India 100 2017 The annual report on the most valuable Indian brands May 2017

Foreword. Contents

steady downward spiral of poor communication, Foreword 2 wasted resources and a negative impact on the bottom line. Definitions 4 Methodology 6 Brand Finance bridges the gap between the marketing and financial worlds. Our teams have Excecutive Summary 8 experience across a wide range of disciplines from market research and visual identity to tax and Full Table (USDm) 12 accounting. We understand the importance of design, advertising and marketing, but we also Full Table (INRm) 14 believe that the ultimate and overriding purpose of Understand Your Brand’s Value 16 brands is to make money. That is why we connect brands to the bottom line. How We Can Help 18

By valuing brands, we provide a mutually intelligible Contact Details 19 language for marketers and finance teams. David Haigh, CEO, Brand Finance Marketers then have the ability to communicate the significance of what they do and boards can use What is the purpose of a strong brand; to attract the information to chart a course that maximises customers, to build loyalty, to motivate staff? All profits. true, but for a commercial brand at least, the first Without knowing the precise, financial value of an answer must always be ‘to make money’. asset, how can you know if you are maximising your returns? If you are intending to license a brand, how Huge investments are made in the design, launch can you know you are getting a fair price? If you are and ongoing promotion of brands. Given their intending to sell, how do you know what the right potential financial value, this makes sense. time is? How do you decide which brands to Unfortunately, most organisations fail to go beyond discontinue, whether to rebrand and how to arrange that, missing huge opportunities to effectively make your brand architecture? Brand Finance has use of what are often their most important assets. conducted thousands of brand and branded Monitoring of brand performance should be the business valuations to help answer these questions. next step, but is often sporadic. Where it does take place it frequently lacks financial rigour and is Brand Finance’s recently conducted share price heavily reliant on qualitative measures poorly study revealed the compelling link between strong understood by non-marketers. brands and stock market performance. It was found that investing in the most highly branded companies As a result, marketing teams struggle to would lead to a return almost double that of the communicate the value of their work and boards average for the S&P 500 as a whole. then underestimate the significance of their brands Acknowledging and managing a company’s to the business. Skeptical finance teams, intangible assets taps into the hidden value that lies unconvinced by what they perceive as marketing within it. The following report is a first step to mumbo jumbo may fail to agree necessary understanding more about brands, how to value investments. What marketing spend there is can them and how to use that information to benefit the end up poorly directed as marketers are left to business. The team and I look forward to continuing operate with insufficient financial guidance or the conversation with you. accountability. The end result can be a slow but

2. Brand Finance AustraliaGlobalAirlinesIndia 100 500 30 100May 30February March February2017 20162016 2015 Brand Finance 100 May 2017 3. Definitions

Effect of a Brand on Stakeholders E.g. Definitions Titan + Enterprise Value – the value of the Company entire enterprise, made up of Directors ltd Potential Middle ‘Branded‘Branded multiple branded businesses Customers Managers Enterprise’Enterprise’

Existing All Other ‘Branded‘Branded + Branded Business Value – the Customers Employees Business’ E.g. Business’ Tanishq value of a single branded business operating under the subject brand ‘Brand’ Contribution’ Influencers Production + Brand Contribution– The total e.g. Media Brand E.g. economic benefit derived by a Tanishq business from its brand ‘Brand Value’ Trade Sales Channels + Brand Value – the value of the E.g. trade marks (and relating Tanishq Strategic marketing IP and ‘goodwill’ Debt Allies & providers attached to it) within the branded Suppliers Investors business

Branded Business Value Brand Contribution Brand Value Brand Strength

A brand should be viewed in the context of the The brand values contained in our league tables In the very broadest sense, a brand is the focus Brand Strength is the part of our analysis most business in which it operates. For this reason are those of the potentially transferable brand for all the expectations and opinions held by directly and easily influenced by those Brand Finance always conducts a Branded asset only, but for marketers and managers customers, staff and other stakeholders about an responsible for marketing and brand Business Valuation as part of any brand valuation. alike. An assessment of overall brand organisation and its products and services. management. In order to determine the strength Where a company has a purely mono-branded contribution to a business provides powerful However, when looking at brands as business of a brand we have developed the Brand architecture, the business value is the same as insights to help optimise performance. assets that can be bought, sold and licensed, a Strength Index (BSI). We analyse marketing the overall company value or ‘enterprise value’. more technical definition is required. investment, brand equity (the goodwill Brand Contribution represents the overall uplift accumulated with customers, staff and other In the more usual situation where a company in shareholder value that the business derives Brand Finance helped to craft the internationally stakeholders) and finally the impact of those on owns multiple brands, business value refers to from owning the brand rather than operating a recognised standard on Brand Valuation, ISO business performance. the value of the assets and revenue stream of the generic brand. 10668. That defines a brand as “a marketing- business line attached to that brand specifically. related intangible asset including, but not limited Following this analysis, each brand is assigned We evaluate the full brand value chain in order to Brands affect a variety of stakeholders, not just to, names, terms, signs, symbols, logos and a BSI score out of 100, which is fed into the understand the links between marketing customers but also staff, strategic partners, designs, or a combination of these, intended to brand value calculation. Based on the score, investment, brand tracking data, stakeholder regulators, investors and more, having a identify goods, services or entities, or a each brand in the league table is assigned a behaviour and business value to maximise the significant impact on financial value beyond combination of these, creating distinctive images rating between AAA+ and D in a format similar returns business owners can obtain from their what can be bought or sold in a transaction. and associations in the minds of stakeholders, to a credit rating. AAA+ brands are exceptionally brands. thereby generating economic benefits/value”. strong and well managed while a failing brand would be assigned a D grade.

