Asian Paints Ltd. · NSE:ASIANPAINT
Asian Paints — CLSA India 2005
46 slides from Asian Paints's conference presentation, November 2005
Slide 1: CLSA – India 2005
1 CLSA – India 2005 Gurgaon November 7-9, 2005
Slide 2: Presentation structure
2 Presentation structure • Overview of the company • Results : H1 - FY 2006 • Outlook and Risks : FY 2006
Slide 3: The Asian Paints Group
3 The Asian Paints Group Asia’s fourth Among the Top 10 largest paint Decorative Coatings company & leaders companies in the world in 11 countries Operates in 22 countries Group revenue of with 29 paint mfg facilities US $ 585 million & with mfg capacity of market capitalization 400 mn ltrs/annum of
Slide 4: Asian Paints Group - Sales Breakup FY 2005
4 Asian Paints Group - Sales Breakup FY 2005 2.9% 19.4% 77.7% Paints-India Chemicals International Only 50% of Asian PPG sales have been considered in Paints India
Slide 5: Decoratives Market in India
5 Decoratives Market in India Decorative BU – India contributes 70 % to group’s revenue • Very low per capita consumption • Most of sale is for re-decoration • Painter / contractor led for long; now becoming B-I-Y (Buy It Yourself) • Virtually no D-I-Y(Do It Yourself) segment except at very low end
Slide 6: Decorative Business Unit - Segments
6 Decorative Business Unit - Segments • Asian Paints is the leader in all segments in Decorative Paints viz – Interior wall finishes – Enamels – Exterior Finishes – Wood Finishes
Slide 7: Elements of the Supply Chain
7 Elements of the Supply Chain 16 Outside Over 3000 SKUs Processing Centres 5 Manufacturing Over 600 Active Raw Plants Materials 6 Regional Over 300 Active Distribution Centres Packaging Materials 70 Sales Locations Over 2000 Industrial 17000 Dealers Customers
Slide 8: Industrial Coatings - India
8 Industrial Coatings - India • Second largest player in industrial coatings in India • Growth in excess of 25% over the past 3 years • Constitutes around 8 % of the group’s revenue* *Only 50 % of Asian PPG Industries sales have been included
Slide 9: Industrial Coatings - India
9 Industrial Coatings - India • Asian PPG Industries Ltd. – A 50:50 JV with PPG Industries of USA to manufacture automotive coatings – Second largest supplier to the auto segment in India – Lead suppliers to many major auto manufacturers. • Asian Paints Industrial Coatings Ltd. – 100% subsidiary for
Slide 10: Industrial Coatings - India
10 Industrial Coatings - India • APL Industrial Paints business – Current business comprises of • Protective Coatings, Road Markings, Floor Coatings and General Industrial Liquid Paints – Second largest in Protective Coatings – Become the second largest player in Road Markings within three years of
Slide 11: Chemicals
11 Chemicals • As a part of its backward integration strategy, Asian Paints manufactures Phthalic Anhydride (PAN) and Pentaerythritol • PAN is manufactured in Gujarat and Penta in Tamil Nadu • Chemicals business contributes 2.9 % to the group’s revenue – Its contribution to the group’s revenue has b
Slide 12: EBITDA & PAT (Rs Mn)
12 Asian Paints Limited Consistent Performance 3600 20000 EBITDA & PAT (Rs Mn) 3200 18000 2800 16000 2400 14000 2000 12000 l 1600 10000 1200 800 8000 400 6000 2000-01 2001-02 2002-03 2003-04 2004-05 Net Sales EBITDA PAT
Slide 13: Net working capital & ROCE for the last five years
13 Asian Paints Limited - Net working capital & ROCE for the last five years 80 71 60 46 39 27 38 40 36.5 41.5 33.6 37.4 20 27.9 0 FY'01 FY'02 FY'03 FY'04 FY'05 ROCE (%) NWC(in days) ROCE : EBIT/Cap.emp
Slide 14: The Indian Paint Market
The Indian Paint Market asianpaints
Slide 15: Indian Paint Market
15 Indian Paint Market • Estimated to be around Rs. 82 billion (USD 1.9 bn) • Unorganised sector controls around 35 % of the paint market • Decorative to Industrial Coatings ratio is around 70:30 • Exterior coatings is the fastest growing segment in Decorative coatings • Automotive coatings is the f
Slide 16: Paint Revenue Share FY 2005
