ADF Foods Limited Investor Presentation Q4 FY24 PDF

9th May, 2024 National Stock Exchange of India Limited, BSE Limited, Exchange Plaza, Department of Corporate Services, Bandra Kurla Complex, Phiroze Jeejeebhoy Towers , Bandra (Eas...

9th May, 2024 National Stock Exchange of India Limited, BSE Limited, Exchange Plaza, Department of Corporate Services, Bandra Kurla Complex, Phiroze Jeejeebhoy Towers , Bandra (East), Dalal Street, Mumbai - 400 051. Mumbai - 400 001. Symbol: ADFFOODS Scrip Code: 519183 Dear Sir/Madam, Sub: Investor Presentation of Q4 & FY24. Please find enclose herewith the Corporate Presentation of the Company for the Quarter and Financial Year ended 31st March, 2024. The aforementioned Presentation has been uploaded on the Company’s website viz., www.adf-foods.com You are requested to the take the above on your records. Thanking You, Yours faithfully, For ADF Foods Limited SHALAKA Digitally signed by SHALAKA SWAPNIL SWAPNIL OVALEKAR Date: 2024.05.09 OVALEKAR 21:39:36 +05'30' Shalaka Ovalekar Company Secretary Encl: As Above Regd Off: 83/86, G.I.D.C Industrial Estate, Nadiad - 387 001, India. Tel.: +91 268 2551381/82 Fax: +91 268 2565068 Email: [email protected] CIN: L15400GJ1990PLC014265 Corp. Off: Marathon Innova, B2, G01, Ground Floor, G. K. Road, Lower Parel, Mumbai 400 013. INDIA. Tel.: +91 22 6141 5555, Fax: +91 22 6141 5577, Email: [email protected], Web: www.adf-foods.com ADF Foods Limited Investor Presentation Q4 FY24 May 2024 1  Contents 01 Company Overview 02 Business Overview 03 Industry trends & ADF Growth 04 Annual Performance March 2023 2 Company Overview 3 ADF Snapshot ADF - At a Glance 2 1932 Leading Global 400+ Product Manufacturing manufacturer Network 8 Brands SKUs Facilities A leading Impressive footprint Distinctive, high-recall Wide range 9-decade Vintage Annual manufacturing spanning across the brands catering to of products with origins dating food processing company and globe with products niche demographics demonstrating back to 1932 capacity of distributor of available in over with a strong extensive presence ~28,000 MT prepared ethnic food 55 countries consumer following across the value chain 4 Unlocking Growth A Global Culinary Cutting-edge Manufacturing Diversified Product & Sustainable Performance & Powerhouse & Wide-reaching Brand Portfolio Key Growth Initiatives Distribution Network 29%+ 400+ Product Ashoka Manufacturing  One of the biggest ethnic food processing companies globally 2 facilities SKUs 3-year CAGR* (Flagship Brand) *FY21 – FY24 Unparalleled presence throughout the entire 28,000  ~25% Strong 55+ Countries Annual food value chain within the specialized food business. (FY24 Standalone) EBITDA Margins MT processing capacity  Products from frozen foods, ready-to-eat / Zero Debt-free Distribution ready-to-cook items, & meal accompaniments. Net Debt Balance sheet  Impressive footprint spanning 2 warehouses in USA North America, UK, EU, Middle East, & Asia Pacific.  Strategic investments & 8 Distributors International Significant 180+ worldwide Brand product range expansion in Truly Indian (for mainstream brands customers) & Soul (for India investments Business). Significant growth potential through blend of Customer Segment  organic & inorganic opportunities including  Catering to multiple demographics & development of a greenfield facility. establishing a robust consumer base with a  South Asian diaspora (Global) strong brand loyalty.  