GIC, BARING INDIA PE INVESTING $100 MN IN MARICO

GROUP 6

AGENDA

Executive Summary

FMCG Industry Overview

Indian FMCG Overview Government of Singapore Investment Corporation (GIC)

Baring Private Equity Partners India

Marico Deal Structure

Investment Rationale
Valuation Pre post Investment Scenario

EXECUTIVE SUMMARY

Singapores sovereign wealth fund GIC and Baring Private Equity Partners India to invest $100 million in public listed FMCG company Marico Marico will use this amount to fund its recent acquisition of personal care brands, including Set Wet, Livon and Zatak among others, from Reckitt Benckiser. GIC is investing $75 million and Baring India Private Equity Fund is putting $25 million. Share purchase value is Rs 170 per share at par with market.

FMCG INDUSTRY OVERVIEW(1/2) Asia's FMCG market

1 2 3 Evolving consumer taste and preferences 4

Growth in other Asian markets (e.g Vietnam)

Focus on innovation and R&D

Rising affluences in Asia

India's FMCG market

1 Products must offer value for money 2 Uptrading in some categories (e.g skincare)

3
Demand for new categories (e.g men's grooming)

4 Entry of new brands, brand/line extensions

FMCG INDUSTRY OVERVIEW(2/2)

Soaps and cleansers: Market demand growth (% change pa) Asia and Australasia China Hong Kong 2011 2012 5.9 12.0 8.6 7.0 12.7 6.8 2013 2014 2015 5.9 9.7 3.7 5.8 9.3 3.4 5.3 7.3 3.0 Greater awareness of products, brands

India
Japan

11.1
-0.6

9.9
2.4

10.5
1.5

9.8
1.4

9.8
1.0

Rising incomes driving purchases

Desire to experimen t with brands, products

Increasing consumer demand Food, beverages, tobacco: Market 2011 demand growth (% change pa) Asia and Australasia 3.0 2012 2.8 2013 3.6 2014 3.3 2015 2.7

FMCG growth is a function of:

Evolving consumer lifestyles

China
Hong Kong India Japan

4.2
5.1 -0.5 2.7

2.8
4.6 1.6 2.7

1.6
5.1 0.9 1.5

1.4
4.6 0.7 2.3

1.0
4.7 0.4 2.3

Availability of online channel to shop

Growth of modern trades

New product launches

INDIAN FMCG INDUSTRY (1/3) Fast Facts: Indian FMCG Industry FMCG industry represents 2.5% of the Indias GDP The industry has grown at ~17%CAGR FMCG accounted for 1.9% of the total FDI inflows in April 2000- September 2012 Food products and personal care together make up two-third of the sectors revenues. Rural India accounts for 70% of the Indian population and accounts for 50% of the total FMCG market. Changing lifestyle and increasing consumer demand, the Indian FMCG market is expected to cross $80 bn by 2026 in towns with population of up to 10 lakh. India's labour cost is amongst the lowest in the world, after China & Indonesia, giving it a competitive advantage over other countries.

INDIAN FMCG INDUSTRY (2/3)

Opportunities in FMCG Sector: Untapped rural market India is one of the worlds biggest producers of a number of FMCG products but the countrys exports account for a very small proportion of the overall output. Food-processing Industry: With 200 mn people expected to shift to processed and packaged food, India needs around USD 30 bn of investment in the food processing industry.

Key Concerns of FMCG Sector: High inflation Rising cost of inputs Emergence of private labels Counterfeits and pass-offs Rupee depreciation may hit margins of companies Infrastructure bottlenecks

INDIAN FMCG INDUSTRY (3/3) Major segments in FMCG sector (India specific)

Household Care
Fabric Wash Household Cleaners

Personal Care
Oral Care Hair Care Skin Care

Food & Beverages

Healthy Beverages Bakery Snacks Processes Food

ABOUT GOVERNMENT OF SINGAPORE INVESTMENT CORPORATION (GIC)

About GIC

Investment Approach

Strengths

Investment management organization with investments over $100b 30 yrs of experience with exchange traded and OTC markets in stocks, derivatives, fixed income, natural resources, cash One of worlds top 10 real estate investment firm in terms of AUM

