Volume No. VII Issue No. 22 August 19, 2016 FINANCIAL SUMMARY

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1 For private circulation only Volume No. VII Issue No. 22 3M India Minting money Rs 13,210 Sensex: 28,077 Nifty: 8,667 FINANCIAL SUMMARY PARTICULARS NET OPM OP OTHER PBDIT INT. PBDT DEPR / PBT TAX PAT FROM EO PAT EPS * SALES (%) INCOME (NET) AMOR EXPENSES ORD ACT NET OF TAX 1703 (12P)# (12) (12) (12) Int: Interest (Net). Dep/ Amor: Depreciation / Amortization. ORD ACT: PAT from ordinary activities* On current equity of Rs crore. Face Value: Rs 10. #New projections are as per new Indian Accounting Standard. Past year figures and old projections were as per earlier accounting standard and not comparable. EO: Extraordinary items. (P): Projections. Figures in Rs crore. Source: Capitaline Databases 3M Company, USA holds 75% equity stake in the Company and is a diversified technology and science company with a global presence in Industrial; Health Care, Consumer, Safety and Graphics, and Energy sectors. It is among the leading manufacturers of products for many of the markets it serves. Most of its products involve expertise in product development, manufacturing and marketing, and are subject to competition from products manufactured and sold by other technologically oriented companies. The company has manufacturing facilities in India at Ahmedabad, Bengaluru, Pune and has a R&D Center in Bengaluru. As at March 2016, the company had employee strength of 1,388 personnel. Its products are used in wide range of industries The company s products are used in wide range of businesses. These are Abrasives, Automotive, Casting & Splinting, Dental, Filtration, Food Service & Hospitality, Hand Hygiene, Marine Maintenance and Repair, Medical Device & Optical Components, Orthodontic, Painting Equipment & Supplies, Patient Monitoring, Safety Products, Securement & Immobilization-Dressing Securement, Skin & Wound Care, Sterilization Monitoring, Surgical Solutions, Tapes & Adhesives, Vascular Access and Wire & Cable. On consumer side it serves segments such as Home, Personal Health Care, DIY, Decorating and Organizing, Student, Office and Crafts. Broadly it serves Automotive, Commercial Solutions, Communications, Design & Construction, Electronics, Energy, Health Care, Manufacturing, Mining, Oil & Gas, Safety and Transportation. The company managed its operations in five (5) operating business segments: Industrial; Health Care; Consumer; Safety and Graphics; and Energy. Its five business segments bring together common or related 3M technologies, enhancing the development of innovative products and services and providing for efficient sharing of business resources. These segments have worldwide responsibility for virtually all 3M product lines. STOCK DATA BSE Code : BSE Group : B NSE Code : 3MINDIA Bloomberg : 3M IN Reuters : TMIN.BO Par Value : Rs week High/Low :Rs 15200/Rs 9405 Sector : Trading SHAREHOLDING PATTERN* Category % of equity Foreign : 9.91 Institutions : 2.64 Corporate Holding : 2.56 Promoters : 75.0 Public & Others : 9.89 * as on 30/06/2016 Source: Capitaline Databases

2 3M products are sold through numerous distribution channels, including directly to users and through numerous wholesalers, retailers, converters, distributors and dealers in a wide variety of trades in many countries around the world. June 2016 quarter results sees sales growing 13% and net profit jump 60% In June 2016 quarter sales grew 13% to Rs crore. OPM improved 170 basis points to 15.6% which saw OP rise 27% to Rs crore. Other income jumped 508% to Rs crore and interest cost fell 4% to Rs 35 lakh. After providing for depreciation (down 5% to Rs crore), PBT grew 48% to Rs crore. As taxation grew 29% to Rs crore, PAT soared 60% to Rs crore. Sales were up 14% and PAT was up 85% in FY 2016 In FY 2016 sales were up 14% to Rs crore. OPM had jumped 520 basis points to 16.3% which had taken OP up 68% to Rs crore. PBT was up 87% to Rs crore and PAT was up 85% to Rs crore. Industrial segment The Industrial segment serves a broad range of markets, such as automotive original equipment manufacturer (OEM) and automotive aftermarket (auto body shops and retail), electronics, appliance, paper and printing, packaging, food and beverage, and construction. Industrial products include tapes, a wide variety of coated, non-woven and bonded abrasives, adhesives, advanced ceramics, sealants, specialty materials, closure systems for personal hygiene