Asian Paints Ltd. · NSE:ASIANPAINT
Asian Paints — CLSA Investors' Forum 2002
43 slides from Asian Paints's conference presentation, May 22, 2002
Slide 1: Presentation at The CLSA Investors' Forum 2002 Hong Kong
Asian Paints (India) Limited Presentation at The CLSA Investors’ Forum 2002 Hong Kong May 22-23, 2002 1
Slide 2: Structure
Structure • A] Perspective – Ratings, recognition & commitment to standards – Business Profile – Decorative & Industrial Coatings and Overseas ventures – Growth of sales, profitability & market share • B] Highlights & Results – Highlights of 2001-02 – Results: Delivering Shareholder Value • C] Looki
Slide 3: Part A: Perspective
Part A: Perspective 3
Slide 4: Ratings & Recognition
Ratings & Recognition • India’s largest paint company for over three decades • Amongst the top 15 decorative coatings companies in the world • Ranked 4th in CLSA’s “Enronitis Diagnostic Kit” for accounting health of Indian companies • Ranked as 4th most admired company in India by The Economic Times
Slide 5: Commitment to Standards
Commitment to Standards • High quality management: – 60% of management from best Indian business schools - among highest across industries – 15% of management are scientists & technologists • Commitment to quality - ISO 9001 compliant • Commitment to Health, Safety & Environment - ISO 14001 complian
Slide 6: Business profile
Business profile FY 2001 - Segment information 7% 3% 90% Decorative Business Unit Industrial coatings Chemicals 6
Slide 7: Business Profile
Business Profile Paint business: • Decorative Coatings • Industrial Coatings • Overseas ventures 7
Slide 8: Decorative Coatings
Decorative Coatings • A product for every price-value segment • Some of the most successful brands in India 8
Slide 9: Decorative Coatings
Decorative Coatings • Wall Finishes • Enamels • Exterior coatings • Wood Finishes 9
Slide 10: Decorative Coatings: Wall Finishes
Decorative Coatings Wall Finishes • Leaders in this segment • Powerful brands like Tractor, Royale, Apcolite etc. 10
Slide 11: Decorative Coatings: Enamels
Decorative Coatings Enamels • Undisputed leaders in this segment • Brands like Apcolite Synthetic Enamel, Utsav Enamel dominate the segment 11
Slide 12: Decorative Coatings: Exterior Coatings
Decorative Coatings Exterior Coatings • Leaders by value in this segment • Brands like Apex, Ace dominated the exterior emulsion segment in just a few years • Significant value growth drivers 12
Slide 13: Decorative Coatings: Wood Finishes
Decorative Coatings Wood Finishes • Created this segment • Dominating presence in this segment • Powerful brands like Touchwood, Asian Melamine wood finish 13
Slide 14: Industrial Coatings
Industrial Coatings • Asian Paints is the second largest player in the industrial coatings segment • Main segments: – Automotive Coatings – Powder Coatings – Protective Coatings 14
Slide 15: Industrial Coatings: Automotive Coatings
Industrial Coatings Automotive Coatings • Strong JV (Asian-PPG Industries Ltd) with one of the world’s largest auto OEM coatings companies (PPG) • Profitable company in just 4 years since inception • Successful in supplying to most new MNC entrants in OE sector • Major inroads made in the refinish b
Slide 16: Industrial Coatings: Powder Coatings
Industrial Coatings Powder Coatings • Fastest growing segment in industrial coatings (~ 12%) • Acquired powder coatings business of Hawcoplast Chemicals, pioneer in powder coatings in India, in Nov 2001 16
Slide 17: Industrial Coatings: Protective Coatings
Industrial Coatings Protective Coatings • Good growth rates • Dependent on the projects in the country • Asian Paints has a strong presence in this segment 17
Slide 18: Asian Paints' overseas ventures
Asian Paints’ overseas ventures • 9 overseas ventures with 10 manufacturing units – 5 ventures in the South Pacific region – 2 ventures in South Asia – 1 venture in Africa – 1 venture in the Middle-east 18
Slide 19: Growth over the years
Growth over the years (CAGR) 7 years 5 years 3 years Net Sales 16.86% 11.17% 14.24% PBDIT 19.69% 15.15% 17.08% PBT 20.56% 14.17% 15.76% PAT 22.56% 14.80% 16.37% 19
Slide 20: Net Profits over the years
Net Profits over the years 1200 1000 Profit After Tax (Rs. mn) 800 Rs mn 600 400 CAGR: 21.0% 200 0 90-91 91-92 92-93 93-94 94-95 95-96 96-97 97-98 98-99 99-00 00-01 20
Slide 21: EBITDA margins over the years
EBITDA margins over the years 20 17.7 18 17.4 15.5 16 16.2 16.3 14.7 14 12 1996 1997 1998 1999 2000 2001 21
Slide 22: Continuous market share gain
Continuous market share gain 45% 43% 41% 39% 37% 35% 33% 88-89 90-91 92-93 94-95 96-97 98-99 00-01 Mkt Share among top 6 major paint companies 22
Slide 23: Market dominance
Market dominance Paint Revenue Share FY 01 Top 6 paint companies 12% 4% 17% 3% 20% 44% Asian Paints Nerolac Berger ICI J & N Shalimar 23
Slide 24: Part B: Highlights & Results
Part B: Highlights & Results 24
Slide 25: Highlights of 2001-02
