You are here » Home » Companies » Company Overview » Akzo Nobel India Ltd

Akzo Nobel India Ltd.

BSE: 500710 Sector: Consumer
NSE: AKZOINDIA ISIN Code: INE133A01011
BSE LIVE 19:40 | 19 Oct 1825.90 10.25
(0.56%)
OPEN

1820.00

HIGH

1836.00

LOW

1816.00

NSE 19:31 | 19 Oct 1824.05 13.85
(0.77%)
OPEN

1811.00

HIGH

1837.95

LOW

1811.00

OPEN 1820.00
PREVIOUS CLOSE 1815.65
VOLUME 314
52-Week high 2095.00
52-Week low 1328.00
P/E 38.87
Mkt Cap.(Rs cr) 8,520
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00
OPEN 1820.00
CLOSE 1815.65
VOLUME 314
52-Week high 2095.00
52-Week low 1328.00
P/E 38.87
Mkt Cap.(Rs cr) 8,520
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

Akzo Nobel India Ltd. (AKZOINDIA) - Director Report

Company director report

Dear Members

The Board of Directors are pleased to present their report on the business andoperations of your Company along with the audited financial statements for the year ended31 March 2017.

Business Environment

India's GDP for FY 2016-17 is expected to grow by ~7% compared to the previous year's7.6%. Headline inflation based on Consumer Price Index was 3.8% in March 2017 versusprevious year's 4.8%. Interest rates dropped significantly during the year on account oflower inflation and excess liquidity in the banking system triggered by demonetizationannounced in November 2016. Forex reserves have shown growth during the year indicatingconfidence of international investors in India. INR has appreciated against the USD by 2%towards the end of the year after remaining subdued for most part of the year.

Various credit rating agencies have affirmed India's rating with a positive outlookstating that the reforms initiated by the government will enable the country to improveits performance over the medium term.

Global economic activity is also seen to be picking up in tandem with a long awaitedcyclical recovery in investment manufacturing and trade. Stronger activity andexpectations of robust global demand have also resulted in commodity prices recoveringfrom the troughs of 2016.

The year saw a limited upward movement in crude oil prices and demonetization impactingthe consumption and economic activity albeit temporarily. Economic activity has sincerecovered to normal levels with a modest industrial growth reported in March 2017.

Several measures have been initiated by the government to promote affordable housingdigitalization of the economy and improved tax compliance. Rollout of GST scheduled forJuly 2017 is expected to act as a ‘Booster' to drive higher rate of economic growth.With GST replacing multiple indirect taxes ease of doing business is expected to improve.While the future outlook on business is positive in the short term GST implementationcould be disruptive as companies reorganize their business processes to adapt to the newenvironment.

Finance and Accounts

The financial statements have been prepared in compliance with the Indian AccountingStandards (IndAS) which have become mandatory from 1 April 2016. Figures for the previousyear have been re-stated to facilitate comparison.

As required under IndAS the financial statements include:

Stand alone statements of the Company Akzo Nobel

India Limited; and

Consolidated statements of the Group including the operational results of ICI IndiaResearch and Technology Centre on which the Company exercises effective control.

Revenue for the year at H 31344 million is 7% ahead of previous year withcontribution from all segments. EBITDA from business operations at H 3488 million grew15% over the previous year. After considering exceptional income and tax the net profitfor the year at H 2470 million showed a growth of 15% over previous year's H 2142million mainly on account of improved business performance. It was a year of record forthe Company with revenue and PBT (before exceptional item) crossing H 30 billion and H 3.3billion respectively.

The highlights of the performance during the year are:

(Rs. million)
Stand-alone Consolidated
2016-17 2015-16 2016-17 2015-16
Revenue from operations 31344 29347 31344 29347
Operating profit (EBITDA) 3488 3035 3488 3035
Depreciation (565) (537) (565) (537)
Other Income net of Finance costs 461 545 461 545
Exceptional item 39 99 39 99
Profit before tax 3423 3142 3423 3142
Tax (953) (1000) (953) (1000)
Profit after tax 2470 2142 2470 2142

Transfer to General Reserve

The Company proposes to transfer H 250 million to the General Reserve out of the netprofit for the year ended 31 March 2017.