4. Brand Finance India 100 May 2017 Brand Finance India 100 May 2017 5. Methodology League Table Valuation Methodology Brand Finance Typical Project Approach Brand Finance calculates the values of the 2 Determine the royalty rate range for the respective brands in its league tables using the ‘Royalty brand sectors. This is done by reviewing comparable Relief approach’. This approach involves licensing agreements sourced from Brand Finance’s estimating the likely future sales that are extensive database of license agreements and other attributable to a brand and calculating a royalty online databases. Brand Equity Stakeholder Brand Inputs Performance rate that would be charged for the use of the 3 Calculate royalty rate. The brand strength score is Value Drivers Behaviour Contribution brand, i.e. what the owner would have to pay for applied to the royalty rate range to arrive at a royalty the use of the brand—assuming it were not rate. For example, if the royalty rate range in a brand’s already owned. sector is 1-5% and a brand has a brand strength score of 80 out of 100, then an appropriate royalty 1 2 3 4 The steps in this process are as follows: rate for the use of this brand in the given sector will Brand Audit Trial & Preference Acquisition & Valuation Modelling be 4.2%. Retention 1 Calculate brand strength on a scale of 0 to 100 based 4 Determine brand specific revenues estimating a on a number of attributes such as emotional proportion of parent company revenues attributable Audit the impact Run analytics to Link stakeholder Model the impact of behaviour on connection, financial performance and sustainability, to a specific brand. of brand understand how behaviour with core financial performance and among others. This score is known as the Brand key financial isolating the value of the brand 5 Determine forecast brand specific revenues using a management and perceptions link to Strength Index, and is calculated using brand data investment on behaviour value drivers contribution function of historic revenues, equity analyst forecasts from the BrandAsset® Valuator database, the world’s brand equity and economic growth rates. largest database of brands, which measures brand 6 Apply the royalty rate to the forecast revenues to equity, consideration and emotional imagery derive brand revenues. attributes to assess brand personality in a category 7 Brand revenues are discounted post tax to a net agnostic manner. present value which equals the brand value. Brand strength Brand Brand revenues Brand value index ‘Royalty rate’ How We Help to Maximise Value (BSI)

6. Build scale through licensing/franchising/partnerships Brand Strong brand investment 5. Build core business through market expansion

4. Build core business through product development Brand

equity Maximising a strong brand 3. Portfolio management/rebranding Group companies

2. Optimise brand positioning and strength Brand Weak brand performance Forecast revenues 1. Base-case brand and business valuation (using internal data), growth strategy Evaluate ongoing performance formulation, target-setting, scorecard and Brand strength BSI score applied to an Royalty rate applied to Post-tax brand tracker set-up expressed as a BSI appropriate sector forecast revenues to revenues are score out of 100. royalty rate range. derive brand values. discounted to a net Current brand and Target brand and present value (NPV) business value business value which equals the brand value.

6. Brand Finance India 100 May 2017 Brand Finance India 100 May 2017 7.

Excecutive Summary

Rank 2017: 1 2016: 1 Rank 2017: 6 2016: 6 BV 2017: $ 13,117m BV 2017: $ 4,848m 1 -4% 6 +36% BV 2016: $ 13,713m BV 2016: $ 3,554m Brand Rating: AA+ Brand Rating: AA+

India Rank 2017: 2 2016: 2 Rank 2017: 7 2016: 8 BV 2017: $ 7,722m BV 2017: $ 4,623m 2 +34% 7 +38% BV 2016: $ 5,768m BV 2016: $ 3,360m Brand Rating: AA+ Brand Rating: AAA-