Dedicated teams & Mainstream (Global) professional hiring in India Professional   Acquisition of warehouses & cold storage and internationally to drive 35 Domestic consumers (India)  supported by strategic combination of direct distribution (in USA) & 180+ distributors’ New product hiring growth network set to propel further growth. launches in FY24 5 Investment Rationale ❑ Leveraging extensive experience, deep domain knowledge & multi- Vintage generational understanding along with seasoned food industry Leadership & professionals. Value Creation ❑ Stability ensured by a debt-free balance sheet and return ratios. ADF is one of the Leaders in the high growth ethnic processed food market globally ❑ Full-fledged spectrum from frozen foods to ready meals and Diverse, accompaniments with continuous product innovation. Accelerated Growth Avenues Innovative ❑ Continual launch of new, innovative, synergistic, and customer- Product Portfolio centric products Strengthening ADF market presence, deeper penetration and expanding shelf space within existing and emerging markets. ❑ Over 180+ worldwide distributors Enhanced ❑ Multiple warehouses, and direct distribution in USA Thrust on expanding India's business via e-commerce, Distribution & ❑ Strategic warehouse acquisitions to augment throughput, modern and general trade channels. Warehousing ensuring faster and more reliable service for consumers. Availing PLI benefits for its branding initiatives ❑ Demonstrated by Ashoka's doubling growth resulting in brand Professional hiring in India and internationally to drive Brand Strength revenue crossing Rs. 250 Cr. growth & Investments ❑ Augmentation in Truly Indian & Soul brands ❑ Continuous strategic investment in brands, and product expansion. 6 Q4 FY24 Financial Performance Standalone Performance Revenue from Operations (Rs. Cr.) EBITDA (Rs. Cr.) & EBITDA Margin (%) PAT (Rs. Cr.) & PAT Margin (%) 28.8% 25.6% 24.7% 20.7% 19.6% 19.6% 129.0 98.2 103.2 31.8 28.3 26.4 25.3 20.3 20.3 Q4 FY23 Q3 FY24 Q4 FY24 Q4 FY23 Q3 FY24 Q4 FY24 Q4 FY23 Q3 FY24 Q4 FY24 Consolidated Performance Revenue from Operations (Rs. Cr.) EBITDA (Rs. Cr.) & EBITDA Margin (%) PAT (Rs. Cr.) & PAT Margin (%) 21.5% 20.8% 22.3% 13.1% 14.7% 16.3% 153.6 34.3 26.5 27.0 25.0 129.7 19.1 16.1 123.1 Q4 FY23 Q3 FY24 Q4 FY24 Q4 FY23 Q3 FY24 Q4 FY24 Q4 FY23 Q3 FY24 Q4 FY24 7 FY24 Financial Performance Standalone Performance Revenue from Operations (Rs. Cr.) EBITDA (Rs. Cr.) & EBITDA Margin (%) PAT (Rs. Cr.) & PAT Margin (%) 21.7% 24.6% 17.0% 19.2% 414.1 102.0 79.6 353.3 60.0 76.8 FY23 FY24 FY23 FY24 FY23 FY24 Consolidated Performance Revenue from Operations (Rs. Cr.) EBITDA (Rs. Cr.) & EBITDA Margin (%) PAT (Rs. Cr.) & PAT Margin (%) 17.9% 20.2% 12.4% 14.2% 520.3 104.9 73.8 55.9 450.3 80.6 FY23 FY24 FY23 FY24 FY23 FY24 8 Segment Performance Processed Foods Distribution Revenue from Operations (Rs. Cr.) Revenue from Operations (Rs. Cr.) 132.7 23.3 102.8 106.3 21.0 20.3 Q4 FY23 Q3 FY24 Q4 FY24 Q4 FY23 Q3 FY24 Q4 FY24 EBITDA (Rs. Cr.) & EBITDA Margin (%) EBITDA (Rs. Cr.) & EBITDA Margin (%) 8.5% 8.2% 8.2% 27.4% 27.1% 25.3% 36.0 29.1 26.00 1.7 1.9 1.7 Q4 FY23 Q3 FY24 Q4 FY24 Q4 FY23 Q3 FY24 Q4 FY24 9 Business Overview 10 Business Divisions Business comprises core manufacturing i.e., processed foods business and agency distribution business. 2 Core Revenue Segments (Divisions) 1. Processed Foods 2. Distribution One of the largest Indian exporters of processed foods Strong presence in US with a growing Europe market Revenue from Operations (Rs. Cr.) Revenue from Operations (Rs. Cr.) 17% 88 88 432 86 77 362 335 293 253 32 83% Processed Foods Distribution FY20 FY21 FY22 FY23 FY24 FY20 FY21 FY22 FY23 FY24 FY24 Revenue breakdown Own product portfolio of leading Agency distribution business for processed foods brands for South leading FMCG companies at an Asian diaspora and mainstream and international level. domestic customers. 11  Geographical Presence Impressive footprint spanning North America, Europe, Australia, Middle East, & Asia Pacific. 