Dividend

In accordance with Regulation 43A of the SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015 (the Listing Regulations') the Board has formulated aDividend Distribution Policy. The text of the policy is available on the Company's websitewww.akzonobel.co.in

Keeping in view the current year's performance and other relevant considerations andin line with the Company's Dividend Distribution Policy the Board is pleased to recommenda dividend of H 22 per share for the financial year 2016-17 compared with the dividend ofH 20 per share and a special dividend of H 50 per share in the previous year.

Management Discussion and Analysis

Industry structure

The Company is present in Coatings and Specialty Chemicals segments.

The Coatings segment has two main components: Decorative Paints and PerformanceCoatings and is served by both organised and unorganised sectors.

Decorative Paints account for a major part of the industry. The main drivers for thegrowth of this sector have been shortening of the repainting cycle and increased demandfrom smaller towns.

Performance Coatings is essentially a B2B business and is technology intensive with adiverse set of growth drivers with strong emphasis on selling a solution rather than aproduct.

Product quality performance and service levels will continue as the keydifferentiators in this market.

In Specialty Chemicals segment the Company operates in Polymer Chemistry andSurface Chemistry businesses which cater to oil & gas personal care and agrochemicalindustries.

Business Performance

Coatings

Overall market for Coatings was moderately positive barring demonetization blues duringthe third quarter of the fiscal year. The segment recorded a revenue of H 28703 millionduring the year 2016-17 compared to the previous year's H 27382 million a growth of 5%.Segment Profit however improved by 12% to H 2860 million reflecting impact of costcontrol and productivity improvement.

Top-line growth was driven by premium as well as mass market products. Margins wereimpacted by drop in realisation in the previous year which was partly mitigated by bettermix productivity improvement and value creation initiatives.

Your Company will continue to stay focused on growing ahead of the market. Positiveoutlook on macro-economic factors like GDP indicates a boost in revenue growth in themedium term.

Highlights of different businesses within the Coatings segment are given below:

Decorative Paints business has presence in premium as well as mass market andeconomy segments with strong positioning in the premium segment. The business haslaunched a series of innovative new products during the year that have receivedencouraging response from the market. Some of them are:

Dulux Stay Bright Gloss a water based alternative to solvent based enamel

Dulux Quick drying water based Primer for wood & metal substrate as an alternativeto solvent based primers

Dulux Weathershield Crack Bridging primer

Velvet Touch Platinum Glo in the Super Premium

Interior category

Dulux Enamel Gloss Small Packs and Universal

Stainers

Dulux Weather Shield Express - a 2 coat system that eliminates the need for a primer

The business has also established itself as a manufacturing hub for Colorants andTinters to neighbouring countries by leveraging its capacities.

Going forward macro developments like nuclear families availability of easy financefor housing govt's thrust on affordable housing etc are expected to push up theper-capita consumption of Paints in the country and sustain the growth momentum in thisbusiness. However upward trend in key RM prices and possible disruptions due to GSTimplementation remain a concern in the near term.

Protective Coatings business services a wide range of industrial activity like oil& gas (including downstream expansion projects/ offshore exploration etc) powerwaste water management mining high value infrastructure (HVI) chemical and generalindustries. The major driving factors for the markets are boost in government projects andinvestment in infrastructure like 100 smart cities freight and industrial corridors‘Make in Indi' etc.

Expanding the distribution reach duly supported by a robust cost efficient mid-tierproduct portfolio is also planned for gaining market share in protective coatings market.

Industrial Coatings business of BASF India Limited which was acquired for aconsideration of H 119 million during the year has been seamlessly integrated with theexisting Protective Coatings operations.

Marine Coatings business mainly deals in Biocidal Antifouling Slime Release FoulRelease Seastores Cargo Hold Coatings Cargo Tank Coatings and Universal Primers. Itserves customers in Deep Sea Dry Docks Sea Stores New building and Coastal docking(i.e. offshore supply service & transport vessels and fishing etc.) sectors.

Although the ship building industry has been affected by global economic conditionsthe outlook for Indian shipping industry appears positive.

Powder Coatings market can be broadly classified under General Trade CoatersGeneral Industries Automobiles Functional Domestic Appliances Architectural andInformation Technology. The market is highly fragmented with over 40% of the market isestimated as being serviced by unorganized sector. Work on a new powder coatings facilityat the Company's Thane site is in progress.

Metal Coatings business can be broadly classified under coil coatings and packagingcoatings.

Coil Coatings market is dominated by Building & Construction product categorybesides Extrusion Aluminum Composite Panels and Domestic Appliances.