products, acoustic systems products, and components and products that are used in the manufacture, repair and maintenance of automotive, marine, aircraft and specialty vehicles. Major industrial products include vinyl, polyester, foil and specialty industrial tapes and adhesives; Scotch Masking Tape, Scotch Filament Tape and Scotch Packaging Tape; packaging equipment; 3M VHB Bonding Tapes; conductive, low surface energy, sealants, hot melt, spray and structural adhesives; reclosable fasteners; label materials for durable goods; and coated, nonwoven and microstructured surface finishing and grinding abrasives for the industrial market. Other industrial products include fluoroelastomers for seals, tubes and gaskets in engines. For the quarter, sales from the Industrial segment grew 15% to Rs crore and accounted for 41% of sales. PBIT from the same grew 38% to Rs crore and accounted for 48% of total. In FY 2016, sales from the Industrial segment grew 10% to Rs crore and accounted for 42% of sales. PBIT from the same grew 57% to Rs crore and accounted for 49% of total. Industrial Business continues to focus on high gross margins product categories while rationalizing low profitable ones to stabilize profits. The Industrial Retail business comprising wood working, decorative & auto refinish had excelled in penetrating into lower tiers of the Indian market. 3M continues to invest in the Car Care segment with new formats which include mobile detailing and fuel station centers fueling further growth in this space 3M India has a large number of hi-tech products and strong brands catering to a wide variety of industrial and consumer segments 3M Company, USA holds 75% equity stake in the Company and is a diversified technology and science company with a global presence in Industrial; Health Care, Consumer, Safety and Graphics, and Energy sectors 2

3 Health Care segment Health Care business serves markets that include large multi-specialty hospitals and small clinics, dental and orthodontic practitioners, processed food manufacturers and pharmaceutical companies. Our offerings include medical and surgical supplies, medical devices, skin & wound care and infection prevention products & solutions, drug delivery systems, dental and orthodontic products and food safety products. For the quarter, sales from the Health Care business grew 25% to Rs crore and accounted for 16% of sales. PBIT from the same grew 69% to Rs crore and accounted for 16% of total. In FY 2016, sales from the Health Care business grew 16% to Rs crore and accounted for 15% of sales. PBIT from the same grew 129% to Rs crore and accounted for 13% of total. Products manufactured in Medical plant in Ranjangaon have found good acceptance amongst end customers and this has resulted in significant business growth. The Go-to-Market strategy to expand reach into smaller cities through the extended sales representative model has been successfully scaled up leading to higher level of penetration of 3M products in markets that were earlier not covered. Sales through e-commerce for both medical and dental products have gained traction and the company is seeing continued year on year growth. Healthcare Academy which offers basic and premium online courses for customers has seen encouraging registrations since launch. This should go a long way to improve patient care through education of caregivers. Safety and Graphics segment Safety & Graphics business serves a broad range of markets that serve to increase the safety, security & productivity of people & improves facility design, aesthetics, hygiene, etc. Major product offerings include personal protection products; traffic safety & security products, border security solutions; public safety & identity management solutions; commercial graphics sheeting & systems; architectural surface & lighting solutions; cleaning & protection products for commercial establishments, etc Personal protection products include maintenance-free & reusable respirators, personal protective equipment, head & face protection, body protection, hearing protection & protective eyewear. In traffic safety & security, 3M provides reflective sheeting used on highway signs, vehicle license plates, construction work-zone devices, pavement marking systems, electronic surveillance products, films that protect against counterfeiting & reflective materials that are widely used on apparel, footwear & accessories, enhancing visibility in low-light situations. Traffic safety & security also provides remote people-monitoring technologies used for offender-monitoring applications. The portfolio also includes RFID tracking technologies & Automatic Number Plate Recognition (ANPR). Major commercial graphics products include films, inks, digital signage systems & related products used to produce graphics for vehicles, signs & interior surfaces. Other products include spill-control sorbents; nonwoven abrasive materials for floor maintenance Its five business segments bring together common or related 3M technologies, enhancing the development of innovative products and services and providing for efficient sharing of business resources. These segments have worldwide responsibility for virtually all 3M product lines Sales from the Health Care business grew 25% to Rs crore and accounted for 16% of sales. PBIT from the same grew 69% to Rs crore and accounted for 16% of total for the quarter 3

4 & commercial cleaning; floor matting, housekeeping chemicals, etc. For the quarter, sales from the Safety & Graphics business grew 9% to Rs crore and accounted for 25% of sales. PBIT from the same fell 7% to Rs 7.94 crore and accounted for 10% of total. In FY 2016, sales from the Safety & Graphics business grew 17% to Rs crore and accounted for 25% of sales. PBIT from the same grew 172% to Rs crore and accounted for 13% of total. Personal Safety Division is making significant progress in the fast growing Pharmaceutical sector through focused Key Account Programs. It has created the India Pharmaceutical Advisory Council to ensure increased Safety at high risk and hazardous pharma manufacturing zones. The division continues to increase its penetration into the SME segment through various awareness and contact programs and other onsite SME activation programs. The Traffic Safety & Security Division continues their good work in the road safety market with launch of new products like Conspicuity Tapes, Vertical Delineators, Solar RPMs, flexible median markers, etc. The Traffic Safety & Security Division has launched new products like Automated Number Plate Recognition (ANPR) cameras, Variable Message Signs to cater to the Smart City Requirements in India. Consumer segment Consumer segment serves markets that include consumer retail, modern trade, office retail, and the pharmacy channel. The products in this segment include office supply products, stationery products, home care products, protective material products, and consumer health care products. Major consumer products include Scotch brand products, such as Scotch Magic Tape and Scotch Glue Stick; Post-it Products, such as Post-it Flags, Post-it Note Pads and Dispensers; home care products, including Scotch-Brite Scour Pads, Scotch-Brite Scrub Sponges, Scotch-Brite Microfiber Cloth products; for the pharmacy channel Nexcare Adhesive Bandages; and Nexcare branded first aid product lines. For the quarter, sales from the Consumer segment grew 11% to Rs crore and accounted for 10% of sales. PBIT from the same grew 56% to Rs 8.36 crore and accounted for 10% of total. In FY 2016, sales from the Consumer segment grew 17% to Rs crore and accounted for 10% of sales. PBIT from the same grew 241% to Rs crore and accounted for 11% of total. The company s is pursuing continued growth with distribution expansion program to increase availability of Home Care range of products in Tier B&C towns. It is also pursuing accelerated sales through ecommerce channel with focus on product portfolio, good digital content and on-line demand generation programs. It is doing continued investment in Scotch-Brite brand in Television and trade to create pull for its products, especially in the utensil and wipes portfolio. Energy segment Infrastructure Protection Products Division of 3M offers a comprehensive array of products that ensure effective protection against corrosion for a Personal Safety Division is making significant progress in the fast growing Pharmaceutical sector through focused Key Account Programs Consumer segment serves markets that include consumer retail, modern trade, office retail, and the pharmacy channel. 4

