The Directors have pleasure in presenting the 71st Annual Report of AsianPaints Limited for the financial year ended 31st March 2017.
(Rs. in crores)
| ||Standalone || ||Consolidated || |
| ||Year ended 31.03.2017 ||Year ended 31.03.2016 ||Growth (%) ||Year ended 31.03.2017 ||Year ended 31.03.2016 ||Growth (%) |
|Revenue from Operations ||14360.43 ||13332.18 ||7.7 ||17084.76 ||15841.69 ||7.8 |
|Earnings Before Interest Taxes Depreciation and Amortization ||2972.34 ||2726.36 ||9.0 ||3284.03 ||2982.54 ||10.1 |
|Less : Finance Costs ||18.86 ||23.40 || ||30.58 ||40.66 || |
|Less : Depreciation and Amortisation expense ||295.43 ||234.51 || ||338.84 ||275.58 || |
|Profit Before Exceptional Item & Tax ||2658.05 ||2468.45 ||7.7 ||2914.61 ||2666.30 ||9.3 |
|Exceptional Item ||- ||65.35 || ||- ||52.45 || |
|Profit Before Tax ||2658.05 ||2403.10 ||10.6 ||2914.61 ||2613.85 ||11.5 |
|Less : Tax Expense ||854.95 ||780.29 || ||947.98 ||844.49 || |
|Profit After Tax ||1803.10 ||1622.81 ||11.1 ||1966.63 ||1769.36 ||11.1 |
|Share of profit of Associate || || || ||49.61 ||33.42 || |
|Profit After Tax including share of Associate ||1803.10 ||1622.81 ||11.1 ||2016.24 ||1802.78 ||11.8 |
|Attributable to: || || || || || || |
|Shareholders of the Company ||1803.10 ||1622.81 ||11.1 ||1939.42 ||1745.16 ||11.1 |
|Non-Controlling Interest || || || ||76.82 ||57.62 || |
|Other Comprehensive Income (net of tax) ||139.04 ||(17.26) || ||7.68 ||(23.49) || |
|Total Comprehensive Income ||1942.14 ||1605.55 ||21.0 ||2023.92 ||1779.29 ||13.7 |
|Attributable to: || || || || || || |
|Shareholders of the Company ||1942.14 ||1605.55 ||21.0 ||1998.40 ||1726.97 ||15.7 |
|Non-Controlling Interest || || || ||25.52 ||52.32 || |
|Opening balance in Retained Earnings ||2181.55 ||1839.64 || ||2141.50 ||1807.76 || |
|AMOUNT AVAILABLE FOR APPROPRIATION ||3990.03 ||3464.17 || ||4090.25 ||3552.90 || |
|Dividend - Interim - FY 2016-17 ||254.19 ||- || ||254.19 ||- || |
|Interim - FY 2015-16 ||- ||211.03 || ||- ||211.03 || |
|- Final - FY 2015-16 ||508.37 ||- || ||508.37 ||- || |
|Final - FY 2014-15 ||- ||412.45 || ||- ||412.45 || |
|Tax on Dividend ||154.33 ||126.24 || ||154.33 ||126.24 || |
|Transfer to General Reserve ||500.00 ||532.90 || ||500.00 ||660.82 || |
|Transfer to Other Reserve ||- ||- || ||0.61 ||0.86 || |
|Closing Balance in Retained Earnings ||2573.14 ||2181.55 || ||2672.75 ||2141.50 || |
The Company has adopted Indian Accounting Standards (Ind AS) with effect from 1stApril 2016 pursuant to the notification of Companies (Indian Accounting Standard) Rules2015 issued by the Ministry of Corporate Affairs. Previous years' figures have beenrestated and audited by the Joint Statutory Auditors of the Company namely M/s. BSR& Co. LLP Chartered Accountants (Firm Registration No. 101248W/W-100022) and M/s.Deloitte Haskins & Sells LLP Chartered Accountants (Firm Registration No.117366W/W-100018).
During the financial year 2016-17 revenue from operations on standalone basisincreased to Rs. 14360.43 crores as against Rs. 13332.18 crores in the previous year a growth of 7.7%.