Packaging coatings market can be broadly classified into Inks beer & beveragegeneral line closures and food. General line segment holds the biggest chunk of themarket.

The business has also built up an export portfolio of value added products toneighbouring countries by leveraging its manufacturing capacities.

Vehicle Refinishes business is present in the Refinish segment and has a strongfoothold in mid-market range of products which is served through the retail network of theDecorative Paints business.

New car/commercial vehicle companies setting up operations in India as well asexpansion plans of existing companies indicate a positive growth trend for this business.The Company is also working on plans to strengthen its retail portfolio and expanddistribution.

Specialty Coatings market can be broadly classified into 2-wheelers DomesticAppliances Consumer Electronics Helmets Auto Exteriors Auto Interiors and Wireless. Atpresent the Company is present mainly in auto interiors segment.

The Company will continue to leverage its strengths in Auto interiors segment even asit seeks to penetrate and enter new market segments.

The business opened a first-of-its-kind Specialty Coatings production facility andcolour laboratory in Noida Uttar Pradesh.

Specialty Chemicals

This segment recorded a turnover of H 2641 million compared to previous year's H1965 million a growth of 34%. The growth is attributable mainly to a change in businessmodel where the Company has taken up the distribution of products sourced from overseasmanufacturers. Profit from the segment improved by 42% to H 214 million over the previousyear.

Corporate Governance

A report on Corporate Governance along with a certificate from a practicing CompanySecretary confirming compliance with the conditions of corporate governance is attachedas Annexure I to this report.

Responsible Care / Corporate Social Responsibility

Your Company is committed to conduct its business in a socially and environmentallyresponsible way for the benefit of all its stake-holders. Planet Possible is yourCompany's approach to sustainability which focuses on creating more value from fewerresources across the value chain.

The company has adopted the Hoshin Kanri approach in formulating the HSE&Simprovement plans. This promotes a sense of direction and alignment between differentfunctions and / or levels of an organization ensuring that improvement and transformationefforts are oriented to the business objectives.

Our sustainability agenda aims to create value for our customers by providing productswith excellent functionality that generate resource or performance benefits ahead ofcompetitive products.

A Business Responsibility Report is attached as Annexure II-A.

During the year your Company implemented several CSR projects on its own with employeevolunteers as well as in partnership with implementing agencies. Such activities weremainly executed in the areas of health education skill development and environmentprotection. A report on the CSR activities undertaken by your Company is attached as

Annexure II-B.

Human Resources

Your Company had cordial relations with employees across all locations during the year.The total number of employees on the rolls of the Company as at 31 March 2017 was 1902(previous year 1830).

Information as per Section 197 of the Companies Act 2013 read with the Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 forms part of thisreport. However as permitted under the provisions of Section 137 of the Act the Reportand Accounts are being sent to the members excluding the statement containing the saidinformation.

Any member interested in obtaining such particulars may inspect the same at theRegistered Office of the Company or write to the Company Secretary for a copy.

The disclosures alongside are made in terms of Rule 5 of the Companies (Appointment andRemuneration of Managerial Personnel) Rules 2014:

(i) (ii)
Name Status Ratio of the remuneration of each Director to the median remuneration of the employees of the Company for the financial year 2016-17 Percentage increase in remuneration during 2016-17
Mr Nihal Kaviratne CBE Non Executive 4.2 161% increase as commission was enhanced from H 0.8 m to H 2.3 m with approval of the Board in order to compensate for the time and effort expended by the Chairman on company's affairs over and above what is normally expected from a non-executive chairman.
Mr Jayakumar Krishnaswamy Managing Director 30.8 11% of fixed pay
Mr Pradip Menon Wholetime Director 22.3 Nil
Mr R Gopalakrishnan Non Executive – Independent 1.8 Nil
Mr Amit Jain Non Executive - Nil
Mr Arabinda Ghosh Non Executive - Nil
Mr Raj S Kapur Non Executive – Independent 1.8 Nil
Dr Sanjiv Misra Non Executive – Independent 1.7 Nil
Ms Kimsuka Narsimhan Non Executive – Independent 1.7 Nil
Mr Arvind Uppal Non Executive – Independent 1.6 Nil
Mr R Guha Company Secretary NA 10% of fixed pay

 

Description Remarks
(iii) Percentage increase in the median remuneration of employees in the financial year 9%
(iv) Number of permanent employees on the rolls of the Company 1902 as on 31 March 2017
(v) Average percentile increase already made in the salaries of employees other than the managerial personnel in the last financial year and its comparison with the percentile increase in the managerial remuneration and justification thereof and point out if there are any exceptional circumstances for increase in the managerial remuneration Average percentage increase in base salary of non-managerial personnel was 9% which is comparable with the increase in the managerial remuneration

It is hereby affirmed that the remuneration to managerial personnel referred to aboveis as per the remuneration policy of the Company.

