Akzo Nobel India Limited (ANIL) has entered into two significant agreements with its ultimate parent company, Akzo Nobel N.V. (AN N.V.), following a previously disclosed share purchase agreement with JSW Paints Limited. These agreements are crucial steps in ensuring business continuity during the proposed transaction period.

Intellectual Property License Agreement

The first agreement, an Intellectual Property License Amendment and Consolidation Agreement (IPLA), allows ANIL to use certain intellectual property rights on a royalty-bearing basis. This includes copyrights, patents, domain names, and trademarks related to the performance coatings business.

Key points of the IPLA include:

• ANIL can continue manufacturing, distributing, and selling performance coatings products in India, Bangladesh, Bhutan, Nepal, and Sri Lanka.
• The company has the right to sub-license the intellectual property rights and know-how to its affiliates and third parties under specified terms.
• ANIL will pay royalties on products using the licensed intellectual property or know-how, subject to approved related party transaction limits.

Corporate Brand License Agreement

The second agreement, a Corporate Brand License Agreement (CBLA), permits ANIL to use the AkzoNobel corporate brand on a royalty-free basis for a transitional period of 15 months following the completion of the proposed transaction.

Significant aspects of the CBLA include:

• It's a transitional arrangement allowing ANIL to use the 'Corporate Brand' in specified territories.
• The agreement is valid for 15 months from the completion date defined in the share purchase agreement, unless terminated earlier.
• ANIL is required to phase out the use of the AkzoNobel brand within 12-18 months.

Implications and Considerations

These agreements are part of the broader context of the proposed acquisition of ANIL by JSW Paints Limited. While ensuring business continuity, they also set the stage for ANIL's transition away from the AkzoNobel brand.

The CBLA, in particular, presents both opportunities and challenges:

• It provides a grace period for ANIL to continue using the established AkzoNobel brand.
• However, the company will incur costs to phase out the brand use while the value derived from it diminishes.

Both agreements include standard provisions for quality standards, compliance, audits, and usage restrictions. Notably, these arrangements do not impact the management or control of ANIL, but they do signify the upcoming changes in the company's ownership and branding structure.

As the proposed transaction progresses, stakeholders will be keenly watching how ANIL navigates this transition period, particularly in terms of maintaining its market position while preparing for a new corporate identity.

Akzo Nobel India Limited , a leading paints and coatings company and maker of Dulux Paints, has announced its financial results for the second quarter and first half of the fiscal year 2025-26, revealing a significant surge in net profit driven by exceptional items.

Q2 FY2025-26 Highlights

The company reported a remarkable increase in net profit for Q2 FY2025-26, reaching ₹1,682.7 crore, up from ₹97.9 crore in the same quarter last year. This substantial growth is primarily attributed to exceptional items amounting to ₹1,874.2 crore, which includes profits from the sale of its Powder Coatings business division and International Research Center division.

However, the company faced challenges in its core operations:

• Revenue from operations decreased by 15.0% to ₹834.9 crore, compared to ₹982.3 crore in Q2 FY2024-25.
• EBIT (Earnings Before Interest and Taxes) from operations declined by 25.7% to ₹92.3 crore, down from ₹124.2 crore in the corresponding quarter of the previous year.

H1 FY2025-26 Performance

For the first half of FY2025-26, Akzo Nobel India reported:

• A 9.3% decrease in revenue from operations, totaling ₹1,830.0 crore, compared to ₹2,018.6 crore in H1 FY2024-25.
• EBIT from operations fell by 23.1% to ₹208.5 crore, down from ₹271.3 crore in the same period last year.
• Net profit, including exceptional items, rose significantly to ₹1,773.7 crore, a 734.5% increase from ₹212.5 crore in H1 FY2024-25.

Performance Excluding Divested Business

Excluding the divested Powder Coatings and IRC businesses, the company's results for Q2 FY2025-26 were as follows:

Management Commentary

Rajiv Rajgopal, Chairman and Managing Director of Akzo Nobel India Limited, commented on the results: "In Q2 FY2025-26, volume growth partially countered the impact of weather disruptions and competitive pressure on our topline. B2B vertical growth was led by industrial coatings and demand across mining, power and automotive sectors. Although retail remained under pressure, premium product portfolio witnessed a renewed uptick in demand."

He added, "Margins were constricted by vertical mix dynamics; however, disciplined operational cost control safeguarded our profitability. Navigating a challenging operating environment in H1 FY2025-26, the Company sustained its double-digit profitability while investing in brand, innovations and growth initiatives."

Recent Highlights

• The company celebrated five years of Dulux Assurance with the 'Lage Shaandaar, Chale Shaandaar' campaign.
• In decorative paints, Akzo Nobel India launched two flagship mass-market brand renovations:
  • Dulux Promise range of interior and exterior emulsions was upgraded with Colour Lock technology and superior wipe-ability for interiors.
  • Dulux Weathershield Projects was re-introduced at a more competitive price point in the entry-level exterior emulsion segment.
• The company expanded its Interdur range of anti-corrosive protective coatings with the launch of Interdur 1133 and Interdur 1135.

Despite facing challenges in its core operations, Akzo Nobel India's exceptional items have significantly boosted its financial performance for the quarter and half-year. The company continues to focus on innovation and brand initiatives while navigating a competitive market environment.