Diff presentation 29 june 2013

Dairy Ice Creams & Frozen Foods (P) Ltd - Confidential

THE PRODUCT

• Ice Cream is a product that is enjoyed across the world without the barriers of food habits, cultures, age & gender.

• Ice Creams have traditionally been part of popular culture for every celebratory occasion whatever the size.

• Ice Creams are highly impulse driven and are available across counters varying from Grocery stores to exclusive parlors.


THE INDUSTRY• Rapidly growing industry growing at

20% per annum across the country.

• Indian ice cream market is worth Rs. 3500 crores (750 Million USD Approx) in terms of retail value

• Annual national consumption pegged at 300 million liters in terms of volume.

• Per capita consumption of ice cream in India is 0.3 liters, as against 2.9 liters global average leaving tremendous scope for growth for 2 or 3 decades.

• Maximum growth is in B & C tier towns.

• Virtual non availability in 50% of the country.


THE PLAYERS

• Amul & Kwality Walls are the only pan India players.

• Substantial number of regional players.

• Largest volume delivered by local & artisanal players.


THE COMPANY • Dairy Ice Creams & Frozen Foods (P) Ltd or DIFF was incorporated in the year 1980.

• Produces an wide array of Ice Creams & Frozen Desserts.

• First HACCP certified ice cream plant in AP

• New facility of DIFF incorporates the latest in international food safety standards.

• New facility has gone live from december 2011


THE VISION & MISSION

• VISION: Delivering the experience of Pure Pleasure

• MISSION: To create Ice Creams that deliver pure pleasure in absolutely safe, state of art facilities that meet the highest standards and deliver the experience of unadulterated happiness.


THE MARKET• Multiple brands of DIFF

• Diffys

• Exclusia

• Jumani

• Halka

• Private Label partnerships of DIFF

• Metro

• DIFF operates in all segments of the industry.

• Retail

• Institutional

• Catering

• Ice Cream Parlors

• Mobile Vending Operations

• Super Markets

First HACCP certified ice cream plant in AP


THE TEAM

• AJAY KUMAR VADHI, MD

• He is a post graduate and started his career with Cadbury India Ltd in 1989.

• Worked with Uni Lever Group in the Ice Creams divisions till 1996. Quit to start his own ice cream business. Bought over the current company in 2002.

• Sheik Mujibulla, Head of Quality Assurance

• Post Graduate in microbiology with about eight years experience in ice cream industry in India and Saudi Arabia

• M. NAVEEN, Production Manager

• He is a micro biologist by profession.

• Has had extensive experience in productionand research and development of new products and recipes.

• VENU KUMAR, Head – Distribution & Logistics

• Has a 10 year experience in the industry.

• currently responsible for overall primary distribution and services of the company.

• SRIDHAR, Sales Head

• Has about 9 years experience in the FMCG industry.

• Currently heads the sales network and has the overall responsibility of increasing the footprint of the brand in the market.


THE PRODUCTS Impulse

Cups

Cones

Sticks

Novelty Packs

Carry Homes

Pre Filled Sundaes

Institutions Packs

KEY CLIENTS


Diffys• Currently our largest selling brand.

• The most visible brand in the modern trade.

• Currently sold in major parts of Andhra Pradesh.

• Current outlet base of 750.

• The entire retail market is being serviced by a

network of distributors.

• Extremely strong institutional presence.


THE EXOTICA / EXCULSIA

Exotica is the first super premium indian brand

Naturally Flavored without artificial ingredients like

Colors & flavors

Product designed in line with global standards

Positioned to deliver absolute pleasure

Natural vanilla – Voted India’s best premium ice cream

Pa n India roll out in next 3 years

Currently being rebranded as Exclusia for expansion into pan India markets.


THE SINSPOT

SINSPOT – a successful franchisee of exotica launched

3 sinspots activated in Hyderabad in the most premium locations

Awarded the best Ice Cream store in the region by times Food Guide

Pan India roll out in next 3 years


THE HALKA• First successful commercial branded diabetic friendly

ice creams

• It is available through retail chain as well as super markets

• Available in two variants

• Sugar Free

• Low Fat

• Opportunity to expand the portfolio further with more specialized health friendly ice creams


THE JUMANI IGLOO• Exclusive uniquely designed mobile vending units

• Highly popular near tourist locations as well as well as near kid zones

• Creates a massive market for impulse buying

• Most effective medium of brand building and also serves as reminder advertising


THE JUST CHILL Soon to be launched chain of

exclusive Ice Cream

stores for brand Jumani.

Standardized exterior and

parlor ambience.

20 to 25 stores planned for this

year

THE SALES NETWORK

Strong Distribution and dealer Network is the result of Lucrative Margin and Return that brand Jumani provides to Them. It provides to Them deep freezers For storage of ice Creams, display signs Broads, popPromotional material,Etc.

