Project Crystal

Confidential Information Memorandum

1
Abbreviations

3D 3 dimension GVT Glazed vitrified tiles PVT Polished vitrified tiles

Ad Advertisement HO Head office PWD Public Works Department
Admin Administration HP Himachal Pradesh RERA Real Estate Regulatory Authority
App Application IGBC Indian Green Building Council RM Raw material
ATL Above the line INR ROCE Return on capital employed
Indian rupees
Avg Average
ISO International Organization for S.E. Asia South East Asia
BIS Bureau of Indian Standards Standardization
Billion J&K SCMD Standard cubic meters per day
bn Jammu & Kashmir
British Standard European Norm sq. ft Square feet
BS EN JV Joint Venture
sq. mtrs. Square metres
CAGR Compounded annual growth rate LATAM Latin America
T Tonne
Capex ME Middle East
Capital expenditure
Management information T-3 Terminal 3
CE Conformité Européene MIS
system
TSI Thailand Securities Institute
CII Confederation of Indian Industry mm Millimetre
TV Television
CPWD Central Public Works Department mn Million
TVC Television commercial
EBIT Earnings before interest and tax MOR Modulus of rupture
UAE United Arab Emirates
Earnings before interest, tax, MP Madhya Pradesh
EBITDA depreciation & amortization Uttar Pradesh
UP
msm Million square metres
ERP Enterprise resource planning United States of America
US
FIFO First in first out MT Metric tonne
Varmora Granito Private Limited
VGPL
MW Megawatt
FY Financial year Varmora International
National Buildings Construction VI
NBCC Corporation
Govt Government And
&
p.a. Per annum
GST Goods and service tax

Strictly Private and Confidential 2

 Contents

1. Executive Summary
2. Tiles Business Overview

A. Product Portfolio
B. Branding
C. Sales and Distribution
D. Infrastructure Overview
E. IT & HR
F. Growth Strategy and Business Plan
G. Industry Overview

3. Bath-ware Business Overview

4. Summary

5. Annexure

4 3
Strictly Private and Confidential
Basis and source of information

► The terms Varmora Group / Company used in this document refers to the combined
operations of all the entities forming part of the transaction.
► Financial data presented in this document represents the unaudited proforma
consolidated financial statements as prepared by the Company for the purposes of the
proposed transaction.
► Average realization (INR per square meter) trends presented in the document have
been adjusted for the impact of excise on traded goods embedded in historic and
1QFY18 (refer to slide 85).

► The financials for the years ending 31 March 2021 is estimated and represent
management estimates.
► FY means financial year ending 31 March unless otherwise mentioned.

Strictly Private and Confidential 4

 Section 1 Executive Summary

6 5
 Varmora Group – Emerging as a pre-eminent player in the Indian
ceramic tiles market
► Founded in 1993
Profile ► Among the top 5 branded players in tiles industry
in India and amongst the fastest growing players

Business ► Manufactures and retails branded tiles and bath

ware globally

► Tile manufacturing capacity of 34.5 msm

Infrastructure ► Sanitaryware capacity of 1 mn units p.a.
► Strategically located in Morbi (Gujarat)

► 12 experience centers
Distribution ► Network of 248 showrooms (8 international),
1,500 dealers and 7,000+ touch points for tiles
► ~440 distributors and 120+ showrooms for bath
ware

Strictly Private and Confidential 6

 Financial Snapshot (Tiles and Bathware)
10000 15.00%
13.90%

9000 12.00%
10.90% 10.75%
10.10% 10.17%

8000 9.00%

7000 9092 6.00%

8364
8116
7598
6000 6974 3.00%

5000 0.00%
FY17 FY18 FY19 FY20 FY21
Revenue(INR mn) EBITDA margin

Strictly Private and Confidential 7

 Group is organized across product focussed manufacturing entities

Varmora family

Varmora Granito Private Limited

Capacity of 8.01 msm p.a. of GVT and PVT
Responsible for sales and marketing for the entire Group

Varmora Ceramics Private Limited

Owns Real estate; being 100% wholly owned subsidiary
of VGPL

67.63% 66.77% 83% 100% 30% 30% 30% 50.09%

Tocco Solaris Nextile Varmora Sentosa Fiorenza Renite Conffi

Ceramics Ceramics Marbosys International Granito Granito Vitrified LLP Sanitaryware

► Capacity ► Capacity of ► Capacity of ► Caters to ► JV Entity ► JV Entity ► JV Entity ► Capacity of

of 3.3 msm 6.4 msm p.a. 2.8 msm p.a. Export market. ► Capacity of ► Capacity ► Capacity of 1 million
p.a. of GVT of Ceramic ► Commercial 4.1 msm p.a. of 6.5 msm 3.4 msm p.a. pieces p.a. of
and PVT. Tiles. production of PVT tiles. p.a. of PVT. of GVT. Sanitaryware.
commenced in
September
2018 VGPL retains operational oversight on the plant
►Manufacture and controls quality parameters. It retains the first
s large format right on 100% of the output at pre-agreed market
tiles. linked pricing formulae.

EBITDA margins are considered as 100% of subsidiaries. Assuming minority shares will be bought out.
8
Strictly Private and Confidential
 Section 2
Tiles Business Overview

9 Strictly Private and Confidential 9

Strong and established market presence

Attractive GVT driven

product range Accessible capacity of
GVT revenue to total
46% 34.51 msm with 20.51
Growth during last 5
year volume CAGR of 39% msm of owned
11% 12%
manufacturing capacity
and the balance through
FY15 FY18 FY20 JV

Industry leading ROCE

Amongst Top 5 branded
players in India
13%+
3rd largest GVT player
with a volume share of
FA turnover
~8% INR~8.3 bn in branded
revenues above ~5X
Among the leading
exporters from India

Source: Management

Strictly Private and Confidential 10

A comprehensive portfolio of tiles . . .

Glazed Vitrified Tiles (GVT) Polished Vitrified Tiles (PVT) Ceramic Tiles (Ceramic)

Category

► Sugar ► Wooden ► Soluble salt ► Colored body

► Digital wall
► Hi gloss ► Glossy ► Double charge
Finishes / ► Parking tiles
products ► Metallic ► Rustic ► Full body
► Porcelain
► Twin charge
► Matt ► Rocker
► 300X600 ► 900X1800
► 600X600 ► 600X1200 ► 250X600 ► 400X400
► 600X600 ► 1200X1200
Key sizes ► 800X800 ► 300X300 ► 300X600
(mm) ► 600X1200 ► 1200X2400
► 800X1200 ► 300X450
► 200X1200 ► 800X1600

FY20 revenue INR 3,325 mn INR 2,352 mn INR 1,615 mn

CAGR: 23.14% 9154 8981 10000 CAGR: 8.35% 8000 CAGR: 2.43% 7577 7512 7260
10000
7911 8400
7210 6594 6536
8000 7230 8000 6959
6095
5450 6000
6000 6000
Volume 3906
(‘000 sq. m.) 4000 4000
4000
2000 2000

0 0 2000
FY16 FY17 FY18 FY19 FY20 FY16 FY17 FY18 FY19 FY20 FY16 FY17 FY18 FY19 FY20

11 Strictly Private and Confidential 11

…catering to diverse end-markets in India and globally

Retail Projects Exports

Category

► 1,400 dealers ► Approvals from all central and state ► 120 Active dealers
► 248 showrooms/ experience centres government authorities (CPWD,
► 11 showrooms
Presence state PWD and NBCC) in place
► 312 member sales & marketing team
► 85% of the revenues are under
► Dedicated team of 35+ employees
► 7,000+ touch points “Varmora” brands

31% 29% North 1% 11% Africa

14% Europe
South 13%
Far East
Key stats
East 22% Latin America
(Retail +
Project) 14% 26% West Middle East

39% North America

FY20 revenue INR 4,769 mn INR 830 mn

INR 1,818 mn

20000 CAGR: 12.10% CAGR: 7.14% 5214 5685

16191 16112 3500 CAGR: 8.18% 6000
4827
2729 2858 2843
14916 3000 2589 5000 4315 4342
15000 11873 2500 2076
Volume 4000
10203 2000
10000 3000
(‘000 sq. m.) 1500
2000
1000
5000 1000
500
0 0
0 FY16 FY17 FY18 FY19 FY20
FY16 FY17 FY18 FY19 FY20
FY16 FY17 FY18 FY19 FY20

Strictly Private and Confidential 12

Pioneers in technology adoption and product innovation

4
First company in India

1
First company to
to launch “Hi-Gloss”
introduce “Full Body
1200X1800 mm PVT” in series
2008 in India

Developed 800X800

2
First company in India to
introduce “Digital
printing technology” 5 mm double charge
for Indian markets in
2011- import
substitution

Inaugurated country’s largest

3 6
Installed the longest kiln
of ~300 meters in the single floor showroom in
country in Fiorenza India -40,000 sq. ft.
Granito

Source: Management

Strictly Private and Confidential 13

Varmora accelerating growth through new product introductions
and focused marketing initiatives

