#1matic PANEER Go Gear Spreet 74142 Gowardhan Processed Made home ow's milk PARAG MILK FOODS LIMITED Investor Presentation PARAG October 2019 Ideas for a new day PRIDE OF Milkrich frround Cows Go Gowardhan GO TOPP slurp Gowardhan avvalar Milkrich MILK FULL OF LOVE GO NATURAL CHESTS SHREDLIKEER Go GO Hulk Ghee Go NATURAL EHRA#2Safe Harbor PARAG Ideas for a new day This presentation and the accompanying slides (the "Presentation"), which have been prepared by Parag Milk Foods Limited (the "Company"), have been prepared solely for information purposes and do not constitute any offer, recommendation or invitation to purchase or subscribe for any securities, and shall not form the basis or be relied on in connection with any contract or binding commitment what so ever. No offering of securities of the Company will be made except by means of a statutory offering document containing detailed information about the Company. This Presentation has been prepared by the Company based on information and data which the Company considers reliable, but the Company makes no representation or warranty, express or implied, whatsoever, and no reliance shall be placed on, the truth, accuracy, completeness, fairness and reasonableness of the contents of this Presentation. This Presentation may not be all inclusive and may not contain all of the information that you may consider material. Any liability in respect of the contents of, or any omission from, this Presentation is expressly excluded Certain matters discussed in this Presentation may contain statements regarding the Company's market opportunity and business prospects that are individually and collectively forward-looking statements. Such forward-looking statements are not guarantees of future performance and are subject to known and unknown risks, uncertainties and assumptions that are difficult to predict. These risks and uncertainties include, but are not limited to, the performance of the Indian economy and of the economies of various international markets, the performance of the industry in India and world-wide, competition, the company's ability to successfully implement its strategy, the Company's future levels of growth and expansion, technological implementation, changes and advancements, changes in revenue, income or cash flows, the Company's market preferences and its exposure to market risks, as well as other risks. The Company's actual results, levels of activity, performance or achievements could differ materially and adversely from results expressed in or implied by this Presentation. The Company assumes no obligation to update any forward-looking information contained in this Presentation. Any forward-looking statements and projections made by third parties included in this Presentation are not adopted by the Company and the Company is not responsible for such third party statements and projections. 2#3Contents Q2 & H1 FY20 Financials & 1 Key Developments 2 Company Overview 4 Financial Highlights 5 Annexures 3 Industry Dynamics PARAG Ideas for a new day 3#4Consolidated Financial Analysis - Q2 FY20 Revenue (Rs. Mn) 5,735 +11.6% EBITDA (Rs. Mn) PARAG Ideas for a new day Product wise Revenue Break-up (Rs. Mn) -4.5% 6,400 581 5,735 6,401 555 11.6% 10.8% 4% 18.4% 1 19.0% 15% 1 Q2 FY19 Q2 FY20 Q2 FY19 Q2 FY20 304 PAT (Rs. Mn) -6.4% 285 10.1% 5.3% Margins (%) 68.6% 11% 68.1% EBITDA% PAT% 72% 8.7% 4.5% 1.4%. Q2 FY19 Skimmed Milk Powder Q2 FY19 Q2 FY20 Q2 FY19 Liquid Milk Q2 FY20 2.1% Q2 FY20 Milk Products Others 4#5- Consolidated Financial Analysis – H1 FY20 Revenue (Rs. Mn) 11,229 +13.1% EBITDA (Rs. Mn) PARAG Ideas for a new day Product wise Revenue Break-up (Rs. Mn) -4.6% 12,698 1,177 11,229 12,698 1,123 12.1% 12.0% 12% 18.9% 18.6% H1 FY19 H1 FY20 H1 FY19 H1 FY20 587 PAT (Rs. Mn) -4.6% 560 10.5% 5.2% 11% 1 Margins (%) 67.4% 13% 67.5% EBITDA% PAT% 31% 8.8% 1.6%. H1 FY19 4.4% 1.9%. H1 FY20 Skimmed Milk Powder Milk Products Liquid Milk Others H1 FY19 H1 FY20 H1 FY19 H1 FY20 5#6Key Highlights Revenue Gross Profit EBITDA Consolidated Revenue from Operations for Q2 FY20 stood at Rs. 6,400 million, a growth of 11.6% YoY from Rs. 5,735 million in Q2 FY19. . Growth was driven by an increase in revenue from Milk Products by 11% YoY to Rs. 4,360 million Gross Profit for Q2 FY20 stood at Rs. 1,643 million as compared to Rs. 1,768 million in Q2 FY19. • Gross margins stood at 25.7% in Q2 FY20 impacted due to disruptions in milk availability caused by prolonged monsoons . Substantial improvement in milk availability has been seen since Dusshera with a slight moderation in milk prices EBITDA for Q2 FY20 stood at Rs. 