Safe Harbour
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accuracy, completeness or correctness of the information or opinions contained in this presentation. Such information and
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2
Key Investment Arguments
Key Investment Arguments
360⁰ Business Model
Strong Consumer
Portfolio
• Only Company in the Alcobev industry to straddle all segments of the spirits
value chain (consumer and manufacturing)
• Insulates from risk in price movement of any one of the products
• Enables leveraging growth opportunities across all segments
• Ensures greater quality control over the entire value chain
• Robust growth - higher than industry average; contributing more than 50%
to the top-line
• Undisputed leader in North India in IMIL with over a decade of experience volumes of >12 mn cases per year
• Pioneer in branding IMIL, developed Nimboo, Rs. 3,500 mn brand at retail
level
• Distribution presence for IMFL in 8 states, covering ~40% of the industry
• Launched 4 mainstream brands, of which Hannibal Rum has qualified for CSD
registration
Deep Relationships
for Franchisee IMFL
• Proxy play on growth of branded IMFL business - sticky business with limited
investments and consistent margins
• Tie ups with industry majors like ABD, Jagatjit and USL for bottling 3.75 mn
cases per year, who control over 45% of the relevant markets
Significant Player in
Bulk Alcohol
• Amongst the largest distillation capacity in the country at 84.4mn liters p.a., in
advanced stages of increasing this to 120 mn bulk litres
• Secures access to alcohol for branded operations in a scenario where
demand-supply gap for bulk alcohol is expected to widen considerably
4
Key Investment Arguments
Capital Efficient
Operations
• Ability to build technologically superior plants at a much lower cost than the
industry average: Over the last 3 years, ~3x capacity expansion has been
achieved without any equity dilution
• Strong cash conversion cycle resulting in low working capital investment at
33 days
• Reflected in high Asset Turnover of ~1.9x and ROCE of ~21%, amongst most
favourable in industry
Healthy Financials
• Over the last 3 years, achieved CAGR of 36.4% in gross sales, 37.8% in EBIDTA
and 46.8% in PAT
• Strong Balance Sheet with low leverage, debt-equity of 0.4x, amongst most
favorable in the industry
• Scope to increase leverage for organic/inorganic expansion
Strong Management
Team
• Managed by a group of professionals and an experienced management team
with a healthy mix of industry experts and young energetic talent
5
Industry Overview
India has the largest spirits industry after China…
Spirits Consumption in 2010 (mn cases)
1,200
 Indian spirits industry is ~485 mn cases,
valued at ~$23 bn
 Globally, it is ranked second in volume
terms and third in value terms
1,000
994
800
600
484
400
275
200
186
133
127
109
64
61
49
Germany
Thailand
Philippines
Source: IWSR
Brazil
Japan
South Korea
USA
Russia
India
China
0
Per Capita Consumption (Litres p.a.)
