AkzoNobel India – Annual General Meeting 14 th Aug 2015 Kolkata
Welcome to AkzoNobel 2
Contents 1. About AkzoNobel 2. AkzoNobel in India and our Businesses 3. Changing Business Environment 4. AkzoNobel India Initiatives in 2014-15 5. Key Indices 6. Plans for the coming year 3
AkzoNobel India – Some Facts AkzoNobel in India Mohali • 1800 employees (Decorative Paints, Vehicle Refinishes) • 6 plants • 6 offices • 83 warehouses • 8,500 plus retailers ; ~800 B2B Gurgaon customers One Akzo-Corporate Office North - Delhi Gwalior Decorative Plant Mumbai Functional Chemicals, East - Kolkata Surface Chemistry, Decorative, RDI West - Mumbai Regional offices Hyderabad Decorative Paints Packaging Plant, Manufacturing sites Agrochemical lab Warehouse Mahad RD&I Polymer Chemicals Hoskote MPC Coating, Powder Coatings, Industrial Finishes, Packaging South - Chennai Coatings, Vehicle Refinishes, RDI 6
Our Businesses 63 Warehouses, Our Products Range 4 Manufacturing Sites + PFR 8,500+ Retailers Coatings Our Businesses Our Brands Mfg Sites at Bangalore, Mohali Our Businesses Mfg Site at Mahad Our Brands Chemicals 7
Changing Business Environment 8
Positive Developments in the Indian Economy Developmental Policies Positive Implications Rate cuts by Improved sovereign India’s growth to outpace RBI credit profile China’s - IMF, World Bank 9
Policy Implications on Industrial Environment Urban Development Infrastructure • 100 smart cities • Revival of SEZs • House for every household • Low cost airports • Around industrial corridors (positive • Extensive road network – 12000km per year implication on Tier2 and Tier3 towns) • Renovation of 6 major ports • Estimated spend – € 1.1 Billion • PPP in railways • Swachh Bharat – Toilets in all villages Decorative Perf. Coatings Chemicals Decorative Perf. Coatings Manufacturing Coal, Gas, Energy and Water • Make in India • Coal mines ordinance • $ 25 Bn investment by China/Japan on • Nuclear fuel deals with US, Australia, France Industrial Parks and Canada • Labor reforms • Clean energy plants (Wind) • GST introduction • Clean water supply programs Decorative Perf. Coatings Chemicals Perf. Coatings 10
Coatings Industry Growth 24.0% Industry Growth 1.2X – 1.6X 16.0% 9% - 11.0% GDP Growth 8.0% 7.5% Hence, estimated 0.0% growth 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 9% - 11% Coatings Industry Value Growth GDP Growth 1.2x-1.6x correlation of Coatings Industry with GDP growth Building & Protective and Coil Chemicals: demand Infrastructure: Tax reforms and Auto Coatings: investment in growth for FMCG and urbanization, boost to industry revival Defence , Construction asphalt real estate sector and Power sectors Source: GDP forecast - IMF AkzoNobel India | August 2015 11
Signs of Improvement, but Sluggish • Confidence in the Indian economy has tempered a bit in recent months • In the fiscal year 2014/15 (April-March) GDP grew by 7.4% (old scale – 6%) • However, there is concern about short term acceleration in economic growth, as the pace of reforms has been slow • For sustained economic growth, structural reforms will be necessary. Anticipate a lag of 1-2 years for impact of policies to be felt • Despite bank rate reduction, pace of economic growth is sluggish • The economy will grow faster from 2016 onwards 12
1. AkzoNobel India Initiatives in 2014-15 • Innovations • Operational Excellence • Sustainability and CSR 13
Let’s Color! New propositions Differentiation to charge premium WS All Velvet Touch Super Premium Weather Weathershield Weathershield VT Diamond Glo Signature Powerflex Mass Market : Complete range for Satin Promise Exterior ProCover - Woodcare Dulux Super clean StayBright COtW Strengthening our propositions New face of Velvet touch diamond Shraddha Kapoor Dulux Visualizer app – helping you SEE Refreshed campaign for Velvet touch – Taking YOUR OWN ROOM IN ANY COLOUR, Fashion Trends for Walls forward LIVE! VT diamond to be backed by High Decibel campaign 14
Innovations to fortify market position Eco Friendly Operation Excellence Technology Leadership • Digital Color Matching • Green Energy Initiative • Increased production capacity by Technology Installed solar energy 18% system to cater 1% of total • In Line Dispersion Technology power consumption introduced • Water based technology • Make in India From “Import • Chrome free high and Sell” to “Make and Sell” performance primers Grow Green initiative with X-rite app for Powder First Orders for S Cross, Hyundai Creta and Bajaj Coatings Studds CoatIN launch 15
