kwality limited (“kwality”)

Kwality Limited (“Kwality”)

2

Strictly Private & Confidential

This presentation has been prepared by Kwality Limited (the “Company”) solely for information purposes, without regard to any specific

objectives, financial situations or informational needs of any particular person. All information contained has been prepared solely by the

Company. No information contained herein has been independently verified by anyone else. This presentation may not be copied,

distributed, redistributed or disseminated, directly or indirectly, in any manner. No part of it should form the basis of or be relied upon in

connection with any investment decision or any contract or commitment to purchase or subscribe for any securities. Any person placing

reliance on the information contained in this presentation or any other communication by the Company does so at his or her own risk and

the Company shall not be liable for any loss or damage caused pursuant to any act or omission based on or in reliance upon the

information contained herein. No representation or warranty, express or implied, is made as to, and no reliance should be placed on, the

fairness, accuracy, completeness or correctness of the information or opinions contained in this presentation. Such information and

opinions are in all events not current after the date of this presentation. Further, past performance is not necessarily indicative of future

results. This presentation is not a complete description of the Company. This presentation may contain statements that constitute forward-

looking statements. All forward looking statements are subject to risks, uncertainties and assumptions that could cause actual results to

differ materially from those contemplated by the relevant forward-looking statement. Important factors that could cause actual results to

differ materially include, among others, future changes or developments in the Company’s business, its competitive environment and

political, economic, legal and social conditions. Given these risks, uncertainties and other factors, viewers of this presentation are

cautioned not to place undue reliance on these forward-looking statements. The Company disclaims any obligation to update these

forward-looking statements to reflect future events or developments. Except as otherwise noted, all of the information contained herein is

indicative and is based on management information, current plans and estimates in the form as it has been disclosed in this presentation.

Any opinion, estimate or projection herein constitutes a judgment as of the date of this presentation and there can be no assurance that

future results or events will be consistent with any such opinion, estimate or projection. The Company may alter, modify or otherwise

change in any manner the content of this presentation, without obligation to notify any person of such change or changes. The accuracy of

this presentation is not guaranteed, it may be incomplete or condensed and it may not contain all material information concerning the

Company. This presentation is not intended to be an offer document or a prospectus under the Companies Act, 2013, as amended, the

Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2009, as amended or any other

applicable law.

This presentation does not constitute an offer or invitation, directly or indirectly, to purchase or subscribe for any securities of the

Company by any person in any jurisdiction, including India and the United States.

Disclaimer

3


Company Overview

Industry Snapshot

Business & Operations

The Road Ahead

Summary Financials

Annexure

4


Kwality Ltd. – Key Highlights

Overview Overview

� One of the Largest & fastest growing Player in the Private Dairy Sector in India

– Kwality Limited is one of the largest manufacturer and processor of dairy products in the private sector in India.

– Established in 1992 as backward integration unit of Kwality Ice Creams and acquired by the current promoters in 2002.

– Currently, Processing capacity of more than 3.2 mn litres of milk per day with Six (6) milk processing units in Palwal (Haryana),

Saharanpur (UP), Bulandshaher (UP), Jarar (UP), Sitapur (UP) & Ajmer (Rajasthan).

� Increasing Direct Procurement : Key to Success

– Currently, procuring ca. 18% of milk requirement directly from more than 300,000 farmers spread across ca. 4500 villages through

22 MCCs - Company intends to increase this procurement mix from the current ca. 18% to ca. 50% directly from farmers.

– Ensuring consistent quality and taste which are important parameters for success in value added products

– Currently, operating 22 Milk Chilling Centres (MCCs) in U.P. Rajasthan and Haryana which the Company intends to expand to

achieve the above objective to improve the procurement mix

� Transforming Business

– Company’s primary focus is to transform from a traditional B2B to B2C Company

– Strategically looking to change the current business mix from 70:30 (Institutional : Retail) to sharper focus on retail over a period

of time

– Product Portfolio Expansion – Evolving from a Commoditised Player to a Branded Player in the dairy industry by adding Value

Added Products like flavoured milk, cheese, UHT Milk, table butter in various variants and other dairy products

– Focusing on Brand Development with investments being planned in customer engagement channels

– Strengthening and Enhancing of its retail distribution network

– Strategic partnership with different Agencies Like McCANN & Cheil India for Creative, Adfactors for PR, Digital Quotient for Social

Media, Zenith Optimedia for Media Planning, Ernst & Young for IT and Akshay Kumar as brand Ambassador.

� Strengthening Human Capital

– Building upon Management with recruits from leading FMCG companies and large corporates

5


Kwality Limited - Growth Path till date . . .

2011 2013 2016

SALES (Rs. Mn)*

EBITDA (Rs. Mn)*

Farmers Network – No. of Farmers

(Direct Procurement)

Processing Capacity

(Mn Kg)

PRODUCTS

Pasteurised/Standardised Milk

Ghee

Skimmed Milk

SMP

Curd

Other Milk Powder

Butter Bulk


Ghee

Skimmed Milk

SMP

Curd

Other Milk Powder

Pouched Milk

Pouched Curd

Butter Bulk


Ghee

Skimmed Milk

SMP

Curd

Other Milk Powder

Pouched Milk

Pouched Chaach

Pouched Curd

Butter Bulk

957 986 1244

16,025 57,24136,916

988 3,786

* Standalone Numbers

1,00,000 3,00,00010000

~3.5x Growth

~4x Growth

2,133

6


� Company was incorporated as Kwality Dairy (India) Limited (Kwality)1992

� MOU signed with Gujarat Co-operative Milk Marketing Federation Limited (GCMMF) for processing and packing milk to be sold under

AMUL brand2003

� Strategic alliance with Britannia Industries for manufacturing and packing of Curd products2007

� Backward integration initiative by setting up first Milk Chilling Center (MCC) at Fatehabad, Haryana.

