#1Tilaknagar Industries Ltd. ESTD. 1933 *U* D TILAKNAGAR INDUSTRIES LTD Investor Presentation September 2021 lencal Gins O Tilaknagar Industries | Investor Presentation#2ப HH יד ידי பப HE יד ESTD. 1933 ID HH OUR DNA ידי HH T יד די பப பப Tilaknagar Industries | Investor Presentation HH HH 0#3Meet 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. Tilaknagar Industries | Investor Presentation ESTD. 1933 ID O 3#460000 We channel this passion into a clear purpose To deliver rich experiences for consumers by blending decades of experience with continuous innovation. Tilaknagar Industries | Investor Presentation ESTD. 1933 U ID 0#5ப יד HH ידי ப יד HH HH = ESTD. 1933 ID TILAKNAGAR AT A GLANCE ידי ידי HH T T பப பப יד HH HH Tilaknagar Industries | Investor Presentation O 5#6About the Company Largest premium brandy manufacturer in India with presence across all segments of IMFL Manufacturing units across 11 states 16 Owned: 4 units Tie-up: 12 units ESTD. 1933 ID T Share of Brandy as % 15+ Brands across products 92% of total volumes 87% Sales through: 5.45 Share of sales to Volumes (in cases) sold - State corporations 86% mn South India as % of total volumes 3% - Distributors 10% - Direct Sales *All data is for FY21 Tilaknagar Industries | Investor Presentation O#760000 We sell millions of cases across India ROYALE MANSION HOUSE MANSION HOUSE madica TI's COURRIER NAPOLEON FIVENT MANSION HOUSE COURRIER NAPOLEON COURRIER NAPOLEON PREMIUM FRENCH BRANDY XOX RUM KLAGAS INDUSTRES Tilaknagar Industries | Investor Presentation ESTD. 1933 ID T I 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 ☐ Super premium brandy ☐ Fast approaching millionaire brand status (0.6 mn cases sold in FY21) O#8Brandy & South India – Playing to our strengths - Market leadership in the 2nd largest IMFL segment in the largest alcohol consuming region of India Category-wise spirits sales (in volumes) 12% 4% Region-wise IMFL sales 19% 65% ■ Whiskey ■ Brandy ■ Rum White Spirits Rest of India 40% 60% South India Telangana & Andhra Pradesh contribute towards the highest IMFL consumption in India. 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) Tilaknagar Industries | Investor Presentation ESTD. 1933 T ID 8 O#960000 India's undisputed Brandy king Å Largest manufacturer of premium Brandy in India Brandy is 2nd largest product segment in IMFL Dominant presence in South India Mansion House - India's most sold premium brandy Tilaknagar Industries | Investor Presentation Huge opportunity in untapped markets - both product and geography ☑ Brandy is the most versatile of all IMFLS Basket of Brandy products across premium price-points ESTD. 1933 T O#1000000 Our manufacturing and consumption footprint Head office Company-owned units: 4 units Jammu (x1) Lease / Tied-up units: 12 units Mohali (Punjab) (Army dedicated) - PunjabExpo Breweries Assam (x1) Sales through State Corporations Sales through Distribution Sikkim Shrirampur (Maharashtra) West Bengal (x1) Odisha (x1) Silvassa Odisha Telangana (x2) Mumbai East Godavari District (Andhra) - Prag Distilleries Maharashtra Telangana Kuppal District (K'taka) Vahni Distilleries Goa Andhra Pradesh (x3) Andhra Pradesh Karnataka Karnataka (x1) Kerala (x2) Tilaknagar Industries | Investor Presentation Kerala Puducherry West Bengal Assam * Sales through CSDs not included in map ESTD. 1933 T 10 O 10#11ப יד HH ידי பப יד HH HH = = ESTD. 1933 ID ROADMAP AND TEAM ידי יד ידי HH T பப பப יד HH HH Tilaknagar Industries | Investor Presentation 11 O#1260000 00000 Our journey At the cusp of a turnaround Beginning 2008-2014 2014-2017 2018 onwards ESTD. 1933 ID T Founded in 1933 as Maharashtra Sugar Mills Ltd. (MSML) to manufacture sugar and allied products Tilaknagar Distilleries and Industries Ltd. (TDIL) promoted as 100% subsidiary of MSML to