Tilaknagar Industries Ltd — Investor Presentation 2021

Sep 2, 2021

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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 : investor@tilind.com, Website: www.tilind.com, Phone: +91 22 22831716/18, Fax: +91 22 22046904

BSE Limited National Stock Exchange of India Ltd The Corporate Relationship Dept, Exchange Plaza, 1st Floor, Phiroze Jeejeebhoy Towers, Bandra-Kurla Complex, Dalal Street, Bandra (East), Mumbai-400 001. Mumbai-400 051. Scrip Code : 507205 Scrip Code : TI

Dear Sir/s,

Sub: Investor Presentation

Pursuant to Regulation 30 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (the “Listing Regulations” ), please find enclosed herewith the Investor Presentation.

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

We request you to take the above information on record.

Thanking you,

Yours faithfully,

For Tilaknagar Industries Limited

Digitally signed by AMIT AMIT DAHANUKAR DAHANUKAR Date: 2021.09.02 13:24:33 +05'30' Amit Dahanukar Chairman & Managing Director (DIN: 00305636)

Tilaknagar Industries Ltd.

9/2/2021

Investor Presentation September 2021

Tilaknagar Industries | Investor Presentation

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OUR DNA

Tilaknagar Industries | Investor Presentation

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Meet the Passionate Experts

From our founding years, our story is one of obsession with customer delight. Created by Babasaheb Dahanukar in 1933, Tilaknagar is the culmination of years of experience and knowledge coming together to create the ultimate liquor experience.

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We channel this passion into a clear purpose

To deliver rich experiences for consumers by blending decades of experience with continuous innovation.

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TILAKNAGAR AT A GLANCE

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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

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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

• Super premium brandy

• Fast approaching millionaire brand status

• (0.6 mn cases sold in FY21)

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Brandy & South India – Playing to our strengths

Market leadership in the 2[nd] largest IMFL segment in the largest alcohol consuming region of India

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Category-wise spirits sales (in volumes)
4%
12%
Whiskey
Brandy
19%
Rum
White Spirits
65%
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Region-wise IMFL sales

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Rest of India
40% 60%
South India
Telangana & Andhra Pradesh
contribute towards the highest
IMFL consumption in India.
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BRANDY CONSUMPTION MOVING TOWARDS BRAND LOYALTY AND PREMIUMIZATION

Brandy and South India have both seen an increasing trend in volume sales for the Company Brandy volume share: 82% (FY17) vs. 92% (FY21) South India volume share: 79% (FY17) vs. 86% (FY21)

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India’s undisputed Brandy king

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Largest manufacturer of Brandy is 2 [nd] largest product Dominant presence in South
premium Brandy in India segment in IMFL India
Huge opportunity in untapped markets –
both product and geography
Mansion House - India’s most Brandy is the most versatile of Basket of Brandy products
sold premium brandy all IMFLs across premium price-points
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Our manufacturing and consumption footprint

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Head office Sales through State Corporations
Company-owned units: 4 units Sales through Distribution
Jammu (x1) Lease / Tied-up units: 12 units
Mohali (Punjab)
(Army dedicated) –
PunjabExpo Breweries Sikkim
Assam (x1) Assam
West Bengal (x1) West Bengal
Shrirampur
(Maharashtra) Odisha (x1)
Silvassa
Odisha
Mumbai Telangana (x2)
East Godavari District (Andhra) – Maharashtra Telangana
Prag Distilleries
Kuppal District (K’taka) –
Vahni Distilleries Goa
Andhra Pradesh (x3) Andhra Pradesh
Karnataka
Karnataka (x1)
Puducherry
Kerala (x2) Kerala
Sales through CSDs not included in map
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ROADMAP AND TEAM