Notes:

1. The aforesaid details are calculated on the basis of remuneration for the financialyear 2016-17.

2. Remuneration to Directors includes sitting fees paid to them for the financial year2016-17.

3. Median remuneration in the Company (on cost to company basis) for all its employeeswas H 574872 for the financial year 2016-17.

4. Remuneration to Directors is within the overall limits approved by the shareholders.

Conservation of Energy Technology Absorption and Forex Earnings and Outgo

Your Company continues to use its research and development base to bring consumers newproducts with improved performance features and products for special applications.Particulars in respect of conservation of energy technology absorption and foreignexchange earnings and outgo pursuant to Section 134 of the Companies Act 2013 are givenin Annexure III to this report.

Information Technology

Your Company continues to leverage IT for efficient management of its businessoperations and enhancing customer experience.

CRM has been further enhanced to help expedite resolution of customer complaints.

All efforts are on hand to make the Company's IM systems GST compliant to ensure zerobusiness interruption on migration to the GST platform.

Internal Control Systems

Your Company has an effective risk management framework which helps the Board tomonitor the state of controls in key business processes. Your Company has well-establishedprocedures for internal controls commensurate with its size and operations. Theorganisation is appropriately staffed with qualified and experienced personnel forimplementing and monitoring the internal control environment.

The Board periodically reviews reports of compliance with all laws applicable to theCompany. The Company has an IT enabled tool incorporating all applicable legal complianceswhich are marked to their respective owners. The compliance library is updatedperiodically covering all changes w.r.t. Laws/Regulations.

Policy Against Sexual Harassment

Your Company has formulated a policy for the prevention of sexual harassment within theCompany. It seeks to prevent and deter acts of sexual harassment and communicateprocedures for their resolution and settlement. Internal Complaints Committees have beenconstituted in accordance with the requirements of the law. There were no cases/complaints reported in this regard during 2016-17. A copy of the Policy against sexualharassment has been disseminated amongst all employees and is posted on the Companywebsite which can be accessed from www.akzonobel.co.in.

Related Party Transactions (RPTs)

Your Company enters into various transactions with related parties as defined underSection 2(76) of the Companies Act 2013. All the RPTs are undertaken in compliance withthe provisions set out in Companies Act 2013 and the Listing Regulations. Your Companyhas a robust process for RPTs and the transactions with Related Parties are referred tothe Audit Committee for its approval at the scheduled quarterly meetings or as may becalled upon from time to time along with all relevant information of such transactions.

The Policy on materiality of RPTs and dealing with RPTs as approved by the Board may beaccessed on the Company's website at www.akzonobel.co.in.

All contracts / arrangements / transactions entered by the Company during the financialyear with related parties were in the ordinary course of business and on an arm's lengthbasis. During the year the Company had not entered into any contract / arrangement /transaction with related parties which could be considered material in accordance withthe policy of the Company on materiality of RPTs.

Your Directors draw attention of the members to Note 34 to the financial statementwhich contains the requisite disclosures.

Loans Guarantees & Investments

There are no loans given or guarantees issued that are covered under Section 186 of theAct read with the Rules made thereunder. Details of investments made under the saidsection are covered in Notes 5.1 and 8.1 of the financial statements.

Extracts of the Annual Return

As required under Section 134(3)(a) of the Act read with the Companies (Management andAdministration) Rules 2014 an extract of the Annual return in the prescribed form isattached as Annexure IV.

Directors & Key Management Personnel

Mr Nihal Kaviratne CBE and Mr Amit Jain will be retiring by rotation at the forthcomingAnnual General Meeting (AGM). Mr Kaviratne is not seeking re-election while Mr Jain hasoffered himself for re-election.

A brief resume of Mr Amit Jain as required under regulation 36 of the ListingRegulations is given in the notice convening the AGM.

The Board wishes to place on record its deep appreciation of the contribution of MrNihal Kaviratne CBE during his tenure with the Company.

