Investor Presentation February 2012
Industry Overview The Indian FMCG industry at INR 1300 bn (around USD 30bn) accounts for 2.2% of the GDP (growing g at robust 9%) In the last decade, the sector grew by 11% annually The FMCG industry is expected to grow at a base rate of atleast 12% annually to become an INR 4000 bn (around USD 90bn) industry by 2020. Historical Growth of FMCG Industry 1 Accelerating Premiumization 4 Rapid Globalisation 2 Evolving Categories 5 Many Indias 3 Goldmine at BOP 6 Growing Modern Trade GDP growth of ~ 5% annually Golden years for FMCG Industry; GDP growth of ~ 8%, rural markets opened up INR 1300 bn FMCG sector Environment 7 Eco consciousness 8 Game changing Technologies 9 Enabling Policies Key Trends shaping the FMCG markets in India Source: Industry Reports 2
Key Drivers of the FMCG industry in India Source: Industry Reports 3
Low penetration.big opportunity 100.0% 90.0% 95.6% 92.3% 88.6% 80.0% 74.2% 70.0% 0% 64.3% 60.0% 50.0% 0% 55.7% 51.6% 40.0% 30.0% 20.0% 17.1% 10.0% 0.0% Toilet Soap Washing Powders Detergent Bar Hair Oil Toothpaste Shampoo Talcum Powder Fairness Cream 17% 1.7% 1.3% Antiseptic Cream Cold Cream Low penetration of major segments indicates long term growth story Source: Industry Reports 4
Company Overview Emami Limited, the flagship company of the Emami Group, is a leading FMCG player in India The Company is promoted by Mr. R.S. Agarwal and Mr. R.S. Goenka Emami has been in the health, beauty and personal care since the last 35 years and has sustained its prominent position in Ayurvedic products Aided by state-of-the-art R&D, it has developed power brands like Navratna, BoroPlus and Fair and Handsome About 80% of the Company s production comes from tax exempt zones Gross revenue of over Rs 12 bn ($245mn) in FY 2011 with a CAGR of 26% over last 5 years To make people Healthy and Beautiful, naturally 5
Shareholding Pattern MFs / FIIs, 17.1% Others, 10.2% Promoters 72.7% Listed on the NSE, BSE and Kolkata stock exchanges Market capitalisation of around Rs. 56 bn (USD 1.14bn) Return to investors of around 140% following its QIP in July 2009 6
Board of Directors S.N. Promoter Directors S.N. Independent Directors 1 Sri R. S. Agarwal 8 Sri Viren j. Shah, Industrialist, ex Governor of West Bengal 2 Sri R. S. Goenka 9 Sri K. N. Memani, ex Country Head of E&Y, India 3 Sri S. K. Goenka 10 Sri Y. P. Trivedi, eminent tax expert & advocate, Rajya Sabha member 4 Sri Mohan Goenka 11 Sri S. K. Todi, Industrialist 5 Sri A. V. Agarwal 12 Sri Amit Kiran Deb, ex Chief Secretary, Govt. of West Bengal 6 SriH. V. Agarwal 13 SriS.B. S. Ganguly, Industrialist 7 Smt. Priti Sureka 14 Vaidya Suresh Chaturvedi, Ayurvedacharya, Padmashree 7
The Journey. Crossed Net Sales 8
Strategy Aggressive promotion through celebrities Expand distribution reach rural Differentiated Value For Money products Product innovation to enter new categories Brand extensions Entry in new geographies drive exports Leveraging existing distribution network Drive Revenue Benchmark A&P spends to industry Stabilization of new launches and brands Continuous Cost control initiatives Fiscal efficiency for manufacturing facilities in tax exempt zones Grow Net profit Foray into new categories and International business to drive revenue growth 9