Cost of goods sold as a percentage to revenue from operations decreased to 59.8% asagainst 60.7% in the previous year. Employee cost as a percentage to revenue fromoperations increased to 5.2% (Rs. 742.83 crores) against 5% (Rs. 666.83 crores) in theprevious year.
Other expenses as a percentage to revenue from operations increased to 16.5% (Rs.2364.44 crores) as against 15.8% (Rs. 2101.70 crores) in the previous year.
The Profit After Tax for the current year is Rs. 1803.10 crores as against Rs.1622.81 crores in the previous year a growth of Rs. 11.1%. The growth in profit ismainly driven by increase in revenue from operations and softening of input materialprices during the year.
On a consolidated basis the group achieved revenue of Rs. 17084.76 crores as againstRs. 15841.69 crores a growth of 7.8%. Net profit after non controlling interestfor the group for the current year is Rs. 1939.42 crores as against Rs. 1745.16 croresin the previous year a growth of Rs. 11.1%.
There are no material changes and commitments affecting the financial position of theCompany which have occurred between the end of the financial year 2016-17 and the date ofthis report.
CONSOLIDATED FINANCIAL STATEMENTS
As per Regulation 33 of the Securities and Exchange Board of India (Listing Obligationsand Disclosure Requirements) Regulations 2015 (hereinafter referred to as "ListingRegulations") and applicable provisions of the Companies Act 2013 read with theRules issued thereunder the Consolidated Financial Statements of the Company for thefinancial year 2016-17 have been prepared in compliance with applicable AccountingStandards and on the basis of audited financial statements of the Company itssubsidiaries and associate companies as approved by the respective Board of Directors.
The Consolidated Financial Statements together with the Auditors' Report form part ofthis Annual Report.
A separate statement containing the salient features of financial statements of allsubsidiaries of the Company forms a part of consolidated financial statements incompliance with Section 129 and other applicable provisions if any of theCompanies Act 2013. In accordance with Section 136 of the Companies Act 2013 thefinancial statements of the subsidiary and associate companies are available forinspection by the members at the Registered Office of the Company during business hours onall days except Saturdays Sundays and public holidays upto the date of the Annual GeneralMeeting (AGM'). Any member desirous of obtaining a copy of the said financialstatements may write to the Company Secretary at the Registered Office of the Company. Thefinancial statements including the consolidated financial statements financial statementsof subsidiaries and all other documents required to be attached to this report have beenuploaded on the website of the Company (www.asianpaints.com). The Company hasformulated a policy for determining material subsidiaries. The policy may be accessed onthe website of the Company (www.asianpaints.com)
During the year under review In order to consolidate the Company's investments inoverseas subsidiary companies Asian Paints (International) Limited Mauritius (APIL)wholly owned subsidiary of the Company has transferred holdings in its operationalsubsidiary companies to Berger International Private Limited Singapore (BIPL) indirectsubsidiary of the Company.
The Board of Directors of the Company at their meeting held on 25thOctober 2016 approved the Scheme of Amalgamation of APIL into the Company("Scheme"). The Company has also received approval from SEBI in the form ofNo adverse Observation letters' regarding the Scheme from the BSE Limited and theNational Stock Exchange of India Limited in accordance with the provisions of theCompanies Act 2013 and the Listing Regulations. During the financial year 2016-17 theMinistry of Corporate Affairs notified Section 230 to 234 of the Companies Act 2013 andthe Companies (Compromises Arrangements and Amalgamations) Amendment Rules 2017pursuant to which any foreign company which is proposed to merge with an Indian companyrequires prior approval of the Reserve Bank of India ("RBI"). Accordingly theCompany has made an application to the RBI and post receiving approval from RBI would filenecessary applications with the National Company Law Tribunal for obtaining sanction tothe Scheme.