Historic Overview Growth drivers Going Forward

9000 304 400
293
9000 400
Revenue & unit

300 ► New product introductions to account for 65%+ of 293 294 296 298
7000
realisation

incremental revenues in FY19 300

200
5000 6542 7007 7000 200
100 ► 296 Favorable product mix change with 8057
7007 7119 7461 100
3000 0 GVT to contribute
FY17 FY18 5000 0
FY18 FY19 FY20 FY21
Revenue (INR mn) Realisation
Revenue (INR mn) Realisation

60.00%
46.8% 46.4%
► Improving product mix towards stable margin
margin trend

49% 48.20% 47.90%

GVT and high reliance on owned capacity through 46.40%
Material

capacity additions to drive margin expansion

► Potential incremental upsides from realization
expansion not factored .
30.00%
FY17 FY18 FY18 FY19 FY20 FY21

3.00%
124 ► Initiate brand building through increased spend on
Advertisement and

above the line (ATL) advertisement spend 310 2.30%

sales promotion

2.00% 2.10%
► Aggressive expansion of showroom network 210
1.82%
2.0% 370 2.00%
further enhancing reach and market presence
38 248
110
► Potential incremental volume upsides over base 124
171
1.5%
management plan 10 1.00%
FY18 FY19 FY20 FY21
FY17 FY18
No. of showrooms in India
No. of showrooms in India
Marketing spend to India revenue
Marketing spend to India revenue

Strictly Private and Confidential 14

Varmora has been among the fastest growing among the top
players in the domestic ceramic tiles market

Domestic product revenue ► Varmora has been among the fastest growing
players significantly outpacing the market growth
6284.235
6271.6671
6259.0993
6246.5314
6233.9635
6221.3957
6208.8278
6196.2599
5985 driven by aggressive market expansion
6183.692
6171.1242
6158.5563
6145.9884
6133.4206
6120.8527
6108.2848
6095.717
6083.1491
6070.5812
6058.0133
6045.4455
6032.8776
6020.3097
6007.7419
5995.174
5982.6061
5970.0383
5957.4704
5944.9025
5932.3346
5919.7668
5907.1989
5894.631Revenue (INR mn) 5672 5643
5882.0632
5869.4953
5856.9274
5844.3596
5831.7917
5819.2238
5806.6559
5794.0881
5781.5202
5768.9523
5756.3845
5743.8166
5731.2487
5718.6809 5302
5706.113
5693.5451
5680.9772
5668.4094
5655.8415
5643.2736
5630.7058
5618.1379
5605.57
5593.0022
5580.4343
5567.8664
5555.2985
5542.7307 ► Slower growth in FY18 reflects the short term
5530.1628
5517.5949
5505.0271
5492.4592
5479.8913
5467.3235
5454.7556
5442.1877
5429.6198
5417.052
5404.4841
5391.9162
5379.3484
5366.7805
5354.2126
5341.6448
5329.0769
5316.509
5303.9411
5291.3733
5278.8054
5266.2375
5253.6697
5241.1018
5228.5339
5215.9661
5203.3982
5190.8303
5178.2624
5165.6946
5153.1267
5140.5588
5127.991
5115.4231
5102.8552
4880
5090.2874
5077.7195
5065.1516
5052.5837
5040.0159
5027.448
5014.8801
5002.3123
4989.7444
4977.1765
4964.6087
4952.0408
4939.4729
4926.905
4914.3372
4901.7693
4889.2014
4876.6336
4864.0657
4851.4978
4838.93
4826.3621
4813.7942
4801.2263
4788.6585
4776.0906
4763.5227
4750.9549
4738.387
4725.8191
4713.2513
4700.6834
4688.1155
4675.5476
4662.9798
4650.4119 4289 impact of GST, RERA and Vibrant Ceramics
4637.844
4625.2762
4612.7083
4600.1404
4587.5726
4575.0047
4562.4368
4549.8689
4537.3011
4524.7332
4512.1653
4499.5975
4487.0296
4474.4617
4461.8939
4449.326
4436.7581
4424.1902
4411.6224
4399.0545
4386.4866
4373.9188
4361.3509
4348.783
4336.2152
4323.6473
4311.0794
4298.5115 3867
4285.9437
4273.3758
4260.8079
4248.2401
4235.6722
4223.1043
4210.5365
4197.9686
4185.4007
4172.8328
4160.265
4147.6971
4135.1292
4122.5614
4109.9935
4097.4256
4084.8578
4072.2899
4059.722
4047.1541
4034.5863
4022.0184
4009.4505
3996.8827
3984.3148
3971.7469
3959.1791
3946.6112
3934.0433
3921.4754
3908.9076
3896.3397
3883.7718
3871.204
3858.6361
3846.0682
3833.5004
3820.9325
3808.3646
► Launch of new large format GVT (Nextile) to
3795.7967
3783.2289
3770.661
3758.0931
3745.5253
3732.9574
3720.3895
3707.8217
3695.2538
3682.6859
3670.118
3657.5502
3644.9823
3632.4144
3619.8466
3607.2787
3594.7108
3582.143
3569.5751 3060
3557.0072
3544.4393
3531.8715
3519.3036
3506.7357
3494.1679
3481.6
3469.0321
3456.4643
3443.8964
3431.3285
3418.7606
3406.1928
3393.6249
3381.057
3368.4892
3355.9213
3343.3534
3330.7856
3318.2177
3305.6498
3293.0819
3280.5141
3267.9462
3255.3783
3242.8105
3230.2426
3217.6747
3205.1069
3192.539
3179.9711
3167.4032
further add to the revenue growth FY19 onwards
3154.8354
3142.2675
3129.6996
3117.1318
3104.5639
3091.996
3079.4282
3066.8603
3054.2924
3041.7245
3029.1567
3016.5888
3004.0209
2991.4531
2978.8852
2966.3173
2953.7495
2941.1816
2928.6137
2916.0458
2903.478
2890.9101
2878.3422
2865.7744
2853.2065
2840.6386
2828.0708
2815.5029
2802.935
2790.3671
2777.7993
2765.2314
2752.6635
2740.0957
2727.5278
2714.9599
2702.3921
2689.8242
2677.2563
2664.6884
2652.1206
2639.5527
2626.9848
2614.417
2601.8491
2589.2812
2576.7134
2564.1455
2551.5776
2539.0097
2526.4419
2513.874
2501.3061
2488.7383
2476.1704
2463.6025
2451.0347
2438.4668
2425.8989
2413.331
2400.7632
2388.1953
2375.6274
2363.0596
2350.4917
2337.9238
► In FY20 and FY21, Covid-19 effect is factored.
2325.356
2312.7881
2300.2202
2287.6523
2275.0845
2262.5166
2249.9487
2237.3809
2224.813
2212.2451
2199.6773
2187.1094
2174.5415
2161.9736
2149.4058
2136.8379
2124.27
2111.7022
2099.1343
2086.5664
2073.9986
2061.4307
2048.8628
2036.2949
2023.7271
2011.1592
1998.5913
1986.0235
1973.4556
1960.8877
1948.3199
1935.752
1923.1841
1910.6162
1898.0484
1885.4805
1872.9126
1860.3448
1847.7769
1835.209
1822.6412
1810.0733
1797.5054
1784.9375
1772.3697
1759.8018
1747.2339
1734.6661
1722.0982
1709.5303
1696.9625
1684.3946
1671.8267
1659.2588
1646.691
1634.1231
1621.5552
1608.9874
1596.4195
1583.8516
1571.2838
1558.7159
1546.148
1533.5801
1521.0123
1508.4444
1495.8765
1483.3087
1470.7408
1458.1729
1445.6051
1433.0372
1420.4693
1407.9014
1395.3336
1382.7657
1370.1978
1357.63
1345.0621
1332.4942
1319.9264
1307.3585
1294.7906
1282.2227
1269.6549
1257.087
1244.5191
1231.9513
1219.3834
1206.8155
1194.2477
1181.6798
1169.1119
1156.544
1143.9762
1131.4083
1118.8404
1106.2726
1093.7047
1081.1368
1068.569
1056.0011
1043.4332
1030.8653
1018.2975
1005.7296
993.16173
980.59386
968.02599
955.45812
942.89025
930.32238
917.75451
905.18664
892.61877
880.0509
867.48303
854.91516
842.34729
829.77942
817.21155
804.64368
792.07581
779.50794
766.94007
754.3722
741.80433
729.23646
716.66859
704.10072
691.53285
678.96498
666.39711
653.82924
641.26137
628.6935
616.12563
603.55776
590.98989
578.42202
565.85415
553.28628
540.71841
528.15054
515.58267
503.0148
490.44693
477.87906
465.31119
452.74332
440.17545
427.60758
415.03971
402.47184
389.90397
377.3361
364.76823
352.20036
339.63249
327.06462
314.49675
301.92888
289.36101
276.79314
264.22527
251.6574
239.08953
226.52166
213.95379
201.38592
188.81805
176.25018
163.68231
151.11444
138.54657
125.9787
113.41083
100.84296
88.27509
75.70722
63.13935
50.57148
38.00361
25.43574
12.86787
0.3
FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21

