Corporate Presentation - Globus Spirits

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2

Key Investment Arguments

Key Investment Arguments
360⁰ Business Model
Strong Consumer
Portfolio
Deep Relationships
for Franchisee IMFL
• 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
• 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

China
Germany
India
France
Russia
UK
USA
New Zealand
South Korea
USA
Japan
Canada
Brazil
Japan
Thailand
China
Philippines
India
Germany
India has the largest spirits industry after China…
Spirits Consumption in 2010 (mn cases)
Indian spirits industry is ~485 mn cases,
valued at ~$23 bn
1,200
1,000
800
994
Globally, it is ranked second in volume
terms and third in value terms
600
400
200
484
275
186
133 127 109
64 61 49
0
Source: IWSR
Per Capita Consumption (Litres p.a.)
Yet, per capita consumption in India is still
amongst the lowest in the world…
15
12
9
6
3
11.7
11.1
10.2 9.6
8.7 8.2
7.3
4.7
1.0
0
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%
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
Wine, 1 ,
0%
Source: IWSR, Industry Sources
Beer, 197 ,
28%
IMFL, 234 ,
34%
IMIL, 260 ,
38%
…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
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
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
IMFL Consumption in India in 2010 (mn cases)
Source: IWSR
Vodka , 7.3,
Others 3% , 0.2,
Gin, 2.2, 1%
0%
Rum , 43.8,
19%
Brandy , 43.4,
18%
Whisky ,
137.5, 59%
…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
Semi-
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
‣ 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
5,000
4,000
3,000
2,000
1,000
0
Consumer Business Revenue (Rs. Mn)
3,883
2,865
1,900
1,000
1,208
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
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
State
Market Share in IMIL
FY12 Sales
(Mn Cases)
Market
Share
Haryana 7.2 27%
Rajasthan 3.9 25%
Delhi 1.5 25%
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
Communication strategy: Visual displays, POS
promotions
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%
16

Encouraging growth in IMFL business
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
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
IMFL Brands
Brand Category Price Point
French Castle Brandy Semi-Premium
County Club Whisky Regular
Hannibal Legendary Rum Regular
White Lace Gin Regular
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
Bulk Alcohol & IMFL Franchisee Sales Trend
(Rs. Mn)
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
‘Cash Cow’ for supporting growth of branded
IMFL business
2,500
2,000
1,500
1,000
500
0
2,336
2,101
1,752
1,502
1,300
FY08 FY09 FY10 FY11 FY12
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
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
Manufacturing Facilities & Capacity
Unit
Samalkha,
Haryana
Hisar,
Haryana
Behror,
Rajasthan
Bulk Litres
(mn)
Bottling
(mn Cases)
35.0 9.6
14.4 4.2
35.0 4.8
Capacity Ramp-up (FY10-FY13E)… 4x capacity in 4 years
28.8 mn
84.4 mn 84.4 mn
Brownfield expansion at
Samalkha and Behror
Merger of ADL with GSL
120 mn
Brownfield expansion at
Samalkha and Behror
expected to be completed
by FY13 end
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%
Key Institutional Holding
Name # Shares % Share
IDFC MF 1,820,000 7.9%
Promoters
67.1%
Mutual
Funds
14.2%
Corp Bodies
5.2%
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%
Individuals
& Others
12.2%
ING India Investment Funds 88,416 0.4%
28

Board of Directors
Person
Mr. Gautam Premnath
Khandelwal
Non-Executive Chairman
Mr. Ajay Kumar Swarup
Promoter & Managing
Director
Mr. Manik Lal Dutta
Executive Director
Dr. Bhaskar Roy
Director Finance & CFO
Mr. Shekhar Swarup
Executive Director
Mr. Rajesh Kumar Malik
Whole-Time Director
Mr. Rameshwar Dayal
Aggarwal
Whole-Time Director
Particulars
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.
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.
Over 36 years of experience in alcohol industry. Mr. Dutta was earlier with UB Group as
production head for North India & Nepal operation.
Over 21 years of experience in finance and general management with companies such as
Dhampur Sugar Mills Ltd and Saraya Industries Ltd.
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.
Over 29 years of experience in liquor industry with firms such as Tilaknagar industries,
Associated Distilleries, etc.
Over 25 years of experience in liquor industry with firms such as Royal Distilleries, Som
Distilleries, Oasis Distilleries, etc.
29

Board of Directors
Person
Mr. Joginder Singh Damija
Independent Director
Mr. Santosh Kumar Bishwal
Independent Director
Mr. S.L. Singh
Independent Director
Particulars
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.
Extensive experience with companies such Union Carbide, UB Group in senior positions.
Mr. Bishwal is a faculty at XLRI.
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
Chalam Surampudi
Business Head – Projects &
Supply Chain
Sudhir Chopra
CEO- IMFL
Paritosh Bhandari
Marketing Head
KP Pande
Senior Vice President
Particulars
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.
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.
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.
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
Manoj Gupta
GM – Finance
Kavita Sharma
GM – Human Resources
Particulars
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.
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
Particulars (Rs. Million) FY08 FY09 FY10 FY11 FY12
4 year
CAGR
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
EBIDTA 245 286 400 652 750
37.2%
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
Earnings Per Share (in Rs.) 10.3 10.5 14.6 17.4 17.8
34.3%
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
Particulars (Rs. Million)
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
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
4.0
3.0
2.0
1.0
3.3
Asset Turnover Ratio
2.7
2.3
1.8 1.9
Ability to build plants at lower cost making
efficient use of capital
0.0
FY08 FY09 FY10 FY11 FY12
ROCE (%) RONW (%)
50%
40%
30%
20%
10%
42.3%
31.9%
44.9%
28.9%
20.9%
40%
30%
20%
10%
34.9%
24.3%
26.2%
21.6%
17.9%
0%
FY08 FY09 FY10 FY11 FY12
0%
FY08 FY09 FY10 FY11 FY12
36

Investor Contact
For more information about us, please visit www.globusspirits.com OR contact:
Dr. Bhaskar Roy/ Ruchika Bansal
Globus Spirits Limited
Phone: +91 11 6642 4600
Fax: +91 11 6642 4629
Email: broy@globusgroup.in
ruchika@globusgroup.in
Ishan Selarka / Mayur Maniyar
Citigate Dewe Rogerson
Phone : +91 22 6645 1232 / 1220
Fax: +91 22 6645 1213
Email: ishan@cdr-india.com
mayur@cdr-india.com
37