Radico Khaitan Ltd'

1
Radico Khaitan Ltd.

• Investor Presentation
• October 08

2
Contents

• The Indian Spirits Market
• Challenges Of Indian Spirits Industry
• Indian Spirits Industry Growth Drivers
• Radico - The Journey So Far
• Future Growth Drivers for Radico

3
Contents

• 6. SWOT Analysis
• 7. Financials
• 8. Core team of Radico

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The Indian Spirits Market

• Grown at CAGR of 9 over the past decade with
  11-12 in last 2 years
• Total market volume 140 million cases in
  FY2008
• Liquor industry segmentation Whisky 61
  Brandy 19 Rum 15 White Spirits
  05
• Lowest per capita consumption India 1.4
• (In litres) China 3.0 Thailand
  3.5 Japan 3.8

Source NACER
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Challenges for Spirits Industry

• Liquor in India is a state subject. Addressing
  each state is like addressing a country.
• High investments for production distribution
  channels.
• Restrictive Liquor Advertising.
• High entry barriers for new entrants

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Indian Spirits Industry Growth Drivers
Large increase projected in emerging and regular
consumers
Aspiration Profile Change in Urban India
Spending Patterns
1012
1178
Age Profile
Shift from savings to spending on lifestyle
products services
150 million likely to be added to target consumer
group in this decade
gt 60
7
8
20-59
48
54
0-19
45
38
2001
2011
Increasingly favourable demographics profile
increase in discretionary spends to further boost
demand
Source NCAER, BW Marketing Handbook
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Growth Drivers of the Spirits Industry

• 790 million are in the drinking age group which
  are
• increasing by 20 million annually
• Deregulation by state governments.

Strong growth opportunities in the coming years
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Radico The Journey So Far..
1943-1997 - Spirit Company
1998-2008 Second Largest Branded Company

• Started Distillery in 1943
• A Major Spirits Supplier
• Supplier of Rum to Armed Forces
• Bottler for others

• Launched its first brand 8 PM Whisky in 1998
• Second fastest growing company in the world by
  volume from 2002-2006. (avg growth rate29.8)
• Creation of number of Millionaire brands - 8PM
  Whisky, Contessa Rum and Old Admiral Brandy.
• Market leader in semi- premium vodka segment
  with launch of Magic Moments in 2006 reaching
  millionaire club by 2008-09
• Strong and dedicated sales distribution team,
  covering 95 of bars, clubs and retail points
• Acquisition of Whytehall whisky from Bacardi
  Martini India Ltd in 2004 and Brihans range of
  brands from Brihans, Maharashtra in 2005.
• 28 bottling units 5 own bottling units 23
  Contract bottling units in India
• Diageo Radico JV to create premium brands in
  the IMFL segment with its first launch of
  Masterstroke Deluxe Whiskey in 2007.

Source JP Morgan Nov 2007
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High Success Rate Of Brands Launches
Acquisitions
2006
2005
2004
2002
1998
1972
CONTESSA RUM (Regular Range) 2.5 million case
8PM WHISKY (Regular Range) 4 million case
MAGIC MOMENTS VODKA (Semi premium
Range) 1.1million
OLD ADMIRAL BRANDY (Regular Range) 2 million
case
WHYTEHALL WHISKY Acquisition (Deluxe
Range) 0.5 million case
BRIHANS BRANDS Acquisition (Regular Range) 1.5
million case
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Radicos Robust growth over last decade
Over the last 9 years Radico Volume grown at
CAGR of 23 against Industry volume CAGR at 9
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Indian Spirits Segmentation
Liquor Segment
Industry estimates
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Indian Spirits Segmentation
Liquor Segment
Industry estimates
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Indian Spirits Segmentation
Liquor Segment
Industry estimates
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Radico Marketing
Success Stories

• 8 PM Whisky
• Launched in 1998, it was the first Indian whisky
  (blended with scotch) offered to Indian consumers
• First Spirits brand to enter Limca book of
  Records for selling one million cases in the
  first year of launch
• The launch TV campaign was adjudged among the
  best ads of the century at Cannes
• Recently famous Bollywood actress Mallika
  Sherawat endorsed the brand.

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Radico Marketing Success Stories

• 8 PM Whisky
• The new packaging launched in FY 09 is the first
  Grain blended whisky launched in operating
  segment.
• Grain proposition is considered to be smooth,
  mellow a superior whisky.

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Radico Marketing Success Stories

• Old Admiral Brandy
• Launched in 2002
• Adjudged fastest growing brandy brand in the
  world by Drinks International for two consecutive
  years 2003 and 2004
• Sold one million cases in the second year of its
  launch
• Katrina Kaif had endorsed the brand in 2004.

