Tilaknagar Industries Ltd — Earnings Release 2023

Nov 10, 2022

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November 10, 2022

To, To, BSE Limited National Stock Exchange of India Limited Phiroze Jeejeebhoy Towers, Exchange Plaza, C-1, Block-G, Dalai Street, Bandra-Kurla Complex, Bandra (East), Mumbai 400001 Mumbai-400 051. Scrip Code : 507205 Symbol : TI

Sub : Earnings Presentation for unaudited Financial Results for quarter ended September 30, 2022

Dear Sir/Madam,

Pursuant to Regulation 30 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (the “Listing Regulations” ), please find attached herewith the Earnings Presentation for the unaudited Financial Results for quarter ended September 30, 2022.

The same is also available on our website www.tilind.com.

We request you to take the above information on record.

Thanking you,

Yours faithfully,

For Tilaknagar Industries Ltd.

Digitally signed by DIPTI VARUN DIPTI VARUN TODKAR TODKAR Date: 2022.11.10 20:31:04 +05'30'

Dipti Todkar

Company Secretary & Compliance Officer

Encl: as above

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Tilaknagar Industries Ltd.

(BSE: 507205 | NSE: TI)

11/10/2022

Earnings Presentation Q2 (Jul to Sep 2022) & H1 FY23

Tilaknagar Industries | Q2 (Jul to Sep 2022) & H1 FY23

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Q2 & H1 FY23 PERFORMANCE

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Tilaknagar Industries | Q2 (Jul to Sep 2022) & H1 FY23

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Q2 FY23 – at a glance

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	Q2 FY23 Q2 FY22 Y-o-Y growth	Q1 FY23 Q-o-Q growth	H1 FY23 H1 FY22 Y-o-Y growth
Business performance (in lacs):
Brandy volumes Others Total volumes	22.7 17.0 33.4% 1.6 1.0 56.9% 24.3 18.1 34.7%	16.5 37.8% 1.2 36.0% 17.7 37.7%	39.2 27.5 42.8% 2.8 1.7 64.1% 42.0 29.2 44.0%
NSR (Rs. per case)	1,179 1,081 9.1%	1,157 1.9%	1,170 1,114 5.0%
Financial performance (Rs. Crs):
Revenue from operations (Net) Gross profit Gross margin (%) EBITDA EBITDA margin (%) EBIT Profit / (Loss) after tax	274.50 201.11 36.5% 134.82 98.23 37.2% 49.1% 48.8% 27 bps 31.43 30.54 2.9% 11.4% 15.2% -373 bps 23.21 22.29 4.1% 13.88 11.30 22.8%	229.55 19.6% 103.48 30.3% 45.1% 403 bps 21.72 44.7% 9.5% 199 bps 13.67 69.8% 1.04 1,240.4%	504.05 336.42 49.8% 238.30 174.18 36.8% 47.3% 51.8% -450 bps 53.15 53.91 -1.4% 10.5% 16.0% -548 bps 36.88 37.47 -1.6% 14.92 11.67 27.8%

Tilaknagar Industries | Q2 (Jul to Sep 2022) & H1 FY23

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Debt reduction journey…

…working towards near net debt-free position by FY24

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Debt reduction (Rs. Crs) [(a)(b)(c)] Debt as of 30-Sep-22 [(a)(b)(c)]
37
1,199
EARC Term Loan
48
High-cost trade deposits
Trade Deposits
(interest rate of 18-20% p.a.) of
Rs. 64 crs repaid in H1 FY23
264 Vendor Financing
543
492
449
380
349 361
299
269 ▪ EARC debt is at 9% p.a.
▪ EARC balance debt of Rs. 130 crs will be waived
off on satisfactory repayment
31-Mar-19 31-Mar-21 31-Mar-22 30-Jun-22 30-Sep-22 31-Mar-21 31-Mar-22 30-Jun-22 30-Sep-22
Gross debt Net debt
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(a) Debt adjusted for EARC balance debt of Rs. 130 crs which would be waived off in FY24 on following the repayment schedule