2 Manufacturing locations NADIAD, NASIK 55+ Countries 180+ Global Distributors presence worldwide 2 2 Manufacturing 2 Warehouses (USA) Distribution locations NEW JERSEY ATLANTA warehouses in USA Corporate headquarters MUMBAI Focus Brands 12 Ashoka: ADF Foods' Flagship Brand The Taste of Home for South Asian Diaspora Reinforcing Indian Heritage and Pioneering Growth  Born in 1988, Ashoka quickly gained momentum as ADF Foods' flagship brand catering to Indian palates globally. Ashoka Brand Sales (Rs. Cr.) 254 Global Presence 211  Ashoka products are enjoyed in 55+ countries worldwide. 157  Primary markets: USA, Canada, UK, Middle East and EU 119 Distribution Channels  Ashoka accommodates varied shopping preferences with sales from ethnic stores and mainstream/modern trade stores. FY21 FY22 FY23 FY24 Brand Value Proposition:  Ashoka, carrying the essence of 'Desi at Heart', transports the authentic taste of home to consumers overseas, recreating a culinary bridge back to India  Well-suited to contemporary lifestyles with focus on convenience & quick preparation. Product Range Brand Growth  Ambient Range  Pickles, Chutney, Pastes, pulp, sauces, Ready to eat curries/rice, Murabba In the last 3 years alone, Ashoka's growth has more than doubled, showcasing increasing demand for authentic Indian  Frozen Range  Indian breads, Ready to eat curries/rice, Indian snacks & vegetables, cuisine. plant-based curries, Indo-Thai, Indo-Chinese, sweets. 13 Ashoka: Bringing Authentic Indian Taste Abroad A Journey through India's Culinary Landscape 14 SOUL: The Essence of Global Flavours in Indian Kitchens A D2C brand Embodying Authentic Global Flavours for Indian Consumers Target Audience: SKUs:  Tailored for millennials and the urban Indian consumer.  Offeringa total of 20 – 25 SKUs including wide range of pickles, sauces, and pastes available in convenient packaging Brand Differentiators:  Plans to add more SKUs in FY25  Perfect blend of taste and health, achieved through controlled sodium levels and the use of nutrient-enriched olive oil.  Fusion of global flavours with a traditional Indian touch in products like Indian Pickles, Ready to Cook Pasta-Pizza Sauces, International Dips, and more. Sales & Distribution Channels Leading E-commerce Own website* Platforms Brand Outlook:  Offers PAN India delivery through a dedicated company web shop. SOUL aspires to be Rs. 100 crore brand in the next 3-4 years  Presence on leading e-commerce platforms - Big Basket, Swiggy Instamart, Flipkart, and Amazon Fresh for wider reach. * https://soul-foods.in/ 15 Soul's Blueprint for Growth in India's Premium Market Initial Success-Driven Premium Pricing for Investment Higher Profitability Significant traction from initial Rs. 5 Offering a premium range that crore investment prompted additional ensures superior gross margins infusion to capitalize on the momentum and further accelerate Soul's market expansion. Expansion Gourmet Leadership Strategic Expansion in Commitment Expansion Acquisition FY25 Pledging a total investment of Product line with olive oil-based and Onboarded experienced senior Gearing up for exciting product lineup Rs. 13 crore for FY25 to bolster traditional chutneys, and pickles with professional from a leading consumer and strategic expansion into Modern ADF Soul's growth trajectory. plans to launch more exciting company to spearhead 'Soul' Trade, set to energize the market in products in better-for-you foods second half of FY25. space. 