post results roadshow - united spirits · post results roadshow 6 june 2016. anand kripalu ceo...
TRANSCRIPT
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POST RESULTS ROADSHOW
6 JUNE 2016
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ANAND KRIPALUCEO & MD
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AGENDA
THE OPPORTUNITY: INDUSTRY OVERVIEW
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RISING INCOME LEVELS AND CHANGING CONSUMPTION DYNAMICS RE-SHAPED THE CONSUMER LANDSCAPE
Households
Affluent
Middle
Aspiring
Globally travelled
Seek luxury experiences
Brand conscious
Willing to pay price for increased value
Premium or Prestige Products.
Price conscious
Just entering the consumption cycle
Occasional consumers of prestige Products
There are not 1, but 3 distinct India’s
2%
2015 2025High % of millennialconsumers
Changing Attitudes leading
to higher spending habits
Increasing Regionalization
of Media
Rise of Digital
Changing consumer landscape
1%
9%1%
32%19%
36%43%
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INDIA IS ~RS 41K CRORE TBA MARKET
7
11
16
291
1
2010 2015Beer Spirits Wine / RTDs
CAGR% 2010-15
20%
12%
9%
11%
24
41
One of the largest global Spirits markets
• 6% of global TBA growth driven by India
Strong growth opportunity
• ~25m consumers enter LDA+ every year
• Per capita consumption low and expected to increase as incomes rise
• Currently <2 alcohol LPA/head
• Increase to 3-4 alcohol LPA/head
• Social barriers to alcohol softening
Spirits is 70% of India TBA, lower taxes compared to beer
• 11% of global spirits growth will come from India
Rs k Crore
USL internal estimate
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STRONG PREMIUMIZATION TREND IN SPIRITS
11.016.9
4.7
10.4
0.7
1.4
0.1
0.4
2010 2015
Popular Prestige Premium Luxury
Prestige & above NSV contribution
Prestige & above Profit contribution
33% 42%
52% 61%
CAGR%2010-15
33%Luxury
21%Premium
21%Prestige
9%Popular
16
29Rs k Crore
USL internal estimate
12%Spirits
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AGENDA
USL AT A GLANCE
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Advantaged route to consumer with full coverage
of all relevant liquor outlets
USL AT A GLANCE
Over 140 own
brands with 15millionaire brands
Outstandingportfolio across eachprice point
Wide manufacturing footprint with presence in every
state/territory
Largest alcobev
company in India and
2nd largest by
volume in the world
Strong distribution capability with products available in >95% of
stores
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BIGGEST BRANDS IN MARKET
India’s largest consumer goods brand
No. 1 premium white spirit in India
Fast growing Indian whiskey
2nd largest Scotch in India
No. 1 Luxury Imported Scotch Whisky in India
Fastest growing scotch in India
Premium Indian whiskey
Highest priced Indian whiskey
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OUTSTANDING PORTFOLIO ACROSS EACH PRICE POINTLu
xury
Pre
miu
mP
rest
ige
Po
pu
lar
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AGENDA
OUR AMBITION AND STRATEGY
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OUR LONG TERM PERFORMANCE AMBITION IS:
To create one of the best performing, most trusted and respected consumer products
companies in India
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OUR STRATEGY TO DELIVER OUR GLOBAL AMBITION
01
02
03
04
05
Strengthen and accelerate core brands to win across each of the 3 India’s
Evolve Route to consumer to deliver balance between sell-in and demand creation
Drive out cost throughout the value chain to invest in growth and enhance margins
Transform USL and industry reputation towards ideals of corporate citizenship
Guarantee plans with right organization, people and capabilities
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STRENGTHEN AND ACCELERATE CORE BRANDS
Innovate and introduce new to market brands
Renovate and rejuvenate our existing brands
Continue to invest behind our brands1
2
3
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STRENGTHEN AND ACCELERATE CORE BRANDS
Renovation
Strengthen positioning and activation. Renovate our brands and drive sustained growth
Royal Challenge McDowell’s No 1. whiskey Signature
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STRENGTHEN ROUTE TO CONSUMER
Affluent
Middle
Aspiring
Luxury
Premium Core
Prestige Core
Popular
Portfolio
Leverage outlet as a media to build brand
imagery
Create demand through consumer-winning activationsconsumer-winning
activations
Leverage trade as an ambassador
for our business
Key RTC objectives
Leverage scale
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STRENGTHEN ROUTE TO CONSUMER
What was done differently?