555 million as compared to Rs. 581 million in Q2 FY19. EBITDA Margin for Q2 FY20 stood at 8.7% which was impacted mainly due to decline in gross margins PAT • PAT for Q2 FY20 stood at Rs. 285 million as compared to Rs. 304 million in Q2 FY19 PARAG Ideas for a new day 6#7Consolidated Profit & Loss Statement Particulars Q2 FY20 Q2 FY19 YOY Q1 FY20 QoQ H1 FY20 H1 FY19 YOY Revenue from Operations 6,400.3 5,734.8 11.6% 6,297.4 1.6% 12,698.7 11,229.1 13.1% Raw Material Costs 4,757.3 3,967.1 4,612.9 9,370.2 7,793.7 GROSS PROFIT 1,643.0 1,767.7 -7.1% 1,684.5 -2.5% 3,327.4 3,435.4 -3.1% Gross Margins 25.7% 30.8% -510 bps 26.7% -100 bps 26.2% 30.6% -440 bps Employee Expenses 259.3 232.6 267.1 526.4 436.8 Other Expenses 828.9 954.0 848.8 1,677.7 1,821.2 EBITDA 554.8 581.1 -4.5% 568.5 -2.4% 1,123.3 1,177.4 -4.6% EBITDA Margin % 8.7% 10.1% -140 bps 9.0% -30 bps 8.8% 10.5% -170 bps Other Income 30.8 14.7 28.1 58.9 32.5 Depreciation 130.2 133.6 132.9 263.1 269.1 EBIT 455.4 462.1 -1.5% 463.8 -1.8% 919.1 940.7 -2.3% Finance Cost 86.3 76.3 93.2 179.5 177.8 Exceptional Items 0.0 0.0 0.0 0.0 0.0 PBT 369.0 385.8 -4.3% 370.6 -0.4% 739.6 762.9 -3.1% Tax Expense 84.1 81.5 95.5 179.6 175.9 PAT 284.9 304.3 -6.4% 275.1 3.6% 560.0 587.0 -5% PAT Margin % 4.5% 5.3% -80 bps 4.4% 10 bps 4.4% 5.2% -80 bps Other Comprehensive Income 0.3 -1.1 0.2 0.5 -1.5 Total Comprehensive Income 285.2 303.2 -5.9% 275.3 3.6% 560.5 585.5 -4.3% Amounts in Rs. Million PARAG Ideas for a new day 7#8Consolidated Balance Sheet Particulars Sep-19 Mar-19 Particulars Sep-19 Mar-19 ASSETS EQUITY AND LIABILITIES Non-current assets Equity Property, plant and equipment 4,223.2 4,023.4 Equity Share capital 839.4 839.4 Capital work-in-progress 54.5 290.3 Other equity 7,894.8 7,432.0 Other intangible assets 46.0 34.5 Sub-total-Shareholders' funds 8,734.2 8,271.4 Biological assets other than LIABILITIES 362.9 337.6 bearer plants Non-current liabilities Financial assets Financial liabilities Investments 6.5 5.3 Borrowings 583.0 646.2 Loans 3.8 3.5 Provisions 12.0 44.5 Other financial assets 123.9 130.0 Other non-current liabilities 48.2 0.0 Deferred tax assets (net) 165.1 166.7 Sub-total-Non-current liabilities 643.2 690.7 Other non-current assets 158.5 219.2 Current liabilities Sub-total Non-Current Assets 5,144.4 5,210.4 Financial liabilities Current assets Inventories 4,890.5 4,628.8 Borrowings 1,528.0 1,488.8 Financial assets Trade payables 2,875.6 2,971.0 Trade receivables 3,127.3 2,786.5 Other financial liabilities 745.2 725.7 Cash and cash equivalents 100.2 73.5 Other current liabilities 147.2 84.3 Other Bank balances 187.4 46.9 Provisions 111.8 10.2 Other current assets 1,584.3 1,674.3 Current tax liabilities (net) 248.9 178.4 - Sub-total Current Assets 9,889.7 9,209.9 Sub-total-Current liabilities 5,656.7 5,458.3 TOTAL-ASSETS 15,034.1 14,420.4 TOTAL - EQUITY AND LIABILITIES 15,034.1 14,420.4 Amounts in Rs. Million PARAG Ideas for a new day 8#9Consolidated Cash Flows Statement Particulars Net Profit After Taxes as per Statement of Profit & Loss Operating Profit before Working Capital changes Cash Generated from Operations Direct taxes paid (Net of refund) Net Cash Flow from Operating Activities (A) H1 FY20 FY19 H1 FY19 739.6 1,477.9 762.9 1,192.6 2,807.9 1,359.3 615.9 1,683.0 1,073.3 -106.4 -272.6 -96.3 509.6 1,410.4 977.0 -287.7 -701.4 -547.6 Net Cash Flow from Investing Activities (B) Net Cash Flow from Financing Activities (C) -195.2 -945.5 -520.9 Net Increase/(decrease) in Cash and Cash Equivalents (A+B+C) 26.7 -236.6 -91.5 Cash and Cash Equivalent at the beginning of the period 73.5 310.0 310.0 Cash and Cash Equivalent at the end of the period 100.2 73.5 218.5 Amounts in Rs. Million Strong Free Cash Flow Generation of Rs. 33.7 crore in H1 FY20 PARAG Ideas for a new day#10Marketing Campaigns & Consumer Engagement Initiatives PARAG GO Cheese Go B Chugis host CHEESE Make it amazing! Cheese Go Cheese 目 Go Gowardhan Ghee "ט प्रेमाचा रंग सोनेरी պ ABP FITBIT JIŞII Gowardhan Pore Cow Ghee PARAG Ideas for a new day TASTY विज्ञापन में उल्लिखित उत्पाद और संचार केवल सूचना के संबंध में किए गए हैं. कंपनी 0 किसी भी समान उत्पाद श्रेणी या ब्रांडों के साथ किसी भी संबंध का दावा नहीं करेगी। ZEE टॉकीज fan& Pago GO Cheese TVC ran on POGO (Kids) and Top Marathi Regional Movie Channel Zee Talkies Powered By (()) अचार Co-Powered By Gowardhan SYSKAWIRES Gowardhan Ghee Campaign on Regional Marathi News Channel ABP Majha Avvatar MUSCLE GAINER Ge BARAKA WW BAWANA MA 23P ZARBIYARA W MAA Beverages Gowardhan Dahi TOP UP Keep your energy levels high with Topp Up Keep your gut happy Digital & Social Media Promotions C-200 Vilaston