IIFL Enterprising India Investor Conference 2012 Mumbai

1

February 16, 2012

Disclaimer
This presentation may contain statements which reflect Management’s current views and estimates and could be construed as forward looking statements. The future involves certain risks and uncertainties that could cause actual results to differ materially from the current views being expressed. Potential risks and uncertainties include such factors as general economic conditions, foreign exchange fluctuations, competitive product and pricing pressures and regulatory developments. Responses can only be given to questions which are not price sensitive.

The Asian Paints Group Today…

India’s largest paint company for over four decades

Operates in 17 countries with 24 paint manufacturing facilities

Group revenue of INR 7706 Crores (77.06 Billion) in FY 11

.Business Operations – Consolidated Paints India Decorative Coatings – India Industrial Coatings – India APL – Industrial APPG APICL 81% 5% 1% APL .Paints Chemicals APPG* + APICL International 13% Sales Contribution FY 2010-11 Chemicals India International Operations * 50% of APPG considered since it is a 50:50 JV with PPG Inc.

India Strong presence throughout the country across all product segments Introduced many innovative concept in the Indian paint industry like Small packs Exterior segment Home Solutions (painting solution service) Colour Next (prediction of Colour Trends through in-depth research) Special Effects / Textured paints Signature Store Colour Ideas Samplers .Decorative Coatings .

through a 50:50 JV with PPG Inc. the largest player in auto refinish segment. road marking paints and powder coatings segment through a 100% subsidiary . post acquisition of ICI India’s 2k auto refinish business in 2007 Commissioned a 3. Tamil Nadu in 2008 Operates in the protective coatings.Industrial Coatings . of US as well as through a 100% subsidiary The Auto segment is catered through our JV (APPG) Second largest supplier to the auto segment in India Now.200 KL / year plant in Chennai.India Asian Paints participates in the Industrial Coatings segment directly. floor coatings.

Industrial Coatings . and also by establishing a second 50-50 joint venture Industrial businesses of both Asian Paints and PPG will be part of this second JV and Asian Paints and APICL plants will toll manufacture for them Asian Paints to take the lead in the second venture and PPG to take the lead in the existing APPG JV The arrangement is subject to regularity approvals and is expected to be completed by June 2012 .India Asian Paints and PPG to expand their existing non-decorative coatings presence in India jointly through their current 50-50 joint venture relationship (APPG).

Chemicals Asian Paints also manufactures Phthalic Anhydride (PAN) and Pentaerythritol PAN is manufactured in Gujarat and Penta in Tamil Nadu More than 50% consumed internally Chemicals business contributes about 1% to the group’s consolidated revenue Its contribution to the group’s revenue has been continuously decreasing .

Nepal.3% Caribbean South Pacific .9% Middle East Asia 52.2% 24. Bangladesh and Singapore operations % sales contribution of each region – FY 2011 7.International Operations Contributes 13% to the group turnover Began by establishing presence in Fiji in 1978 Presence in 16 countries spread over 4 regions Middle East Caribbean South Pacific Islands Asia * Asia includes Sri Lanka.6% 15.

Macro Environment .

however IIP for November came in at 5. INR rose by more than 8% in the month of Jan 2012 Domestic macro indicators giving mixed signals.Macro Environment Volatile global environment has resulted in sharp movements in currencies.9% after a negative 4. making forex management a challenge for corporates INR depreciated by more than 19% in the current financial year till Dec 2011 Conversely.47% in Dec-11 after staying above 9% for most part of the year Food Inflation declined to (-3.7% in Oct 11 RBI maintained key policy rates during the last monetary review leading to expectation of easing policy going into the new year Cooling off being witnessed in global economy. Euro zone uncertainty continues Global Commodity prices have started stabilizing Crude has remained stable during the financial year at above USD 100 levels 11 .1%) in the month of December-11 Many industries facing slowdown. Inflation finally coming down WPI dropped to 7.

Presentation structure Performance: Q3 & 9M FY 2011-12 Review of Business Units Outlook and Risks 12 .