manufacture industrial alcohol, IMFL and sugar cubes TDIL merged with MSML after MSML exits sugar business and renamed to Tilaknagar Industries Acquired subsidiaries Vahni Distilleries (Karnataka), Prag Distilleries (Andhra), Kesarval Springs Distillers (Goa) and PunjabExpo (Punjab) Acquired seven brands from Alcobrew Distilleries for CSD segment and IFB Agro's IMFL business (Volga' vodka and 'Blue Lagoon' gin) for an entry into East Indian markets of West Bengal, Assam and Odisha Commissioned expansion of 50 KLPD molasses based distillery to 100 KLPD and 100 KLPD grain based distillery I At its peak, registered net revenue of Rs. 824 crs in FY14 Expansion project at Prag stalled I Defaults in repayment to banks and financial institutions I Sale of assets of Kesarval Springs Distillers to Indospirit Beverages Pvt. Ltd. in 2015 | Restructuring of debt completed with EARC One-time settlements reached with all lenders Enters into 10 yrs agreement to manufacture products for Pernod Ricard products at bottling plant in Maharashtra Achieved EBITDA margin of 10% for FY21 Growth in volumes from 4 mn cases in FY16 to 5.5 mn cases in FY21 Tilaknagar Industries | Investor Presentation 12 O 12#1360000 00000 Business Strategic Roadmap 600 Brandy focus ■ Drive market leadership in brandy Mansion House sells more than 4 mn cases annually Brandy presence across premium price-points - MHB, CNB Green, CNB Blue, CNB Gold Drive scale Strong volumes despite imposition of AED due to Covid-19 ■ Further growth in existing markets Expansion in fast-growing new markets across India Bottling arrangements to drive growth 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) (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 Tilaknagar Industries | Investor Presentation ESTD. 1933 T G] O 13#14Our strategy to reduce debt 00000 Volume growth in existing markets ⑭ Favorable product mix Entry into new fast-growing brandy markets Expansion through bottling tie-ups Working capital efficiencies Debt restructuring (already achieved) Tilaknagar Industries | Investor Presentation Operating leverage + Margin expansion + Asset-light model ESTD. 1933 ID Cash-flow generation Reduce debt 14 O#150000 Experienced Experienced and energized team at the helm ESTD. 1933 T ID Amit Dahanukar, Chairman & Managing Director 45 years of age, he has over 20 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 Ajit Sirsat, Chief Financial Officer Has over 26 years of experience in Finance and Accounts across industries He is a Chartered Accountant and Cost & Management Accountant Varadarajan Srinivasaraghavan, General Manager - Manufacturing Has over 25 years of industry experience He is a B. Tech (Mechanical) and looks at overall manufacturing and procurement at corporate level Ameya Deshpande, Head-Corporate Development & Strategy Has been an Investment Banker with Deutsche Bank and BNP Paribas and was also co- founder of a food-travel start-up called Authenticook He has recently joined the Company in July 2021 Tilaknagar Industries | Investor Presentation O 15#16ப HH יד ידי பப HE יד HH ידי ESTD. 1933 ID FINANCIALS יד ידי HH T பப பப יד Tilaknagar Industries | Investor Presentation O 16 HH HH#176060* Debt restructuring update Debt as of 31-Mar-21 (a)(b) 1,252 crs 182 Mar-19 627 crs Mar-21 81 28 ESTD. 1933 T ID ■EARC Term Loan ■ Cash Credit 336 ■ Other Debt ■Trade Deposits (Unsecured) 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 SBI Bank of India IDBI Bank Standard Chartered Bank DCB Bank Tilaknagar Industries | Investor Presentation Full settlement achieved 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 17#1800000 Improving business fundamentals Premiumisation strategy to enhance margins and cash flows Total Volumes Sold (mn cases) 84% Brandy Sales (mn cases) 89% 