Morgan Stanley Investor Conference

Mumbai
June 10, 2015

Disclaimer
This presentation may contain statements which reflect Managements
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.

Presentation structure
Group Overview

Economic Environment : Q4 & FY15

Financial Performance : Q4 & FY15
Business Review : Q4 & FY15

Risks and Outlook

Asian Paints Group Today

Over

No.

Paint Company
in India

13th
Largest Coating
Company
In the World

USD

Billion

Group revenue

Operations in

19

Company; Four
times in a row

Times nearest
Competitor in India

26

countries

Paint
Manufacturing
Plants

Part of NSE Nifty

Servicing
Consumers in over

50

65

Forbes Asias Fab

50

Countries

rd

Largest Paint
Company in Asia

47
Years of Market
Leadership in India

7000+
Employees
worldwide

Global standing
14.0
12.0

In Billion USD

10.0

13.3

12.8

11.2

13th largest in the World

9.3

8.0

3rd largest in Asia

6.0
4.0

4.3 4.1
4.1 4.0
3.1 3.1

2.0
-

2.3 2.3
2.1 2.1 2.0
1.9 1.7

1.4 1.3
1.1

* Coating World 2014 Rankings

Worldwide Operations

Jamaica

Egypt
Barbados

Trinidad & Tobago

Ethiopia

Bahrain
UAE
Oman

Nepal
India

Bangladesh

Sri Lanka

Singapore
Indonesia
Solomon Islands
Vanuatu
Samoa
Fiji
Tonga

Strong Brands

Aspiration

To be the fore runner of inspiring dcor and to actively

empower customers to create their dream homes

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)

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 Consultancy @ Home

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

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

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

Changing with times

Business Portfolio

Decorative Coatings India

Industrial Coatings India

13%
1%

PPG Asian Paints

5%

Asian Paints PPG

International Operations
81%

Home Improvement Business India

Sleek
Ess Ess

Decorative - India

Home Improvement - India

Industrial - India

Chemical Business
FY 2014- 2015

International Operations

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

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
Indias 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

International Operations

1.6%

Contributes about 13% to the group turnover

Began by establishing presence in Fiji in 1978

7.0%

11.8%

31.0%

48.6%

Presence in 18 countries spread over 5 regions

Caribbean : Jamaica, Barbados and Trinidad & Tobago
Middle East : UAE, Bahrain, Oman & Egypt
Asia : Nepal, Sri Lanka, Bangladesh, Singapore & Indonesia

Caribbean

Middle East

Asia

South Pacific

FY 2014- 2015

South Pacific : Fiji, Tonga, Solomon Islands, Vanuatu &

Samoa
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

Africa

Home Improvement Business - India

In 2012, Asian Paints announced plans to consider opportunities in the area of Home
Improvement and Dcor

Entered Kitchen space in India in Aug13 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 June14 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

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 groups consolidated revenue

Contribution to the groups revenue has been continuously decreasing

Consistent performance
Consolidated Net Sales and
Operating Income ( Rs. Crores)

Net Profit (Rs. Crores)

1,395
1,400

14,183

16,000

1,200

14,000
12,000
10,000

1,000
CAGR
18.6%

800

8,000

CAGR
23.1%

600

6,000
4,000

400

2,574

174

200

2,000

0
2004-05

2014-15

2004-05

2014-15

Sustained value creation...

Market Cap (Rs. Crores)

60%

50%

7,000

3,751

30%

4,000

20%

3,000

10%

2,000

2013-14

2014-15

2012-13

2004-05

2009-10

2008-09

0%

1,000

2007-08

5,000

53%

46%

51%
47% 49%

39%

40%

2006-07

6,000

52% 51% 54%

2014-15

CAGR
35.42%

2005-06

8,000

60%

2004-05

9,000

70%

73%

2011-12

10,000

80%

2010-11

77,820

Dividend Payout Ratio

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 4th 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

Presentation structure
Group Overview

Economic Environment : Q4 & FY15

Financial Performance : Q4 & FY15
Business Review : Q4 & FY15

Risks and Outlook

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 hasnt helped to improve demand conditions
significantly
Progress on infrastructure spends also slower than expected

