IIFL Enterprising India Investors‟ Conference...

IIFL Enterprising India Investors‟ Conference

Mumbai

February 25, 2013

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.

The Asian Paints Group Today…

India‟s largest paint company for over four decades

Group gross revenue of over ` 10,000 crores (USD 2 Bn) in FY 2012

Operates in 17 countries with 23 paint manufacturing facilities

Business Operations – Consolidated

Paints India

Decorative Coatings – India

Industrial Coatings – India

APPG (PPG AP)

AP PPG

Chemicals India

International Operations

•50% of APPG considered since it is a 50:50 JV with PPG Inc.

• Business of APICL/ APCO now part of AP PPG

81%

4%

3%

12%

APL APPG APICL/APCO International

Sales Composition – March 2012

Decorative Coatings - India

Strong presence throughout the country across all product segments

Introduced many innovative concept in the Indian paint industry like Small packs

Exterior segment

Home Solutions (painting solution service)

Colour Next (prediction of Colour Trends through in-depth research)

Special Effects / Textured paints

Signature Store

Colour Ideas

Samplers

Industrial Coatings - India

Asian Paints participates in the Industrial Coatings segment, through two

50:50 JVs with PPG Inc. of US

PPG AP (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

AP PPG (For Non Auto Industrial)

Protective coatings, floor coatings, road marking paints and powder coatings

segment catered to by thisJV

Services customers in the sectors of Infrastructure, Oil & Gas, Power Plants,

White Goods, etc.

Chemicals

Asian Paints also manufactures Phthalic Anhydride (PAN) and

Pentaerythritol

PAN is manufactured in Gujarat and Penta in Tamil Nadu

More than 50% consumed internally

Chemicals business contributes about 1% to the group’s consolidated

revenue

Its contribution to the group‟s revenue has been continuously decreasing

The New Brand Identity

Signifies our intent to establish a deeper connect with our

customers

Ensure that the Asian Paints brand is able to stir the consumer‟s

imagination, ignite their creativity as well as expand their vision to

a new vista of possibility

The new logo conveys these elements with the flowing ribbon

formation that creates the „AP‟ design highlighting the easy flow,

smoothness, dynamism and possibility that our solution and

offerings will provide.

Corporate Brand Positioning

“To be the fore runner of inspiring décor and to actively

empower customers to create their dream homes”

International Operations

Contributes about 12% to the group

turnover

Began by establishing presence in Fiji in

1978

Presence in 16 countries spread over 4

regions

Middle East

Caribbean

South Pacific Islands

Asia* Asia includes Sri Lanka, Nepal, Bangladesh and Singapore operations

14.2%

48.8%

28.9%

8.2%

Caribbean

Middle East

Asia

South Pacific

% sales contribution of each region – FY 2012

Caribbean

South East Asia

Singapore

UAE, Bahrain & Oman

Middle East

Jamaica, Barbados, Trinidad & Tobago

South Asia

Sri Lanka,Nepal & Bangladesh

South Pacific

Fiji, Tonga, Vanuatu, Samoa & Solomon Islands

Egypt

International Operations - Brands

Presentation structure

Performance: Q3 & 9M FY 2012-13

Review of Business Units

Macro Environment - Outlook and Risks

Sales Performance Q3 FY 2012-13

Standalone

Net Sales and Operating Income at ` 2536.96 crores; grew by 20.0%

Consolidated

Income from operations at ` 3052.9 crores; grew by 18.9%

28.9%

25.5%

20.3%

28.9%

25.7%

6.7%

16.2%

20.3%

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

30.0%

35.0%

Q1-FY12 Q2-FY12 Q3-FY12 Q4-FY12 FY2012 Q1-FY13 Q2-FY13 Q3-FY13

Standalone Net Sales & Operating Income

Gr

rate

over

the s

am

e p

eri

od

of

LY

Profit performance Q3 FY 2012-13

Standalone:

PAT at ` 312 crores; grew by 24.6%

EBIT at ` 455.3 crores; grew by 25.3%

Consolidated:

PAT after Minority Interest at ` 335.2 crores; grew by 30.5 %

EBIT at ` 504.7 crores; grew by 29.2%

18.9%

16.6%

18.5%16.8%

18.3%

21.0%

16.0%

18.8%

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

Q1-FY12 Q2-FY12 Q3-FY12 Q4-FY12 FY2012 Q1-FY13 Q2-FY13 Q3-FY13

Standalone Paint Segment EBIT Margins

Sales & Profit Performance 9M FY 2012-13

Standalone:

Income from operations Up by 14.4% to Rs 6739.19 crores

PBDIT up by 17.6 % to Rs 1193.25 crores

Net profit up by 13.5% to Rs. 810.44 crores

Consolidated:

Income from operations up by 16.2% to Rs 8237.3 crores

PBDIT up by 18.4% to Rs 1338.6 crores

PAT after Minority Interest up by 18.3% to Rs 862.8 crores

Presentation structure

Performance : Q3 & 9M FY 2012-13

Review of Business Units

Macro Environment - Outlook and Risks

Review of Business Units

Decorative Business - India

Industrial Operations - India

International Operations

Decoratives Business - India

Demand Conditions

Good demand for decorative coatings across the country during festive season

Cumulative price increase for 9M FY13 is 5.3%

No Price revision effected in Q3 FY13

Announced 0.2% price cut on select product categories w.e.f Jan 2013

Input Cost

Witnessed Softening in prices of Titanium Dioxide and some other chemicals

Material price Index for 9M FY 13 was 105.56 (taking FY 11-12 base as 100 )

Decoratives Business - India

Sales & Marketing

The total number of Colour Worlds have crossed 23,500

Tremendous response to the “Happy Painting Guide” campaign

Colour Idea stores continue to receive a very good response

80 Colour Ideas stores in operation

Expansion Plans

Khandala project construction progressing well

Phase I – 3,00,000 KL to be commissioned in Q4 of FY 2012-13

The Plant can be further scaled up to 4,00,000 KL

Capex

Capex for the year estimated to be around ` 750 crores

Review of Business Units

Decorative Business - India

Industrial Operations - India

International Operations

Industrial Operations

Auto (PPGAPP) and Non-Auto Industrial (AP PPG)segments

Auto refinish and General Industrial segments have shown relatively better

growth

Challenging demand conditions due to poor demand from projects business

and slowdown in OEM segment

Review of Business Units

Decorative Business - India

Industrial Operations - India

International Operations

23

International Operations

Good growth witnessed in Middle East and Asia Region

Regions YTD Dec 12 YTD Dec 11 Gr %

Caribbean 160.50 134.10 20%

Middle East 557.94 439.90 27%

Asia 301.77 237.33 27%

South Pacific 86.14 66.67 29%

Total 1,106.35 878.00 26%

Net Sales (` in Crores)

Regions YTD Dec 12 YTD Dec 11 Gr %

Caribbean 11.42 10.50 9%

Middle East 70.88 55.00 29%

Asia 27.94 16.30 71%

South Pacific 12.92 9.13 42%

Total 123.17 90.93 35%

PBIT (` in Crores)

Presentation structure

Performance : Q3 & 9M FY 2012-13

Review of Business Units

Macro Environment - Outlook and Risks

Macro Environment

While there are reasons to be concerned because of lower Gross Domestic Product

(GDP) numbers, poor industrial production figures and weak external demand; easing

inflation numbers provide some relief to the overall long term structural growth story

RBI‟s decision to cut Repo rates and CRR by 25 bps is expected to give a boost to the

liquidity by providing liquidity and making the borrowings cheaper

Global economy exhibited mixed trends wherein on one hand US is showing some

signs of improvement, UK on the other hand is exhibiting signs of a double dip

recession

Key events to shape the outlook for next year

Annual Budget

Elections

RBI‟s stance on balancing growth and inflation

Outlook and Risks

Any further fall in GDP growth rate might impact demand in India

Weak consumer sentiments may lead to slowdown in discretionary spending in

urban areas

Commodity prices are softening but a trend reversal may raise a concern

Further depreciation in rupee will make imports more costly

Politically uncertainty and slow growth throughout the emerging economies may

draw the attention of the world away from BRIC economies

Thank you...