Export product revenue ► Company tightened its credit policies starting

FY16 leading to momentary drop in revenues by
2175.585
2171.2344
2166.8839
2162.5333
2072 14% between FY15 & FY17, mainly in LATAM
2158.1827
2153.8322
2149.4816
2145.131
2140.7804
2136.4299
2132.0793
2127.7287
2123.3782
2119.0276
2114.677
2110.3265
2105.9759
2101.6253
2097.2747
2092.9242
2088.5736
2084.223
2079.8725
2075.5219
2071.1713
2066.8208
2062.4702
2058.1196
2053.769
2049.4185
2045.0679
2040.7173
2036.3668
2032.0162
2027.6656
2023.3151
2018.9645
2014.6139
2010.2633
2005.9128
2001.5622
1997.2116
Revenue (INR mn) and ME markets
1992.8611
1988.5105
1984.1599
1979.8094
1975.4588
1971.1082
1966.7576
1962.4071
1958.0565
1953.7059
1949.3554
1945.0048
1940.6542
1936.3037
1931.9531
1927.6025
1923.2519
1918.9014
1914.5508
1910.2002
1905.8497
1901.4991
1897.1485
1818
1892.798
1888.4474
1884.0968
1879.7462
1875.3957
1871.0451
1866.6945
1862.344
1857.9934
1853.6428
1849.2923
1844.9417
1840.5911
1836.2405
1831.89
1827.5394
1823.1888
1818.8383
1814.4877
1810.1371
1805.7866
1801.436
1797.0854
1792.7348
1788.3843
1784.0337
1779.6831
1775.3326
1770.982
1766.6314
1762.2809
1757.9303
1753.5797
1749.2291
1744.8786
1740.528
1736.1774
1731.8269
1727.4763
1723.1257
1718.7752
1714.4246
1710.074
1705.7234
1701.3729
1697.0223
1692.6717
1688.3212
1683.9706
1679.62
1675.2695
1670.9189
1666.5683
1662.2177
1657.8672
1653.5166
► Over the past 10-12 months, the management
1649.166
1644.8155
1640.4649
1636.1143
1631.7638
1627.4132
1623.0626
1618.712
1614.3615
1610.0109
1605.6603
1601.3098
1596.9592 1453 1461 1447
1592.6086
1588.2581
1583.9075
1579.5569
1575.2063
1570.8558
1566.5052
1562.1546
1557.8041
1553.4535
1549.1029
1544.7524
1540.4018
1536.0512
1531.7006
1527.3501
1522.9995
1518.6489
1514.2984
1509.9478
1505.5972
1501.2467
1496.8961
1418 has successfully adopted a region focused
1492.5455
1488.1949
1483.8444
1479.4938
1475.1432
1470.7927
1466.4421
1462.0915
1457.741
1453.3904
1449.0398
1444.6892
1440.3387
1435.9881
1431.6375
1427.287
1422.9364
1418.5858
1414.2353
1409.8847
1405.5341
1401.1835
1396.833
1392.4824
1388.1318
1383.7813
1379.4307
1375.0801 1254
1370.7296
1366.379
1362.0284
1357.6778
1353.3273
1348.9767
1344.6261
1340.2756
1335.925
1331.5744
1327.2239
1322.8733
1318.5227
1314.1721
1309.8216
1305.471
1301.1204
1296.7699
1292.4193
1288.0687
1283.7182
1279.3676
1275.017
1270.6664
1266.3159
1261.9653
1257.6147
1253.2642
1248.9136
1244.563
1240.2125
1235.8619
1231.5113
1227.1607
1222.8102
1218.4596
1214.109
1209.7585
strategy to develop export markets
1205.4079
1201.0573
1196.7068
1192.3562
1188.0056
1183.655
1179.3045
1174.9539
1170.6033
1166.2528
1161.9022
1157.5516
1153.2011
1148.8505
1144.4999
1140.1493
1135.7988
1131.4482
1127.0976
1122.7471
1118.3965
1114.0459
1109.6954
1105.3448
1100.9942
1096.6436
1092.2931
1087.9425
1083.5919
1079.2414
1074.8908
1070.5402
1066.1897
1061.8391
1057.4885
1053.1379
1048.7874
1044.4368
1040.0862
1035.7357
1031.3851
1027.0345
1022.684
1018.3334
1013.9828
1009.6322
1005.2817
1000.9311
996.58053
992.22996
987.87939
983.52882
979.17825
974.82768
970.47711
966.12654
961.77597
957.4254
953.07483
948.72426
944.37369
940.02312
935.67255
931.32198
926.97141
922.62084
918.27027
► New showrooms, strengthening of Tier II
913.9197
909.56913
905.21856
900.86799
896.51742
892.16685
887.81628
883.46571
879.11514
874.76457
870.414
866.06343
861.71286
857.36229
853.01172
848.66115
844.31058
839.96001
835.60944
831.25887
826.9083
822.55773
818.20716
813.85659
809.50602
805.15545
800.80488
796.45431
792.10374
787.75317
783.4026
779.05203
774.70146
770.35089
766.00032
761.64975
757.29918
752.94861
748.59804
744.24747
739.8969
735.54633
731.19576
726.84519
722.49462
718.14405
713.79348
709.44291
705.09234
700.74177
distribution set-up and focus on new markets are
696.3912
692.04063
687.69006
683.33949
678.98892
674.63835
670.28778
665.93721
661.58664
657.23607
652.8855
648.53493
644.18436
639.83379
635.48322
631.13265
626.78208
622.43151
618.08094
613.73037
522
609.3798
605.02923
600.67866
596.32809
591.97752
587.62695
583.27638
578.92581
574.57524
570.22467
565.8741
561.52353
557.17296
552.82239
548.47182
544.12125
539.77068
535.42011
531.06954
526.71897
522.3684
518.01783
513.66726
509.31669
504.96612
500.61555
496.26498
491.91441
487.56384
483.21327
478.8627
474.51213
expected to sustain growth
470.16156
465.81099
461.46042
457.10985
452.75928
448.40871
444.05814
439.70757
435.357
431.00643
426.65586
422.30529
417.95472
413.60415
409.25358
404.90301
400.55244
396.20187
391.8513
387.50073
383.15016
378.79959
374.44902
370.09845
365.74788
361.39731
357.04674
352.69617
348.3456
343.99503
339.64446
335.29389
330.94332
326.59275
322.24218
317.89161
313.54104
309.19047
304.8399
300.48933
296.13876
291.78819
287.43762
283.08705
278.73648
274.38591
270.03534
265.68477
261.3342
256.98363
252.63306
248.28249
243.93192
239.58135
235.23078
230.88021
226.52964
222.17907
217.8285
213.47793
209.12736
204.77679
200.42622
196.07565
191.72508
187.37451
183.02394
178.67337
174.3228
169.97223
165.62166
161.27109
156.92052
152.56995
148.21938
143.86881
139.51824
135.16767
130.8171
126.46653
122.11596
117.76539
113.41482
109.06425
104.71368
100.36311
96.01254
91.66197
87.3114
82.96083
78.61026
74.25969
69.90912
65.55855
61.20798
56.85741
52.50684
48.15627
43.8057
39.45513
35.10456
30.75399
26.40342
22.05285
17.70228
13.35171
9.00114
4.65057
0.3
FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21

Strictly Private and Confidential 15

Financial Overview (Tiles)
INR mn FY17 A FY18 A FY19 A FY20 P FY21 E
Net Sales 6,171 6,898 7,119 7,461 8,057
Growth % 11.8 3.2 4.8 8.0
Raw material, stores & packing 3,106 3,649 3,628 3,862 4,197
Material Margin % 49.7 47.1 49.0 48.2 47.9
Manufacturing Expense 1,145 1,304 1,489 1,528 1,608
Gross Margin 1,920 1,945 2,002 2,071 2,253
% Net Sales 31.1 28.2 28.1 27.8 28.0
Employee Expenses 410 511 572 613 651
Selling Expense 440 473 476 450 482
Admin Expenses/ Export Expense 161 167 272 287 310
EBITDA 909 794 682 721 810
% Net sales 14.73 11.51 9.58 9.66 10.05
Depreciation 196 188 258 284 321
EBIT 713 606 424 437 489
% Net Sales 11.55 8.79 5.96 5.86 6.07

Net Fixed Assets 1,020 1,375 1,569 1,482 1,462

*Profit on sale of shares of Sol-ink Pvt Ltd. is not considered in above EBITDA (i.e. Rs.35 mn in FY19 and Rs.37 mn in FY20.)

