Project Title : Shop Signage and Decoration

Project Name : Country : Thailand

BU / SMU / Function : Site : ChaengWatana
Business Area : Decorative Paints
Approval Request Template for Investment [Growth]
Version: 2016v1

Investment Category : Investment / PPE Cost Accuracy : Not Applicable

Investment Nature : New Product Approval Cycle : Choose an item. 2022
Type of Request : Overrun Project Completion Date : Choose an item. 2022
To be Authorized LC million : $0.04 million To be Approved by : SB
Helios Method Applied : Not Applicable To be Authorized* € million :
FX rate* LC/€ :
Included in Budget : Yes, CAPEX

Short project description / Objective

This proposal is for the signage of 6 Store and computers for store upgrading for Singapore Retail market.
Capex amount we need for 836k THB

Related documents / Impact on other Business Areas

Key Financials ** Competitive Environment (in volume)

Δ Sales (S$’000) 370 Market size 3 mil
Δ CM (S$’000) 202 Market growth rate 1– 2%
Δ OPEX (S$’000) 50 Initial market share 20%
Δ Operating Income (S$’000) 88 Market share** 23%
Δ ROS (%) 24% Main competitor 1 Nippon
Δ FTE - Main competitor 2 Jotun

Project KPIs (taken from Project Evaluator) Site or Business Performance ***
IRR (%) 34% Sales (S$’000) -
Payback Period (nominal, in years) 2.92 CM (S$’000) -
NPV (S$’000) 50 ROS (%) -

2025
CAPEX, Total Cash Flow, One-offs (taken from Project Evaluator) Total 2021 2022 2023 2024
to 30
CAPEX (S$’000) (30)  (30)  - -  -   -
Total Cash Flow (incl. CAPEX) (S$’000) 50 (21)  8.3 8.3 9.7 44.8
Cash One-offs (S$’000)   -   -   -  -   -    -
Non-Cash One-offs (S$’000) (incl. impairment, accelerated depreciation)   -   -   -  -   -    -

Please limit the document to a maximum of 8 – 10 pages. If this number of pages is exceeded, information needs to
be transferred to Annexes. The Executive Summary, which will be used for ORM/ExCo submissions, should be
maximum 2 pages (3 pages for complex or large projects).

* To be authorized amount is to be stated in local currency and needs to be converted with the latest month closing rate available, published by ACD-FR

** In third year after start-up of production and only to be filled in to the extent applicable

*** Todays’ financial metrics of the relevant managerial unit

This “Approval Request” template aims to cover growth related investment proposals in Plant & Equipment as well
as in Intellectual Property, New Technology & Joint Development Agreements.

1. Executive summary

This proposal seeks authorization for capital expenditure of S$35k.

2. Description current situation

Market competition has intensified with key competitor Nippon Paint being more aggressively
competing in the market. This has caused all competing paint manufacturers eyeing for any in store
presence, which leads to sales in Retail. Like all other market, space in store is always a scarcity and
opportunity does not knock on your store twice. Therefore, we are focusing our efforts to continue our
expansion plans & to achieve our 2022 OPI, we are pushing ahead with more outlets presence,
especially for store in the sub urban location.

In Singapore, stores with tinting machine contribute to most of the industry sales and the trend is expected to
continue. The competition scenario (number of machines) and market share is indicated below:

BRAND UNITS MARKET SHARE

    %

DULUX 64 25

Nippon 180 60

Jotun 14 6

Berger 5 5

Raffles Paint 8 2

Others 2 2

TOTAL 271 100.0

It is critical for the business to maintain the momentum of machine placement to create the required
channel capacity for realizing its growth targets. Installation of new spectrometer scanner is also an
important tool to get better colour accuracy thus able to do conversion easier and faster.

In order to increase numeric reach, gain market share and increase visibility of the Dulux brand, we need to
deploy tinting machines into retail outlets. Machine placement in competition & Key location stores will lead
to significant gains in market share. The opposite is true. We have experienced fierce competition from
Nippon Paint and Jotun where they would invest heavily to gain foothold for instore space. As a result,
retailers would take deals based on a first come first serve basis and/or strike deals with either
manufacturer that provides the best benefits.

2
3. Economic justification

3.1 Key assumptions including description of Base Case

Gross Margins : GM is taken at current levels of 55% of NR basis average 2019 actuals

Price / RMC Inflation : It has been assumed that any future RM inflation will get recouped through equivalent price
increase. Hence no price increase and RM cost inflation considered

NPV : A discount rate of 7.5% has been assumed for NPV calculation, advised by BU

3.2 Financial evaluation

Parameter Result
IRR 34 %
Payback period 2.92 Years
NPV SGD 50K

3.3 Impact on Key Financials

Incremental impact over 5 years period:
Δ Sales (S$’000) 370
Δ CM (S$’000) 202
Δ OPEX (S$’000) 50
Δ Operating Income (S$’000) 88

Others :

a. POST productivity and utilisation (volume per machine per year) for actual and assumptions is 1200 Ltrs
per year.
b. Current balance of machine is 6 units to be installed by end June. Some machines were pulled back
from trade due to poor productivity.
c. All these units will be installed in bigger outlets. The current outlet machine will be brought back to
overhaul and then re channel to new SSO. This is to maximize productivity and usage. Incremental
revenue assumption will be about $20K per SSO per year.
d. Retail Sales Manager will update incremental revenue in dart.