25

Presentation structure
Group Overview

Economic Environment : Q4 & FY15

Financial Performance : Q4 & FY15
Business Review : Q4 & FY15

Risks and Outlook

Financials FY 2014-15

27

Growth over Last Year

Standalone Revenue Growth Trend

28

Dividend

In FY 2014-15
Total Dividend of Rs. 6.10 per share ( 610%)
Final dividend of Rs. 4.30 per share
Interim dividend of Rs. 1.80 per share
Payout ratio of 52.6% for the year (on standalone financials)

In FY 2013-14*
Total Dividend of Rs. 5.30 per share (530%)
Final dividend of Rs. 4.20 per share
Interim dividend of Rs. 1.10 per share
Payout ratio of 50.9% for the year (on standalone financials)

* Face Value split Rs 10 to Re 1 during FY 2013-14

29

Presentation structure
Group Overview

Economic Environment : Q4 & FY15

Financial Performance : Q4 & FY15
Business Review : Q4 & FY15

Risks and Outlook

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 May14 & 1.2% on 1st June14
Price Reduction of 1.95% wef 11th Feb15
Khandala plant subsidy income of Rs. 109 crores (Rs. 65.6 crores in FY14)
Exceptional items includes
Rs. 2.4 crores for impairment of Bhandup plant fixed assets (Rs. 10 crores in FY14)
Rs. 25.2 crores for VRS/VSS for employees at Bhandup plant
Rs. 14.04 crores on account of reversal of provision for diminution in value of
investments in Asian Paints International Ltd, Mauritius
31

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

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. 1750 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 28th April 2015

33

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. 25.5 crores (Rs. 24.4 crores in FY14)

Total royalty paid by International operating subsidiaries at Rs. 37.5 crores (Rs. 37 crores in FY14)

AP International, Mauritius holds 100% stake in BIL, Singapore wef 31st July 2014

Acquisition of 51% controlling stake in Kadisco, Ethiopia completed in Feb2015, 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

Business Review International

Net Sales ( Rs in crores)
Regions

FY 15

FY 14

PBIT (Rs in crores)

Gr (%)

FY 15

FY 14

Gr (%)

Caribbean

213.4

215.4

-0.9%

17.5

2.0

777.7%

Middle East
Asia

876.8

843.0

4.0%

65.6

80.4

-18.3%

558.5
126.6

491.5
133.3

13.6%
-5.1%

39.0
23.3

49.1
23.4

-20.6%
-0.5%

156.1

-4.4%

South Pacific
Africa

28.2

IBU

1,781.2

7.9
1,659.9

7.3%

149.2

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%

1.6%
7.0%

Caribbean : Jamaica, Barbados and Trinidad &

Tobago

11.8%

Middle East : UAE, Bahrain, Oman & Egypt

31.0%

Asia : Nepal, Sri Lanka, Bangladesh, Singapore &

Indonesia
48.6%

South Pacific : Fiji, Tonga, Solomon Islands,

Vanuatu & Samoa
Africa : Ethiopia

Net sales break-up

35

Caribbean

Middle East

Asia

South Pacific

Africa

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

Business Review Industrial India

PPG Asian Paints (PPGAP)

Net sales grew by 12.2% to Rs. 997.9 crores with net profit of Rs.
56.1 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. 289.2 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

Business Review Home Improvement

Sleek
Registered Net Sales of Rs. 119.1 crores in FY15; Loss of Rs. 14.5 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. 81.8 crores in FY15; Loss of Rs. 9.82 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

Presentation structure
Group Overview

Economic Environment : Q4 & FY15

Financial Performance : Q4 & FY15
Business Review : Q4 & FY15

Risks and Outlook

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

THANK YOU

41

ANNEXURES

42

STANDALONE Q4 FY 2014-15

43

CONSOLIDATED Q4 FY 2014-15

44

STANDALONE 12M FY 2014-15

45

CONSOLIDATED 12M FY 2014-15

46

KEY RATIOS

% to Income From Operations

Material Cost
PBDIT
PBT
PAT

Standalone
Consolidated
FY 14-15 FY 13-14 FY 14-15 FY 13-14
55.3%
57.0%
56.2%
57.7%
17.3%
17.1%
15.8%
15.7%
16.7%
16.4%
14.8%
14.5%
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