Tilaknagar Industries Ltd — Interim / Quarterly Report 2021

Nov 12, 2021

CIN: L15420PN1933PLC133303

Registered Office: P.O. Tilaknagar, Tal. Shrirampur, Dist. Ahmednagar, Maharashtra-413 720 Corporate Office: 3rd Floor, Industrial Assurance Building, Churchgate, Mumbai, Maharashtra-400 020 Email: investor@tilind.com, Website: www.tilind.com, Phone: +91 22 22831716/18, Fax: +91 22 22046904

November 12, 2021

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 and Half year ended September 30, 2021

Dear Sir/Madam,

Pursuant to Regulation 30 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (the "Listing Regulations"), please find enclosed herewith the Earnings Presentation for Unaudited Financial Results for Quarter and Half year ended September 30, 2021.

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.

AMIT DAHANUKAR Digitally signed by AMIT DAHANUKAR Date: 2021.11.12 16:14:55 +05'30'

Amit Dahanukar Chairman & Managing Director (DIN: 00305636)

Encl: as above

Tilaknagar Industries Ltd. (BSE: 507205 | NSE: TI)

Earnings Presentation Q2 FY22 (Jul to Sep 2021)

Q2 FY22 PERFORMANCE

Tilaknagar Industries | Q2 FY22 Earnings Presentation 2

Q2 FY22 Highlights

Strong performance led by brandy

Key Performance Highlights (Q2 FY22 vs. Q2 FY21) Volume (in lacs cases)

• Volumes have grown to 18.22 lacs cases in Q2 FY22 (up 22% Y-o-Y)
• Strong NSR of Rs. 1,081 per case (vs. Rs. 968 per case in Q2 FY21)
• Net revenue from operations at Rs. 201 crs (up 52% Y-o-Y)
• Gross profit at Rs. 98 crs (up 42% Y-o-Y); Gross margin at 48.8%
• EBITDA at Rs. 31 crs (up 59% Y-o-Y); EBITDA margin at 15.2%
• Profit after tax at Rs. 11 crs (from loss of last year); this includes a Rs. 3.5 crs of income tax refund pertaining to previous years
• Debt reduced to Rs. 518 crs as of Sep-21; from Rs. 543 crs as of Mar-21

3

Management commentary on Q2 FY22 results

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

• We are glad to share a very strong set of numbers despite an uncertain and challenging environment, not only in terms of Covid-19 and related state-specific restrictions but also challenges of inflationary pressures on the business
• Q2 saw a 'normal-like' state-wise business contribution, with all of our major states contributing meaningful volumes this was unlike Q1 FY22 which saw states like Kerala hardly contributing due to lock-downs at the time
• Volumes grew 22.3% on a Y-o-Y basis; and in conjunction with higher NSR per case of Rs. 1,081, led to a net revenue growth of 52%
• Gross margins fell to 48.8% vs. 52.4% in Q2 FY21; this was owing to inflationary pressure on both, ENA and packaging material cost
• EBITDA margins expanded to 15.2% vs. 14.5% in Q2 FY21 on account of operating leverage
• PAT increased to Rs. 11 crs i.e. 5.6% PAT margin, on account of improving operating margin profile as well as a Rs. 3.5 crs tax adjustment from prior years
• The growth in volumes and expansion in margins has enabled us in generating good cash flows leading to reduction in our debt by Rs. 25 crs completely through internal accruals

Strong Q2 FY22 performance…

…operating margin expansion owing to operating leverage

	Q2 FY22	Q2 FY21	Y-o-Ygrowth	Q1 FY22	Q-o-Qgrowth	H1 FY22	H1FY21	Y-o-Ygrowth
Volumes (in lacs):
Brandy volumes	17.04	13.79	23.5%	10.42	63.5%	27.46	19.24	42.7%
Others	1.18	1.10	7.4%	0.67	75.2%	1.85	1.62	13.9%
Total volumes	18.22	14.89	22.3%	11.09	64.2%	29.31	20.86	40.5%
NSR (Rs.per case)	1,081	968	11.7%	1,168	-7.4%	1,114	997	11.8%
Financialperformance (Rs. Crs):
Revenuefrom operations (Net)	201.11	132.41	51.9%	135.30	48.6%	336.42	188.79	78.2%
Gross profit	98.23	69.38	41.6%	75.95	29.3%	174.18	101.28	72.0%
Gross margin(%)	48.8%	52.4%	-356 bps	56.1%	-729 bps	51.8%	53.6%	-187 bps
EBITDA	30.54	19.21	59.0%	23.37	30.6%	53.91	21.68	148.7%
EBITDA margin (%)	15.2%	14.5%	68 bps	17.3%	-209 bps	16.0%	11.5%	454 bps
EBIT	22.29	10.84	105.6%	15.18	46.8%	37.47	5.00	649.0%
Profit / (Loss)after tax	11.30	-2.69	NM	0.37	2,948.2%	11.67	-25.49	NM

