Tilaknagar Industries Ltd — Earnings Release 2023

Feb 7, 2023

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February 07, 2023

To, BSE Limited Phiroze Jeejeebhoy Towers, Dalai Street, Mumbai 400001 Scrip Code : 507205

To,

National Stock Exchange of India Limited Exchange Plaza, C-1, Block-G, Bandra-Kurla Complex, Bandra (East), Mumbai-400 051. Symbol : TI

Sub : Earnings Presentation for unaudited Financial Results for quarter ended December 31, 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 December 31, 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.

DIPTI Digitally signed by DIPTI VARUN VARUN TODKAR Date: 2023.02.07 TODKAR 17:59:48 +05'30' Dipti Todkar Company Secretary

Encl: as above

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Tilaknagar Industries Ltd.

(BSE: 507205 | NSE: TI)

2/7/2023

Earnings Presentation Q3 (Oct to Dec 2022) & 9M FY23

Tilaknagar Industries | Q3 (Oct to Dec 2022) & 9M FY23

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Q3 & 9M FY23 PERFORMANCE

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Tilaknagar Industries | Q3 (Oct to Dec 2022) & 9M FY23

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Q3 & 9M FY23 – at a glance

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	Q3 FY23 Q3 FY22 Y-o-Y growth	Q2 FY23 Q-o-Q growth	9M FY23 9M FY22 Y-o-Y growth
Business performance (in lacs):
Brandy volumes Others Total volumes	24.3 17.7 37.6% 1.7 1.0 70.1% 26.0 18.7 39.4%	22.7 6.9% 1.6 9.0% 24.3 7.1%	63.5 45.0 41.2% 4.5 2.8 58.8% 68.0 47.8 42.3%
NSR (Rs. per case)	1,222 1,140 7.2%	1,179 3.7%	1,190 1,127 5.6%
Financial performance (Rs. Crs):
Revenue from operations (Net) Gross profit Gross margin (%) EBITDA EBITDA margin (%) EBIT PAT (excl. exceptional items)	302.87 205.90 47.1% 149.99 109.17 37.4% 49.5% 53.0% -350 bps 40.56 32.42 25.1% 13.4% 15.7% -235 bps 32.41 24.20 33.9% 24.55 10.27 139.2%	274.50 10.3% 134.82 11.3% 49.1% 41 bps 31.43 29.1% 11.4% 194 bps 23.21 39.6% 13.88 76.8%	806.91 542.31 48.8% 388.29 283.35 37.0% 48.1% 52.2% -413 bps 93.71 86.33 8.5% 11.6% 15.9% -431 bps 69.29 61.67 12.3% 39.47 21.94 79.9%

Tilaknagar Industries | Q3 (Oct to Dec 2022) & 9M 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)] Debt as of 31-Dec-22 [(a)(b)(c)]
1,199 37
EARC Term Loan
35
High-cost trade deposits
Trade Deposits
(interest rate of 18-20% p.a.) of
Rs. 77 crs repaid in 9M FY23
Vendor Financing
251
543
492
449
380
349 361
323
299
269 ▪ EARC debt is at 9% p.a.
186
▪ EARC balance debt of Rs. 130 crs will be waived
off on satisfactory repayment
Mar-19 Mar-21 Mar-22 Jun-22 Sep-22 Dec-22 Mar-21 Mar-22 Jun-22 Sep-22 Dec-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 includes interest bearing trade deposits which is a part of Other Financial Liabilities

Tilaknagar Industries | Q3 (Oct to Dec 2022) & 9M FY23

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Volumes at significantly higher levels compared to preCovid times

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Volume (lacs cases)

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30
26.0
24.3
25
20 18.1 18.9 18.5 17.6 17.2 18.1 18.7 19.5 17.7 ▪ 39% volume
16.3 16.5
growth on
14.7 14.9
15 13.8 13.5 YoY basis
11.1 ▪ 48% volume
10 growth vs. Q3
6.0 FY20 (pre-
5 Covid)
0
FY19 FY20 FY21 FY22 FY23
Q1 Q2 Q3 Q4
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Tilaknagar Industries | Q3 (Oct to Dec 2022) & 9M FY23

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Operational highlights

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Net Revenue (Rs. Crs)
Highest ever quarterly 807
net revenues
303
275
542
241
230
192 201 206
168 356
132 135
56
Q1 FY21 Q2 FY21 Q3 FY21 Q4 FY21 Q1 FY22 Q2 FY22 Q3 FY22 Q4 FY22 Q1 FY23 Q2 FY23 Q3 FY23 9M FY21 9M FY22 9M FY23
EBITDA (Rs. Crs)
41 94
86
31 32 31
26
23
22 22
19 44
10
2
Q1 FY21 Q2 FY21 Q3 FY21 Q4 FY21 Q1 FY22 Q2 FY22 Q3 FY22 Q4 FY22 Q1 FY23 Q2 FY23 Q3 FY23 9M FY21 9M FY22 9M FY23
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Tilaknagar Industries | Q3 (Oct to Dec 2022) & 9M 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 our highest ever quarterly net revenues at Rs. 303 crs

• ❑ December 2022 has been our best month in terms of volumes in a decade, touching almost 11 lacs cases, led by MHB at 8.7 lacs cases, the highest monthly sales ever