15
12
11.1
10.2
9.6
9
8.7
8.2
7.3
4.7
6
3
1.0
India
China
Japan
Canada
USA
New Zealand
UK
France
0
Germany
Yet, per capita consumption in India is still
amongst the lowest in the world…
11.7
Source: WHO, Global Health Observatory Date Repository, Latest
Data available for each country (varies between 2007 to 2010)
7
IMIL is the largest alcobev segment
 Indian Made Indian Liquor (IMIL), widely
known as country liquor, is the oldest and
largest segment in the country
Alcobev Consumption in India in 2010 (mn cases)
 Grew from 195 mn cases in FY2005 to 260 mn
cases in FY2010 valued at ~$3.7 billion
 Growing at a steady rate of 6-8%, with some
states in North and East India experiencing
faster growth at 8-10%
Beer, 197 ,
28%
Wine, 1 ,
0%
 Consistent rise in demand driven by increase
in incomes and implementation of rural
schemes by the government
 Largest consumption centres are in North and
Central India
IMIL, 260 ,
38%
IMFL, 234 ,
34%
Source: IWSR, Industry Sources
…growth is driven by the rural consumption story in India
8
IMIL is an established and evolving industry
Addressable
Consumer Segment
• Caters to the low-income group, usually SEC D, unskilled workers and
population in rural areas
• Highly price sensitive segment and strong preference for local flavours,
making it difficult to create pan-India brands
Regionalized
Market
• High entry barriers as each IMIL producer has to have a distillery in the
state in which it proposes to sell and market IMIL
• Single price point market, wherein price is decided annually by the
government
• Has resulted in market becoming regionalized and fragmented
Evolving Landscape
• Markets evolving from quota based systems and distribution controls to
free private markets
• Consumer preferences changing to demand better products, innovative
packaging
• Need for companies to focus on product and brand development
The market is organized and well regulated – highest contributing to state exchequer
9
IMFL is experiencing rapid growth…
 Indian IMFL industry stood at $19.2 bn in
2010 growing at a rapid 18.9% p.a. during the
period 2006-10, amongst the highest in the
world
IMFL Consumption in India in 2010 (mn cases)
Vodka , 7.3,
3% , 0.2,
Others
Gin, 2.2, 1%
0%
 Caters to the more affluent consumers,
usually Sec A to Sec C
 Whisky is the largest category, comprising
~60% of the volumes, while vodka and brandy
are the fastest growing at 20%+ levels
Rum , 43.8,
19%
Brandy , 43.4,
18%
Whisky ,
137.5, 59%
 Growth is expected to sustain at 12.1% levels
during the period 2010-2015, outperforming
most other nations
 Strong volume growth is led by increasing
population, favorable societal perception,
higher purchasing power and low penetration
levels
Source: IWSR
…driven by attractive demographics and changing perceptions
10
Unique 360⁰ model – sustainable, balanced growth
Consumer
Manufacturing





Asset driven
Low risk
Growth capped by capacity
Lower margins
Reduces price risk on bulk
alcohol purchase for brand
operations




Brand driven
High initial risk
Wider growth opportunities
Higher margins
12
Consumer portfolio spread across value segments
Premium
 Serves the Sec A class
 MRP is more than Rs.500 per 750ml bottle
 Usually imported blends, solid heritage
 GSL planning to launch products in this segment
SemiPremium
 Serves the Sec A/B classes
 MRP is ~Rs.250-500 per 750ml bottle
 GSL presence in brandy
 GSL brand is French Castle, launched recently in May’12
Regular
 Serves the Sec B/C classes
 MRP is ~Rs.180-250 per 750ml bottle
 GSL presence in whisky, rum and gin
 GSL brands are County Club, Hannibal, White Lace
Economy (IMIL)
 Serves the lower income group
 MRP is ~Rs.70-100 per 750ml bottle
 Flavored catering to local taste preferences
 GSL brands are Nimboo, Narangi, Heer Ranjha, etc.
…strategy has always been geared toward value enhancement
13
The consumer business has shown robust growth
 Consumer business has grown at a rapid
CAGR of 40% during FY08-FY12
 Comprises more than 50% of the aggregate
company turnover
 Has two divisions – Indian Made Indian
Liquor (IMIL) and Indian Made Foreign
Liquor
 IMFL (regular) have grown to a 8% share of
the consumer business in just under 4
years
Consumer Business Revenue (Rs. Mn)
5,000
3,883
4,000
2,865
3,000
1,900
2,000
1,000
1,000
1,208
0
FY08
FY09
FY10
FY11
FY12
Consumer Business Breakup*
IMIL
92%
IMFL
8%
*Based on Ex-Distillery Value of sales in FY12
14
Largest Indian player in the ‘economy’ segment
 Leadership position in all three states , i.e., Haryana,
Rajasthan and Delhi
Market Share in IMIL
FY12 Sales
(Mn Cases)
Market
Share
Haryana
7.2
27%
Rajasthan
3.9
25%
Delhi
1.5
25%
State
 Retail level value of business is ~Rs. 15 billion
 Volume in excess of 12 mn cases per year
 Key brands are Nimboo, Narangi, Ghoomar, Heer
Ranjha
 Pioneered the concept of branding with launch of
‘Nimboo’ brand in Haryana
 Markets evolving from ‘commodity’ to ‘brand’ as
traditional controls are giving way to free markets
 Growth to be driven by favorable industry dynamics
(growth at 8-10%) and leveraging strong positioning
through introduction of innovative products
Solid competitive position – distribution strength, brand equity
15
Pioneer in branding IMIL with launch of Nimboo
 Positioning: Pristine appearance, lovely, clean and
intense aroma lemon peel in the first whiffs..