Highlights of 2001-02 1a. Pricing strategy and b. Growth in sales & profits 2. Building reserves 3. First acquisition in India 4. Market expansion drives 5. New product launches 25
Slide 26: 1a. Pricing strategy
1a. Pricing strategy Soft raw Soft raw material prices material prices RR && DD Price Price efficiencies efficiencies reductions reductions 1.Volume 1.Volume growth growth Need to Need to restr- restr- ucture competn ucture competn 2.Margin 2.Margin expansion expansion despite despite price price cu
Slide 27: 1b. Growth in sales & profits
1b. Growth in sales & profits Net Sales Net Sales up up by by 8.3% 8.3% ... ... Rs 9113 Rs 9868 mn mn PBDIT up PBDIT up by by 11.6% 11.6% ... ... Rs 1541 Rs 1719 mn mn Rs 837 mn PAT up PAT up by by 12.1% 12.1% ... ... Rs 747 mn For the nine months period Apr- Dec 2001 27
Slide 28: 1b. Growth in sales and profits
1b. Growth in sales and profits Apr - Dec’ 01 Apr - Dec’ 00 EBITDA /Net Sales 17.42 % 16.90 % EBITDA - OI /Net Sales 15.53 % 15.57 % EBIT / Net Sales 14.73 % 14.26 % EBT / Net Sales 13.29 % 12.23 % PAT/ Net Sales 8.49 % 8.19 % 28
Slide 29: 2. Building Reserves
Fall in 2. Building Reserves inventory levels Working Acquis- capital ition w/o Higher reduction addl.debt supplier credit War Chest Higher Prodn. reserves capacity increase Assets Higher Lower getting capital interest “sweated” product- costs more ivity Lower capex 29
Slide 30: 2. Building Reserves
2. Building Reserves • Working capital reduced drastically • Debt equity poised for sharp drop • Gross Fixed Asset Turnover ratio set to improve 30
Slide 31: 3. First acquisition in India - Hawcoplast Chemicals Ltd.
3. First acquisition in India - Hawcoplast Chemicals Ltd. • Acquired Powder Coatings business of Hawcoplast Chemicals - pioneer in Powder Coatings in India • Price consideration Rs. 160 million plus net current assets • Powder Coatings is the fastest growing industrial coatings segment (12-14% p.a.)
Slide 32: 4. Consumer-centric initiatives
4. Consumer-centric initiatives • Asian Paints Home Solutions – Offer a “painted surface” vs. just “paint” – “One-stop-shop” providing integrated painting services – Aimed at controlling the quality of end product – Overcomes major “barriers to purchase/consumption” – Good response from the market –
Slide 33: 5. New Product Launches
5. New Product Launches Water Based Luxury Tractor Enamel Emulsion Elastomeric Hi- Asian Wall Stretch Exterior paint Putty 33
Slide 34: Results: Delivering Shareholder Value
Results: Delivering Shareholder Value 350 3750 Data from Jan 1 2002 - May 13 2002 Asian Paints (Rs) BSE Sensex 300 3500 250 3250 1-Jan-02 29-Jan-02 26-Feb-02 26-Mar-02 23-Apr-02 34
Slide 35: Results: Delivering Shareholder Value
Results: Delivering Shareholder Value Illustration of value accretion to an IPO subscriber if he had held on to his shares till date: Shares Rs Subscription to IPO (1982) @ Rs 23 100 2300.00 add, bonuses earned 1129 - Holdings in 2002 @ Rs 320 1229 393,216.00 CAGR of capital appreciation 29.3% 35
Slide 36: Part C: Looking Ahead
ee ——_ Part C: Looking Ahead S\N Yer 36 asian paints fr %
Slide 37: Paint Industry Attractiveness
Paint Industry Attractiveness • Overall paint demand will be boosted by – Very low penetration levels of paint in India – Recent impetus given by Finance Minister to the Housing Industry – Excellent growth recorded by Housing Finance segment – Increased government focus on infrastructure development
Slide 38: Asian Paints' Competitive Advantage
Asian Paints’ Competitive Advantage • Lack of any threatening competition – nearest competitor half our size • Balanced portfolio of products – products are positioned across all price points (economy - mid range - premium) • Closeness to customers & keen market understanding – completely redefined
Slide 39: Future Strategy
Future Strategy Basic commitment is to enhancing Shareholder Value Future strategy will rest on 2 pillars Growth Growth Profitability Profitability 39
Slide 40: Future Strategy: Decorative Coatings
Future Strategy Decorative Coatings • Continue the effort to move closer to the consumer to identify & fill needs • Tap vast potential of Wood Finish segment • Exterior Coatings segment will help increase value sales • Continue to invest in brand building 40
Slide 41: Future Strategy: Industrial Coatings and International
Future Strategy Industrial Coatings • To explore alliances with worldwide paint majors to tap vast potential of the segment • Leverage the recent acquisition to be a strong player in the industrial coatings business International • To expand and become the leading player in emerging markets 41
Slide 42: Future Targets
Future Targets • ROCE (EBIT/CE) of more than 35% for next 2 years • Net Sales growth 10 - 12% in 2002-03 • Build Reserves - further reduce capex to Rs 60-70 crores for next 2 years put together • Maintain margins for next 2 years 42
Slide 43: Thank You
Thank You 43