Rank 2017: 3 2016: 4 Rank 2017: 8 2016: 9 BV 2017: $ 4,595m 3 BV 2017: $ 6,814m +37% 8 +41% 100 BV 2016: $ 3,261m BV 2016: $ 4,988m Brand Rating: AA Brand Rating: AA

Rank 2017: 4 2016: 5 Rank 2017: 9 2016: 10 BV 2017: $ 4,463m 4 BV 2017: $ 6,224m +30% 9 +38% BV 2016: $ 4,794m BV 2016: $ 3,236m Brand Rating: AA+ Brand Rating: AA+

Rank 2017: 5 2016: 3 Rank 2017: 10 2016: 11 BV 2017: $ 5,509m BV 2017: $ 3,575m 5 -4% 10 +21% BV 2016: $ 5,760m BV 2016: $ 2,949m Brand Rating: AA+ Brand Rating: AA

last year to 62nd now. India’s biggest airline presence, beyond tobacco, for over a decade. In Strong brand value growth characterises the of industries in which operating conditions are recently announced the addition of 35 new routes the last four to five years it has become a formidable 2017 Brand Finance India 100. 68 of India’s 100 very challenging for all participants. In this context and increasing frequency on existing ones. At the competitor in the food and beverage, personal most valuable brands have grown in value this the slight decline can be seen as a stabilisation in opposite end of the scale, the iconic care, apparel and stationery sectors, challenging year, with 54 of those enjoying double-digit challenging times. As Tata’s new chairman, brand has fallen 14 places to 93rd with brand incumbents that have dominated those industries growth. There are however some notable , settles in and value dropping below US$300 million. Like so for over a century. This broad spectrum of exceptions, most obviously, India’s most valuable attempts to streamline the ’s many other hotel brands it has been hit by the excellence is making ITC a household name brand, Tata. activities, we expect Tata to return to brand value impact of technology, with aggregator sites across India and contributing to the brand’s growth soon. creating pricing pressure and Airbnb introducing strength. There has already been intense speculation as to competition. whether Brand Value has fallen due to Tata’s IT services brands continue to be one of India’s Mahindra, a stalwart of Indian enterprise has re- board room drama. In Brand Finance’s view this great success stories, dominating not just the This year’s fastest falling brand is Micromax. The entered the top ten this year, after posting healthy is emphatically not the case. Tata’s Brand national rankings but the international rankings tech firm has lost 39% of its brand value and nearly growth in its flagship automotive division and Strength Index score in fact improved significantly of their sector too. Even as other Indian brands fallen out of the top 100, placing 95th. Micromax strengthening its presence in SAARC countries. this year and its brand rating was upgraded from perform strongly, IT services brands are is struggling to compete following the influx of Mahindra’s agricultural division and its tractors A+ to AA+. Corrective action has been taken managing to improve their national ranks. strong Chinese mobile brands such as Oppo and business are well-established strengths while quickly and the stakeholders at large have not is up from 5th to 4th, HCL from 10th to 9th and Vivo into the Indian market in the last couple of more recent initiatives such as crop-care solutions, been significantly affected. The brand value drop from 12th to 11th. years. seed distribution and power solutions through of 4% is clearly not positive, however it is a lesser Mahindra Powerol are poised to accelerate decline than between 2015 and 2016, when The biggest improvement in rankings however ITC is India’s most powerful brand. It is India’s growth. This year brand value is up 21% to US$3.6 brand value fell 11%. Tata is present in a number comes from Indigo Airlines which is up from 95th only AAA rated brand, with a Brand Strength Index billion. score of 86. ITC has been expanding its strategic 8. Brand Finance India 100 May 2017 Brand Finance India 100 May 2017 9.

Excecutive Summary

Brand Value Over Time Brand Value Change 2016-2017 (USDm) Brand Value Change 2016-2017 (%)

20 Airtel Airtel $1953 $1953 Filpkart 103% 110% 19 State LIC LIC $1826 $1826 Indigo Flipkart 96% 103% 18 Infosys Infosys $1430 $1430 Power Finance Corporation Indigo 95% 96% 17 Indian Oil Indian Oil $1334 $1334 PowerRoyal Finance Enfield Corporation 77% 95% 16 Infosys 15 Reliance Reliance $1293 $1293 Yes BankRoyal Enfield 75% 77% 14 Larsen & ToubroLarsen & Toubro $1263 $1263 75% 75% $1226 13 LIC HCL HCL $1226 Adani EnterprisesApollo Tyres 67% 75% 12 HDFC BankHDFC Bank $820 $820 AdaniNTPC Enterprises 64% 67% 11 Wipro Wipro $766 $766 NTPC 61% 64% 10 airtel Hindustan PetroleumHindustan Petroleum $705 $705 HindustanHDFC Petroleum 61% 61% 9 $-88 $-88 Tanishq Tanishq Limited 8 -12% -12% Oil India Limited SAIL 7 $-92 $-92 SAIL -16% -16% Canara BankCanara Bank