Investing with a long-term horizon with exposure to equity and equity like assets Identifying and managing risk an integral part of management responsibility Established framework for risk taking to maximize clients returns

Investment in cross-asset opportunities with defined and clear drivers for investment Skilled and experienced team Global presence and efficient governance structure GIC has the highest corporate credit ratings by both Standard & Poor and Moody

GIC INVESTMENT FRAMEWORK Performance of Global Markets

Creation of global reference portfolio with 65:35 investment principle 65% in global equities and 35% in global bonds

Asset Allocation Strategy

Own asset allocation strategy to achieve better return than reference portfolio Enhance long term return through portfolio construction and diversification

Active Portfolio
Investment within each asset class and asset classes other than policy portfolio Active portfolio controlled by clear risks defined by the GIC board

Policy Portfolio
GIC co-invested in consumer products and services business with Actis in Bangalore-based Nilgiri Dairy Farms

ABOUT BARING PRIVATE EQUITY PARTNERS INDIA

About Baring PE

Investment Approach

Accolades

Founded in 1984, one of first pan-European providers of private equity capital Invested in major markets outside USA via regional funds with $12b AUM Finalized its MBO from parent company ING Group in August 2004

Follows top-down approach for investment decisions Seeks significant minority stakes or control and Board position to influence key decision making Controls the exit decision and have well defined exit rights through IPO

Pioneer in providing private equity capital in India First fund to conclude a MBO of listed company in Asia First cross-border M&A in India and first venture capital to invest in the Indian BPO sector

BARING PRIVATE EQUITY PARTNERS INDIA PORTFOLIO

Baring India Investment Limited PCC - $40mn Mphasis Software Mphasis Inc SRA Systems (Exited) Jyothy Laboratories (Exited)

Baring India Private Equity Fund II - $177mn Maples Technologies Secova Auro Mira Energy Integra Infrasoft Technologies

Baring India Private Equity Fund III - $563mn Marico Sintex Muthoot Finance Shilpa Medicare TD Power Systems

Source: www.bpepindia.com

ABOUT MARICO (1/3) Overview Shareholding Pattern

7% 33% 60% Promoters Institutions Non-Institutions

Industry: Consumer goods Founded: 1987 Headquarters: Bandra, Mumbai, India Management: Harsh Mariwala (CEO) Products: Edible Oil, Hair Oils, Skin Care, Fabric Care, etc. Revenue: INR 40083 million CAGR : 44% for the past 5 years Major Brands: Parachute, Saffola, Mediker, Sil, Revive, Kaya clinic, etc

Revenue Segregation
Coconut Oil International Business Other 4% 7% 14% Saffola Hair Oil Kaya Clinic 35%

24%

16%

ABOUT MARICO (2/3) Key financials

Key Fundamentals Market Cap (Rs. Cr.): EPS - TTM (Rs.): P/E Ratio (x): Latest Dividend (%): Dividend Yield (%): Value 13,629.01 6.65 31.76 10 0.47

Peers Review
Peers Marico Emami P&G Hygiene Godrej Colgate-Palmolive Market Cap (INR Cr) 13629 10664 10010 26229 17851

ABOUT MARICO (3/3) Financial trend of Marico

Key Financial Parameter
Return on Equity (%) Operating Profit Margin (%) Net Profit Margin (%) Debt to Equity Working Capital Days
Mar'04 Mar'05 Mar'06 Mar'07 Mar'08 Mar'09 Mar'10 Mar'11 Mar'12 Mar'13

30.67

34.76

36.04

43.94

63.58

53.16

43.67

32.05

30.97

23.9

8.43

8.71

12.66

12.75

12.91

12.81

13.73

13.21

12.22

13.78

6.51

6.76

7.54

6.4

8.46

8.55

9.16

8.18

8.13

8.34

0.06

0.25

0.92

1.31

1.14

0.83

0.68

0.85

0.69

0.44

63

65

70

70

77

79

94

121

134

143

Cash Conversion Cycle

19

17

11

10

19

25

41

44

39

DEAL STRUCTURE(1/3) Deal Overview

GIC & Baring India PE

(private equity firms)

Investment in 2012

Marico
(brands: parachute hair oil and saffola edible oil)

