Akzo Nobel India - Dulux Paints

Tanishk_Ojha · 2024-03-05T13:02:45+01:00

Annual Report 2009-10 AkzoNobel, the largest paint company in the world, is all set to re-invent the paints industry with its foray in the Indian market. IC...

Tanishk_Ojha

Annual Report 2009-10

AkzoNobel, the largest paint company in the world, is all set to re-invent the paints industry with its foray in the Indian market. ICI India, the maker of Dulux and Duco range of paints, is now AkzoNobel India and this change was brought in with a new sense of energy and purpose by the Company.
The superior retail experience is manifest in the trademark Dulux Decorator Centres. Dulux, which pioneered the concept of these modern retail initiatives, provides a complete painting solutions experience to the consumer through its Decorator Centres. These outlets offer a world-class ambience to the consumers, where they can experience the brand offering and get a one stop offering for painting with the help of trained colour consultants.
Currently, the Company has a Contractor partner programme that focuses on building contractor capability. In this programme, the Company partners with contractors to help them enhance their productivity through various products and tools.
Your Company's Paints business segment consists of Decorative and Refinish businesses.
In Decorative Paints business, your Company continued to invest in Retail Modernization which was started last year under the brand Dulux Decorator Centre. A new initiative for improving your Company's visibility in the retail segment called Visual Merchandising was launched during the year, providing world class visibility elements to its dealers to differentiate their outlets.
In Refinish Paints business, your Company initiated focus on new emerging segment 'Mid Tier PU' and revamped the Brand Strategy for 'Eterna' with clear market segmentation. The business continued its focus on demand generation through programmes like 'The Great Finishers Club', colour workshops and training in colour matching skills for painters.

Tanishk_Ojha

Annual Report 2010-11

On a note of concern, the paints industry in India is also in the throes of unprecedented raw material inflation. Furthermore, with many international players entering the Indian market, there is intense competition.
The increasing network of our Dulux Decorator Centres is an initiative for our business partners, namely, dealers, contractors and specifiers; demonstrating to them how they can achieve superior profitability by dealing in our products.
Your Company’s Paints segment consists of the Decorative and Automotive businesses.
Dulux Promise, a new product for the Exterior mid-tier category, was launched in December 2010. With its ‘Colour Guard’ technology, the product offers a wide range of colours and longevity.
- The business also re-launched two of its products during the year after renovating them for quality and ease of application. In addition, an international product ‘Dulux All’ was also introduced to the Indian market.
Further, your Company has invested in enhancing its production capacity at the Hyderabad Plant for waterborne paints. The Tinter manufacturing facilities have been debottlenecked at the Mohali and Thane Plants.
The Automotive business introduced an international brand ‘Dynacoat’ from the AkzoNobel stable in the Indian market during the year. This launch showcases the technical expertise and international lineage of AkzoNobel, even as it demonstrates your Company’s commitment to quality.

Tanishk_Ojha

Annual Report 2011-12

Three Akzo Nobel subsidiaries, Akzo Nobel Coatings India Private Limited, Akzo Nobel Car Refinishes India Private Limited and Akzo Nobel Chemicals (India) Limited, merged with Akzo Nobel India to leverage the power of ‘One AkzoNobel’ and realise its vision for the future.

https://economictimes.indiatimes.com/industry/banking/finance/minority-investors-lose-as-akzo-nobel-coatings-akzo-nobel-car-refinishes-and-akzo-nobel-chemicals-merger-gets-requisite-majority/articleshow/11842986.cms?from=mdr

We know that the potential for the paints business in India is high, propelled by the growth in the automobile and construction industries.
The GDP growth projection of 6 to 6.5% for the year translates to a growth of 9 to 10% in the paints business in India.
Further, as a signal of confidence in the prospects of the Company, the Board has recommended an increase in the dividend to Rs 20 and proposed a share buyback programme at a price of Rs 920 per share through a tender offer.
In the premium category, we launched DSS Colour Bright, Dulux Guardian and Velvet Touch Trends. These launches reinforce the credentials of Dulux as the brand that introduces high quality, innovative products that always value-add to consumer lifestyle.
We enhanced our manufacturing capacity significantly with the commissioning of a 30 million litre facility in Hyderabad. Our Bangalore site has been strengthened with a new capacity for Coil Coatings being added to the existing range of Performance coatings. The number of our operating factory sites in our Company has gone up from three to five and we are adding one more integrated Greenfield site at Gwalior, for which we plan to invest up to Rs 150 crore over the next year.
A new Greenfield site at Gwalior, Madhya Pradesh, has been acquired and work has commenced to establish an integrated Coatings facility.
ROYALTY - As a measure to ensure seamless access to the global R&D of AkzoNobel in development of new products, knowhow and technologies to the business, a framework of royalty has been approved by the Board during the year. The arrangement entails a royalty charge of approx 1% of sales for the first two years, going up to approx 2% thereafter.