Brand ae 6 $-134 $-134 Bank of IndiaBank of India -18% -18% Union BankUnion of India Bank of India 5 $-165 $-165 BHEL BHEL -19% -19% SAIL SAIL 4 $-180 $-180 Punjab NationalPunjab Bank National Bank -22% -22% Idea CellularIdea Cellular 3 $-183 $-183 Micromax Micromax -23% -23% Bank of IndiaBank of India 2 $-251 $-251 State Bank ofState India Bank of India -24% -24% Punjab NationalPunjab Bank National Bank 1 $-304 $-304 0 Bank of Baroda -27% -27% BHEL BHEL $-564 $-564 Idea CellularIdea Cellular -34% -34% Bank of BarodaBank of Baroda 2011 2012 2013 2014 2015 2016 2017 $-596 $-596 Tata Group Tata Group -39% -39% Micromax Micromax Total Brand Value by Sector 2017 -750.000000-342.857143-750.00000064.285714471.428571-342.857143878.57142964.2857141285.714286471.4285711692.857143878.5714291285.7142861692.857143 -60 -39 -18 -603 -3924 -1845 663 2487 10845 12966 15087 108 129 150 KEY Colour Industry Total Brand % of Total Value (USDbn) Brand Value Conglomerate 31.74 23.0%

Conglomerate Banks 21.44 15.6% 23% Technology 16.83 12.2%

Oil&Gas 12.92 9.4%

Telecoms 11.04 8.0%

Engineering 7.72 5.6%

Banks Insurance 6.81 4.9% 15.6% Telecoms Automobiles 5.93 4.3% 8% Food 5.63 4.1% Technology Oil & Gas 12.2% 9.4% Retail 4.44 3.2%

Others 13.37 9.7%

10. Brand Finance India 100 May 2017 Brand Finance India 100 May 2017 11. Brand Finance India 100 (USDm)

Top 100 most valuable Indian brands 1 - 50. Top 100 most valuable Indian brands 51 - 100.

Rank Rank Brand name Sector Brand % Brand Brand Brand Rank Rank Brand name Sector Brand % Brand Brand Brand 2017 2016 value (USDm) change value rating rating 2017 2016 value (USDm) change value (USDm) rating rating 2017 (USDm) 2016 2017 2016 2017 2016 2017 2016 1 1 Tata Group Conglomerate 13,117 -4% 13,713 AA+ A+ 51 39 Vedanta Resources 2 2 Airtel Telecoms 7,722 34% 5,768 AA+ AA+ 52 37 3 4 LIC Insurance 6,814 37% 4,988 AA AA 53 56 Nandini 4 5 Infosys Technology 6,224 30% 4,794 AA+ AA+ 54 43 5 3 Banks 5,509 -4% 5,760 AA+ AA+ 55 59 Mother Dairy 6 6 Reliance Conglomerate 4,848 36% 3,554 AA+ AA+ 56 85 Flipkart 7 8 Larsen & Toubro Engineering & Construction 4,623 38% 3,360 AAA- AA+ 57 70 Power Grid Corporation of India 8 9 Indian Oil Oil & Gas 4,595 41% 3,261 AA AA 58 69 Aircel 9 10 HCL Technology 4,463 38% 3,236 AA+ AA+ 59 52 Videocon 10 11 Mahindra 60 50 MRF 11 12 Wipro 61 84 Apollo Tyres 12 7 ONGC 62 95 Indigo 13 14 HDFC Bank 63 94 Power Finance Corporation 14 16 Amul 64 74 Gitanjali 15 13 ICICI Bank 65 40 BHEL 16 18 66 46 17 24 67 77 TVS 19 15 Idea Cellular 68 42 Bank of India 18 23 Godrej 69 61 20 27 Hindustan Petroleum 70 65 ACC 21 New 71 New MRPL 22 22 Reliance (ADAG) 72 New 23 19 73 64 Indusind Bank 24 21 74 67 Motherson Sumi 25 20 Aditya Birla 75 63 Jet Airways 26 31 HDFC 76 54 SAIL 27 25 ITC LTD 77 80 28 26 Hero 78 76 Cairn India 29 30 79 62 30 28 80 58 31 35 Britannia 81 75 Nerolac 32 33 Ultratech Cement 82 81 IDBI Bank 33 49 Royal Enfield 83 New Housing Finance 34 32 Tanishq 84 New 35 New Officer's Choice 85 91 Pidilite 36 68 Coal India 86 71 Bharti Infratel 37 38 87 100 38 36 Kingfisher 88 86 39 53 JSW 89 72 Oil India Limited 40 60 Adani Enterprises 90 New 41 51 ZEE 91 82 DLF 42 41 GAIL 92 87 Syndicate Bank 43 45 Jaypee Group 93 79 Taj 44 55 BSNL 94 New JK Tyre 45 66 NTPC 95 57 Micromax 46 44 Parle 96 89 GMR Infrastructure 47 73 Yes Bank 97 83 48 48 Future Retail 98 New DishTV 49 47 99 New Welspun Group 50 34 Bank of Baroda 100 88

