Akzo Nobel India : AGM 2022 Transcript

"AkzoNobel India Limited 68th Annual General

Meeting"

August 05, 2022

MANAGEMENT: MR. OSCAR WEZENBEEK, CHAIRMAN

MR. RAJIV RAJAGOPAL, MANAGING DIRECTOR MR. R KRISHNA, WHOLETIME DIRECTOR AND CFO MS. SMRITI REKHA VIJAY - INDEPENDENT DIRECTOR AND CHAIRPERSON OF AUDIT COMMITTEE & CORPORATE SOCIAL RESPONSIBILITY COMMITTEE MR. AMIT JAIN, INDEPENDENT DIRECTOR AND CHAIRMAN OF NOMINATION AND REMUNERATION COMMITTEE AND RISK MANAGEMENT COMMITTEE MR. HEMANT SAHAI, INDEPENDENT DIRECTOR AND CHAIRPERSON OF STAKEHOLDERS RELATIONSHIP COMMITTEE

MS. HARSHI RASTOGI, COMPANY SECRETARY AND COMPLIANCE OFFICER

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Moderator:Good afternoon and a warm welcome to you all to the 68th Annual General Meeting of AkzoNobel India Limited through video conferencing or other audio-visual means. As a reminder, for the smooth conduct of the meeting, the members will be in the mute mode. An audio and video will be opened for speaker shareholders to speak at the AGM as per the pre- registration. Please note that, as per the requirements the proceedings of the Annual General Meeting will be recorded and available on the website of the company. I now request Mr. Oscar Wezenbeek, Chairman - Akzo Nobel India Limited, to kindly initiate the proceedings of the 2022 AGM. Over to you, sir.

Oscar Wezenbeek: Distinguished Shareholders, It is now 2:30 pm. I find that the quorum is present, so I call this meeting to order.

On behalf of the entire Board, it is indeed my pleasure in welcoming you to the 68th Annual General Meeting of your Company - Akzo Nobel India Limited.

Let me start the proceedings by introducing my fellow board members who join me today in this AGM through Video Conferencing and Other Audio-Visual Means.

Let me begin by introducing the board members.

To my extreme left is Ms Smriti Rekha Vijay - Independent Director and Chairperson of Audit Committee & Corporate Social Responsibility Committee.

Next to her is Mr Amit Jain, Independent Director, Chairman of Nomination and Remuneration Committee and Risk Management Committee.

To my immediate left is Mr Rajiv Rajgopal - your company's Managing Director.

Sitting immediately to my right is Mr R Krishna - your Company's Wholetime Director and CFO. Krishna joined the Board on 1 December 2021 and I welcome him to this meeting.

Next to Krishna is Mr Hemant Sahai - Independent Director and Chairperson of Stakeholders Relationship Committee.

Also joining us is Ms Harshi Rastogi - Company Secretary and Compliance Officer of your Company.

I also acknowledge the participation of the statutory auditors, M/s Price Waterhouse Chartered Accountants LLP; the Secretarial Auditors M/s A K Labh & Company and Cost Auditors M/s Chandra Wadhwa & Company in this meeting.

Please note, all statutory registers are available during the AGM for inspection at NSDL website.

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Before starting the formal business, I would like to share a few opening remarks.

Dear Shareholders… Namaste!

It's my great pleasure in welcoming you to the 68th Annual General Meeting of your Company.

The past two years have shown us the meaning of "Vasudev Kutumbakam" that the world is one family. In today's connected world, continued disruptions, uncertainties and volatilities are not only weighing on the global growth outlook, but also changing the context of our business environment.

Most economies worldwide are seeing high inflation, while currency volatility continues.

Crude - one of the key raw materials for our industry, while hovering around the 100$ mark now, is still unpredictable in its movement. Meanwhile, supply chain issues continue to be one of the most universal challenges given the significant global bottlenecks.

The World Bank estimates that after rebounding to an estimated 5.7% in 2021, the global growth is expected to decelerate markedly in 2022, to 2.9%.

It is in this backdrop that India stands tall as a bright spot in the global world order. With a projected GDP growth of 7.2% for the current financial year 2022-23, India is the world's fastest growing major economy. And this story of growth is expected to pick up further momentum, India is expected to become a $5 trillion economy within the next five years.

In today's VUCA world - that's seeing Volatility, Uncertainty, Complexity and Ambiguity- I'm reminded of the truth of what Charles Darwin said over a century ago, "The world will not be inherited by the strongest, it will be inherited by those most able to change".

Sustainable growth is no longer a multiple of resilience, rather of accelerated adaptation and innovation.