5 variety of installations and structures. While 3M Scotchkote Fusion Bonded Epoxy Powders and Scotchkote Liquid Epoxy Coatings offer protection for steel pipelines, associated fittings and structures used in the oil, gas, water, industrial and construction markets, the range of 3M Scotchcast Powder Resins are ideal for OEM electrical insulation applications. 3M Dynatel Locators combine simple interfaces, large backlit high-resolution graphics, excellent balance and ergonomics with precision locating capabilities to quickly and accurately identify underground assets. In Renewable Energy 3M is helping to transform the fields of Generation & Conservation of Energy. 3M supports solar & wind energy initiatives through product solutions such as films, tapes, coatings, encapsulants and adhesives that help reduce the cost of energy generation. For energy conservation and management needs of customers we provide affordable window film technology that ensures effective health and environment protection. For the quarter, sales from the Energy segment fell 13% to Rs crore and accounted for 6% of sales. PBIT from the same fell 7% to Rs 8.81 crore and accounted for 11% of total. In FY 2016, sales from the Energy segment grew 30% to Rs crore and accounted for 6% of sales. PBIT from the same grew 115% to Rs crore and accounted for 11% of total. Weakness in the global Oil & Gas scenario lead to project delays. However, there was traction in some domestic projects in Telecom and Oil & Gas sectors which reversed the trend for infrastructure protection products. For Renewable energy business, there was increased usage of Energy Management and safety films due to enhanced focus on energy efficiency & green buildings, security concerns and the growing usage of glass in commercial and residential complexes. Prepared to avail of opportunities from Government s Make in India and Smart Cities initiatives 3M is known globally to be a leading manufacturer. The Make in India initiative is helping 3M deploy its manufacturing strength within the country. The evolving Electronics, Defence and Automobile manufacturing will help 3M lay a very strong foundation for local manufacturing in the country. 3M s philosophy for smart cities is to help develop the market for smart cities through collaboration with other relevant stakeholders with similar interests. The company is working closely with the government to help India develop smart cities. The company has strategies in place for growth Seeing the pickup in consumption while the industrial production remains stagnant, 3M has increased focus on consumption driven businesses. This has yielded strong results with 60% of growth in FY 2016 coming from a few top actions in consumption businesses, like adoption of newer business models, and increased spend on digital marketing. It has focused on geographic penetration plans mainly for consumption driven businesses. 3M is also tapping on the increased sustainability focus of companies as well as the government through introduction of products and green 3M supports solar & wind energy initiatives through product solutions such as films, tapes, coatings, encapsulants and adhesives that help reduce the cost of energy generation 3M s philosophy for smart cities is to help develop the market for smart cities through collaboration with other relevant stakeholders with similar interests 5

6 initiatives. 3M has increased focus on sciences that save lives, save resources, save energy and improve productivity efficiently. 3M targets to have 10% of its sale through ecommerce in the next 5 years. 3M has beaten its own plans for ecommerce in 2015, and is laying a foundation for much faster growth through ecommerce in the coming years, through strategic tie ups. 3M targets to have 10% of its sale through ecommerce in the next 5 years Valuation In FY 2017 we expect the company to register sales and net profit of Rs crore and Rs crore respectively, which gives an EPS of Rs The share price trades at Rs 13210, giving a P/E of 58.2 times. The company traditionally enjoys high P/E due to its large number of hi-tech products and strong brands catering to a wide variety of industrial and consumer segments. Expected pick up in Indian economy, lower commodity prices and stable currency augur well for continued good growth from the company in future. 3M INDIA: RESULTS PARTICULARS 1606 (3) # 1506 (3) & VAR. (%) 1603 (12) 1503 (12) VAR. (%) Net Sales OPM (%) OP Other Income PBDIT Interest (Net) PBDT Depreciation / Amortization PBT Tax Expenses PAT from ordinary activities EO net of tax PAT EPS * * On current equity of Rs crore. Face Value: Rs 10. #Quarterly results are as per new Indian Accounting Standard, Full year results are as per old accounting standard. EO: Extraordinary items. Figures in Rs crore Source: Capitaline Databases 6