Kansai Nerolac Paints Limited · NSE:KANSAINER
Kansai Nerolac Paints — Q4 FY2020 Earnings Presentation
47 slides from Kansai Nerolac Paints's earnings presentation, May 7, 2020
Slide 1: Cover letter: Q4 FY20 Investor Presentation filing
1 May 7, 2020 1. Corporate Relationship Department 2. Manager – Listing BSE Limited, National Stock Exchange of India Ltd. Phiroze Jeejeebhoy Towers, Exchange Plaza, C-1, Block G, Dalal Street, Bandra Kurla Complex, Bandra (E), Mumbai - 400001. Mumbai - 400 051. Sub.: Q4 FY 20 and FY20 Financial Res
Slide 2: Nerolac
NEROLAC (
Slide 3: Investor Presentation (Update 19-20)
3 •Investor Presentation (Update 19-20) All rights for this presentation are reserved with Kansai Nerolac Paints Limited. 2
Slide 4: Disclaimer
4 Disclaimer This presentation may contain statements which reflect management’s current views and estimates and could be construed as forward making statements. The future involves certain risks and uncertainties that could cause actual results to differ materially from the current views being expr
Slide 5: Agenda: Business Environment FY 2019-20
5 Agenda • Business Environment FY 2019-20 All rights for this presentation are reserved with Kansai Nerolac Paints Limited. 4
Slide 6: Recap of Business Environment 2019-20
6 Recap of Business Environment 2019-20 Demand slowdown Liquidity crunch Geo political uncertainty Currency volatility Corporate Rate Cut Limited impact of Initiatives COVID 19 and Lock-down Investor Presentation May 2020
Slide 7: Agenda: Financial Performance FY 2019-20
7 Agenda • Financial Performance FY 2019-20 All rights for this presentation are reserved with Kansai Nerolac Paints Limited. 6
Slide 8: Financial Analysis
8 Financial Analysis Positives Negatives Unprecedented decline in Auto Increased saliency of Decorative demand Strong control on overheads Slowdown in Decorative demand Input Costs showing a declining COVID 19 and Lock down trend Gross Profit increase across Exchange Volatility Improvement in profit
Slide 9: Financials – Standalone Q4 and FY 19-20
9 Financials – Standalone Q4 and FY 19-20 Q4 12M Rs. Millions 2018-19 % to 2019-20 % to Net Gr % 2018-19 % to 2019-20 % to Gr % Net Sale Sale Net Sale Net Sale Net Revenue 11532 9880 -14.3 51736 49432 -4.5 Material Costs 7349 63.7 6078 61.5 33025 63.8 30576 61.9 Overheads 1956 17.0 1918 19.4 8434 16
Slide 10: Financials – Consolidated Q4 and FY 19-20
10 Financials – Consolidated Q4 and FY 19-20 Q4 12M Rs. Millions 2018-19 % to 2019-20 % to Gr % 2018-19 % to 2019-20 % to Gr % Net Sale Net Sale Net Sale Net Sale Net Revenue 12212 10801 -11.6 54243 52800 -2.7 Material Costs 7779 63.7 6593 61.0 34620 63.8 32590 61.7 Overheads 2140 17.5 2267 21.0 911
Slide 11: Working Capital
11 Working Capital Rs Million FY 2018-2019 FY 2019-2020 WORKING CAPITAL Value NOD Value NOD Inventories 10528 116 9301 111 Debtors 6740 37 6745 38 Loans & Advances 5627 4934 Cash & Bank balances (Excluding FD) 814 413 Total 23709 21393 Less: Curr. Liab. & Prov. 8781 72 7456 70 NET WORKING CAPITAL 14
Slide 12: Cash Flow
12 Cash Flow Particulars (Rs Million) 2018-19 2019-20 Profit Before tax 7134 6836 Add: Adjustment for Non-cash & non-operating items 400 1077 Operating Profit Before Working Capital Changes 7534 7913 Changes in Working capital (3452) (147) Less : Direct tax paid (2978) (1560) Operating Cash Flow 110
Slide 13: Cash Position
13 Cash Position Element (Rs Million) 31st Mar 2019 31st Mar 2020 Cash 813 380 Bank Fixed Deposit 0 1250 Treasury Investment 1960 3050 Total 2773 4690 Investor Presentation May 2020
Slide 14: Dividend
14 Dividend Financial Year 2017-18 2018-19 2019-20 Dividend % 260 260 315 Investor Presentation May 2020
Slide 15: Agenda: Business Review FY 2019-20
15 Agenda • Business Review FY 2019-20 All rights for this presentation are reserved with Kansai Nerolac Paints Limited. 14
Slide 16: Decorative
16 Decorative • Highlights • Shift towards bottom of pyramid products • Kashmir where company has a strong presence impacted • Prolonged monsoons/ Floods impacted demand during festive season • Soldier brand recorded growth of 18 % • Distribution expansion to 25000 dealers • Low end emulsions launch
