LargestDairy

Largest Private Private Dairy Company

Company in India in India

Kwality Limited

Q3FY17 Investor Presentation

February 2017

www.Kwality.com
 Industry Overview

Company Overview

Quarterly Results Overview

Recent Key Developments

Shareholding Pattern

www.Kwality.com KWALITY LIMITED 2

Global Dairy Industry India is the largest Producer and Consumer of Dairy Products

Production Global Milk/Milk Products Production Volumes 2015E-2020E

MMT
CAGR
Global milk production grew at a CAGR of 2.3% during 2010-2014 to reach 792.0 million metric tones 920
2.1% 901.2
(MMT) in 2014, on the back of population growth, rising disposable incomes, favorable demographics, 900 883.1
brand awareness, increasing urbanization & westernization of diets in emerging economies, primarily 880 864.9
India and China 860 846.7
840 828.5
India is the largest producer of Milk, accounting for over 18% of world production of milk and 820 810.3
dairy products 800
780
During the period 2015E-2020E, global production of Milk and Dairy products is expected to grow at a 760
CAGR of 2.1% to reach 901.2 MMT by 2020E 2015E 2016E 2017E 2018E 2019E 2020E

India is expected to grow at a CAGR of 4.2% during the same period to reach over 184.9 MMT, Country-Wise Top Producers of Milk/Milk Products in 2015E-2020E
to surpass EU (177.4) by 2020E
All figures in MMT, except CAGR

Consumption 35.1 2.0%

Brazil 38.8 India is expected to witness highest
volume growth during the period, to
Country-Wise basis, India is the worlds largest consumer of milk, other key markets include USA, China, 39.2 1.2% surpass EU by 2020E
Russia, and Pakistan Pakistan 41.5

45.5 0.5%
Globally, approximately 66% of milk and dairy products are consumed for factory use, 33% for fluid use China 46.7
and 1% for feed use
95.5 1.7%
USA 103.8
Foreign Trade
163.5
EU 1.6%
Top Exporting Countries New Zealand and EU account for over 50% of world trade, followed by USA 177.4
150.9
4.2%
Top Import Markets China, Russia, MENA region, and South-East Asia account for majority of imports India 184.9

Source: IMARC, FAO, Crisil CAGR

Source: IMARC 2015E 2020E

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Dairy Industry in India Consumption levels are expected to surpass production by 2021E

Production Structure of Dairy Industry in India Largely Unorganized

Organized
Milk production in India grew at a CAGR of 4.8% during FY11 - FY16E, estimated to be 154 MMT in 2015-16 20% Organized

Cooperatives Private Dairies

Total production of milk and dairy products in India is expected to reach over 189 MMT in 2021E

Key Production Markets: U.P , Rajasthan, Andhra Pradesh, Gujarat, and Punjab account for over 53% of
overall production in India Unorganized
Unorganized Local Vendors Self Consumption
Buffalo milk accounts for 48.7% of total milk produced in India, followed by Cow (47.9%) 80%
Product-Wise Products Market Potential in India 2015E-2020E
Consumption
All Figures in INR Bn
Largest Segment - Liquid Milk
Milk consumption in India grew at a CAGR of 5.3% during FY11 - FY16E, estimated to be 146 MMT in 2015- 17
Butter Milk 20%
16E, driven by steady population growth, rising disposable incomes, favorable demographics, increasing 43
6,068
brand awareness and urbanization
Cheese 14 21%
36
3,021
Currently, over 52% of total production is consumed by people themselves, only 48% is marketable 15
Lassi 39
21%

Liquid milk is the largest consumed dairy product in India, with 52%, share, followed by Ghee 16
Flavored Milk 48
25% 2015E 2020E
(12%)
UHT Milk 33 26%
104
Total consumption of milk and dairy products in India is expected to increase from 146 MMT in FY16E to
192 MMT in FY21E; implying a CAGR growth of 5.6% 195 14%
Butter 382

Total market size of milk and dairy products in India estimated to be INR 6,671 Bn in FY16E; growing at over Curd 251 14%
493
15% annually
Ghee 709
1,367 14%
Market Size is estimated to reach INR 11,543 Bn by 2020E
2015E 2020E CAGR
Source: IMARC estimates, Industry Source: Dairy India,Rabo Bank Estimates, Amrit Corp & IMARC estimates

www.Kwality.com KWALITY LIMITED 4

Dairy Industry in India Emerging Trends

Growth of Organized Segment outpacing Unorganized Organized Dairy Industry in India - 2020E
Organized
20.4% 19.6%
Organized segment grew at a CAGR of 20.4% during 2010-2014 as against unorganized sector CAGR of
14.2% during the same period on the back of shift in consumer preferences towards branded Unorganized Unorganized

CAGR%
products 14.2% 13.3% Organized
26%
The trend is expected to continue in the coming years. During the period 2015E-2020E, organized
segment is expected to grow at a CAGR of 19.6% as compared to 13.3% for the unorganized segment Unorganized
74%

Enhanced focus on Value-Added Products (VAPs) and B2C

In the recent past, change in demographics and rapid urbanization have resulted in significant demand 2010-2014 2015E-2020E Market Size (100%)
for VAPs like cheese, condensed milk, UHT, flavored butter/milk/yoghurt, protein-based INR 11,543 Bn
beverages/health supplements; VAPs expected to grow at a healthy rate of 23% annually till 2020E