2560. The Industrial business of APL was transferred to AP Coatings Ltd (A 100% subsidiary of APL) w.4% 28.9% 25.5% 20. grew by 22% during the quarter . 1st June 2011 Consolidated 13 Net Sales at Rs.Sales Performance Q3 FY 2011-12 Standalone Sales & operating Income Gr rate over the same period of LY 45% 40% 35% 30% 25% 20% 15% 10% 5% 0% 1st Qtr 2nd Qtr 3rd Qtr 4th Qtr 12M FY11 FY11 FY11 FY11 FY 11 1st Qtr 2nd Qtr 3rd Qtr FY12 FY12 FY12 37.e.f.3% 6.0% 24.0% 23. grew by 20.0% Standalone Net Sales at Rs.53 crores.3% during the quarter Sales growth is to be seen in the light of last year (Q3-FY11) which was 37% more than that of the earlier year (Q3-FY10) and that itself was 27% higher than that of the year before that (Q3FY-09).3% 28. 2109.5 crores.

0% 10.9% 16. 250.7% Margins maintained at last year levels despite pressure on the cost front Consolidated: PAT after Minority Interest at Rs.9% 17. growth by 16% 14 .0% 20. 363. 389. growth by 16. 256.2% EBIT at Rs.0% 5.0% 1 Qtr 2nd Qtr 3rd Qtr 4th Qtr st FY1 1 FY1 1 FY1 1 FY1 1 1 2M FY 1 1 1 Qtr 2nd Qtr 3rd Qtr st FY1 2 FY1 2 FY1 2 20.0% 18. grew by 21.0% 18.0% 0.2% 19.5 crores.86 crores. grew by 21.0% 15.6 % EBIT at Rs.3% 16.4 crores.Profit performance Q3 FY 2011-12 Standalone Paint Segm ent EBIT Margins 25.5% Standalone: PAT at Rs.21 crores.6% 18.

grew by 24. 5875.8 crores in previous year 15 .2 crores. 7071.6% during the period Consolidated Net Sales at Rs.Sales Performance 9M FY 2011-12 Standalone Net Sales at Rs. 765. 861.68 crores.2% during the period International Operations continue to be impacted by political events and macro economic uncertainty Net Sales at Rs. grew by 23.75 crores compared to Rs.

3% Profitability impacted due to: Significant increase in RM prices compared to previous year Price increase does not fully recover increase Unexpected depreciation of Rupee against the USD Impact of Rs. grew by 18. 30 crores for 9M-FY12 (Rs. 1034.2 crores. grew by 17.25 crores. 729. 1104.Profit Performance 9M FY 2011-12 Standalone PAT at Rs. 713.1% Consolidated PAT after Minority Interest at Rs.8 crores.97 crores.2% EBIT at Rs. grew by 10. grew by 11% EBIT at Rs. 15 crores in Q3-FY12) 16 .

Presentation structure Performance : Q3 & 9M FY 2011-12 Review of Business Units Outlook and Risks 17 .

Review of Business Units Decorative Business .India International Operations 18 .India Industrial Operations .

1st December.India Demand Conditions Good demand for decorative coatings across the country Growth in smaller towns continue to be faster than the larger cities Interior and exterior emulsions continue to lead growth Inflationary Impact Material inflation significantly high compared to previous year Consumption average for 9M FY12 stood at 117.44 as against base of 100 of previous year Consumption Average Q1 114.05 Q2 116. 2011 Overall availability of Titanium Dioxide was comfortable although high prices remain a concern Prices have leveled off for the time being The high price of crude did not allow the prices of various raw materials to soften 19 .e.Decoratives Business .53% during the year Price increase of 2.99 Q3 121.17% w.f.59 Cumulative price increase of 10.

500 Delhi signature store opened in September to excellent response Tremendous response to the “Happy Painting Guide” campaign Colour Idea stores continue to receive a very good response 28 Colour Ideas stores in operation Expansion Plans Khandala project construction progressing well Phase I – 3. 150 crores 20 .000 KL to be commissioned in Q4 of FY 2012-13 Rohtak Phase-II expansion initiated Phase II capacity addition of 50.India Retailing Initiatives The total number of Colour Worlds have crossed 20.00.000 KL by Q1 of FY 2012-13 Capital expenditure of Rs.Decoratives Business .

India International Operations 21 .India Industrial Operations .Review of Business Units Decorative Business .