Strictly Private and Confidential 16

Company is looking to raise Fund to implement its identified
growth strategies

Enhanced advertising & promotion

spend
► Initiate meaningful ATLspends
► Target spend in the medium
term to strengthen brand
presence
► To help drive volume growth and
improved realization

Consolidate distribution
Continued focus on GVT
footprint
► Launched large format ► Threefold growth in
GVT in September 2018 showrooms to 354
► Expand blended GVT ► Expand dealer network to
realization by product cover untapped cities within
mix and introduction of next 24 months
new size. ► Marketing JV’s and
► Install new GVT Klin in distribution built-up in
nextile plant to expand Europe and S.E. Asia to
capacity by additional 1.68 expand international
msm p.a. by mid of 2021 footprint

Strictly Private and Confidential 17

Ceramic tiles industry pegged at ~INR 290 bn growing at ~8%

India is the second largest Organised market growing at GVT is the fastest growing
ceramic tiles market ~13% technology

Market size (INR bn) CAGR Revenue CAGR (2009 to 2018)

Consumption (msm)
5,475
GVT 20%
146 194 219 13%
135 152
785 706 412 369 4%
141 172 152 158 PVT 12%
135

FY17 FY18 FY19 FY20 FY21

Ceramic 7%
Unorganized Organized

Government initiatives and structural drivers to boost the tiles market in India

1 2 3 4

Housing for All & Smart Cities GST rate and E-way bill Demand from end-markets Urbanization and
nuclearisation
• Construct 60 mn houses by • GST rate reduced to 18% • Incremental annual housing
2022; 1/3rd demand from from earlier ~28% demand of 5+ mn units; ~116 • 35% of India’s population is
urban population • Create level playing field msf of commercial real estate expected to live in urban
between organized and to be added in the near term cities by 2021
• Promote 100 cities to offer
core infrastructure and unorganized players • Demand from large projects • Increasing nuclearisation
quality of life to citizens • Organized sector’s share to including airports, metro lines, leading to increase in
increase from 50% to 60% convention centres, etc. number of houses

Source: Industry reports; Ceramic World Review; News articles

Strictly Private and Confidential 18

Investment attractiveness

1 2 3 4 5
Extensive Significant
Established Attractive distribution Industry leading
industry
brand product portfolio network growth
tailwinds

► Amongst the top ► Network of 248 Volume growth of ► India is the 2nd
► Favourable ►
5 ceramic tile showrooms, largest tile market
product mix with 17%, surpassing
brands of India 1,500+ in the world
~60% revenues industry growth
with branded distributors and and that for
to accrue from ► Implementation of
revenues of INR over 7,000 touch
GVT market leaders GST expected to
~8.3 bn points
► Large format tiles ► ROCE of 13%+, accelerate market
► Sales &
► Brand introduced in in the top quartile shift towards
marketing team of organized players
established with September 2018 of the market
310+ people
limited ad spend to expand ► Business ► Ongoing
blended ► Strategy in place targeting revenue Government
► Target ad spend realization and to expand CAGR of 14% initiatives to
and showroom margin profile showroom to despite increased provide
expansion to 385+ and building spend on significant fillip in
further distribution brand the medium term
consolidate brand footprint to cover
position with the untapped cities
ensuing benefits
Source: Management

Strictly Private and Confidential 19

 Section 2A Product Portfolio

20 Strictly Private and Confidential 20

Glazed Vitrified Tiles
Varmora has emerged as a leading player in the segment

GVT revenue has increased over in 3 Years.

► Total available capacity of 12.24 msm spread across 3
manufacturing units Revenue (INR mn) Realization

► Strong operating performance having outpaced its

3428

3325
peers and the industry
► Expanded market share from 3% in FY15 to 9% in

2668
FY18
► Emerged as 3rd largest player in India

2094
► Successful expansion of product range and finishes

1661
at regular intervals
► FY15: Launched large sized (800X800 mm and
800X1200 mm)
► FY16: Introduced new finishes like “High gloss”,
“Deep punch” and “Premium extra white” and full

411

379

370

370
369
body (16 mm thickness) tiles
► FY17: “Rocker”, “Satin” and “Colour body” finishes
FY16 FY17 FY18 FY19 FY20
Launched
(Impact of Covid)
► FY18: In October Launch of new sizes (900X1800,
1200X1200, 1200X2400) which drives GVT volume.
► FY20: Launch of 80X260 slab in the month of January.
Seeing as replacement of granite in counter top market
(Huge opportunity for Exports)

Source: Management

Strictly Private and Confidential 21

Varmora has successfully developed new products

New finishes Slab tiles

High gloss tiles Large sized tiles to targeted at
the marble customers
Deep punch
Sizes:1200X2400 mm
Premium Extra white 1200X2400 mm
1200X1200 mm
High gloss tiles 1200x1800 mm
900x1800mm
800x2600mm
2014 2015 2016 2017 2018 2019 & 2020

New sizes and

Large format tiles finishes
800X800 mm and 800X1200 mm
1200X600 mm with Satin finish
➢ Rocker Finish
➢ Satin Finish
➢ Granulla Finish
➢ Sugar Glue Finish etc.
800X1200 tiles

Strictly Private and Confidential 22

Polished Vitrified Tiles

PVT revenue and realization trends

► Overall PVT sales volume (excluding projects) grew at
a CAGR of 17% between FY16 and FY18, driven by 2341 2380 2352
2500
► Strong growth in domestic channel (13.0%) 2211
2065
► 30+% growth in exports volumes driven by strong 2000
growth in LATAM markets
1500
► Project sales remained flat at ~1 msm during this period
due to weak sentiments in housing market and on
1000
account of implementation of RERA, which also had an
impact on realization 345
500 311 293 282 280

► Despite strong volume growth, overall PVT revenues 0

FY16 FY17 FY18 FY19 FY20
grew by only 4% on account of:
► Export realizations declined by 18% due to increased Revenue (INR mn) Realization
competition in LATAM market, leading to an overall FY20 revenue Split
export revenue growth of only 9%
Exports
► Revenues from domestic retail improved at a CAGR of
20%
~6% during this period
► Project revenues declined by 7% on account of weak
realizations with no volume growth
Projects
17%

Retail
63%

Strictly Private and Confidential 23

Varmora has launched new series and finishes in PVT

New
Innovative series
technology Amazon/zade stone
feeder designs
600X600 mm Twin
600X600 mm soluble
charge soluble printing 800X800 mm and 600X1200
printing
mm

2014 2015 2016 2017 2018 2019

Large format tiles

800X1200 mm Double charge

800X1200 mm Double
charge

Strictly Private and Confidential 24

Ceramic - wall and floor tiles

Ceramic revenue trends

► Domestic ceramic tile revenues grew 3% between
FY16 and FY18. While volumes grew at 16%,
realizations dipped at 5%
2000 1870
► International volumes on the other hand dropped by 1800 1715
1696
15% owing to sharp drop from the Middle East region 1615
1558
consequent to introduction of tight credit policy 1600

► Solaris plant catered to 70 - 80% of total volumes with 1400

the balance being outsourced from 3rd parties 1200

► Focus on expansion into Tier II and Tier III cities and 1000
growth in project demand, specially from the
800
Government sector is expected to drive domestic
volume. 600

400
► Industry realizations are expected to have bottomed 254 236 207 222
202
out after the steep fall witnessed in the last couple of 200
years
0
► With Solaris peaking out on capacity, incremental FY16 FY17 FY18 FY19 FY20
volume growth in FY20 and beyond is targeted to be Revenue (INR mn) Realization
entire met through outsourcing

Strictly Private and Confidential 25

New launches in Ceramic segment

New series New finish

Raindrop series Rocker series
Mexicana series high deep New range of 300X600 mm
punch -300X300 mm series
Mexicana Raindrop

2014 2015 2016 2017 2018 2019

Polished wall tiles

300X600 mm polished ceramic wall tiles
til

Glassia series

Strictly Private and Confidential 26

 Section 2B Branding

29 Strictly Private and Confidential 27

‘Varmora’ brand has grownMore than~9x in the last 10 years with no
significant ATL spend

10 years growth of brand ‘Varmora’

Evolution through the years

8,364
8,116
7,541
6,659

700

FY08 FY11 FY14 FY17 FY18 FY19 FY20

Branded sales (INR mn)

Advertisement & sales promotion expenses – FY18

► Varmora brand established in 2001 and today is already
grown into a ~INR 8.3 bn brand INR mn 1,052
► 100% of domestic sales including those to Project segment
are under the Varmora brand
595
► ~85% of international sales are under the Varmora brand
with the balance being private label 285
105
► Brand has been built entirely through on-the-ground
initiatives (exhibitions, dealer level initiatives etc.) with no
Varmora Kajaria Somany Asian Granito
significant advertisement spend made till date
Lowest advertisement spend in the industry

Source: Annual reports

Strictly Private and Confidential 28

Brand promotion strategy has gradually evolved over last 3-4 years
Continue…
2016 2017 2018

Standardized manuals & Mobile app and social Launched 3D virtual

catalogues media campaign showroom

Airport branding and in Annual dealers meet in

Magazine advertisements Thailand
flight advertisements

Mobile app and social media 40,000 sq ft. single floor

Hired brand consultant
campaign showroom

Strictly Private and Confidential 29

Brand promotion strategy has gradually evolved over last 3-4 years

2019 -2020

Launch of Showrooms

Strictly Private and Confidential 30

Focused on formal product launches across India to build channel
and brand recognition

800X800 mm and 800X1200 mm GVT launched in High gloss tiles, deep punch, twin
2016 Premium extra white tiles launched in 2017

Bhopal, Delhi and Indore Delhi, Chandigarh, Chennai and Jaipur

600X600 mm GVT, 1200X600 mm GVT, 800X800 mm & 800X1200 mm double charge (PVT), 300X600 mm &
300X450 mm wall tiles (ceramic), 600X600 and 600X1200 full body and color body tiles (GVT) in 2018

Delhi, Kochi and Udaipur

Strictly Private and Confidential 31

Focused on formal product launches across India to build channel
and brand recognition

Mega Launch of all India Dealers Meet in Udaipur June 2019 . A Five day event of showcasing new range and
sizes of all verticals a Massive Display of 14500 Sqft was made .