16 Truly Indian: Unlocking Global Markets With Authentic Indian Flavours Bridging Cultures with Authentic Indian Taste Target Audience:  Exclusively targeted at the global mainstream population, specifically non-Indian diaspora seeking traditional Indian flavours. Product Features:  Delivers the REAL taste of India with fresh, shelf- stable ready-to-heat foods, offering vegan & Distribution Channels: vegetarian options.  Soldexclusively through  Wide product range includes ready-to-eat meals, meal accompaniments, pastes and sauces, mainstream/modern trade stores, carefully crafted for a milder palate. bolstering its presence across large supermarkets, club stores, and food service markets. 100% Product Range: Mainstream / Modern trade stores Regular Meal Assortments Update & Outlook:  Poppadum boxes  Cooking sauces  Mango chutneys  Dedicated sales team hired in USA for FY25 launch plans  Condiment pastes  Ready to eat  Expanded range of frozen items and new offerings in sauce, Presence: pastes and curries, increasing penetration and shelf space  Strong presence across Germany 17  Exploring Our Other Esteemed Brands Positioning Products Geographies Retail Channel Premium brand targeted at Meal accompaniments, pastes, Middle East 95% from mainstream/ modern Arabic diaspora sauces trade stores Economy Brand Meal accompaniments, pastes, Middle East 65% from mainstream/modern sauces trade stores; 35% general trade The company also owns other brands such as PJ’s, Nate’s and Khansaama. 18 Product Portfolio Select Key Products Ready-to-eat & Food Frozen Products Spices & Others Ready-to-cook Accompaniments ▪ Snacks- Punjabi ▪ Ready to eat- Pav ▪ Pickles- Chilli, Lemon, ▪ Spices- Madras Curry Samosas, Batata Bhaji, Dal Makhani, Mango, Mixed Powder, Tamarind Vada, Kathi Rolls Matar Paneer ▪ Chutneys – Coconut, and other ▪ Vegetables- Green ▪ Ready to eat Vegan- Coriander, Mint, Chilli, Mix Vegetable Bhindi Masala, Sandwich, Pani Puri, Cut, Methi, Palak Paneer (Tofu) Date & Tamarind ▪ Breads- Naans, Makhani ▪ Sauces- Pasta and Parathas Pizza Sauce 400+ SKUs 19 Marketing Initiatives Increased shelf visibility and consumer loyalty, translating into outperformance 20 Marketing Initiatives Product sampling @ retail stores 21 Marketing Initiatives Television sponsorships Sponsorship of Live Telecast of Tata IPL GEC & News News Channel L Band & IPL Sponsor Tag 22 Marketing Initiatives YouTube, Instagram & LinkedIn presence – Engaging fans with product stories, event snapshots and interesting contests 23 Manufacturing Facilities Plant 1 Nadiad, Gujarat Plant 2 Nasik, Maharashtra  Total Built up area - ~26,000 Sqm*  Total Built up area – ~12,000 Sqm*  Frozenfoods (Samosas, vegetables, snacks,  Totally automated spice processing unit by Buhler, parathas, etc.) Meal accompaniments (Pickles, Germany chutneys, pastes, sauces) Ready to eat curries &  Ready to eat curries and spices; meal accompaniments canned vegetables 28,000 MT Annual food processing capacity Incremental CAPEX Initiatives & Outlook Benefits ✓ Brownfield and debottlenecking efforts at existing plants Incremental revenue Unlocking capacities in in Nadiad & Nasik Rs. 180 - 200 crores existing & new facilities ✓ Surat Greenfield expansion (~Rs. 75 crores – Phase 1) in Incremental revenue existing and new lines for frozen foods Rs. 250 - 275 crores ✓ Substantial progress on the upcoming Cold storage Cold storage upgrade Higher operational upgrade in Nadiad worth ~Rs. 15 crore, to further efficiency enhance throughput 24  Warehousing Facilities Available For Distribution Business Warehousing and Distribution Facilities Atlanta, USA (34,000 sq.ft.) New Jersey, USA (66,000 sq.ft.) Cold storage facility in New Jersey, USA Combined 100,000 sq. ft of area for warehousing and distributing operations shared among two warehouses in Atlanta and New Jersey (NJ). Enhanced capabilities through the establishment of a new cold storage facility (large freezer capacity) to enhance the handling of our frozen product range, elevating service levels and boosting margins. 