� Launched own brand “Dairy Best” to deliver premium quality Ghee, Dairy Whitener & other dairy products.

� Agreement with Pashupati Dairies for Milk Processing on Job work basis at Saharanpur plant

� License granted by the National Research Development Corp for know how and process of manufacturing of low cholesterol Pure

Ghee

2010

� Launch of Livlite (85% Low Cholesterol Ghee) with Bipasha Basu as Brand Ambassador.

� Set up 100% wholly owned subsidiary in the Free Trade Zone of Dubai

� Penetrated new markets both nationally & internationally.

� Added new institutional clients such as the Indian Railways and other Private Sector companies

� Set up its second manufacturing facility for expansion in FDP range of products at Haryana.

� Took on lease processing facility in Ajmer (Rajasthan), Sitapur (UP) & Jarar (UP).

2011

� Company became public listed on Bombay Stock Exchange (BSE).1995

� KDIL taken over by current promoters together with its manufacturing facility at Haryana.2002

Key Milestones

7


Key Milestones

� Acquired the processing facilities from Varshey Bandhu, Dibai, UP.

� Started marketing of UHT milk under “Dairy Best” brand.

� Change in the name of Company to Kwality Limited.

2013

� Started trial of value added products like Flavoured milk, ice cream, flavoured lassi, yogurt etc.

� Embarked on the expansion plan to increase capacities of existing plants and also to add capabilities for new value added products

like various variants of cheese, UHT milk, Table butter in tubs, cream in tetra packs etc.

� Started process of setting Company owned Milk Chilling centres having capacities of more than 50000 LPD

� Acquired two milk processing plants on lease

2014

� Started streamlining the Marketing and Branding initiatives.

� Appointed Cheil India & Mccann as Creative Partners, Adfactors for PR, Zenith Optimedia for Media Releases, Digital Quotient for

Social Media.

� Signed on Akshay Kumar as Brand Ambassador for all our dairy range of products.

� Signed on Ernst & Young for IT Transformation in company.

� First Dairy Company giving ESOP’s to all its employees at any designation.

2015

� Started marketing of pouched milk, curd & paneer under “Dairy Best” brand.2012

8


Company Overview

Industry Snapshot


The Road Ahead

Summary Financials

Annexure

9


Brief Overview of the Indian Dairy Industry

Source: FAOSTAT

Trends in Milk Production and Per Capita Availability: 1960 to 2015Trends in Milk Production and Per Capita Availability: 1960 to 2015

• India is the largest milk producing nation in the world - Production of ca. 147 mn metric tonnes in 2014-15

• Consumption in India stood at ca. 138 mn metric tonnes during this period and as per the Planning Commission of

India, the domestic demand for milk is expected to be ca.192 mn metric tonnes by 2021-22

• Milk production growing at a CAGR of ca. 4-5% and consumption growing at CAGR of ca. 5-6%

• Present per capita availability of milk in India is 290 grams/day — higher than the average for the developing

countries in the Asia-Pacific region, against the world average of 284 grams

• About 80% of milk produced is still handled by the unorganized sector and the remaining 20% is equally shared by

Co-operatives and Private Dairies

• India is the world’s largest producer, consumer of Milk and has the maximum number of Milching Animals.

• Total dairy market is estimated to be Rs. 5,030 Bn in 2014-15.

20 22 3256

8197

108 112 116 122 128 133 140 147

0

50

100

150

200

250

300

0

50

100

150

200

1960-61 1970-17 1980-81 1991-92 2000-01 2005-06 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13 2013-14 2014-15

Production (million tonnes) Per capita availablity grams/day

Source: IMARC Report

10


Dairy Industry : Growing Organized Market

� Indian Organised Dairy market size Rs. 1,025 bn in 2014 comprising

of Cooperative and Private Players

� This segment is expected to grow at a CAGR of ca. 19% till 2019-20

Organized market is growing at a healthy rateOrganized market is growing at a healthy rate

Government Initiatives

Shift from the Unorganised to

Organized Sector

Entry of Private Sector

Players

Strong Co-operative

Movement

Increasing Urbanization

&Rising Disposable

Income

• Increase in consumer base – Growing

Population with growing nuclear families

• Exposure to Western consumption pattern -

increased consumer interest in high protein diet

• Increasing awareness and availability of dairy

products through channels such as organised

retail and food service segments

• Introduction of new types of dairy products

• Increased consciousness about quality of food

products

• Shift of consumers from unbranded to branded

products.

Supported bySupported byINDIA ORGANISED DAIRY INDUSTRY – KEY GROWTH DRIVERS

17.2% 17.7% 18.5% 19.5% 20.4%26.2%

82.8% 82.3% 81.5% 80.5% 79.6%73.8%

0.0%

20.0%

40.0%

60.0%

80.0%

100.0%

2010 2011 2012 2013 2014 2020 (E)

Organised UnorganisedSource: IMARC Report

Source: IMARC Report

11


63,877

18,565 12,950

37,972

2,19,979

65,098

37,630

1,32,089

-

50,000

1,00,000

1,50,000

2,00,000

2,50,000

Delhi Rajasthan Uttar Pradesh Haryana

2005 2014

102.86

121.06 128.00

-

20.00

40.00

60.00

80.00

100.00

120.00

140.00

2001 2011 2015(E)

Kwality’s Major Presence

– NCR (Delhi)