Extract of Income Statement

			Y-o-Y		Q-o-Q			Y-o-Y
(Rs. Crs)	Q2 FY22	Q2 FY21	growth	Q1 FY22	growth	H1 FY22	H1 FY21	growth
Revenue from operations (Gross)	445.3	359.9	23.7%	324.1	37.4%	769.5	545.3	41.1%
Less: Excise Duty	244.2	227.5	7.4%	188.8	29.3%	433.1	356.5	21.5%
Revenue from Operations (Net)	201.1	132.4	51.9%	135.3	48.6%	336.4	188.8	78.2%
Other income	1.3	3.0	-55.9%	0.2	573.0%	1.5	3.3	-54.1%
Total Revenue (I)	202.4	135.4	49.5%	135.5	49.4%	337.9	192.1	75.9%
EXPENSES:
(a) Cost of materials consumed	94.4	67.5	39.7%	63.8	47.9%	158.2	100.8	56.9%
(b) Purchases of stock-in-trade	0.0	0.0	NM	0.0	NM	0.0	0.0	NM
(c) Changes in inventories of finished goods, work-in-progress and stock-in-trade	8.5	-4.5	NM	-4.4	NM	4.1	-13.3	NM
(d) Employee benefits expense	6.3	7.5	-16.3%	7.1	-11.8%	13.4	14.4	-6.8%
(e) Other expenses	61.4	42.7	43.9%	45.4	35.1%	106.8	65.2	63.9%
Total Expenses (II)	170.6	113.2	50.7%	111.9	52.4%	282.5	167.1	69.1%
Profit before interest, tax, depreciation and amortisation (I - II)	31.9	22.2	43.4%	23.6	35.2%	55.4	25.0	121.8%
Finance costs	15.8	16.5	-4.3%	15.0	5.5%	30.8	33.8	-8.7%
Depreciation and amortisation expense	8.2	8.4	-1.4%	8.2	0.7%	16.4	16.7	-1.4%
Profit before tax	7.8	-2.7	NM	0.4	1999.8%	8.2	-25.5	NM
Tax expenses :
(a) Current tax	0.0	0.0	NM	0.0	NM	0.0	0.0	NM
(b) Tax for earlier periods	-3.5	0.0	NM	0.0	NM	-3.5	0.0	NM
(c) Deferred tax	0.0	0.0	NM	0.0	NM	0.0	0.0	NM
Total tax expense	-3.5	0.0	NM	0.0	NM	-3.5	0.0	NM
Profit for the period	11.3	-2.7	NM	0.4	2948.2%	11.7	-25.5	NM

Extract of Balance Sheet

(Rs. Crs)	As at Sep-21	As at Mar-21	(Rs. Crs)	As at Sep-21	As at Mar-21
ASSETS			EQUITY AND LIABILITIES
Non-Current Assets			Equity
Property, Plant and Equipment	451.5	467.8	Equity Share Capital	140.3	125.4
Capital Work-in-Progress	100.2	100.1	Other Equity	-149.0	-181.2
Right of Use Assets	0.3	0.4	Total Equity	-8.7	-55.7
Other Intangible Assets	0.3	0.4
Financial Assets			Liabilities
Investments	0.0	0.0	Non-Current Liabilities
Other Financial Assets	28.5	29.0	Financial Liabilities
Deferred Tax Assets (Net)	10.1	70.9	Borrowings	407.6	459.0
Other Non-Current Assets	2.9	3.8	Lease Liabilities	0.0	0.1
Total Non-Current Assets	593.9	672.4	Other Financial Liabilities	201.6	181.7
			Provisions	4.3	4.3
Current Assets			Other Non-Current Liabilities	23.5	30.5
Inventories	64.0	72.1	Total Non-Current Liabilities	637.1	675.6
Financial Assets
Trade Receivables	211.0	181.1	Current Liabilities
Cash and Cash Equivalents	37.5	44.9	Financial Liabilities
Bank Balance other than above	3.5	3.2	Borrowings	106.3	121.5
Loans	0.0	0.0	Lease Liabilities	0.3	0.5
Other Financial Assets	0.2	0.2	Trade Payables	150.9	148.0
Other Current Assets	34.1	37.6	Other Financial Liabilities	18.2	73.4
Total Current Assets	350.3	339.1	Provisions	22.5	29.0
			Current Tax Liabilities (Net)	0.0	0.0
			Other Current Liabilities	17.6	19.3
			Total Current Liabilities	315.8	391.7
TOTAL ASSETS	944.1	1,011.5	TOTAL EQUITY AND LIABILITIES	944.1	1,011.5