Tanishk_Ojha

Annual Report 2012-13

Over the course of the past year, we have given immense focus on cash. This has allowed us to achieve profitable growth and generate a cash flow of Rs 2441 million from operations (previous year Rs 1717 million) and a ROCE of 30% in the financial year 2012-13, an improvement over last year’s 28%. Your company also invested in a state-of- the-art greenfield factory at Gwalior, which was fully funded from internal accruals.

Tanishk_Ojha

Annual Report 2013-14

AkzoNobel India manufactures and markets a wide range of coatings covering Decorative paints, Performance coatings and Specialty Chemicals. Our portfolio includes well-known brands such as Dulux, Sikkens, International and Interpon. We provide solutions to many industries and sectors including automotive, consumer electronics, power, aviation, shipping and leisure craft, construction, oil and gas,water and waste water treatment, food and beverages, etc.

The business has started its operations to service the Bangladesh market during the year by appointing a selling agent in that country.

Tanishk_Ojha

Annual Report 2014-15

In India, our Decorative Paints business continues to perform well, leveraging its competitive advantages. It is driven by innovation and a keen desire to meet customer needs. The Performance Coatings and Specialty Chemicals businesses also contribute to the overall growth of revenue and profitability; here, too, innovation plays a key role. We have opened a production facility for packaging coatings in Thane; it has a capacity of 5,000 tonnes a year and is set to produce a broad range of products for the packaging coating industry.
- We have also set up a new agrochemicals laboratory in Mumbai to assist formulators in developing their customised agrochemical recipes.

Tanishk_Ojha

Annual Report 2015-16

We managed to sweat our assets with minimum additional capital cost. Revenues stood at Rs. 2,740 crore, and PAT was Rs. 202 crore, compared to Rs. 2,527 crore and Rs. 186 crore, respectively, in the previous year. Our business segments earned a profit of Rs. 251 crore, growing by 20 per cent over the previous year, despite tough market conditions, justifying the shareholder faith in AkzoNobel India.
Your Company has acquired a land parcel in Mysuru, Karnataka state, to cater to future expansion requirements.

Tanishk_Ojha

Annual Report 2016-17

We continue to sweat our assets and invest judiciously to leverage growth opportunities. this included a Specialty Coatings production facility and colour laboratory with an investment of Rs. 3 crore and a Powder Coatings plant with a planned investment of Rs. 65 crore.

Tanishk_Ojha

Annual Report 2017-18

We are adopting a laser sharp focus to achieve 15% return on sales by 2020.
Last year, your company’s specialty chemicals business was sold to an affiliate of AkzoNobel Group for Rs. 320 crore with your overwhelming support. We have always believed in sharing wealth with all of you in a transparent manner, and this time is no different: a share buyback programme has been launched and a dividend of Rs. 22 per share has been recommended.
- The buyback proposal comprised a purchase of 1.12 million fully paid-up equity shares of the Company aggregating to 2.4% of the issued, subscribed and paid-up Equity Capital of the Company at a price of Rs. 2,100 per equity share.
In order to strengthen our leading position in powder coatings, we have commissioned a new plant in Thane. This Rs. 650 million facility complements our existing plant capacity in Bangalore, adding new product lines in bonded metallic and functional powder coatings.
Last year, we added tinting machines to more than 2,000 new outlets and are able to reach out to over 15,000 sales outlets.
Moving forward, we will be measuring our performance by a clear company-wide target: 15% Return on Sales (ROS) and >25% Return on Investment (ROI) by the year 2020.

Tanishk_Ojha

Annual Report 2018-19

I would like to take this opportunity to formally welcome Mr Rajiv Rajgopal as the Managing Director of your Company since November 1, 2018. Rajiv has been with AkzoNobel in leadership roles for more than six years. I am confident that his leadership will bring dynamism and momentum to steer your Company to greater heights.
We inaugurated a new Powder Coatings facility in Thane, Mumbai, in the first half of 2018. The state-of-the-art facility introduce a new product lines in bonded metallic and functional powder coatings.
India’s Paints & Coatings industry is a fairly structured one, with organised players accounting for 65-70% of the industry’s sales.
The GST slab applicable to the Company’s product lines has been reduced to 18% in July 2018, from 28% prevailing till then. The benefit arising from the rate reduction has been passed on to the consumers by adjusting the retail price (MRP).
New business opportunities in the Coatings area are being continuously evaluated. Special product lines to service the prestigious projects of Railways and other high-profile public infrastructure projects are being developed basis their specifications.