– Rajasthan

– Haryana

– Uttar Pradesh

India - A Widening Market

Source: Census of India, 2001 & 2011 and News Reports

Population Growth with growing Urban Population Per Capita Income

Kwality’s Target Market – Better Positioned in terms of % Growth

24,143.0

74,380.0

-

10,000.0

20,000.0

30,000.0

40,000.0

50,000.0

60,000.0

70,000.0

80,000.0

2005 2014

CAGR – 14.73% 14.96% 12.58% 14.86%

Rajasthan 2001 2011

Total Population (Crs) 5.65 6.85

Growth(%) 28.33 21.31

Urban (% of Total Popln.) 23% 25%

Uttar Pradesh 2001 2011


Growth(%) 25.8 20.23


Delhi 2001 2011

Total Population (Crs) 1.38 1.67,

Growth(%) 46.31 21.21


Haryana 2001 2011


Growth(%) 28.06 19.9


Per Capital Income* Growth (Year 2005 to 2014)

Urban Population %

(27.82%)

Urban Population %

(31.15%)

Favourable Demographics

In Crs.

*Per Capita Net State Domestic Product at Factor CostSource: RBI

Rs.

Rs.

Source: Census of India, 2001 & 2011 and News Reports

Source: RBI

12


Organized Dairy Market - Transformation

Source: Rabobank 2013

Liquid Milk

66%

Milk Powder

5%

Ghee (Clarified

butter)

8%

Dahi (Yoghurt)

2%

Butter

3%

Cheese

(Processed and

Mozzarella)

2%

Ice cream

4%

Others

0%

Dairy whitner

2%

Paneer

1%

Baby foods

4%

UHT

products

2%

Flavoured Milk

1%

Other

21%

Liquid Milk

60%

Milk Powder

3%

Ghee (Clarified

butter)

6%

Dahi (Yoghurt)

4%

Butter

2%

Cheese

(Processed and

Mozzarella)

3%

Ice cream

8%

Others

2%

Dairy whitner

1%Paneer

1%

Baby foods

5%

UHT products

3%

Flavoured Milk

2%

Other

31%

� Value added products have gained importance due to a change in

demographic and dietary patterns

� The market share of value added products is expected to increase from

21% to 31% from 2012-13 to 2019-20 and the VAPs market is expected to

grow at a CAGR of 23%

� Factors driving this growth : (a) Increasing young population - Value added

milk products like cheese finds usage in convenience foods like pizza, pasta,

and burgers. (b) Aggressive growth plans of QSR players - demand for milk,

condensed milk and cream is high from coffee chains

Value added products in the Organized market is growing at a healthy rateValue added products in the Organized market is growing at a healthy rate

Liquid Milk Value Added Products

Traditional VAP’s:

Butter Milk, Cottage Cheese,

Butter, Ice-cream

Non-Traditional VAP’s:

Flavoured Milk, Low Fat &

Flavoured Yogurt, UHT Milk,

Flavoured Butter

Market: 2012-13 – USD 10 Bn Market: 2019-20 – USD 24 Bn

Organized Dairy Market - LandscapeOrganized Dairy Market - Landscape

Raw Milk

13


Dairy Products – Huge Market Potential

Liquid Milk – Market (Sales) UHT Milk – Market (Sales)

Source: IMARC Report (Numbers rounded off)

Butter - Market (Sales) Cheese– Market (Sales)

1,501

2,621 3,021

4,006

6,068

-

1,000

2,000

3,000

4,000

5,000

6,000

7,000

2010 2014 2015

(E)

2017

(E)

2020

(E)

10

26 33

53

104

-

20

40

60

80

100

120

2010 2014 2015

(E)

2017

(E)

2020

(E)

91

168 195

259

382

-

100

200

300

400

500

2010 2014 2015

(E)

2017

(E)

2020

(E)

5

12 14

21

36

-

5

10

15

20

25

30

35

40

2010 2014 2015

(E)

2017

(E)

2020

(E)

Flavored Milk – Market (Sales) Curd – Market (Sales) Lassi - Market (Sales)Butter Milk (Chaach)–

Market (Sales)

5

13 16

25

48

-

10

20

30

40

50

60

2010 2014 2015 (E) 2017 (E) 2020 (E)

124

217 251

331

493

-

100

200

300

400

500

600

2010 2014 2015

(E)

2017

(E)

2020

(E)

5

13 15

23

39

-

5

10

15

20

25

30

35

40

45

2010 2014 2015

(E)

2017

(E)

2020

(E)

6

14 17

25

43

-

5

10

15

20

25

30

35

40

45

50

2010 2014 2015

(E)

2017

(E)

2020

(E)

Rs. Bn Rs. Bn Rs. Bn Rs. Bn

Rs. Bn Rs. Bn Rs. Bn Rs. Bn

14


Company Overview

Industry Snapshot


The Road Ahead

Summary Financials

Annexure

15


Business Description

Product PortfolioProduct Portfolio

• Kwality produces a range of quality milk and milk products

• Transforming itself into a complete dairy products with

introduction of variety of Value added Products

• In the last three years, the Company transformed itself and

has launched new products targeting the retail consumers viz.

consumer packs for Pure Ghee, Pure Cow Ghee, Low

Cholesterol Ghee, Pouched milk, pouched curd, dairy

whitener, chaach, etc.