Increasing Young Population Value added milk products like cheese finds usage in
convenience foods for Pizzas, Pasta, Burgers et al Shift in Value Added Products (VAP)

Aggressive Growth plans of QSR players Rising demand for milk, condensed milk, and cream
especially from coffee chains Emerging VAPs
Changing lifestyles and Increasing health awareness is evolving low-fat high-protein dietary Flavored
patterns especially among millennials and young population, driving demand for products like Traditional VAPs Milk/Yoghurt
low fat yoghurts/cheese, protein-based health drinks/supplements among others Curd/Butter-Milk UHT Milk
Liquid Milk & Cottage-Cheese Flavored Butter
Shift towards Branded Products Milk Powders Butter Protein-based
Beverages &
Pouched Milk Ice-Cream Supplements
Rising disposable incomes and increasing brand awareness especially in urban markets resulting in
Skimmed Milk Low-Fat
strong demand for branded products, thereby organized segment; Tier-I and Tier-II cities offer Powder Cheese/Yoghurt
significant growth opportunities for retail
Dairy Whiteners
Companies are enhancing their focus on brand building/Marketing activities with
aggressive spending and expansion of their marketing & sales team to create strong brand
recall, customer retention, and reach Shifting towards Branded Products

Source: IMARC, Crisil, Industry

www.Kwality.com KWALITY LIMITED 5

 Industry Overview

Company Overview

Quarterly Results Overview

Recent Key Developments

Shareholding Pattern

www.Kwality.com KWALITY LIMITED 6

Kwality Limited - Overview

Background
Revenue (INR Mn)
Established in the year 1992 as a backward integration unit of Kwality Ice-creams, later taken over by Mr. Sanjay
70,000 64,438
Dhingra & family in 2002, Kwality has emerged to be amongst largest and fastest growing private dairies in India CAGR
28% 58,914
60,000
Procurement Network /MCCs
50,150
50,000
Established strong relationships with more than ca. 325,000 farmers spread across ca. 4,500 villages in U.P. ,
Rajasthan, and Haryana; with 24 MCCs located close to procurement areas 39,304
40,000
Company intends to increase its procurement directly from farmers from current ca. 22% to 50% over the
medium term by leveraging and further strengthening its existing network 30,000
24,163
20,000
Manufacturing Facilities
10,000
Has six state-of-the-art milk-processing units in North India (Haryana, Rajasthan, and U.P.) with combined capacity
of 3.4+ Mn litres/day -
FY 12 FY 13 FY 14 FY 15 FY 16
Dedicated R&D department for product innovation, world-class testing labs and quality control systems
Consolidated figures
Products Amongst largest and fastest growing private dairy companies in India
Diversified product portfolio across Fresh Milk, UHT Milk, Flavored Milk, Milk Powders, Curd, Chaach, and
Ghee/Fat categories catering to institutional and retail customers Product Portfolio
Product mix to rapidly shift towards value-added products such as Paneer, Cream, Yoghurts, Table-Butter,
Segment Milk Milk Powder Curd & Chaach Ghee/Fat
Cheese, amongst others; to launch multiple variants over a period of time

Distribution Network Pouched Milk Skimmed Milk Set Curd Pure Ghee
Bulk Milk Powder Pouched Curd Pure Cow
Skimmed Milk Whole Milk Chaach Plain Ghee
Established extensive distribution network with 1,900 distributors covering 45,000 touch points across Northern
Key Flavored Milk Powder & Masala Low
markets ; continuous efforts underway to further expand into new and existing markets Products Dairy Whiteners Cholesterol
UHT Milk
Ghee
Strong Management Team Cream/Bulk
Butter
Backed by strong management team comprising of industry experts with cumulative experience of over 200 years

www.Kwality.com KWALITY LIMITED 7

 Kwality Limited Roadmap

2014: Acquired two facilities on lease, set-up owned MCCs 2016

Trial of flavored milk/lassi, yoghurt et al
Our Journey So Far Commenced adding new capacities for value-added 2015
products like cheese, butter, UHT. Tetra packs, et al 2016: Registered
2014
KDILs Kwality
Brand for the entire
2012: Started marketing of 2013 range of Dairy
2010: pouched milk, curd, and paneer Products
under Dairy Best 2012 2015:
Set up first MCC in Haryana
Involved E&Y for
Launched Ghee, Dairy Whitener & other products under Ad-for-Equity
IT transformation
Dairy Best brand deal with HT
Agreement with Pashupati Dairies for milk processing
2011 2013: Name changed to Our Independent Media and ToI
Kwality Ltd. Director Dr. R.S.
License received from NRDC for processing & manufacturing
Khanna became
of low cholesterol ghee 2010 Acquired facilities from Leading Private
Chairman
Varshney Bandhu in U.P Equity Firm
Signed Bollywood
Marketing of UHT Milk Kohlberg Kravis
actor Akshay
under Dairy Best & Roberts (KKR)
2011: Kumar as brand
agrees to
2003: MoU signed with Set up wholly-owned subsidiary in Dubai ambassador
provide capital
2007
GCMMF for processing and FTZ First dairy of up to INR
packing milk for Amul brand Launched low cholesterol ghee Livlite company to 5,200 Mn
with Bipasha Basu as brand ambassador Launch company- through
Set up 2nd manufacturing facility in wide ESOP plan structured Debt
2003
Haryana for expansion of FDP products Appointed
1992: Incorporated as Kwality McCann for
Took on lease processing facility in
Dairy (India) Limited 2007: Strategic Alliance with Creative, Zenith
Ajmer, Sitapur, and Jarar
As backward integration of Britannia industries for Optimedia for
Added new clients including Railways
Kwality Ice Cream; listed in manufacturing and packing of media planning,
and penetrated into new markets
1995 on BSE curd Adfactors for PR,
2002 Digital Quotient
for Social
1992 Marketing