 Best in class product: High quality grain extra
neutral alcohol versus rectified spirit used by all
competition
 Innovative flavoring: New flavour in a market
previously dominated by orange flavours
 Premium packaging : Visually appealing
Launched ‘Nimboo’ in Haryana
in June 2011…
… in a span of less than 1 year,
it became a Rs. 3,500 mn brand
at retail level
… taking GSL market share from
20% to 27%
 Communication strategy: Visual displays, POS
promotions
16
Encouraging growth in IMFL business
IMFL Brands
 Launched IMFL business in 2007-08,
introduced brands in regular and semipremium category
 Distribution reach in 8 states, i.e., Haryana,
Rajasthan, Chandigarh, Punjab, Himachal
Pradesh, Kerala, Andhra Pradesh and Delhi
contributing to ~40% of industry
Brand
Category
Price Point
French Castle
Brandy
Semi-Premium
County Club
Whisky
Regular
Hannibal Legendary
Rum
Regular
White Lace
Gin
Regular
 Two-fold growth strategy

Build robust distribution network through launch
of brands in regular or mass market segments
and leverage this network for marketing higher
value added products

Build a premium product portfolio in
collaboration with international partners
enjoying strong brand equity globally
17
French Castle Brandy
Launched recently in May’12…
Introduced in parts of Andhra Pradesh, soon to be launched in
Kerala
Product Description
Brandy in semi-premium segment, made from the finest grape
spirits
Target Segment
 Age group of 25 – 35 year olds
 Sec A/B
Positioning
 Person, who is discerning, thinker, enjoys finer things in life, this
is a drink for him to relax with
 Has French culture embedded in its DNA and every moment of
truth with the consumer will have a “French” connection
18
County Club Whisky
Product Description
Whisky in regular segment, blended with rare mature malts, attractively
packaged
Target Segment
 Age group of 25 – 35 year olds
 Sec B2/C (e.g. sales professionals,
sole traders, etc.)
Positioning
Reinforces self confidence and belief,
meant for aspiring & confident
individuals, who are extrovert and
who like to socialize – punchline “Har
Safar Apne Dum Par”
Presence
Punjab,
Haryana,
Chandigarh,
Himachal Pradesh, Uttar Pradesh,
Rajasthan and Andhra Pradesh
19
Hannibal Legendary Rum
Product Description
Rum in regular segment
Target Segment
 Age group of 25 – 40 year olds
 Sec B2/C (e.g. sales professionals, sole
traders, etc.)