Segment Ghee /Fat Milk Powder MilkCurd &

Chaach

Key

Products

• Pure Ghee

• Pure Cow

Ghee

• Low

Cholesterol

Ghee

• Butter Bulk

• Skimmed

Milk

Powder

• Whole Milk

Powder

• Dairy

Whitener

• Pouched

Milk in

Variants

• Bulk Milk

• Skimmed

Milk

• Set Curd

• Pouched

Curd

• Chaach

Pure Cow gheeDesi ghee Low Cholesterol Ghee Flavoured MilkPaneer

16


Business Description

Instant Dairy

Whitener

Pouched Milk

CurdChaach & Lassi

Butter

Skimmed Milk

Powder

17


Kwality - Milk Procurement till date . . .

• Over the years, Kwality has developed a network of vendors to

source quality milk - one of the most important success factors in

the industry

• The Company has a strong reach in the rural regions of milk

producing states surrounding the National Capital Region (NCR)

• Currently sources ca. 82% of milk from large contractors (Vendors) in

the state of UP, Rajasthan & Haryana and the rest from its own

procurement network comprising Milk Chilling Centers (MCC).

• Commenced its own procurement network from MCCs in 2010.

• Currently having 22 MCCs in the states of Rajasthan, Uttar Pradesh

and Haryana

• The company currently procures milk directly from ca. 3,00,000

farmers spread across ca. 4500 villages.

Milk Procurement StrategyMilk Procurement Strategy Annual Milk ProcurementAnnual Milk Procurement

Source: Company Management

73.5

102.5

165.2170.14

180.36

193.73

0

20

40

60

80

100

120

140

160

180

200

FY11 FY12 FY13 FY14 FY15 FY16M

ilk

So

lid

s In

‘0

00

to

nn

es

18


Kwality - Procurement Models

Dairy Processing

Plant

Milk Chilling Centre

(MCC)

Village Level

Collection Centre

(VLCC)

Milk Producer

Member

Direct Procurement Channel Contractor Procurement Channel Hybrid Procurement Channel

Local Contractors

Milk Producer

Member

Dairy Processing

Plant

Ow

ne

d/L

ea

sed

by

th

e D

air

y C

om

pa

ny

Local Contractors

Milk Producer

Member

Dairy Processing

Plant

Milk

An

aly

sers p

rovid

ed

to

Co

ntra

ctors to

en

sure

qu

ality

Collection twice a day with Equipment's

(Automatic Milk Collection unit)

Collection once a day without

Equipment'sCollection twice a day with

Equipment's (Milk Analysers)

19


Milk Processing Facilities

Location: Agra (UP) Sitapur (UP) Ajmer(Rajasthan)

Company Owned / Company ControlledCompany Owned / Company Controlled

Softa, Haryana Dibai (UP)

• 788 Mn Kg

OutsourcedOutsourced

Saharanpur (UP)

• 164 Mn Kg

Ow

ne

d

Ow

ne

d

Lea

sed

• 164 Mn Kg

• 54.75 Mn Kg • 36.5 Mn Kg • 36.5 Mn Kg

Quality CertificationsQuality Certifications

1,116 Mn Kgs

(90% of Total)

127.75 Mn Kgs

(10% of Total)

=

=

20


Kwality Margin Enhancers

Kwality - Sales Mix . . . so Far

Growing Retail Sales

9% 10% 12%19% 24%

31% 33%

91% 90% 88%81% 76%

69% 67%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

FY 10 FY 11 FY 12 FY 13 FY 14 FY 15 FY 16

Retail Insitutional

Coupled with Improving Branded Sales

64%

73% 73% 72%

64%61%

36%

27% 27% 28%

36%39%

0%

10%

20%

30%

40%

50%

60%

70%

80%

FY 10 FY 11 FY 12 FY 13 FY 14 FY 15

Unbranded Branded

Institutional Client Base Supported by Strengthening Distribution Network

700 900

1,050

1,150

1,600

1,800

14,000

19,000

26,000 27,000 32,000

40,000

-

5,000

10,000

15,000

20,000

25,000

30,000

35,000

40,000

45,000

-

500

1,000

1,500

2,000

FY 11 FY 12 FY 13 FY 14 FY 15 FY 16

Distributors Point of Sale

DistributorsPoint of Sale

21


Kwality – International Operations

� Kwality has established its 100% subsidiary, Kwality Dairy Products, FZE (KDPF) at Jebel Ali Free Zone, Dubai to

focus on international trade.

� KDPF has got trading license for trading of various milk based products.

� KDPF import the Dairy Products from India, Australia, New Zealand and Eastern European Countries including

Turkey, Ireland, Holland, Poland and Ukraine, New Zealand and sell the products, both domestically and

export to GCC, Middle East, Far East, Bangladesh, China, Thailand, Africa etc.

� Product portfolio consists of Pure Ghee, Cow Ghee, Livlite Ghee (85% Cholesterol Free), Skimmed Milk

Powder, Whole Milk Powder, Butter, Dairy Creamer, Dairy Mix, Paneer and other dairy products.

� During the FY 15-16, Company has achieved the sales Turnover of AED 393.57 mn with Profit of AED 15.82 mn

(4.02%).

� With the removal of ban on export of milk powder, Kwality has increased its focus on export of dairy products

from India. Kwality is emerged as one of the largest exporter of dairy products from India, exporting across

continents like Asia, Africa & Australia and to more than 28 countries including Japan, UAE, Seychelles,

Bangladesh, Sri Lanka, Jordan, Niger, Morocco etc.

� Kwality has posted Export Turnover of Rs. 7,305 Mn during FY 2015-16.

Kwality Dairy Products FZE (KDPF)

Exports from India

22


Board of Directors

Dr. Rattan Sagar Khanna(Chairman & Independent Director)

� Aged 69 years and currently associated with a no. of reputed institutions in Dairy Sector including,

Deptt. Of Animal Husbandry, Sikkim, Namastey India Foods, Ganesh Scientific Research Foundation,

CIAHDD, Gerson Lehrman Group, New York etc.