25 Distribution Business Distribution Business Alongside the processed food business, ADF has undertaken the agency distribution for a select FMCG company products whose ROCE is in line with own brands, broadening the overall portfolio Serving as a distribution partner for a for renowned packaged tea brands such as Lipton, Brooke Bond Red Label, Taj Mahal as well as for F&B brand Knorr (Unilever) bolstering brand associations. Strengthening distribution business allows for deeper network penetration, allowing for the dilution of distribution expenses and enhanced shelf space visibility. This business operates on a pull and push effect proving beneficial for both ADF Foods Ltd and the FMCG company. 26 Certifications & Accreditations ISO 2200: 2018 SGS accreditation demonstrates certification by BVQI UKAS accreditation ensures high Kosher that our products, processes and for management standards for managing Dietary Regulations of services meet the highest system standards occupational health & safety Jewish Community manufacturing standards HALAL certification SMETA AUDIT for the 4 BRC accreditation APEDA assures product pillars -Labour Standard, (Ministry of Commerce and do not contain Health & Safety, Industries) Award for ingredients forbidden Environment, Business exceptional exports for Islamic followers Ethics of safety, quality performance 27  Board Of Directors Bimal Thakkar Ravinder Jain Viren Merchant Jay Mehta Chairman, Managing Director and CEO Independent Director Non-Executive Director Non-Executive Director 37+ years of experience in domestic and 45+ years of experience in business 30+ years of experience and expertise in 35+ years of rich industrial experience group and is the export food industry management business management and pharmaceutical director of Indian operations at Mehta Group, that Instrumental role in developing brands and Ex - MD of Shaw Wallace, MD of Millennium and healthcare industry spans 4 continents and has business interests in cement new products, tapping new markets, Alcobev and head of McDowell and Co. Currently CEO of Encore Healthcare Pvt Ltd. & building materials, horticulture, consultancy, etc. international acquisitions, setting up of Executive Vice Chairman of Saurashtra Cement Ltd. subsidiary companies in U.K. and U.S.A. Deepa Harris Chandir Gidwani Pheroze Mistry Arjuun Guuha M. M. Srivastava Independent Director Independent Director Independent Director Whole Time Director Additional Director (Independent) 30+ years of expertise in high end 45+ years of experience in financial 40+ years of experience in business A senior food industry professional, A science graduate, master in physics IAS luxury hospitality category services administration. with 29+ years of experience. (Retd) & MBA with 40+ years administrative & Independent Director of PVR Limited, Chairman Emeritus & Founder of He is associated with companies He has held several senior corporate experience Jubilant Foodworks, Prozone Intu Centrum Capital Ltd; Member of across the areas of logistics, industrial management roles, including Head of Held positions such as Member (Fin) - Gujarat Properties, Taj Safaris, Concept industry associations e.g. FICCI, CII, coating and painting, shipping, Operations & CEO positions, both in Electricity Board, MD - Gujarat Agro Industries, Hospitality and TCPL Packaging. etc. dredging, general and Life Insurance, India and overseas, with leading Secretary - Finance Department, Commissioner Investments Immovable Property etc. Indian Corporations and MNCs. of Commercial Tax Department, Principal Secretary - Energy Petrochemicals. 