2002: KDIL taken over by current

promoters together with its
manufacturing facility at Traditionally a B2B player, rapidly shifting its business model
Haryana
towards B2C

www.Kwality.com KWALITY LIMITED 8

Diversified Product Portfolio

Pouched Milk Flavoured Milk Curd Paneer

Skimmed Milk Instant Dairy

Powder Chaach Ghee Butter
Whitener

www.Kwality.com KWALITY LIMITED 9

Our New Brand Campaign

www.Kwality.com KWALITY LIMITED 10

Product Range

Full Cream Milk Double Toned Milk Toned Milk

Available in:200ml, 500ml, 1ltr Available in:200ml, 500ml Available in:200ml, 500ml, 1ltr

Chaach Skimmed Milk Dahi Toned Milk Dahi

Available in: 500ml Available in:200ml, 400ml, 1ltr Available in:200ml, 400ml, 1ltr

www.Kwality.com KWALITY LTD. 11

Manufacturing Facilities Six World-Class Units, Capacity of 3.4 Mn Litres/Day

Close to Largest Milk Production Areas

Palwal, Haryana
Ajmer,
Rajasthan Dibai, Sitapur, Saharanpur, and
Jarar, in U.P.

Rajasthan
11%

U.P
18% Account for 34% of Total
Production in India
Others
66%
Haryana
5%

Streamlined Operations - Equipped with Robotic systems, cutting-edge technology for quality control systems and sophisticated R&D facilities

www.Kwality.com KWALITY LIMITED 12

Quality Control and Certifications

Quality Control
Quality Certifications

The Company possesses a strong Research and Development infrastructure which

encompass a technological advanced equipment and in-house testing labs with
stringent quality control systems.

Supporting the strong infrastructure, the Company has a dedicated and experienced
team of professionals. The result is an enhanced focus of product innovation,
creating a strong pipeline of differentiated products.

Further, to ensure supreme quality across the value chain from farm to customer,
We are committed to the quality standards and
systemic fixes and process improvements are being implemented to make quality as norms to ensure safe and quality products for
the strongest vertical within the organisation consumers.

www.Kwality.com KWALITY LTD. 13

Integrated Business Model
Established relationships
with over ca. 325,000
farmer families across ca.
4,500 villages in U.P,
Rajasthan, and Haryana
Currently, ca. 22% of
daily milk requirement
sourced directly from
farmers through village
level collection centers
(VLCCs) and 24 Milk
Chilling Centers (MCCs),
balance from large
contractors
Procurement
www.Kwality.com
Processing
Six dairy plants in North
India with combined
capacity of 3.4 Mn ltrs/day
World-class facilities with
streamlined operations
and dedicated R&D
department
Diversified product
portfolio Variants of
Fresh milk, Curd, Chaach,
Ghee, milk powders,
amongst others
KWALITY LIMITED
Created separate SBUs
for Fresh products
division, Consumer
products division, and
Institutional division,
headed by profit Branding
managers
Network of 1,900+
distributors covering
45,000+ touch points in Signed Bollywood actor
north markets
Mr. Akshay Kumar as
General and modern
brand ambassador
trade channels
Engaged reputed
Exporting to 28 countries advertising/marketing
Wholly-owned agencies for Creative,
subsidiary in Dubai Media Planning & Digital
Concluded Ad-for-Equity
deal with Times of India
Distribution and HT Media
Started new brand
campaign across Print,
Radio, T.V. , Outdoor,
and Online campaign
14
Distribution Network Growing Retail Penetration

Strong Presence in Largest Consumption Markets in India Growing Retail Network

3,000
Kwalitys Major Presence 45,000 48,000
40,000 43,000
2,500
NCR (Delhi) 32,000 38,000
Rajasthan 2,000 27,000 1,800 1,900 33,000
26,000
Haryana 1,600 28,000
Marketing
Uttar Pradesh 1,500 19,000 23,000
1,150 & Sales
1,050 18,000 300+
1,000 900 13,000 employees
8,000
500
3,000
- (2,000)
FY 12 FY 13 FY 14 FY 15 FY 16 9MFY17
Distributors Points of Sale

Implemented SBU Based Approach Sales Mix

Pouched Milk, Curd, Chaach, Paneer B2C
Fresh Products Division
et al 12%

B2C
UHT, flavoured Milk, Cream, packed
39%
Consumer Products Division Ghee, Table-Butter, Cheese, Yoghurts FY 12 B2C Expansion 9M FY 17
et al B2B
61%
Institutional Division Ghee, Milk powders, Bulk Milk &
B2B
Butter et al
88%