� In past, served as a Consultant of Department of Animal Husbandry, Fisheries & Veterinary Services,

CEO of Animal Feeds Business in Dabur Ayurveda Limited., Advisor to the GCMMF, GM in GCMMF,

New Delhi, MD of Rajasthan Co-operative Dairy Federation, Resident Representative of National

Dairy Development Board, head (Projects) of Indian Dairy Corporation, Baroda etc.

� Contributed about 100 researchers, reviews and sectoral articles.

Sanjay Dhingra (MD)

� Significant experience of more than two decades in the business of FMCG products with varied

exposure in manufacturing, trading and international marketing.

� Business acumen combined with his grass root level exposure in the FMCG industry

� Instrumental in turning around the business post taking over in 2003 and establishing Kwality as a

dominant player in the dairy industry in the Country.

� Felicitated by, the then, Hon’ble Union Finance Minister Mr. Pranab Mukherjee for being a successful

self industrialist and for his immense contribution to the Dairy sector.

Sidhant Gupta (Director)

� Management graduate with rich experience of more than a decade, in strategic business

development, liasoning & international trade.

� Key member Instrumental in implementation of the growth strategy and ongoing expansion project

in the Company.

� Played a pivotal role in expanding the company’s global footprint with tremendous growth and

enhancement of the group’s value by launching new dairy products.

� He has been instrumental in bringing about technological & managerial excellence in the company’s

operations.

23


Board of DirectorsBoard of Directors

Dr S.K. Bhalla

(Director)

� P.HD by qualification, has more than 40 years of experience in Dairy Industry

� Has worked as Chief Executive “Maahi” Milk Producer Company Limited, COO of Mother Dairy

Fruit & Vegetable Private Limited, General Manager (QA) of GCMMF Ltd., President Operations of

Dynamix Dairy Industries Ltd., Senior Manager in Tech. Div. of Nestle India Ltd., etc.

� Also served as Federation Nominee on the Board of Surat District Co-operative Milk Producers

Union Ltd., Surat, Banaskantha District Co-operative Milk Producers' Union Ltd., Palanpur and

Kaira District Co-Operative Milk Producers Union Ltd., Anand.

� Holds rich experience in planning and setting up of manufacturing plant, , Development of new

products and their market trials, Production related trouble shootings at various levels in

manufacturing units, Co-ordination of production planning with sales and marketing, etc.

Manjit Dahiya

(Director)

� More than 25 years of experience in the Dairy Industry

� Expert in setting dairy plants, development of dairy products and implementing latest

developments in dairy industry.

� Responsible for handling technical issue at the Pant and milk chilling centers.

� Responsible for bringing lots of reforms in manufacturing of SMP, Ghee, Cheese, Paneer, Dairy

Whitener and other dairy products. He has expert knowledge in the products manufactured by

Kwality Limited and its utilization.

Ankita Mehrotra

(Independent Director)

� A fellow member of Institute of Chartered Accountants of India and a graduate in commerce.

� Brings with her the vast expertise in the field of implementation and design of systems, audit, and

advisory services.

� Has business and financial expertise in financial accounting, taxation, auditing and management

accounting.

� She is a partner of practising Chartered Accountancy firm Khatri & Mehrotra

24


Board Members

Backed by

Consistent Quality

Manufacturing

Expansion

Human Capital

Development

IT Development Branding & Marketing

New Products

Development

Procurement

Distribution Network

Expansion / Development

Engagement of

External Partners

for Enhancement

of Integration

INTEGRATION

Kwality Organisation Setup Strategic Shift

Business Transformation Team

25


Key Management Profile

Nawal Sharma

(Chief Business

Transformation officer)

� 23 years of rich experience across multiple industry including Business Transformation (Consulting), Telecom, BPO

& FMCG and worked with companies like Reliance Communications, Bharti BT Internet etc.

� Key professional experience cuts across all layers of organization management, i.e., business layer, process layer,

organization layer & execution layer.

Rajesh Verma

(VP- International Marketing)

� Having 2 decades of experience in FMCG majors & blue chip companies such as Blowplast Industries, VIP Industries,

HUL, Bata India.

� Responsible for handling Sales & Marketing function including International Marketing.

Rajendra Singh

(MCC State Head)

� An MBA from IGNOU and M.Sc in Agricultural Botany from Meerut University

� He has more than 32 years of experience in the implementation of the world’s largest poverty alleviation

programme “Operation Flood”

Jayant Karmakar

(CGM- Palwal)

� A Graduate in Dairy Technology, having more than 22 years of experience in Dairy Industry.

� Expert in Strategic decisions, planning and budgets, Milk Procurement, Quality Processing, cost control etc.

Adarsh Kumar Abrol

(GM Works- Bulandsahar)

� B.Sc Dairying (Dairy Technology) from Dairy Science College, National Dairy Research Institute, Karnal, Haryana

� He has more than 36 years of experience, an expert in manufacturing techniques of Condensed Milk, SMP and Desi

Ghee and also have good knowledge for erection of Condensing Plant, Tetra Pack Unit, Recombination Section,

Packing & Sterilization Plant

Sanjeev Tomar

(GM Production, Palwal)

� Dairy Technologist by qualification having an experience of more than 15 years. He has worked on all Dairy

products on commercial scale namely Market Milk, Aseptic Milk, Flavoured Milk , milk powders of all types etc.

Pawan Sharma

(Vice President & Head-HR)

� MBA in HR with experience of more than 25 years.

