#1Tilaknagar Industries Ltd. (BSE: 507205 | NSE: TI) Earnings Presentation Q3 (Oct to Dec 2022) & 9M FY23 The lencal Gins Tilaknagar Industries | Q3 (Oct to Dec 2022) & 9M FY23 ESTD. 1933 D TILAKNAGAR INDUSTRIES LTD O#2יד HH பப יד ידי HH HE יד יד HH ESTD. 1933 ID Q3 & 9M FY23 PERFORMANCE T HH T T பப יד HH HH Tilaknagar Industries | Q3 (Oct to Dec 2022) & 9M FY23 O 2#3Q3 & 9M FY23 - at a glance Q3 FY23 Q3 FY22 Y-o-Y growth Q-0-Q Y-o-Y Q2 FY23 growth 9M FY23 9M FY22 growth Business performance (in lacs): Brandy volumes 24.3 17.7 37.6% 22.7 6.9% 63.5 45.0 41.2% Others 1.7 1.0 70.1% 1.6 9.0% 4.5 2.8 58.8% Total volumes 26.0 18.7 39.4% 24.3 7.1% 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) 302.87 205.90 47.1% 274.50 10.3% 806.91 542.31 48.8% Gross profit 149.99 109.17 37.4% 134.82 11.3% 388.29 283.35 37.0% Gross margin (%) 49.5% 53.0% -350 bps 49.1% 41 bps 48.1% 52.2% -413 bps EBITDA 40.56 32.42 25.1% 31.43 29.1% 93.71 86.33 8.5% EBITDA margin (%) 13.4% 15.7% -235 bps 11.4% 194 bps 11.6% 15.9% -431 bps EBIT 32.41 24.20 33.9% 23.21 39.6% 69.29 61.67 12.3% PAT (excl. exceptional items) 24.55 10.27 139.2% 13.88 76.8% 39.47 21.94 79.9% Tilaknagar Industries | Q3 (Oct to Dec 2022) & 9M FY23 0 G] ESTD. 1933 T#4Debt reduction journey... ...working towards near net debt-free position by FY24 Debt reduction (Rs. Crs) (a)(b) 1,199 Debt as of 31-Dec-22(a)(b)(c) 37 High-cost trade deposits (interest rate of 18-20% p.a.) of Rs. 77 crs repaid in 9M FY23 543 492 449 380 349 361 323 299 269 186 Mar-19 Mar-21 Mar-22 Jun-22 Sep-22 Dec-22 Mar-21 Mar-22 Gross debt Jun-22 Sep-22 Dec-22 Net debt (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 35 ■EARC Term Loan ■Trade Deposits ■ Vendor Financing 251 ESTD. 1933 ID T ■ EARC debt is at 9% p.a. EARC balance debt of Rs. 130 crs will be waived off on satisfactory repayment 0#500000 Volumes at significantly higher levels compared to pre- 00000 Covid times ESTD. 1933 ID T 30 25 20 18.9 18.1 16.3 15 13.8 10 5 13.5 Volume (lacs cases) 19.5 18.5 17.6 18.1 18.7 17.2 17.7 16.5 14.7 14.9 6.0 11.1 26.0 24.3 0 FY19 FY20 FY21 FY22 FY23 ■Q1 Q2 Q3 Q4 Tilaknagar Industries | Q3 (Oct to Dec 2022) & 9M FY23 ■ 39% volume growth on YoY basis ■ 48% volume growth vs. Q3 FY20 (pre- Covid) 0#6Coooo Operational highlights Net Revenue (Rs. Crs) Highest ever quarterly net revenues 303 275 241 230 192 201 206 168 132 135 56 Q1 FY21 Q2 FY21 Q3 FY21 Q4 FY21 Q1 FY22 Q2 FY22 Q3 FY22 Q4 FY22 Q1 FY23 Q2 FY23 Q3 FY23 EBITDA (Rs. Crs) 2 22 19 10 32 31 26 23 22 22 31 I 41 I I I 356 542 807 ESTD. 1933 T 9M FY21 9M FY22 9M FY23 44 86 98 94 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 Tilaknagar Industries | Q3 (Oct to Dec 2022) & 9M FY23 0 6#700000 Management commentary From the desk of Mr. Amit Dahanukar, Chairman & Managing Director We are very proud to have delivered our highest ever quarterly net revenues at Rs. 303 crs ESTD. 1933 ID T 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 2nd 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 0#860000 Extract of Income Statement (Rs. Crs) Revenue from operations (Gross) Less: Excise Duty Revenue from Operations (Net) Other income Total Revenue (1) EXPENSES: Y-o-Y Q-o-Q Y-o-Y Q3 FY23 Q3 FY22 growth % Q2 FY23 growth % 675.46 501.67 34.6% 596.05 13.3% 1,752.03 372.59 295.77 26.0% 321.55 15.9% 945.12 9M FY23 9M FY22 growth % 37.8% 728.84 29.7% 1,271.15 302.87 205.90 47.1% 274.50 10.3% 806.91 542.31 48.8% 1.17 1.12 4.4% 0.59 98.7% 2.42 2.64 -8.2% 304.03 207.01 46.9% 275.09 10.5% 809.34 544.95 48.5% ESTD. 1933 ID (a) Cost of materials consumed 174.69 99.23 76.0% 147.51 18.4% (b) Purchases of stock-in-trade 0.00 0.00 NM 0.00 NM (c) Changes in inventories of finished goods, work-in-progress and stock-in-trade -21.81 -2.51 NM -7.83 NM 443.63 0.00 -25.00 257.39 72.4% 0.00 NM 1.57 NM (d) Employee benefits expense 10.72 6.94 54.6% 8.98 19.4% 28.19 20.36 38.5% (e) Other expenses 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% Depreciation and amortisation expense 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 Tax expenses: (a) Current tax (b) Tax for earlier periods Deferred tax Total tax expense 75.88 9.79 675.3% 13.88 446.5% 90.80 17.94 406.0% 0.00 0.00 NM 0.00 NM 0.00 0.00 NM 0.00 -0.48 NM 0.00 NM 0.00 -4.00 NM 0.00 0.00 NM 0.00 NM 0.00 0.00 NM 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% Tilaknagar Industries | Q3 (Oct to Dec 2022) & 9M FY23 8 O#9יד பப HH יד יד ידי HE יד HH = T ESTD. 1933 ID COMPANY & INDUSTRY OVERVIEW HH T பப T יד HH HH Tilaknagar Industries | Q3 (Oct to Dec 2022) & 9M FY23 9 O#1060000 About the Company Largest premium brandy manufacturer in India with presence across all segments of IMFL Manufacturing units across 12 states ESTD. 1933 ID T 20 Owned: 4 units 15+ Share of Brandy as % Brands across products 94% of total volumes Contract manufacturing: 16 units 6.73 Volumes (in cases) sold 86% Share of sales to South India as % of mn total volumes * All data is for FY22; manufacturing units is as on date Tilaknagar Industries | Q3 (Oct to Dec 2022) & 9M FY23 10 10#11Presence across IMFL categories Focus on semi-premium and above segments Super-Premium Rs. 1,000 & Above Premium Rs. 700-1,000 Deluxe Semi-Premium Rs. 500-700 (Note: All MRP for 750ml) New Launch #1 Premium Brandy in India Mansion House Reserve Brandy Courrier Napoleon Brandy Green New Launch ESTD. 1933 ID T Mansion House Flavoured Brandy Mansion House Brandy Mansion House Gold Whisky Courrier Napoleon Brandy Red madiras Madiraa XXX Rum GOLD Blue Lagoon Gin Orange Tilaknagar Industries | Q3 (Oct to Dec 2022) & 9M FY23 O 11#1260000 We sell millions of cases across India ROYALE MANSION HOUSE MANSION HOUSE madica TI's COURRIER NAPOLEON FIVENT MANSION HOUSE COURRIER NAPOLEON COURRIER NAPOLEON FRENCH BRANDY PREMIUM XOX RUM KLAGAS INDUSTRES Tilaknagar Industries | Q3 (Oct to Dec 2022) & 9M FY23 ESTD. 1933 T ID MANSION HOUSE Mansion House is a millionaire brand (more than 5.5 mn cases sold in FY22 as well as in 9M FY23) 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) O 12#1300000 ESTD. 1933 T Our strategic focus... ...the way forward Volume growth ■ FY22 growth in volumes for MHB and CNB stands at 24% each ☐ 6 yrs CAGR of 9.1% for MHB ◉ Equal focus on high-growth, nascent regions Market share growth (b) ■ Continued focus on brandy ■ Market share (as % of brandy) growth. from 12.4% to 16.8% ■ Market share (as % of IMFL) growth from 2.4% to 3.4% Efficient