Tanishk_Ojha

Annual Report 2019-20

We achieved a double-digit ROS% for the very first time which stood at 11.3%.
The implementation of Integrated Business Planning (IBP) including warehouse consolidation resulted in performance improvement and cost efficiencies.
AkzoNobel Group has bagged a 44-countries’ (including India) supply deal with BMW, and we are confident of delivering value for our Auto and Specialty Coatings business. We are also very proud to have partnered with the Indian Railways in coating the Vande Bharat Express, also known as Train 18. Overall our strategy has reflected in improved Gross Margins and EBIT margins. At 46%, we achieved our highest ever GM% in recent years, improving ₄₀₀ bps since last year.
The company has attained sustainable double-digit EBIT% in last few quarters on the back of:
1. Growth in focus segments,
2. Structural cost interventions like a single ERP platform, setting up of Shared services, Integrations across businesses, etc.,
3. Relentless focus on driving cost and working capital efficiency across areas.

Tanishk_Ojha

Annual Report 2020-21

As I reflect over the past four years as Chairman, your Company has reinforced its profitability with Return on Sales (ROS) steadily improving from 8.8% in 2017-18 to 11.0% in 2020-21. We have strengthened our leading position in powder coating through strategic capacity investment in the new Thane plant in 2017-18.
Despite the uncertainties abound, our Operating Working Capital as a percentage to Revenue also improved further. Noteworthy, that your Company remained comfortable on liquidity front with cash of Rs. 7,330 million, as on 31st March 2021.
Our Automotive and Specialty Coatings (ASC) business premium brand Sikkens got approvals from the global brands like Citreon that has recently debuted in India.
During the year, the ASC business received OEM approvals from players like Citroen and MG, which reinforces the trust and preference for AkzoNobel’s premium Sikkens brand.

Tanishk_Ojha

Annual Report 2021-22

Your Company successfully closed FY 2021-22 with new highs. At Rs. 31,486 million, revenue from operations was highest ever and surpassed the Rs. 30,000 million mark for the first time since our transformation into a focused Paints and Coatings organization.
We also reported highest ever Profit from Operations at Rs. 3,564 million with a 34% YoY growth. Led by strategic pricing initiatives, prudent opex management and value-engineering, we continued to deliver double digit profitability at 11.3% for the third straight year and matched our ever- highest EBIT% with the pre-COVID year of 2019-20.
Consequent to the geo-political conditions, increased inventory levels has become an industry-wide phenomenon. However, despite rising Operating Working Capital requirements, our liquidity position continues to remain strong at Rs. 4,576 million.
Akzo Nobel India strived to meet these changing needs on many levels. Dulux Simply Refresh, our disruptive debut in the growing Do-It-Yourself (DIY) segment is empowering new-age consumers in India to take up home renovation projects and experience the magic of Dulux without the hassles associated with a traditional paint job.
Our Automotive and Specialty Chemicals (ASC) business partnered with Mahindra & Mahindra to create the dazzling golden hues of XUV700 Gold Edition. Investments in bonded technology and exciting innovations in the EV sector drove new opportunities in Powder coatings.
During the year, the ASC business was pleased to leverage its global partnership with McLaren in India by shipping in its 1st order. McLaren Cars operate under Super Premium luxury sports car segment and our brand Sikkens is exclusively approved and used as OEM finishes as well as for their Aluminium, Carbon fiber and other composite substrate.

Tanishk_Ojha

Annual Report 2022-23

In FY23, our topline of H38,021 million with a 21% growth outperformed the industry average yet again. As a challenger brand, an accelerated growth trajectory resulted in our being among the Top 2 in incremental share gains in the industry since two years in a row.
The size of the industry is estimated to grow from Rs. 62,000 crores to H1 lakh crore in the next five years.
During the financial year 2022-23, the Paints & Coatings industry experienced a favorable development with the softening of raw material prices from their previous highs. As raw materials account for approximately 55-60% of the input costs, price corrections in crude oil and other essential components resulted in improved margins for the industry.
Paints & Coatings industry has emerged as an attractive sector, as indicated by the entry of several new players in recent times. These new entrants are actively investing in infrastructure, technology, and marketing to establish their presence and capture a share of the market. This heightened competition has prompted existing players to further bolster their capabilities and differentiate themselves in order to maintain their market position, leading to a surge in investment activity within the industry.
In the passenger vehicle segment, both Sikkens and Lesonal brands are approved for Tata Motors network refinishing requirements. This year, Lesonal surpassed growth expectations with new brand penetration in Tata Motors’ total volumes.
Metal Impacts (P) Ltd., one of the leading producers of aluminum cans in India, considers Akzo Nobel India as their preferred partner for complete monobloc offerings.