At AkzoNobel, we've made it our business to deliver sustainable and innovative solutions that our customers, communities - and the planet - are increasingly relying on. Active in over 150 countries worldwide, AkzoNobel has been setting the standard in colour and protection for more than 200 years.

Fueling our intent to be the reference in our industry is our mid-term Grow & Deliver ambition - the next phase of our transformation.

Our recent acquisitions such as Grupo Orbis in Latin America and Titan Paints in Spain; and the agreement to acquire all the decorative paints and coatings activities of Kansai Paint in 12 countries of Africa, are proof-points of how we're investing to create leading global positions and driving growth in emerging markets.

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India being one of the fastest growing economies worldwide, AkzoNobel has a sharp focus to grow in this key market within the South Asia Pacific region.

While the 15 by 20 journey strengthened Akzo Nobel India's foundation, the past two years under Grow and Deliver ambition have enabled us to build further on the long-term profitable growth journey for our people and our customers.

Here, I must give full credit to the wonderful team who have made us the second Fastest Growing Company in the Indian paints and coatings industry in the financial year 2021-22.

Esteemed shareholders, the Company's Annual Report for the financial year 2021-22 have already been circulated to you. I would like to share some key highlights of our powerful performance.

Our revenue from operations was highest ever at Rs. 31,486 million. With a 30% year on year growth, we've surpassed the Rs. 30,000 million-mark for the first time since our transformation into a focused paint and coatings organization in 2017.

We reported highest-ever Profit from Operations at Rs. 3,564 million with 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.

While increased inventory levels have become an industry-wide phenomenon and led to rising Operating Working Capital requirements, our liquidity position continues to remain strong at Rs. 4,576 million.

In response to the changing consumer needs, your Company stayed on course its Grow and Deliver ambition. We've gained a competitive edge with our focused actions under five areas:

1. Strong margin management with calibrated pricing initiatives
2. Enhancing our Brand
3. Product Innovations
4. Expanding our distribution reach to new geographies with Distribution 2.0 strategy;
   and
5. Accelerating digital disruption

One of the biggest proof-points of our strategy execution was in implementing calibrated pricing initiatives to the tune of 21% during the year, ahead of competition. This demonstrates more

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than ever before, the tremendous resilience of our people who went beyond to deliver robust performance quarter on quarter.

While maintaining cost discipline, our progressive marketing campaigns, such as the new Dulux Velvet Touch television ad campaign aired during the IPL, enhanced our brand connect with Indian consumers.

Pioneering technologies in the innovative products we're supplying today is differentiating AkzoNobel from the competition. In paints, revolutionary technologies such as next-gen Tru Colour technology in our flagship Dulux Velvet Touch, or the new PU technology in Dulux Weathershield Max were well received by consumers.

Similarly, we created new benchmarks with industry-first offerings like Dulux Simply Refresh range of DIY solutions, introduced bio-based paints that improve indoor air quality; and made exciting forays in new segments like woodcare and floor coatings.

In coatings business, customer-centric solutions for infrastructure, power, mining, automotive industries resulted in good order books. In powder coatings, new launches such as the Futura range for building facades and exciting offerings for the growing EV segment were introduced. During the year, we localized our protective topcoats for windmill blades and Interpon AM - our high-quality powder coating with anti-microbial technology. In industrial coatings, good growth was observed across our coil, extrusion and metal packaging coatings.

Acting as a tailwind to our ambitions is the steady progress we are making under Distribution

2.0 strategy. Our offline network has grown nearly 50% over the past few years. With our unique hub and spoke model, we have rapidly scaled up our reach to cover nearly 5,000 towns. Additionally, through partnerships with e-commerce giants and tie-ups with aggregators, we are now a click away from the e-consumers of today.

We realize that digital transformation and innovation is a key lever to growth. As digital revolution is fast changing the consumer landscape, we want to lead this shift from the front. This is where our Paint the Future India startup challenge comes in. I am confident that this will be a gamechanger in the Indian paints and coatings industry. By combining our expertise with the disruptive digital solutions of startups in India - which is the third largest startup ecosystem in the world - we aim to enhance the magic of Dulux paints and transform the way Indian consumers digitally experience our products and services in India.

Overall, our actions in tandem with our continued focus to maintain our lean cost structure, put us in good stead to drive our long-term profitable growth in India.

I also want to share that your Company is committed to taking actions to address globally relevant challenges and protect future generations. When it comes to sustainability, everything we do is focused on a few key areas: our products, our people, our own operations, our customers and suppliers, and the world around us.

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