12. Brand Finance India 100 May 2017 Brand Finance India 100 May 2017 13. Brand Finance India 100 (INR cr)

Top 100 most valuable Indian brands 1 - 50. Top 100 most valuable Indian brands 51 - 100.

Rank Rank Brand name Sector Brand % Brand Brand Brand Rank Rank Brand name Sector Brand % Brand Brand Brand 2017 2016 value (INR cr) change value (INR cr) rating rating 2017 2016 value (INR cr) change value (INR cr) rating rating 2017 2016 2017 2016 2017 2016 2017 2016 1 1 Tata Group Conglomerate 87,353 -5% 91,493 AA+ A+ 51 39 Vedanta Resources 2 2 Airtel Telecoms 51,426 34% 38,487 AA+ AA+ 52 37 Punjab National Bank 3 4 LIC Insurance 45,382 36% 33,281 AA AA 53 56 Nandini 4 5 Infosys Technology 41,452 30% 31,987 AA+ AA+ 54 43 Dabur 5 3 State Bank of India Banks 36,688 -5% 38,428 AA+ AA+ 55 59 Mother Dairy 6 6 Reliance Conglomerate 32,285 36% 23,715 AA+ AA+ 56 85 Flipkart 7 8 Larsen & Toubro Engineering & Construction 30,788 37% 22,415 AAA- AA+ 57 70 Power Grid Corporation of India 8 9 Indian Oil Oil & Gas 30,601 41% 21,756 AA AA 58 69 Aircel 9 10 HCL Technology 29,720 38% 21,591 AA+ AA+ 59 52 Videocon 10 11 Mahindra Conglomerate 23,811 21% 19,674 AA AA+ 60 50 MRF 11 12 Wipro 61 84 Apollo Tyres 12 7 ONGC 62 95 Indigo 13 14 HDFC Bank 63 94 Power Finance Corporation 14 16 Amul 64 74 Gitanjali 15 13 ICICI Bank 65 40 BHEL 16 18 Maruti Suzuki 66 46 Canara Bank 17 24 Bharat Petroleum 67 77 TVS 19 15 Idea Cellular 68 42 Bank of India 18 23 Godrej 69 61 Ambuja Cements 20 27 Hindustan Petroleum 70 65 ACC 21 New Bajaj Group 71 New MRPL 22 22 Reliance (ADAG) 72 New Shriram Group 23 19 Asian Paints 73 64 Indusind Bank 24 21 Axis Bank 74 67 Motherson Sumi 25 20 Aditya Birla 75 63 Jet Airways 26 31 HDFC 76 54 SAIL 27 25 ITC LTD 77 80 Sun Pharma 28 26 Hero 78 76 Cairn India 29 30 United Spirits 79 62 Berger Paints 30 28 Kotak Mahindra Bank 80 58 Union Bank of India 31 35 Britannia 81 75 Nerolac 32 33 Ultratech Cement 82 81 IDBI Bank 33 49 Royal Enfield 83 New Indiabulls Housing Finance 34 32 Tanishq 84 New Mphasis 35 New Officer's Choice 85 91 Pidilite 36 68 Coal India 86 71 Bharti Infratel 37 38 Marico 87 100 Voltas 38 36 Kingfisher 88 86 Air India 39 53 JSW 89 72 Oil India Limited 40 60 Adani Enterprises 90 New Biocon 41 51 ZEE 91 82 DLF 42 41 GAIL 92 87 Syndicate Bank 43 45 Jaypee Group 93 79 Taj 44 55 BSNL 94 New JK Tyre 45 66 NTPC 95 57 Micromax 46 44 Parle 96 89 GMR Infrastructure 47 73 Yes Bank 97 83 Emami 48 48 Future Retail 98 New DishTV 49 47 Ashok Leyland 99 New Welspun Group 50 34 Bank of Baroda 100 88 Central Bank of India