(b) Debt adjusted for EARC balance debt of Rs. 34 crs which has been converted to equity in Apr-21

(c) Debt includes interest bearing trade deposits which is a part of Other Financial Liabilities

Tilaknagar Industries | Q2 (Jul to Sep 2022) & H1 FY23

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Highest quarterly volumes since FY14

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Volume (lacs cases)

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24.3
25
19.5
20 18.1 18.9 18.5 17.6 18.1 18.7 17.7 ▪ 35% volume
17.2
16.3 14.7 14.9 16.5 growth on
15 13.8 13.5 YoY basis
11.1 ▪
31% volume
10 growth vs. Q2
6.0 FY20 (pre-
5 Covid)
0
FY19 FY20 FY21 FY22 FY23
Q1 Q2 Q3 Q4
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Tilaknagar Industries | Q2 (Jul to Sep 2022) & H1 FY23

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Operational highlights

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	Net Revenue (Rs. Crs)	Net Revenue (Rs. Crs)	Net Revenue (Rs. Crs)	Net Revenue (Rs. Crs)	Net Revenue (Rs. Crs)	Net Revenue (Rs. Crs)	Net Revenue (Rs. Crs)
	56	132	168 192 135	201	206 241 230	275			189 336 504 H1 FY21 H1 FY22 H1 FY23
	Q1 FY21	Q2 FY21	Q3 FY21 Q4 FY21 Q1 FY22	Q2 FY22	Q3 FY22 Q4 FY22 Q1 FY23	Q2 FY23
					EBITDA (Rs. Crs)
	2	19	22 10 23	31	32 26 22	31			22 54 53 H1 FY21 H1 FY22 H1 FY23
	Q1 FY21	Q2 FY21	Q3 FY21 Q4 FY21 Q1 FY22	Q2 FY22	Q3 FY22 Q4 FY22 Q1 FY23	Q2 FY23

Tilaknagar Industries | Q2 (Jul to Sep 2022) & H1 FY23

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Management commentary

From the desk of Mr. Amit Dahanukar, Chairman & Managing Director

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• ❑ We are very proud to have delivered a very strong quarter driven by our highest quarterly volumes in the past 8+ years

• ❑ While inflationary headwinds persist, we have been able to expand our EBITDA margin compared to Q1 FY23 on the back of regional mix improvement

• While we expect these headwinds to abate in the medium term, we estimate that these pressures will persist in the immediate short term; over the next quarter or two

• Our aim is to build on our growth through new product innovations and regional expansions, with an eye on sustainable profitability

• ❑ As mentioned in our previous earnings presentation, we continue to adopt multiple mitigation strategies including focus on profitable brands, favorable product & regional mix, cost optimization efforts and improved productivity

• While certain states have given some price increases, we have seen limited impact of the same, due to our low presence in these states

• We are hopeful that we will get industry-wide price increases in our key states

• ❑ In FY23, we have launched 2 new premium products under the Mansion House family of brands; Mansion House Flavoured Brandy and Mansion House Reserve, with an aim to open up the brandy category to a young, experimental and aspirational audience

• ❑ Our debt reduction strategy is also on-track and we expect to be near net debt free by end of FY24

• ❑ I am also glad to share that, today, we have announced a preferential issue to raise an amount of Rs. 100 crs from Think Investments