8 crores for the Nine Months period ending Dec 2011 22 . including Auto.Industrial Operations Business Environment Industrial business.f 1st June. 252.e.2011 Demand for project and maintenance was buoyant in Q3 Powder Business Impacted due to slowdown in manufacturing industry Demand seems to remain subdued and challenging for the rest of the year as well Asian PPG Industries (50:50 JV for Automotive Coatings) Sales growth of 17% to Rs. continued to face challenging conditions High pressure on margins due to increasing material cost Industrial Paints Business Figures are not comparable as industrial business including powder coating was transferred to AP Coatings w.

Asian Paints had announced about its proposed new 50:50 JV with PPG for its industrial business in India The composite scheme for Merger and Demerger was filed with the Hon’ble High Court in Sept-11.Industrial Operations Proposed Joint Venture with PPG On Jan 24. encompassing all businesses of companies as originally envisaged. 2011. will be filed shortly with the Hon’ble High Court of Mumbai The entire process is expected to be completed by June 2012 23 . as PPG Industries Inc. USA is restructuring its operations in India. However. the scheme has been withdrawn Revised composite scheme for Merger and Demerger.

some equipment and materials at the Company's Penterythritol Plant at Cuddalore in Tamil Nadu had been damaged As a result of it. the plant was temporarily shut down for some days and has now been restarted The repair and reconstruction work to set right the damage caused at the plant is in progress and the same is not expected to hamper production All Assets have been fully insured by us 24 .Penta Plant In Dec 2011. Due to the severe cyclonic storm 'Thane' in Tamil Nadu.

Review of Business Units Decorative Business .India International Operations 25 .India Industrial Operations .

42 -30% 57.14 13% PBIT (Rs Cr) R eg ions C aribbean Middle E as t As ia S outh P acific T otal 2012 8.21 237.10 438.33 79.L Y 122.39 8% 190.05 49.47 2011 +/.79 -26% 11.33 66.L Y 11.76 9% 406. and Sri Lanka have registered good growth Markets in Middle East have still not bounced back from the political unrest and recessionary conditions Inflationary pressures continue to impact the profitability of international operations too R eg ions C aribbean Middle E as t As ia S outh P acific T otal 2012 134.94 17% 776.25 2011 +/.04 25% 56.18 -19% 26 . Nepal.25 -13% 17.18 8.61 876.73 -29% 98.International Operations Net S ales ( R s C r) Oman.92 13.

Presentation structure Performance : Q3 & 9M FY 2011-12 Review of Business Units Outlook and Risks 27 .

expected to come down further Annual Budget would be a closely watched affair after the recent concerns on policy paralysis and growth Rural Demand expected to stay robust Introduction of Food security Bill expected to route spending to consumer goods 28 .Outlook and Risks Two Key Events to shape the outlook for the next year State Elections Annual Budget Elections in multiple states during the 4th Quarter Would impact the policies of the Central government going forward. Coal prices and FDI Inflation showing signs of easing. Good show by the ruling party might impact policies on Oil prices.

Outlook and Risks Overall fall in GDP growth rate might impact demand in India Weak consumer sentiments may lead to slowdown in discretionary spending in urban areas Slackening of demand being seen across many industries Raw material inflation is a global phenomena and continues to be a cause of concern Lot of volatility due to supply-demand equations. World Bank has slashed Global growth outlook to 2. some crude derivatives show softening Depreciation of the Rupee has impacted adversely.5% for 2012 leading to concerns of slowing growth Political uncertainty might add to the already recessionary conditions being witnessed in the Middle East market 29 . else softening may have been more beneficial Availability of Ti02 has eased but high prices remain a concern Internationally. some materials like Rutile continue to rise.

Thank you... 30 .

Annexure 31 .

551.68 366.4% 15.0% 23.37 12.9% 16.64 5.2% 7.18 113.6% 32 .27 19.68 22.2% 23.4% 16.76 266.Consolidated P&L – Q3 FY2011-12 (Rs in Crores) S ales & O p Inc ome Material C os t E mployee C os ts O ther E xpens es D epreciation P rofit from O perations before O ther Inc ome and Interes t O ther Income P B IT Interes t PBT C urr.54 389.76 480.21 9.33 22.43 9.64 316.78 3M 10-11 2.0% 54.60 1.3% 16.85 329.97 Gr % 22.04 220.37 335. & D ef.03 380.560.5% 16.57 256.7% -20.8% 14. T ax P AT before Minority interes t Minority S hare P AT to parent S hareholders E PS 3M 11-12 2.06 30.53 1.6% 16.79 97.71 28.1% 15.253.099.52 389.8% 18.42 232.86 26.35 131.46 111.