� Responsible for developing, implementing and maintaining HR strategies, policies and procedures and monitor as

well as to identify manpower requirements and make appropriate recommendation to management for

implementation.

26


Key Management Profile

Sachin Sachdeva

(GM Procurement)

� He has 15 years of experience in milk procurement as well as MCC operations.

Anil Katyal

(Chief General Manager –

Sales CPD II)

� He is having more than 24 years of experience in Sales and Marketing in FMCG Companies including VRS

Foods

Inderjeet Singh

(Chief General Manager –

Institutional Sales )

� B.Com from Delhi University and has more than 30 years of experience in Dairy Industry including Milk Food,

Cepham Milk Specialties, Parle Exports, HMM etc..

Sunit Shangle

(Chief Financial Officer)

� CA with more than 25 years of experience in the field of Finance & Accounts with specialization in raising of

funds. He has been associated with various listed Companies and also raised funds for them through IPO

Naveen Sharma

(Head – Purchase)

� An MBA from Global Open University and MDP in Logistics and Supply chain from IIM Ahmedabad having an

experience of more than 14 years

� Experience in Agro Chemical and FMCG Industry in areas of strategic sourcing, procurement, Packaging

Materials (from Flexible to Rigid), logistics, performance optimization (Business Solutions), supplier

development, business negotiations & supply-chain management

Pradeep Srivastava

(C.S. & Compliance Officer)

� He is a Fellow member of Institute of Company Secretaries of India and in addition to it also holds a Bachelor’s

degree in Law and Science. Mr. Pradeep Srivastava is having more than 12 years of experience and an expert

in Corporate Laws, Securities Laws, SEBI, RBI and other compliances.

27


Corporate Social Responsibility

• Kwality has till date taken conscious steps towards raising the quality

& hygiene of raw milk obtained and also to improve the health and

life style of the farmer community

• Organizes various camps and village meetings regularly to discuss the

requirements of farmers

• Assist in issues pertaining to Vaccination, Cattle feed, increasing milk

yield and facilitating the loan requirements of farmers through

financial institutions.

• Educate farmers on the general quality of life improvement and

hygienic living standards along with other social issues

• Animal Health: Kwality deploys a team of veterinary doctors who are based in rural areas who look after the health of farmers’ animals and provide

necessary education

• Artificial Insemination (AI): Doctors deputed by KDIL also take care of AI needs of the farmers’ animals

• Cattle Feed: KDIL provides good quality and balanced cattle feed at cost price to take care of nutrition needs of the milk animals

• FMD vaccination: An annual FMD vaccination program at subsidized cost is organized for vaccination of animals to protect them against Foot and

Mouth disease

• Loaning for farmers: Kwality has tied up with various banks including Allahabad Bank, Central Bank of India, Bank of India, Syndicate Bank etc. to

provide loans to its farmer for not only buying animals but also tractors etc.

• Village Adoption programmes: Kwality is adopting villages where it takes initiative in educating women about cleanliness, primary health, providing

scholarship to girl child etc.

• Insurance: Providing insurance not only for the animals but also the farmers by providing them with medical & accidental insurance

Milk Procurement Team’s CSR Activities

28


Company Overview

Industry Snapshot


The Road Ahead

Summary Financials

Annexure

29


Future Strategy

Future Objective

Future Objective

• Company is currently selling a

diverse range of products including

Liquid Milk in pouches and

otherwise, Milk Powders, Ghee,

Curd, Chaach etc.

• Company’s key focus has been

on strengthening its

management expertise in line

with the expansion plan

• Planning to open another 20-25 MCCs in

next 3-4 years to ensure sustained

availability of quality milk

• To increase the catchment area of the

existing MCCs and VLCs

• To further increase milk procurement

through Hybrid system

• To increase the facilities/ incentives to

farmers including veterinary doctors to look

after animal health and artificial

insemination need, subsidised animal feed

and annual FMD vaccination to ensure that

farmers is associated to Kwality and thus

increase the number of farmers under each

VCC

• Company plans to launch various

new products catering to the

increasing health needs of the

Indian Consumer including

flavoured milk

• Launch of milk powders for retail

consumers in small packages.

• Setting up manufacturing facilities

for products like variants of

cheese, drinking yogurt , butter in

tubs, cream in tetra pack,

flavoured milk, UHT milk, etc.

• Company has and is in the

process to build upon its

management team with recruits

from leading FMCG companies

and large corporates

• Recent senior level recruits

include – HR Head, Head –

Purchase, Head - Products

• To retain quality personnel,

various initiatives introduced

like ESOPs for all its employees

at all levels, Fast Track Growth

& Reward plans for performing

employees

• Ernst & Young for IT systems.

Milk ProcurementMilk ProcurementNew Products &

Consumer BrandsNew Products &

Consumer Brands

Building upon Human Capital

Building upon Human Capital

SMP – Skimmed Milk Powder; WMP – Whole Milk Powder

DIRECT PROCUREMENT PLANS

Current

18%

25%

50%

Plans to Achieve the Targets

30


Future Strategy – Action Plan

� To ensure consistent quality and taste which are important parameters for success in value added

products, the Company has embarked upon a massive expansion in milk procurement

� Company intends to increase the procurement mix from the current ca. 18% to ca. 50% directly from

farmers for which extensive surveys have already been done.

� Total CAPEX envisaged by the Company for this exercise would be ca. Rs. 1,250 Mn of which the Company

has already invested Rs. 425 Mn

� Various initiatives for development of direct Farmer Connect in order to achieve the desired results

Pro

ducti

on F

acilit

ies � Kwality has undertaken an expansion plan at its plant location at Softa, Haryana with a total CAPEX of

Rs. 4,000 Mn of which the Company has till date invested ca. Rs. 2,375 Mn

� Expansion resulting in increase in the production capacities by 9 lakh litres / day.

