#1ap asianpaints Investor Presentation August 2018#2DISCLAIMER 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. 2#3ASIAN PAINTS TODAY No. 1 Over $ 2.5 Billion 3 Times nearest 3rd Largest Paint Offerings across: Company in Asia Paint Company in India Operations in 16 countries Forbes Asia's Fab 50 Company; Fifth times in a row Group revenue 25 Paint Manufacturing Plants Part of NSE Nifty 50 Competitor in India 9th Largest Paint Part of 30 share BSE S&P SENSEX Servicing Consumers in over 65 Countries Co In the World 50+ Years of Market Leadership in India 7500+ Employees worldwide Paints Chemicals Wall Coverings Water proofing Kitchen Bath fittings Adhesives 3#4In Billion USD 16.0 14.8 14.0 12.0 10.0 8.0 6.0 4.0 2.0 PPG COATINGS INDUSTRY - GLOBAL STANDING Sherwin-Williams Akzo Nobel 11.6 11.5 1.5 1.0 0.9 5.4 5.0 4.8 4.4 2.9 2.6 2.2 2.0 1.6 Nippon Paints RPM BASF Axalta Kansai Paint Asian Paints Masco Jotun Hempel DAW Berger Paints Dulux Source: Coatings World Magazine (July 2018 issue) Sales#5BUSINESS SEGMENTS - PORTFOLIO 12% 9% 2% 77% DECO-INDIA INTERNATIONAL INDUSTRIAL PAINTS HOME IMPROVEMENT Deco India: Paints, Water Proofing, Wall Coverings & Adhesives International - Operations outside India (Asia, Africa, Middle East and South Pacific) Industrial - Two 50:50 JVs with PPG Inc, USA for automotive & Industrial paints in India Home Improvement - Bath & Kitchen business in India 7#6INDIAN PAINT INDUSTRY - DYNAMICS 50:50 Global Ratio Servicing directly by company 75:25 Decorative Paints to Industrial Paints Paints sold through Mom & Pop Shops 1 to 1.5 times Real GDP Growth Growth closely linked to GDP Growth $7 Billion Industry Low per Capita Paint Consumption at ~3.75 Kgs Global average @ 12-15 Kgs 70:30 Organized sector to Unorganized Potential for growth 8#7• • • INDIAN PAINT INDUSTRY - GROWTH DRIVERS Urbanization & Nuclear Family phenomenon; Smart Cities; Affordable Housing • • Family involvement in decision making Upgradation, trendy colours, wall coverings, designer walls etc. Higher awareness influencing customer preferences • Quality, Decorative and Protective features of paints Unorganized to Organized shift with GST implementation from July 2017 GST rate reduction - latest reduction from 28% to 18% (July 2018) • Infrastructure growth viz. Roads, Ports, Refineries etc. • Benefits Industrial Paint segment Automobile majors' India focus and Making India an Export hub • Benefits Auto Paint segment 6#8DECO INDIA - BUSINESS FOOTPRINT • • • Largest business unit - 77% of group revenues Leveraging its distribution strength (55,000 dealers across the country) Introduced new categories like Water-proofing, Adhesives, Wallpapers State of the art, highly automated decorative paint manufacturing plants - Six such plants across the country for an efficient distribution footprint • Total manufacturing capacity of 1.13 million KL/annum of Decorative paint products • Some of the largest single location automated paint manufacturing capacities across the world Setting up paint manufacturing facilities with full scale capacity of 0.6 million KL/annum in Mysuru (Karnataka) and 0.5 million KL/annum in Vizag (Andhra Pradesh) First phase of 0.3 million KL/annum to be commissioned in FY 2018-19 at both locations 10#9Empty#10LAST 20 YEARS......... • Increased Market Share by over 20% DECO INDIA • Exploded emulsion growth - especially in exteriors • Upgraded distempers to emulsions • Launched over 150 new products • Re-invented the brand - moved into Décor & services -APHS, Paint Total, ColourPro, Colour Consultancy • VISION:- 'To be the fore runner of inspiring décor and to actively empower customers to create their dream homes' 10#11asian paints 1954 DECO INDIA - CHANGING WITH TIMES asianpaints ap asianpaints 2002 Lifting the brand into a modern, contemporary space • Unique, Vibrant, Colourful 2012 • Symbol of creativity and décor 13#12DECO INDIA The key has been continuously attempting to understand and meet the changing