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Varun Beverages Limited April 30, 2025 Q1 CY2025 Results Presentation (a PepsiCo franchisee)
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(a PepsiCo franchisee) Disclaimer This communication contains certain forward-looking statements relating to the business, financial performance, strategy and results of Varun Beverages Limited (“VBL” or the “Company”) and/ or the industry in which it operates. Such forward-looking statements involve a number of risks, uncertainties and assumptions which could cause actual results or events to differ materially from those expressed or implied by the forward-looking statements. These include, among other factors, changes in economic, political, regulatory, business or other market conditions. Neither the Company nor its affiliates or advisors or representatives nor any of its or their parent or subsidiary undertakings or any such person’s officers or employees guarantees that the assumptions underlying such forward- looking statements are free from errors nor does either accept any responsibility for the future accuracy of the forward-looking statements contained in this presentation or the actual occurrence of the forecasted developments. The Company assumes no responsibility to publicly amend, modify or revise any forward-looking statements, on the basis of any subsequent developments, information or events, or otherwise. Given these uncertainties and other factors, viewers of this communication are cautioned not to place undue reliance on these forward-looking statements. 2
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3 Company Overview Chairman’s Message Sustainability Initiatives Q1 CY2025 Results Overview Performance Highlights Table of Contents
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404 337 454 653 737 82189 88 115 149 176 303 493 425 569 802 913 1,124 2019 2020 2021 2022 2023 2024 India International 4 Total Sales Volumes (mn Cases*) 2019-2024: Sales Volume CAGR: ~18% Note: *A unit case is equal to 5.678 liters of beverage divided in 24 bottles of ~ 237 ml each Key player in the global beverage industry and the second largest franchisee of PepsiCo in the world (outside US) with operations spanning across 10 countries with franchise rights and additional 4 countries with distribution rights. Note: Map not to scale 4 Company Snapshot
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5 # Manufacturing of Cheetos (underway) & Distribution of Frito Lay, Doritos and Cheetos in Morocco; Manufacturing (underway) & Distribution of Simba Munchiez in Zambia and Zimbabwe; Co-manufacturing of Kurkure Puffcorn in India. ^ Manufacturing & Distribution of own brands is restricted in select territories. * “CreamBell” trademark has been licensed to be used by VBL for ambient temperature value added dairy based beverages. Carbonated Soft Drinks Brands licensed by PepsiCo: Own Brands^: Fruit Pulp / Juice Based Drinks Sports Drink Snacks# Club Soda Energy Drink Packaged WaterIce TeaCarbonated Juice Based Drinks Carbonated Soft Drinks Energy Drink Packaged Water Dairy Based Beverages* Complete Brand Portfolio
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6 • Production Facilities • Sales & Distribution – GTM & Logistics • In-outlet Management – Visi-Coolers • Consumer Push Management (BTL) - Market Share Gains 33+ Years of Association (agreement in India valid till April, 2039) 90%+ of PepsiCo India Sales Volume Demand Delivery Demand Creation • Trademarks • Formulation through Concentrate • Product & Packaging innovation through investment in R&D • Consumer Pull Management (ATL) - Brand Development Symbiotic Relationship with PepsiCo
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7 VBL- END-TO-END EXECUTION ACROSS VALUE CHAIN ▪ 130+ depots ▪ 2,800+ primary distributors with strong distribution infra of 10,000+ vehicles with 2,000+ EVs ▪ 2,600+ owned vehicles ▪ Installed 1.15 million+ visi-coolers, reaching 4 million+ outlets ▪ VBL - local level promotion and in-store activation ▪ PepsiCo - brand development & consumer marketing ▪ Experienced sales team of over 3,500+ employees ▪ Responsible for category value/volume growth ▪ Path created for reaching out to every 5 th person in the world ▪ Production optimization ▪ Backward integration (3 exclusive + 16 integrated plants) ▪ Innovation (packaging etc.) ▪ Working capital efficiencies ▪ Disciplined capex investment ▪ Territory acquisition ▪ 50 state-of-the-art production facilities ▪ 38 in India & 12 in International territories DISTRIBUTION & WAREHOUSING CUSTOMER MANAGEMENT IN-MARKET EXECUTION COST EFFICIENCIES CASH MANAGEMENT MANUFACTURING Other Raw Materials Bottling Concentrate (PepsiCo) SOLID INRASTRUCTURE ROBUST SUPPLY CHAIN DEMAND DELIVERY MARKET SHARE GAINS MARGIN EXPANSION ROE EXPANSION / FUTURE GROWTH Key Player in the Beverage Industry – Business Model 7