Tanishk_Ojha

Conference Calls

June 2022

We've also taken a 4.7% price increase in January and February, but you know, last two weeks of January and the first two weeks of February, the demand was a bit soft because of the impact of Omicron, but we saw from the second week of February pretty much and let me be honest, going forward even to quite recent times a very strong uptick in demand.
I would just say that this is the first quarter where I can officially say that we started gaining market share. And if you've seen the quarter results, you know for the full year we become the second fastest you know paint growing company in India.
As I mentioned our distribution 2.0 we have now started see when I joined this company in 2013 we were covering 800 towns in the country, right? You know when I came back in 2018 we had moved up to about 2,000 towns. As of this morning we got a dashboard which told me that we are today almost in 4,700 towns. our journey is in the next two years. I want to reach 9,000 towns.
(On Grasim Entry) - I really wanted to be in that position because, you know, I do think that the global is really taking India and India growth story quite seriously. I think it was important to demonstrate that India business can do it.
Our retention of our dealers has been very sharp, has been closer to 93 to 95% ,despite the fact that we took a price increase ahead of our competitors.
The other thing remember we are the only player in this entire country that coats any surface. We coat an aeroplane, we coat Indian Navy, we coat the Indian submarine. We coat American Pentagon right.
A lot of trial steps. Yeah, so we do test in our research in labs we do the test in in markets like Cherrapunji for example on exterior to test heavy rainfall, performance etc.

Tanishk_Ojha

August 2022 Concall

We have announced that we are going to expand our Gwalior site for expansion for both powder coating and for paints.
We cater to about 4,000 B2B customers. About 66-67% of our business comes from paints, and the balance comes from coating business.
And if I were to look at it, you know, we started with a 15-by-20, where we were driving profitability. And the reason was, after one of our competitors tried to acquire us globally, India had to play its part of 15 by 20.
We'll continue to drive value creation and to ensure that we continue to deliver double digit profitability.
I mean that more than 75% of our turnover in paints is covered through distributors.

Because remember, when a person brings multiple cans of Coke, you're consuming AkzoNobel, because we coat the inner and outer surface of the can. When you consume a lot of Nestle products, we coat Nestle cans, right, so I'm just giving examples of our customers. And when they grow, we grow. You've seen astounding results now coming from the infrastructure big players, you know, some of our largest customers, whether it's L&T etc., are all doing brilliantly.
We used to have 123 depots at one point of time; now we've got 30 levels.
We don't keep more than 21 days of stock with distributor where you want to be the token distributor. Distributor is not supposed to be a stockpile. Yes, the stock is for making sure faster service to market.

Tanishk_Ojha

November 2022 Concall

I joined this company of about 2000 towns in 2015. We are already in about 5000 towns and will move to 8000 towns in the next couple of years.
Although we also invested in advertising and marketing initiatives and other growth-related spends, we maintained our focus on the Deliver aspect of our ambition, delivering 15% EBIT growth.
The revenue growth in double digits, high double digit. you know, we would have grown almost equal to our overall growth. So that tells you that we've seriously gained market share.
We explained that we're expanding on our major capex or we are expanding our powder product capacity. And the second point is regarding the trading some of our products in premium flagship brand in automotive aftermarket business, which is maybe 30 40% we are importing.
We are gearing ourselves for shifts that are happening in the market. Electric vehicles, infrastructure, because of the quality of our products that we sell, right? You may or may not know that we also have just coated INS Vikrant, Vande Bharat express.