Slide 17: Automotive
17 Automotive • Highlights • Unprecedented slow down in Automotive • Considerable drop in Automotive production • Inflation in earlier years not fully compensated • Value Addition & Value Engineering (VA-VE) through the introduction of new products for productivity improvement, process improvement a
Slide 18: Auto Refinish (Aftermarket)
18 Auto Refinish (Aftermarket) • Highlights • Business grew by 12 % in value terms • “Cardea” PU system for Mid tier Retail segment launched • Approval from Major OEMs • Training programs for dealerships Investor Presentation May 2020
Slide 19: Performance Coatings
19 Performance Coatings • Highlights • Company registered a high single digit growth • Company gained Market Share • Increased presence in Drums & Barrels, Electricals, PEB, Helmets • Significant traction in Coil Coatings • New Segments : Floor Coatings, Pipe Coatings and Coatings for Bridges (Anti
Slide 20: Powder Coatings
20 Powder Coatings • Highlights • Company gained Market Share • Increased Presence in Auto Ancillary, Electricals, AC and Furniture • Entry into Rebar Coating, Pipe Coatings, HR Powders for Auto Components, Bonded Metallic Powders & Super Durable Powders Investor Presentation May 2020
Slide 21: Subsidiaries - Domestics
21 Subsidiaries - Domestics • Marpol (Powders) • Perma (Construction Chemicals) • Overall growth at -7.4 %, affected due to • Expansion in retail slowdown in Automotive which contributes • Nerolac Perma Range launched significantly to the portfolio • EBITDA at 9 % from 6.4 % • Planned capacity expan
Slide 22: Subsidiaries – International
22 Subsidiaries – International • Nepal • Sri-Lanka • Topline growth of 2 % • Topline growth of 3.5 % • Liquidity crisis • Challenging market condition through out • SAP ERP implemented the year • EBITDA at 16.4 % against LY 16.8 % • Changes in Taxation structure • Company changed its Go-to-market a
Slide 23: Capacity
23 Capacity • State of art Digital factory (Goindwal - Punjab) • Commercial production commenced at Goindwal (52.8 M L Annual capacity) • Company has also commissioned a CED facility at its Saykha Plant, Gujarat (12 M L Annual capacity) • Brown field projects proceeding on schedule • Total capacity
Slide 24: Strategic Initiatives
24 Strategic Initiatives • Digital • Machine Learning app with Chatbots based on SAP Leonardo implemented • Pilot projects completed for IoT, RPA and Visual Analytics • New Tie –ups • Tied – up with ICRO TONE, an Italian Brand for High end Wood finishes Investor Presentation May 2020
Slide 25: Transforming key assets
25 Transforming key assets Investor Presentation 24 May 2020
Slide 26: New Corporate Identity
26 New Corporate Identity PURPOSE Create Environments for a healthy and beautiful future EXPRESSION Colors that care PROMISE Renew Life Investor Presentation May 2020
Slide 27: Environment -1/2
27 Environment -1/2 Water Management Waste Management : Haz. Waste reduction Carbon Footprint ZERO LIQUID DISCHARGE across all plants through Focus on Reduction at Source , co processing, recycle and reuse Move towards Carbon Neutrality installation of Ultrafiltration (UF), Reverse Osmosis schemes e
Slide 28: Environment -2/2
28 Environment -2/2 Emission Management In FY 2019-20, Scope 3 emissions increased by 9% as compared to FY 2015-16 In FY 19-20, Scope 1 emissions decreased by 79% as But, Scope 3 emission Intensity decreased from 0.034 MT of CO2 eq/KL of FG to compared to FY 15-16 0.032 MT of CO2 eq/KL of FG Increas
Slide 29: Society
29 Society Promoting Education (Near Plants) Rural development/Community development (Project Annapurna) Preventive Health Care & Sanitation (Near Plants) Ensuring Environmental Sustainability Investor Presentation May 2020 (Rain Water Harvesting)
Slide 30: Governance
30 Governance Internal Audit with Focus on Online Compliance Tracking System enabled Control Efficiency Index (CEI) through Legatrix Software Enterprise Risk Management Robust Control Index (RCI) Governance Compliance Risk Investor Presentation May 2020
Slide 31: Agenda: Strategy