• ❑ Despite the 2 price increases in glass costs faced by the industry, we were able to expand our EBITDA to above Rs. 40 crs at a healthy EBITDA margin of 13.4% vs. 11.4% in Q2 FY23

• This margin expansion was predominantly on account of operating leverage as well as favourable regional and brand mix

• We expect the inflationary headwinds to abate in the medium term, but estimate that these pressures will persist in the immediate short term

• We have seen strong growth in Mansion House Flandy, our Flavoured Brandy range; Flandy is currently available only in Telangana and Puducherry and will be launched in other regions soon

• ❑ Our existing EBITDA expansion has been purely on the back of our mitigation strategies against inflation; these include focus on profitable brands, favorable product & regional mix, cost optimization efforts and improved productivity

• We have yet to see any meaningful price increase in any of the states we are present in, but are very hopeful that we will get industry-wide price increases in our key states

• ❑ Our aim to open up the brandy category to a young, experimental and aspirational audience continues and we will be looking at launching more premium and aspirational products over the next few quarters

• ❑ Our debt reduction strategy is also on-track; we have reduced our debt by Rs. 126 crs in the 9 months of this financial year

• ❑ In the 2[nd] half of December 2022, we also completed the Rs. 100 crs. preferential issue to Think Investments

Tilaknagar Industries | Q3 (Oct to Dec 2022) & 9M FY23

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Extract of Income Statement

			Y-o-Y		Q-o-Q			Y-o-Y
(Rs. Crs)	Q3 FY23	Q3 FY22	growth %	Q2 FY23	growth %	**9M FY23 **	9M FY22	growth %
Revenue from operations (Gross)	675.46	501.67	34.6%	596.05	13.3%	1,752.03	1,271.15	37.8%
Less: ExciseDuty	372.59	295.77	26.0%	321.55	15.9%	945.12	728.84	29.7%
Revenue from Operations (Net)	302.87	205.90	47.1%	274.50	10.3%	806.91	542.31	48.8%
Other income	1.17	1.12	4.4%	0.59	98.7%	2.42	2.64	-8.2%
Total Revenue (I)	304.03	207.01	46.9%	275.09	10.5%	809.34	544.95	48.5%
EXPENSES:
(a) Cost of materials consumed	174.69	99.23	76.0%	147.51	18.4%	443.63	257.39	72.4%
(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	-21.81	-2.51	NM	-7.83	NM	-25.00	1.57	NM
(d)Employee benefits expense	10.72	6.94	54.6%	8.98	19.4%	28.19	20.36	38.5%
(e) Otherexpenses	98.71	69.81	41.4%	94.41	4.6%	266.39	176.66	50.8%
Total Expenses (II)	262.30	173.47	51.2%	243.07	7.9%	713.21	455.98	56.4%
Profit before interest, tax, depreciation and amortisation (I - II)	41.73	33.54	24.4%	32.02	30.3%	96.13	88.97	8.0%
Finance costs	9.02	15.53	-41.9%	9.91	-9.0%	32.24	46.37	-30.5%
Depreciationand amortisationexpense	8.16	8.22	-0.8%	8.22	-0.8%	24.42	24.66	-1.0%
Profit before tax	24.55	9.79	150.9%	13.88	76.8%	39.47	17.94	120.0%
Exceptional item	51.33	0.00	NM	0.00	NM	51.33	0.00	NM
Profit before tax	75.88	9.79	675.3%	13.88	446.5%	90.80	17.94	406.0%
Tax expenses :
(a) Current tax	0.00	0.00	NM	0.00	NM	0.00	0.00	NM
(b)Tax forearlierperiods	0.00	-0.48	NM	0.00	NM	0.00	-4.00	NM
(c)Deferred tax	0.00	0.00	NM	0.00	NM	0.00	0.00	NM
Total tax expense	0.00	-0.48	NM	0.00	NM	0.00	-4.00	NM
Profit for the period	75.88	10.27	639.2%	13.88	446.5%	90.80	21.94	313.9%

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Tilaknagar Industries | Q3 (Oct to Dec 2022) & 9M FY23

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COMPANY & INDUSTRY OVERVIEW

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Tilaknagar Industries | Q3 (Oct to Dec 2022) & 9M 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 on date

Tilaknagar Industries | Q3 (Oct to Dec 2022) & 9M 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 | Q3 (Oct to Dec 2022) & 9M 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 as well as in 9M FY23)

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• ❑ As per IWSR Drinks Market Analysis, Mansion House is the highest selling 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 as well as in 9M FY23)

Tilaknagar Industries | Q3 (Oct to Dec 2022) & 9M FY23

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Our strategic focus…

…the way forward

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Volume growth Market share growth[(b)]

• ▪

• FY22 growth in volumes for MHB and Continued focus on brandy 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
▪
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

(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 | Q3 (Oct to Dec 2022) & 9M 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 | Q3 (Oct to Dec 2022) & 9M 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 | Q3 (Oct to Dec 2022) & 9M FY23

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FY22 FINANCIALS

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Tilaknagar Industries | Q3 (Oct to Dec 2022) & 9M 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 | Q3 (Oct to Dec 2022) & 9M 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 (%)
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 | Q3 (Oct to Dec 2022) & 9M 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 | Q3 (Oct to Dec 2022) & 9M 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