Analyst Presentation - June 2006

8/3/2019 Analyst Presentation - June 2006

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Investor PresentationQ1 - FY 2007



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Presentation structure

• Results : Q1 – FY 2007

• Results : FY 2006

• Outlook and Risks : FY 2007



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Highlights : Consolidated Results

Q1 – FY2007• Consolidated Sales have grown by 17.3% to Rs. 7773 mn

– Strong performance by the Indian Paints business and the Middle

East region• PBDIT has increased by 26.3% to Rs. 1096.9 million

– PBDIT/Net Sales has improved to 14.1% from 13.1 %

– Most Raw Material prices have been benign during the quarter. Asa result to RM/Net sales ratio improved to 57.5 % from 60.0%

– Other expenses as a proportion to Net Sales increased to 21.4%

from 19.2% - due to the increase in freight and handling charges

• PBT after goodwill increased by 33.% to Rs. 911.9 million

• Net Profit increased by 37.7% to Rs. 603.0 million



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Consolidated P&L – Q1 FY 2007



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Consolidated Sales breakup :

Q1 FY 2007

* 50 % of Asian PPG Industries sales are included

@ Period considered Jan - Mar



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Asian Paints Standalone P&L

Q1 FY 2007

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Asian Paints – Decorative Business

Unit• Demand was buoyant in almost all segments of the

decorative coatings business in India

• Growth recorded over a higher base which arose due toVAT implementation in the previous corresponding quarter

• Raw material prices have been benign during the quarter

– The price of Titanium dioxide reduced by 4 % to USD 1965 /ton

compared to the price in Mar’06

– Price of mineral turpentine oil however increased by 20 % since

the last quarter

– Prices of raw materials were rising towards the end of the quarter

• In June’06, the company increased prices on solventbased products by around 2 %. This price increase willpartially offset the increase in input costs for solvent

based products

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Asian Paints – Industrial &

International Business Unit• Industrial business in India grew in excess of 20%

– Due to good growth registered by the automotive, powder

and road markings segment.

• The international business recorded satisfactory

growth in excess of 10%. – All five operating regions viz. Caribbean, Middle East, South

Asia, South East Asia and South Pacific registered sales

growth

– The Middle East and South Asia region registered sales

growth in excess of 20%

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Key Ratios

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Dividend

• Total dividend of Rs. 12.50 / share distributed for FY

2006

– Includes one time special dividend of Rs. 2.5 /share on the

occasion of the 60th year of incorporation of the company

– Dividend payout ratio at 62 % (before Extra Ordinary Item)

• Total dividend distributed in FY 2005 was Rs. 9.50 per

share

– Dividend payout ratio was 60 %

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Highlights - Consolidated results

–FY2006• Paint volumes for the year including

international increased by 14.9% to 406,791KL

– Deco-India, Industrial-India and International

volumes registered double digit volume growth

• Sales growth of 17.4 % driven by

– Good growth registered by Paints-India business

and the Middle East region

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Consolidated P&L –FY 2006

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Consolidated Sales breakup :

FY 2006

* 50 % of Asian PPG Industries sales are included

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Asian Paints Consolidated Results FY2006

• Standalone

• Industrial Operations

• International Operations

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Standalone P&L : FY2006

EOI (Extra Ordinary Item) – Provision for diminution

in value of Investment.

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Standalone P&L : FY2006

• Extraordinary item pertains to diminution in

value on international investments of Rs. 336

million provided based on management’s

assessment of the fair value of the investment

– This has arisen due to erosion in the net worth of

certain subsidiaries in South East Asia and South Asia

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Paints : Decoratives India FY’06

• Demand for decorative paints was good

• Excellent growth in all wall finish products• 7000 Colour Worlds now installed in the country

• Pricing FY 2006

– Deco BU increased prices in June and Nov’05– Reduced prices in some emulsion paints in Dec’05

