analyst presentation - fy2007

8/8/2019 Analyst Presentation - FY2007

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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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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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• 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.




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• 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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• 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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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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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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• 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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• 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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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...

analyst presentation - fy2007

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