An Investor presentation

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• An Investor presentation

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Contents
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Contents

• The Journey So-Far
• Volume Growth Comparison
• Consistent Profit Performance
• Diageo Radico- The Blue Blood marriage
• Radico Liquor Segmentation
• Marketing Success Stories
• Treading Towards Global Growth
• Sustained Competitive edge of Radico

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The Indian Made Foreign Liquor Industry

• Grown at CAGR of 9 over the past decade and
  10-12 in last two fiscal years
• Total market value Rs.34,000 crore
  (US7.6 billion)
• Total market volume 100 million cases in
  FY2006
• Liquor industry segmentation Whisky
  58 Brandy 17 Rum 20 White
  Spirits 5
• Lowest per capita consumption India 0.2
  liters Thailand 3.5 liters China 3.0
  liters Japan 3.8 liters

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Indian Liquor IndustryIncreasingly favourable
demographics profile to further boost demand
Aspiration Profile Change in Urban India
Spending Patterns
Age Profile
1012
1178
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
Large increase projected in emerging and regular
consumers
Increase in discretionary spend also to boost
demand
Source NCAER, BW Marketing Handbook
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Challenges of the IMFL Industry

• India is 28 countries in the context of one
  (There are 31 states but some are very small).
  There are at least 23 quite different market of
  importance.
• Each state levies taxation on alcohol at its own
  determined rates and excise duties. States
  control the distribution channels in its own way.
  It is a state by state not national market.
• Prices vary by states and are low by
  international standards The pricing flexibility
  is there in only 32 markets.
• High investments for production distribution
  channels.
• Surrogate Liquor Advertising.
• Thereby leading to high entry barriers to launch
  brands
• by new companies

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Growth Drivers of the IMFL Industry

• Changing demographis 54 of youth and middle aged
  population increased in 2011 from 48 in 2001.
• Addition of 20 million plus drinking age
  population annually.
• Changing lifestyles No. of Indian drinkers rose
  from 1 in 300 two decades ago to 1 in a 20 today.
• Deregulation by state governments.
• Influence of western culture.

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Radico Today The Journey So Far
1943-1998 Spirit Company
Started Distillery in 1943 A Major Spirits
Supplier Supplier of Rum in Armed
Forces Bottler for others
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Radico Robust growth in the last 7 years
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Radico Volume Growth Comparison

• Radico Volume in cases Growth
• 2000-01 2.97 million -
• 2001-02 3.70 million 25
• 2002-03 4.72 million 28
• 2002-03 6.35 million 34
• 2004-05 10.02 million 58
• 2005-06 12.02 million 20

• Industry Growth
• 2000-01 8-9
• 2001-02 8-9
• 2002-03 8-9
• 2003-04 10
• 2004-05 10-12
• 2005-06 10-12

32
9
CAGR
CAGR
Radico outperformed the industry by 256
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Radico Consistent Profit performance

• Radicos past five years profit performance
• Year In US million Growth
• 2001-02 2.6 -
• 2002-03 4.1 58
• 2003-04 5.7 39
• 2004-05 8.0 40
• 2005-06 10 25
• CAGR 40.5
• Annualised

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DiageoRadico Blue blood marriage

• DiageoRadico is a 5050 JV which marries
  Radicos distribution manufacturing base with
  Diageos marketing muscle to tap the fast growing
  Premium IMFL market to create new brands.
• The brands will be created in the gap area in
  brown spirit segment i.e Premium brown sprit
  segment.
• The two companies will continue to operate in
  their own independent businesses outside of the
  JV and will maintain their respective brand
  portfolios.

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About Diageo

• Diageo is the No 1 Premium Alcoholic Beverage
  Company in the World.
• It has 10 brands among the top 20 brands in the
  Impacts hot brands survey (Impact- U.K based
  trade magazine) .
• Diageo has a strong presence in the Premium
  Scotch segment with leading brands in India such
  as- Johnnie Walker-Black Label, Black White and
  VAT 69 and premium vodka with its Smirnoff range.

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Radico Marketing Success Stories

• 8 PM Whisky
• Launched in 1998 first brand with Guala cap in
  its segment.
• First Indian whisky to be blended with scotch.
• Its ad campaign was adjudged among the best ads
  of the century.
• First brand to enter Limca book of Records for
  selling million case in first year of launch
• Old Admiral Brandy
• Frosted bottle / VSOP Brandy/ pricing were the
  brand differentiators
• Fastest growing brandy brand in the world for the
  past two years
• Sold one million cases in the second year of its
  launch

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

• Contessa Rum
• It has 22 of the defence market share
• largest selling rum brand in the defence segment
• Magic Moments Vodka
• Packaging/Pricing brand differentiator
• Looking at gaining 15 market share by the end of
  the financial year.

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RadicoTreading Towards Global Growth

• Radicos brands present in 30 countries across
  the world.
• Set up Radico Global in Dubai to focus on global
  trading.
• Set up two JVs for production lines in U.K
  Africa in the last quarter.

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RadicoSustained Competitive Edge
Rampur distillery amongst the largest
Distillery in the world and production of spirit
90 million lit p.a Grain, Molasses Malt
Buoyant brands Millionaire Club 8 PM Whisky,
Contessa Rum Old Admiral Brandy
Most Awarded brands for quality at Monde
Selection, International Wine Spirit
Competition International Spirits Challenge
SAP-ERP/ Hewitt Associates for HR
35 bottling units across the country 2 units
overseas
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Way ForwardExpanding Domestic Branded Business

• War chest of 70 million USD both for domestic
  International growth -Organic Inorganic growth
• New brand launches expanding presence in all
  segments of liquor Industry, e.g. Magic Moments
  vodka segment
• Umbrella brands strategy
• Brand acquisition
• Grain based brands to be focus
• Aligning with Diageo the largest premium
  Alcoholic Beverage company in the world to create
  premium brands with high margins.

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Way ForwardExpanding International Business

• -Develop - new products for the
  international markets.
• -Revamp existing brand portfolio - Improve the
  packaging to
• give it a more international look and feel. 8PM
  Whisky, Old
• Admiral Whisky, 8PM Bermuda Rum.
• -Market development - explore links/ contacts for
  new markets
• like EU, CIS, Latin America and South America.
• -Acquisitions Brands, facilities, distribution
  network
• -Distribution Tie-up Tie-up with existing
  Companies having
• strong distribution net work.
• -Brand building - Explore marketing opportunities
  in the
• developed markets

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Operative PerformancesFY2006 results
Gross Sales
Net Sales
Net Profit
252.3
152.2
10.0
US millions
US millions
US millions
EBIDTA Margin 12 Return on Equity 30
Note Includes sales from contract bottling units
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Operative PerformancesGross Sales and Profit
After Tax (PAT)
Gross Sales (US millions)
Profit After Tax (US million)
Note Includes sales from contract bottling units
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Operative PerformancesEBITDA Margin ()
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Operative Performances Ratios R.O.E
Balance Sheet Ratios (Figures in )
Return on Equity
Dividend
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Operative PerformancesJune Quarter 2006
Rs(In Lacs)
USD (In Mln)
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Shareholding Pattern
As on 08.09.2006
The market cap of the company is Rs 1380 crs (USD
299 mn).
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Radico Core Team
Sanjay Lamba President, International Business
Raju Vaziraney President, Domestic Business
R.K. Mehrotra President, Finance
K.P Singh President, Manufacturing Operations
Vice Presidents /Asst Vice Presidents
Management 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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