Source Drinks International,U.K,May 2006
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Radico Marketing Success Stories

• Contessa Rum
• Largest selling rum brand in the defense segment
  in FY08
• 20 of the defense market share
• Sold 2.35 million case in FY08

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Radico Marketing Success Stories

• Magic Moments Vodka
• The only successful Brand launch in the industry
  across all flavors in last 5 years
• Innovation in Packaging
• Created new price point in the segment
• Fastest growing brand in the category
• The youth icon of Indian Bollywood industry-
  Hrithik Roshan has endorsed the brand
• Rewarded with Gold Medal at Monde selection in
  2008

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Radico Marketing Success Stories

• Magic Moments Vodka

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Radico Marketing Success Stories

• Magic Moments Remix Vodka- launched in Six New
  Flavors in FY 09.
• Chocolate
• Green Apple
• Raspberry
• Lemon Grass Ginger
• Lemon
• Orange

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• M2- Remix

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Largest Alcohol Manufacturer in the Country
Radicos Sustained Competitive Edge
Distillery

• The company has its largest distillery in the
  country based in Rampur, UP
• The distillery has a capacity of manufacturing
  104 million litres annually
• 100 capacity utilization
• Molasses Based 75 million litres
• Grain Based 28 million litres
• Malt Based 720 thousand litres
• The grain based facility was added in FY07

New Greenfield project

• The company has entered into joint venture to
  set up another distillery in Maharashtra with an
  annual capacity of 36 million litres
• It is expected to be operational by Dec 2008

Canteen Stores Department (CSD)

• Radico market share is 29 of the CSD volume.
• High Entry Barriers for getting brands approved.

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Diageo Radico Joint Venture
The Blue Blood Marriage
Diageo is the No.1 premium alcohol Beverage
company in the world It has 10 brands among the
top 20 brands in the impacts hot brands survey (
impact UK based trading magazine) Diageo has a
strong presence in premium scotch segment with
leading brands in India such as- Johnnie Walker,
Black White and VAT 69

• The company has entered into a 5050 JV with
  Diageo which is the largest Premium liquor player
  globally to set up a brand marketing company
• The JV has launched its first brand Master
  Stroke in the deluxe whiskey segment. It has
  registered sale of around 230000 cases in 1st
  year
• Both the companies have contributed Rs.75 million
  as the equity capital
• Shahrukh Khan had endorsed the brand Masterstroke

Diageo Radico Pvt. Ltd.
Organization Structure of JV
Asif Adil MD
Raju Vaziraney CEO
Abhishek Khaitan MD
Dr. Lalit Khaitan Director
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M2 with Flavors Spreading the Magic..
Global Vodka Industry 22.5 Indian Vodka
Industry 3 (4.4 million) (2007-08) Indian
Vodka Industry growing 36 CAGR
M2 Driving the semi-premium Vodka segment
At Present
M2 Vodka aims to become a millionaire brand in
2008-09 M2 CAGR96 (2006 onwards) Industry
Market Share 15 Semi premium segment market
share 70
Indian Vodka Industry 15 million
(estimated) Indian Vodka Growth seen at 27 CAGR
In 5 years By 2013
Magic moments aiming at becoming market leader
in the vodka category
Source JP Morgan 2007
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Future Growth Drivers

• Magic Moments
• Expanding M2 brand portfolio through 6 new
  flavors introduced in the country
• Test marketing of M2 vodka initiated in
  international markets in FY09
• Increasing width of distribution through CSD in
  FY09
• 8PM growth track
• Launch of new packaging in the country with
  strong new communication backed by Malika
  Shehrawats endorsement
• Launch of grain blended whisky
• New Brand Launches
• Exploring possibilities of tapping premium
  spirits market segment through launch of premium
  brands in the country.
• Open to Strategic tie ups with global players
• Old Admiral Brandy and Contessa Rum to witness
  the volume growth
• Due to upgradation of the consumer from cheap to
  regular

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SWOT Analysis

• Strengths
• Second largest player in the Indian spirits
  market
• 3 millionaire brands
• Innovation in brand creation.
• Established distribution network
• Largest distillery in UP and Maharashtra
• Large Presence In CSD
• Opportunities
• Launching new premium brands
• Making inroads in the untapped markets
• Uniform Federal Excise Policy
• Strategic tie up with global players

• Weakness
• Surrogate advertisement
• Not present in all price points
• Threats
• Volatility in raw material prices
• Change in regulatory environment.

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Financial Summary
Key Financials
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Shareholding Pattern
As on 28.09.2008
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Radico Core Team
Raju Vaziraney COO, Domestic Business
Sanjeev Banga Head International Business
Dilip Banthiya CFO
K.P Singh Director, Mfg Operations
Vice Presidents /Asst Vice Presidents
Management Committees , Regional Profit Center
Committees.
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Disclaimer
Certain statements in this presentation
concerning our future growth prospects are
forward- looking statements, which involve a
number of risks, and uncertainties that could
cause actual results to differ materially from
those in such forward-looking statements. The
risks and uncertainties relating to these
statements include, but are not limited to, risks
and uncertainties regarding fluctuations in
earnings, our ability to manage growth, including
those factors which may affect our cost
advantage, wage increases, our ability to attract
and retain highly skilled professionals, time and
cost overruns on fixed- price, fixed-time frame
contracts, client concentration, restrictions on
immigration, our ability to manage our
international operations, reduced demand for
technology in our key focus areas, disruptions in
telecommunication networks, our ability to
successfully complete and integrate potential
acquisitions, withdrawal of governmental fiscal
incentives, political instability, legal
restrictions on raising capital or acquiring
companies outside India. Radico Khaitan may,
from time to time, make additional written and
oral forward-looking statements, including our
reports to shareholders. The Company does not
undertake to update any forward-looking statement
that may be made from time to time by or on
behalf of the company.  
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Thank You!

• QA