Tilaknagar Industries | Q2 (Jul to Sep 2022) & H1 FY23

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Extract of Income Statement

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			Y-o-Y		Q-o-Q			Y-o-Y
(Rs. Crs)	Q2 FY23	Q2 FY22	growth %	Q1 FY23	growth %	H1 FY23	H1 FY22	growth %
Revenue from operations (Gross)	596.05	445.35	33.8%	480.52	24.0%	1,076.57	769.48	39.9%
Less: ExciseDuty	321.55	244.23	31.7%	250.97	28.1%	572.53	433.07	32.2%
Revenue from Operations (Net)	274.50	201.11	36.5%	229.55	19.6%	504.05	336.42	49.8%
Other income	0.59	1.33	-55.7%	0.67	-12.1%	1.26	1.52	-17.5%
Total Revenue (I)	275.09	202.44	35.9%	230.22	19.5%	505.30	337.94	49.5%
EXPENSES:
(a) Cost of materials consumed	147.51	94.36	56.3%	121.43	21.5%	268.94	158.16	70.0%
(b)Purchases ofstock-in-trade	0.00	0.00	NM	0.00	NM	0.00	0.00	NM
(c) Changesin inventories of finished goods,work-in-progress and stock-in-trade	-7.83	8.52	NM	4.63	NM	-3.19	4.07	NM
(d)Employee benefits expense	8.98	6.29	42.8%	8.49	5.8%	17.47	13.42	30.2%
(e) Otherexpenses	94.41	61.41	53.7%	73.28	28.8%	167.68	106.85	56.9%
Total Expenses (II)	243.07	170.57	42.5%	207.83	17.0%	450.90	282.50	59.6%
Profit before interest, tax, depreciation and amortisation (I - II)	32.02	31.86	0.5%	22.39	43.0%	54.40	55.43	-1.9%
Finance costs	9.91	15.83	-37.4%	13.30	-25.5%	23.21	30.84	-24.7%
Depreciationand amortisationexpense	8.22	8.25	-0.4%	8.05	2.2%	16.27	16.44	-1.1%
Profit before tax	13.88	7.79	78.3%	1.04	1240.4%	14.92	8.16	82.9%
Tax expenses :
(a) Current tax	0.00	0.00	NM	0.00	NM	0.00	0.00	NM
(b)Tax forearlierperiods	0.00	-3.52	NM	0.00	NM	0.00	-3.52	NM
(c)Deferred tax	0.00	0.00	NM	0.00	NM	0.00	0.00	NM
Total tax expense	0.00	-3.52	NM	0.00	NM	0.00	-3.52	NM
Profit for the period	13.88	11.30	22.8%	1.04	1240.4%	14.92	11.67	27.8%

Tilaknagar Industries | Q2 (Jul to Sep 2022) & H1 FY23

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Extract of Balance Sheet

Extract of Balance Sheet
(Rs. Crs) As at Sep-22 As at Mar-22 ASSETS Non-Current Assets Property,Plant andEquipment 424.3 438.8 Capital Work-in-Progress 100.3 100.2 Right ofUseAssets 2.5 0.2 Other IntangibleAssets 0.3 0.3 Financial Assets Investments 0.0 0.0 Other Financial Assets 27.0 41.4 Non-CurrentTax Assets (Net) 7.1 3.1 Other Non-CurrentAssets 10.9 9.2 Total Non-Current Assets 572.5 593.3 Current Assets Inventories 79.9 72.3 Financial Assets TradeReceivables 243.9 236.8 Cashand Cash Equivalents 42.5 42.7 Other Bank Balances 34.1 27.9 Loans 0.0 0.0 Other Financial Assets 10.4 17.0 OtherCurrentAssets 20.9 23.3 Total Current Assets 431.7 420.0 TOTAL ASSETS 1,004.2 1,013.3	(Rs. Crs) As at Sep-22 As at Mar-22
	EQUITY AND LIABILITIES
	Equity
	Equity Share Capital 165.9 158.6
	Other Equity 61.1 -25.1
	Total Equity 227.1 133.5
	Liabilities
	Non-Current Liabilities
	Financial Liabilities
	Borrowings 329.5 381.0
	LeaseLiabilities 2.0 0.1
	Other Financial Liabilities 38.7 40.2
	Provisions 4.8 4.7
	Other Non-CurrentLiabilities 13.7 14.5
	Total Non-Current Liabilities 388.7 440.5
	Current Liabilities
	Financial Liabilities
	Borrowings 154.6 204.0
	LeaseLiabilities 0.6 0.1
	TradePayables 162.7 171.3
	Other Financial Liabilities 32.6 17.7
	Provisions 24.9 26.3
	CurrentTax Liabilities (Net) 0.0 0.0
	OtherCurrentLiabilities 13.0 19.8
	Total Current Liabilities 388.4 439.3
	TOTAL EQUITY AND LIABILITIES 1,004.2 1,013.3