Declaration by Independent Directors

The Company has received necessary declarations from each Independent Director that he/she meets the criteria of independence laid down in Section 149(6) of the Act and theListing Regulations.

Auditors

Statutory Auditors

M/s Price Waterhouse Chartered Accountants LLP will retire as the Auditors of theCompany at the conclusion of the forthcoming AGM and being eligible have offeredthemselves for re-appointment.

Cost Auditors

In terms of Section 148 of the Companies Act 2013 Cost Audit was conducted for theyear 2016-17 by M/s. Chandra Wadhwa & Co. New Delhi. Their report for the year2015-16 has been filed with MCA within the stipulated time.

The Board has re-appointed M/s Chandra Wadhwa & Co. New Delhi as the Cost Auditorsfor conducting Cost Audit for the financial year 2017-18 whose remuneration is subject tothe approval of the shareholders at the AGM.

Secretarial Auditors

In terms of Section 204 of the Companies Act 2013 a Secretarial Audit was conductedfor the year 2016-17 by M/s A K Labh & Co. Kolkata. Their report is appended.

The Board has re-appointed M/s A K Labh & Co. Kolkata to conduct Secretarial Auditfor the financial year 2017-18.

Directors' Responsibility Statement

As required under Section 134(5) of the Companies Act 2013 the Board states that:

(a) in the preparation of the annual accounts the applicable accounting standards hadbeen followed along with proper explanation relating to material departures;

(b) the Directors had selected such accounting policies and applied them consistentlyand made judgments and estimates that are reasonable and prudent so as to give a true andfair view of the state of affairs of the Company at the end of the financial year and ofthe profit and loss of the Company for that period;

(c) the Directors had taken proper and sufficient care for the maintenance of adequateaccounting records in accordance with the provisions of this Act for safeguarding theassets of the Company and for preventing and detecting fraud and other irregularities;

(d) the Directors had prepared the annual accounts on a going concern basis;

(e) the Directors had laid down internal financial controls to be followed by theCompany and that such internal financial controls are adequate and were operatingeffectively; and

(f) the Directors have devised proper systems to ensure compliance with the provisionsof all applicable laws and that such systems were adequate and operating effectively.

General

Your Directors state that no disclosure or reporting is required in respect of thefollowing items as there were no transactions on these items during the year underreview:

1. The Company has issued only one class of equity shares with equal rights.

2. The Company has not issued any shares during the year under ESOPs or Sweat Equityor otherwise.

3. The Managing Director or Wholetime Directors of the Company did not receive anyremuneration or commission from any other company belonging to AkzoNobel Group orassociate companies.

4. No significant or material orders were passed by the Regulators or Courts orTribunals which could impact the going concern status and the Company's operations infuture.

5. Your Company has not accepted any public deposits during the year and no amount onaccount of principal or interest on public deposits was outstanding as on the date of thebalance sheet.

Cautionary Statement

Some of the statements in this report describing your Company's objectives andexpectations expressed in good faith may constitute ‘forward looking statements'within the meaning of applicable laws and regulations. Actual results might differmaterially from those in the event of changes in the assumptions/ market conditions.

Acknowledgment

The Directors wish to convey their gratitude and appreciation to all the employees ofyour Company for their valuable contribution during the year. They also wish to place onrecord their appreciation of your Company's customers shareholders investors bankersagents suppliers distributors and other business associates for their cooperation andsupport.

On behalf of the Board
18 May 2017 N Kaviratne CBE
Mumbai Chairman

Annexure Il-A

Business Responsibility Report

(In terms of Regulation 34(2)(f) of the Securities and Exchange Board of India (ListingObligations and Disclosure Requirements) Regulations 2015)

This Business Responsibility (BR) Report follows the National Voluntary Guidelines onsocial environmental and economic responsibilities of business as notified by theMinistry of Corporate Affairs Government of India which laid down the followingprinciples:

Principle # Description
P1 Businesses should conduct and govern themselves with Ethics Transparency and Accountability
P2 Businesses should provide goods and services that are safe and contribute to sustainability throughout their life cycle
P3 Businesses should promote the well-being of all employees
P4 Businesses should respect the interests of and be responsive towards all stakeholders especially those who are disadvantaged vulnerable and marginalized
P5 Businesses should respect and promote human rights
P6 Businesses should respect protect and make efforts to restore the environment
P7 Businesses when engaged in influencing public and regulatory policy should do so in a responsible manner
P8 Businesses should support inclusive growth and equitable development
P9 Businesses should engage with and provide value to their customers and consumers in a responsible manner

