B&K Investor Conference. Mumbai

Transcription

1 B&K Investor Conference Mumbai June 3, 2015

2 Disclaimer This presentation may contain statements which reflect Management s current views and estimates and could be construed as forward looking statements. The future involves certain risks and uncertainties that could cause actual results to differ materially from the current views being expressed. Potential risks and uncertainties include such factors as general economic conditions, foreign exchange fluctuations, competitive product and pricing pressures and regulatory developments. Responses can only be given to questions which are not price sensitive.

3 Presentation structure Group Overview Economic Environment : Q4 & FY15 Financial Performance : Q4 & FY15 Business Review : Q4 & FY15 Risks and Outlook

4 Asian Paints Group Today No. 1 Paint Company in India Over USD 2 Billion Group revenue 3 Times nearest Competitor in India 3rd Largest Paint Company in Asia 13 th Largest Coating Company In the World Operations in 19 countries 26 Paint Manufacturing Plants 47 Years of Market Leadership in India Forbes Asia s Fab 50 Company; Four times in a row Part of NSE Nifty 50 Servicing Consumers in over 65 Countries Employees worldwide

5 In Billion USD Global standing th largest in the World rd largest in Asia * Coating World 2014 Rankings

6 Worldwide Operations Jamaica Barbados Trinidad & Tobago Egypt Ethiopia Bahrain UAE Oman India Nepal Sri Lanka Bangladesh Singapore Indonesia Solomon Islands Vanuatu Samoa Fiji Tonga

7 Strong Brands

8 Aspiration To be the fore runner of inspiring décor and to actively empower customers to create their dream homes

9 Stand for Belief in fostering the principles of trust and transparency Ability to adapt itself to the changing environment Dynamic professional management team focused towards delivering stakeholder value with highest levels of corporate governance Innovative strategies in the marketplace Efficient manufacturing and logistics Capabilities to effectively harness Information Technology to improve efficiency in operations (SAP, i2, etc.) Prudent management of financial resources Focus on Research and Development (dedicated group R & D centre in India at Turbhe near Mumbai)

10 Innovative Market place Strategies Small Packs Exterior Paint Segment Consumer and Dealer helpline Colour Next (Prediction of Colour trends through in-depth research) Special effect and textured paints Signature Stores Colour Ideas store Samplers Beautiful Homes Guide Water Proofing and Wallpaper business Ezycolour Service brand Home Solutions (Painting solution service) Colour Home

11 Powerful Consumer Connect Signature Stores in Metros Colour Idea Stores Innovative retailing strategy showcasing latest product and solution offerings enabling consumers to get inspired, try and decide Strong presence in all product segments, servicing over 34,000+ dealers

12 Robust Supply chain and IT State of the art Supply Chain system using cutting edge latest technology for efficient management and execution World Class, large manufacturing facilities with latest automation technologies Largest single location paint manufacturing capacities at Rohtak, Haryana and Khandala, Maharashtra. Both these plants can be scaled up to 4,00,000 KL p.a. Planning to set up a new, fully-automated manufacturing facility over the next 2-3 years Strong distribution and logistic network across geographies using modern material storage and handling technologies Dedicated in-house IT team adding value to business process in terms of higher productivity, lower costs, speed, consistency and standardization

13 Dedicated R&D Dedicated Research and Technology facility at Turbhe (Near Mumbai) with over 150 scientists Supports company strategy around Technology development, Sustainable new products, Green products, Value reengineering for productivity improvement and cost optimization Our scientists had won the Roon award in 2013 one of the highest technical achievements in the coatings industry

14 Changing with times

15 Business Portfolio Decorative Coatings India Industrial Coatings India PPG Asian Paints Asian Paints PPG 1% 5% 13% International Operations Home Improvement Business India Sleek Ess Ess Chemical Business FY % Decorative - India Home Improvement - India Industrial - India International Operations

16 Decorative Coatings - India Largest business unit of the company Primarily operates in four segments o Interior Wall finishes o Exterior Wall finishes o Metal Finishes (Enamels) o Wood Finishes Introduced new categories like water-proofing & wallpapers Product for every price point and requirement