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Tilaknagar Industries | Q2 (Jul to Sep 2022) & H1 FY23

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Recent Product Developments

Launch of Mansion House Flavoured Brandy

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• India’s First Premium Flavoured Brandy

• An inclusive drink for all; across agegroups, genders, for all occasions

• Available in three flavours

• Peach

• Orange

• Cherry

• Launched in Puducherry in Jun-22 and in Telangana in Sep-22; other regions to follow

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Removal of Monocartons

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Launch of Mansion House Reserve Brandy

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• Super-premium variant of our flagship brand, Mansion House Brandy

• Blend made from special kind of ‘Ugni Blanc’ grapes from the Sahyadris

• Initially launched in Tamil Nadu in Sep-22; India’s largest brandy consuming state; other states to follow

• This segment in Tamil Nadu is 19 lacs cases strong in FY22

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✓ Focus on sustainability Cost saving measure ✓

Tilaknagar Industries | Q2 (Jul to Sep 2022) & H1 FY23

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COMPANY & INDUSTRY OVERVIEW

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Tilaknagar Industries | Q2 (Jul to Sep 2022) & H1 FY23

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About the Company

Largest premium brandy manufacturer in India with presence across all segments of IMFL

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Manufacturing units
across 12 states
20 Owned: 4 units 15+ Brands across products
Contract manufacturing:
16 units
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Share of Brandy as %
94%
of total volumes
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6.73
Volumes (in cases)
sold
mn
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Share of sales to
86% South India as % of
total volumes
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* All data is for FY22; manufacturing units is as of 10[th] Nov 2022

Tilaknagar Industries | Q2 (Jul to Sep 2022) & H1 FY23

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Presence across IMFL categories

Focus on semi-premium and above segments

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Super-Premium
Rs. 1,000 & Above Mansion House Reserve Brandy Courrier Napoleon Brandy Green Mansion House Flavoured Brandy
Premium
Rs. 700-1,000 Mansion House Brandy Mansion House Gold Whisky Courrier Napoleon Brandy Red
Deluxe / Semi-Premium
Rs. 500-700 Madiraa XXX Rum Blue Lagoon Gin Orange
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(Note: All MRP for 750ml)

Tilaknagar Industries | Q2 (Jul to Sep 2022) & H1 FY23

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We sell millions of cases across India

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MANSION HOUSE

• ❑ Mansion House is a millionaire brand (more than 5.5 mn cases sold in FY22)

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• ❑ Mansion House is the highest selling premium brandy in India

• ❑ Manufactured across all units

• ❑ A brand with a high brand loyalty driving repeat purchases

COURRIER NAPOLEON

• ❑ Fast approaching millionaire brand status

• (0.8 mn cases sold in FY22)

Tilaknagar Industries | Q2 (Jul to Sep 2022) & H1 FY23

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Our strategic focus…

…the way forward

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Volume growth Market share growth[(b)]

• Continued focus on brandy

• FY22 growth in volumes for MHB and CNB stands at 24% each

• Market share (as % of brandy) growth

• ▪ 6 yrs CAGR of 9.1% for MHB from 12.4% to 16.8%

• ▪

• Equal focus on high-growth, nascent Market share (as % of IMFL) growth from regions 2.4% to 3.4%

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Efficient levels of capacity utilisation
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▪
Pernod Ricard agreements enables
efficient capacity utilisation levels
▪
Incremental region-specific growth
enabled through bottling arrangements
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• Debt repayment and cash flow generation Resolution of auditor qualifications ▪ ▪ Focus on repayment of high-cost debt Focus on taking proactive measures to

• ▪ resolve all auditor qualifications Target to become near net debt free by FY24