Paras Pharmaceuticals
(brands: Set Wet, Livon, Zatak)

Acquired brands in 2011

Acquired brands in 2012

Reckitt Benckiser
(brands: Set Wet, Livon, Zatak)

DEAL STRUCTURE(2/3) Deal Details Reckitt Benckiser acquired Paras Pharmaceuticals for INR 32.6bn ($726mn) in April 2011 Marico acquired brands like Set Wet, Livon, Zatak from Reckitt via preferential allotment Fund parass personal care brands acquisitions and other capital expenditures
Deal price (as on 06/04/2012) Rs. 170 Current Price (as on 02/26/2014) Rs. 211.8

6th Apr, 2012

2nd May, 2012

Marico signed the definite agreement for the deal

General meeting for shareholders approval for fresh allotment

16th May, 2012 Board resolution was passed for the investment

DEAL STRUCTURE(3/3) Final Deal Structure (Transactions)

GIC Indivest Pte ltd

No. of shares: 22mn Total (INR mn): 3750 Stake(%): 3.42

Baring India PE
No. of shares: 7mn Total (INR mn): 1250 Stake(%): 1.14

Marico Transaction Size (INR mm): 5000 Price per share(INR): 170

Advisors
Kotak Mahindra Capital Company Ltd

Clients
Marico Ltd

Citigroup Global Markets India Pvt Ltd

AZB & Partners

Marico Ltd
Indivest Pte Ltd (Legal)

INVESTMENT RATIONALE
Investment Rationale

Products

Diversified Product Mix Well Recognized Brands

Incorporation of ERP and SAP tools Disintegration of Inbound Copra supply chain

Supply Chain Management

Customers

Global Presence 30% of Revenue from exports Direct Reach: Over 900,000 outlets Indirect Reach: 4 million outlets Segment Diversification via Acquisitions

Regular Innovations to increase growth

Operational Innovation

Distribution Network

Focus on Emerging Markets International Business Group CAGR 27%

Opportunities

Inorganic Growth

EBITDA 15% RoE 35% D/E 68%

Strong financial Parameters

VALUATION OF MARICO (1/11)

Final Value
Discounted Cash Flow

Trading Comparables

Transaction Comparables

VALUATION OF MARICO (2/11) Discounted Cash Flow (DCF) Key Assumptions

Country

India

Risk free Rate (rf)

The sales growth is expected to be sustained at a 5 year CAGR of 21% The working capital change has been taken in proportion to the revenue increase projections, the net change arising out of the differences of the total non-cash current assets and non-debt current liabilities

8.78%
8.22% 0.455

Market Risk Premium Unlevered Beta

Levered Beta
S&P credit rating Damodaran risk spread

0.480
bb4%

After-tax Cost of Debt

Cost of Equity D/E

9.60%
12.70% 7.40%

WACC

12.51%

VALUATION OF MARICO (3/11) DCF Output

Values Amount in million INR

PV of Cash Flows PV of Terminal Value

Enterprise Value Less: Total Debt Preferred Stock Minority Interest Plus: Cash and Equivalents Equity Value Shares Outstanding Implied Per Share Value

13812.10 80034.30
93846.40 7953.5 0 249 3983.6 89627.44 614.93 145.75

VALUATION OF MARICO (4/11) Trading Comparables

Selection Criteria

Company Shortlisted

Location: Asia Pacific Emerging Markets Industry: FMCG - Household and Personal Products Product Lines: Similar product lines as Marico

Colgate-Palmolive (India) Limited (BSE:500830) Pidilite Industries Limited (BSE:500331) Dabur India Ltd. (BSE:500096) Godrej Consumer Products Limited (BSE:532424)

VALUATION OF MARICO (5/11) Trading Comparables Output

NTM TEV/Forward Total Revenue High Low Mean Median 5.02x 2.57x 3.54x 3.29x NTM TEV/Forward EBITDA 22.15x 14.97x 18.49x 18.42x

Value
NTM TEV/Forward Total Revenue High Low Mean Median 226779.65 116100.34 160033.25 148626.50 NTM TEV/Forward EBITDA 149107.47 100773.76 124452.56 123964.51

