PINC P (!11t! @ ail.",,s 4# 1,"{_,. IE l) Pnone: 91 033 :2-11 9135,031 2261.19.11/.1.1.lu\ i 9l 033.1001 ,1ll.12 tu,t,.,,,k o,tt :.\.;;::::;,,:,,i|:;i:::i;,i;:;::, ,a . .i,Di ;:::::::,:;;:;::,::"::;i,,",*t li ail : pslaapnrcoNpir
13.06.2016
To BSE Limited (R€gular oflice & Corporate Relation Dept, Scrip Code: 53g771) Phiroz€e Jeejeebhoy Towers, Dulal Street, MuEbai-400001
To Calcutta Stock Exchatrge Limited (Scrip Codet 10029247) 7, Lyons Road Kolkata-700001
Dear Sir^4adarn,
Sub: Antrual Report 201916 Ref: R€sulatiod 34(1)
Enclosed herewith the 3 8e Annual Report of the Company for the year 201 5_ 16.
Ihis for your information a.nd record please.
Thanking you ForPitrcon Spirit Limited {/ Aditya IGrwa Company Secretary
lUica IKamarbari, Kahbe a, Rrjarhat, Bisltnupur, North 24 lgns, W B., Pi n-700 1.15, CoMtry Spii| Rohanda, Villagc - Gopatpur, Cha dig;rh, P.o. - Can8an,gar. 24Pargancs (Norr[) Pin I 700 132 _00 F\4( G : fl1. \ilsrtrj Ru,d. ArJrp,rr. Xoll,ara - l0o What makes Pincon Spirit Limited one of the most exciting liquor companies in India today?
PINCON SPIRIT LIMITED PINCON SPIRIT LIMITED th Annual 15 www.pinconspirit.in 38 Report 20 16 Bringing superior IMFL attributes to the IMIL space 06 India’s liquor industry is regulated by the government at one end and dominated by multinationals at the other. How Pincon has strengthened its credentials as an Opportunity- responsive company Their formidable industry barriers mean 04 that industry players are either large or
Chairman’s Vision slow-growing. Making the review To make liquor consumption leap consumption safe, hygienic The one exception is Pincon Spirit Limited. happen 14 and responsible Pincon’s biggest contribution has been in graduating the consumer at the bottom of the consumption pyramid to a superior product One of the youngest corporatised success stories in India’s liquor space. And one of 08 the fastest-growing as well. Forward-looking statement In this annual report, we have disclosed forward looking information to enable investors to comprehend our prospects and take investment decisions. This report and other statements- written and oral- that we periodically make contain forward looking statements that set out anticipated results based on the Here’s proof: Company reported its eighth management plans and assumptions. We have tried wherever possible to identify such statements by using words such as ‘anticipate’, ‘estimate’, ‘expects’, ‘projects’, ‘intends’, ‘plans’, ‘beliefs’ and ‘words of similar substance in connection with any discussion of future performance. We cannot guarantee that these forward looking statements will be realised, although we believe we have been prudent in our assumptions. The achievements of results are subject to risk, uncertainties and even inaccurate assumptions. Should known or unknown risk or uncertainties materialise, or should underlying assumptions prove inaccurate, successive year of profitable growth in actual; results could vary materially from those anticipated, estimated or projected. Readers should bear this in mind. We undertake no obligation to publicly update any forward-looking statement, whether as a result of new information, future events or otherwise. 2015-16. Revenues grew by 43%. Profit after tax strengthened by 53%. Making the Company one of the most Contents exciting prospects in India’s liquor industry.
