EPL : Transcript of Analysts/Institutional Investor Meet/Con. Call

EPL Limited (EPL)

Investor Meeting

June 28, 2022

Presentation

Anand Kripalu: Very good evening, everybody. And on behalf of all of us at EPL, I'd like to extend a very warm welcome to every one of you who's taken time, who's weathered the rain, and the traffic. And for those of you who got here on time, a special thanks. But I must also apologize that we are starting 15 minutes late just to give a little bit of a window to those who really did get stuck outside. I'm Anand Kripalu and I'm the MD and CEO of EPL. Now we typically connect every quarter as you know, after our results. And we typically end up discussing shorter term issues, right, that's what happens every quarter, I just want to say that we will share numbers and so on and so forth.

But our purpose today, just to be clear, our purpose today is to share our thinking on the longer-term strategy for this business. All right, so that is the primary purpose of this session. Because once that strategic context is clear, I think the quarterly conversations just become clearer. And you'll understand more easily what we're trying to do with this business. So it is about the longer-term and many of you may not be excited, but it is a bit about the longer-term today. Joining me today is Ram Ramasamy, he is here, he's our Chief Operating Officer and Amit Jain, who's our CFO, and the three of us will collectively answer your questions, right, once I've made the opening presentation.

I'd also like to use this opportunity to welcome a new colleague, Chaitali, who joined us recently, Chaitali is there. She has taken over as VP, Corporate Finance for those of you who track the company, the role that Amit Jain was performing earlier. Before EPL, she's worked at Laxmi Organics and before that 15 years at SKF. Yes, now, as she settles into the business, she will soon lead the Investor Relations function and will be really your first point of contact. Now, we have a mix of people in the audience, at least for those who registered and therefore, some people will be very familiar with the business and some not so.

So, there are some aspects of this presentation, which some of you may find us repetitive of something that you know, so please bear with me, as far as that is concerned, okay. So let me start with an overview of the company. So we are the global specialist in tube packaging, we make and sell about 8 billion tubes a year making us the largest tube manufacturer globally.

We have been in existence, right for decades. And that, in some ways, reflects the deep relationship that we have with customers who stuck

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EPL Limited (EPL)

Investor Meeting

June 28, 2022

with us, right decade in and decade out. We are present across five categories. So pretty much anything that can be packaged in a tube, we do four decades of existence with a development program internally means that we have very deep technical knowledge of the products that we make. And I must tell you, having been in marketing for many years and sold many categories. I have to say this, there's probably more science in the tube than in the products inside.

Okay, so the deep technical expertise that we have, I think is very, very important. And that has ensured that we invest in R&D, in development. And we have filed over 150 patents till date. And we continue to do that, in the quest of staying ahead. We're able to service pretty much all parts of the world globally through 20 production sites that are located everywhere and you can see that on the slide. Additionally, we have a Greenfield plant coming up in Brazil, which many of you know and a unit in Indonesia where we have a minority stake, so I think we are pretty much a global company.

We make laminated tubes. And that's really the core of our business. And we make laminated tubes with aluminum or without. We also selectively do extruded tubes. Yes and apart from that, we make our own laminates, and our own caps and closures, and selectively also sell laminate and caps and closures to other parties but selectively. The categories we operate in is of course, oral care, which many of you know beauty & cosmetics, pharmaceuticals and health, food, and home and industrial.

But really, the lion's share, which I will explain later, the tube category is really Oral, B&C and pharma and health. We have enviable list of customers, global customers, and some of the biggest names in consumer goods which you can see on the slide, and a large number of regional and local customers around the world.

So it's really a wide portfolio of customers ranging from global MNCs to really what we in China call local Kings, right. Companies that are present in China, but are king sized in terms of the kind of business they do. All right, so with that overview, let me briefly look at what's happened in the past in terms of our performance. First and foremost, over the last five years, right, and what I've done is I've plotted revenue and EBITDA for you here. Okay, so in the last five years, our underlying revenue growth, and just so that it's like for like, we've removed CSPL in Russia and so on, our underlying revenue growth CAGR has been 8.5%. I think importantly, the last two years have delivered double-digit growth. Our margins, which were touching

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EPL Limited (EPL)

Investor Meeting

June 28, 2022

20%, or 20 odd percent, right has obviously taken a hit in FY '22, right.

And I'm going to come back and talk a bit more about FY '22 and what happened. If I zoom in to our regions and regional performance, as you know, we have four regions, okay. So if we do that, I think the first thing that you should notice from this slide is that our growth has been broad based over these five years, okay and three of the four regions has actually delivered consistent double-digit growth, right. And of course, there will be some years when it's better and some years when it's slower, but it's consistent with broad based growth, pretty much around the world, with three of the four regions delivering that double-digit growth. Now, in each of the slides, I've put a vertical dotted line, I hope it's visible on the slide.

And if you look at the left of the dotted line, by and large, we were making progress on margins. Okay. And I just want to say that the margin in AMESA at 22% is actually 23%, if I just add back, the TSA which we have shared publicly, right. So we were pretty much there, right? EAP, has made good progress, the Americas, right 17% to 19% to 20% and Europe, which has been a subject of constant conversation in our quarterly calls has actually moved from 10% to 13%, okay.

So all regions were making appropriate progress, either they were maintaining very high margins or making progress where we needed to be. But clearly what's happened through FY '21 and '22 is that we have got tripped a bit, okay partly because of COVID, right and thereafter everything that's happened in FY '22, in terms of the external environment, okay. But the point I want to make is this, that before the dark clouds started coming, before FY '21, we were making progress, right on margins, even in the relatively smaller regions of the Americas, and Europe.

And all I want to say is this, that we all know that one day these dark clouds will pass, right, the Sun will shine again. And once that happens, this business has the ability to deliver consistent margin improvement, including in regions like the Europe and the Americas.

Okay, so that's really the key message that I want to share. Over these five years, many things have happened. And just to name a few key milestones, the commercialization of Platina, our 100% recyclable sustainable laminate tube, setting up a new plant in Assam as a Greenfield investment, of course, the importance of the Blackstone investment in this business and the fact that that enables us to be far

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