• QDVP3 (Quality, Distribution, Visibility, Price, Promotion, Persuasion)
• Guidelines for each type of channel• Intense execution by sales team• Incentives linked to 3rd party audits
• Result: ~20% of India’s alcobevoutlets made into “Perfect Stores”
BEF
OR
EA
FTER
Create a “Sell Out” culture and leverage stores in a media dark market
Creating Perfect Stores
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DRIVE OUT COSTS
Productivity
What was done differently?
• Productivity program launched in F15
• Nothing held holy – all P&L lines challenged
• Big wins: Glass light weighting, procurement efficiency and network optimization
Mitigate pricing shortfall and improve margins through Productivity
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TRANSFORM USL AND INDUSTRY REPUTATION
Shaping the environment to do business
• Data & analysis based White Papers created on topics of interest to states to build a symbiotic relationship and create compelling “Win-Win” outcomes.
• Create broader partnership with states• Address overlapping impacts of center & state policies
• “USL-Road to Safety” - National programme in partnership with NDTV • Spanning 45 cities across 20 Indian states designed to reach 12,000 Traffic Police
officers and 8,000 Drivers
• Grass root community outreach program in districts where USL has a presence• Aimed at empowering communities through Safe access to water; Healthcare;
Employable skills training
Influencing public policy
Alcohol in Society
Project SHE
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BUILDING A FUTURE READY ORGANIZATION
Create a “Fit for Purpose” organization with the right capabilities and processes in place
What was done differently
Right sizing organization by reducing layers and improving spans
Bring in new capabilities – e.g. Innovation, Compliance, Manufacturing Excellence
Creating performance culture focused on value delivery
Measuring employee engagement with targeted improvement interventions
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AGENDA
FINANCIAL RESULTS
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SANJEEV CHURIWALA - CFO
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FULL YEAR F16 PERFORMANCE IN SUMMARY
Diageo brand portfolio added
Rs 676 Crore net sales
Prestige and Above segment net sales up
26%
EBITDA margin
9.7%, up 364bps
EBITDA Rs. 880 Crore
with 81% growth
Net sales growth
13%
Profit after tax
Rs. 981 Crore
Share gains in a number of brands
Net debt reduced by
Rs. 737 Crore to Rs.
4,250 Crore
Underlying marketing investment up
10%Diageo brand portfolio fully integrated
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VOLUME DECLINE OF 1%
94.2
93.0
2.2 2.9
3.7
1.9
1.3
86
88
90
92
94
96
98
ReportedF15
Powerbrands infocusedstates
Haywards OtherPopularbrands
Prestigeand Abovesegment
Diageobrand
portfolio
ReportedF16
Popular segment Prestige & Above segment
Case, mn
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NET SALES GROWTH OF 13%
8,049
9,092
92
275
676
7,000
7,500
8,000
8,500
9,000
9,500
ReportedF15
Popular segment Prestige andAbove segment
Diageo brandportfolio
ReportedF16
Rs Crore
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486
880
506 (273)
93 (36)61 43
0
400
800
1,200
ReportedF15
Gross profitfrom
operations
Marketingspend
RPT benefiton Marketing
spend
Staff costs Otheroperatingexpenses
RPT benefiton Otheroperatingexpenses
ReportedF16
EBITDA AND EBITDA MARGIN
6.0% 0.9ppts (2)ppts 1.1ppts 0.5ppts 2.6ppts 0.5ppts 9.7%Rs Crore
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CASH MOVEMENT - CONSOLIDATED
363
162
393
868
168 (232)
(737)
(468)
(193)
0
400
800
1,200
1,600
2,000
OpeningcashF15
Cash fromoperations
Sale of UBLshares
Bouvetdivestment
Net capexpayment
Loanrepayment
Net interestpayment
Tax paid ClosingcashF16
Rs Crore
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DEBT MOVEMENT - CONSOLIDATED
4,987
4,250
(82) (654)
2,000
4,000
6,000
ReportedF15
Long termproceeds
Short termrepayment
ReportedF16
Rs Crore