14. Brand Finance India 100 May 2017 Brand Finance India 100 May 2017 15. Understand Your Brand’s Value

Drivers of Change Brand Strength Index 2016 An ideal balanced scorecard of fundamental brand related measures Brand Value Dashboard Three key areas impact Brand Value (EURm) Brand Valuation Assumptions Effective BSI Weighting Attributes 18 131 Underlying economic assumptions used in valuation 34 $707m $882m $10,216m 6.25% Product: R&D expenditure, Widely recognised factors deployed by Brand Capital expenditure Strong brand (EUR) (EUR) Marketers to create brand loyalty and Brand [XXX] Brand Value Brand Value (EUR) Brand value (EURm) Investment Enterprise Value AA+ Investment 25% 6.25% Place: Website Ranking 729 729 Inputs market share. We therefore benchmark 78/100 616 616 650 6.25% People: Number of Employees, €650m €729m €9,399m Employee Growth brands against relevant input measures by Brand 25% Equity X 6.25% Promotion: Marketing expenditure sector against each of these factors. % = Historic brand value performance (EURm) Peer Group Comparison (USDm) $650 Brand Performance Forecast revenues $6,265 2015 Brand Strength Business Performance External Changes 2016 5.00% Familiarity 800 729 Weak brand $ $3,031 7.50% Consideration How do stakeholders feel about the brand 650 $2,328 $1,913 $707 700 607 7.50% Preference vs. competitors? Brand Strength Business Outlook Economic Outlook Customer 35% 7.50% Satisfaction 600 [XXX] [XXX]’s brand strength has increased compared to last year. Brands drive higher revenues. An investor would therefore All future returns are subject to risk. If the risk of not 7.50% Recommendation/NPS • Brand equity accounts for 50% to reflect Revenue Long Term Growth Rate Tax Rate Discount Rate 500 pay more for a brand that makes more money. receiving the forecast returns is higher (increasing the Brand the importance of stakeholder As the brand continues its sustainability drive, [XXX] has discount rate), the brand’s market is not growing as quickly Equity 5.00% Employee Score Licensing payments for the use of a After the explicit forecasts, the brand Forecasted royalties are reduced by Earnings in the future are worth less 320 Staff 5% perceptions to behaviour 400 Brand Value by Product Segment been improving across all CSR scores. It now has the [XXX]’s revenue base and the 5 year forecast growth have as expected (lower long term growth rate) or the tax rate in brand are derived from revenue. will continue to grow. However, it is the tax rate to reflect the actual than consumption now. This rate is 275 highest CSR scores it has had in the last four years across fallen this year, resulting in a loss of $177m USD to total the brand’s regions of operation is higher, then the brand’s 300 Increases or decreases in forecasted unlikely that the company will sustain amount that would be received by therefore used to reduce future 213 Environment, Employees and Governance. brand value. value is reduced and vice versa. 50% 2.50% Credit Rating • Brand Equity is important to all 37% Financial 5% revenue increase or decrease the extraordinary returns into the future the brand owner after tax. earnings to their value today. Nutrition 2.50% Analyst Recommendation stakeholder groups with customers being 200 The premium approach is also leading to significant margin However, it is important to note that this has arisen as a final valuation. so forecast industry growth rates are advantages – positively affecting “performance”. result of the company divesting a number of divisions. the most important 100 Performance Materials 1.67% Environment Score applied. 58% External 5% 1.67% Community Score 0 Other Activities 4% 1.67% Governance Score 2011 2012 2013 2014 2015 2016 2016 2015 2016 2015 2016 2015 5 year Compound Annual Growth Rate Long Term Growth Rate Tax Rate Discount Rate Brand 5 Year Forecast 6.25% Revenue (CAGR) 78 76 2.6% 3.4% Discount Rate 9.1% 8.6% Brand Strength Index Strength Growth Quantitative market, market share and 7% Brand 6.25% % Margin financial measures resulting from the Long Term Growth 3.2% 2.6% 2015 2014 2015 2014 2015 2014 2015 2014 Base Year 8,205 9,570 Performance Outputs 25% 6.25% % Forecast Margin Revenue (EURm) strength of the brand. 6.25% % Forecast Revenue Growth Tax 28.9% 30.2% 25% 2.6% 3.4% -0.8% 3.2% 2.6% +0.6% 29% 30% -1.3% 9.1% 8.6% +0.5%