Opportunity-responsive 04 Bringing IMFL attributes to IMIL space 06 Making the consumption leap happen 08 An insight into the corporate 10 Our corporate journey 12 Chairman’s review 14 Our robust business model 16 Company review 17 Management discussion and analysis 18 Managing business uncertainties 24 Statutory A PRODUCT [email protected] section 26 Balance Sheet and P&L Account 61 Annual 15 Report 20 16 Corporate overview | Statutory reports | Financial statements 2 3 PINCON. JUST DIFFERENT. Most established liquor companies Most IM L companies have high marketing focus on the upmarket consumer. budgets. Pincon focuses at the bottom of the Pincon’s business model is weighted around low country’s consumption pyramid. marketing costs, which can be passed on to the retailers. Most liquor companies focus on upmarket niche segments. Most liquor companies begin by blending Pincon selected to focus on the popular bottling and branding followed by segment. distribution. Pincon was engaged in the distribution business Most liquor companies address existing and used this insight of liquor across blending, price segments. bottling, branding and marketing – hence the Pincon has successfully created new price entire value chain. segments. Most liquor companies prefer to specialise in a There have been virtually no new space of their choosing. players entering the IM L space in the Pincon is extending its IMFL specialisation to the last couple of decades. IMIL segment. Pincon has been one of the most exciting entrants in the country’s IMFL sector. nnual 15 eport 16 Corporate overview | Statutory reports | Financial statements 4 5 THE PINCON DIFFERENCE Opportunity- The Company widened it responsive. footprint across 21 districts of A few years ago, the West Bengal Government West Bengal. embarked on reforming the liquor sector. Pincon was among the first to respond to this emerging opportunity. The result is that Pincon’s first- mover’s advantage has helped it acquire a leading market share and enhance revenue visibility.
he State Government’s policy of issuing composite licenses made it possible for IMFL and IMIL T manufacturers to market their products from the same retail points. This ‘open market’ approach increased the throughput of liquor brands and products through retail outlets. Besides, the very classification of the points of liquor sale was extended to clubs, bars and hotels. Pincon was among the first liquor companies in West Bengal to recognise the implications of this reform. The Company invested aggressively, creating its first IMFL bottling capacity in 2013 widened its footprint across 21 districts of West Bengal. It launched more brands. It invested in facilities that enhanced IMIL acceptability, eliminating the odour usually associated with this product following the use of grain- based ENA. The result is that Pincon’s first-mover’s advantage has helped it acquire a leading market share and enhance revenue visibility. Making it a dominant IMIL player in West Bengal.
Bottling plants 1 in 2013-14 2 in 2014-15 3 in 2015-16 nnual 15 eport 16 Corporate overview | Statutory reports | Financial statements 6 7
THE PINCON DIFFERENCE Bringing IMFL attributes to the
IMIL space. ntil a few years ago, Pincon was largely present in the IMFL segment. When the The Company U Company selected to extend to the IMIL Pincon is one of the few companies to have space, it leveraged the knowledge gathered from the proactively invested extended successfully from the premium to the IMFL segment. in deodorising popular segment. The Company’s principal learning was centred around product quality. The result was that Pincon its IMIL products, was among one of the first players to graduate enhancing their social from molasses-based IMIL to the superior grain- based equivalent, achieving the requisite 70 degree acceptability and strength. creating new markets. The Company created branded IMIL products with an upmarket look for the first time, revolutionising on-site consumer promotional methods. The Company proactively invested in deodorising its The result is that Pincon IMIL products, enhancing their social acceptability singlehandedly graduated and creating new markets. the West Bengal consumer The Company effectively utilised PET bottles from drinking illicit liquor to market its products and thus drive sales and consumption to progressive realisations. IMIL equivalents. The result is that Pincon singlehandedly graduated the West Bengal consumer from drinking illicit liquor consumption to progressive IMIL equivalents. Graduating lifestyles at the bottom-of-the-pyramid.
Additions to the IMIL portfolio 0 in 2014 1 in 2015 3 in 2016 nnual 15 eport 16 Corporate overview | Statutory reports | Financial statements 8 9
THE PINCON DIFFERENCE
Making the few years ago, Pincon launched Pincon Series, a mid-priced liquor category. Rather than compete A R ather than compete with some of the established brands and take years to carve out an with some of the consumption identity, Pincon responded laterally. established brands The Company introduced radical pricing. H50 for a 180 ml bottle. H100 for a 375 ml bottle. And H260 and take years to carve leap happen. for a litre bottle. Most experts indicated that the out an identity, Pincon pricing would only attract more IMFL drinkers. responded laterally. Pincon’s biggest contribution has What Pincon achieved was entirely unexpected. The Company addressed a large chunk of IMIL been graduating the consumer at consumers as well. Attracted by the price-value the bottom-of-the-pyramid to a proposition, a number of them were encouraged superior product. to transform their tastes and lifestyles. Going beyond enhancing The Company introduced market shares; creating new radical pricing. H50 for a 180 ml markets altogether. bottle. H100 for a 375 ml bottle. And H260 for a litre bottle.