COMPETITORS IN INDIA

• Amul(8)

• Quality Walls(7%)

• Vadilal(3%)

• Mother Dairy(2%)

• Cream Bell(1%)

COMPETITORS IN AP

Quality Walls (8%)

Amul (5%)

Scoops(4%)

Dinshaw(1.5%)

JUMANI (2%)


AWARDS & ACCOLADES

• Most awarded ice cream company in 2010

• Brand Jumani won 6 out of 8 silver categories in Great Indian Ice Cream Contest

• Sin spot has been Voted as the best ice cream outlet by Times Food Guide in the region

AWARDS & ACCOLADES

AWARDS & ACCOLADES

Advantages of proposed acquisition of Western region dominant ice cream player

• Direct access to major and growth market of western India comprising of Goa, Northern and Coastal Karnataka, Central and Western Maharashtra

• Adding around 8 crs to the top line of the company and can subsequently be scale upto 20 Crs in two years down the line.

• Launch pad for Exclusia in premium market of western region.

• Net work of more than 1500 dealers

• State of art of machinery, logistic and distribution infrastructure

• The proposed acquisition will help in reducing the operating cost by shifting the manufacturing process to Hyderabad and enhancing the capacity to 2500 Liters per hour from the current 1500 Liters per hour.

Expansion of market and distribution network

• Penetrating into newer territories of Andhra Pradesh, Tamil Nadu and Southern Karnataka.

• Increasing dealer network to 4000 from existing 1000 dealers / freezers.

• Launch of Exclusia premium ice-cream across Pan India.

• Targeting the burgeoning retail segment and hospitality sector.

• Increase in parlor outlet in premium segment from 2 to 50.

• Increase in mobile vending operation from 120 to 400.


Strengths Weaknesses• Quality & Consistency.• State of Art production facilities among

the top 3 in the country .• Product Innovation.• Good dealer relationship; very low

attrition. • Virtual monopoly among high end

hospitality groups.

• Retail width is not at a desired level consequently the impulse sale has been less then desired. Slow to take off in the parlor segment

• Public perception that Diffys is a premium brand whereas it is targeted for the mass segment.

Threats Opportunities• A very fragmented industry Very large

number of players .

• High food prices

• Increase in quality awareness levels in the consuming class leading to creation of brand loyalty towards quality brands Consolidation of the retail industry.

• Success of Exotica can be replicated across the country

THE ROAD MAP

• Focus on complete regional coverage

for brand Diffys by rapid retail expansion

that is currently on and proposed

acquisition.

• Pan India spread of Exotica

Product Segmentation by sub-branding

“HALKA”. Ex.: Low Fat, Diabetic friendly

and Probiotic, etc.

• Launch of “Just Chill” ice cream parlors.

• Expansion of mobile vending operations.

EBITDA OF THE PROJECT Rs in Lakhs

2010

2011

2012

2013

2014

2015

2016

2017

2018

0

100

200

300

400

500

600

700

800

61.4

1

124.

58

176.

3

217.

98

415.

01 543.

26 673.

15

722.

66

746.

21

EDIDTA

PAT OF THE PROJECTRs in lakhs

2010 2011 2012 2013 2014 2015 2016 2017 20180

100

200

300

400

500

600

700

14.3

1

22.4

6

12.1

8

18.9

8

167.5

9 288.0

6 455.2

3

541.9

2

592.7

3

PAT

Value of Operating Equity

Present value of unlevered firm

Rs. 4173.50 Lakhs

Present value of tax shield

Nil

Present value of market value of debt

Rs. 1277.83 Lakhs

Value of firmRs. 4173.50Lakhs

Value of Operating Equity = 4173.50 – 1277.83 = Rs. 2895.68 LakhsNo. of Equity Shares = 67.11 Lakhs sharesValue of Each Equity share = Value of Operating Equity/ No of Equity Shares = 2895.68 / 67.11 = Rs. 43.15

SHARE VALUATION

INVESTMENT MODE : Compulsory Convertible Debentures

A debenture is an instrument of debt executed by the company acknowledging its obligation to repay the sum at a specified rate and also carrying an interest. It is one of the methods of raising the loan capital of the company. The instruments will convert into Equity Shares in the Company at an agreed Price, which shall not be less than DCF.

Security : 100% backed by the Value of the Amount Taken, till the Date of Conversion to Equity shares

Interest : Till the instrument is converted 12% p.a.,

Tenure : 3-5 years as Debentures, there of converted to Equity.

EXIT OPTIONS :

Taking the Shares to the Recognized Stock Exchanges through the IPO Mode

Third Party Coming into the into the Shoe of Investor, by taking the Shares of the Investor

Promoter Group Coming into the into the Shoe of Investor, by taking the Shares of the Investor

Complete take over by the Investor, by giving an exit option to the current promoters.

THANK YOU

Business

Diff presentation 29 june 2013