28 New Product Launches In Q4 FY24 Frozen Sweets Canned Sweets Dips & Sauces Frozen Snacks Frozen Breads Shelf Stable 29 Industry trends & ADF Growth Aspirations 30 Culinary Horizons: Key Drivers Shaping the Ethnic Food Landscape Ethnic Food Trends Demographic factors & Macro Economic Trends Surge in health-conscious ethnic options: plant-based, Increase in nuclear Rise in Immigration vegetarian, vegan. families Growing fascination with diverse culinary cultures. Globalization & Post-COVID-19 shift International travel Convenience driving ready-to-eat ethnic food market. Increasing Rapid urbanization Millennials & Gen Z's Rise of fusion cuisine and street-food inspired dishes. Increasing per capita income* across the globe Per capita income - USA Per capita income - India Increased consumer experimentation with global flavours. ₹ 2,01,431 $76,329 $62,823 $63,528 ₹ 1,64,961 ₹ 1,59,848 $57,867 ₹ 1,43,230 Social media and technology enhancing access to and interest in ethnic cuisines. 2016 2018 2020 2022 2016 2018 2020 2022 *Source: World Bank Open Data, For India Conversion rate (US$ 1 = Rs. 83.55) 31 ADF Foods – Our Aspirations Brownfield and debottlenecking initiatives to boost revenue potential at Aspirational Revenue growth potential (Rs. Cr.) current capacities by Rs. 180 – 200 crores Upcoming Greenfield expansion to further boost revenue potential by 1,000 - 1,100 Rs. 250 – 275 crores + Scale up in Distribution business and potential outsourcing 150+ opportunities supported by newer markets & products and optimized ~950 operations to drive continued expansion. + Key Growth drivers ~ 700 ~250 Ashoka to propel ADF Foods with a steady 20-25% annual growth + 520 ~180 SOUL projected to hit Rs. 100 crores in domestic revenue within three years through an aggressive growth strategy +250 Truly Indian poised to mirror Germany’s success in USA market Strategic ambitions to enter newer markets Opportunity in inorganic growth to further boost momentum Ongoing efforts to increase penetration and shelf space FY24 + Brownfield & + Greenfield + Distribution & Continuous innovation committed in extending existing products debottlenecking other and exploring new categories. Potential to reach Rs. 900 – 1,000 crores till FY27 32 Annual Performance Highlights 33 Consolidated 5-year Financial Highlights Rs. Cr. unless stated FY20 FY21 FY22 FY23 FY24 Profit & Loss Highlights Revenue from Operations 285.2 369.8 421.2 450.3 520.3 Gross Profit 136.1 154.7 211.5 235.9 276.2 Gross Profit (%) 47.7% 41.8% 50.2% 52.4% 53.1% EBITDA 53.1 68.3 66.6 80.6 104.9 EBITDA Margin (%) 18.6% 18.5% 15.8% 17.9% 20.2% PAT 42.8 50.1 48.5 55.9 73.8 PAT Margin (%) 15.0% 13.6% 11.5% 12.4% 14.2% Balance Sheet Highlights Equity 204.4 273.5 345.6 421.6 442.0 Net Debt* (54.7) (81.2) (101.3) (143.4) (144.5) Tangible & Intangible Assets** 79.6 77.5 137.1 157.2 165.6 Working Capital 86.4 103 115.6 134.9 137.5 * Negative figure represents surplus cash, bank and short-term investments **Excluding goodwill 34 34 Consistent Shareholder Returns Value creation for Consistent shareholder value creation through dividend payouts and buyback of shares shareholders Rs. ~120 Cr. returned to our shareholders since FY 19 43.9 30.0 13.2* 8.8 11.0 6.0 6.0 FY19 FY20 FY21 FY22 FY23 FY24 Regular Dividend (Rs. Cr) Share Buyback Amount (Rs. Cr) Special Dividend (Rs. Cr) * The board had recommended a dividend of Rs. 1.20 /- per equity share of FV Rs. 2/- each. 35 Safe Harbor 36  Thank You ADF Foods Limited Ernst & Young LLP CIN: L15400GJ1990PLC014265 Investor Relations Advisory Mr. Shardul Doshi, CFO Ravi Udeshi Sumedh Desai [email protected] [email protected] [email protected] 37