On 3rd April 2017 BIPL acquired 100% controlling stake in Causeway PaintsLanka (Private) Limited ("CPLPL") Sri Lanka for a consideration of Rs.386.75 crores (approx.) in cash. The aforesaid transaction was entered into with anobjective of enhancing the group's presence in the Sri Lankan market where theCompany through its indirect subsidiary Company Asian Paints (Lanka) Limited already hasoperations. CPLPL is a key player in the Sri Lankan coatings market operating for morethan 2 (two) decades and supplies mainly decorative paints (including wood finishes) andautomotive paints.
A statement containing the financial performance of each of the subsidiaries and jointventure companies included in the consolidated financial statements of the Company is setout in the Annexure [A] to this Report. Additional details of the performance andoperations of the subsidiaries and joint venture companies along with details of therestructuring and investments made by the Company are set out in the Management Discussionand Analysis which also forms a part of this report.
TRANSFER TO GENERAL RESERVE
The Company proposes to transfer Rs. 500 crores to the General Reserve. An amount ofRs. 2573.14 crores is proposed to be retained in the Retained Earnings.
During the financial year 2016-17 the Company declared and paid to the shareholdersan interim dividend of Rs. 2.65 (Rupees two and paise sixty five only) per equityshare of the face value of Rs. 1 (Rupee one) each in the month of October 2016. Forcelebrating 75 years of Excellence at Asian Paints the Board of Directors of the Companyhave recommended payment of one-time special dividend of Rs. 2 (Rupees two only) perequity share of the face value of Rs. 1 (Rupee one) each in addition to final dividend ofRs. 5.65 (Rupees five and paise sixty five only) per equity share of the face value of Rs.1 (Rupee one) each for approval of the shareholders at the ensuing AGM. If approved thetotal dividend (interim dividend one-time special dividend and final dividend) for thefinancial year 2016-17 will be Rs. 10.30 (Rupees ten and paise thirty only) per equityshare of the face value of Rs. 1 (Rupee one) each as against the total dividend of Rs.7.50 (Rupees seven and paise fifty only) per equity share of the face value of Rs. 1(Rupee one) paid for the previous financial year 2015-16.
In accordance with Regulation 43A of the Listing Regulations the Company hasformulated a Dividend Distribution Policy' and details of the same have beenuploaded on the Company's website (www.asianpaints.com).
REGISTRAR AND TRANSFER AGENT OF THE COMPANY
As mentioned in the last year's Annual Report the Company had during the financialyear 2015-16 discovered certain irregularities with regard to the share related anddividend encashment activities carried out by M/s. Sharepro Services (India) PrivateLimited (hereinafter referred to as "Sharepro") Company's erstwhile Registrar& Transfer Agent. The Board of Directors of the Company at their meeting held on 14thMarch 2016 had approved the appointment of M/s. TSR Darashaw Limited as theRegistrar and Transfer Agent with effect from 1st April 2016. Further SEBIvide its Interim Order dated 22nd March 2016 has restrained Sharepro fromconducting Registrar & Transfer Agent activities.
The Company has taken necessary legal steps and action against Sharepro and some of itsemployees.
DIRECTORS AND KEY MANAGERIAL PERSONNEL
Resignation of Mr. Dipankar Basu:
Mr. Dipankar Basu Independent Director stepped down from the Board of Directors ofthe Company w.e.f. 1st January 2017 due to his advancing age.
During his long association with the Company his contribution to the Audit Committeeas the Chairman as well as to the Board and the Nomination and Remuneration Committee hasbeen immensely valuable. The Board places on record its appreciation for his inspiringguidance and his outstanding contribution to improve the overall functioning of theCompany.
Appointment of Mr. R. Seshasayee:
During the financial year 2016-17 the Board of Directors at their meeting held on 23rdJanuary 2017 had appointed Mr. R. Seshasayee as an Additional Director(Independent Director) of the Company. Appropriate resolution for the appointment of Mr.R. Seshasayee as an Independent Director of the Company is being placed for the approvalof the shareholders of the Company at the ensuing AGM for a period of 5 (five) years fromthe date of his appointment. The Board of Directors of the Company recommend hisappointment as an Independent Director of the Company.