Launch of 800x2600 Full body tiles in Jan20 at Delhi . This is considered to be replacement of Granite in counter
tops.

Strictly Private and Confidential 32

Brand visibility enhanced by participation in exhibitions in India and
international markets
Domestic

Vibrant Ceramics 2017 Habitat Conclave 2016 Ace Tech 2015 and 2018
International

Coverings 2017, USA Cevisama, Spain 2018 Expo CIHAC, Mexico 2017

Strictly Private and Confidential 33

Brand visibility enhanced by participation in exhibitions in India and
international markets
International

Cevisama, Spain 2019

Cevisama, Spain 2020

Strictly Private and Confidential 34

Management focus on improving brand recall; planned marketing
spends..

Product launches Radio

► Company had targeted launch of TV commercial in mid of FY20 however
the same was put on hold on account of weak market sentiments of
and TV commercials Web
Covid-19, proper implementation of GST in the ceramic trade.
► A formal launch of TVC is targeted by mid of 2021 focused on cinemas to
series
be followed with roll out on TV channels. Current budgeted spend of INR
30 to 50 mn targeted over the next 3 years.
Sports sponsorship
► Overall, the business anticipates enhancing the annual advertisement
and sales promotion spend to average 3-3.5% of domestic revenues. Expand airport branding to all
metros & Tier I cities
► Focus to capture influences to create brand viability in BtoB
segment(like architects and Builders).
International exhibitions
► Dedicated team for projects to get Volume Revenues.

Print advertisements

Strictly Private and Confidential 35

User friendly mobile application and corporate website

Mobile application Corporate website

► The mobile app across different platforms
encompasses 300+ concepts and 4,000+ tile designs
► Catalogues can be easily downloaded from the app
and allows sharing over messaging platforms
► Up to date events and news including new showroom
announcements
► The website has been redesigned at regular intervals
to make it user-friendly
► Complete portfolio of products available along with
information about experience centers and showrooms
► The 360 degree virtual tour experience allows users to
see the tiles in real time with over 300+ mockups

Strictly Private and Confidential 36

 Section 2C Sales & Distribution

36 Strictly Private and Confidential 37

 Company has already built an extensive pan-India sales and
distribution footprint

J&K
0.93%
S: 5
1,400+ dealers
D: 31
HP
Uttarakhand

Punjab
0.81%
S: 1
2.02%
S: 7
7,000+ touch points
2.17% D: 23 D: 48
S: 9
D: 85 Haryana
3.05%
Nepal
1.82%
12 branch offices cum
S: 7 Northeast
Rajasthan
5.56%
E:1
S:18
Delhi
3.19%
D: 20
3.04% experience centres
D: 56 E:1 UP S: 4
E: 1
11.6% Bihar D: 26
S: 31 S: 3
D: 92 D: 28 S: 62
D: 155
3.15%
S: 6 showrooms
D: 14
MP Jharkhand
2.18% 1.57% West Bengal
Gujarat
14.89%
S: 21
D: 90
S: 1
D: 20
4.90% 300+ sales & marketing
E: 2 Chhattisgarh E:1
S: 22
D: 228
2.52%
S: 11
S: 6
D: 50
team
D: 30
Orissa

Maharashtra & Goa

Telengana
5.27%
3.23%
S: 3
Sales presence in most
E: 1
9.75%
E: 1
S: 3
D: 41
of top 100 cities
S: 10
D: 22
Revenue share –FY20
D: 220
Andhra Pradesh
2.50%
E: Experience Centre 18 states with over INR
Karnataka
E:1 S: Showrooms
5.55%
E: 1
S:2
D: 46 D: Dealers 100 mn in revenues
S: 9
D: 80

Kerala Tamil Nadu

4.83% 7.98%
E: 1 E :1
S: 2 S: 7
D: 90 D:120

Strictly Private and Confidential 38

And has a clearly outlined strategy to triple showrooms

Stores
Store Format Area
# March Plan
(sq. ft.) 2020

Star 300 82

Multi brand 160

outlet
300 48
Privilege

1,000 9
Surface

Exclusive 1,800 63 210

Galaxy
outlets

Universe 2,000+ 46

100+ showrooms added in the last 18 months

Strictly Private and Confidential 39

 Showroom expansion in untapped region to drive revenue growth

Market position across states Year- end showroom count

400 370
J&K 350 310
S:3
HP
300
S:2
248
Punjab Uttarakhand 250
S:15 S:9
Haryana 200 165
S18
Rajasthan NEPAL 150 124
S:27 Delhi UP S:4
S:7
Northeast 100
S:45 S:7
38
Bihar 50
12
0
Gujarat Jharkhand
MP FY17 FY18 FY19 FY20 FY21 FY22
S:37 S:25 S:4 West Bengal
S:16
Chhattisgarh
S:10 ► Focus on expansion in Tier I and Tier II cities
Maharashtra & Goa Orissa
S:44
Telengana S:6 ► Select dealers to be converted to showrooms
S:6

Andhra Pradesh
► On an average the Company invests INR 155-
Karnataka
S:25
S:18 225 K per showroom for branding, tiles,
samples and cassette depending on the size
S: Showrooms 1 of the showroom
Kerala
Tamil Nadu
S:8
S:22 ► Short turnaround time of 90-100 days for
setting up new showrooms
1 Excludes 4 showrooms in union territories

Strictly Private and Confidential 40

Project business

Revenue trend
► Dedicated team of 35 employees developed in FY19
1200
969
► Recent empanelment’s:
1000
826 822 830 ► Approved by most central and state government
786
800 authorities (CPWD, state PWD and NBCC)
► One of the 3 vendors for ‘Reliance Smart’;
600
Opportunity of 10 msm of single SKU over 2 years
400
► Recently empanelled with leading realtors including
200 Sobha Developer, Omaxe and Unitech
0
► Increase focus on large projects
FY16 FY17 FY18 FY19 FY20 ► Deepen relationship with influencers
Revenue (INR mn)
Varmora group serves marquee institutional clients in India

Real estate clients General industry

Strictly Private and Confidential 41

Select institutional clients and marquee projects executed

Godrej Emami City, Kolkata Reliance Jio stores (1,100 stores)

Supplied tiles for the Chennai Supplied 100% of ceramic tile Sole supplier to 100% of Jio stores
project requirements across India
T3- Indira Gandhi International
Reliance Trendz PVR Cinemas
Airport - Delhi

Sole supplier to 100% of Reliance Caters to tiles requirement of PVR Supplied 100% of ceramic tile
Trendz stores across India Cinemas across India requirements

Strictly Private and Confidential 42

Export sales

Revenue trend
2500 ► Introduced the brand “Magnifica” in a partnership to
2072
1818 cater to the European market
2000
1461 1446 ► Focus on second level distributors for deep and long
1500 1254
term relationships
1000
► FY17 revenue dropped due to tightening of credit
500 policy in Middle East and LATAM markets
0 ► Done JV partnership in China and Europe in
FY17 FY18 FY19 FY20 FY21
FY20.
International footprint for showrooms

Brand established for European market

Varmora Europe

US Europe
1% 13%
S: - S: 2
D: 49 Varmora China
D: 8
Far East
39%
ME S: 2
14% D: 27
Africa S: 5
10% D: 25
Revenue share FY20 S: 2
D: 8
S: Showrooms LATAM
D: Dealers 21%
S: 2
D: 51

Strictly Private and Confidential 43

Country-wise Export by Volume and Revenue

FY 19 FY 20
Volume Break up Volume Break up
0% 3% 1% 10%
14% 12%
27% Africa Africa
10%
Europe Europe
Far east Far east
24%
Latin America Latin America
27%
Middle East Middle East
North America North America
29% 43%

Revenue Break up Revenue Break up

0% 3% 1% 11%
14%
17% Africa Africa
27%
Europe 13% Europe
Far east Far east
Latin America 22% Latin America

25% Middle East Middle East

North America North America
28%
39%
44
Strictly Private and Confidential
Management has well defined dedicated strategy for each
international market
Middle East Europe

► 5 showrooms spread across Iraq, Kuwait and UAE
► Focus on developing relationships with tier II
distributors
► Leverage Magnifica brand for premium realization
and product acceptance
► Ongoing negotiations for large contract in Iraq
► Marketing tie-up with Spanish entity to introduce Magnifica brand.
► Global sourcing including locally manufactured products.
► Expand agents from current base of 7.
► Proposed to start operations in Lithuania (cover Russia and
Europe major parts).