Innovations in Chemicals Salt licks – first global brand Sustainable savings in Insulin ELOTEX™ CAST - technology in India Production for gypsum floorings • Salt licks are a scientific • Improves Partnered with India's largest workability and answer to Salt biotech company to improve levelling properties for supplementation vital for their insulin production. flooring applications optimum production and • 15 % lifetime increase of the • Savings on time and costs for fertility of dairy animals Kromasil product used raw material and logistics • Free Choice concept allows • > 5x increase in process • Sustainable contribution in animals to decide themselves productivity an eco-premium product how much salt is needed by • 75% solvent reduction their body 17
Growing importance of AkzoNobel India as an Export Hub Export of Dramatone and VT Finishes to South Asia and Middle East Export of coil & extrusion coatings to Asia and Africa 18
Sustainability and CSR 19
Planet Possible: Doing more with less AkzoNobel’s Approach to Sustainability By working closely with customers and suppliers, we can create more value from fewer resources for our customers, ourselves and society as a whole. Potential to complement Government’s “Zero Defect, Zero Effect” initiative 20
AkzoNobel India Operational eco-efficiency Reducing our environmental footprint 21
ANIL CSR Based on AkzoNobel Human Cities Platform
Operational Excellence 23
Operational Excellence Strengthen Organic Growth world class sales process Embed Product & Margin Mgmt Derive functional synergies Cost conscious Value Creation to culture bring down costs 24
60 Vibrant Years of AkzoNobel Leveraging the Power of One Akzo - Merger delivering synergies – Volumes, Margins up - Providing sustainable solutions across industries - Seamless access to superior technology, global brands and modern processes Innovations to fortify market position - VT Diamond Glo, Promise Primer & Stay Bright - Dulux felicitated as a “Super - brand”; Dulux Superclean voted “Product of the year” - Green initiatives and sustainable savings for us and our customers Building Capacity and Capability - eco-efficient Gwalior factory Challenges - New production facility for Packaging Coatings FX risk - Agrochemical lab in Thane Fragile economic envrionment Our Values and Strategy - Alignment to the global strategy - Nurturing Talent - Winning together with our Suppliers, Shareholders and Society
Key Indices… Revenue Trend (INR mn) CAGR 8% 24,698 23,717 21,772 19,496 6,445 2011-12 2012-13 2013-14 2014-15 Q1 2015-16 Business ROCE % 30 28 27 22 2011-12 2012-13 2013-14 2014-15 26
Stock Price reflecting improving Business prospects ANI outperforms AGM 2015 AGM 2014 SENSEX by 4 times BSE Sensex AkzoNobel India Stock Performance Dividends As at Aug 13, 2015 • Consistent track record of dividends – winning together with our shareholders Stock Price INR 1,435 • Special dividend to commemorate 60 years Market Cap INR 69 bn D Market Cap • INR 20 per share dividend recommended for +43% FY 2014-15 (i.e. INR 1.1 bn wealth for EPS INR 39.93 shareholders ) P/E ratio 36.52 27
Plans for the coming year 28
Key Thrust Areas Coatings Chemicals • Improve profitability and • Retain leadership in Premium segment, whilst gaining market share gain market share in Mid tier Segment • Focus on localization to • Distribution expansion secure supply chain and access to Mid-markets • RM/ Product localization • Continue process • Cost reduction through Operational efficiency and improvements to drive reducing process complexity sustainable savings for us and our customers • Focus on new/ evolving businesses (Metallic Powders, Packaging Coatings) • Key Account Management • Continued innovations
Concluding Remarks • Optimism within India; Optimism about India • Slew of economic reforms announced by the government • Sustained growth expectations for the coatings industry (CAGR 9% - 11%) • AkzoNobel India to scale up to get into the global radar; India strategic as a hub in South Asia • Execute AkzoNobel global strategy – build country synergies • Inculcate operational efficiencies with sustainability • Aggressively Grow the Business in India Hence, big play in India… 30
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