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(a PepsiCo franchisee) Chairman’s Message Commenting on the performance for Q1 CY2025, Mr. Ravi Jaipuria, Chairman – Varun Beverages Limited said: 8 “We are pleased to report a strong operational and financial performance in the first quarter of CY2025. Consolidated sales volumes grew by 30.1% YoY, driven by healthy organic volume growth of 15.5% in India. The integration of the SA territory has progressed well, with focused efforts on strengthening on-ground infrastructure, streamlining operations, and enhancing execution across the market. We achieved 141 million cases in SA over the trailing four quarters, marking a growth of ~13% over the same period last year. Historically, net realizations in SA are lower due to a higher mix of own brands; however, we are actively working to scale PepsiCo’s portfolio, which is expected to support improvements in realizations and margins going forward. We recently commenced operations at our new greenfield production facilities in Kangra (Himachal Pradesh) and Prayagraj (Uttar Pradesh), significantly enhancing capacity concurrently with the peak summer season. The implementation of other two greenfield production facilities scheduled for 2025 season in Bihar and Meghalaya is on track and shall commence the commercial production very soon. Additionally, we have established backward integration facilities at Prayagraj and DRC, further strengthening our operational backbone and supply chain efficiency. Building on our nascent presence in the snack food segment, we have initiated the distribution and sale of PepsiCo’s snack products in Zimbabwe and Zambia. These markets present a significant growth opportunity within the packaged foods category, supporting our focus on portfolio expansion across high-potential regions. In-line with our dividend policy, the Board of Directors has approved an interim dividend of 25% of face value, i.e., Rs. 0.50 per share, resulting in a total cash outflow of approximately ~Rs. 1,691 million. Looking ahead, we see immense headroom for growth in India’s beverage market, supported by rising per capita incomes, accelerating urbanisation, expanding electrification, and improving cold-chain infrastructure. With adequate capacities in place, a diversified product portfolio, and a strengthened distribution network, we remain well-positioned to capitalise on these opportunities and deliver sustainable value to all stakeholders.”
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(a PepsiCo franchisee) Key Developments 9 2. Agreement to distribute & sell PepsiCo’s snack products in Zimbabwe and Zambia : ▪ Varun Zimbabwe and Varun Zambia (subsidiaries of the Company) started distribution & selling of PepsiCo’s snack products in the territory of Zimbabwe and Zambia w.e.f. 1 February 2025. 3. Dividend : ▪ Final dividend of Rs. 0.50 (Fifty paise only) per equity share of the face value of Rs. 2 each for the year ended 31 December 2024, was approved by the shareholders at the Annual General Meeting held on 03 April 2025 and subsequently paid in April 2025. ▪ In line with the guidelines of Company’s dividend policy, the Board of Director’s have approved an interim dividend @ 25% of face value i.e. Rs. 0.50 per share. Total cash outflow would be ~Rs. 1,691 million. 4. Credit Rating Upgrade : ▪ CRISIL (an S&P Global Company) upgraded the companies long-term rating for bank loan facilities to Crisil AAA/Stable from Crisil AA+/Stable. 1. Commencement of Commercial Production at Kangra and Prayagraj : ▪ We have commissioned new production facilities at Kangra (Himachal Pradesh) and Prayagraj (Uttar Pradesh). ▪ Further, we have set-up backward integration facilities at our Prayagraj plant in India, as well as at our DRC plant in the international region.