Additions to the IMFL portfolio 9 in 2013-14 11 in 2014-15 11 in 2015-16 nnual 15 eport 16 Corporate overview | Statutory reports | Financial statements 10 11
Pincon Spirit Limited. ackground Management Pincon Spirit Limited entered Pincon Spirit Limited is headed India’s liquor business in 2005 as a by Mr. Monoranjan Roy. The wholesale distributor of high-volume Company’s operations are Extended from IMFL IMFL brands. Over the decade, managed by a 14-member senior Pincon has emerged as a leading management team who are player in blending, bottling and supported by 90+ employees. to IMIL. distributing proprietary IMFL and IMIL products. Besides this, Pincon refines, bottles and distributes edible Pioneered the advent oils in the FMCG segment. of branded IMIL. acilities rands The Company manages six blending Pincon enjoys a presence in all and bottling facilities (two owned IMFL segments through 11 in- and three contract manufacturing) house brands. The Company’s three Leveraging the ensuring that products reach 2,000+ brands in the IMIL space make it retail outlets in West Bengal, Karnataka, a dominant player in West Bengal. Odisha, Jharkhand and Uttarakhand, In the FMCG space, two edible growth prospects quickly and cost-effectively. Also, it oil brands enjoy wide consumer has its own oil refining and packaging acceptance in West Bengal. of two fast-growing plant in West Bengal. business segments. ey shareholder information Market capitalisation Enterprise value Face value per share BSE Code: 538771 in H crore in H crore in H CSE Code: 10029247
*All information relevant as of Liquor and edible oil. 243 504 10 31 March 2016
OTH R CORPORAT I ORMATIO Headquarters: Bangalore, India Listing: CSE Ltd and BSE Ltd. Our presence Contribution towards CSR initiatives: H0.20 crore in West Bengal *As of FY 2015-16 (districts) 5 in 2013-14 12 in 2014-15 21 in 2015-16 nnual 15 eport 16 Corporate overview | Statutory reports | Financial statements 12 13 OUR CORPORATE JOURNEY
2005-0 2010 2011 2012 2013 2014 2015 n Entered into a tie-ups n Present management n Launched first in-house n Expanded whisky and n Launched Highland n Set up office in Bengaluru n Launched Odisha Choice with bottling units outside takes over Sarang Viniyog brand in the IMFL segment rum portfolio Blue Whisky in the mid- for expanding into South Whisky in Odisha in the West Bengal for its IMFL Ltd, (presently Pincon – Pincon XXX Matured premium segment India economic segment brands n Launched Pincon King’s Spirit Limited) Rum Coin 50 (vodka, rum and n Launched Pincon Ruby n Launched in-house IMFL n Launched Ultra Force n Launched Pincon No. 1 n Launched wholesale n Crossed turnover of H50 whisky) Gold XO Brandy brand in Karnataka XXX Jamaican Rum in the Whisky distribution of reputed crore premium segment n Crossed turnover of H240 n Entered the FMCG n Entered the IMIL segment IMFL brands in West Bengal n Pincon XXX Matured crore segment – edible oils by launching Pincon n Launched Pincon Ruby Rum emerged as the third Bangla No.1 in West Bengal Gold Orange Flavoured Gin largest rum brand in West n Crossed turnover of H300 in regular segment Bengal* crore n Got listed on the BSE n Crossed turnover of H600 n Crossed turnover of H100 crore and net profit H10 crore crore
*As per a survey conducted by the West Bengal Foreign Liquor Manufacturers and Bonders Association
THIS IS HOW WE n Revenues increased by 43% from H693 H17 crore in 2014-15 to H26 crore. one more IMFL blending and bottling unit (Orbitol Solutions Pte Ltd), a Singapore- onward marketing in India. OUTPERFORMED crore in 2014-15 to H988 crore. n Acquired an IMIL bottling unit of in West Bengal coupled with two popular based company that will enable Pincon n Penetrated deeper and enhanced n EBITDA grew by 64% from H35 crore in National Industrial Corporation (Nicols) in IMIL brands. to export its own brand of Ultra Force XXX acceptance of edible oils in West Bengal. THE SECTOR 2014-15 to H58 crore. Asansol. n Decided to make a direct overseas Jamaican Rum to ASEAN countries. This will facilitate the import of liquor and pulses for IN 2015-16 n Profit after tax increased by 53% from n Planned to acquire two more IMIL and investment to acquire 100% of OSPL