Annexure

29

Consolidated P&L : Q3 FY2012-13

Particulars 31.12.2012 31.12.2011 Gr %

Income from operations

Net Sales/Income from operations (Net of excise duty) 3,037.14 2,558.86 19%

Other operating income 15.78 8.13 94%

Total income from operations (net) 3,052.92 2,566.99 19%

Expenses

Material Cost 1,813.33 1,551.35 17%

Employee benefits expense 153.17 131.79 16%

Depreciation and amortisation expense 36.61 30.67 19%

Other expenses 575.99 478.71 20%

Total Expenses 2,579.10 2,192.52 18%

Profit from operations before other income and finance costs (1-2) 473.82 374.47 27%

Other income 30.91 16.07 92%

Profit from ordinary activities before finance costs (3+4) 504.73 390.54 29%

Finance costs 7.85 10.65 -26%

Profit from ordinary activities before tax (5-6) 496.88 379.89 31%

Tax expense 146.56 113.47 29%

Net Profit from ordinary activities after tax (7-8) 350.32 266.42 31%

Minority Interest 15.09 9.56 58%

Net Profit after taxes and minority interest (9-10) 335.23 256.86 31%

Quarter Ended

(` in Crores)

Standalone P&L : Q3 FY2012-13

(` in Crores)

Particulars 31.12.2012 31.12.2011 Gr %

Income from Operations 2,536.96 2,114.18 20%Material Cost 1,482.40 1,253.30 18%Employee Remuneration 97.56 83.22 17%Other Expenses 505.77 410.18 23%PBDIT 451.23 367.47 23%Depreciation 30.08 24.88 21%Profit from Operations before Other Income and

Interest421.15 342.59 23%

Other Income 34.12 20.80 64%PBIT 455.27 363.39 25%Interest 5.97 6.20 -4%PBT 449.30 357.19 26%Curr. & Def Tax 137.27 106.70 29%PAT 312.03 250.49 25%EPS 32.53 26.11

Quarter Ended

Consolidated P&L : 9M FY2012-13

Particulars 31.12.2012 31.12.2011 Gr %

Income from operations

Net Sales/Income from operations (Net of excise duty) 8,192.34 7,060.66 16%

Other operating income 44.96 28.71 57%

Total income from operations (net) 8,237.30 7,089.37 16%

Expenses

Material Cost 4,868.60 4,255.69 14%

Employee benefits expense 463.47 390.56 19%

Depreciation and amortisation expense 105.75 89.75 18%

Other expenses 1,566.60 1,312.30 19%

Total Expenses 7,004.42 6,048.30 16%

Profit from operations before other income and finance costs (1-2) 1,232.88 1,041.07 18%

Other income 76.59 64.61 19%

Profit from ordinary activities before finance costs (3+4) 1,309.47 1,105.68 18%

Finance costs 30.88 25.99 19%

Profit from ordinary activities before tax (5-6) 1,278.59 1,079.69 18%

Tax expense 377.93 323.83 17%

Net Profit from ordinary activities after tax (7-8) 900.66 755.86 19%

Minority Interest 37.89 26.61 42%

Net Profit after taxes and minority interest (9-10) 862.77 729.25 18%

Nine Months Ended

(` in Crores)

Standalone P&L : 9M FY2012-13

(` in Crores)

Particulars 31.12.2012 31.12.2011 Gr %

Income from Operations 6,739.19 5,888.36 14.4%Material Cost 3,913.36 3,494.04 12.0%Employee Remuneration 299.74 256.30 16.9%Other Expenses 1,332.84 1,122.69 18.7%PBDIT 1,193.25 1,015.34 17.5%Depreciation 86.86 73.98 17.4%Profit from Operations before Other Income and

Interest 1,106.39 941.36 17.5%

Other Income 82.44 92.81 -11.2%PBIT 1,188.83 1,034.17 15.0%Interest 23.71 17.14 38.3%PBT 1,165.12 1,017.02 14.6%Curr. & Def Tax 354.68 303.22 17.0%PAT 810.44 713.81 13.5%EPS 84.49 74.42

Nine Months Ended

Key Ratios

% to Sales & Op. Inc. YTD Dec 12 YTD Dec 11 YTD Dec 12 YTD Dec 11

Material Cost/Net Sales 58.4% 59.5% 59.4% 60.3%

PBDIT/Net Sales 19.0% 17.6% 16.3% 16.0%

PBT/Net Sales 17.4% 17.3% 15.6% 18.1%

PAT/Net Sales* 12.1% 12.1% 11.0% 12.6%

* For Consolidation results, PAT is before Minority Interest

Standalone Consolidated