needs of the ever-changing consumer • • Refashioned retailing – focus on dealer influencing the consumer - Increased reach - 15,000 retailers to 55,000 retailers (43,000 ColourWorlds - proprietary tinting system) Achieved a premium image; high sale of faux finishes. Leader across all geographies except Kashmir • 70% of sale on 3 day payment • Use Information Technology across all areas of operation 135 depots servicing 55,000 customers yet reduced FG inventories · 20 to 30 new products every year • Built the largest and most modern factories in the world • Branched into waterproofing, painting tools, premium wood finishes, adhesives 12#13DECO INDIA · • Network Expansion • About 3000 dealers added every year • 4000 ColourWorlds additions per annum 25 Colour Ideas additions per annum Most products sell at a 5 to 10% premium to competition while gaining share. • Research & Development • 225 scientists at a $25 million facility • Continuous Sourcing / Formulation efficiency; New Product Development Training & Development • Painter training for skill development /upskilling -100,000 trainings in FY17-18. 4#14• DECO INDIA - INNOVATION IN RETAILING Innovating the retailing footprint with more than 385 Colour Ideas stores . • Showcasing latest product and solution offerings Enabling consumers to get inspired, try and decide - helped by a consultant Anupuron Colour Solut asianpain Vardhman Paints वर्धमान पेंन्ट्स Vardhaman Paint 006 17 ap asianpaints colourideas Colour House MAGANDA കളർഹൗസ് Traditional Hardware shops 43000+ Colour World - Paints tinted at dealer outlets Colour Ideas - Modern dealer outlets - end to end home décor solutions 14#15DECO INDIA - INNOVATION IN RETAILING Experimenting with AP Homes • Multi-category integrated décor store offering products & solutions across categories of paints, wallpapers, kitchen, bath fittings, sanitaryware, furnishings, light fittings, etc. ap homes 81 AP Homes - Multi-category décor stores at Coimbatore, New Delhi, Kochi & Raipur 15#16• ● • INDUSTRIAL COATINGS INDIA Participating in the Indian Industrial coatings segment through 2 Joint ventures with PPG Inc. of USA, the global coatings leader Industrial business makes up about 9% of the group revenues Servicing the entire spectrum of Industrial coatings products - Automotive coatings, Refinishes, Protective coatings, Floor coatings, Powder coatings • Market leader in the Auto Refinish segment • Second largest player in the Auto OEM segment • • Expanding Industrial coatings manufacturing capacity to cater to OEM demand Many Auto OEMs (including Ford, Hyundai, General Motors) focused on using India as a base for servicing overseas markets PPG asian paints asian paints PPG Automotive, Marine and Speciality Coatings PROTECTIVE, PERFORMANCE AND POWDER COATINGS 16#17INTERNATIONAL BUSINESS Contributes about 12% of group revenues operating in 15 countries outside India • In top three in all markets in Decorative paints, except in Singapore & Indonesia Significant presence in Middle East and South Asia Expanding its international presence with key focus on Africa and South East Asia . . Setting up greenfield operations in Indonesia with capacity of 24,550 KL/annum Acquired the 2nd largest paint company, Kadisco, in Ethiopia in 2015 Acquired the 2nd largest paint company, Causeway, in Sri Lanka in April 2017 Recently divested operations in Caribbean to realign the portfolio towards high growth emerging markets . 