SECTION A: GENERAL INFORMATION ABOUT THE COMPANY

1. Corporate Identity Number (CIN) of the Company: L24292WB1954PLC021516

2. Name of the Company: Akzo Nobel India Limited

3. Registered address: Geetanjali Apartment 1st Floor 8-B Middleton Street Kolkata700 071

4. Website : www.akzonobel.co.in

5. E-mail id : investor.india@akzonobel.com

6. Financial year reported: April 2016 - March 2017

7. Sectors that the Company is engaged in (industrial activity code-wise):

Code # Description
202 Paints varnishes enamels or lacquers
201 Organic and inorganic chemical compounds

8. Three key products that the Company manufactures/ provides (as in balance sheet)are:

1) Paints/Synthetic Enamels

2) Colorants and Thinners

3) Polymerisation Chemicals

9. Total number of locations where business activity is undertaken by the Company:

(a) Number of International Locations Nil
(b) Number of National Locations:
Manufacturing facilities 6
R&T Centre 1
Depots/Sales locations 76
Offices 4

10. Markets served by the Company: National and International

SECTION B: FINANCIAL DETAILS OF THE COMPANY

1. Paid up Capital : H 466.6 million

2. Total Turnover : H 31344 million

3. Total profit after taxes : H 2470 million

4. Total Spending on Corporate Social Responsibility (CSR) as percentage of profitafter tax : H 44 million amounting to 1.8% of PAT

5. List of activities in which expenditure in 4 above has been incurred: (a) Promotionof Education and eradicating malnutrition (b) Environment Sustainability (c) SkillDevelopment (d) Healthcare

SECTION C: OTHER DETAILS

1. Does the Company have any Subsidiary Company/ Companies: Yes ICI India Research andtechnology Centre a not for profit company engaged in scientific research where theCompany has effective control.

2. Do the Subsidiary Company/Companies participate in the BR Initiatives of the parentcompany?: Yes

3. Do any other entity/entities (e.g. suppliers distributors etc.) that the Companydoes business with participate in the BR initiatives of the Company?

The Company encourages all its business partners to adopt its policies and practices.

SECTION D: BR INFORMATION

1. Details of Director responsible for BR

(a) Details of the Director responsible for implementation of the BR policy:
DIN Number 02099219
Name Jayakumar Krishnaswamy
Designation Managing Director
(b) Details of the BR head:
Name Rajasekaran Guha
Designation Company Secretary
Telephone number 0124-2540400
Email ID investor.india@akzonobel.com

2. Principle-wise [as per National Voluntary Guidelines] BR Policy/policies(Reply in Y/N)

(a) Details of compliance (Y/N)

No. Questions P1 P2 P3 P4 P5 P6 P7 P8 P9
1 Do you have a policy/ policies for Y Y Y Y Y Y Y Y Y
2 Has the policy been formulated in consultation with the relevant stakeholders? Y Y Y Y Y Y Y Y Y
3 Does the policy conform to any national / international standards? If yes specify? Y Y Y Y Y Y Y Y Y
4 Has the policy approved by the Board? Y Y Y Y Y Y Y Y Y
5 Does the Company have a specified committee of the Board/ Director/ Official to oversee the implementation of the policy? Y Y Y Y Y Y Y Y Y
6 Indicate the link for the policy to be viewed online? Code of Conduct and Whistleblower Policies HSE&S and Sustainability Policies Sustainability Policy CSR Policy Code of Conduct and Sustainability Policies HSE&S and Sustainability Policies Code of Conduct Policy Sustainability and CSR Policies HSE&S and Sustainability Policies

All these policies are available at

www.akzonobel.co.in

7 Has the policy been formally communicated to all relevant internal and external stakeholders? Y Y Y Y Y Y Y Y Y
8 Does the Company have in-house structure to implement the policy/ policies. Y Y Y Y Y Y Y Y Y
9 Does the Company have a grievance redressal mechanism related to the policy/ policies to address stakeholders' grievances related to the policy/ policies? Y Y Y Y Y Y Y Y Y
10 Has the Company carried out independent audit/ evaluation of the working of this policy by an internal or external agency? Y Y Y Y Y Y Y Y Y

(b) If answer to the question at serial number 1 against any principle is ‘No'please explain why:

All answered yes hence not applicable.