Bay Sodian-ag Protoas-Sy Pride of Cows Read geng we MeowWelnes 10#11Goodness Sustainability Nutrition Ambition Innovation Company Overview#12Parag at a Glance PARAG Ideas for a new day Strong Relationships Established Strong Relationships with over 2 lakh farmers and over 3.5 lakh retail touch points State-of-the-art Facilities Aggregate milk processing capacity of 2.9 mn litres per day with the largest Cheese production capacity in India of 60 MT/day and a Paneer Capacity of 20MT/day Strong Distribution 170+ SKU's 7 Brands Pan-India Distribution Network of 19 Depots, over 140 Super Stockists and 3,000+ Distributors Diversified product portfolio with 170+ SKU's that cater to a wide range of customers Gowardhan Go Pride Of Cows Topp Up Milkrich Avvatar Slurp Ranked #1 Parag Milk Foods was ranked #1 in Fortune India's 'Next 500' from #67 last year Go Green Chutney Go Schezwan Go slurp PANEER Gowardhan Gold Gowardhan Gulab Jammen MIX GO Go Daily Milk Supremo Go Go Go Lassi Gowardhan Dahi Go Go avvalar Gowardhan Ghee Milkrich Go Pre Chase ROUTE 100% WHEY PROTEIN ANGLES 12#13Evolution of the Company Gowardh Go Go Cheese Spagal Cheese Spread RAN Se Cary Go Cheese Spanel PARAG Ideas for a new day Delivered From our FRESH FARM to your home everyday PRIDE OF CO 1992 Parag Milk Foods Ltd founded in 1992 with one purpose: To deliver Fresh Milk and Diary Products 1998 Commissioned Manchar plant and began manufacturing Traditional products like Butter and Ghee under the brand, 'Gowardhan' 2005 Birth of Bhagyalaxmi Dairy Farm - India's most modern dairy farm with the finest International Equipments 2008 Commissioned "Go Cheese World" - India's largest cheese manufacturing plant with a capacity of 40 MT per day 2010 Palamaner plant was established with a world-class UHT facility 2011 Birth of 'Pride of Cows', a First-of-its-kind premium farm-to home milk brand Celebrating LISTING CEREMONY of PARAG 10 00 2014 Realising the needs of our institutional clients, we launched B2B Whey Protein PARAG Ideas for a new day 2015 Relaunched the brand Parag with a new identity 2016 Got listed on the bourses, thus becoming a Publicly branded and owned entity avvalar ABSOLUTE 100% WHEY PROTEIN FREE S 2017 Launched a 100% Whey protein under the brand Avvatar Go Protein power avvalar DANONE LAN ADVANCED MASS GAINER 2018 Extended the Health & Nutrition Product Portfolio by adding Go Protein Power & Avvatar Advance Mass Gainer 2018 Established our third manufacturing facility in North India in Sonipat, Haryana on acquiring Danone's manufacturing facility 13#14Our Diverse Product Portfolio catering to all segments of customers Dahl auvalar MUSCLE GAINER Gowardhan Gowardhan Lea STAR Fresh Curd Ghee Brands www avvalar SOLUTE 100% WHEY PROTEIN PANEER Go Go Chope Green Chutney Shepse Stie Schezwan Target Customer Group Positioning Household consumers seeking premium quality cow's milk DE OF CO Health enthusiasts Premium Modern Traditional ◉ Children and the youth primarily for direct consumption On-the-go consumption as source of instant nourishment Traditional Indian recipes and cooking ingredients Indian households PARAG Ideas for a new day 14#15Our Brand Power 2nd Largest Player in Cheese in the India with 35% Market Share Pioneers of Fresh Paneer with a 75 Day Shelf Life Leaders & Pioneers of Cow Ghee category under Brand 'Gowardhan' Ghee Own one of the Largest Cow Farms in India India's First Company to launch a truly made in India B2C Whey protein powder under Brand 'Avvatar' Leading private player in UHT Category under the Brand 'GO' Introduced the concept of Farm-to-Home milk under the brand 'Pride of Cows' Converted waste into value-added products like organic fertilizers from cow manure and urine under brand 'Bhagyalaxmi Dairy Farms' PARAG Ideas for a new day 15#16Last mile availability from Farm to Fork' Jammu Jalandhar Pan-India Reach Depot Super Stockist Distribution Network 19 Depots PARAG Ideas for a new day Route-to-market Strategy PARAG Ideas for a new day Parwanoo Karnal Delhi Siliguri Guwahati 140+ Fresh Milk Exports Jodhpur Jaipur Kanpur Patna Super Stockists Products Udaipur General Trade Ranchi Ahmedaba Surat Indore Kolkata Nagpur Raipur Cuttack Mumbai 3,000+ Distributors Modern Trade Bulk Business Manchar Hyderabad Goa 3.5 lakhs Palamaner Bengaluru Chennai Calicut Andaman & Nicobar Cochin • Retail Touch points Pm Dedicated Sales and Marketing team comprising of over 800 personnel Direct Institutions Business HORECA . Sales force Automation -Better visibility of Supply Chain Management Disclaimer: Maps not to scale. All data, information, and maps are provided "as