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(a PepsiCo franchisee) 314 mn 402 mn 220 mn 267 mn 156 mn 215 mn 240 mn 312 mn - 100 200 300 400 Q2 2023 Q2 2024 Q3 2023 Q3 2024 Q4 2023 Q4 2024 Q1 2024 Q1 2025 Quarterly Sales Volumes (Category-wise mn unit cases) Results Overview 10 43,173 55,669 160,426 200,077 Q1 2024 Q1 2025 CY 2023 CY 2024 Revenue 9,888 12,640 36,095 47,111 Q1 2024 Q1 2025 CY 2023 CY 2024 EBITDA Rs. mn Rs. mn 5,480 7,314 21,018 26,343 Q1 2024 Q1 2025 CY 2023 CY 2024 PAT Rs. mn28.9% 23.5% 22.5% 22.7%22.9% 27.8% 33.5% 24.7% 30.5% 25.3% 28.1% 21.9% 38.1% 30.1% Period Q2 2023 Q2 2024 Q3 2023 Q3 2024 Q4 2023 Q4 2024 Q1 2024 Q1 2025 CSD 232 74% 307 76% 159 72% 200 75% 106 68% 158 73% 169 71% 234 75% NCB 23 7% 32 8% 11 5% 11 4% 8 5% 8 4% 18 7% 22 7% Water 59 19% 63 16% 50 23% 56 21% 42 27% 49 23% 53 22% 56 18%
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(a PepsiCo franchisee) 11 Consolidated Profit & Loss Statement Particulars (Rs. million) Q1 2025 Q1 2024 YoY(%) CY 2024 CY 2023 YoY (%) 1.Income (a) Revenue from operations 56,800.26 43,979.80 29.2% 204,813.28 163,210.63 25.5% (b) Excise Duty 1,130.91 806.67 40.2% 4,736.78 2,784.82 70.1% Net Revenues 55,669.35 43,173.13 28.9% 200,076.50 160,425.81 24.7% (c) Other income 280.58 83.53 235.9% 1212.68 793.59 52.8% 2. Expenses (a) Cost of materials consumed 26,710.71 19,309.22 38.3% 82,937.43 70,264.61 18.0% (b) Purchase of stock-in-trade 711.84 2,352.15 -69.7% 6,859.21 4,626.96 48.2% (c) Changes in inventories of FG, WIP and stock-in-trade (2,131.92) (2,785.88) 23.5% (749.40) (842.69) 11.1% (d) Employee benefits expense 5,115.02 3,936.72 29.9% 18,850.26 14,465.87 30.3% (e) Finance costs 411.24 936.87 -56.1% 4,503.86 2,680.99 68.0% (f) Depreciation and amortisation expense 2,725.13 1,875.16 45.3% 9,473.86 6,809.06 39.1% (g) Other expenses 12,624.06 10,473.31 20.5% 45,068.29 35,816.21 25.8% Total expenses 46,166.08 36,097.55 27.9% 166,943.51 133,821.01 24.8% EBITDA 12,639.64 9,887.61 27.8% 47,110.71 36,094.85 30.5% 3. Profit before share of (loss)/profit of associates and joint venture (1-2) 9,783.85 7,159.11 36.7% 34,345.67 27,398.39 25.4% 4. Share of loss of associates and joint venture (5.77) (1.61) -258.4% (14.78) (4.79) -208.6% 5. Profit before tax (3+4) 9,778.08 7,157.50 36.6% 34,330.89 27,393.60 25.3% 6. Tax expense 2,464.50 1,677.68 46.9% 7,988.04 6,375.47 25.3% 7. Net profit after tax (5-6) 7,313.58 5,479.82 33.5% 26,342.85 21,018.13 25.3%
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(a PepsiCo franchisee) Discussion on Financial & Operational Performance • Consolidated sales volume grew by 30.1% to 312.4 million cases in Q1 CY2025 from 240.2 million cases in Q1 CY2024 driven by strong organic volume growth of 15.5% in India and in-organic volume contributions from South Africa and DRC. • Net Revenue from operations grew by 28.9% in Q1 CY2025 to Rs. 55,669.4 million from Rs. 43,173.1 million in Q1 CY2024. • Realization per case increased by 1.8% in India and remained flat in International markets (ex. South Africa). There is a decline of 0.9% in net realization per case at the consolidated level because of lower realization in own brands in South Africa market. • We have achieved 141 million cases in South Africa in the trailing four quarters which is a ~13% growth over same period last year. • CSD constituted 75%, NCB 7% and Packaged Drinking Water 18% in Q1 CY2025 • Due to relatively lower margin profile of owned brands in the South African market and the higher mix of CSD in India, Gross margins stood at 54.6%, a decline of 171 basis points as compared to Q1 CY2024. • In Q1 CY2025, mix of Low sugar / No sugar products has increased to ~ 59% of our consolidated sales volumes. 