Middle
Far East Europe Africa
East

► Joint Venture at Varmora China

► Final stage of receiving TSI process Africa ► Varmora is one of the two Indian
Far companies to have brand license in Egypt
certification from Thailand.
► Plans to open showroom in Vietnam. East ► Ethiopia, South Africa and Egypt are the
focus countries
► Target markets include Korea and China
USA LATAM

USA Latin America

► 2 showrooms in Argentina and Columbia that helps

► Established 5 dealers in USA
► Developed specific product size for the market
► Opportunistic approach given the need to
provide credit
serve nearby countries
► Historically strong presence in Mexico
► Currently negotiating large contract in Argentina
► Focus on increasing showrooms, enhance spend
on advertisement in magazines and exhibitions

Strictly Private and Confidential 45

 Section 2D Infrastructure Overview

44 Strictly Private and Confidential 46

Strategically located plant with accessible capacity of ~34.51 msm

Morbi: W orld’s 2nd ► All plants are located in Morbi, Gujarat, the heart of
largest ceramic tile ceramic tiles manufacturing in India
manufacturing cluster
► All plants are located within 4 km radius

► Strategically located close to the highway with easy

access to ports and key raw material inputs
Gujarat
► Product focused plants imparting high degree of
production efficiencies and cost competitiveness

Plant Key Products Capacity (p.a.)

Varmora Granito Pvt. Ltd. GVT and PVT 8.01 msm
Solaris Ceramics Pvt. Ltd. Ceramic Tiles 6.4 msm
Tocco Ceramics Pvt. Ltd. PVT 3.3 msm
Nextile Marbosys Pvt. Ltd. GVT 2.8 msm
Sentosa Granito Pvt. Ltd. PVT 4.1 msm
Fiorenza Granito Pvt. Ltd. PVT 6.5 msm
Renite Vitrified LLP GVT 3.4 msm

Strictly Private and Confidential 47

 Company has expanded its manufacturing footprint continuously
over the past 20+ years

Establishment of wall Started a

Started construction of a Started the construction new plant
tiles plant with 850 sq.
vitrified tiles plant in of India’s largest wall tiles Nextile
m. per day production JV with Sentosa Granito
Morbi, introduction of plant with digital printing Marbosys
including two sizes with capacity of 4.9 msm
300X450 mm large sized technology as a first in for big
100X200 mm and slabs.
rectified tiles India
150X200 mm

2003 to 2009 to 2016 to

1994 1997 2008 2011 2012 2020
2004 2010 2019

Expanded
Manufactured India’s -JV with Fiorenza Granito operation in
Enhanced total Commercial production in Pvt Ltd with capacity of 6.5 China & Europe
biggest vitrified tiles in
production capacity multi charged vitrified tiles msm. Installed India’s with joint
1200X1800 mm slabs
upto 5,000 sq. m. per plant with capacity of 2.6 longest kiln of 298 m. ventures to cover
for the first time by an - JV with Renite Vitrified retail network in
day msm in just 182 days
Indian company LLP with capacity of 3.4 export and also
msm. for brand visibility
Source: Management

Strictly Private and Confidential 48

Varmora Granito Pvt. Ltd.

1 Established in 2004

2 Installed capacity of 8.01 msm p.a.

Manufactures GVT and PVT

3 Sizes: 600X600 mm and 600X1200 mm
300X300 mm and 400X400 mm

4 Total built up area of ~45,128 sq. m.

Connected load capacity of 4 MW, gas connection

5
contract of 42,000 SCMD

Plant and machinery

Easy color from LB Officine,
3 Firing kiln from Modena Digital Print from Creta, Spain Italy

3 digital print machines to Easy color machine to manufacture

Capacity of 180 X 3 MT per day manufacture GVT color body tiles

Strictly Private and Confidential 49

Tocco Ceramics Pvt Ltd.

1 Established in 2011

2 Installed capacity of 3.3 msm p.a.

3 Manufactures PVT

4 Total built up area of 24,600 sq. m.

Connected load capacity of 2.1 MW power and

5 gas connection contract of 14,000 SCMD

Plant and machinery

Digital Machine from Double charge feeder
Firing kiln from Modena Press from HLT, China
Creta, Spain by Boffin, China

Capacity of 195 MT per 3 machines for 800X800

5,000 T X 3 presses 6 Bars, 5 Colors
day and 600X600 mm tiles

Strictly Private and Confidential 50

Solaris Ceramics Pvt. Ltd.

1 Established in 2009

2 Installed capacity of 6.4 msm p.a.

3 Manufactures ceramic tiles

4 Total built up area of 32,515 sq. m.

Connected load capacity of 1.8 MW, gas

5
connection contract of 28,000 SCMD

Plant and machinery

3 Firing kilns from Digital Machine from

Modena Press from HLT, China
Creta, Spain

Strictly Private and Confidential 51

Nextile Marbosys Pvt. Ltd.

1 To be operational from July 2018

2 Capacity of 2.8 msm p.a.

Will manufacture large sized GVT Sizes:

3 1200X2400 mm, 1200X1200 mm,
900X1800 mm and 800X1600 mm

4 Total built up area of 39,123 sq. m.

Plant and machinery

2 Press from HLT, Digital machine from
China System Technology, Italy FIFO storage system Automatic packing line

Capacity of 16,800T and 12 bars to manufacture For inventory

7,500 T 1200X2400 mm tiles management of green tile To handle large sized tiles

Strictly Private and Confidential 52

Robust processes incorporated as part of entire manufacturing flow
to ensure products meet highest quality standards

► Defined process in place at every level of manufacturing to meet stringent quality requirements

Incoming quality check In process quality check Final product quality check

► Quality checked for every
incoming raw material before
unloading
► For ‘Feldspar’, content of
calcium, magnesium,
potassium and sodium is
checked; post firing shrinkage
and whiteness is tested
► For ‘Clay’, plasticity and
whiteness is tested
► In process checks include: ► Final quality checks include:
►Slurry- Viscosity, density and ► 100% output
residue
► Size, curvature, thickness
►Powder - Granule mesh size and
moisture content of the powder and color shades
►Press - Thickness and pressing
force
►Glaze line – Viscosity, density and

► For ‘Glaze’, whiteness and weight per tile

thermal expansion capacity is ►Fired tiles – Size, planarity,
tested curvature, wedging, % of water
absorption and MOR
►Post polishing – all visible defects

Strictly Private and Confidential 53

Quality certifications in place

ISO 13006-2012 ISO 9001-2008 BIS for pressed ceramics

CE Certification BS EN 9001:2008 Membership of IGBC(CII)

Strictly Private and Confidential 54

 Section 2E IT & HR

53 Strictly Private and Confidential 55

Management team with a deep understanding of the market and
emerging industry trends
Name Designati Background Role
on (Years of
Experience)
Management:
Ramanbhai Varmora Founder 35 First generation entrepreneur; pioneered ceramic tiles business in
Morbi in 1992. Started manufacturing facilities and now not involved in
day to day operations. Overlooks only key decision matters of required.

Bhavesh Varmora Chairman 20 Responsible for overall management of the group with focus on driving
key strategic initiatives. Also involved in taking new change initiatives
as and when required.
Manish Varmora JMD 17 Responsible for new technologies and products. Any new product when
to introduce and how is a key strategic decision maker.
Hiren Varmora JMD 8 Responsible for sales of Tiles and Bath ware (International and
Domestic).
Key Managerial Personnel:
Ashok Patel Director 21 Responsible for overall production and quality management of all
manufacturing facilities. Also responsible for keeping track on
Production cost and overall efficiency of Plants.
Amit Doshi Director 16 Oversees all aspects of Business Finance, IT and Marketing function.
Also responsible for HR & Admin Function.
Hardik Doshi Director 15 Regional Sales head taking care of Northern and Western region of
domestic sales of tiles.
Rajesh Detroja Director 15 Regional Sales head taking care of Southern and Eastern region of
domestic sales of tiles.

Strictly Private and Confidential 56

Management team with a deep understanding of the market and
emerging industry trends
Name Designati Background Role
on (Years of
Experience)
Key Managerial Personnel:
Sanjay Singh GM sales- 22 Regional Sales head taking care of Northern region of domestic sales
North of tiles.

Dilip Chandwani GM sales- 20 Regional Sales head taking care of West region and Nepal of domestic
west sales of tiles.

Pradip Menon GM sales- 16 Regional Sales head taking care of Southern region of domestic sales
South of tiles.

Sandeep Somani GM sales- 18 Regional Sales head taking care of East region of domestic sales of
East tiles.

