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Investor PresentationFY 2007 – Annual Results
May 10, 2007
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Presentation structure
• Results : Q4 – FY 2007
• Results : FY 2007
• Outlook : FY 2008
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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
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Consolidated P&L – Q4 FY07
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Standalone P&L – Q4 FY07
EOI (Extra Ordinary Item) – Provision for diminution in valueof Investment.
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Presentation structure
• Results : Q4 – FY 2007
• Results : FY 2007
• Outlook : FY 2008
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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
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Consolidated P&L –FY 2007
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* 50 % of Asian PPG Industries sales are included
Consolidated Sales breakup :FY 2007 & Q4 FY 07
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Asian Paints Consolidated Results FY2007
• Asian Paints Standalone Results
• Decorative Business – India
• Industrial Operations – India
• International Operations
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Asian Paints - Standalone P&L :
FY2007
EOI (Extra Ordinary Item) – Provision for diminution
in value of Investment.
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• 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
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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
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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
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Asian Paints Consolidated Results FY2007
• Asian Paints Standalone Results
• Decorative Business – India
• Industrial Operations – India
• International Operations
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• 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
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• 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.
Paints : Decoratives India
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Paints : Decoratives India
• 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
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Paints : Decoratives India
• 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
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Asian Paints Consolidated Results FY2007
• Asian Paints Standalone Results
• Decorative Business – India
• Industrial Operations – India
• International Operations
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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
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• 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
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Asian Paints Consolidated Results FY2007
• Asian Paints Standalone Results
• Decorative Business – India
• Industrial Operations – India
• International Operations
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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
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International Operations : FY2007
• 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
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International Operations : FY2007
• 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
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Region wise Sales Breakup
CY 2005
MiddleEast,
37.8%
South
Asia,
9.0%
SouthPacific,
12.6%
S.E.
Asia,
14.6%
Caribbe
an,
25.9%
CY 2006Caribb
ean,
24.1%
S.E.
Asia,
13.3%
South
Pacific,
11.5%
South
Asia,
9.8%
Middle
East,
41.2%
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Region wise – Sales & EBIT
FY 2007
In INR million
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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
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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)
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Key Ratios
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Presentation structure
• Results : Q4 – FY 2007
• Results : FY 2007
• Outlook : FY 2008
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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
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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
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Thank you...