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Our journey

At the cusp of a turnaround

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Beginning 2008-2014 2014-2017 2018 onwards
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Founded in 1933 as Maharashtra Sugar Mills Ltd. (MSML) to	Acquired subsidiaries Vahni Distilleries (Karnataka), Prag	Expansion project at Prag stalled	Restructuring of debt completed with EARC
manufacture sugar and allied products	Distilleries (Andhra), Kesarval Springs Distillers (Goa) and	Defaults in repayment to banks and financial institutions	One-time settlements reached with
	PunjabExpo (Punjab)		all lenders
Tilaknagar Distilleries and Industries Ltd. (TDIL) promoted as 100% subsidiary of MSML to manufacture industrial alcohol, IMFL and sugar cubes	Acquired seven brands from Alcobrew Distilleries for CSD segment and IFB Agro’s IMFL business (‘Volga’ vodka and ‘Blue	Sale of assets of Kesarval Springs Distillers to Indospirit Beverages Pvt. Ltd. in 2015	Enters into 10 yrs agreement to manufacture products for Pernod Ricard products at bottling plant in Maharashtra
	Lagoon’ gin) for an entry into East
TDIL merged with MSML after MSML exits sugar business and	Indian markets of West Bengal, Assam and Odisha		Achieved EBITDA margin of 10% for FY21
renamed to Tilaknagar Industries	Commissioned expansion of 50		Growth in volumes from 4 mn
	KLPD molasses based distillery to		cases in FY16 to 5.5 mn cases in
	100 KLPD and 100 KLPD grain		FY21
	based distillery

 At its peak, registered net revenue of Rs. 824 crs in FY14

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Business Strategic Roadmap

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Brandy focus Drive scale

• 

• Drive market leadership in Strong volumes despite brandy - Mansion House sells imposition of AED due to more than 4 mn cases annually Covid-19

• Brandy presence across premium price-points – MHB, CNB Green, CNB Blue, CNB Gold

• Further growth in existing markets

• Expansion in fast-growing new markets across India

Focus on margins, cash-flows & deleveraging

• Impact of operating leverage

• Strengthen balance sheet

• Debt reduced from Rs. 1,252 crs as of Mar-19 to Rs. 627 crs as of Mar-21[(a)(b)]

• Bottling arrangements to drive growth

(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

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Our strategy to reduce debt

Operating leverage

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Volume growth in existing markets
+
Favorable product mix
+
Entry into new fast-growing brandy markets
=
Expansion through bottling tie-ups
Working capital efficiencies
Debt restructuring (already achieved)
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+ Margin expansion

+ Asset-light model

Cash-flow generation

Reduce debt

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Experienced and energized team at the helm

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Ajit Sirsat,

Varadarajan Srinivasaraghavan, General Manager – Manufacturing

Amit Dahanukar, Chairman & Managing Director Chief Financial Officer

• 45 years of age, he has over 20 years of industry experience

• Has over 26 years of experience in Finance and Accounts across industries

• Has over 25 years of industry experience

• CMD since 2006, he graduated in electrical engineering with a masters degree in engineering management from Stanford University, U.S.A

• He is a B. Tech (Mechanical) and looks at overall manufacturing and procurement at corporate level

• He is a Chartered Accountant and Cost & Management Accountant

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Ameya Deshpande, Head – Corporate Development & Strategy

• Has been an Investment Banker with Deutsche Bank and BNP Paribas and was also cofounder of a food-travel start-up called Authenticook

• He has recently joined the Company in July 2021

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FINANCIALS

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Debt restructuring update

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Debt as of 31-Mar-21[(a)(b)]

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EARC Term Loan
1,252 crs 182
Cash Credit
627 crs
336
Other Debt
81
Trade Deposits
28 (Unsecured)
Mar-19 Mar-21
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• EARC debt is at 9% p.a.