Determining the Royalty Rate Brand Performance Brand Investment In order to apply the Brand Strength Index, a hypothetical royalty rate range needs to be set Competitor Royalty Rates An ideal balanced scorecard of fundamental brand related measures Proven inputs that drive the Brand Equity and financial results Following the OECD guidelines, Brand Finance sets the hypothetical brand royalty rate ranges by reference to three tests: Competitor royalty rates will be different based on different strengths of the brand, having Brand Strength Index Brand Strength Index different operating segments and company-specific long term affordability • Comparable Agreements: A search of comparable licensing agreements for brands in each industry is conducted every year. The margin analyses Brand Investment Brand Performance are then compared against the royalty rates found in these agreements to analyse the importance of brand in the industry and set an appropriate 1.2% average industry royalty rate. 10.0 1.0% 10.0 9.3 • Industry Margins: An analysis of 25% to 40% of margins, generally accepted as rules of thumb for licensing rates for all intangible assets in a 8.9 8.9 8.0 7.7 company. These rates are adjusted to take into account the importance of brand in a given industry. 8.0 8.1 0.8% 0.8% 0.8% 0.8% 6.4 6.0 • Affordability: Thirdly, an analysis of the brand’s specific royalties is conducted. If the brand has been able to sustain extraordinary profits over an 0.7% 6.0 5.3 0.6% extended time it is likely that hypothetical brand owners would be willing to pay closer to the company’s margins than the industry average. In the 0.6% 0.6% 0.6% 5.0 4.0 case of Brand Finance’s League Table models, affordability will be based on the forecast EBIT. 4.0 [XXX]DSM Best in Class Competitor Average 0.5% DSM[XXX] Best in Class Competitor Average 2.0 • Average industry royalty rate ranges can be seen below 2.0 0.0 High 0.0 Effective Effective Weighting 6.25% 6.25% 6.25% 6.25% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% Weighting 6.25% 6.25% 6.25% 6.25% DSM BASF Dow Du Pont Akzo Nobel Akzo Nobel Best in Best in Class [XXX] Du Pont Multiple Akzo Nobel Mid Class Akzo Nobel Dow Akzo Nobel Du Pont Product Place People Promotion [XXX] Revenue Margin % Forecast Revenue Growth % Forecast Margin % Low Relative quality of the brand’s investment in Relative quality of a brand’s distribution Relative quality of the human network Relative quality of the brand’s promotions. its products. The measure can include R&D network. It can include the quality of supporting the brand. This may include the Marketing investment, the quality of visual Akzo Nobel – Paints and spend and capital expenditure. logistical infrastructure available to the size of the support network, its likely future identity and the effectiveness of the [XXX] BASF Dow Du Pont Akzo Nobel - Corporate The brand’s ability to drive a The brand’s ability to drive a The brand’s ability to improve Coatings brand, the quality of its online presence, or growth or the investment in workforce brand’s social media is covered by this volume premium. Implied by price premium. Implied by business prospects across the number and quality of its retail outlets. training and human resources. measure. 78 78 80 80 82 82 current and future revenue. current and future margins. various KPIs

A Brand Value Report provides a complete + Internal understanding of brand Royalty Rates Trademark Audit breakdown of the assumptions, data + Brand value tracking sources and calculations used to arrive at + Competitor benchmarking Analysis of competitor royalty rates, industry Analysis of the current level of protection for the your brand’s value. + Historical brand value royalty rate ranges and margin analysis used to brands word marks and trademark iconography Each report includes expert recommendations determine brand specific royalty rate. highlighting areas where the marks are in need for growing brand value to drive business of protection. performance and offers a cost-effective way to Brand Strength Index + Transfer pricing gaining a better understanding of your position + Licensing/ franchising negotiation + Highlight unprotected marks against competitors. A breakdown of how the brand performed on + International licensing + Spot potential infringement various metrics of brand strength, benchmarked + Competitor benchmarking + Trademark registration strategy A full report includes the following sections against competitor brands in a balanced which can also be purchased individually. scorecard framework. For more information regarding our Brand Value Cost of Capital Reports, please contact: + Brand strength tracking Brand Valuation Summary + Brand strength analysis A breakdown of the cost of capital calculation, Alex Haigh + Management KPI’s including risk free rates, brand debt risk Director of League Tables, Brand Finance Overview of the brand valuation including + Competitor benchmarking premiums and the cost of equity through CAPM. executive summary, explanation of changes in [email protected] brand value and historic and peer group + Independent view of cost of capital for internal comparisons. valuations and project appraisal exercises +44 (0)20 7389 9400

16. Brand Finance India 100 May 2017 Brand Finance India 100 May 2017 17. How we can help Contact details

1. Valuation: What are my intangible assets 2. Analytics: How can I improve marketing worth? effectiveness? Contact us Our offices Valuations may be conducted for technical purposes Analytical services help to uncover drivers of demand For brand value report and to set a baseline against which potential strategic and insights. Identifying the factors which drive enquiries, please contact: brand scenarios can be evaluated. consumer behaviour allow an understanding N 2. IO AN of how brands create bottom-line impact. Alex Haigh T A A L Director of League Tables U Y L T Brand Finance A I V C • Branded Business Valuation • Trademark Valuation [email protected] . S • Market Research Analytics • Brand Audits 1 • Intangible Asset Valuation • Brand Contribution Brand & • Brand Scorecard Tracking • Return on Marketing Investment