Sales & Distribution Strategy aligned with nature of products and

customers catered
On Standalone Sales

www.Kwality.com KWALITY LIMITED 15

Recent Key Developments KKR to provide upto INR 520 Cr. For Expansion

Debt Consolidation Strengthening infrastructure for direct

procurement

Debt
Procurement Leading Private Equity Firm
Repayment

KWALITY LIMITED Utilization

Areas

Brand
Capacity
Building & IT
Expansion
Infrastructure
Capacity expansion by 9.0 lac
Brand building, advertisements, litres/day for value-added product
Sales Promotions, other marketing categories like Cheese, Paneer, UHT
activities Milk, Flavored Milk, Table Butter,
Developing robust IT Infrastructure amongst others

Capital Infusion through Structured Debt with tenure of six years

www.Kwality.com KWALITY LIMITED 16

Recent Key Developments Inked Ad-for-Equity Deal with ToI and HT Media

KWALITY LIMITED and all Online Platforms

amongst others

Offers Advertisements and Promotions across BCCL and HT Media owned media properties including English dailies, TV channels, Radio
stations and a host of internet platforms, among others

www.Kwality.com KWALITY LIMITED 17

Growth Strategy Roadmap Vision 2020
B2B
Achieve Critical Mass
Sustainable Business Growth
Strategy
Achieving Critical Mass Consolidated Sales
through B2B Model
Period 2002-2012
Capacity Expansion
Expand Product Portfolio
Marquee client base Established Subsidiary in
Penetrate new Markets -
India & Abroad
Manufacture Low
cholesterol Ghee
B2B
www.Kwality.com
Embark on B2C Model
Strategy
Capacity expansion and
strengthen procurement
network
Milestones Strong position in North
Widening Product mix Established network
Period 2012-2016
reached INR 24,163 Mn with fresh milk products
in FY12 like Pouched Milk, Dahi,
Chaach, amongst others
Capacity 2.4 Mn
litres/day Initiating Business
Transformation for B2C
Dubai Launch B2C B2B
Clients: Added ITC, Marquee client base
Hindustan Unilever,
Railways among others Strengthen employee
Launched Livlite , our base across levels Subsidiary Sales INR
low-cholesterol ghee
Launch ESOP scheme
across levels
KWALITY LIMITED
Leading Consumer Dairy Company
B2C
Strategy
Strengthen direct
Procurement, setup
MCCs and increase
network
Milestones
Capacity expansion for
Capacity of 3.4 Mn value-added products
ltrs/day across six plants
in U.P, Haryana, and Product mix shift
Rajasthan towards value-added
Vision 2020
products cheese, butter,
UHT, yoghurt, flavoured Sales Mix 70% Retail,
with ca.3 lac farmers Milk,Paneer, et al
across ca.4,500 villages
Launch multiple variants
Launched Fresh Milk of value-added products
Products under B2C
Deleveraging with B2C
MCC Count - 22 business model Business automation
Standalone Sales Build a Strong B2C brand
reached INR 57,536 Mn
in FY16; 32% Retail Strengthen Distribution
Enhanced focus on IT
6,902 Mn enablement
ESOP plan launch across
levels in 2015
B2C
Enter New markets
Target
Direct Procurement: 50%
MCC Count 50+
Capacity addition - 9 lac+
litres/day for value-
added products
Product mix shift
towards branded/B2C
products
balance B2B
Strong operating
margins and cash flow,
reduce leverage
through IT enablement
Deeper retail
penetration in existing
and new markets
PAT expansion with
renewed Dividend
Policy
18
 Industry Overview

Company Overview

Quarterly Results Overview

Recent Key Developments

Shareholding Pattern

www.Kwality.com KWALITY LIMITED 19

Quarterly Overview Q3FY17 Sales Overview

Sales (INR Mn)

+11.2% y/y

16,000 15,830
15,500

15,000

14,500 14,240 Sales Mix

14,000

13,500
Q3'FY16 Q3'FY17
13,000

Q3'FY16 Q3'FY17

32%
B2C Sales (INR Mn) +36.4% y/y 39%
7,000
6,135
6,000 61%
68%

5,000 4,499
4,000

3,000 Institutional Retail Institutional Retail

2,000

1,000

Standalone Sales Q3'FY16 Q3'FY17

www.Kwality.com KWALITY LIMITED 20

Nine Months Overview 9MFY17 Sales Overview

Sales (INR Mn)

+8.5% y/y

47,000
45,968
46,000

45,000

44,000

43,000 42,360 Sales Mix

42,000

41,000
9M'FY16 9M'FY17
40,000

9M'FY16 9M'FY17

+34.3% y/y 32%

B2C Sales (INR Mn) 39%
20,000
18,121
18,000
61%
16,000 68%

14,000
13,491
12,000
10,000
Institutional Retail Institutional Retail
8,000
6,000
4,000
2,000
-

Standalone Sales 9M'FY16 9M'FY17

www.Kwality.com KWALITY LIMITED 21

Quarterly Overview Q3FY17 Profitability

1,6 00
1,5 90
1,5 80
EBITDA and Margin PBT and Margin 4.4%
6.8%
1,5 70
1,5 60

+17.5% y/y
1,5 50 800 4.6 %
1,5 40
1,5 30
1,5 20
1,5 10 790
1,5 00
1,4 90

+31.5% y/y
1,4 80 7.2 %
1,4 70 780

6.4%
1,4 60
1,4 50
1,4 40
1,4 30 770
1,4 20
1,4 10
1,4 00 760
1,3 90
1,3 80
1,3 70
1,3 60 750
1,3 50
1,3 40
1,3 30