2 298.044.8 24.6 294.9 25.3 83.& Def.109.6 21.1% 16.0% 21.1 23.6% 21.8% 22.4) 250.8 277.5 363.253.4 (4.5% 4.2 410.3 21.1) 206.Standalone P&L – Q3 FY2011-12 Q3 FY'12 Q3 FY'11 Gr % Net Sales and Operating Income Material Cost Employee Remuneration Other Expenditure PBDIT Depreciation Profit from operations before interest Other Income PBIT Interest PBT Curr.1 (0.1 1.0% 12.5 20.8 301.4 6.754.5 1.3% 33 .2 357.9 92.5 26. Tax Excess/Short Provision Income Tax PAT EPS 2.9% 20.9 337.6% 21.5 3.3% 20.2 107.6 73.7% 70.2 1.3% 21.2 362.5% 20.8 334.

6% 9.12 83.61 3.03 1.3% 6.69 390.313.67 1.080.Consolidated P&L–9M FY2011-12 (Rs in Crores) S ales & O p Inc ome Material C os t E mployee C os ts O ther E xpens es D epreciation P rofit from O perations before O ther Inc ome and Interes t O ther Income P B IT Interes t PBT C urr.22 68.97 939.104.2% 28.5% -20.52 Gr % 23.60 324.25 76.73 755.2% 24.022.03 89.0% 11.1% 15.97 24.63 987.56 62.071.321. & D ef T ax P AT before Minority interes t Minority S hare P AT to parent S hareholders E PS 9M 11-12 7.3% 66.26 657.61 729.8% 31.75 1.3% 9.53 1.60 297.9% 8.002.255.68 4.94 339.03 9M 10-11 5.3% 10.12 690.740.48 33.31 1.37 1.056.4% 9.23 14.87 26.66 82.0% 11.0% 34 .

4% 12.6 890.1 1.4% 12.2 74.5% 5.002.0 875.714.0% 18.0) 713.9 24.1% 114.6% 29.8 74.3 8.875.3 62.4 228.7 62.5 820.8 70. Tax Excess/Short Provision Income Tax PAT EPS 5.9 2.034.7% 16.3 274.017.0 928.0 307.9 1.2% 68.& Def.Standalone P&L – 9M FY2011-12 (` in Cr) ` 9M FY'12 9M FY'11 Gr % Net Sales and Operating Income Material Cost Employee Remuneration Other Expenditure PBDIT Depreciation Profit from operations before interest Other Income PBIT Interest PBT Curr.7 1.3 1.494.4 (2.0 256.8) 603.700.0% 13.2 (4.122.4% 25.0 895.2 105.2 3.9 883.4 4.2% 35 .3% 17.2 17.2% 12.

82 188.e.67 53.071.659.75 89.68 9M-F Y '11 4.61 861.785.P aints C hemicals AP P G * AP IC L /AP C O ** International G roup 9M-F Y '12 5.f.11 215.80 5.740.48 252.Consolidated Sales breakup : 9M FY2011-12 AP L .73 55.61 G rowth 24% 62% 17% 253% 13% 23% *50% of Asian PPG Industries sales considered **Figures are not comparable as the industrial business including powder coating was transferred to AP Coatings w.42 765. 1st June. 2011 36 .75 7.

6% 18.6% 15.8% 10. PAT is before Minority Interest 37 . Material Cost/Net Sales PBDIT/Net Sales PBT/Net Sales PAT/Net Sales* * For Consolidation results.5% 57.7% 17.3% 17.7% 12.0% % to Sales & Op.2% 12.2% 57.3% 60.8% 17. Inc.Key Ratios Standalone Consolidated 9M FY12 9M FY11 9M FY12 9M FY11 59.9% 17.3% 18.7% 15.1% 12.

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