3. Governance related to BR

The Board of Directors assess the BR performance of the Company on periodic basis.

Starting from year 2015-16 the Company publishes the information on BR which forms partof the Annual Report of the Company. The Annual Report is available on the website of theCompany at www.akzonobel.co.in

SECTION E: PRINCIPLE-WISE PERFORMANCE

PRINCIPLE 1: BUSINESSES SHOULD CONDUCT AND GOVERN THEMSELVES WITH ETHICS TRANSPARENCYAND ACCOUNTABILITY

For Akzo Nobel India promoting integrity means acting in accordance with its valuesresponsible excellent and innovative wherever it does business. A key element ofintegrity is compliance: adherence to the law and to its internal regulations. It has zerotolerance for corruption and violation of the principles of fair competition and wherethey do occur such instances are rigorously investigated and taken to their logicalconclusion.

Your Company's policies relating to ethics bribery and corruption cover the Company aswell as its external stakeholders who have business relations with the Company. It hasinstituted various mechanisms for receiving and resolving complaints from itsstakeholders.

Your Company received 13 shareholder complaints during the past financial year all ofwhich have been resolved. It also received 9 cases reported through ‘Speak up' (VigilMechanism) during the year; all of which were investigated and resolved. There were 1529consumer complaints received by the Company of which 1407 resolved and 122 were underresolution as at the end of the financial year.

PRINCIPLE 2: BUSINESSES SHOULD PROVIDE GOODS AND SERVICES THAT ARE SAFE AND CONTRIBUTETO SUSTAINABILITY THROUGHOUT THEIR LIFE CYCLE

Your Company pursues its sustainability agenda through its Planet Possible programmewhich highlights its commitment to creating more value from fewer resources across thevalue chain. The Company also continued its innovation in order to supply sustainableproducts and solutions to its customers.

Your Company seeks to lead by example by improving the environmental/social performanceof its products and processes which are measured through development of eco-premiumsolutions.

PRINCIPLE 3: BUSINESSES SHOULD PROMOTE THE WELL-BEING OF ALL EMPLOYEES

Total number of permanent employees of the Company were 1902 among which 126 werefemale. There were 2 regular employees with disabilities. It also has about 750contractual/temporary workforce.

There are recognized trade unions at some of the Company's locations representing theworkmen. Approximately 8% of permanent employees are members of these unions.

Your Company did not receive any complaints relating to child labour forced labourinvoluntary labour or sexual harassment in the last financial year.

Safety training related to the areas of work is mandatory for all employees. Inaddition employees are encouraged to enroll for skill development training which isprovided through internal or external programmes.

PRINCIPLE 4: BUSINESSES SHOULD RESPECT THE INTERESTS OF AND BE RESPONSIVE TOWARDS ALLSTAKEHOLDERS ESPECIALLY THOSE WHO ARE DISADVANTAGED VULNERABLE AND MARGINALISED.

Identifying the stakeholders and engaging with them is critical to the Company's CSRand Health Safety Environment and Security (HSE&S) policies. The Company has broadlyidentified six groups covering both internal and external stakeholders as follows:

1. Employees

2. Local communities

3. Regulatory authorities

4. Customers

5. Shareholders

6. Dealers suppliers and other business partners

Out of the above groups local communities and contractual employees are identified asvulnerable and marginalized stakeholders. The Company has taken several initiatives toengage with these sections of the community.

Further the Company creates social value by developing its employees and being activein the communities where it operates.

PRINCIPLE 5: BUSINESSES SHOULD RESPECT AND PROMOTE HUMAN RIGHTS

Your Company's Human Rights policy is covered in its Code of Conduct. All businesspartners are required to confirm adherence to the Code of Conduct of the Company. TheCompany did not receive any stakeholder complaint during the year 2016-17 regarding humanrights.

PRINCIPLE 6: BUSINESSES SHOULD RESPECT PROTECT AND MAKE EFFORTS TO RESTORE THEENVIRONMENT

Your Company's environment policy applies to its employees as well as business partnersin respect of the services and products received from them. The Company continues to focusits efforts on innovation in order to supply sustainable products and solutions to itscustomers.

Reducing the carbon footprint across the value chain is an important objective of theCompany. In pursuance of its core principle of sustainability several initiatives havebeen taken in the manufacturing operations to reduce energy and water consumption. Alsoactions have been taken to minimize VOC in the products manufactured by the Company. Ithas also ensured that no lead or other heavy metals are used in the production process.

