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Tilaknagar Industries Ltd Investor Presentation 2021

Nov 12, 2021

60357_rns_2021-11-12_c9e728d1-06ea-4b3b-9de9-245ebeecf2e9.pdf

Investor Presentation

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CIN: L15420PN1933PLC133303

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

November 12, 2021

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 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.

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

DAHANUKAR 16:14:55 +05'30' Amit Dahanukar Chairman & Managing Director (DIN: 00305636)

Encl: as above

Tilaknagar Industries Ltd.

(BSE: 507205 | NSE: TI)

11/12/2021

Earnings Presentation Q2 FY22 (Jul to Sep 2021)

Tilaknagar Industries | Q2 FY22 Earnings Presentation

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Q2 FY22 PERFORMANCE

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Tilaknagar Industries | Q2 FY22 Earnings Presentation

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Q2 FY22 Highlights

Strong performance led by brandy

Key Performance Highlights (Q2 FY22 vs. Q2 FY21)

  • 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

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Volume (in lacs cases)

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18.2
Lockdown 17.2
16.5 Lockdown
impact
14.9 impact
11.1
6.0
Q1 FY21 Q2 FY21 Q3 FY21 Q4 FY21 Q1 FY22 Q2 FY22
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Tilaknagar Industries | Q2 FY22 Earnings Presentation

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Management commentary on Q2 FY22 results

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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

Tilaknagar Industries | Q2 FY22 Earnings Presentation

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Strong Q2 FY22 performance…

…operating margin expansion owing to operating leverage

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

Tilaknagar Industries | Q2 FY22 Earnings Presentation

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Extract of Income Statement

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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: ExciseDuty 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 ofstock-in-trade 0.0 0.0 NM 0.0 NM 0.0 0.0 NM
(c) Changesin 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) Otherexpenses 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%
Depreciationand amortisationexpense 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 forearlierperiods -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

Tilaknagar Industries | Q2 FY22 Earnings Presentation

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Extract of Balance Sheet

(Rs. Crs)
As at Sep-21 As at Mar-21
ASSETS
Non-Current Assets
Property,Plant andEquipment
451.5
467.8
Capital Work-in-Progress
100.2
100.1
Right ofUseAssets
0.3
0.4
Other IntangibleAssets
0.3
0.4
Financial Assets
Investments
0.0
0.0
Other Financial Assets
28.5
29.0
DeferredTax Assets (Net)
10.1
70.9
Other Non-CurrentAssets
2.9
3.8
Total Non-Current Assets
593.9
672.4
Current Assets
Inventories
64.0
72.1
Financial Assets
TradeReceivables
211.0
181.1
Cashand Cash Equivalents
37.5
44.9
Bank Balance otherthanabove
3.5
3.2
Loans
0.0
0.0
Other Financial Assets
0.2
0.2
OtherCurrentAssets
34.1
37.6
Total Current Assets
350.3
339.1
TOTAL ASSETS
944.1
1,011.5
(Rs. Crs)
As at Sep-21 As at Mar-21
EQUITY AND LIABILITIES
Equity
Equity Share Capital
140.3
125.4
Other Equity
-149.0
-181.2
Total Equity
-8.7
-55.7
Liabilities
Non-Current Liabilities
Financial Liabilities
Borrowings
407.6
459.0
LeaseLiabilities
0.0
0.1
Other Financial Liabilities
201.6
181.7
Provisions
4.3
4.3
Other Non-CurrentLiabilities
23.5
30.5
Total Non-Current Liabilities
637.1
675.6
Current Liabilities
Financial Liabilities
Borrowings
106.3
121.5
LeaseLiabilities
0.3
0.5
TradePayables
150.9
148.0
Other Financial Liabilities
18.2
73.4
Provisions
22.5
29.0
CurrentTax Liabilities (Net)
0.0
0.0
OtherCurrentLiabilities
17.6
19.3
Total Current Liabilities
315.8
391.7
TOTAL EQUITY AND LIABILITIES
944.1
1,011.5

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Tilaknagar Industries | Q2 FY22 Earnings Presentation

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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
Adjustmentfor:
Depreciation&Amortisation 16.4 16.7
Provision for non-moving and obsoleteinventories 1.0 0.0
Finance Costs 30.8 33.8
Interestincome -1.4 -0.2
Otheradjustments 2.8 -1.1
Operating profit before working capital changes 57.9 23.7
Working capitaladjustment:
(Decrease)/Increaseintrade payables, currentliabilities, provisions and other financial liabilities -41.8 -25.1
(Increase) /Decreasein loans and advances and otherassets 62.9 -10.1
(Increase) /Decreasein inventories 7.0 -11.7
(Increase) /Decreaseintradereceivables -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
Proceedsfromborrowings 3.3 2.9
Repayment ofborrowingsincluding currentmaturities -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 inCash & Cash equivalents -7.3 -8.4
Opening cash& cashequivalents 44.9 37.3
Closing cash & cash equivalents 37.5 28.9