• EARC balance debt of Rs. 145 crs will be waived off on satisfactory repayment

• 70% of EARC Term Loan is repayable after 2 years

• (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

Settlements reached with nearly all lenders

Lender	Full settlement achieved
SBI
Bank of India
IDBI Bank
Standard Chartered Bank
DCB Bank

EARC debt repayment schedule

(Rs. Crs)	< 1 yr	1 – 2 yrs	2 – 3 yrs
EARC Trust SC233	5.60	6.80	15.68
EARC Trust SC241	28.00	34.00	188.97
EARC Trust SC269	11.20	13.60	32.38
Total	44.80	54.40	237.02

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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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FY21 revenues vs. FY20 revenues

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Rs. Mn
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FY20 Brandy Others Brandy Others FY21
Net Revenue Net Revenue
Volume Impact Price Impact
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• Net revenue is pertaining to IMFL sales only and excludes revenues from sale of spirits and packing material

Revenues for FY21 predominantly impacted due to fall in volumes on account of Covid-19 lockdown Strong close to the year

H2 FY20 vs. H2 FY21: 3.16 mn vs. 3.41 mn cases 8% volume growth Y-o-Y – higher than industry growth

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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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Q1 FY22 Result Update

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Management commentary on Q1 FY22 results

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

• While the last couple of years were invested in restructuring our debt, the next couple of years will be invested towards building the business to a scale which enables us to generate cash-flows which will help us in reinvesting for growth as well as comfortably servicing and reducing our debt

• A favourable product-geography mix has enabled us to increase our gross margins from 44.4% in Q4 FY21 to 56% in Q1 FY22; also leading to higher NSRs

• EBITDA saw a 128% increase in Q1 FY22 compared to Q4 FY21 on the back of higher NSRs and operating leverage

• EBITDA margins stood at 17% for Q1 FY22 compared to 10% for FY21

• We achieved a positive PAT for the first time in many years and expect the upward trend in profitability to continue

• Finance costs were down 20% in Q1 FY22 compared to Q4 FY21 due to reduction in debt levels

• We have been servicing the Edelweiss ARC debt on-time and have also reached one-time settlements with all of our other lenders

• While business was impacted starting 2[nd] week of April, we have been seeing significant improvement in volumes from mid-June onwards

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Q1 FY22 Volumes

Approaching normal levels of business; July and August touches more than 6 lacs cases

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Q1 FY22 vs. Q4 FY21 – On the path to complete recovery

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Cases in lacs
Jan-21 Feb-21 Mar-21 Q4FY21
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Since 2017, the volumes for the month of June have been
outpaced by subsequent months for that financial year
Apr-21 May-21 Jun-21 Q1FY22
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Q1 FY22 vs. Q1 FY21 – 82% growth Y-o-Y

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Cases in lacs
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Apr-20 May-20 Jun-20 Q1FY21
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Apr-21
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May-21 Jun-21 Q1FY22
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Strong Q1 FY22 performance…

…Despite impact of state-level lockdowns across the country; significant margin expansion compared to a normal like-to-like quarter i.e. Q1 FY20

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like-to-like quarter i.e. Q1 FY20
	Q1 FY22 Q1 FY21 Y-o-Y growth %	Q1 FY20 Q1 FY22 vs Q1 FY20 growth %	Q4 FY21 Q-o-Q growth %
Volumes (in lacs):
Brandy volumes Others Total volumes	10.4 5.4 91% 0.7 0.5 27% 11.1 6.0 86%	12.1 -14% 1.5 -54% 13.6 -18%	15.8 -34% 1.4 -51% 17.2 -36%
Financial performance (Rs. Mn):
Revenue from operations Gross profit Gross margin (%) EBITDA EBITDA margin (%) EBIT Finance Costs Profit / (Loss) after tax	1,353.0 563.8 140% 759.5 319.0 138% 56.1% 56.6% -44 bps 233.7 24.7 846% 17.3% 4.4% 1,289 bps 151.8 -58.4 NM 150.1 172.4 -13% 3.7 -228 NM	1,350.6 0.2% 649.0 17% 48.1% 808 bps 161.6 45% 12.0% 531 bps 79.3 91% 462.2 -68% -369.6 NM	1,923.4 -30% 854.3 -11% 44.4% 1,171 bps 102.4 128% 5.3% 1,195 bps 21.3 611% 187.1 -20% -90.2 NM

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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.

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

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THANK YOU