is" without warranty or any representation of accuracy, timeliness or completeness 16#17Partner with Leading Institutions and Quick Service Restaurants -? Interact with Customers at the Inception Phase of the Product and even help them to curate a menu Supplies To: Customization of the product according to the Need Maintaining the Exclusivity of the Product Prominent Burger Chains Leading Pizza Chains Major FMCG companies H PARAG Ideas for a new day Strong/ Long term Relations with Customers Hotels, Restaurants and Food Chains 17#18A Pan-India Manufacturing Footprint Key Features: Parag's Manufacturing Footprint Newly Acquired Facility from Danone One of the Largest Cheese Plants in India Sonipat Plant, Haryana رکھتے کہ Manchar Plant, Pune Raipur Nagpur Vashi & Vasai Hyderabad Palamaner Plant, AP Mysore Trichy Key Categories Milk Processing Cheese Paneer Ghee Whey Processing Manufacturing Location Processing Location Capacity 2.9 mn litres per day per day 60MT 20MT per day 110 MT per day 6 lakh litres per day India's 1st state-of-the-art fully integrated Whey Protein Plant Fully automated Paneer Plant World-class UHT facility India's most Modern Dairy Farm ☐ Houses Over 2,500 Holstein Friesian Cows With an Average yield of 20-25 litres per cow vs India's Average of 4-5 litres per cow Newly Acquired Sonipat Facility & Infrastructure ☐ Currently has a Milk & Curd Processing Unit Future Plans to install processing units for pouch milk, flavoured milk, pouch butter milk, cup curd, misthi doi as well as expand the existing yoghurt facility Disclaimer: Maps not to scale. All data, information, and maps are provided "as is" without warranty or any representation of accuracy, timeliness or completeness PARAG Ideas for a new day State-of-the-art Technology 18#19Farmer Relationship is an Integral part of our Business 3-tier Milk Procurement Process Tier 1 Village collection centres procure milk from over 2 lakh farmers in 29 districts Milk is then transported to Tier 2 nearby Bulk Milk Coolers (BMC) and chilled Procurement Network Haryana Rajasthan Uttar Pradesh Madhya Pradesh Maharashtra Farmer Services Never Say No for Milk PARAG Ideas for a new day Transparent Milk Pricing Correct Quantity & Quality Supplying Cattle feed at subsidized rates Building Relationship with Farmers Improving the Productivity of Cows Andhra Pradesh The chilled milk is then Karnataka O Tier 3 transported in tanks Tamil Nadu Future Sourcing States post Danone's plant Acquisition Free Health Camps for Cattles to our dairy plant Current Sourcing States Disclaimer: Maps not to scale. All data, information, and maps are provided "as is" without warranty or any representation of accuracy, timeliness or completeness Free Vaccinations for Cattles 19#20Board of Directors Mr. Devendra Shah Chairman Mr. B. M. Vyas Director Mr. Narendra Ambwani Independent Director PARAG Ideas for a new day Mr. Pritam Shah Managing Director Mr. Sunil Goyal Independent Director Mr. Nitin Dhavalikar Independent Director Mrs. Radhika Pereira Independent Director Mr. Ramesh Chandak Director The Board consists of well qualified personnel with a strong understanding on the Procurement & Production Processes with a wide gamut of Industry experience in the Dairy and Consumer Space backed by innovative abilities to make the company a successful Dairy FMCG company. 20#21Our Management Team Mr. Venkat Shankar Chief Executive Officer He has more than 15+ years of experience in the FMCG (Food) space with his most recent stint with Britannia Industries Ltd as the VP & Head of the Dairy Business. Prior to that he has spent 14 years in Pepsico Sales & Marketing and 9 years in Private Equity across numerous regions of India which has helped him gain the experience of various trade and consumer behaviours. He has also managed multi- functional and P&L responsibilities. He has a PGDM degree from IIM Ahmedabad and an Engineering degree from IIT Kanpur. Mr. Shirish Upadhyay Senior VP Strategy He has 20+ years of experience in dairy and has spent 12 years with GCMMFL (Amul). He has been associated with our company since 2010 during which he was responsible for strategic planning & operations. For a brief time, he advised the management on Company strategy and operations, and is joining the Company full-time from July 2019. He has a Bachelor's degree in Science from Sardar Patel University and a Master's degree in Business Administration from Bhavnagar University. Mr. Shashikant Dalmia Chief Financial Officer He has been with the group for the last 7 years and has handled various functions which include Direct Taxation, Costing, Treasury & Risk Management, Corporate Finance & Accounts, Budget Planning, and Liaising with Government authorities as well as various accounting functions at Plant level. He is also involved in the strategic initiatives of the Group's International business and Long-range planning. He is a qualified Chartered Accountant. Mr. H.S. Oberoi President - Cheese Manufacturing A Mozzarella Cheese manufacturing expert, he has a B. Tech degree and over 52 years of extensive experience in the dairy industry. Ms. Akshali Shah VP-Strategy (Sales & Marketing) An MBA in Family Managed Business from S.P. Jain Institute of Management & Research, she is actively involved in branding, marketing & advertising strategy, category intelligence & competitive analysis. She has also played a key role in the revamping the corporate identity of company. Mrs. Rachana Sanganeria Company Secretary & Compliance Officer Qualified Company Secretary and an Associate Member of the Institute of Company Secretaries of India. She also holds a Bachelor's degree in Commerce and LL.B. degree from the University of Mumbai. She has over 18 years of experience as a Company Secretary. PARAG Ideas for a new day 21#22Integration of Technology across all verticals Business intelligence and Analytics captured through SAP Theory of Constraints (Vector) Dashboard for live monitoring of order taking and past trends of retailers Our systems provide real- time analysis of the quality and quantity of milk procured FUTURE-READY TECHNOLOGY PLATFORM Buy, manage, sell Buy, manage, sell SAP Ariba A SUPPLIERS Integration ARIBA* An SAP Company SAP BUYER PROCUREMENT LP Connect (Milk) E-Auction OPERATIONS Vector flow Network Optimiser Addi 888 DISTRIBUTION Distributor Management Systems Sales Force Automation FULLY INTEGRATED SAP, ERP, AND DATA ANALYTICS PARAG Ideas for a new day Seamless integration of our manufacturing facilities, cold chain and our distribution network of super-stockists & retailers Sales Force Automation helps to increase productivity and enhance the time spent on driving sales Distribution Management System helps with inventory management and provides us with secondary sales data in real-time 22#23Our Strategy for Value Creation Increase Operational Efficiencies Leverage in-house technological, R&D capabilities to: ☐ Maintain strict operational controls ◉ Enhance customer services levels Develop customised systems & processes Operational Efficiencies Strengthen Our Brands ☐ Enhance brand recall through strategic branding initiatives ☐ Increase Ad spend on diverse channels including television, newsprint, digital media Increase Milk Procurement - ☐ ☐ Strengthening existing farmer relations Offer quality & quantity based incentives Set up new collection centres & reach new districts To add 75 new bulk coolers, 100 automated collection systems Brands Health & Nutrition PARAG Ideas for a new day Focus on Health & Nutrition Introduce healthy & nutritious product variants like ☐ ■ Whey protein powder for mass consumption and in different formats Colostrum products - as daily supplements High protein, low fat cheese products Increase Value-added Product Portfolio ◉ Offer wider range of farm-to home products under 'Pride of Cows' Focus on health & nutritional aspect in developing premium products Sell whey protein directly to consumers in the form of a branded product ■ Value- added Product ◉ PARAG Ideas for a new day Milk Procurement Product Reach Enhance Product Reach ☐ Strengthen distributor & stockists base to achieve higher retail penetration ☐ Introduce low unit price products in Tier III cities ◉ Identify specific states and regions in India to increase sales volumes 23#24with a Industry Dynamics#25Indian Dairy Market Indian Dairy Market (US$ 107 Bn) Organised Dairy Market (US$ 15 Bn) Cooperatives (US$ 7 Bn) Private Dairies (US$ 8 Bn) Milk production volume break-up by Marketability 54% 46% ■Self Consumption ■ Marketable Milk Source: IMARC Report - Industry size is as per market realizations Amounts in US$ Billion, 1US$ = INR 67 Unorganised Dairy Market (US$ 92 Bn) PARAG Ideas for a new day Traditional Milkmen / Vendors (US$ 34 Bn) Self Consumption at Home (US$ 58 Bn) Marketable Milk volume break-up by Segment Organized Marketable Milk volume break-up by Segment 70% 30% 45% 55% ■ Unorganised ■ Organised ■ Cooperatives Private Players 25#26Tremendous Growth Potential across Product Segments Liquid Milk Ghee 22,403 +15.0% 90,567 39,119 Paneer Curd +14.8% 9,761 7,358 20,403 +14.8% +14.8% 9,224 5,149 4,373 2,448 3,239 1,851 2010 2014 2020E 2010 2014 2020E 2010 2014 2020E 2010 2014 2020E