3.7%
4.1 %
1,3 20 740
1,3 10
1,3 00
1,2 90
1,2 80 730
1,2 70
1,2 60

690
1,2 50
1,2 40 720
1,2 30
1,2 20
1,2 10

1,076
1,2 00 710
1,1 90 6.2 %
1,1 80
1,1 70
1,1 60 700
1,1 50
1,1 40
1,1 30

+32 Bps y/y

1,1 20 690
1,1 10

+37 Bps y/y

1,1 00 3.6 %
1,0 90
1,0 80 680
1,0 70
1,0 60
1,0 50
670
1,0 40
1,0 30

916
1,0 20
1,0 10 660
1,0 00
990
980
970 650
960
950
940
930 640
920
910
900
890 5.2 % 630
880 3.1 %
870
860
850 620
840
830
820
810 610
800
790
780
770 600
760
750
740
730 590
720
710
700
690 580
680
670
660 570 2.6 %
650

524
640
630
620 560
610
600
590 4.2 %
580 550
570
560
550
540 540
530
520
510
500 530
490
480
470
460 520
450
440 2.1 %
430
420 510
410
400
390
380 500
370
360
350
340 490
330
320
310
300 480
3.2 %
290
280
270 470
260
250
240
230 460
220
210 1.6 %
200
190 450
180
170
160
150 440
140
130
120
110 430
100
90
80
70 420
60
50
40
30 410
20
10
0 2.2 %
400 1.1 %

Q3'FY16 Q3'FY17 Q3'FY16 Q3'FY17

EBITDA EBITDA % PBT PBT %

PAT and Margin +21.6% y/y

EPS*
600
3.6 %

590

580

570

560

550

540
2.9% 3.1 % 2.0

1.9
530

520

2.6%
1.9

510

500

490
+24 Bps y/y 1.8

451
480 2.6 %

1.6
470

1.7

460

450

440 1.6

430

420 2.1 %

1.5

410

371
400

390 1.4

380

370

1.3

360 1.6 %

350

340 1.2

330

320

1.1

310

300 1.1 %

1.0

Q3'FY16 Q3'FY17 Q3'FY16 Q3'FY17

PAT PAT %

Standalone financials; All figures in INR Mn except y/y growth, Margins, and EPS *fully diluted basis

www.Kwality.com KWALITY LIMITED 22

Nine Months Overview 9MFY17 Profitability

EBITDA and Margin PBT and Margin

3,6 00
3,5 90

6.7% +13.9% y/y

2,50 0
2,49 0
2,48 0
2,47 0
2,46 0
2,45 0
2,44 0
2,43 0 4.3% 4.6 %

+30.8% y/y
3,5 80 2,42 0
3,5 70
3,5 60 2,41 0
3,5 50 6.7 % 2,40 0
3,5 40 2,39 0
3,5 30
3,5 20 2,38 0
3,5 10 2,37 0
3,5 00
3,4 90 2,36 0
3,4 80 2,35 0
3,4 70 2,34 0
3,4 60
3,4 50 2,33 0
3,4 40 2,32 0
3,4 30
3,4 20 2,31 0
3,4 10 2,30 0
3,4 00 2,29 0
3,3 90
3,3 80 2,28 0

6.4%
3,3 70 2,27 0
3,3 60
3,3 50 2,26 0
3,3 40 2,25 0
3,3 30
3,3 20 2,24 0 4.1 %
3,3 10 2,23 0
3,3 00 2,22 0
3,2 90
3,2 80 2,21 0

3,066
3,2 70 2,20 0
3,2 60 6.2 %
3,2 50 2,19 0
3,2 40 2,18 0
3,2 30 2,17 0
3,2 20
3,2 10 2,16 0
3,2 00 2,15 0
3,1 90
3,1 80 2,14 0

3.5%
3,1 70 2,13 0
3,1 60 2,12 0
3,1 50
3,1 40 2,11 0

1,961
3,1 30 2,10 0
3,1 20
3,1 10 2,09 0
3,1 00 2,08 0
3,0 90 2,07 0
3,0 80
3,0 70 2,06 0
3,0 60 2,05 0
3,0 50
3,0 40 2,04 0
3,0 30 2,03 0
3,0 20 2,02 0
3,0 10
3,0 00 2,01 0

+27 Bps y/y

2,9 90 2,00 0
2,9 80 5.7 %
2,9 70 1,99 0

+31 Bps y/y

2,9 60 1,98 0 3.6 %
2,9 50
2,9 40 1,97 0
2,9 30 1,96 0
2,9 20 1,95 0
2,9 10
2,9 00 1,94 0
2,8 90 1,93 0
2,8 80
2,8 70 1,92 0

2,693
2,8 60 1,91 0
2,8 50 1,90 0
2,8 40
2,8 30 1,89 0
2,8 20 1,88 0
2,8 10
2,8 00 1,87 0
2,7 90 1,86 0
2,7 80 1,85 0
2,7 70
2,7 60 1,84 0
2,7 50 1,83 0
2,7 40
2,7 30 1,82 0
2,7 20 1,81 0
2,7 10 1,80 0
2,7 00 5.2 %
2,6 90 1,79 0
2,6 80 1,78 0
2,6 70
2,6 60 1,77 0
2,6 50 1,76 0
2,6 40 1,75 0
2,6 30
2,6 20 1,74 0
2,6 10 1,73 0
2,6 00 3.1 %
2,5 90 1,72 0
2,5 80 1,71 0
2,5 70
2,5 60 1,70 0