Revenue : 45175.229 m INR EBITDA: 6,731.71 m INR

VALUATION OF MARICO (6/11) Transaction Comparables Selection Criteria Location : Asia Pacific Industry : FMCG - Emerging Markets Minimum TEV/Revenue: Transaction Types : Private Maximum TEV/Revenue: Placement OR Merger/Acquisition Period : [4/1/2009-3/31/2012] Average TEV/Revenue:
Multiple
1.03x 3.83x 2.65x

Value
38454.95 142992.67 99198.83

Multiple Minimum TEV/EBITDA: Maximum TEV/EBITDA: Average TEV/EBITDA: 9.98x 33.6x 18.77x

Value 55522.73 186930.24 104425.02 Revenue : 45175.229 million INR EBITDA: 6,731.71 million INR

VALUATION OF MARICO (7/11) Football Field Analysis

VALUATION OF MARICO (8/11) Weightage Distribution Valuation Type

Figures in million INR
Weight 40.00% Valuation Type DCF 52 Week High/Low Maximum 109853 Minimum 77840 Average 93846

20.00%

109742 EV/Forward Revenue EV/Forward EBITDA

78203

93972

7.50% 12.50%

Trading Comparable

226780 149107

116100 100774

160033 124453

7.50% 12.50%

Transaction Comparable

EV/Revenue EV/EBITDA

142993 186930

38455 55523

99199 104425

VALUATION OF MARICO (9/11) Final Value per share

Figures in million INR Maximum Minimum 43941.28 31135.8
21948.36 15640.512 Average 37538.52 18794.436 Maximum Trading Comparable 17008.4737 18638.4331 8707.5254 12596.72 12002.4937 15556.5703 Final Equity 135627.3 Value Minimum Average

DCF 52 Week High/Low

Number of shares : 614.93 million

77905

104385.1

Transaction Comparable

10724.45 23366.28 135627.28

2884.121 6940.3415 77905.02

7439.9122 13053.1273 104385.06

Value per share

220.56

126.69

169.75

Final Value

Value per share through Valuation: Rs. 169.75

VALUATION OF MARICO (10/11) Discounted Cash Flow (DCF) ( At present) Key Assumptions
Country Risk free Rate (rf) Market Risk Premium Unlevered Beta Levered Beta S&P credit rating Damodaran risk spread Cost of Debt Cost of Equity India 8.78% 8.22% 0.455 0.480 bb4% 9.60% 11.90% Plus: Cash and Equivalents 3803.50

DCF Output
Values
PV of Cash Flows PV of Terminal Value Enterprise Value Less: Amount in INR MILLION 9897.20 107575.10 117472.30

Total Debt
Preferred Stock Minority Interest

8742.90
0 351.40

Equity Value
Shares Outstanding Implied Per Share Value

1,12,181.50
644.9 173.96 (INR)

D/E
WACC

6.40%
11.8%

VALUATION OF MARICO (11/11) Investment Gains

Figures in INR

Purchase Price in 2012 Market Price in 2014 Gain Percentage Gain IN 2 YEARS CAGR

Rs. 170 Rs. 211.80 Rs. 41.80 24.59% 11.67%

PRE INVESTMENT SCENARIO Performance Analysis ( Source: Annual Report 2011-2012) Revenue growth of 28% over previous year Focused on acquisitions to pursue growth

Explore opportunities in skin care, hair care, food in Asia & Africa
Small packs led to 11% growth in parachute International business contributed 24% to the revenue and growth of 30% over FY11

Entered new geographies and scaled up presence in Malaysia, Bhutan & Myanmar
Launched exciting range of water gels, ice gels, rave gels & wax Acquisition of Paras in line with the strategy of strengthening in hair care, skin care & male grooming Acquisition provides an entry into growing deodorant business Acquired portfolio gives access to chemist & cosmetic channels

POST INVESTMENT SCENARIO Performance Analysis ( Source: Annual Report 2012-2013)

Revenue growth of 15% over previous year

Contributed by 12% expansion in volumes including 4% inorganic growth

Parachute Advanced Body Lotion achieved a market share of 7% Performance of acquired brands: 18% growth over previous year

Leadership position in hair creams & gels

Demerger of Kaya Clinics

THANK YOU