12 Sales Volumes / Net Revenues Gross Margins
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(a PepsiCo franchisee) Discussion on Financial & Operational Performance 13 • EBITDA increased by 27.8% in Q1 CY2025 to Rs. 12,639.6 million from Rs. 9,887.6 million in Q1 CY2024 in-line with Net Revenue growth. • EBITDA margins improved in India by 111 bps on account of operational efficiencies from the robust volume growth. • EBITDA margins marginally declined at the consolidated level by 20 bps because of the lower profitability in South Africa market @ 14.4% and its higher mix in the Q1 CY2025. EBITDA • PAT increased by 33.5% to Rs. 7,313.6 million in Q1 CY2025 from Rs. 5,479.8 million in Q1 CY2024 driven by robust volume growth and lower finance cost. • Depreciation increased by 45.3% on account of commissioning of new plants of last year (Supa, Gorakhpur and Khordha) which were not present in the base quarter and consolidation of SA & DRC in the current quarter. • Post repayment of debt through QIP proceeds, finance cost in India is negligible and there is interest income of Rs. 108 million during the quarter. • Interest cost in international markets is primarily in South Africa which also includes the lease rentals under Ind AS 116 of Rs. 86 million as the manufacturing facilities in South Africa are on lease. PAT
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(a PepsiCo franchisee) Performance Highlights (CY2019 – CY2024) 14 71 65 88 132 160 200 2019 2020 2021 2022 2023 2024 14 12 17 28 36 47 20.3% 18.6% 18.8% 21.2% 22.5% 23.5% 0% 5% 10% 15% 20% 25% 30% (5.00) 5.00 15.00 25.00 35.00 45.00 55.00 2019 2020 2021 2022 2023 2024 EBITDA EBITDA Margins (%) 34 36 42 52 71 167 1.0 0.8 0.7 0.7 0.7 0.0 0.0 1.0 2.0 3.0 4.0 5.0 - 50.00 100.00 150.00 200.00 2019 2020 2021 2022 2023 2024 Net Worth Net D/E Rs. bn Rs. bnRs. bn REVENUE CAGR (2019-24) – 22.9% EBITDA CAGR (2019-24) – 26.6% NET WORTH CAGR (2019-24) – 37.9% 5 4 7 16 21 26 6.6% 5.5% 8.5% 11.8% 13.1% 13.2% 0.0% 5.0% 10.0% 15.0% (3.00) 0.50 4.00 7.50 11.00 14.50 18.00 21.50 25.00 28.50 32.00 2019 2020 2021 2022 2023 2024 PAT PAT Margins Rs. bn PAT CAGR (2019-24) – 41.0%
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190+ Water bodies (ponds & check dams) maintained Using only half of recharged water for manufacturing 1.89 2021 2022 2023 2024 2025 Target 1.70 1.57* 1.56* 1.40 Water consumed Per liter of beverage produced Process Improvements150+ Increase ground water level Reduce water usage (WUR)2x WRR SUSTAINABILITY – Being Water Positive (CDP water rating: A-) -26% by 2025 15 * Steady state WUR was 1.54 times in 2023 and 1.50 times in 2024, the differential is on account of stabilization of 2 new greenfield plants in 2023 and 3 new greenfield plants in 2024.