Modern Products Growth CAGR of 26% Source: IMARC Report Amounts in US$ Million, 1US$ = INR 67 UHT Milk Traditional Products Growth CAGR of 15% Flavoured Milk Cheese Whey (Powder) 716 1,552 881 149 +26.4% +25.3% +27.9% +25.8% 388 149 194 75 179 75 45 15 2010 2014 2020E 2010 2014 2020E 2010 2014 2020E 2010 2014 2020E PARAG Ideas for a new day 26#279000 700 600 500 406 300 200 100 2 3806 8888 5 Financial Highlights#28Key Financial Highlights FY15 Pre IPO Revenue (Rs. Mn) +13.5% 23,957 19,545 14,441 FY15 322 FY15 EBITDA (Rs. Mn) +20.2% 2,235 1,933 1,072 FY18 FY19 FY15 FY18 FY19 PAT (Rs. Mn) On Consolidated Basis Margins (%) +39.1% 1,207 871 EBITDA% PAT% -ROCE% 17.2% 15.4% 12.1% 9.9% 9.3% 7.4% 4.5% 5.0% 2.2% FY18 FY19 FY15 FY18 FY19 PARAG Ideas for a new day 28#29Key Financial Highlights On Consolidated Basis Working Capital (In Days) 72 FY18 -5.6% 68 Operating Cash Flows (Rs. Mn) 613 FY19 FY18 Fixed Assets Turnover Ratio 5.0 +159.5% Debt to Equity 1,591 FY19 19.5% 0.4 6.0 0.3 FY18 FY19 FY18 FY19 PARAG Ideas for a new day 29#30Consolidated Profit & Loss Statement Particulars Revenue from Operations Raw Material Costs GROSS PROFIT Gross Margins FY19 FY18 23,956.6 19,545.1 16,573.6 13,678.9 7,383.0 5,866.2 30.8% 30.0% Employee Expenses 949.9 735.2 Other Expenses 4,198.1 3,198.1 EBITDA 2,235.0 1,932.9 EBITDA Margin % 9.3% 9.9% Other Income 102.6 120.0 Depreciation 501.9 506.0 EBIT Finance Cost Exceptional Items PBT 1,835.7 1,546.9 357.9 357.3 Tax Expense PAT PAT Margin % 1,477.9 1,189.6 270.7 319.0 1,207.2 870.56 5.0% 4.5% Other Comprehensive Income Total Comprehensive Income 1.0 1,208.2 -3.1 867.5 Amounts in Rs. Million PARAG Ideas for a new day 30#31Consolidated Balance Sheet Particulars ASSETS Mar-19 Mar-18 Particulars Mar-19 Mar-18 EQUITY AND LIABILITIES Non-current assets Equity Property, plant and equipment Capital work-in-progress 4,023.4 290.3 3,922.7 Equity Share capital 839.4 838.9 204.0 Other equity 7,432.0 6,282.8 Other intangible assets 34.5 47.5 Sub-total-Shareholders' funds 8,271.4 7,121.6 Biological assets other than bearer plants 337.6 290.9 LIABILITIES Financial assets Non-current liabilities Investments 5.3 5.1 Financial liabilities Loans 3.5 3.5 Borrowings 646.2 635.2 Other financial assets 130.0 95.6 Provisions 40.8 35.5 Deferred tax assets (net) 166.7 75.2 Other non-current liabilities 0.0 58.2 Other non-current assets 219.2 119.7 Sub-total-Non-current liabilities 799.8 728.8 Sub-total-Non-Current Assets 5,210.4 4,764.0 Current liabilities Current assets Financial liabilities Inventories 4,628.8 4,379.3 Borrowings 1,497.5 2,001.5 Financial assets Trade payables 2,971.0 3,032.6 Trade receivables 2,786.5 2,517.2 Other financial liabilities 725.7 742.5 Cash and cash equivalents 73.5 310.0 Other current liabilities 75.7 113.0 Other Bank balances 46.9 186.0 Provisions 13.9 13.8 Other current assets 1,674.3 1,658.7 Current tax liabilities (net) 178.4 61.5 Sub-total Current Assets 9,209.9 9,051.3 Sub-total-Current liabilities 5,462.0 5,964.8 TOTAL - ASSETS 14,420.4 13,815.3 TOTAL - EQUITY AND LIABILITIES 14,420.4 13,815.3 Amounts in Rs. Million PARAG Ideas for a new day 31#32Annexures#33India's Favourable Dynamics offer Huge Opportunities India GDP Growth 7.1% 6.4% PARAG Ideas for a new day Rising Middle Class Population & Income Levels Middle class households to grow from 255 million in 2015 to 586 million in 2025 at a CAGR of 8.7% Rising income & disposable income to drive consumption of milk & dairy products 7.5% Urbanisation • FY14 FY17 FY20E* . Urban population expected to increase from 31.2% in 2011 to 34.5% in 2021 Preference for clean, hygienic & ready-to-eat milk & dairy products to boost organised dairy industry Changing Dietary Patterns with focus on Milk Milk being important source of vital nutrients especially for vegetarians, consumers are shifting away from cereals to milk & dairy products 31% Indian population is vegetarian, ensuring continuous demand for milk & dairy products Shift to Packaged Food to drive Organised Market Source: IMARC Report * As per World Bank report on Global Economic Prospects - January 2018 • Increasing quality & safety concerns increasing demand for packaged food, in particular pasteurised packaged milk Organised market share to also increase to 26%, in value terms, by 2020 33#34India Contributes > 20% of Global Milk Production Countries Top Milk Producing Countries (Million MT) 2017 2018E 2019E 2020E 2027E CAGR India 169 174 181 188 244 3.7% EU-28 164 167 167 169 177 0.8% USA 98 98 99 100 105 0.7% Pakistan 54 56 58 59 70 2.8% China 40 40 43 44 45 50 2.3% Russia 31 31 31 31 31 0.0% Brazil New Zealand