Analyst Presentation - FY2007

8/8/2019 Analyst Presentation - FY2007

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Investor PresentationFY 2007 – Annual Results

May 10, 2007

Presentation structure

• Results : Q4 – FY 2007

• Results : FY 2007

• Outlook : FY 2008

Highlights : Q4 – FY2007

• Consolidated Net sales and operating income

increased by 25.4 % to Rs. 9,589 million– Good growth witnessed by all business units

– Volume growth has been impressive for the

quarter

• Net Profit has risen by 43 % to Rs. 666 mn

– Good performance by the Decorative Business Unit

– Improved performance by International operations

• Material costs have risen during the quarter

• Operating margins have improved due to

impressive volume growth

Consolidated P&L – Q4 FY07

Standalone P&L – Q4 FY07

EOI (Extra Ordinary Item) – Provision for diminution in valueof Investment.

Highlights - Consolidated results–FY2007

• Paint volumes for the year including international

increased by 18.7 % to 481,976 KL – All three business units registered in excess of 15% volume

growth

• Value Sales have grown by 21.5 % driven by

– Good growth registered by Paints-India business and the

Middle East region

• Material costs as a percentage to sales have gone up

marginally

• HR costs have risen by 17.4 % to Rs. 2621 mn

• However operating margins have been maintained due

to control on other overheads

Consolidated P&L –FY 2007

* 50 % of Asian PPG Industries sales are included

Consolidated Sales breakup :FY 2007 & Q4 FY 07

Asian Paints Consolidated Results FY2007

• Asian Paints Standalone Results

• Decorative Business – India

• Industrial Operations – India

• International Operations

Asian Paints - Standalone P&L :

FY2007

EOI (Extra Ordinary Item) – Provision for diminution

in value of Investment.

• Net Sales grew by 21.7 % due to strong growth by

all segments of the paints business

• Net profit has increased by 45.7% to Rs. 2720 mn

– Due to the performance of the Decorative – India business

– In FY’2006 results, Rs. 336 million was provided towards

diminution in the value of investments in overseas units

– Adjusting for EOI, Net profit has risen by 23.5 %

• Chemicals business registered revenue growth of

12.9% to Rs. 961.5 mn (adjusting for inter segmentrevenue)

– PBIT for this business increased by 105.9 % to Rs. 246.3

million

Asian Paints - Standalone P&L :

FY2007

Environment – FY2007

• India

• GDP growth at 9.0 % for FY07 – Estimated at 9.2 % for FY 08 aided by a surge in industry

and services sector

– Higher growth than FY07 predicted for services and

industrial sector

• Inflation and rising interest rates are a cause forconcern

• Manufacturing, Capital goods, consumer goods,construction, cement, automobiles – all haveregistered good growth for FY2007

Estimates : Citigroup Macroscope

Paint Industry – India : FY 2007

• Paints industry estimated between Rs. 112 and Rs.

115 billion for FY2007

– Value growth is estimated at around 18% in FY2007

• Decorative paints estimated to have grown by

around 19 % in value

• Industrial Paints is estimated to have grown by

around 17 % in value

• Demand conditions have been good in most

segments of the paint industry• Input costs continued its upward trend during the

year putting pressure on operating margins of paint

companies

• Demand for decorative paints was good nearly

throughout the year and in most parts of thecountry

– While Southern region of the country continues to do very

well, the exceptions were Delhi and North East region

• All segments for Decorative India registereddouble digit growth

• Excellent growth in all wall finish products

– Impressive growth recorded by interior and exterioremulsions

• 8500 Colour Worlds now installed in the country

– Penetration into small towns continues

Paints : Decoratives India

• Pricing FY 2006

– Four price increases effected during the year.

– Overall prince increase in the year was around 4.25%

– All price increases have been absorbed well by the market

• New Products

– Royale Play range expanded

– Luxury Ultra Gloss enamel launched in many markets

• Colour Next 2007 launched

– The company is beginning to be recognised as an authority inforecasting colour trends.