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Operational boundaries across different scopes Increase Renewable Energy GHG Emissions 2021 2022 2023 2024 2025E 125 Solar (Rooftop + Captive Power Solution) & Windmill RE Mix % & kWh million units 79 (16%)58 (13%)21 (6%)18 (7%) POSITIVE CLIMATE ACTIONS 2,000+ EV in trade for last mile 375K+ Plantations (since 2020) Efficient Visi Coolers – R290 (all new coolers starting 2023) 30% by 2030 SUSTAINABILITY – Reducing Carbon Footprint (CDP climate rating: A) 16 Net Zero by 2050 Note: The increase in GHG emissions is attributed to inorganic acquisitions in CY 2024. CY2022 CY2023 CY2024 Scope 3 668.2 626.5 671.0 Scope 2 83.2 73.7 75.9 Scope 1 21.7 17.9 19.0
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Packaging rationalization • Removal of pads (20k MT of paper saving, equivalent to 400k trees) • Shrink film and label rationalization (1.4 MT of material saving) Increase Plastic Waste Recycle Reduce Plastic Usage Preforms by 10-20% 600ml to 2.25 liters (2010 to-date) Closures by 20-25% CSD/Juices/Water (2010 to-date) 2021 2022 2023 2024 2025E 70% 80% 86% 88% 100% Ahead of EPR Regulations rPET Pepsi Zero Sugar and Sting energy come in rPET packaging ~7,000 MT used in 2024 30% rPET mix in packaging by 2025 INDORAMA JV SUSTAINABILITY – Robust Packaging & Plastic Recycling 17
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(a PepsiCo franchisee) Conference Call Details 18 Varun Beverages Limited Q1 CY2025 Earnings Conference Call Time • Wednesday, April 30, 2025 at 2:30 PM IST Conference dial-in Primary number • +91 22 6280 1141 / +91 22 7115 8042 International T oll Free Number • Hong Kong: 800 964 448 • Singapore: 800 101 2045 • UK: 0 808 101 1573 • USA: 1 866 746 2133
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(a PepsiCo franchisee) About Us Varun Beverages Limited (“VBL” or the “Company”) is a key player in beverage industry and one of the largest franchisee of PepsiCo in the world (outside USA). The Company produces and distributes a wide range of carbonated soft drinks (CSDs), as well as a large selection of non-carbonated beverages (NCBs), including packaged drinking water sold under trademarks owned by PepsiCo. PepsiCo CSD brands produced and sold by VBL include Pepsi, Pepsi Zero, Mountain Dew, Sting, Seven-Up, Mirinda, Seven-Up Nimbooz Masala Soda and Evervess. PepsiCo NCB brands produced and sold by the Company include Slice, Tropicana Juices (100% and Delight), Seven-Up Nimbooz, Gatorade as well as packaged drinking water under the brand Aquafina. VBL has been associated with PepsiCo since the 1990s and have over three decades consolidated its business association with PepsiCo, increasing the number of licensed territories and sub-territories covered by the Company, producing and distributing a wider range of PepsiCo beverages, introducing various SKUs in the portfolio, and expanding the distribution network. As on date, VBL has been granted franchises for various PepsiCo products across 26 States and 6 Union Territories in India. India is the largest market and contributed ~72% of revenues from operations (net) in Fiscal 2024. VBL has also been granted the franchise for various PepsiCo products for the territories of Nepal, Sri Lanka, Morocco, Zambia, Zimbabwe, South Africa, Lesotho, Eswatini & DRC and distribution rights for Namibia, Botswana, Mozambique and Madagascar. 19 For more information about us, please visit www.varunbeverages.com or contact: Raj Gandhi / Deepak Dabas / Manjit Singh Chadha Anoop Poojari / Mitesh Jain Varun Beverages Ltd CDR India Tel: +91 124 4643100 / +91 9871100000 / +91 9810779979 Tel: +91 9833090434 / +91 9619444691 E-mail: raj.gandhi@rjcorp.in E-mail: anoop@cdr-india.com deepak.dabas@rjcorp.in mitesh@cdr-india.com manjit.chadha@rjcorp.in
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Thank You!