Diff presentation 30 june 2013 1a

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 29 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 NETWORKStrong distribution and

dealer network is the

result of lucrative

margin and return that

brand Diffys provides to

them. It provides to

them deep freezers for

storage of ice creams,

display signs broads,

POP promotional

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%)

• Diffys / Jumani (2%)


AWARDS & ACCOLADES

• Most awarded ice cream

company in 2010.

• Brand Diffys won 6 out of 8 silver

categories in Great Indian Ice

Cream Contest

• Sinspot 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.

TOPLINES OF THE PROJECT Rs in Lakhs

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

Diff presentation 30 june 2013 1a

Business

ice creams divisions

ice cream industry

product ice cream

consumption of ice cream

ice cream business

indian ice cream market

best ice cream store

premium ice cream pa