16 The Indian Paint Market Paint Revenue Share FY 2005 35.00% 29.60% 0.20% 2.70% 12.20% 12.40% 7.90% Asian Paints Nerolac Berger Paints ICI Shalimar J&N Other Players* * Others include regional players, organised players who are not listed and the small scale sector
Slide 17: Indian Paint Market - Trends
17 Indian Paint Market - Trends • Post liberalisation, the Indian paint market has grown by around 1.5 to 2 times real GDP growth every year • Overall paint demand will continue to be good and will be boosted by – Very low penetration levels of paint in India – Policies conducive for growth of the c
Slide 18: Indian Paint Market - Trends
18 Indian Paint Market - Trends • Demand for premium paints will increase due to – More educated consumers & increased aspirations for better homes & lifestyles • Industrial coatings expected to grow faster than decorative coatings – New emerging segments like Powder coatings, Road Markings, Floor c
Slide 19: International Business Unit contributes 19% to group revenue
19 International Business Unit contributes 19 % to the group’s revenue
Slide 20: International Presence
International Presence 20 South East Asia Caribbean Singapore, Myanmar, Jamaica, Barbados and Thailand, Trinidad & Tobago Malaysia & China South Asia Middle East Sri Lanka Oman, UAE, Bahrain Nepal & Bangladesh & Egypt South Pacific Australia, Fiji, Tonga, Vanuatu, Samoa & Solomon Islands
Slide 21: Defining the Priorities for Growth
21 Defining the Priorities for Growth Jamaica, Trinidad & Barbados Caribbean Egypt & GCC Middle East (Bahrain, UAE & Oman) Growth Leadership Regions Regions South Asia Nepal, Sri Lanka, Bangladesh South East Singapore, Malaysia South Pacific Asia Thailand & China South Pacific Islands
Slide 22: Medium Term Objectives
22 Medium Term Objectives Growth Regions – Focus on aggressive top line growth To be within the top 3 players in the defined segment in each of these markets Leadership Regions – Focus on maximizing free cash flows To be seen as a premium company and to increase market share atleast 1 % p.a
Slide 23: Presentation structure
23 Presentation structure • Overview of the company • Results : H1 - FY 2006 • Outlook and Risks : FY 2006
Slide 24: Dividend
24 Dividend • Interim dividend of 45% announced for FY 2006 • Interim dividend of 40% distributed for the FY 2005 • Total dividend of 95 % distributed for FY 2005 – Dividend payout ratio was 60 % in FY2005
Slide 25: Consolidated P&L – H1 FY 2006
25 Consolidated P&L – H1 FY 2006
Slide 26: Highlights - Consolidated results – H1FY2006
26 Highlights - Consolidated results –H1FY2006 • Sales growth of 19.6 % driven by – Strong growth in decorative and industrial paints in India & the Middle East region • Other income has decreased by 21.7% to Rs 122.9 million mainly on account of lower dividend income on investments in India • Bette
Slide 27: Consolidated Sales breakup: H1 FY 2006
27 Consolidated Sales breakup : H1 FY 2006 * 50 % of Asian PPG Industries sales are included
Slide 28: Asian Paints Consolidated Results H1 FY 2006
28 Asian Paints Consolidated Results H1 FY 2006 • Decorative Business - India • Industrial Operations - India • International Operations
Slide 29: Paints : Decoratives India : H1 FY’06
29 Paints : Decoratives India : H1 FY’06 • Demand for decorative paints has been good – South and East region registered very good growth • Excellent growth in all wall finish products – Impressive growth recorded by interior and exterior emulsions • Over 800 ColourWorlds installed in the first half
Slide 30: Paints : Decoratives India : H1 FY’06
30 Paints : Decoratives India : H1 FY’06 • New products are faring well – Apex Ultima launched in most parts of the country ; Excellent response from network – Utsav range of products launched in the recent past has received good response; Will help penetrate the economy segment • Asian Paints Home
Slide 31: Paints : Decoratives India : H1 FY’06
31 Paints : Decoratives India : H1 FY’06 • Price of TiO2 has been stable in last four months • Prices of solvents have increased significantly • Prices of monomers, additives and vegetable oils have decreased in the last three months