World 29 29 30 30 31 36 2.1% Global Animal Wise Milk Production - 2017 - 11.5% 3.5% ■ Cow ■ Buffalo PARAG Ideas for a new day ■Goat & Others 85.0% India Animal Wise Milk Production - 2017 - 21 21 22 22 23 25 1.5% 55.0% 823 844 859 875 994 1.9% Source: IMARC Report, Ministry of Animal Husbandry, Dairy & Fisheries and FAO 45.0% ■ Cow ■ Buffalo 34#35Milk Production in India Dr. Verghese Kurien initiated operation Flood to increase Milk Production Liberalization of the sector in 1991 led to entry of private players 78 +2.8% 51 30 17 20 21 1950 1960 1970 1980 Source: Ministry of Animal Husbandry, Dairy and Fisheries 1990 2000 Milk Production (Million MT) 116 188 +4.3% 169 244 2010 2017 2020E 2027E PARAG Ideas for a new day 35#36Ghee Market (Butter Oil/Cooking Oil/Clarified Butter) India's Ghee Market Size (in US$ Million) Key Highlights PARAG Ideas for a new day 20,403 17,985 15,791 +16.0% 13,836 10,582 8,030 6,030 4,463 3,075 2007 2009 2011 2013 2015 2017 2018 2019E 2020E Organized vs Unorganized Sales 15.0% 15.0% 16.0% 17.0% 18.0% 20.0% 20.0% 21.0% 21.0% 85.0% 85.0% 84.0% 83.0% 82.0% 80.0% 80.0% 79.0% 79.0% 2007 2009 2011 2013 2015 2017 2018 2019E 2020E Organised Unorganised Source: IMARC Report 1US$ = INR 67 • Ghee is traditionally used as cooking oil in Indian households It is the 2nd largest category in the Indian dairy industry after Liquid Milk The organized market is currently 20% of total, and is growing rapidly at a CAGR of 17% Parag is present in the "Cow Ghee" category and are not only pioneers of the category but also the most sought after brand in the segment • The Cow Ghee segment is growing faster than the overall Ghee market and has higher margins 36#37Cheese Market India's Cheese Market Size (in US$ Million) I PARAG Ideas for a new day 328 +25.3% 263 204 164 134 54 69 85 106 410 513 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Cheese - Value Market Share 7.0% 7.0% 9.0% 35.0% 42.0% ■ Amul ■ Parag Milk Foods ■ Britannia ■ Dynamix ■ Others Key Highlights Cheese is one of the fastest growing segments among dairy products in India Rise in food service outlets and changing food habits are major drivers Earlier, the cheese market in India was dominated by block cheese, slices and cubes • Through innovation Parag has achieved a leadership position with a 1/3 rd market share Parag dominates the Institutional & HoReCa segment Maharashtra is the biggest market for cheese consumption, followed by Gujarat, Delhi, Tamil Nadu and Uttar Pradesh Source: IMARC Report 1US$ = INR 67 37#38Paneer (Cottage cheese) India's Paneer Market Size (in US$ Million) 9,761 8,582 7,522 6,597 +16.8% 5,030 3,806 2,896 1,940 1,358 2007 2009 2011 2013 2015 2017 2018 2019E 2020E Organized vs Unorganized Sales 1.6% 1.9% 2.0% 2.3% 2.6% 2.9% 3.1% 3.3% 3.5% 98.4% 98.1% 98.0% 97.7% 97.4% 97.1% 96.9% 96.7% 96.5% 2007 2009 2011 2013 2015 2017 2018 2019E 2020E Organised Unorganised Source: IMARC Report 1US$ = INR 67 I PARAG Ideas for a new day Key Highlights Paneer is to India what cheese is to the Western world and is an integral part of many Indian recipes • Paneer is the third largest segment in the milk products category • Paneer is consumed like vegetables in Indian households and therefore purchased fresh on a daily basis • With innovation in manufacturing & packaging, Parag has created a long-shelf life Fresh Paneer made from 100% cow milk • Due to hygiene and consistency in taste, the trend towards branded packaged paneer is gaining momentum 38#39Curd (Dahi) India's Curd Market Size (in US$ Million) 7,358 6,478 5,687 +15.4% 4,940 3,746 2,836 2,134 1,597 1,179 2007 2009 2011 2013 2015 2017 2018 2019E 2020E Organized vs Unorganized Sales 4.0% 4.0% 5.0% 5.0% 6.0% 6.0% 7.0% 7.0% 7.0% 96.0% 96.0% 95.0% 95.0% 94.0% 94.0% 93.0% 93.0% 93.0% 2007 2009 2011 2013 2015 2017 2018 2019E 2020E Organised Unorganised Source: IMARC Report 1US$ = INR 67 I Key Highlights PARAG Ideas for a new day • Curd industry has transformed from being a product that was traditionally made at home to a branded & packaged product The organized curd market is growing rapidly at a CAGR of 20%+ with even higher growth in metros • With a distinctive home-made recipe and made of pure Cow milk, our curd is well-positioned to dominate this category in major markets Parag has significant presence in major metros like Mumbai, Pune, Nagpur, Hyderabad, Bangalore & Chennai and is now expanding into Delhi NCR and nearby markets of North & East 39#40UHT & Beverages India's UHT Market Size (in US$ Million) I I 1,552 I 1,239 I I 985 I I +28.4% 791 I I 493 I 313 194 104 2009 2011 2013 2015 2017 2018 2019E 2020E