17 Industrial Coatings - India Asian Paints participates in the Industrial Coatings segment, through two 50:50 JVs with PPG Inc. of US PPG Asian Paints (For Auto Coatings) The Auto segment is catered through our JV (PPG AP) Second largest supplier to the auto segment in India Now, the largest player in auto refinish segment, post acquisition of ICI India s 2k auto refinish business in 2007 Commissioned a 3,200 KL / year plant in Chennai, Tamil Nadu in 2008 Asian Paints PPG (For Non Auto Industrial) Protective coatings, floor coatings, road marking paints and powder coatings segment catered to by this JV Services customers in the sectors of Infrastructure, Oil & Gas, Power Plants, White Goods, etc

18 International Operations Contributes about 13% to the group turnover 7.0% 1.6% 11.8% Began by establishing presence in Fiji in 1978 Presence in 18 countries spread over 5 regions 31.0% 48.6% Caribbean : Jamaica, Barbados and Trinidad & Tobago Middle East : UAE, Bahrain, Oman & Egypt Asia : Nepal, Sri Lanka, Bangladesh, Singapore & Indonesia South Pacific : Fiji, Tonga, Solomon Islands, Vanuatu & Samoa Caribbean Middle East Asia South Pacific Africa FY Africa : Ethiopia Focus on establishing presence and growing in high growth emerging markets Looking for expansion in key markets of Africa and South East Asia Acquired 51% stake in Kadisco Chemical Industry PLC, Ethiopia in Feb 2015 Setting up paint manufacturing facility at Indonesia

19 Home Improvement Business - India In 2012, Asian Paints announced plans to consider opportunities in the area of Home Improvement and Décor Entered Kitchen space in India in Aug 13 by acquiring 51% stake in Sleek International Sleek is a major organized player in the modern kitchen solution space with pan India presence Engaged in the business of manufacturing, selling and distributing kitchens, kitchen components including wire baskets, cabinets, appliances, accessories etc. Retail network of more than 30 showrooms including shop-in-shops and 250+ dealers Entered the Bathroom fitting business in June 14 through acquisition of front end sales business (including brands, network and sales infrastructure) of ESS ESS Bathroom products Pvt Ltd ESS ESS is a prominent player in the bath business segment in India and has high quality products in this segment

20 Chemicals Asian Paints manufactures Phthalic Anhydride (PAN) and Pentaerythritol PAN manufactured in Gujarat and Penta in Tamil Nadu More than 50% consumed internally Contributes about 1% to the group s consolidated revenue Contribution to the group s revenue has been continuously decreasing

21 Consistent performance Consolidated Net Sales and Operating Income ( Rs. Crores) Net Profit (Rs. Crores) 1,395 16,000 14,000 14,183 1,400 1,200 12,000 10,000 CAGR 18.6% 1, CAGR 23.1% 8,000 6,000 4,000 2, ,

22 Sustained value creation... Market Cap (Rs. Crores) Dividend Payout Ratio 77,820 80% 73% 10,000 9,000 8,000 7,000 6,000 5,000 CAGR 35.42% 3,751 70% 60% 50% 40% 30% 60% 52% 51% 54% 46% 47% 49% 51% 53% 39% 4,000 3,000 2,000 1,000 20% 10% 0%

23 Recent Accolades Felicitated as one of the MOST IMPACTFUL COMPANIES OF THE DECADE by CNBC Awaaz in Jan 2015 Included in Forbes Magazine's - Asia's Fab 50 List of cos 4 years in a row from 2011 Rated as the 6th most valuable Brands in India Aug 2014 (Compiled by marketing and brand consultancy Millward Brown and WPP Group) Ranked as the 4 th most admired company in the FMCG Sector by Fortune India Aug 2014 Presented with the Asian Centre for Corporate Governance & Sustainability Award for the Best Governed Company in 2011 Asian Paints receives the Best Audit Committee Award from the Asian Centre for Corporate Governance & Sustainability in 2011 Sword of Honour" by the British Safety Council for all the paint plants in India, considered as the pinnacle of achievement in safety across the world

24 Presentation structure Group Overview Economic Environment : Q4 & FY15 Financial Performance : Q4 & FY15 Business Review : Q4 & FY15 Risks and Outlook