Extract of Cash Flow Statement

	Half year	Half year
(Rs. Crs)	ended Sep-21	ended Sep-20
Cash flow from Operating activities
Net profit (Loss) before tax	8.2	-25.5
Adjustment for:
Depreciation & Amortisation	16.4	16.7
Provision for non-moving and obsolete inventories	1.0	0.0
Finance Costs	30.8	33.8
Interest income	-1.4	-0.2
Other adjustments	2.8	-1.1
Operating profit before working capital changes	57.9	23.7
Working capital adjustment:
(Decrease)/ Increase in trade payables, current liabilities, provisions and other financial liabilities	-41.8	-25.1
(Increase) / Decrease in loans and advances and other assets	62.9	-10.1
(Increase) / Decrease in inventories	7.0	-11.7
(Increase) / Decrease in trade receivables	-29.9	56.5
Total working capital adjustment	-1.8	9.6
Direct taxes (net) refund / (paid)	4.5	3.8
Net Cash from Operating activities	60.6	37.2
Cash Flow from Investing activities
Net Cash from Investing Activities	1.2	0.2
Cash Flow from Financing activities
Proceeds from borrowings	3.3	2.9
Repayment of borrowings including current maturities	-45.8	-25.0
Finance costs paid	-27.8	-23.4
Other financing activities	1.1	-0.2
Net Cash from Financing Activities	-69.1	-45.8
Net increase in Cash & Cash equivalents	-7.3	-8.4
Opening cash & cash equivalents	44.9	37.3
Closing cash & cash equivalents	37.5	28.9

COMPANY & INDUSTRY OVERVIEW

Tilaknagar Industries | Q2 FY22 Earnings Presentation 9

About the Company

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

Manufacturing units across 11 states Owned: 4 units Tie-up: 12 units

Share of Brandy as %

Volumes (in cases) sold

Share of sales to South India as % of total volumes

Sales through:

• State corporations
• Distributors
• Direct Sales

* All data is for FY21

We sell millions of cases across India

MANSION HOUSE

• Mansion House is a millionaire brand (more than 4.4 mn cases sold in FY21)
• 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 (0.6 mn cases sold in FY21)

Our strategic focus…

…the way forward

• Focus on repayment of high-cost debt
• Target to become near debt-free by FY24
• Focus on taking proactive measures to resolve all auditor qualifications

(a) The above volume data is for Mansion House Brandy in the states of Telangana, Karnataka, Kerala, Puducherry and Goa i.e. states which contribute 70%+ of our total volumes (b) Market share growth comparison between FY17 and FY21 in the states of Telangana, Karnataka, Kerala, Puducherry and Goa

MHB and MHB Brandy segment growing faster…

…than overall Brandy, Whiskey and IMFL

MHB: Mansion House Brandy; 5 year CAGR from FY17 to FY21

(a) The above data is for the states of Telangana, AP, Karnataka, Kerala, Puducherry and Goa i.e. states which contribute 85% of our total volumes

(b) Relevant segment for brandy and whiskey refers to overall brandy and whiskey segment within same price band as MHB respectively

Bottling arrangement with Pernod Ricard

• Bottling at Shrirampur Plant in Maharashtra
• 10 year bottling agreement leading to near-full capacity utilisation
• Potential for providing grain-based ENA
• Impact on revenues: FY21 vs. Going forward

Debt reduction journey…

…working towards near debt-free position by FY24

Debt reduction (Rs. Crs) (a)(b)(c)

(a) Debt adjusted for EARC balance debt of Rs. 145 crs which would be waived off in FY24 on following the repayment schedule FY22 and FY23

(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

Debt as of 30-Sep-21(a)(b)(c)

15

FY21 FINANCIALS

Tilaknagar Industries | Q2 FY22 Earnings Presentation 16

Improving business fundamentals

Premiumisation strategy to enhance margins and cash flows

17

Focus on margins and cashflows

Most of write-offs impacting EBITDA have been undertaken

EBITDA (Rs. Mn) and EBITDA Margin (%) Finance Cost (Rs. Mn) and as % of Net Revenues

Financial Summary – Income Statement

(Rs. Mn)	FY18	FY19	FY20	FY21
Gross Revenue	12,916	15,255	14,835	14,184
Less: Excise Duty	7,138	8,642	8,306	8,696
Net Revenue	5,778	6,613	6,528	5,488
Gross Profit	2,934	3,417	3,006	2,714
Gross Margin %	51%	52%	46%	49%
Employee Costs	220	333	296	252
As% of Net Revenue	3.8%	5.0%	4.5%	4.6%
Other Expenses	2,686	2,522	3,230	1,921
As % of Net Revenue	46%	38%	49%	35%
EBITDA	29	561	-519	541
EBITDA Margin %	0%	8%	-8%	10%
Depreciation &Amortisation	373	367	330	331
Finance Costs	1,519	1,842	1,289	710
PAT	-1,511	-1,595	2,697	-384
PAT Margin %	-25%	-24%	40%	-7%

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.

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