1,499
2,5 50 1,69 0
2,5 40 1,68 0
2,5 30
2,5 20 1,67 0
2,5 10 1,66 0
2,5 00
2,4 90 1,65 0
2,4 80 1,64 0
2,4 70 1,63 0
2,4 60
2,4 50 1,62 0
2,4 40 1,61 0
2,4 30
2,4 20 4.7 % 1,60 0
2,4 10 1,59 0
2,4 00 1,58 0
2,3 90
2,3 80 1,57 0
2,3 70 1,56 0
2,3 60
2,3 50 1,55 0
2,3 40 1,54 0
2,3 30 1,53 0
2,3 20
2,3 10 1,52 0
2,3 00 1,51 0
2,2 90
2,2 80 1,50 0
2,2 70 1,49 0
2,2 60 1,48 0
2,2 50
2,2 40 1,47 0 2.6 %
2,2 30 1,46 0
2,2 20
2,2 10 1,45 0
2,2 00 1,44 0
2,1 90
2,1 80 1,43 0
2,1 70 1,42 0
2,1 60 1,41 0
2,1 50
2,1 40 1,40 0
2,1 30 4.2 % 1,39 0
2,1 20
2,1 10 1,38 0
2,1 00 1,37 0
2,0 90 1,36 0
2,0 80
2,0 70 1,35 0
2,0 60 1,34 0
2,0 50
2,0 40 1,33 0
2,0 30 1,32 0
2,0 20 1,31 0
2,0 10
2,0 00 1,30 0
1,9 90 1,29 0
1,9 80
1,9 70 1,28 0
1,9 60 1,27 0
1,9 50 1,26 0
1,9 40
1,9 30 1,25 0
1,9 20 1,24 0
1,9 10
1,9 00 1,23 0
1,8 90 1,22 0
1,8 80 1,21 0 2.1 %
1,8 70
1,8 60 1,20 0
1,8 50 3.7 % 1,19 0
1,8 40
1,8 30 1,18 0
1,8 20 1,17 0
1,8 10
1,8 00 1,16 0
1,7 90 1,15 0
1,7 80 1,14 0
1,7 70
1,7 60 1,13 0
1,7 50 1,12 0
1,7 40
1,7 30 1,11 0
1,7 20 1,10 0
1,7 10 1,09 0
1,7 00
1,6 90 1,08 0
1,6 80 1,07 0
1,6 70
1,6 60 1,06 0
1,6 50 1,05 0
1,6 40 1,04 0
1,6 30
1,6 20 1,03 0
1,6 10 1,02 0
1,6 00
1,5 90 1,01 0
1,5 80 1,00 0
1,5 70 3.2 %
1,5 60 990
1,5 50 980
1,5 40 970
1,5 30
1,5 20 960 1.6 %
1,5 10 950
1,5 00
1,4 90 940
1,4 80 930
1,4 70 920
1,4 60
1,4 50 910
1,4 40 900
1,4 30
1,4 20 890
1,4 10 880
1,4 00 870
1,3 90
1,3 80 860
1,3 70 850
1,3 60
1,3 50 840
1,3 40 830
1,3 30 820
1,3 20
1,3 10 810
1,3 00 800
1,2 90 2.7 %
1,2 80 790
1,2 70 780
1,2 60 770
1,2 50
1,2 40 760
1,2 30 750
1,2 20
1,2 10 740
1,2 00 730
1,1 90
1,1 80 720
1,1 70 710
1,1 60 700 1.1 %
1,1 50
1,1 40
1,1 30
1,1 20
1,1 10
1,1 00
1,0 90
1,0 80
1,0 70
1,0 60
1,0 50
1,0 40
1,0 30
1,0 20
1,0 10
1,0 00 2.2 %

9M'FY16 9M'FY17
9M'FY16 9M'FY17
PBT PBT %
EBITDA EBITDA %

PAT and Margin +17.6% y/y

EPS*
1,70 0
1,69 0
1,68 0
1,67 0

2.8%
1,66 0
1,65 0
1,64 0 3.1 %
1,63 0
1,62 0
1,61 0
1,60 0
1,59 0
1,58 0
1,57 0
1,56 0
1,55 0
1,54 0
1,53 0
1,52 0

2.6% 5.5
1,51 0
1,50 0
1,49 0
1,48 0 5.6
1,47 0
1,46 0
1,45 0
1,44 0
1,43 0
1,42 0
1,41 0

1,294
1,40 0
1,39 0

+22 Bps y/y

1,38 0 2.6 %
1,37 0
1,36 0
1,35 0 5.4
1,34 0
1,33 0
1,32 0
1,31 0
1,30 0
1,29 0
1,28 0
1,27 0
1,26 0
1,25 0
1,24 0
1,23 0
1,22 0

1,100
5.2
1,21 0
1,20 0
1,19 0
1,18 0
1,17 0
1,16 0
1,15 0
1,14 0
1,13 0
1,12 0 2.1 %
1,11 0
1,10 0
1,09 0 5.0
1,08 0
1,07 0
1,06 0
1,05 0
1,04 0
1,03 0
1,02 0

4.7
1,01 0
1,00 0
990
980
970
960 4.8
950
940
930
920
910
900
890
880
870
860 1.6 %
850
840
830 4.6
820
810
800
790
780
770
760
750
740
730
720
710
700 4.4
690
680
670
660
650
640
630
620
610
600 1.1 %