Key Highlights PARAG Ideas for a new day India's Flavoured Milk Beverages Market Size (US$ Million) 716 582 463 +25.5% 373 239 149 90 60 2009 2011 2013 2015 2017 2018 2019E 2020E Key Highlights ● . • . In 2014, the UHT milk market accounted for less than 1% of the total milk market and ~5% of the organized milk market However, with benefits like safety, convenience and longer shelf life, usage of UHT milk is increasing at a fast pace in major metros Milk deficit areas are switching from milk powders to UHT milk Parag has established itself as a the largest private player in this segment Flavoured milk represents one of the fastest growing segments in the Indian dairy market due to: • Indian consumers slowly substituting carbonated soft drinks with healthier options • Advent of single serve, re-sealable bottles and tetra packs which has made milk convenient for use and easier to distribute Source: IMARC Report 1US$ = INR 67 40#41Whey Protein Category Market Size Historical Growth Rates Sports Nutrition Segment Health & I I Nutrition Segment US$ 225-300 Million US$ 225-300 Million I I 25-30% 25-30% I Target Consumer Group Athletes, Sports Enthusiasts, Gym- goers Mass consumers like children, women, aged people I I I I Market Players Almost 100% Imported Products Few Large MNCs I are present Source: IMARC Report 1US$ = INR 67 I I I I | Key Highlights PARAG Ideas for a new day • Whey Protein market is estimated at 35,000 MT, translating into business potential of US$ 450 Million, growing upwards of 25% Parag has the most integrated & largest whey processing facility in the country and intends to dominate this market • We have introduced 'Avvatar' whey protein in the sports nutrition category and are in process of launching various products under the Health & Nutrition segment as well Parag intends to not only have the Health & Nutrition business as 7% of its portfolio in the medium term, but more importantly, intends to drive its profitability and growth for both Cheese & Whey businesses 41#42Liquid Milk Market India's Liquid Milk Market Size (in US$ Million) 90,567 79,015 68,731 59,791 +16.4% 45,090 33,896 25,463 18,060 12,910 2007 2009 2011 2013 2015 2017 2018 2019E 2020E Organized vs Unorganized Sales 15.0% 16.0% 17.0% 18.8% 20.8% 22.9% 24.0% 25.1% 26.3% II 85.0% 84.0% 83.0% 81.2% 79.2% 77.1% 76.0% 74.9% 73.7% 2007 2009 2011 2013 2015 2017 2018 2019E 2020E Organised Unorganised Source: IMARC Report 1US$ = INR 67 I PARAG Ideas for a new day Key Highlights A majority (77%) of the milk sold in India is unorganized and in the form of loose milk sold by milkmen The organized sector in liquid milk is highly fragmented with several regional players and co- operatives Consumers are shifting from loose liquid milk to branded packaged milk due to safety and quality concerns The organized liquid milk market is growing faster than the unorganized market Parag has a strong presence in urban parts of West and South India and is currently the largest private player in Mumbai 42#43We are present in all key Cow milk procuring States In Million MT PARAG Ideas for a new day Sr. States No Milk Production % Share of (2016-17) Total Milk Produced CAGR for last 2 years Cow Milk Production % Share of Cow Milk (2016-17) CAGR for last 2 years 1 Tamil Nadu 7.6 4.6% 2.9% 7.1 93% 3.1% 2 Karnataka 6.6 4.0% 3.5% 4.6 70% 2.6% Haryana Uttar 3 Maharashtra 10.4 6.4% 4.4% 6.2 60% 8.2% Rajasthan Pradesh 4 Bihar 8.7 5.3% 5.8% 5.2 60% 9.2% Madhya Pradesh 5 Madhya Pradesh 13.4 8.2% 11.7% 6.6 49% 14.7% 6 Gujarat 12.8 7.8% 4.6% 5.8 45% 7.7% Maharashtra 7 Rajasthan 19.4 11.9% 6.9% 7.1 37% 7.9% 8 Andhra Pradesh* 16.9 10.3% 12.3% 5.3 31% 12.1% Andhra Pradesh 9 Uttar Pradesh 27.6 16.9% 4.6% 8.6 31% 16.2% Karnataka Future Sourcing States post ramping up Sonipat plant operations Tamil Nadu 10 Punjab 11.3 6.9% 4.4% 3.2 28% 3.1% Current Sourcing States 11 Haryana 9.0 5.5% 6.6% 1.7 19% 17.8% India Total 163.7 100.0% 5.8% 70.2 43% 8.2% *Including Telangana Disclaimer: Maps not to scale. All data, information, and maps are provided "as is" without warranty or any representation of accuracy, timeliness or completeness Source: Ministry of Animal Husbandry, Dairy and Fisheries 43#44Contact Us PARAG Ideas for a new day Company : Parag Milk Foods Limited CIN: L15204PN1992PLC070209 SGA Strategic Growth Advisors Investor Relations Advisors: Strategic Growth Advisors Pvt. Ltd. CIN: U74140MH2010PTC204285 Name: Natasha Kedia Email: [email protected] Phone: +91 22 4300 5555/ Ext: 631 Varun Divadkar / Deven Dhruva [email protected]/ [email protected] +91-9763702204 / +91-9833373300 PARAG Ideas for a new day 44