Snapshot of Power Brands Power Brand Segment Market Size (INR in Millions) Market Size (USD in Millions) Emami s Market Share in % 2005 2011 Navratna Oil Cooling oil 6,650650 136 47 54 Boroplus Cream Antiseptic Cr. 3,050 62 65 75 Zandu & Mentho Balm 6,100 124 13* 56 Plus Balm Fair & Handsome Men's fairness cream 2,850 58 -- 57 Boroplus Powder Prickly heat 2,200 45 16 14 powder Navratna Cool Talc Cool Talc 3,350 68 -- 17 Fast Relief Pain reliever 4,350 89 7 8 Sona Chandi & Zandu Chyawanprash 2,100 43 10# 15 Source: AC Nielsen * Only Menthoplus # Only Sona Chandi 10
Domestic Reach Strong foothold in rural India Nation-wide domestic distribution network 2800+ distributors, 500,000+ retail outlets, Brand reach 3mn outlets t Team of 2500 front line sales force Domestic Sales on cash basis North, 29% East, 22% South, 23% West, 26% Geographical breakup of Sales Initiated t Project Swadesh to reach all 5000 population towns by 2013 11
Global Reach 12
International business contributes around 14% of the total revenue Growing at a CAGR of 34% over last 5 years CIS, 11% Others, 3% Africa, 35% GCC, 21% SAARC, 30% Internationally, products available in 75 countries strong growth coming from Middle East, CIS and SAARC 13
Research Capabilities Focus: Product innovation, product differentiation, cost control and maintaining excellent product quality Team comprises qualified Ayurvedacharyas and specialized Ayurveda scientists; advisory panel comprising top Ayurvedic experts A modern fully equipped laboratory with cgmp practices State-of-the-art Himani Ayurvedic Science Foundation in Kolkata Setting up a 30,000 sq. ft. State-of-the-art ultra modern R&D centre in Kolkata Also set up a Market intelligence and innovation centre in Kolkata 14
Celebrity Endorsements 15
New Launches The new launches like Navratna Cool Talc, Boroplus Body Lotion, Navratna Extra Thanda Oil, Malai Kesar Cold Cream and Vasocare Petroleum Jelly are performing very well Launched Boroplus Healthy and Fair Winter Cream last winter, Navratna Coconut Cool Oil and Boroplus Sun Protection Lotion in this year Continue to launch 2-3 innovative products / brand extensions every year Ayurvedic healthcare, Hair care and Skin care will be the focus area Strong pipeline of new products 16
Navratna Oil o Market size of Rs. 6650 mn ($136 mn) o Market leader with 54% market share o Grew by 20% in FY11 o Growing at CAGR of 15% in last 6 years o Commissioned some of the most visible brand ambassadors (Amitabh Bachchan, Shahrukh Khan, and Mahesh Babu, Chiranjeevi and Upendra for South) o Navratna Brand has been ranked 3 rd among India s most trusted brands in hair oil category by Brand Equity Survey, 2011 o Two major line extensions of Navratna, Navratna Extra Thanda Oil and Navratna Cool Talc are receiving encouraging market response. An ayurvedic therapeutic cooling oil providing physical and mental stress relief, protection and nourishment 17
Boroplus Antiseptic Cream o Market size of Rs. 3050 mn ($62 mn) o Leader in the antiseptic cream market with a 75% share o Largest selling antiseptic cream not only in India but also in Ukraine, Russia and Nepal o Sales grew by 9 in FY11 o Growing at CAGR of 17% in last 6 years o Boroplus Brand ranked 21 st among India s most trusted brands in Personal care category by Brand Equity Survey, 2011 o Launched brand extension Body Lotion and Healthy and Fair winter cream An ayurvedic antiseptic and protective cream ideal for harsh winter conditions and minor skin problems (chapped, cracked and dry skin) 18
Fair & Handsome Fairness Cream o Launched in October 2005; first fairness cream for men in India o Market size at Rs. 2850 mn ($58 mn) with a market share of 57% o Fair and Handsome ranked 26 th among India s most trusted brands in Personal care category by Brand Equity Survey, 2011 o Sales grew by 11% in FY11 o Launched 7ml and 15ml LUPs. Five power formula contains double-strength peptide complex (patented in US) for tougher male skin 19