� This enhancement in production is primarily to cater to value added products like flavoured milk, variants

of cheese, UHT milk, Butter in tubs, Cream in Tetrapacks etc.

� Installing latest processing machines including robots which involve minimum human intervention

� Company is currently in the process to testing few of these value added products like flavoured milk,

variants of cheese, etc. for early launch.

Pro

cure

ment

31


Brands Strategy

• Roll out high margin value added products under KDIL’s Kwality with mother brand architecture

• Build a modern, youthful & trendy brand with focus on “Active performance” as against general goodness of milk

• Roped in India’s leading Bollywood actor Akshay Kumar as brand ambassador to promote range of products & get

quick consumer mindshare.

• Engaged marketing partners who are best in their respective fields for seamless roll out of integrated marketing

program focussing on ATL, BTL & consumer engagement programs. This include McCANN & Cheil India for

creative, Zenith Optimedia for media planning, Adfactors for PR & Digital Quotient in digital space.

Primary Focus Would be Towards Brand Development to Transform from a Traditional B2B to B2C Business Model

32


Company Overview

Industry Snapshot


The Road Ahead

Summary Financials

Annexure

33


16,080

23,946

36,923

45,780

52,69257,242

0

10000

20000

30000

40000

50000

60000

70000

2011A 2012A 2013A 2014A 2015A 2016A

In R

s m

n

CAGR 29%

Total Revenues EBDITA

988

1651

2133

2721

6.14%

6.89%

5.78%5.94%

6.04% 6.28%

3.00%

4.00%

5.00%

6.00%

7.00%

0

500

1000

1500

2000

2500

3000

2011A 2012A 2013A 2014A 2015A 2016A

In R

s m

n

CAGR 29%

EBDITA EBDITA %

3182

955

1577

2037

2632

5.94%

6.59%

5.52% 5.55%

5.78%

6.21%

3.00%

4.00%

5.00%

6.00%

7.00%

0

500

1000

1500

2000

2500

3000

2011A 2012A 2013A 2014A 2015A 2016A

In R

s m

n

CAGR 30%

EBIT EBIT%

3046

452

909 965

12661409 1442

2.86%

3.81%

2.61%

2.77% 2.67%2.52%

0.00%

1.00%

2.00%

3.00%

4.00%

0

500

1000

1500

2000

2500

3000

2011A 2012A 2013A 2014A 2015A 2016A

In R

s m

n

CAGR 26%

PAT PAT%

PATEBIT

Financial Snapshot (Standalone)

34


Current Financials & Ratios (Standalone)

Historical Return RatiosHistorical Return Ratios

RONW = Average Net Worth / PAT

ROCE = Average Capital Employed / EBIT

65.27%67.16%

42.56%

37.68%

28.03%

20.88%

24.42% 23.18%20.35% 20.04% 19.17%

18.64%

0.00%

10.00%

20.00%

30.00%

40.00%

50.00%

60.00%

70.00%

80.00%

0.00%

10.00%

20.00%

30.00%

40.00%

50.00%

60.00%

70.00%

80.00%

2011 2012 2013 2014 2015 2016

RONW ROCE

35


24,162

39,297

50,110

58,78364,141

0

10000

20000

30000

40000

50000

60000

70000

2012A 2013A 2014A 2015A 2016A

In R

s m

n

CAGR 28%

Net Sales

Total Revenues Total Revenues EBDITAEBDITA

1665

2232

2934

3499

3888

6.9% 5.7%

5.9%6.0% 6.1%

0.0%

2.0%

4.0%

6.0%

8.0%

0

1000

2000

3000

4000

2012A 2013A 2014A 2015A 2016A

In R

s m

n

CAGR 24%

EBDITA EBDITA %

1590

2136

2844

3364

6.6%

5.4%5.7% 5.7%

6.2%

0.0%

2.0%

4.0%

6.0%

8.0%

0

500

1000

1500

2000

2500

3000

3500

2012A 2013A 2014A 2015A 2016A

In R

s m

n

CAGR 26%

EBIT EBIT%

923 1056

14491665

17363.8%

2.7%

2.9% 2.8%2.7%

0.0%

1.0%

2.0%

3.0%

4.0%

0

500

1000

1500

2000

2012A 2013A 2014A 2015A 2016A

In R

s m

n

CAGR 17%

PAT PAT%

PATPATEBITEBIT

Financial Snapshot (Consolidated)

36


Company Overview

Industry Snapshot


The Road Ahead

Summary Financials

Annexure

37


Historical Financials (Standalone)

Income Statement (Rs in mn)Income Statement (Rs in mn)

Particulars FY 11 FY 12 FY 13 FY 14 FY 15 FY 16

Total Income 16,080 23,946 36,923 45,780 52,692 57,242

Growth in Income(%) 52% 49% 54% 24% 15% 9%

Total Expenditure 14,594 21,672 33,736 41,800 47,924 51,646

Gross Profit 1,212 2,274 3,187 3,981 4,768 5,596

Gross Profit (%) 7.5% 9.5% 8.6% 8.7% 9.04% 9.78%

Personnel Expenses 39 86 135 179 235 327

Administration Expenses 185 537 919 1,081 1,351 1,779

EBITDA 988 1,651 2,133 2,721 3,182 3,490

EBITDA% 6.3% 6.1% 5.8% 5.9% 6.04% 6.10%

Other Income 2 1 7 40 114 294

Interest Expense 356 651 923 1,126 1,341 1,473

Depreciation / Amortization 35 75 103 129 250 228

Extraordinary Expenses 30

Profit Before Tax (PBT) 599 926 1,084 1,505 1,705 2,083

PBT% 3.8% 3.9% 2.9% 3.3% 3.24% 3.64%

Tax 146 17 119 239 295 641

Profit After Tax (PAT) 452 909 965 1,266 1,409 1,442

PAT% 2.9% 3.8% 2.6% 2.8% 2.67% 2.52%

38


Historical Financials (Standalone) (cont’d.)