31 Agenda • Strategy All rights for this presentation are reserved with Kansai Nerolac Paints Limited. 30
Slide 32: Strategy
32 Strategy New Segments: Adhesives, Construction Chemicals, Coil Coatings, Rebar, Pipe Coatings and Specialty Coatings EXPAND HORIZONS Decorative, Automotive, PCD, ARF CORE Strengthen the Core while Expanding Horizons Technology Service Innovative Products Specialized Teams Brand New Geographies: N
Slide 33: Adopt and Embed Digital
33 ADOPT AND EMBED DIGITAL CREATE DIGITAL ASSETS VISION INCORPORATE DATA & INFO WITHIN & OUTSIDE AUTOMATION & CONTROL VISION AUTOMATE FOR AVAILABILITY & RELIABILITY INTELLIGENCE LAYER VISION OUTSIDE IN PERSPECTIVE, PREDICTIVE, VISUAL SMART ENTERPRISE VISION DEPLOY AI, ML BASED TOOLS EXPERIENCE LAYER
Slide 34: Agenda: COVID Risks and Organisation Response
34 Agenda • COVID Risks and Organisation Response All rights for this presentation are reserved with Kansai Nerolac Paints Limited. 33
Slide 35: Fall out of Lock down (COVID 19)
35 Fall out of Lock down (COVID 19) • Business at stand-still from Mar 20 • April NIL sales STAGE 1 • Safe shut-down • Security Protocols in protocols activated for place plants • BCP for its Call Center • WFH protocols activated STAGE 2 • Factories of KNP have progressively STAGE 3 opened progressi
Slide 36: Stakeholder connect – Employees Care
36 Stakeholder connect – Employees Care Employees paid full Salary for Mar & Apr No Salary Cut Skill & Competency Training during WFH Minimum Insurance cover Rs 1.5 M Employee Care for Sales Staff and Operators Skill Upgradation 15 % Staff Travel by bike AROGYA SETU & Social distancing Virtual Meeti
Slide 37: Stakeholder Connect – Channel Partner Care
37 Stakeholder Connect – Channel Partner Care TRAINING Dealer Care Safe Environment Safe Dealing 25K dealers connected along with family Managing Finances Educate Painters Investor Presentation May 2020
Slide 38: Stake holder Connect – OEM Care
38 Stake holder Connect – OEM Care Safe Shut-down& Safe Start up Responsive Supply Chain Multi – Plant State of the Art R&D support Investor Presentation May 2020
Slide 39: Stakeholder Connect – Product Care
39 Stakeholder Connect – Product Care Stop thumb scanning Sanitize all inward and outward material Sanitizer at all touch points Safe RM Storage Safe Operations Warehouse and Truck Sanitization Investor Presentation May 2020
Slide 40: Stakeholder Connect – Painter Care
40 Stakeholder Connect – Painter Care Do’s and Don'ts Painter’s Pitch Investor Presentation May 2020
Slide 41: Stakeholder Connect – Consumer Care
41 Stakeholder Connect – Consumer Care All KNPL products are Heavy Metal Free Most products are either low VOC or Ultra low VOC First company to take lead in making products healthier for its users New Product Pipeline Investor Presentation May 2020
Slide 42: Stakeholder Connect – Society Care
42 Stakeholder Connect – Society Care Rs 40 M donated to Crowd sourcing initiative Rs 27 M disbursed to Painters PMCARES fund for painter https://www.youtube.com/watch?v=d86WWbrfd9w&t=2s Social Media Connect Investor Presentation May 2020
Slide 43: Stake holder – Vendor Care
43 Stake holder – Vendor Care COVID Care Manual RM Supply Risk Mitigation Safe Raw / Packing Material Investor Presentation May 2020
Slide 44: Stake holder – Shareholder Care
44 Stake holder – Shareholder Care 2019-20 Dividend increased Conserve Cash Mitigate Risk Overhead – ZBB Continuous Stress test Productivity of Assets & People Investor Presentation Leverage Digital May 2020
Slide 45: CAPEX
45 CAPEX Rs Million 2019-20 2020-21 Projects 1430 1140 Normal 740 600 Total 2170 1740 Investor Presentation May 2020
Slide 46: Operating Model
46 Operating Model Focus on Cash Generation Fueling growth Focus on collections Re-allocate spends to get ROI Optimize Working Capital Leverage Healthy Home Paints Platform Optimize material consumption Re-allocate manpower across portfolios Drive productivity & optimize capacity Reduce non essentia
Slide 47: Thank you
47 • Thank you All rights for this presentation are reserved with Kansai Nerolac Paints Limited. 46
Kansai Nerolac Paints — Q4 FY2020 Earnings Presentation on 6ix