Positioning
Evokes a perfect feeling of bravery, power and
heroism that personifies Hannibal Barca – the
taste that conquers
Presence
Delhi, Haryana, Rajasthan, Punjab, Chandigarh,
Kerala
…awarded the SILVER MEDAL at the Monde
Selection in 2008
20
Manufacturing Business
Steady cash flow generation business…
 Comprises bulk alcohol manufacturing and
bottling for third-party IMFL brand owners
 Dominance in alcohol manufacturing built
through continuous focus on improving
quality and reducing costs
 Low risk segments – with reasonably assured
off-take and steady growth
 Manufacturing operations ensure greater
quality control on entire value chain and
guaranteed supplies
Bulk Alcohol & IMFL Franchisee Sales Trend
(Rs. Mn)
2,336
2,500
2,101
2,000
1,500
1,752
1,502
1,300
1,000
500
0
FY08
FY09
FY10
FY11
FY12
 ‘Cash Cow’ for supporting growth of branded
IMFL business
22
Amongst the largest distillation capacity in India
 State-of-the-art plants at Rajasthan (Behror) & Haryana
(Samalkha & Hisar) having aggregate annual distillation
capacity of 84.4 mn bulk litres with multi-feedstock
capability
Manufacturing Facilities & Capacity
 Deploy zero-discharge technology – environment friendly
and higher operating efficiency
 Ability to build technologically superior plants at a much
lower cost than the industry average
 Strong growth expected in this segment given the macro
situation vis-à-vis demand-supply gap for potable alcohol
and implementation of ethanol blending requirements
Capacity Ramp-up (FY10-FY13E)… 4x capacity in 4 years
84.4 mn
28.8 mn
Bulk Litres
(mn)
Bottling
(mn Cases)
Samalkha,
Haryana
35.0
9.6
Hisar,
Haryana
14.4
4.2
Behror,
Rajasthan
35.0
4.8
Unit
84.4 mn
Brownfield expansion at
Samalkha and Behror
120 mn
Brownfield expansion at
Samalkha and Behror
expected to be completed
by FY13 end
Merger of ADL with GSL
FY10
FY11
FY12
FY13E
23
Manufacturing the largest brands in the world
 Established relationships with leading liquor
companies viz. United Spirits, Jagatjit
Industries and ABD Ltd for supply of highquality bulk alcohol and bottling of their main
brands
 Currently, bottling Officer’s Choice and
Bagpiper, the largest selling whiskies in the
world
 Third-party bottling provides for assured offtake of bulk alcohol, ensuring high level of
capacity utilization
Market Volumes of Franchisors in FY12 (mn cases)*
Name
Haryana
Rajasthan
United Spirits
4.3
-*
Allied Blenders &
Distillers
0.8
1.5
Jagatjit Industries
1.7
-*
Total IMFL Industry
10.2
8.0
* Bottling relationship with USL, ABD and JIL in Haryana and
only ABD in Rajasthan (data based on Globus estimates)
 Sticky business with limited investments and
consistent margins
 Proxy play on IMFL industry growth; growth
dependent on brands performance of
customers
24
Growth Strategy
Focus on balanced growth…
Manufacturing
Bulk Alcohol
 Enhance operational efficiency and
capacity utilization
 Build exports presence
IMFL Franchisee Bottling
 Strengthen existing alliances
 Add new customers
Consumer
IMFL
 Leverage existing distribution through
launch of higher value-added brands
 Collaborate with strong international
brands for premium products
 Expand distribution reach and
consolidate regular segment
IMIL
 Consolidate position in existing states
 Expand to new states
… by nurturing consumer business, driven by cash flows from manufacturing
26
Shareholding and Organisation
Ownership Structure
 Listed on National Stock Exchange (NSE) and Bombay Stock Exchange (BSE)
Shareholding Pattern as on June 15, 2012
FIIs
1.3%
Promoters
67.1%
Mutual
Funds
14.2%
Corp Bodies
5.2%
Individuals
& Others
12.2%
Key Institutional Holding
Name
# Shares
% Share
IDFC MF
1,820,000
7.9%
SBI MF
902,890
3.9%
Franklin Templeton MF
354,639
1.5%
Mirae Asset India MF
188,269
0.8%
India Max Investment Fund
198,728
0.9%
ING India Investment Funds
88,416
0.4%
28
Board of Directors
Person
Particulars
Mr. Gautam Premnath
Khandelwal
Non-Executive Chairman
Over 23 years of experience in senior managerial positions, Mr. Khandelwal is on the
Board of many companies such as Nagpur Power & Industries Ltd., Motwane Mfg. Co.
Pvt. Ltd., Krohm Solutions Pvt. Ltd., Punjab National Bank etc.
