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Radico Khaitan Ltd. Earnings Presentation Q4 and Full Year Radico Khaitan Ltd. (BSE: 532497; NSE: RADICO) Earnings Presentation Q4 and Full Year FY2020 Recent Branding and Marketing Campaigns #VocalForLocal #VocalForLocal Earnings Presentation | Q4 and Full Year FY2020 1 FY2020 Performance Highlights Continued strong operational performance and robust top line growth Prestige & Above Regular & Others Total IMFL Volume Volume Volume Increased Increased Increased 12.5% 15.2% 11.4% to 24.30 Million Cases to 7.05 Million Cases to 17.25 Million Cases Total Revenue from Comprehensive Operations (Net) Gross Profit* Adjusted EBITDA** Income Increased Increased Increased Increased 15.7% 11.1% 5.4% 20.0% to ` 2,427.04 Crore to ` 1,179.83 Crore to ` 368.19 Crore to ` 224.80 Crore Note: All numbers above are on Standalone basis for FY2020 and Y-o-Y comparison * Gross Profit adjusted for the excise duty component on the finished stock of country liquor transferred to depot as per Ind AS accounting treatment ** EBITDA for 12M FY2020 adjusted for ` 24.17 Crore pertaining to exceptional items Earnings Presentation | Q4 and Full Year FY2020 2 FY2020 Performance Highlights Leverage and Return Ratios Net Debt Position (` Crore) Annual Interest Cost (` Crore) 947 785 162 570 215 63 382 85 80 319 68 250 35 32 Mar-16 Mar-17 Mar-18 Mar-19 Mar-20 FY2016 FY2017 FY2018 FY2019 FY2020 Net Debt / EBITDA (x) Return on Equity (ROE) and Return on Capital Employed (ROCE) ROE ROCE 18.1% 17.7% 15.2% 15.9% 12.7% 11.2% 9.2% 5.1 8.3% 8.2% 8.2% 3.7 2.1 0.9 1.0 FY2016 FY2017 FY2018 FY2019 FY2020 FY2016 FY2017 FY2018 FY2019 FY2020 ROE: Total Comprehensive Income / Average Shareholders Equity ROCE: Adjusted EBIT / Average Capital Employed Capital Employed: Shareholders Equity + Total Debt Earnings Presentation | Q4 and Full Year FY2020 3 FY2020 Performance Highlights Continued strong top line growth Q4 FY2020 vs. Q4 FY2019 12M FY2020 vs. 12M FY2019 o Total IMFL volume of 24.30 Million Cases (+12.5%) o Total IMFL volume of 5.82 Million Cases (+13.1%) o Prestige & Above brands volume of 7.05 Million Cases (+15.2%) o Prestige & Above brands volume of 1.53 Million Cases (+11.3%) o Prestige & Above brands contribution to the total IMFL o Prestige & Above brands contribution to the total IMFL volumes of 29.0% (vs. 28.3% last year) volumes of 26.4% (vs. 26.8% last year) o Revenue from Operations (Net) of ` 2,427.04 Cr (+15.7%) o Revenue from Operations (Net) of ` 585.36 Cr (+14.8%) o Gross Margin* declined from 50.6% to 48.6% due to input cost o Gross Margin* declined from 52.6% to 48.6% due to input cost pressures offset to a certain extent by product mix changes pressures offset to a certain extent by product mix changes o EBITDA** of ` 368.19 Cr (+5.4%) o EBITDA** of ` 79.61 Cr (+9.6%) o EBITDA** margin declined from 16.7% to 15.2% o EBITDA** margin declined from 14.2% to 13.6% o Reduction in interest costs from ` 35.48 Cr to ` 31.61 Cr o Interest costs increased from ` 7.73 Cr to ` 8.46 Cr o Total Comprehensive Income of ` 224.80 Cr (+20.0%) o Total Comprehensive Income of ` 36.44 Cr (-8.1%) o Dividend of 100% or ` 2/share (up from 60% or ` 1.2/share ) Above financials are on Standalone basis * Gross Profit adjusted for the excise duty component on the finished stock of country liquor transferred to depot as per Ind AS accounting treatment ** EBITDA for 12M FY2020 adjusted for ` 24.17 Crore pertaining to exceptional items: Write off of debtors in Bihar of ` 8.56 Crore in Q4 FY2020; ` 8.59 Crore paid under the SV Scheme during Q3 FY2020 and Environmental Compensation of ` 7.02 Crore paid during H1 FY2020. SV Scheme is Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 which became effective from September 2019 as per the Finance Act, 2019 Earnings Presentation | Q4 and Full Year FY2020 4 Awards and Achievements Radico Khaitan crossed a number of milestones Monde Selection Awards 2020: Tops Fortune India’s ‘The 8PM family of brands crosses 10 Received one Grand Gold and eight Golds Next 500’ 2020 Rankings million cases mark Earnings Presentation | Q4 and Full Year FY2020 5 COVID-19 Measures, Impact and Position Resilient capital structure and robust brand portfolio to enable Radico Khaitan step towards a brighter and healthier future o A global health calamity and economic crisis; Nationwide lockdown brought businesses to a halt and disrupted the economy o Implemented employee health and safety measures in line with health authorities’ guidelines at all our office and factory premises o Manufacturing of ENA partially operational and IMFL bottling fully suspended from 24-March to 4-May Measures o Started production of sanitizers to support the nation’s fight against Coronavirus o Driving agility and responsiveness across the value chain o Developed a company wide policy framework to reflect how systems and processes need to change post COVID-19 