4.2

9M'FY16 9M'FY17 9M'FY16 9M'FY17

PAT PAT %

Standalone financials; All figures in INR Mn except y/y growth, Margins, and EPS *fully diluted basis

www.Kwality.com KWALITY LIMITED 23

Q3/9MFY17 Income Statement Overview

Standalone Financials Key Result Highlights

Particulars Q3FY17 Q3FY16 Growth y/y 9M'FY17 9M'FY16 Growth y/y Revenue
Revenue grew 11.2% y/y to reach INR 15,830 Mn in Q3FY17, primarily
Sales 15,830 14,240 11.2% 45,968 42,360 8.5% driven by B2C business
B2C revenue increased 36.4% y/y during the same period to reach INR 6,135
Gross Profit 1,643 1,282 28.1% 4,526 3,721 21.64% Mn; accounted for 39% of sales
For 9MFY17, B2C business grew 34.3% y/y to reach INR 18,121 Mn
Gross Margin* (%) 10.4% 9.0% +138 bps 9.8% 8.8% +106 bps

Employee Expenses 100 110 -8.61% 289 253 13.85%

Gross Margin
Dep & Amortization 30 58 -48.6% 90 174 -48.5%
Margin expanded 138 bps y/y to 10.4% in Q3FY17, supported by relatively
Other Expenses 466 257 81.6% 1,172 775 51.2% higher realization from B2C business

EBITDA 1,076 916 17.5% 3,066 2,693 13.9%

EBITDA Margin* (%) 6.8% 6.4% +37 bps 6.7% 6.4% +31 bps EBITDA
Other Income 50 48 5.7% 158 137 14.9% In Q3FY17, EBITDA grew 17.5% y/y to reach INR 1,076 Mn as against INR 916
Mn in Q3FY16, owing to increase in B2C business in the sales mix partially
Finance Costs 407 380 7.0% 1,174 1,157 1.4% offset by increase in other expenses
PBT 690 524 31.5% 1,961 1,499 30.8% For 9MFY17, EBITDA stood at INR 3,066 Mn; registered growth of 13.9% y/y

Tax Expense 239 154 55.40% 666 399 67.16%

PAT 451 371 21.6% 1,294 1,100 17.6% PAT & EPS
Growth in PAT in Q3FY17 partially offset by increase in finance costs and tax
PAT Margin* (%) 2.9% 2.6% +24 bps 2.8% 2.6% +22 bps expense
Diluted EPS grew 20.4% to reach INR 1.91 during the same period
EPS (Diluted) 1.91 1.59 20.4% 5.48 4.70 16.7% For 9MFY17, Diluted EPS stood at INR 5.48, registered growth of 16.7% y/y
*As % of Sales
Unaudited financials as per Indian Accounting Standards; All figures in INR Mn except margins and Growth y/y

www.Kwality.com KWALITY LIMITED 24

 Industry Overview

Company Overview

Quarterly Results Overview

Recent Key Developments

Shareholding Pattern

www.Kwality.com KWALITY LIMITED 25

Kwality Inks MoU with Bank of Baroda to disburse INR 4000 Cr. Of Loans to its 1 Lac Farmers in Initial Phase

Salient Features
1. To disburse INR 4000 Cr. of loans among 1 lac farmers initially within Kwalitys established procurement
network of ca. 325,000 farmers across ca. 4,500 villages in U.P., Haryana, and Rajasthan

2. Each Farmer would avail loan of up to INR 4 Lac at a preferential rate which will be utilized primarily
towards purchasing of milching animals, a smart phone, and a two wheeler

3. The scheme is aimed to provide financial assistance to improve socio-economic lives of farmers and
steer them towards digitization

A Win-Win Proposition for All Stakeholders

3E Benefits for Farmers

Enabled Financial Assistance at Preferential rates
Empowerment to increase income levels
E-enablement for opening of accounts, promote seamless transactions and digitization
Increase Direct Procurement for Kwality
Assured supply of best quality milk directly from farmers within our network. The
objective is to increase throughput of our existing procurement engine rapidly to
manufacture consumer products which would further scale up in subsequent phases
Accelerate Product mix shift towards consumer products, to drive margins and reduce
working capital requirements significantly
Acting as a facilitator, assuming no liability
Strengthen existing relationships with Farmers and foster new relationships
Expansion of Priority Sector Lending for Bank of Baroda
Instant access to 1 lac farmers, reducing costs and improving efficiency
Increase exposure in priority sector

Kwality is committed to cover remaining farmers within its network and beyond its procurement areas in subsequent phases

www.Kwality.com KWALITY LTD. 26

Engaged Ernst &Young for Developing Growth Strategy Roadmap

Roped in leading consulting firm Ernst & Young to develop Comprehensive Growth Strategy for B2C Expansion
Key Deliverables

Industry/Market
1 Assessment Assessment of Market size for different product categories/sub-categories and market dynamics
Understand channel dynamics, consumer trends, Route To Market practices, competition

Internal Capability Internal capability bench-marking across value chain

2 Assessment
Assess capability-fit to execute CSFs
Identify gaps areas and their extent
Identification of
3 Lucrative Product
To identify lucrative product categories/sub-categories Where to Grow , segments for operation
Categories Develop distinct proposition and strategic differentiators category/sub-category wise