Mr. Ajay Kumar Swarup
Promoter & Managing
Director
Over 24 years of experience in the liquor industry. Mr. Swarup promoted GSL in 1993 and
prior to that co-promoted Associated Distilleries in 1983. Mr. Swarup completed his
schooling from Doon School, Dehrandun; graduated in Economics from St. Stephens
College, Delhi University, and is a PGDBM from IIM Kolkatta. He was President of All India
Distillers’ Association during the years 1992 – 95.
Mr. Manik Lal Dutta
Executive Director
Over 36 years of experience in alcohol industry. Mr. Dutta was earlier with UB Group as
production head for North India & Nepal operation.
Dr. Bhaskar Roy
Director Finance & CFO
Over 21 years of experience in finance and general management with companies such as
Dhampur Sugar Mills Ltd and Saraya Industries Ltd.
Mr. Shekhar Swarup
Executive Director
Over 3 years of experience, Mr. Swarup joined GSL in 2008. Mr. Swarup has graduated in
Business and Management from University of Bradford, United Kingdom.
Mr. Rajesh Kumar Malik
Whole-Time Director
Over 29 years of experience in liquor industry with firms such as Tilaknagar industries,
Associated Distilleries, etc.
Mr. Rameshwar Dayal
Aggarwal
Whole-Time Director
Over 25 years of experience in liquor industry with firms such as Royal Distilleries, Som
Distilleries, Oasis Distilleries, etc.
29
Board of Directors
Person
Particulars
Mr. Joginder Singh Damija
Independent Director
Over 46 years of experience in various industries including liquor. Served with major
spirit companies including UB Group in multiple positions and as Director and Vice
chairman of SAB India.
Mr. Santosh Kumar Bishwal
Independent Director
Extensive experience with companies such Union Carbide, UB Group in senior positions.
Mr. Bishwal is a faculty at XLRI.
Mr. S.L. Singh
Independent Director
Over 42 years experience in the Distillery, Sugar, Chemical, Pesticide and the Engineering
Industry. He has worked with Jubilant Life Sciences, Jagatjit Industries, Bajaj Hindustan
Ltd etc. Presently associated with the Distillery & Sugar Industry and advises Power
Plants and is also an Associate Consultant with the Ethiopian Government for Ethanol. He
is a Chemical Engineer from IIT Delhi.
30
Key Management
Person
Particulars
Chalam Surampudi
Business Head – Projects &
Supply Chain
Over 25 years of experience in managing varied businesses, from manufacturing of
packaging materials to turnkey systems integration, development & supply of softwareand IT-oriented projects and IT education. Mr Surampudi has managed complex
technical projects and teams of over 150 people toward strategic goals, in the process
working closely with mid- and large-sized customers and suppliers. Mr Surampudi is an
Electrical Engineer with a PGDBM from Indian Institute of Management, Kolkata.
Sudhir Chopra
CEO- IMFL
Over 25 years of experience, Mr. Chopra joined GSL in 2005. Prior to that, he has
worked with several companies in the liquor industry, such as John Distilleries, ABD
India, USL. Mr. Chopra has a PG – Advance Marketing, PGDBA from University of Bath,
United Kingdom.
Paritosh Bhandari
Marketing Head
Over 14 years of experience in the field of marketing, branding and launching new
products. Prior to joining GSL in 2011, Mr. Bhandari has worked with Modi lllva India,
SAB Miller India, Levi Strauss India & Sony Electronics India. Mr. Bhandari has received
coveted awards such as India Spirits Award, SAB Miller Asia Pac Award, Levi's Saddle
Man Trophy etc. Mr. Bhandari is a commerce and management graduate.
KP Pande
Senior Vice President
Over 49 years of experience in the sugar and alcohol industry, has been associated with
the establishment of new distilleries. Mr. Pandey was instrumental in setting up the
Hisar distillery, part of erstwhile Associated Distilleries Ltd, now merged in GSL. He is
also a guest lecturer in CCSHAU University, Hisar and GJU University, Hisar regarding
utilization of distillery effluent for its usage in the agriculture sector. Mr. Pandey is a BSc.
graduate with DIFAT from NSI Kanpur.