levels of capacity utilisation ■ Pernod Ricard agreements enables ☐ efficient capacity utilisation levels ■ Incremental region-specific growth enabled through bottling arrangements Debt repayment and cash flow generation ☐ ■ Focus on repayment of high-cost debt ◉ Target to become near net debt free by FY24 Resolution of auditor qualifications ◉ 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, 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 13 O#14MHB and MHB Brandy segment growing faster... ...than overall Brandy, Whiskey and IMFL MHB vs. Industry Growth (a) G] ESTD. 1933 T Category CAGR MHB market share as % of brandy (a) Market share growth of 36% over 6 years MHB market share as % of IMFL (a) Market share growth of 41% over 6 years MHB ↑ 9.1% Brandy Segment ↑ 2.6% Whiskey Segment ↑ 2.1% IMFL 1.9% MHB: Mansion House Brandy; 6 year CAGR from FY17 to FY22 12.4% 16.4% 16.8% 2.4% 3.0% 3.4% FY17 FY21 FY22 FY17 FY21 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 14 O#1500000 Recent Product Developments Launch of Mansion House Flavoured Brandy ISION HOUS ■India's First Premium Flavoured Brandy ■ An inclusive drink for all; across age- groups, 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 Launch of Mansion House Reserve Brandy AU MANSION HOUSE -RESERVE FRENCH STYLE MANSION HOUSE RESERVE ■ ESTD. 1933 ID T 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 Removal of Monocartons Tilaknagar Industries | Q3 (Oct to Dec 2022) & 9M FY23 HOUSE ROM MANSION HOUSE FRENCH BRANDY Focus on sustainability ✓ Cost saving measure O 15#16יד HH பப ידי HH HH = יד יד יד ESTD. 1933 ID O Tilaknagar Industries | Q3 (Oct to Dec 2022) & 9M FY23 16 FY22 FINANCIALS T HH T די பப יד HH HH#17Improving business fundamentals Premiumisation strategy to enhance margins and cash flows Total Volumes Sold (mn cases) 84% 89% Brandy Sales (mn cases) 91% 92% 94% 5.92 6.64 6.44 5.45 6.73 4.98 5.92 5.86 5.03 6.33 FY18 FY19 FY20 FY21 FY22 FY18 FY19 FY20 FY21 FY22 Share of Brandy to total volumes sold NSR per case (Rs.) Robust sales in South India (mn cases) 83% 87% 5.80 FY19 86% 86% 86% ESTD. 1933 ID T 5.51 4.70 5.82 FY20 FY21 FY22 Share of South India sales to total volumes sold 904 985 1,005 1,014 1,136 4.91 FY18 FY19 FY20 FY21 FY22 FY18 Tilaknagar Industries | Q3 (Oct to Dec 2022) & 9M FY23 17 O#1800000 00000 Focus on margins and cashflows Most of write-offs impacting EBITDA have been undertaken Net Revenues (Rs. Crs) Gross Profit (Rs. Crs) and Gross Margin (%) 51% 52% 46% 51% 49% 578 661 653 549 783 293 342 301 271 401 FY18 FY19 FY20 FY21 FY22 FY18 FY19 FY20 FY21 FY22 EBITDA (Rs. Crs) and EBITDA Margin (%) 8% 14% 10% Finance Cost (Rs. Crs) and as % of Net Revenues 26% 28% 20% 13% 8% 56 54 112 0% -52 -8% 152 184 129 71 62 FY18 FY19 FY20 FY21 FY22 FY18 FY19 FY20 FY21 FY22 (a) EBITDA for FY20 is not comparable due to write-offs impacting EBITDA Tilaknagar Industries | Q3 (Oct to Dec 2022) & 9M FY23 ESTD. 1933 ID T O 18#1960600 Disclaimer 00000 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 ESTD. 1933 T O 19#20ESTD. 1933 *U* TILAKNAGAR INDUSTRIES LTD For further information, please contact: Ameya Deshpande President - Strategy & Corporate Development Email: [email protected]