Nilay Shah GM sales- 15 Taking care of all India sales of Bath ware division.
Bath ware

Strictly Private and Confidential 57

Employee overview

By entity
By work profile

1131 employees 1131 employees 1%

13%

39%
24% 50%

61%

12%

Blue collar White collar VGPL Tocco Solaris Nextile VI

By function By region- sales team

382 employees 5% 312 employees 2%

6% 13%

7% 27%

19%

15%
82%
Sales and coordination Branding and marketing 24%
HO North South East West Export
Production and procurement Finance and administration

Strictly Private and Confidential 58

Information Technology
ERP and Business Intelligence system

Snapshot of Dashboards

► Varmora group has invested in ERP and Business Intelligence (BI) software from Microsoft that helps them to
integrate and manage core business processes
► The software aid online transactions of “Order to Dispatch” and all Finance Processes and provides near real time
information on company’s sales and finance figures
► Additionally, ‘Production’ and ‘Human Resources’ modules are being added in the current year to provide a holistic
management system
► Sales Force Automation is also planned for this fiscal year to ensure better management of expanded sales team
► The BI software is currently accessed by 15 members; plan is to roll out to the Regional manager levels increasing
the count to 40

Strictly Private and Confidential 59

 Section 2F
Growth Strategy &
Business Plan

58 Strictly Private and Confidential 60

Management has identified 4 pillars for growth

1 2 3 4
Expand Enhance Develop Strengthen
product brand distribution manufacturing
portfolio position network setup

► Launch of large format
tiles – Nextile series in
September 2018
► Introduce new designs,
finishes and sizes
► Special pieces with
structure
► New designs in third
firing options
► Undertake aggressive
brand building
exercises through ATL
advertising in cinemas
and TV channels
► Increase advertising
and promotion spends
to 3.5-4% of domestic
revenues in line with
industry leaders
► Improvement and
realization
► Threefold growth in ► Investment of INR 900
number of showrooms mn for Nextile
to 370 planned in the
► E va lu a t e
next 2 years
o p p ort u nit y f o r
► Expand dealer network a u t o m at ion -
to cover untapped im p ro ve p ro d uct ion
e ff iciency/ f irst
cities within next 24
qu a lit y o u t p ut f ro m
months
cu rre n t 9 0 % - 9 5 %
► Develop relationships
► I n st a ll la rge r kiln s.
with Tier II distributors
in export markets

Professionalise management Rollout BI systems across firm Strengthen Corporate

Enablers team – attract industry talent in Strengthen ERP Governance framework
identified areas

Strictly Private and Confidential 61

Balance sheet (Tiles)
INR mn FY17 A FY18 A FY19 A FY20 P FY21 E
Fixed Assets (Net) 1020 1375 1569 1482 1462
Investments 205 213 207 207 207
Deferred Tax(Net) -5 5 10 5 5
Current Assets
Inventories 565 572 723 967 1040
Trade Receivables 1336 1672 2189 2292 2456
Loans and Advances 148 170 131 90 90
Other Current Assets 43 47 47 100 100
subtotal 2092 2461 3090 3449 3685
Current Liabilities
Trade Payables -940 -1093 -1214 -1405 -1461
Other Current Liabilities -772 -401 -443 -282 -282
(-) Re-class of current Maturities of Long term Debts 137 116 195 188 188
Other Current Liabilities -635 -285 -248 -94 -94
Provisions -4 -10 -10 -61 -61
Subtotal -1579 -1388 -1472 -1560 -1616
Net Current Assets 513 1073 1618 1890 2069
Net Debt
Borrowings -874 -1208 -1644 -1622 -1534
(-) Re-class of current Maturities of Long term Debts -137 -116 -195 -188 -188
Borrowings -1011 -1324 -1839 -1810 -1722
Cash and Bank Balances 75 75 47 54 50
Net Debt -936 -1249 -1792 -1756 -1672
Net Assets 797 1417 1612 1827 2070

Strictly Private and Confidential 62

Consolidated profit & loss statement (Tiles)
Particulars FY17 A FY18 A FY19 A FY20 P FY21 E
► Financials for FY17 and FY18
volume 20,344 23,990 24,093 24,641 27,100 are adjusted for excise duty
impact. (refer to GST impact
Growth % 17.92 0.43 2.27 9.98 Slide.)
► Manufacturing costs primarily
Net Sales 6,171 6,898 7,119 7,461 8,057 comprise power and fuel costs
Growth % 11.8 3.2 4.8 8.0 (92-93% of manufacturing
costs); polishing and tile cutting
Raw material, stores & packing 3,106 3,649 3,628 3,862 4,197 (from FY18) and plant repairs

Material Margin % 49.7 47.1 49.0 48.2 47.9 ► Export expenses include
clearing and forwarding, pallet
Manufacturing Expense 1,145 1,304 1,489 1,528 1,608 packing and transportation costs

Gross Margin 1,920 1,945 2,002 2,071 2,253 ► Employee costs includes cost
of all labour, direct and indirect
% Net Sales 31.1 28.2 28.1 27.8 28.0
► Selling expenses includes costs
Employee Expenses 410 511 572 613 651 towards advertisement &
promotion, travelling &
Selling Expense 440 473 476 450 482 conveyance and sales
commission & transportation
Admin Expenses/ Export Expense 161 167 272 287 310 costs (for project sales only)
EBITDA 909 794 682 721 810 ► Administrative expense
comprise of rent & taxes, office
% Net sales 14.73 11.51 9.58 9.66 10.05 operational costs, legal and
Depreciation 196 188 258 284 321 statutory charges,
communication costs etc.
EBIT 713 606 424 437 489 ► Company follows a WDV
% Net Sales 11.55 8.79 5.96 5.86 6.07 method of depreciation

Strictly Private and Confidential 63

Share of own manufacturing revenues sustained at 74%+

Manufactured to traded mix

22% 26% 25%

30% 30%

78% 74% 75%

70% 70%

FY17 FY18 FY19 FY20 FY21

Manufactured revenue Traded revenue

► Own manufacturing focused on higher margin GVT products

► Trading is primarily in PVT and Ceramic tiles
► ~60% of traded revenues is sourced from JV entities where Varmora maintains operational oversight and has the first right on
their production
► Gross margins for manufactured products (includes materials, manufacturing and labour costs) is 27 – 28% whereas for traded
products it is 14 – 16%

Strictly Private and Confidential 64

Potential incremental upsides to base
management business plan

1 2 345
International
market
Brand
building
activities
Boost to
projects
business
Accelerated
shift from
Acquisition of
New
Manufacturin
unorganized
market g facilities in
Company is in Recently empaneled
advanced stage of Benefits of increased by leading realtors in A material shift in Morbi , to add
negotiation for India market towards
contracts in LATAM
advertisement &
promotion spend and
organized sector, new sizes and
Incremental volumes driven by
and Middle East
regions
showroom expansions
from ongoing implementation of
new thickness
in the form of
Cumulative volume improved realizations
Government initiatives GST and the for import and
like Smart City, introduction of E-way
potential 10 msm to and volume growth
Housing for All, bill domestic
be executed in 18 railway modernization
months and metro projects market.

65
Strictly Private and Confidential
 Section 2G
Industry Overview

67 Strictly Private and Confidential 66

India is the second largest ceramic tile market globally

Global tiles consumption (mn sq. m.)

Country CY16
China 5,475
India 785
Brazil 706 Khurja, Uttar Pradesh
Key Regions

Vietnam 412
Indonesia 369
Udaipur, Rajasthan
USA 274
Saudi Arabia 248
Turkey 241 Palpara, W est Bengal

Mexico 235 Morbi, Gujarat

Thailand 189
Total world 12,783

► India has a total of ~700 production units with East & W est Godavari

~30 large players Andhra Pradesh

► Morbi constitute ~90% of tile production in

India
► 610 production units provides employment Cuddalore, Tamil nadu

to over 1 mn people
► Second largest tile cluster in the world with
a vibrant tile industry ecosystem
Source: Ceramic World Review

Strictly Private and Confidential 67

Ceramic tiles market expected to grow at ~9% by value over the
medium term

Tiles market volume growth (msm) Tiles market value growth (INR mn)

346 377
1022 293 318
879 946 270
798 826

FY17 FY18 FY19 FY20 FY21 FY17 FY18 FY19 FY20 FY21

Tiles volume split by technology Tiles value split by technology

GVT
7% GVT
15%
Ceramic
43%
Ceramic PVT
54% 39%

PVT
42%

Source: Ceramic World Review

Strictly Private and Confidential 68

Premiumization of the tiles market has driven the high growth in the
GVT segment

Shift towards high value products 2018

2009
% of total Volumes
GVT GVT
3% 7%

PVT PVT
29% 39%

Ceramic tiles Ceramic tiles

68% 54%

Ceramic tiles PVT GVT

121 127 46

64
47
9

FY09 FY18 FY09 FY18 FY09 FY18

Figures in INR bn
Source: Industry reports, company presentations

Strictly Private and Confidential 69

As the market matures, the unorganized sector is expected to
convert to organized sector/ branded products

Unorganised vs. organized (by value) Shift towards organized sector

60%

50%

Organised Unorganised
FY17 FY21

Unorganised vs. organized (by volume) ► Implementation of GST in FY18 will benefit
organised players and fasten the process of
conversion of the industry from unorganised to
organised

40% ► Industry players expect the organized market to

increase share from 50% currently to 60% in the
60% next 3 years and expect the organized market to
grow at CAGR of 13% vs. overall market growth
of 9%

Organised Unorganised
Source: Industry reports

Strictly Private and Confidential 70

Government initiatives and structural drivers to boost the tiles
market in India

Strictly Private and Confidential 71

Urbanization and growing aspirational class in India

Population growth Urban population

in bn
1.5
1.2 1.3
0.9 1.0
0.6 0.7
33% 35%
0.4 31%
28%

1961 1971 1981 1991 2001 2011 2017 2030 2001 2011 2017 2021
India’s population is expected to increase to 1.5 bn by 2030 Urban population estimated to contribute 35% by 2021

Expected number of houses in 2025 Population age profile

65+ 4%
2011 2017 2025
45-64yr 14%
25-44yr 28%
People per household 4.7 4.5 4.2
20-24yr 9%
# of households (mn) 250 284 333 15-19yr 10%
10-14yr 12%
# of houses (mn) 331 365 458
5-9yr 13%
0-4 yr 11%
>50% of the population under the age of 25; Largest
Nuclearization leading to increase in number of houses
workforce by 2027
Source: CRISIL reports, Industry reports