o Zero IMFL sales during the month of April 2020 o Recovery expected after lockdown relaxation from May 4, 2020 o Impact Near term uncertainty on the control of virus infection o Closely monitoring the situation and invoked crisis management actions to ensure the safety and security of the team as well as uninterrupted operations o Regular review of cash flows and liquidity o Continued strong operational performance with double digit volume growth o Solid balance sheet position with Net Debt of ` 382.04 Crore and comfortable Net Debt / EBITDA ratio of 1.04x Position o Higher working capital due to receivables build up with certain corporation markets but no counterparty risks o All capex and costs are being reviewed to ensure optimization during this time period Earnings Presentation | Q4 and Full Year FY2020 6 Management Perspectives Commenting on the results and performance, Dr. Lalit Khaitan, Chairman & Managing Director said: “I am pleased to report that Radico Khaitan has closed the financial year FY2020 with a remarkable operational and financial performance, especially in the context of the current pandemic and its affect on the global economies. Despite the lock down during the later part of March 2020, we have delivered a robust double digit IMFL volume growth. This is a reflection of our strong brand equity and consumer focused brand portfolio. Management continues to make strategic and highly targeted investments in innovative marketing and products to gain market share. I am confident that we will continue to outperform the industry and strengthen our market positioning in the years to come. The country was under lock down for the entire month of April 2020 and it certainly has impacted all sectors of the economy. We believe it is a temporary phase for our business and after the lockdown is over, we shall return to normalcy soon. In a period of crisis like this, Radico Khaitan stands in solidarity with the nation and we are humbled to have been able to make our small contribution to the nation’s fight against Coronavirus. In addition to cash contributions, we continue to supply sanitizer to various district administrations in UP and other government agencies. We continue to evaluate the impact of this pandemic on our business and remain cautiously optimistic. We have a resilient capital structure and robust brand portfolio to enable us to step towards a brighter and healthier future once this is over.” Earnings Presentation | Q4 and Full Year FY2020 7 Management Perspectives Commenting on the results and performance, Mr. Abhishek Khaitan, Managing Director said: “Radico Khaitan has continued the growth momentum during FY2020. Despite the ongoing economic crisis, we are pleased to deliver IMFL volume growth of 12.5%, led by Prestige & Above volume growth of 15.2%. Net Revenue from Operations during FY2020 increased by 15.7%. As you are aware that we currently have four millionaire brands. At least two more of our brands are approaching the milestone of annual sales of a million case in the near to mid term. I am also proud to report that the 8PM family of brands has crossed volume of 10 million cases during FY2020. The current COVID-19 crisis is unprecedented and at the same time there is a lot of uncertainty around the timing of recovery from this situation. Therefore it is even more difficult to ascertain its impact on the industry as a whole and our business. We are adopting a deliberate and prudent approach to our strategy and it will have a similar ring to those who have seen Radico Khaitan consolidate and grow holistically over the last decade. As we move into FY2021, we will continue to take necessary steps to maintain our robust foundation and financial strength whilst at the same time delivering differentiated consumer experience. We remain confident of our ability to deliver long term value to all our stakeholders.” Earnings Presentation | Q4 and Full Year FY2020 8 Performance Overview Q4 y-o-y Twelve Month y-o-y FY2020 FY2019 Growth (%) FY2020 FY2019 Growth (%) Operational Performance (Million Cases) Prestige & Above 1.53 1.38 11.3% 7.05 6.12 15.2% Regular & Others 4.28 3.76 13.8% 17.25 15.48 11.4% Total Volume 5.82 5.14 13.1% 24.30 21.61 12.5% Prestige & Above as % of Total 26.4% 26.8% 29.0% 28.3% Financial Performance (` Crore) Revenue from Operations (Gross) 2,209.11 1,978.26 11.7% 9,417.89 8,058.00 16.9% Revenue from Operations (Net) 585.36 509.98 14.8% 2,427.04 2,096.95 15.7% Gross Profit 1 284.42 268.27 6.0% 1,179.83 1,061.52 11.1% Gross Margin (%) 48.6% 52.6% 48.6% 50.6% EBITDA 2 79.61 72.61 9.6% 368.19 349.23 5.4% EBITDA Margin (%) 13.6% 14.2% 15.2% 16.7% Total Comprehensive Income 3 36.44 39.68 (8.1)% 224.80 187.35 20.0% Total Comprehensive Income Margin (%) 6.2% 7.8% 9.3% 8.9% Basic EPS (`) 2.89 2.93 (1.4)% 17.05 14.10 20.9% Above financials are on Standalone basis 1.
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