31
Key Management
Person
Particulars
Manoj Gupta
GM – Finance
Over 15 years of experience in in project financing, taxation, budgeting and taxation .
Prior to joining Globus in 2011, Mr. Gupta has worked with several companies in the
FMCG industry like Taj Milk Foods Ltd, etc. Mr. Gupta is a Chartered Accountant.
Kavita Sharma
GM – Human Resources
Over 18 years of experience in human resources and training. Ms. Sharma joined Globus
in 2011 and prior to that was working with Telco Water Technology and Akiko Sherman
Infotek Ltd. Ms. Sharma is graduate from Delhi University and has a management
degree in Human Resource Management.
32
Financial Overview
Strong revenue and profit growth
4 year
CAGR
Particulars (Rs. Million)
FY08
FY09
FY10
FY11
FY12
Income from Operations (Gross)
2,353
2,814
3,843
5,216
7,138
Less: Excise Duty Paid and Discount,
Allowance & Returns
787
852
1,214
1,433
1,585
Total Income from Operations (Net)
1,565
1,962
2,629
3,783
5,552
37.2%
EBIDTA
245
286
400
652
750
32.3%
EBIDTA Margin %
15.4
14.4
15.0
17.0
13.4
- Depreciation
40
57
(73)
69
123
- Interest
11
30
14
28
48
PBT (incl. other income)
195
199
459
554
579
Tax Expenses
69
70
170
155
169
PAT
126
129
289
399
410
PAT Margin %
7.9
6.5
10.9
10.4
7.3
34.3%
Earnings Per Share (in Rs.)
10.3
10.5
14.6
17.4
17.8
14.6%
Note: FY11 onwards, results include financials of ADL, which was merged with GSL effective April 1, 2010
34
Amongst the lowest leverage in the industry
As on
March 31,
2008
As on
March 31,
2009
As on
March 31,
2010
As on
March 31,
2011
As on
March 31,
2012
Shareholders Funds
468
598
1,614
2,085
2,473
Debt
150
180
155
587
1,136
Deferred Tax
45
76
184
260
309
Total Liabilities
663
854
1,953
2,939
3,926
Net Block
362
563
894
2,195
2,795
CWIP
38
4
469
129
602
Investments
0.3
0.3
0.3
1.2
1.2
Net Current Assets
263
287
590
614
528
Total Assets
663
854
1,953
2,939
3,926
Particulars (Rs. Million)
35
The 360⁰ model ensures better return than the industry
 360⁰ model ensures better utilization of
capacities, translating into better than
benchmark asset turnover
 Lower working capital requirements (due to
larger proportion of IMIL business) and higher
operating efficiency translate into higher ROCE
 Ability to build plants at lower cost making
efficient use of capital
Asset Turnover Ratio
4.0
3.3
2.7
3.0
2.3
2.0
40%
31.9%
FY08
40%
20.9%
20%
10%
0%
0%
FY09
FY10
FY10
FY12
FY11
FY12
24.3%
26.2%
21.6%
20%
10%
FY08
FY09
34.9%
30%
28.9%
30%
FY11
0.0
RONW (%)
44.9%
42.3%
1.9
1.0
ROCE (%)
50%
1.8
FY08
FY09
FY10
FY11
17.9%
FY12
36
Investor Contact
For more information about us, please visit www.globusspirits.com OR contact:
Dr. Bhaskar Roy/ Ruchika Bansal
Ishan Selarka / Mayur Maniyar
Globus Spirits Limited
Citigate Dewe Rogerson
Phone: +91 11 6642 4600
Phone : +91 22 6645 1232 / 1220
Fax: +91 11 6642 4629
Fax: +91 22 6645 1213
Email: broy@globusgroup.in
Email: ishan@cdr-india.com
ruchika@globusgroup.in
mayur@cdr-india.com
37