 49.46
		Financial assets 296.10 207.99
		Financial/ Income Tax assets 30.72 31.92
		Other non-current assets 164.54 153.62
		Current Assets 1,312.75 1,208.15
		Inventories 638.84 603.81
		Trade Receivables 547.34 483.51
		Cash and Equivalents 33.92 16.31
		Short-terms loans and advance 6.83 10.27
		Bank balance other then Cash & Equivalents 1.13 7.23
		Other Financial Assets 11.17 10.12
		Other Current Assets 73.53 76.88
		Total Assets 7,824.90 7,741.24

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SEGMENTAL PERFORMANCE

Breakup of Revenue from Operations (Net)

• Revenues from manufacturing business stood at Rs. 1,266 mn in Q2 FY19,againstRs. 971mninQ2 FY18

• Shareof manufacturingbusinessstoodat56%inQ2 FY19

• Shareof consumer business stood at 44% in Q2 FY19 against 52% in thesameperiodlastyear

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IMFL, 0% Bulk Alcohol,
42%
Q2
FY19 Franchisee
IMIL, 44% IMFL
2%
Others, 12%
IMFL, 0%
Q2
Bulk Alcohol,
IMIL, 52%
FY18 36%
Franchisee
IMFL
Others, 11%
2%
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Consumer Manufacturing

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– IMIL STIFF COMPETITION

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Delhi IMIL
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Rajasthan IMIL

Haryana IMIL

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2.33 2.25
0.73
0.12
0.32
0.03
34.10 8.30
778.6 821.0 186.8 97.9
Q2 FY18 Q2 FY19
Q2 FY18 Q2 FY19 Q2 FY18 Q2 FY19
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West Bengal IMIL
0.18
0.15
45.50 57.90
Q2 FY18 Q2 FY19
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• Aggregate IMIL revenues stood at Rs. 985 mn, dip in volumes driven by

Q2 FY19 IMIL Split by Volume (Total 2.78 mn cases)

increasedcompetition

• WestBengalreportedhealthyvolume growth of 22%YoY

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West Bengal
Delhi, 1.0% 6.4%
Haryana,
11.5%
Q2
FY19
Rajasthan,
81.0%
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Figures in Rs Million, Standalone Financials

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MANUFACTURING: BACKBONE TO CONSUMER BUSINESS

Production & Capacity Utilization

• Capacity utilization stood at 91% in Q2 FY19 against 88% in Q2FY18 (excluding Bihar)

• Captive consumption at 45%, with significant scope for conversion from bulk to IMIL/franchiseeinSamalkhaandWestBengal

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88% 91%
16.3 21.8
Q2 FY18 Q2 FY19
Production (Mn BL) Capacity Utilization (%)
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• Franchise Bottling volumes stood at 1.07 mn cases vs. 0.72 mn cases in Q2 FY18 drivenbystrongvolumegrowthin WestBengal

Franchise Bottling

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1.2 1.07
0.72
0.8 0.50
0.21
0.4 0.25 0.30
0.26 0.28
0.0
Q2 FY18 Q2 FY19
Haryana Bottling (Mn Cases) Rajasthan Bottling (Mn Cases)
West Bengal Bottling (Mn Cases)
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Captive Consumption as % of Production
77%
30%
23%
Behror Samalkha West Bengal
Bulk Alcohol
16 22
700.0 36
525.0350.0 722 949 27
175.0
0.0 [918] 0
Q2 FY18 Q2 FY19
Revenue (Rs. Mn) Volumes (Mn BL)
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Figures in Rs Million, Standalone Financials

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COMPANY OVERVIEW

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GLOBUS 360º ALCOBEV PLAYER

• No.1privateplayerinRajasthanIMILwith30%marketshare

• 2.3 mncasessoldinQ2FY19

• No.4privateplayerinHaryanawith7% marketshare

• 0.3 mncasesinsoldinQ2 FY19

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• IncreasingmarketshareinWestBengal

• 0.2 mncasessoldinQ2FY19

• Recommencementof Operationsat BiharFacility

• recommencedcommercial productionof BiharFacility

• Thecapacityof the facilityis 80 KLPD perday

• Companyto produceBulkAlcoholand Ethanolinthefacility

Own Distillery

States where Globus Spirits sells

IMIL:

• Rajasthan

• Haryana

• Delhi

• West Bengal

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LEVERAGING A STRONG 360º BUSINESS MODEL

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360 [o]
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Large, efficient manufacturing operations

• Amongst the largest and most efficient grain-based distillery operations in India with ~ 150 million bulk litres of distillery capacity*

• Present in DDGS – a high-potential coproduct used as Animal Feed

• Well placed to benefit from the Fuel Ethanol blending opportunity in India

• • Bottling for India’s Top 3 IMFL companies

Established consumer business in North India

• Pioneered IMIL branding with launch of NIMBOO brand

• Leading player in Haryana, Rajasthan and Delhi

Unique 360 ⁰ model straddling across the entire alcohol value chain

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GLOBUS PLANS

PRESENT

• ⁰

• • Established 360 model in North India (Haryana & Rajasthan)