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Y T . 4 owners of branded businesses get a better deal modelling will identify the best opportunities, [email protected] by leveraging the value of their intangibles. ensuring resources are allocated to those activities which have the most impact on brand and business value. For all other enquiries, please contact: • M&A Due Diligence • Franchising & Licensing • Brand Governance • Brand Architecture & Portfolio Management • Tax & Transfer Pricing • Expert Witness • Brand Transition • Brand Positioning & Extension [email protected] +44 (0)207 389 9400 For further information on Brand Finance®’s services and valuation experience, please contact your local representative: Country Contact Email address Australia Mark Crowe [email protected] Brazil Pedro Tavares [email protected] MARKETING FINANCE TAX LEGAL linkedin.com/company/ Canada Bill Ratcliffe [email protected] brand-finance China Minnie Fu [email protected]

We help marketers to connect We provide financiers and We help brand owners and We help clients to enforce and Caribbean Nigel Cooper [email protected] their brands to business auditors with an independent fiscal authorities to understand exploit their intellectual East Africa Jawad Jaffer [email protected] performance by evaluating the assessment on all forms of the implications of different property rights by providing France Victoire Ruault [email protected] return on investment (ROI) of brand and intangible asset tax, transfer pricing and brand independent expert advice in- facebook.com/brandfinance Germany Dr. Holger Mühlbauer h.mü[email protected] brand based decisions and valuations. ownership arrangements. and outside of the courtroom. Greece Ioannis Lionis [email protected] strategies. Holland Marc Cloosterman [email protected] India Ajimon Francis [email protected] + Branded Business Valuation + Branded Business Valuation + Branded Business Valuation + Branded Business Valuation twitter.com/brandfinance Indonesia Jimmy Halim [email protected] + Brand Contribution + Brand Contribution + Brand Contribution + Brand Contribution Italy Massimo Pizzo [email protected] + Trademark Valuation + Trademark Valuation + Trademark Valuation + Trademark Valuation Malaysia Samir Dixit [email protected] + Intangible Asset Valuation + Intangible Asset Valuation + Intangible Asset Valuation + Intangible Asset Valuation Disclaimer + Brand Audit + Brand Audit + Brand Audit + Brand Audit Mexico Laurence Newell [email protected] Brand Finance has produced this study LatAm (exc. Brazil) Laurence Newell [email protected] + Market Research Analytics + Market Research Analytics + Market Research Analytics + Tax & Transfer Pricing with an independent and unbiased + Brand Scorecard Tracking + Brand Scorecard Tracking + Franchising & Licensing + Expert Witness analysis. The values derived and Middle East Andrew Campbell [email protected] opinions produced in this study are Nigeria Babatunde Odumeru [email protected] + Return on Marketing + Return on Marketing + Tax & Transfer Pricing based only on publicly available Investment Investment + Expert Witness information and certain assumptions Portugal Pedro Tavares [email protected] + Brand Transition + Brand Transition that Brand Finance used where such Russia Alexander Eremenko [email protected] data was deficient or unclear . Brand + Brand Governance + Brand Governance Finance accepts no responsibility and Scandinavia Alexander Todoran [email protected] + Brand Architecture & + Brand Architecture & will not be liable in the event that the Singapore Samir Dixit [email protected] Portfolio Management Portfolio Management publicly available information relied upon is subsequently found to be South Africa Jeremy Sampson [email protected] + Brand Positioning & + Brand Positioning & inaccurate. Spain Lorena Jorge ramirez [email protected] Extension Extension Sri Lanka Ruchi Gunewardene [email protected] + Franchising & Licensing + Mergers, Acquisitions and The opinions and financial analysis expressed in the report are not to be Switzerland Victoire Ruault [email protected] Finance Raising Due construed as providing investment or Diligence business advice. Brand Finance does Turkey Muhterem Ilgüner [email protected] not intend the report to be relied upon UK Alex Haigh [email protected] + Franchising & Licensing for any reason and excludes all liability + Tax & Transfer Pricing to any body, government or USA Ken Runkel [email protected] + Expert Witness organisation. Vietnam Lai Tien Manh [email protected]

18. Brand Finance India 100 May 2017 Brand Finance India 100 May 2017 19. Contact us.

The World’s Leading Independent Branded Business Valuation and Strategy Consultancy T: +91 98 92 08 59 51 E: [email protected] www.brandfinance.com

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