– Overall in FY2006 price increase was around 0.5%

• Asian Paints Home Solutions

– Added 2 cities in FY2006. APHS is now present in 10 cities

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• New Products

– Apex Ultima nationwide launch completed; the product

comes with a warranty offer– Royale Play – an effect finish – launched in many markets

– Quality upgrades done in Royale and Premium Emulsions

– Utsav economy range of products was widened withseveral new introductions

• Sriperumbudur plant achieves installed capacity

– Excellent all round performance– Capacity now raised to 50,000 KL/ annum

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• Price of TiO2 stable for the last ten months

• Prices of solvents have increased significantly• Prices of monomers, additives and vegetable oils

have decreased in the last six months

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• Standalone



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Industrial Operations

• Sales for automotive JV (APPG) increased by17.7% to Rs. 2798 million

– Both OE and refinish segment performed well. Bilux

the economy PU brand saw yet another year of

impressive growth making it the largest selling brand in

its category

• Sales for powder coatings business (APICL)increased by 36.4 % to Rs. 390 million

– Baddi plant in Himachal Pradesh commissioned in

April’06 for 1400 MT in first phase

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Industrial Operations

• The other industrial coatings business which is

part of the standalone company services the

protective coatings, road markings, floor

coatings segments

– This business grew by over 20% due to very good

growth in the protective coatings segment

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• Standalone



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International Operations : FY2006

• Paint value sales increased by 15.7% to Rs. 5.3 bn

• Operating margins were under pressure as material costs

increase was significant

– Increase could be passed on to the consumer in some markets

• IBU reported a higher loss (after minority interest,

before goodwill) of Rs. 99.7 million (FY’05 loss at Rs 39million) due to

– Higher material costs

– Additional income tax provision of Rs 45 million made in BIL for

earlier years. An appeal has been filed and outcome is awaited

– Higher share of loss from associate company in Philippines and

from subsidiaries in China, Malaysia, Thailand, Bangladesh and

Sri Lanka

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International Operations : FY2006

• The performance of the Middle East, Caribbean

and South Pacific regions has been good

– Performance of SCIB Paints Egypt has been excellent

• South Asia and South East Asia region

underperformed

– Steps have been taken to reduce losses

• ERP solution launched and implementation inmost of the international units

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Region wise Sales Breakup

2004

Middle

East32.6%

South

Asia

8.3%

SouthPacific

13.3%

S.E.

Asia

18.7%

Caribbe

an

27.1%

2005

Middle

East36.9%

SouthPacific

12.3%

South

Asia

9.0%

S.E.

Asia

16.9%

Caribb

ean

24.9%

• Middle East region has once again registered thehighest growth at 30%

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Region wise – EBITDA & ROCEFY 2005 & FY 2006

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Asian Paints Standalone - Cash Flow

• Operating cash flow ishigher by 40% inspite of

higher tax outflow – Last year’s cash flow was

affected by higher inventory

levels due to lower offtake in

Mar’05 in view of VAT fromApr’05

• Capital expenditure forFY’06 lower at Rs 543 mn

– Estimated Capex for FY06

was Rs. 900 mn

– CAPEX for FY07 is estimated

at Rs. 1500 mn

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Key Ratios

Standalone Consolidated

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Outlook and Risks – FY2007

• India

• Paint Industry expected to grow by over 12-13 % by

value

• In Decorative paints emphasis would continue to be to

drive top-line growth

• Demand for industrial coatings will continue to be

buoyant

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Outlook and Risks – FY2007

• International

• Investments in International subsidiaries reviewed

periodically and the Company is looking at rationalising itsinvestment portfolio

• The focus for international business is to grow the top-line

and to improve profitability – The Caribbean, Middle East and South Pacific regions are

expected to perform better during 2006. Focus is on increasing

market share through initiatives viz. new product introductions,dealer tinting systems, entry into new export markets.

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

and South Asia regions.

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Thank you...

Documents

Analyst Presentation - June 2006