• Largest grain based distilleries in India

• Strong IMIL brands that have acceptance and loyalty

• Bottling operations for India„s largest brands of top IMFL players

• Backed by reputed investor, Templeton

FUTURE

• Large market share in IMIL by offering quality products to the consumer

• Establish sustainable premium brands in IMFL

• High capacity utilisation with focus on technology and efficiency at old and new facilities

• Portfolio of high value by-products

NEAR TERM STRATEGY

• Focus on penetrating IMIL in West Bengal

• Launch premium brands of value

• Focus on DDGS, a co-product in the alcohol manufacturing process, in the Indian market

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– EXPANSION INTO EAST BIHAR & WEST BENGAL

• Location advantages like lower raw material costs, higher realizations and other logistical benefits to drive overall profitability

Existing facilities at Haryana & Rajasthan

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Commissioned Greenfield
facilitiesinWest Bengal &
Bihar
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• Capacity of 60 million BL (both states); over 60% of existing Distillery capacity

Severe Alcohol Deficit in West Bengal (mn ltrs) 98 78 20 West Bengal

Consumption Production Deficit

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IMIL BRANDS SHOWCASE

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Nimboo
1 [st ] IMIL brand in India positioned as
awesome mix of natural lemon flavor
with strong yet smooth blend profile
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Heer Ranjha
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Tribute to the most popular
romantic tales of the region . Smooth
blend to enjoy straight up.
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Ghoomar
Tribute to Rajasthani folk dance ;
blend popular in the harsh winter
months of the desert region
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Narangi
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Popular dark spirits„ brand Positioned
as refreshing and juicy as Orange
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UNIQUE COMPETITIVE STRENGTHS

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360°Business Model

• Only company present across full alcobevvalue chain

• Helps capture IMFL growth via franchisee bottling for top IMFL companies

• High utilization, assured captive off-take

• De-risked growth

• High quality maintained with control on entire value chain

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Strong Consumer Portfolio

• Leadership in key states of Rajasthan, Delhi and Haryana

• Achieved sterling success in IMIL branding with Nimboo

• 4 IMIL brands

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Efficient Operations

• State-of-the-art plants across three locations using latest distillation technology, zero discharge and highest grainrecovery in industry

• Supplying to premium brands

• Leadership -mix of experience and young talent

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Healthy Balance Sheet

• Funding for greenfield expansion at Bihar secured via equity

• D/E of 0.64x

• Cash efficient operations

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- ETHANOL A GREAT OPPORTUNITY

Alcohol demand of 6.3bn litres
expected to grow at 12%

Alcohol Demand 2018-19 (Bn Litres)

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Potable ,
Fuel 2.2, 36%
Ethanol,
3.3, 53%
Industrial,
0.7, 11%
Alcohol Demand (Bn Litres)
Potable Industrial Fuel Ethanol
15.4
8.5
3.3 4.2 0.9 1.0
0.7 2.3 0.82.8 3.7 4.8
2018-19 2021-22 2025-36 2029-30
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Strategically located assets to
maximise realisations

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Presence in alcohol deficit/ balanced states – healthy realizations

Opportunity in Ethanol – adding ethanol manufacturing capability

ENA only - Deficit Sate Ethanol + ENA - Surplus State

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MARCHING TOWARDS NEW LEG OF GROWTH THROUGH “UNIBEV”

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UNIBEV: LED BY INDUSTRY VETERAN MR. VIJAY REKHI

Strategy

• Focus on premium IMFL

• Build portfolio of 4-6 niche brands in price segments which contribute max profit and currently only have 2-3 dominant brands

– Premium IMFL Attractive Industry Segment

• Premium IMFL is a highly attractive segment account for over 45% of total profit contribution -

• with just 13% of total volumes ~40 million cases and Rs 2,420 crore gross profit

• Indian premium alcohol market is growing at a steady CAGR of 8% in last 3 years compared to flattish performance of overall IMFL industry

Mr. Vijay Rekhi was the long-time managing director of India„s United Spirits (USL) prior to itstakeoverby Diageoin 2012

At UNIBEV we provide our customers better blends with world-class packaging, to elevate the consumer„s drinking ” experience

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UNIBEV: CURRENT PRODUCT PORTFOLIO

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Governor„s Reserve – 12 years Scotch Whisky

Oakton – 18 years Scotch Whisky

L„Affaire Napoleon – 3 years Brandy

• Presence in Semi-premium whisky segment

• • Segment is about 20m cases

• Presence in Premium whisky segment

• Segment is about 8.5m cases

• Presence in Premium brandy segment

• Segment is about 0.5m cases

“Better brands with world-class packaging”

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SHAREHOLDING PATTERN

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As on September 30, 2018 Outstanding shares – 28.8 mn

Major Non-Promoter Shareholders % shareholding Name % Share

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ABOUT US

Dr. BhaskarRoy

Email: broy@globusgroup.in

Mr. Vikash Verma / Mr. Abhishek Bhatt

Email: vikash.verma@stellar-ir.com / abhishek@stellar-ir.com