Retirement by rotation and subsequent re-appointment:
Mr. Abhay Vakil and Ms. Amrita Vakil Non-Executive Directors are liable to retire byrotation at the ensuing AGM pursuant to Section 152 and other applicable provisions ifany of the Companies Act 2013 read with the Companies (Appointment and Qualification ofDirectors) Rules 2014 (including any statutory modification(s) or re-enactment(s) thereoffor the time being in force) the Articles of Association of the Company and beingeligible have offered themselves for re-appointment. Appropriate resolutions for theirre-appointment are being placed for the approval of the shareholders of the Company at theensuing AGM. The brief resume of the Directors and other related information has beendetailed in the Notice convening the 71st AGM of the Company. The Directorsrecommend their re-appointment as Non-Executive Directors of the Company.
In accordance with the provisions of the Companies Act 2013 read with the Rules issuedthereunder and the Listing Regulations the Independent Directors of the Company(other than Mr. R. Seshasayee) shall hold office upto 31st March 2019 and arenot liable to retire by rotation.
Re-appointment of Managing Director & CEO:
The Board of Directors at their meeting held on 11th May 2017 subjectto the approval of the shareholders at the ensuing AGM considered and approved there-appointment of Mr. K.B.S. Anand as the Managing Director & CEO of theCompany for a further period of 2 (two) years commencing from 1st April 2018.
Mr. K.B.S. Anand Managing Director & CEO and Mr. Jayesh Merchant CFO &Company Secretary President - Industrial JVs are Key Managerial Personnel of the Companyin accordance with the provisions of Sections 2(51) 203 of the Companies Act 2013 readwith Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014(including any statutory modification(s) or re-enactment(s) thereof for the time being inforce).
Disclosure Relating to Remuneration of Directors Key Managerial Personnel andparticulars of Employees:
The remuneration paid to the Directors is in accordance with the Nomination andRemuneration Policy formulated in accordance with Section 178 of the Companies Act 2013and Regulation 19 of the Listing Regulations (including any statutory modification(s) orre-enactment(s) thereof for the time being in force). The salient aspects covered in theNomination and Remuneration Policy have been outlined in the Corporate Governance Reportwhich forms a part of this report.
The Managing Director & CEO of the Company does not receive remuneration from anyof the subsidiaries of the Company.
The information required under Section 197 of the Companies Act 2013 read withCompanies (Appointment and Remuneration of Managerial Personnel) Rules 2014 (includingany statutory modification(s) or re-enactment(s) thereof for the time being in force) inrespect of Directors/employees of the Company is set out in the Annexure [B] tothis report and is also available on the website of the Company (www.asianpaints.com).
DIRECTORS RESPONSIBILITY STATEMENT
Pursuant to Section 134 of the Companies Act 2013 (including any statutorymodification(s) or re-enactment(s) thereof for the time being in force) the Directors ofthe Company confirm that:
a. in the preparation of the annual accounts for the financial year ended 31stMarch 2017 the applicable Accounting Standards and Schedule III of the Companies Act2013 have been followed and there are no material departures from the same;
b. the Directors have selected such accounting policies and applied them consistentlyand made judgements and estimates that are reasonable and prudent so as to give a true andfair view of the state of affairs of the Company as at 31st March 2017 and ofthe profit and loss of the Company for the financial year ended 31st March2017;
c. proper and sufficient care has been taken for the maintenance of adequateaccounting records in accordance with the provisions of the Companies Act 2013 forsafeguarding the assets of the Company and for preventing and detecting fraud and otherirregularities;
d. the annual accounts have been prepared on a going concern' basis;
e. proper internal financial controls laid down by the Directors were followed by theCompany and that such internal financial controls are adequate and operating effectively;and
f. proper systems to ensure compliance with the provisions of all applicable laws werein place and that such systems are adequate and operating effectively.
DECLARATION OF INDEPENDENCE
The Company has received declarations from all the Independent Directorsconfirming that they meet the criteria of independence as prescribed under the provisionsof the
Companies Act 2013 read with the Schedules and Rules issued thereunder as well asRegulation 16 of Listing Regulations (including any statutory modification(s) orre-enactment(s) thereof for the time being in force).