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Tilaknagar Industries | Q2 FY22 Earnings Presentation

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COMPANY & INDUSTRY OVERVIEW

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Tilaknagar Industries | Q2 FY22 Earnings Presentation

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About the Company

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

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15+ Brands across products
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Manufacturing units across 11 states Owned: 4 units 16 Tie-up: 12 units

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5.45
Volumes (in cases)
sold
mn
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86%
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Share of sales to
South India as % of
total volumes
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Share of Brandy as % 92% of total volumes

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87% Sales through:
- State corporations
3%
- Distributors
10% - Direct Sales
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* All data is for FY21

Tilaknagar Industries | Q2 FY22 Earnings Presentation

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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 4.4 mn cases sold in FY21)

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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

  • (0.6 mn cases sold in FY21)

Tilaknagar Industries | Q2 FY22 Earnings Presentation

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Our strategic focus…

…the way forward

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Volume growth

Market share growth[(b)]

Efficient levels of capacity utilisation

  • 5 year CAGR[(a)] of 14.4% – regions contributing 70%+ of volumes (4.4% when Andhra Pradesh also considered)

  • New launches in coming 1-2 quarters

  • Continued focus on brandy

  • Market share (as % of brandy) growth from 9.2% to 16.7%

  • Market share (as % of IMFL) growth from 1.7% to 2.8%

  • Pernod Ricard agreements enables efficient capacity utilisation levels

  • Incremental region-specific growth enabled through bottling arrangements

Debt repayment and cash flow generation

Resolution of auditor qualifications

  • 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

Tilaknagar Industries | Q2 FY22 Earnings Presentation

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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 4.4%
Relevant Brandy Segment (b) 2.9%
Relevant Whiskey Segment (b) 0.5%
Overall Brandy Segment -2.7%
Overall Whiskey Segment -0.6%
Overall IMFL -1.2%

MHB market share as % of IMFL[(a)]

MHB market share as % of brandy[(a)]

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Market share growth of 33% over 5 years Market share growth of 25% over 5 years
12.4% 16.4% 2.4% 3.0%
FY17 FY21 FY17 FY21
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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

Tilaknagar Industries | Q2 FY22 Earnings Presentation

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Bottling arrangement with Pernod Ricard

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  • 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  

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Tilaknagar Industries | Q2 FY22 Earnings Presentation

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Debt reduction journey…

…working towards near debt-free position by FY24

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

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1,199
Debt reduced by Rs. 25 crs
over 2 quarters
543
518
31-Mar-19 31-Mar-21 30-Sep-21
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  • (a) Debt adjusted for EARC balance debt of Rs. 145 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

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

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49
EARC Term Loan
124 Cash Credit
314 Trade Deposits
30
Other Debt
 EARC debt is at 9% p.a.
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  • EARC balance debt of Rs. 145 crs will be waived off on satisfactory repayment

  • 70% of EARC Term Loan is repayable after 2 years (in FY24)  Rs. 99.2 crs to be repaid over FY22 and FY23

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Tilaknagar Industries | Q2 FY22 Earnings Presentation

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FY21 FINANCIALS

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Tilaknagar Industries | Q2 FY22 Earnings Presentation

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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%
5.92 6.64 6.44 5.45
FY18 FY19 FY20 FY21
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Brandy Sales (mn cases)
4.98 5.92 5.86 5.03
FY18 FY19 FY20 FY21
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Share of Brandy to total volumes sold

NSR per case (Rs.)

Robust sales in South India

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904 985 1,005 1,014
FY18 FY19 FY20 FY21
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83% 87% 86% 86%
4.91 5.80 5.51 4.70
FY18 FY19 FY20 FY21
Share of South India sales to total volumes sold
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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. Mn)
5,778 6,613 6,528 5,488
FY18 FY19 FY20 FY21
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Gross Profit (Rs. Mn) and Gross Margin (%)
51% 52% 49%
46%
2,934 3,417 3,006 2,714
FY18 FY19 FY20 FY21
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EBITDA (Rs. Mn) and EBITDA Margin (%)
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8% 10%
29 561 541
0% -519
-8%
FY18 FY19 FY20 FY21
(a) EBITDA for FY20 is not comparable due to write-offs impacting EBITDA
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Finance Cost (Rs. Mn) and as % of Net Revenues
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28%
26%
20%
13%
1,519 1,842 1,289 710
FY18 FY19 FY20 FY21
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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%

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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 FY22 Earnings Presentation

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For further information, please contact: Ameya Deshpande Head – Corporate Development & Strategy Email: [email protected]

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THANK YOU