• Asian Paints Home Solutions

– Added 2 cities in FY2007 i.e. Jaipur and Baroda

– APHS is now present in 12 cities in the country

• Manufacturing facility

– Ankleshwar plant has received environmental

clearance for 100,000 kl from 80,000 kl

• Price of TiO2 have been fairly stable during the year

• Prices of raw materials increased sharply in 2nd and 3rd

quarter in FY 2007

– Major increases were in Xylene, Phthalic Anhydride and vegetableoils

• Prices of solvents have eased in Q4’FY07 due to lower

crude oil prices

Industrial Operations

• Sales for automotive JV (APPG) increased by

23% to Rs. 3447 million – Both OE and refinish segment performed well

– Acquired the advanced refinish business of ICI India

for a consideration of Rs. 520 million• APPG is now the largest player in the auto-refinish

segment

– Work on new manufacturing facility for APPG hascommenced

• Sales for powder coatings business (APICL) increased

by 22.3 % to Rs. 477 million

– Capacity expansion work underway at Baddi plant (HP) and

Sarigam plant (Gujarat)

• The other industrial coatings business which is part

of the standalone company grew by over 20 % – The company is now the second largest in protective

coatings and the largest player in Road Markings

– Exclusive manufacturing facility for industrial coatings

commissioned near Mumbai

• First phase commissioned for 14,000 kl

Industrial Operations

International Operations : FY2007

• Paint value sales increased by 20.8% to Rs. 6.24

billion – Double digit value sales growth recorded by all regions

• Paint Volumes increased by 22.4 % to 94,181 KL

• PBIT for International operations increased by 457 %to Rs. 192 million

• Input prices were buoyant throughout the year and went up

significantly

– Pressure on margins abated by leveraging economies ofscale, formulation engineering and reduction in material

losses in manufacturing

• During the year, the group divested its stake in the

associate company in Philippines and its stake in the

Myanmar subsidiary

• The profitability of international operations was

impacted by the following exceptional items

– Loss of Rs. 71 mn from disposal of stake in associatecompany in Philippines

– Loss of Rs. 7 million due to disposal of subsidiary in Myanmar

– Provision of Rs. 16 million for impairment of buildings of

Thailand subsidiary

– Tax expense is lower by Rs. 75 million due to write-back of

prior year taxes

• New products constituted 14 % of sales turnover

• Over 600 dealer tinting systems are in operation atoverseas units

• Microsoft Navision – the ERP solution is running

successfully in most subsidiaries

• A detailed program is being implemented by all

overseas units to upgrade safety, health and

environment standards

Region wise Sales Breakup

CY 2005

MiddleEast,

SouthPacific,

Caribbe

CY 2006Caribb

Pacific,

Middle

Region wise – Sales & EBIT

FY 2007

In INR million

Asian Paints Standalone - Cash Flow

FY 2007

• Operating cash flow ishigher by 43% inspite of

higher tax outflow – Improvements in working

capital

• Capital expenditure forFY’07 was Rs 800 mn

– Estimated capex for FY07

was Rs. 1500 mn• Estimated Capex for FY08

is Rs. 2750 mn

Dividend

• Final dividend of Rs. 1 /- announced for FY 2007

– First interim dividend of Rs. 5.50 / share distributed in Nov’06

– Second interim dividend of Rs. 6.50 /share distributed in Mar’07

– Total Dividend in FY 2007 is Rs. 13 /-

• Total Dividend of 125%(Rs. 12.5 per share ) distributed

for FY 2006 – Includes one time special dividend of 25% to mark the occasion of

the 60th year of incorporation of the company

• Dividend payout ratio is 52 % for FY 2007 and Dividend

payout ratio for FY2006 was 62% (Before EOI includingspecial dividend)

Key Ratios

Outlook– FY2008

• India

• Paint Industry expected to grow by 13 – 15 % by value• Inflation and rising interest rates are a cause for

concern

• In Decorative paints our emphasis would continue to be

to drive top-line growth

• Demand for industrial coatings will continue to bebuoyant

Outlook– FY2008

• International

• The focus for international business is to grow top-lineand improve profitability

– The Caribbean, Middle East, South Asia and South Pacific

regions are expected to register an improved performance

– Steps have been taken to reduce losses in the South East

Asia region

– Focus is on increasing market share through initiatives viz.

new product introductions, dealer tinting systems and alsoincreasing operating efficiency

Thank you...

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