Operating Model Design

Developing extensive operating model design How to Grow covering the entire value chain post
4 assessment of internal capabilities of the company.
Design of operating model across Sales, Supply Chain
Manufacturing, Marketing value chain, considering Kwalitys objectives and compete assessment

Developing Business Identify financial success parameters

5 Plan
Build financial projections
Identify risks, their mitigation plan, and sensitivity on business plans

Execution Roadmap
Execution roadmap with key task, timelines and responsibilities
6
Project control mechanisms

www.Kwality.com KWALITY LTD. 27

Kwality Commences Commercial Production at its New Unit at Softa Plant, Haryana,
Dedicated primarily for Value-Added Products

Key Highlights
Kwality began commercial production at its new
unit at Softa plant, Haryana on 2nd Feb, 2017,
dedicated primarily for value-added products

The unit is fully automated, equipped with ultra-

modern machinery, world-class quality control
systems, and state-of-the-art R&D lab for which
we have applied for National Accreditation Board
for Testing and Caliberation Laboratories (NABL)
certification, would it eligible for third-party
testing post accreditation

When fully operational, the unit will have milk

handling capacity of 0.9 Mn litres/day primarily
for value-added products such as Flavoured Milk,
Paneer, Cheese, UHT milk, Cream in tetra packs,
Table-Butter, Yoghurts, amongst others, with total
capital outlay of approx. INR 400 crores

With this unit, cumulative milk processing capacity

of Kwality would reach 4.3 Mn litres/day across
its six plants

www.Kwality.com KWALITY LTD. 28

New Products Launched UHT Milk and Cream

Toned UHT Milk Skimmed UHT Milk Milk Cream

Available in: 200ml and 1ltr. Available in: 200ml and 1ltr.
Kwality Milk brings to you an exceptional variety of protein + fortified toned milk,
which is not only rich in calcium, vitamin, and protein but also tastes delicious. The
milk stands for good health. Kwality Milk in our new tetra pak can survive for a
longer duration, without chilling.
Available in: 500ml and 1ltr.
Kwality Cream, made out of pure milk cream, has been finely
processed. It is sterilized at high temperatures and aseptically
packed. Prepare and serve delicious dishes made with Kwality
Cream.

We plan to roll-out 8-10 more variants of high margin value-added products such as Flavoured Milk, Paneer, Cheese, Table-Butter,
Yoghurts, amongst others in phases over the next 12-18 months

www.Kwality.com 29
KWALITY LTD.
Stepping up Multiple levers for B2C Transformation

We increased our procurement network to 3,25,000 farmer families across 4,500

Procurement villages in U.P., Haryana, and Rajasthan
1 Inked MoU with Bank of Baroda to disburse INR 4000 Cr. Of loans to its 1 lac
farmers initially; would provide captive sourcing of milk directly from the farmers

Launched our new brand campaign KDILs Kwality with Bollywood actor Mr.
Levers For B2C

Akshay Kumar
Brand Building and Print campaign in all leading newspapers and jingle airing across radio stations
2 Sales & Marketing T.V commercials, Outdoor, and Digital Campaign in full-swing
Network Reach 1,900+ distributors covering 45,000+ touch points in north
markets

Involved E&Y India for IT transformation, recently concluded B2C aligned IT

3 IT
roadmap aimed towards business automation, real-time business monitor
Implementing cloud-based solution for Sales Automation & Channel management

Appointed our new Chief Marketing Officer (CMO) with over 15 years of rich
4 Human Capital experience in Brand Management & FMCG Marketing
Expansion of Sales & Marketing team

Ramp-up of key functions to support our B2C strategy

www.Kwality.com KWALITY LIMITED 30

Recent Accolades

www.Kwality.com KWALITY LTD. 31

 Industry Overview

Company Overview

Quarterly Results Overview

Recent Key Developments

Shareholding Pattern

www.Kwality.com KWALITY LIMITED 32

 Shareholding Pattern and Stock Data

Shareholding as on 30th September, 2016 Stock Data

Individuals &
Corporates As on 14th Feb, 2017
33%
Share Price (INR) 147.0
Market Capitalization (INR Mn) 34,701.4
Outstanding Shares (Mn) 236.8
Institutions Promoter
3% 64% 52-Week High/Low (INR) 159.4/78.5
Source: Money Control

Stock Price Movement : 01st Oct, 2016 14th Feb, 2017

200

150

100

50
03-Oct-16 23-Oct-16 12-Nov-16 02-Dec-16 22-Dec-16 11-Jan-17 31-Jan-17

Source: BSE, NSE, Yahoo Finance

www.Kwality.com KWALITY LIMITED 33

Disclaimer
The information contained herein has been prepared to assist prospective investors in making their own evaluation of the Company and does not purport to be all-inclusive or to
contain all of the information a prospective or existing investor may desire.

This Information may include certain statements and estimates provided by the Company with respect to the projected future performance of the Company. Such statements,
estimates and projections reflect various assumptions by management concerning possible anticipated results, which assumptions may or may not be correct.

Prospective investors will be expected to have conducted their own due diligence investigation regarding these and all other matters pertinent to investment in the Company.

This presentation may contain statements that are forward looking statements. The companys actual future results may differ materially from those suggested by such
statements, depending on various factors for which the company and its management does not take any responsibility.

For further information, please contact:

Investor Relations

Kwality Limited
CIN L74899DL1992PLC255519

Mr. Varun Kapoor

Varun.Kapoor@Kwality.com

www.Kwality.com KWALITY LIMITED 34