17 17#18MARKET POSITION ACROSS GEOGRAPHIES MARKET REGION COUNTRY POSITION BRAND NEPAL 1 SRI LANKA 1 ASIAN PAINTS CAUSEWAY PAINTS IBU Group ASIA BANGLADESH 2 ASIAN PAINTS INDONESIA SINGAPORE ASIAN PAINTS BERGER PAINTS 6.0% BAHRAIN 1 BERGER PAINTS 24.0% MIDDLE EAST UAE 3 BERGER PAINTS 48.0% OMAN 4 BERGER PAINTS 21.0% AFRICA ETHIOPIA EGYPT 2 SOUTH PACIFIC FIJI, SOLOMON ISLANDS, SAMOA, VANUATU, TONGA 1 ap asianpaints BERGER C.P.T. CAUSEWAY PAINTS PAINTS KADISCO SCIB PAINTS TAUBMANS, APCO KADISCO op asianpaints ■Middle East ■ Africa ■ Asia ■South Pacific scib TAUBMANS Paints APCO BRILLIANT PAINTS, BRILLIANT COLOURS 18#19• • • HOME IMPROVEMENT SEGMENT Forayed in this business segment five years back with a vision of being a complete décor solutions provider to help customers create their dream homes Currently offering products and solutions in 2 categories • Kitchens - engaged in business of manufacturing, selling and distributing complete modular kitchens, kitchen components including wire baskets, cabinets, appliances, accessories, etc; • ⚫ Recently introduced Wardrobes Bath Fittings . • Introduced sanitaryware recently Currently contributes to less than 2% of group revenues but a key focus area for future growth alongside the growth potential in main coatings business • Leveraging our distribution strength and customer understanding around Décor Sleek KITCHENS by Opasianpaints BATH ESSESS FITTINGS by asianpaints 19 19#20HIGHEST STANDARDS OF CORPORATE GOVERNANCE • Company's philosophy founded on fairness, accountability, disclosures and transparency • Comprehensive disclosures, structured accountability in exercise of powers, adhering to best practices and commitment to compliance with regulations - Integral part of business Experienced Board of Directors - Independent Directors with strong industry knowledge & experience 221 21#21CONSISTENT PERFORMANCE CONSOLIDATED GROSS SALES (*Billion) 43.46 CAGR 16% 192.23 Mar 08 Mar 18 CONSOLIDATED NET PROFIT (Billion) 4.09 Mar 08 CAGR 20.39 17.4% Mar 18 * *After Tax and Minority Interest 24 24#22Mar 08 73.36 MARKET CAPITALIZATION (Billion) CAGR 30.8% Mar 18 Current Market Cap at ~ 1380 Billion ($ 20 billion) 1074 SUSTAINED VALUE CREATION 51.0% 54.0% 39.0% 46.0% FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 25 DIVIDEND PAYOUT 47.0% FY16 49.0% 51.0% FY17 FY 18 52.6% 54.2% 53.1% 53.1%#23FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY 18 26 37.3% 36.6% 43.6% 56.5% 42.8% 38.1% 35.6% 34.2% 36.1% 34.6% 31.8% FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY 18 RETURN ON NETWORTH 51.8% 48.4% 60.1% SUSTAINED VALUE CREATION 75.5% 59.1% 53.7% 50.6% 48.9% RETURN ON CAPITAL EMPLOYED 52.2% 50.1% 47.5%#24FINANCIALS: QUARTER 1 - FY 2018-19 STANDALONE Q1 - FY19 (** BILLION) 37.06 40.00 20.00 8.25 5.43 0.00 Q1 - FY19 31.89 Revenue from Operations: 16.2% PBDIT: 38.2% 5.97 PAT: 35.4% 4.01 Q1 - FY18 Revenue PBDIT PAT CONSOLIDATED Q1 - FY19 60.00 43.99 40.00 (*BILLION) 20.00 8.74 5.58 0.00 38.10 PBDIT Margin of 22.3% in Q1 - FY19 as compared to 18.7% in Q1 - FY18 6.65 4.27 Revenue from Operations: 15.5% PBDIT 31.4% PAT : 30.5% PBDIT Margin of 19.9% in Q1 - FY19 as compared to 17.5% in Q1 - FY18 Q1 - FY19 Q1 - FY18 Revenue PBDIT PAT#25THANK YOU 25#26SUSTAINABILITY - DRIVING RESPONSIBLE GROWTH N: Conservation of Natural Resources Reduce Specific Raw Water Consumption Achieve Water Neutrality Rainwater use & recharge inside factory Integrated watershed development in nearby areas Installation of zero liquid discharge RO+MEE facilities N ヨ W E: Energy Saving & Efficiency Reduce Specific Electricity Consumption Energy from Renewable Sources Investment in renewable energy - Solar & Wind Use of Biogas instead of diesel LED lighting & optimized use of utilities W: Waste Reduction Reduce Solid Waste Generation Zero Industrial Effluent Generation Anti-sticking coatings inside equipments to reduce sticking loss Reduce, Reuse & Recycle schemes for effluent & waste reduction Wash-water reuse in formulations 22#27Sustainability Performance: Themes Targets Target 2020 Target 2017-18 Mar Performance FY 17-18 16-17 Sp. non process fresh water consumption (KI/KI) 0.32 (66%) 0.37 (61%) 0.35 (63%) 0.40 (58%) Sp. Trade effluent generation (L/KI) 20.2 (75%) 22.5 (73%) 22.6(73%) 28.4 (65%) Water Neutrality (%) 100% 108% 142% 118% Sp. electricity consumption (KWH/KI) 77.1 (33%) 79.4 (32%) 79.7(32%) 89.3 (23%) Renewable energy (%) 36.2% 31.7% 35.8% 21.9% Sp. HW Disposal (Kg/KI) 1.47 (45%) 1.68 (37%) 1.68 (37%) 2.04 (24%)