Potential environmental risks are identified and reported as per the HSE&S policy.The Company regularly reviews these risks and undertakes initiatives to mitigate them.

All emissions and waste generated by the Company are within the permissible limitsgiven by Central Pollution Control Board (CPCB) / State Pollution Control Boards (SPCB) in2016-17. It has no pending show cause notices from CPCB or SPCB as at end of the financialyear 2016-17.

PRINCIPLE 7: BUSINESSES WHEN ENGAGED IN INFLUENCING PUBLIC AND REGULATORY POLICYSHOULD DO SO IN A RESPONSIBLE MANNER

Your Company engages with the public and regulatory bodies in a responsible manner. TheCompany is a member of the following trade associations:

a) Confederation of Indian Industry (CII)

(b) Federation of Indian Chambers of Commerce & Industry (FICCI)

(c) Indian Paints Association (IPA)

(d) CAPEXIL

Your Company participates in various programmes of these associations and supports themwith appropriate inputs for addressing industry wide issues and in evolving standards forpromotion of product safety and environmental protection.

PRINCIPLE 8: BUSINESSES SHOULD SUPPORT INCLUSIVE GROWTH AND EQUITABLE DEVELOPMENT

Your Company has specified initiatives based on its CSR and HSE&S policies tosupport inclusive growth and equitable development in the society.

Your Company's CSR programmes are monitored by the CSR Committee of the Board. In2016-17 a sum of H 44 million was spent on these programmes details of which are givenin the CSR Report.

PRINCIPLE 9: BUSINESSES SHOULD ENGAGE WITH AND PROVIDE VALUE TO THEIR CUSTOMERS ANDCONSUMERS IN A RESPONSIBLE MANNER

Akzo Nobel India is a customer focused organisation and has adopted a customer centricapproach. It has requisite infrastructure and personnel to receive and address customerfeedbacks and complaints. During the last financial year it ensured that allcustomer/consumer complaints were duly addressed. The products of the Company display allinformation mandated by the law. Additional product information is provided throughproduct information sheets when required.

Your Company conducts surveys from time to time with a view to engage and assessconsumer preferences service levels and effectiveness of its promotional campaigns sothat appropriate changes can be made.

Disclosure of particulars with respect to conservation of energy technologyabsorption foreign exchange earnings and outgo pursuant to Section 134 (3) (m) of theCompanies Act 2013:

A. Conservation of Energy

During the year 2016-17 various energy conservation measures were implemented by theCompany:

i. Conservation measures taken Energy saving measures adopted across all offices & factories. Continued efforts towards optimization of processes are in place.
Installation of Artic master for process chillers and Split AC's of labs offices in one of the manufacturing units.
Installation of smart energy saver for Split AC's below 3 Ton capacity.
Timers for exhaust blowers and ventilation system
Independent light switches at metal shop floor to switch off lights during day time
LED Electrical light fittings installed to reduce power consumption
ii. Steps taken by the Company for utilizing alternate sources of energy The Company initiated process of open access renewable energy wheeling to utilize more Solar energy and to save power cost in parallel. Further the Company has also invested more in solar power generation.
iii. Capital investment on energy conservation equipment's The Company invested about H 1.8 million on energy conservation equipment during the year.

B. Absorption of technology

i. Efforts made towards technology absorption The RD&I center of the Company focusses on development of innovative products & techniques. Efforts during the year resulted in:
Improved batch cycle time Improved yield Better quality products
ii. Benefits derived as a result of the above efforts like product improvement cost reduction product development or import substitution Major Benefits derived from the above initiatives are: Cost reduction Quality improvement Import substitution
iii. In case of imported technology imported during the last 3 years (reckoned from the beginning of the financial year) No technology was imported during the last 3 years

 

iv. Expenditure on R&D 2016-17 2015-16
Capital 0 5
Recurring* 60 108
Total 60 113

*Excludes Royalty Charge

C. Foreign exchange earnings and outgo

(Rs. million)
2016-17 2015-16
Earnings 930 1215
Outgo@ 4161 4502

@ Excludes outgo on account of dividend

Outgo of foreign exchange by the Company is higher than earnings mainly on account ofimport of raw materials and services. Besides the nature of the Company's product linesis such that it is not commercially viable to build a large export portfolio.