Strictly Private and Confidential 72

Structural reforms in India

Smart Cities RERA Housing for All

► Launched in June 2015 to
promote 100 cities that offer
core infrastructure and decent
quality of life to citizens
► Operated as a centrally
sponsored scheme with allotted
budget of INR 480 bn from
FY16-FY20
► Guidelines for real estate
players and builders
► Provides investor/
homeowner added
protection
► Aims to provide houses to
rural and urban poor; 60 mn
houses to be constructed with
40% of the houses aimed at
urban areas
► The urban mission was
launched in June 2015 and
3,50,000 houses completed in
2017-18

Infrastructure Skill India Make in India

► Metro to grow five fold to ~2,000
km; ~525 km under construction,
400 km sanctioned and additional
900 km under approvals
► 100 new airports expected to be
constructed in next 15 years; 70
greenfield constructions
► 110 million skilled
manpower required by
2022
► Over 15 million engineers
and 2 million ITI graduate
every year
► Increase manufacturing sector
growth to 12-14% per annum
over the medium term
► To increase contribution of
manufacturing sector by 9% to
25% of GDP by 2022

Increasing
share of
Impact of GST on Indian Create a level Improve Increased
organised product
Ceramic Tiles market playing field efficiency in
sector to 60% realisations logistics
from 50% by
2021

Source: Industry reports, news reports, World Bank

Strictly Private and Confidential 73

End-market demand

Incremental housing capacity Commercial real estate

In mn 41
5.9 38 39
35 36
5.5 27
37 37
5.2 34 34
5.0 29 30

FY17 FY18 FY19 FY20 FY15 FY16 FY17 FY18 FY19 FY20
New completion (mn sq ft) New absorption (mn sq ft)
Home sales rose 13% in FY18 in top 8 cities ~116 msf to be completed between 2018-20

On-going convention center projects Upcoming branded hotel rooms in top cities

Area Expected year of In ‘000

Project City 166
(in msf) completion
DAICEC,
Mumbai ~8 2019
BKC
119
IICC Delhi ~10 2025

GIFT Ahmedabad ~92 By 2023 FY17 FY22

65% of planned expansion underway

Source: Industry reports, news articles

Strictly Private and Confidential 74

 Growth in ceramic tiles market

Flooring market size in India Tiles usage as a % of the formal flooring sector
INR bn

270 78%
73%
55%
40%

45 37
14 4

Others Marble Granite Wood Tiles 2001 2011 2017 2025

GDP growth versus tiles market growth • Key growth drivers

24 • Economic growth and construction activity

22 High correlation between
GDP growth and tiles market • Under-penetration
20
18 growth; expected uptick • Shift from unorganized to organized
16
14 • Conversion to tiles
12
10 • Premiumization
8
6 • With an expected GDP growth of over 8% in a highly
4 underpenetrated market, prospects for tiles industry
2 remains strong
0
GDP growth Tiles market growth

Source: Industry reports, news reports, company reports

Strictly Private and Confidential 75

 Section 3 Bath-ware Business
Overview

77 Strictly Private and Confidential 76

Sanitary ware and faucets
Key products

Water closets Basins Faucets

Category

► Largest product segment ► Within basins, table tops are ► Includes faucets, showers, bath
contributing ~70% of revenues premium with higher realizations fittings and other accessories.

► One piece and wall hungs ► Launched the ‘Kala’ range of ► Outsourced model with vendors
Comments coloured basins in 2018 identified across India and China
command the highest
realisations
► Launched matt & satin finish ► Launched in 2Q FY 19
table tops in 2019(Glacestone)

1500
996 1035
903
1000
643
488
Revenue 500
trend
(INR mn) 0
FY17 FY18 FY19 FY20 FY21

Revenue (INR mn)

Strictly Private and Confidential 77

Manufacturing facility

1 Established in 2014
Capacity expansion
Installed capacity of 820 k units p.a.; planned 1600 1450
2 expansion to 1,450 K units p.a. in FY22
1200 1100

820
3 Manufactures water closets, basins and urinals 800
610 610

Total land area of 30,857 sq. m. and built up area 400

4
of 26,012 sq. m.
0
Connected load capacity of 500 KVA gas FY17 FY18 FY19 FY20 FY21
5 connection contract of 5,000 SCMD Capacity ('000 units)

► The Group plans to setup a new sanitary ware plant in FY 21 and will come in operation be first quarter of FY22 to
cater increasing demands and switch from trading to manufacturing.

This will also help in proper and timely product availability and cater proper service to dealer and also some areas are
untapped .

Strictly Private and Confidential 78

Balance sheet (Bath ware)
INR mn FY17 A FY18 A FY19 A FY20 P FY21 E
Fixed Assets (Net) 105 155 146 128 105
Investments 0 0 0 0 0
Deferred Tax(Net) -4 -3 -5 -5 -5
Current Assets
Inventories 101 81 127 217 261
Trade Receivables 140 187 281 237 287
Loans and Advances 29 41 30 35 35
Other Current Assets 1 1 1 2 2
subtotal 271 310 440 492 585
Current Liabilities
Trade Payables -107 -123 -180 -145 -150
Other Current Liabilities -23 -46 -67 -58 -58
(-) Re-class of current Maturities of Long term Debts 14 22 21 21 21
Other Current Liabilities -9 -24 -46 -37 -37
Provisions -14 -20 0 0 0
Subtotal -130 -167 -226 -182 -186
Net Current Assets 141 143 214 310 398
Net Debt
Borrowings -135 -158 -175 -216 -194
(-) Re-class of current Maturities of Long term Debts -14 -22 -21 -21 -21
Borrowings -149 -180 -196 -237 -216
Cash and Bank Balances 4 4 5 5 5
Net Debt -145 -176 -191 -232 -211
Net Assets 97 119 164 200 288

Strictly Private and Confidential 79

Profit and Loss Statement (Bath ware)
INR mn FY17 A FY18 A FY19 A FY20 P FY21 E
Net Sales 488 643 996 903 1,035
Growth % 31.8 55.0 -9.3 14.5
Raw material, stores & packing 222 324 452 387 443
Manufacturing Expense 50 51 89 82 94
Gross Margin 216 268 455 435 498
% Net Sales 44.3 41.7 45.7 48.1 48.1
Employee Expenses 107 142 211 209 223
Selling Expense 34 47 81 70 80
Admin Expenses/ Export Expense 12 15 25 27 28
EBITDA 63 64 138 130 167
% Net sales 12.9 10.0 13.9 14.4 16.1
Depreciation 19 18 23 25 23
EBIT 44 46 115 105 144
% Net Sales 9.0 7.2 11.5 11.6 13.9

Net Fixed Assets 105 155 146 128 105

► In April 2018, there was a fire in the sanitary ware facility, which led to loss in inventory resulting in decrease in sales and
EBITDA margins. Insurance claim of INR 29 mn is considered as other income and added in net sales .
► Exports from Conffi for FY17 and FY18 (INR 56 mn and INR 22 mn resp.), were made through VI and included in net sales
above

Strictly Private and Confidential 80

 Section 9
Summary

82 Strictly Private and Confidential 81

Varmora – An ideal platform to access the robust building products
market in India

Leading market ► Top 5 branded tiles player in India with accessible capacity of ~33 msm of tiles
position ► Third largest player in GVT, the fastest growing segment in India

► 248 tiles showroom – to grow over the next 24 – 36 months

Pan India distribution ► 1,500 dealers with 7,000 touch points in tiles
footprint
► 440 distributors & 120+ showrooms in bath-ware

► Management team with deep understanding of the market

Experienced
► Deep personal relationship with dealers and key vendors
management team
with vision for growth ► Proven ability to create capacities and spread distribution reach in short timelines

► Second largest ceramic tile market in the world

Attractive industry
► GST driving shift to organized sector from 50% to 60% in medium term
outlook
► Organized tiles sector growing at 14 – 15%

Attractive opportunity ► Gain access to the Indian ceramic tiles and bath-ware market
in building products ► Attractive Platform to create a building products play through product extensions
► Huge opportunity in Bath ware segment of increasing revenue growth, new
Identified growth business opportunities with acquisitions.
strategy in place ► EBDITA margin improvement

Strictly Private and Confidential 82

Annexure

Strictly Private and Confidential 83

Normalising impact of GST

Adjusted revenues and growth

► Pre GST implementation, company could not claim
credit for excise duty paid on traded products 7,007
6,542
6,898
► The excise element thereby remained embedded in 6,171
sales value resulting in inflated realisation per unit
for FY16, FY17 and in 1QFY18 11.8%

► A corresponding cost was reflected even on the cost

side, thus there was no impact on material margins

► For a comparison of realisation trends for the pre

FY17 FY18
and post GST period, the impact of the excise duty
has been excluded Revenue (INR mn) Adjusted revenue (INR mn)
Adjusted growth

Adjusted realisations per unit

GVT PVT Ceramic

425 411 363 284
369 345 336 260
385379 254
369 221
311 301 293 235 226

FY16 FY17 FY18 FY16 FY17 FY18 FY16 FY17 FY18

Strictly Private and Confidential 84

THANK YOU

85