25 Economic Environment Exciting year with its share of challenges Started off with sky high expectations on the back of the decisive political mandate; However, expectations have tapered off towards a slow & gradual recovery path Improvement in many macro indicators; However, growth slow & difficult to achieve Some of the positives that have helped during the year Sharp drop in crude prices during the year; helped in reigning inflation Strong improvement in portfolio inflows coupled with benefit from lower crude prices helped in a relatively stable exchange rate environment Easing monetary policy rates on back of falling inflation Recovery on the ground relatively slow Lower inflation & fall in interest rates hasn t helped to improve demand conditions significantly Progress on infrastructure spends also slower than expected 25

26 Presentation structure Group Overview Economic Environment : Q4 & FY15 Financial Performance : Q4 & FY15 Business Review : Q4 & FY15 Risks and Outlook

27 27 Financials FY

28 Growth over Last Year Standalone Revenue Growth Trend 28

29 Dividend In FY Total Dividend of Rs per share ( 610%) Final dividend of Rs per share Interim dividend of Rs per share Payout ratio of 52.6% for the year (on standalone financials) In FY * Total Dividend of Rs per share (530%) Final dividend of Rs per share Interim dividend of Rs per share Payout ratio of 50.9% for the year (on standalone financials) * Face Value split Rs 10 to Re 1 during FY

30 Presentation structure Group Overview Economic Environment : Q4 & FY15 Financial Performance : Q4 & FY15 Business Review : Q4 & FY15 Risks and Outlook

31 Business Review APL Standalone Decorative Paints business in India registered single digit volume growth in Q4 due to sluggish demand; Lower growth in the last 2 quarters pulled down the full year volume growth to a single digit Profitability improvement mainly driven by softening of input prices Cumulative price increase of 0.39% for FY15 against increase of 6.25% in FY14 Increased prices by 1% on 1st May 14 & 1.2% on 1st June 14 Price Reduction of 1.95% wef 11th Feb 15 Khandala plant subsidy income of Rs. 109 crores (Rs crores in FY14) Exceptional items includes Rs. 2.4 crores for impairment of Bhandup plant fixed assets (Rs. 10 crores in FY14) Rs crores for VRS/VSS for employees at Bhandup plant Rs crores on account of reversal of provision for diminution in value of investments in Asian Paints International Ltd, Mauritius 31

32 Business Review APL Standalone Continued focus on network expansion and opening new Colour Ideas store Over 30,000 Colour Worlds & 200 Colour Ideas stores across the country Launched exclusive Wood-finishes Colour Ideas store Smartcare - Waterproofing range of products witnessed excellent growth and acceptance across markets Nilaya range of wall coverings received good response during the very first year Launch of several new products like Royale WB Enamel, Royale Matt, 2X Primer cum Putty and Primero Primer Ezycolour Retailer program implemented across more than 2000 dealers Launched Express Painting Service under Ezycolour Home Solutions; Ezycolour Consultancy at Home service extended to 24 cities 32

33 Business Review APL Standalone Capex for FY15 was about Rs. 350 crores Capex for FY16 estimated at approximately Rs. 700 crores Rohtak (Haryana) plant expansion work from 200,000 KL/annum to 400,000 KL/annum in progress as per schedule MOU signed with the Govt. of Andhra Pradesh for setting up 400,000 KL paint manufacturing facility at Visakhapatnam Would involve an outlay of about Rs crores in a phased manner Challenging industrial relations scenario affected production at Sriperumbudur plant in Tamil Nadu during the year; however demand serviced through other plants Cessation of work by operators at the plant wef 28 th April

34 Business Review International Business performed well amidst challenging market conditions in some key markets Egypt showed signs of stabilizing after 3 years of political turmoil Good growth in markets of Bangladesh, Nepal & Emirates; however political unrest continued to impact operations in Bangladesh intermittently Decline in crude prices in the second half of the year impacted economic growth in markets like Bahrain, Oman & Trinidad Royalty received by AP India at Rs crores (Rs crores in FY14) Total royalty paid by International operating subsidiaries at Rs crores (Rs. 37 crores in FY14) AP International, Mauritius holds 100% stake in BIL, Singapore wef 31 st July 2014 Acquisition of 51% controlling stake in Kadisco, Ethiopia completed in Feb 2015, at a consideration of Rs. 117 crores In the process of setting up of paint manufacturing plant in Indonesia with a 24,550 MT capacity subject to necessary regulatory and other approvals 34