Slide 32: Asian Paints Consolidated Results H1 FY 2006
32 Asian Paints Consolidated Results H1 FY 2006 • Decorative Business - India • Industrial Operations - India • International Operations
Slide 33: Industrial Operations - India : H1 FY’06
33 Industrial Operations- India : H1 FY’06 • Sales for Protective coatings has grown in excess of 40 % – Increased spending in infrastructure and new capacity requirements being set up in the country has spurred growth for protective coatings • Sales for Asian PPG, the automotive JV has increased by
Slide 34: Industrial Operations – India : H1 FY’06
34 Industrial Operations – India : H1 FY’06 • Sales for powder coatings has increased by 36.2 % to Rs. 172 million – Industry has grown by 25% due to exports of automotive parts, increased demand for white goods and new applications in architectural coatings
Slide 35: Asian Paints Consolidated Results H1 FY 2006
35 Asian Paints Consolidated Results H1 FY 2006 • Decorative Business - India • Industrial Operations - India • International Operations
Slide 36: International Operations : H1 FY2006
36 International Operations : H1 FY2006 • Value sales increased by 11.0% to Rs. 2.5 billion – Value sales growth is 12.2 % after excluding divestments • Berger International’s revenue has increased by 5.9 % to Rs. 1.6 billion – BIL has reported a loss of Rs 18 million before tax and minority interes
Slide 37: Region wise Sales Breakup
37 Region wise Sales Breakup H1 FY'05 H1 - FY'06 Caribb Caribbe ean an Middle 25.7% Middle 24.0% East East 38.1% 36.2% South South Pacific Pacific 12.9% 13.6% S.E. South S.E. South Asia Asia Asia Asia 16.1% 8.4% 16.2% 8.7% • Middle East region has registered the highest growth at 22%
Slide 38: International Operations : Going ahead
38 International Operations : Going ahead • Investments in International subsidiaries reviewed periodically and the Company will not hesitate to restructure its portfolio where required • Middle East offers great opportunities as huge investments are likely to be made in oil, gas and construction in
Slide 39: Asian Paints - Standalone : Cash Flow
39 Asian Paints -Standalone : Cash Flow • Operating profit is higher by 23% but operating cash flow is lower by 12%, mainly on account of ; – Higher tax outflow due to Rs 120 million of tax paid in Q1 FY’06 for last financial year – Higher WC on account of stock build up in paints and phthalic . • S
Slide 40: Asian Paints Consolidated - Key Ratios
40 Asian Paints Consolidated - Key Ratios
Slide 41: Presentation structure
41 Presentation structure • Overview of the company • Results : H1 - FY 2006 • Outlook and Risks : FY 2006
Slide 42: Environment – FY’2006
42 Environment – FY’2006 • India • GDP growth estimated at 7.5 % for FY06 • Cement dispatches and construction industry continue to perform well • Slowdown in the automotive industry – We are optimistic of this industry’s performance in the long run • Inflation still a cause for concern • Agricultur
Slide 43: Environment – FY’2006
43 Environment – FY’2006 • International • World GDP growth expected to be around 3 % for CY’05 – Asia’s economy expected to be the fastest growing at 6-7% • Middle East economy will continue to perform well due to high oil prices • The economies in the South Pacific, South Asia and South East Asia
Slide 44: Outlook and Risks – FY’2006
44 Outlook and Risks – FY’2006 • India • Paint Industry expected to grow by over 15% by value • In Decorative paints emphasis would continue to be to drive top-line growth • Pressure on margins may continue • Demand for industrial coatings will continue to be buoyant • International • Manage the por
Slide 45: Outlook and Risks – FY 2006
45 Outlook and Risks – FY 2006 • Decoratives paints business in India is expected to grow by 10-12 % by volumes • Industrial business sales is expected to grow in excess of 20 % by value • International operations is expected to grow by 15 % by value – PAT margin excluding extraordinary items to be
Slide 46: Thank you...
Thank you... asianpaints