91% 92% 5.92 6.64 6.44 5.45 4.98 5.92 5.86 5.03 FY18 FY19 FY20 FY21 FY18 FY19 FY20 FY21 Share of Brandy to total volumes sold NSR per case (Rs.) Robust sales in South India 83% 904 985 1,005 1,014 4.91 FY18 FY19 FY20 FY21 FY18 Tilaknagar Industries | Investor Presentation 87% 86% 86% 5.80 FY19 5.51 4.70 FY20 FY21 Share of South India sales to total volumes sold ESTD. 1933 T 18 O#1900000 Focus on margins and cashflows Most of write-offs impacting EBITDA have been undertaken Net Revenues (Rs. Mn) 5,778 6,613 6,528 5,488 FY18 FY19 FY20 FY21 EBITDA (Rs. Mn) and EBITDA Margin (%) 8% 10% 29 561 541 0% -519 -8% FY18 FY19 FY20 (a) EBITDA for FY20 is not comparable due to write-offs impacting EBITDA Tilaknagar Industries | Investor Presentation Gross Profit (Rs. Mn) and Gross Margin (%) 51% 52% 49% 46% 2,934 3,417 3,006 2,714 FY18 FY19 FY20 FY21 Finance Cost (Rs. Mn) and as % of Net Revenues 26% 28% 20% 13% 1,519 1,842 1,289 710 FY21 FY18 FY19 FY20 FY21 ESTD. 1933 ID T 19 O 19#2060000 00000 FY21 revenues vs. FY20 revenues Rs. Mn 6,317.7 FY20 Net Revenue 21.4 11.9 5,397.6 -826.2 -127.2 Brandy Others Brandy Others FY21 Net Revenue Price Impact Volume Impact * 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 Tilaknagar Industries | Investor Presentation ESTD. 1933 T G] 20 20#2100000 Financial Summary – Income Statement (Rs. Mn) Gross Revenue Less: Excise Duty Net Revenue Gross Profit - FY18 FY19 FY20 FY21 12,916 15,255 14,835 14,184 7,138 8,642 8,306 8,696 5,778 6,613 6,528 5,488 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% Tilaknagar Industries | Investor Presentation ESTD. 1933 G] 21 21#22ப HH יד ידי ப HE יד HH ESTD. 1933 ID Q1 FY22 Result Update יד ידי HH T T பப பப יד Tilaknagar Industries | Investor Presentation HH HH 22 22#23Management commentary on Q1 FY22 results From the desk of Mr. Amit Dahanukar, Chairman & Managing Director ESTD. 1933 T G] 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 2nd week of April, we have been seeing significant improvement in volumes from mid-June onwards 00000 Tilaknagar Industries | Investor Presentation 23 23#2400000 Q1 FY22 Volumes Approaching normal levels of business; July and August touches more than 6 lacs cases Cases in lacs 5.9 Q1 FY22 vs. Q4 FY21 - On the path to complete recovery 5.0 17.2 Since 2017, the volumes for the month of June have been outpaced by subsequent months for that financial year 6.3 Jan-21 Feb-21 Mar-21 Cases in lacs Q4FY21 3.3 3.6 Apr-21 4.3 11.1 May-21 Jun-21 Q1FY22 Q1 FY22 vs. Q1 FY21 - 82% growth Y-o-Y 3.3 3.9 6.0 3.6 4.3 11.1 2.1 0.0 Apr-20 May-20 Jun-20 Q1FY21 Apr-21 May-21 Jun-21 Q1FY22 Tilaknagar Industries | Investor Presentation ESTD. 1933 T ID 24 224#25Strong 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 Volumes (in lacs): Brandy volumes Others Total volumes Q1 FY22 Q1 FY21 Y-o-Y growth % Q1 FY20 Q1 FY22 vs Q1 FY20 growth % Q4 FY21 Q-o-Q growth % 10.4 5.4 91% 12.1 -14% 15.8 -34% 0.7 0.5 27% 1.5 -54% 1.4 -51% 11.1 6.0 86% 13.6 -18% 17.2 -36% Financial performance (Rs. Mn): Revenue from operations 1,353.0 563.8 140% 1,350.6 0.2% 1,923.4 -30% Gross profit 759.5 319.0 138% 649.0 17% 854.3 -11% Gross margin (%) 56.1% 56.6% -44 bps 48.1% 808 bps 44.4% 1,171 bps EBITDA 233.7 24.7 846% 161.6 45% 102.4 128% EBITDA margin (%) 17.3% 4.4% 1,289 bps 12.0% 531 bps 5.3% 1,195 bps EBIT 151.8 -58.4 NM 79.3 91% 21.3 611% Finance Costs 150.1 172.4 -13% 462.2 -68% 187.1 -20% Profit (Loss) after tax 3.7 -228 NM -369.6 NM -90.2 NM Tilaknagar Industries | Investor Presentation 25 G] ESTD. 1933 T#26ESTD. 1933 T 60000 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 | Investor Presentation 26 26#27ESTD. 1933 *U* TILAKNAGAR INDUSTRIES LTD For further information, please contact: Ameya Deshpande Head-Corporate Development & Strategy Email: [email protected]