35 Business Review International Net Sales ( Rs in crores) Regions FY 15 FY 14 Gr (%) FY 15 FY 14 Gr (%) Caribbean % % Middle East % % Asia % % South Pacific % % Africa PBIT (Rs in crores) IBU 1, , % % Profit impacted primarily by: Lower profitability in Egypt & Singapore Expenses related to BIL stake acquisition, Indonesia set-up costs and Ethiopia acquisition related costs Excluding Egypt, Net Sales growth of 10.8% & PBIT growth of 5% 7.0% 1.6% 11.8% Caribbean : Jamaica, Barbados and Trinidad & Tobago 31.0% Middle East : UAE, Bahrain, Oman & Egypt 48.6% Asia : Nepal, Sri Lanka, Bangladesh, Singapore & Indonesia South Pacific : Fiji, Tonga, Solomon Islands, Vanuatu & Samoa Africa : Ethiopia Net sales break-up 35 Caribbean Middle East Asia South Pacific Africa

36 Business Review International Kadisco Paints, Ethiopia Sohar Facility, Oman More than 2600 Colour Worlds and 8 Colour Ideas Stores across International markets Smart Care range launched in Nepal and Sri Lanka; Intumescent coating under brand name APCOCHAR launched in the Gulf region Capacity expansion completed at Bangladesh; Sohar facility in Oman to be commissioned soon 36

37 Business Review Industrial India PPG Asian Paints (PPGAP) Net sales grew by 12.2% to Rs crores with net profit of Rs crores Good growth in the General Industrial and Refinish segment Falling raw material prices had a favorable impact Asian Paints PPG (APPPG) Net Sales grew by 17.3% to Rs crores; reported loss of Rs. 5.6 crores Witnessed good growth in the Industrial Liquid Paints and Powder coating segment with trend picking up in the second half of the financial year, especially in Industrial Liquid Paints Note: Figures shown above are at 100%. APL consolidated financials include 50% for both businesses 37

38 Sleek Business Review Home Improvement Registered Net Sales of Rs crores in FY15; Loss of Rs crores during the year after amortization charge of Rs. 4.9 crores Business impacted by the weak consumer demand; Expansion of network also slower than expected ESS ESS Acquired the front end sales business including brands, Network and Sales Infrastructure in June 2014 Registered Net Sales of Rs crores in FY15; Loss of Rs crores (at PBIT level) for the year after amortization charge of Rs. 4.9 crores Both businesses have been co-branded with Asian Paints Continue to work on expansion of network, deriving greater synergies with Asian Paints dealer network and streamlining of operations 38

39 Presentation structure Group Overview Economic Environment : Q4 & FY15 Financial Performance : Q4 & FY15 Business Review : Q4 & FY15 Risks and Outlook

40 Outlook Significant improvement in domestic demand may take some time Recent forecasts of below normal monsoon might impact demand, especially from rural sector On the industrial front, current improvement in demand conditions would need further support from pick-up in industrial activity & infrastructure push from Govt. Raw material prices expected to remain low in the near term Crude has been volatile and flared up significantly from April 2015; Any further increase in crude prices could have an impact Global factors (uncertainty on Greece, US Fed rate hikes) and rising crude prices have increased volatility in exchange rates; Any further depreciation in Rupee would put pressure on margins No significant improvement expected in international markets, especially in Egypt and Caribbean; Devastating earthquake in Nepal would also impact business conditions for some time Concerns remain on political unrest in Bangladesh, further currency depreciation risk in 40 Egypt

41 41 THANK YOU

42 42 ANNEXURES

43 43 STANDALONE Q4 FY

44 44 CONSOLIDATED Q4 FY

45 45 STANDALONE 12M FY

46 46 CONSOLIDATED 12M FY

47 KEY RATIOS Standalone Consolidated % to Income From Operations FY FY FY FY Material Cost 55.3% 57.0% 56.2% 57.7% PBDIT 17.3% 17.1% 15.8% 15.7% PBT 16.7% 16.4% 14.8% 14.5% PAT 11.4% 11.2% 10.1% 9.9% For Standalone and Consolidated results PBT is before Exceptional Items For Consolidated results PAT is before Minority Interest 47