Zandu & Menthoplus Balm o Market size of Rs. 6100 mn ($124 mn) o Zandu, a dominant player in pain management category o Zandu ranked 3 rd among India s most trusted brands in OTC Personal care category by Brand Equity Survey, 2011 o Sales grew by 22% in FY11 o Market share of 56% o CAGR of 20% over the last 6 years in Menthoplus Relief from headaches, body aches and cold 20
Zandu & Sona Chandi Chyawanprash o Market size of Rs. 2100 mn ($43 mn) o Market share of 15% o Grew by 12% in FY11 o Sona Chandi endorsed by Shah Rukh Khan, Sunny Deol and Dharmendra. Immunity builder Surakshit tan aur tez dimag 21
Navratna Cool Talc o Market size of Rs. 3350 mn ($68 mn) o A new launch in the talcum powder category; with cooling properties o Market share at 17% o Growing by over 100% since last 2 years Brings the much required cool and icy sensation in the scorching summers 22
Fast Relief o Market size of Rs. 4350 mn ($89 mn) o Market share of 8% o Grown at a CAGR of 18% in last 6 years. o Brand revamped with enhanced formulation in new packaging as Himani Fast Relief ultra fast formula o Launched Fast Relief Max in cream based non sticky format o Amitabh Bachchan is the Brand Ambassador o Widely accepted in the states of Delhi, UP and Punjab Provides instant relief from backache, muscle pain and other joint pains 23
Operations 7 manufacturing facilities; 2 in Guwahati and 1 in Pantnagar, Uttaranchal enjoying fiscal benefits Most of the facilities are cgmp and ISO 9000 compliant. Units follow highest standards of safety and environment protection 24
Summarised Balance Sheet As at March 31, 2011 LIABILITIES Rs. in USDin ASSETS Rs. in USDin Millions Millions Millions Millions Share Capital & Reserves 6,898.5 140.8 Net Fixed Assets 2,257.7 46.1 Deferred Tax 137.0 2.8 Goodwill 2,651.6 54.1 Loan Funds 2,293.7 293 46.8 Investments 66.2 1.4 Less : Cash & Bank Bal (2,105.0) (43.0) Net Current Assets 2,248.7 45.9 7,224.2 147.4 7,224.2 147.4 25
Net Sales Aggressive 14,000 Growth continues 12,000 10,000 34.2% 22.2% 12.7% 30.3% 35.5% 10,380 In Millions 12,778 23.1% 8,000 7,662 Growt th 6,000 4,000 4,269 5,217 5,881 2,000 2005 06 2006 07 2007 08 2008 09 2009 10 2010 11 Consolidated Growing at CAGR of 25% over last 5 years 26
PAT 2,500 84.8% In Millions 2,287 2,000 66.3% 34.0% 36.2% 1,697 34.8% 1,500 1.9% Growt th 1,000 902 919 500 494 662 2005 06 2006 07 2007 08 2008 09 2009 10 2010 11 Growing at CAGR of 36% over last 5 years Consolidated 27
A&P Expenses 2400 A&P Expenses A&P Expenses as a % of Sales In Millions 26% 2000 23.8% 21.2% 1944 2305 24% 22% Rs in Millions 1600 1200 800 973 1250 19.3% 20% 1441 18.7% 18% 18.0% 16% 14% 400 12% 0 2005 6 2007 8 2008 9 2009 10 2010 11 Higher A&P spends well reflecting in revenue growth 10% 28
Dividend 350% Dividend % Pay Out % 43.1% 43.4% 300% 250% 36.3% 3% 300% 350% 50% 45% 40% Divide end (%) 200% 150% 200% 225% 225% 31.3% 3% 27.0% 35% 30% 25% Pay Ou ut (%) 100% 20% 50% 15% 0% 2006 07 2007 08 2008 09 2009 10 2010 11 Stock Split from Rs. 2/ per share to Rs. 1/ per share in FY11 10% 29
Market Capitalization 70000 60000 55985 Market Cap (Rs s. in Mn) 50000 40000 30000 20000 19266 10000 0 4281 2005 2009 2010 2012 Public issue of 5 mn shares at Rs. 70/ each QIP of 10 mn shares at Rs. 310/ each Present price of Rs. 370/ per share after split from Rs. 2/ to Re.1 each 30