Debt repayment and cash flow generation

• (a) The above volume data is for Mansion House Brandy in the states of Telangana, Andhra Pradesh, Karnataka, Kerala, Puducherry and Goa i.e. states which contribute 88% of our total volumes (b) Market share growth comparison between FY17 and FY22 in the states of Telangana, Andhra Pradesh, Karnataka, Kerala, Puducherry and Goa

Tilaknagar Industries | Q2 (Jul to Sep 2022) & H1 FY23

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MHB and MHB Brandy segment growing faster…

…than overall Brandy, Whiskey and IMFL

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MHB vs. Industry Growth[(a)]

Category	CAGR
MHB	9.1%
Brandy Segment	2.6%
Whiskey Segment	2.1%
IMFL	1.9%

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MHB market share as % of brandy [(a)] MHB market share as % of IMFL [(a)]
Market share growth of 36% over 6 years Market share growth of 41% over 6 years
12.4% 16.4% 16.8% 2.4% 3.0% 3.4%
FY17 FY21 FY22 FY17 FY21 FY22
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MHB: Mansion House Brandy; 6 year CAGR from FY17 to FY22 (a) The above data is for the states of Telangana, AP, Karnataka, Kerala, Puducherry and Goa i.e. states which contribute 88% of our total volumes

Tilaknagar Industries | Q2 (Jul to Sep 2022) & H1 FY23

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FY22 FINANCIALS

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Tilaknagar Industries | Q2 (Jul to Sep 2022) & H1 FY23

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Improving business fundamentals

Premiumisation strategy to enhance margins and cash flows

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Total Volumes Sold (mn cases)
84% 89% 91% 92% 94%
5.92 6.64 6.44 5.45 6.73
FY18 FY19 FY20 FY21 FY22
Share of Brandy to total volumes sold
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Brandy Sales (mn cases)

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4.98 5.92 5.86 5.03 6.33
FY18 FY19 FY20 FY21 FY22
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NSR per case (Rs.)

Robust sales in South India (mn cases)

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904 985 1,005 1,014 1,136
FY18 FY19 FY20 FY21 FY22
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83% 87% 86% 86% 86%
4.91 5.80 5.51 4.70 5.82
FY18 FY19 FY20 FY21 FY22
Share of South India sales to total volumes sold
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Tilaknagar Industries | Q2 (Jul to Sep 2022) & H1 FY23

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Focus on margins and cashflows

Most of write-offs impacting EBITDA have been undertaken

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Net Revenues (Rs. Crs)
578 661 653 549 783
FY18 FY19 FY20 FY21 FY22
EBITDA (Rs. Crs) and EBITDA Margin (%)
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14%
10%
8%
3 56 54 112
0%
-52
-8%
FY18 FY19 FY20 FY21 FY22
(a) EBITDA for FY20 is not comparable due to write-offs impacting EBITDA
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Gross Profit (Rs. Crs) and Gross Margin (%)
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51% 52% 49% 51%
46%
293 342 301 271 401
FY18 FY19 FY20 FY21 FY22
Finance Cost (Rs. Crs) and as % of Net Revenues
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28%
26%
20%
13%
8%
152 184 129 71 62
FY18 FY19 FY20 FY21 FY22
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Tilaknagar Industries | Q2 (Jul to Sep 2022) & H1 FY23

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Disclaimer

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This presentation may include statements which may constitute forward-looking statements including, but without limitation, statements relating to the implementation of strategic initiatives, and other statements relating to Tilaknagar Industries’ future business developments and economic performance. Forward looking statements are based on certain assumptions and expectations of future events. The Company cannot guarantee that these assumptions and expectations are accurate or will be realized. The actual results, performance or achievements, could thus differ materially from those projected in any such forward-looking statements.

The information and opinions contained in this presentation are current. The Company undertakes no obligation to update or revise any information or the opinions expressed in this presentation as a result of new information, future events or otherwise. Any opinions or information expressed in this presentation are subject to change without notice.

Tilaknagar Industries | Q2 (Jul to Sep 2022) & H1 FY23

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For further information, please contact: Ameya Deshpande President – Strategy & Corporate Development Email: adeshpande@tilind.com

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THANK YOU