Balance Sheet (Rs in mn)Balance Sheet (Rs in mn)

Particulars FY 11 FY 12 FY 13 FY 14 FY 15 FY 16

Sources of Funds

Share Capital 203 203 203 203 219 224

Quasi Capital 600 750 750 750

Money received against warrants 187 125

Reserves & Surplus 707 1,594 2,535 3,778 5,668 7,388

Net Worth 1,510 2,547 3,488 4,731 6,074 7,737

Secured Loans 3,646 5,665 7,950 9,008 9,426 10963

Unsecured Loans 2 253 109 375 1,552 2,398

Total Loans 3,648 5,918 8,059 9,383 10,978 13,361

Deferred Tax Liability 8 5 -12 -8 -14 -118

Total Sources of Funds 5,167 8,470 11,536 14,106 17,038 20,980

Application of Funds

Net Block 419 640 729 991 607 653

CWIP - 1 86 220 1,184 1,950

Investment 14 56 62 190 190

Current Assets

Sundry Debtors 4,117 6,562 9,309 12,000 11,513 14,192

Inventories 634 987 987 1675 2,646 1,426

Loans & Advances & Other Current Assets 371 672 1,197 860 2,392 4,091

Sub-Total of Current Assets 5,139 8,221 11,493 14,535 16,551 19,709

Current Liabilities

Sundry Creditors 228 206 484 1,093 511 393

Other Current Liabilities & Provisions 165 200 344 609 983 1,129

Sub-Total of Current Liabilities 393 406 828 1,702 1,494 1,522

Net Current Assets 4,746 7,815 10,665 12,833 15,058 18,187

Total Application of Funds 5,167 8,470 11,536 14,106 17,038 20,980

39


Historical Financials (Consolidated)

Income Statement (Rs in mn)Income Statement (Rs in mn)

Particulars FY 12 FY 13 FY 14 FY 15 FY 16

Total Income 24162 39297 50110 58783 64,141

Growth in Income(%) - 63% 28% 17% 9%

Total Expenditure 21870 35980 45869 53658 58,094

Gross Profit 2292 3317 4240 5125 6,047

Gross Profit (%) 9.5% 8.4% 8.5% 8.7% 9.43%

Personnel Expenses 86 138 186 243 343

Administration Expenses 541 947 1121 1383 1,816

EBITDA 1665 2232 2934 3499 3,888

EBITDA% 6.9% 5.7% 5.9% 5.9% 6.06

Other Income 1 7 40 117 298

Interest Expense 651 931 1156 1403 1,575

Depreciation / Amortization 75 103 130 253 234

Extraordinary Expenses - 30 - - -

Profit Before Tax (PBT) 940 1176 1688 1960 2,377

PBT% 3.9% 3.0% 3.4% 3.3% 3.71

Tax 17 119 239 295 641

Profit After Tax (PAT) 923 1056 1449 1665 1,736

PAT% 3.8% 2.7% 2.9% 2.8% 2.7%

40


Historical Financials (Consolidated) (cont’d.)

Balance Sheet (Rs in mn)Balance Sheet (Rs in mn)

Particulars FY 12 FY 13 FY 14 FY 15 FY 16

Sources of Funds

Share Capital 203 203 203 219 224

Quasi Capital 750 750 750

Money received against warrants 187 125

Reserves & Surplus 1,607 2,642 4,081 6,243 8,293

Net Worth 2,560 3,595 5,034 6,649 8,642

Secured Loans 5,667 8,343 9,752 10,912 12,787

Unsecured Loans 266 529 469 1,580 2,425

Total Loans 5,934 8,872 10,221 12,492 15,212

Deferred Tax Liability 5 -12 -8 -15 -118

Total Sources of Funds 8,498 12,456 15,247 19,126 23,736

Application of Funds

Net Block 640 731 1,058 673 724

CWIP 1 86 220 1,184 1,950

Current Assets

Sundry Debtors 6,602 10,091 13,312 13,246 16,554

Inventories 1,001 1,033 1,874 2,910 1,706

Loans & Advances & Other Current Assets 709 1,780 1,064 2,631 4,455

Sub-Total of Current Assets 8,311 12,904 16,250 18,787 22,715

Current Liabilities

Sundry Creditors 254 918 1,663 520 521

Other Current Liabilities & Provisions 200 348 618 998 1,132

Sub-Total of Current Liabilities 454 1,265 2,280 1,518 1,653

Net Current Assets 7,857 11,639 13,969 17,269 21,062

Total Application of Funds 8,498 12,456 15,247 19,126 23,736

41


Akshay Kumar – Our Brand Ambassador

The Company has appointed Akshay Kumar as the Brand Ambassador for the

company and its entire range of dairy products. The Bollywood superstar

comes on board for a period of two years.

Kwality Limited has been synonymous with health and nutrition. All its

product range has been specially created keeping in mind the health of

consumers. Akshay Kumar is today the fittest Bollywood actor and therefore

fits perfectly with our range of healthy dairy products. The product range

will draw a lot of strength from his persona as there are direct synergies with

the Khiladi.

42


Thank You…

kwality limited (“kwality”)

Documents