H1FY12 Update SALES EBITDA 7000 1200 EBITDA, +19.7% 6103 1010 PAT, 6000 5099 1000 886 5000 800 4000 3000 600 2000 400 1000 0 200 0 EBITDA, 1072 +6.1% PAT, 921 H1FY11 H1FY12 H1FY11 H1FY12 SALES EBITDA/PAT 31
H1FY12 Results Rs. in Millions Particulars H1FY12 % of H1FY11 % of Growth FY11 % of Sales Sales % Sales Net Sales 6103.4 100% 5099.0 100% 19.7% 12777.8 100% Other Income 105.2 1.7% 33.6 0.7% 213.1% 67.0 0.5% Materials Cost 2587.7 42.4% 1975.8 38.7% 31.0% 5231.8 40.9% A&P 1118.1 18.4% 980.4 19.2% 14.0% 2305.0 18.0% Staff Cost 438.1 7.2% 336.7 6.6% 30.1% 737.1 5.8% Admn & Other Exp 992.5 16.3% 829.3 16.3% 19.7% 1969.5 15.4% EBITDA 1072.2 17.6% 1010.4 19.8% 6.1% 2601.4 20.4% Interest (Net) -55.4-0.9% -44.8-0.9% 23.7% -111.7-0.9% Depreciation i 598.99 98% 9.8% 586.3 11.5% 21% 2.1% 1160.9 91% 9.1% Transfer from General Reserve -510.4-8.4% -510.4-10.0% 0.0% -1020.9-8.0% Exceptional Item-Forex Loss 50.5 0.8% -35.8-0.7% -241.1% -118.1-0.9% PBT 988.6 16.2% 1015.11 19.9% 9% -2.6% 2691.22 21.1% 1% Tax 67.2 1.1% 129.1 2.5% -48.0% 400.2 3.1% PAT 921.4 15.1% 886.0 17.4% 4.0% 2291.0 17.9% EPS - Rs. 6.1 5.9 4.0% 15.1 32
Ratings, Awards & Recognitions Corporate Emami among Asia's 'Best Under A Billion' 2010 list of companies compiled by the Forbes magazine Ranked 144 th among BT-500 Most Vl Valuable Companies of India in private Sector (Business Today) Ranked 272 nd among Fortune 500 India s largest Corporations on Profitability in 2010 Rated (by CARE) PR1+ (highest rating) for Short Term borrowings signifying highest safety. Upgraded to AA+ for Long Term borrowings. Brands Zandu ranked 3 rd in OTC Personal Care category; Navratna ranked 3 rd in Hair Oil category; Boroplus ranked 21 st, Emami ranked 24 th and Fair and Handsome ranked 26 th in the Personal Care category by Brand Equity Survey, 2011 Navratna was awarded the best packaging award by Paper Film & Foil Converters Association Operations Abhoypur unit also accredited with ISO 14001:2004 and ISO 18001:2007 accreditation signifying compliance with Environment management system and Occupational health and safety management system Internal Audit Division awarded ISO 9001:2008 accreditation 33
Received INDIASTAR 2010 NATIONAL AWARDS forexcellence in packaging in : Emami VasoCare Petroleum Jelly in In Built Flip Top Cap Zandu Balm 10 G Pack in Bi Colour Container and Cap Emami 5 in 1 shampoo Sachet Emami Hairlife Single Piece Carton Individual Recognition Mr. Naresh Bhansali, CEO Finance, Strategy and Business Development, has been awarded CFO 100 Roll of Honour an award that recognises the top 100 senior finance professionals in India who have made a difference with their acumen, who brilliantly managerisk, construct a safety net and yet drive growth. Mr. Vikram Saxena, AVP IT, has been consistent winner of CIO 100 since last 4 years CII awarded 1 st Prize for sustained level of High Productivity in Eastern Region to Amingaon unit. 34
Key Investment Highlights g One of the fastest growing FMCG company Niche category player + innovator in Therapeutic and Ayurvedic segment - strong entry barriers for the competition Key brands are strong market leaders in their respective categories With the acquisition of Zandu, we have one the strongest Ayurvedic Brand in our portfolio Bigger basket of power brands and entry in new segments Over 80% of the business comes from Wellness categories. Focus on each Brand with patience and continuous investment. Superior gross margins in the industry EBITDA margin before A & P at 39% Production from tax free zones 35
Thank You