Tanishk_Ojha

February 2023 Concall

Clearly, if you see the analyst call that Global CEO, Greg Poux-Guillaume had yesterday, very clearly, on the outlook for '23, he mentions 2 countries and India is one of the 2 countries in Southeast -- South Asia, Vietnam being the other as countries where you would expect strong growth.
Currently, we are running at around 39% gross margin.
I think there were some internal benchmarks that I wanted to exceed where the dream of crossing INR 1,000 crores in a quarter still remains.
Now when you talk about 20%, 30% growth that we saw in the past, yes, it seems it's deceleration. But I do believe still that the double-digit growth is possible.
This business is not about building capacities because I can also announce a lot of capacity. But what do you do with the capacity if your consumers are not readily available to convert.
So look, if you look at our capacities really for the Paints and Coatings range between 200 million to 250 million. See we are -- and that's -- if you look at a three shift basis, our capacity would be anywhere between sound 60%, 65%, but we currently operate on two shifts.
On Grasim Entry - So to my mind, is pricing alone going to be the driver? My years of experience says that, look, it's going to be very tough. I've been in those battles myself. And hence, to have a thought leadership and thinking and something which is a little more strategically disruptive will take time but will be the real acid test.

Look, we have continued to take price increases in our coatings business in the last quarter. On the paints side we did. Coatings, we took -- because coatings, you remember, the price increase takes a lot of time.
- Look, the coatings business has a wide range of margin. On an absolute the deco obviously is more profitable, but coatings have started getting profitable over the last year or 2 years. Some of our coating businesses are extremely profitable, yes. But right now on an aggregate, it is paints which is more profitable than coatings.

Tanishk_Ojha

May 2023 Concall

Now when we do that, and you are absolutely right, our A&P as a percent of our revenue had dipped over the years to almost 1.7%, whereas the other players are about 3% or 3.5%, right? I think our intent is to get back to 3%, 3.5% immediately so that we are seeing, we are visible and not just on media spend but also on visibility in the market; and then over the next 2, 3 years, try and sizably grow it.
In 2018, when I got back, we put the waterproofing range. And now we have serious with the economy with exact numbers. But suffice to say that we are rolling at almost 40% CAGR in that category.

So as I said, waterproofing, we entered pretty late in 2018. We have a CAGR growth since then of almost 48%, 49%, to be honest. And in the last quarter of almost 39%, right? We have started entering many segments, whether it's waterproofing, whether it's supply systems.
Our attempt is like in most things, we want to be in the top 3 in the next 3 years.
So our current capacity utilization depending on the number is close to around 60%. The reason is because we've got a lot of automation into our plans. We've automated significantly. We are only running two shifts now.
We are a number four player. We are perhaps one of the few players in any industry in India at number four, which is significantly profitable. Our profitability in the year has even been ahead of some of our senior players.

Tanishk_Ojha

August 2023 Concall

I am also told I am the first Managing Director after many many years between ICI and AkzoNobel who has got reappointed. And that should give a lot of confidence to our investors who had one major grouse in terms of the fact that the top management, the CEO and the MD, changes between 3 to 5 years. I somehow see that as a bit of a positive if a person goes to upper echelons within AkzoNobel to be able to do more for India.
What's really picking up is infrastructure and real estate. Those are the places where the revenue uptick, L&T, etc., large customers have been fantastic. As far as decorative paints is concerned, I would only say that, look, as I mentioned, our projects business and our premium business which is really the gut of what we do, the bulk of what we do, have been very strong.
The companies which have got a higher premium play, some of which are not also listed and of which I know results have outperformed and the companies which have got a larger mass play.
We are looking at, let me give you one example, Intersleek which is there; what we do is we have got a product which is a bio-grade product which prevents the hulk of the ship from getting seaweeds. We are coming with many such technologies.

If you look at whether it is Central Vista or INS Vikrant where we have been provided our coatings, it really starts telling you today. I think the government is also believing in great quality. They understand the value of having a great brand and great quality, Chartek, which is a fire protection which is typically used in oil rigs. It is also getting used in key defense installations, etc., not just in India but even in the United States, the UK, Europe, etc. To me, it is the quality of products that you have, how well can they live their promise.
On the A&P, we had, during COVID, brought it down to about 1.8. I think going forward, I had mentioned that we will dial it up to 3.5 to 4. On distribution spends in the new markets that we are entering, what we need to do is to build brand visibility, contractor programs, etc., which are fairly cost effective.
From a growth perspective, obviously we need to play in it because a large percentage of the market growth is coming through segments like mass, economy, putty, and waterproofing. In waterproofing, we are very aggressive, I think, both in terms of quality of product and in terms of growth. Where we are lacking is putty, to be specific, and also some economy segments. We are looking at it, we are dialing in.
And what delighted me is the fact that we moved to 36% return on capital employed last year and that journey will continue upwards. We are sweating our assets, we are using technology.
Waterproofing and Construction Chemicals - It is one of my fastest growing segments, Because the quality of products we have got like Dulux AQUATECH is unbelievable. I don't think the top 2 players have got products which are equal to my quality.