Pursuant to the provisions of the Companies Act 2013 read with the Rules issuedthereunder Regulation 17(10) of the Listing Regulations and the circular issued by SEBIdated 5th January 2017 with respect to Guidance Note on BoardEvaluation the evaluation of the annual performance of the Directors/Board/Committees wascarried out for the financial year 2016-17.
The details of the evaluation process are set out in the Corporate Governance Reportwhich forms a part of this report.
NOMINATION AND REMUNERATION POLICY
The Company has formulated and adopted the Nomination and Remuneration Policy inaccordance with the provisions of Companies Act 2013 read with the Rules issuedthereunder and the Listing Regulations. The details of the Nomination and RemunerationPolicy are set out in the Corporate Governance Report which forms a part of this report.
The Nomination and Remuneration Policy of the Company provides that the Nomination andRemuneration Committee shall formulate the criteria for appointment of Executive Non-Executiveand Independent Directors on the Board of Directors of the Company and persons in theSenior Management of the Company their remuneration including determination ofqualifications positive attributes independence of Directors and other matters asprovided under sub-section (3) of Section 178 of the Companies Act 2013 (including anystatutory modification(s) or re-enactment(s) thereof for the time being in force).
The Nomination and Remuneration Policy can be accessed on the website of the Company(www.asianpaints.com).
NUMBER OF MEETINGS OF THE BOARD AND ITS COMMITTEES
The details of the meetings of the Board of Directors and its Committees convenedduring the financial year 2016-17 are given in the Corporate Governance Report which formsa part of this report.
MANAGEMENT DISCUSSION AND ANALYSIS
Management Discussion and Analysis forms an integral part of this report and givesdetails of the overall industry structure economic developments performance and state ofaffairs of the Company's various businesses viz. the decorative business internationaloperations industrial and home improvement business internal controls and theiradequacy risk management systems and other material developments during the financialyear 2016-17.
CORPORATE GOVERNANCE REPORT
In compliance with Regulation 34 of the Listing Regulations a separate report onCorporate Governance along with a certificate from the Auditors on its compliance formsan integral part of this report.
BUSINESS RESPONSIBILITY REPORT
A Business Responsibility Report as per Regulation 34 of the Listing Regulationsdetailing the various initiatives taken by the Company on the environmental social andgovernance front forms an integral part of this report.
AUDITORS AND AUDITORS' REPORT
At the 70th AGM of the Company held on 28th June 2016 theshareholders had approved the appointment of M/s. B S R & Co. LLP CharteredAccountants (Firm Registration No. 101248W/W-100022) jointly with M/s. Deloitte Haskins& Sells LLP Chartered Accountants (Firm Registration No. 117366W/W-100018) as theJoint Statutory Auditors to hold office till the conclusion of the 71st AGM.
M/s. B S R & Co. LLP Chartered Accountants have been the Statutory Auditors ofthe Company since the financial year 2007-08 and their tenure as the Joint StatutoryAuditors of the Company will expire with the conclusion of this ensuing AGM in accordancewith Section 139 and other applicable provisions if any of the Companies Act 2013 readwith the Companies (Audit and Auditors) Rules 2014 (including any statutorymodification(s) or re-enactment(s) thereof for the time being in force).
The Board places on record its appreciation for the contribution of M/s. B S R &Co. LLP Chartered Accountants during their tenure as the Statutory Auditors of theCompany.
M/s. Deloitte Haskins & Sells LLP Chartered Accountants were appointed asStatutory Auditors of the Company at the 70th AGM held on 28thJune 2016 till the conclusion of the 75th AGM subject to ratificationof their appointment by the shareholders of the Company at every AGM held thereafter.
The Company has received written consent(s) and certificate(s) of eligibility inaccordance with Sections 139 141 and other applicable provisions of the Companies Act2013 and Rules issued thereunder (including any statutory modification(s) orre-enactment(s) thereof for the time being in force) from M/s. Deloitte Haskins& Sells LLP. Further M/s. Deloitte Haskins & Sells LLP Chartered Accountantshave confirmed that they hold a valid certificate issued by the Peer Review Board of theInstitute of Chartered Accountants of India as required under the Listing Regulations.
The Auditors' Report for the financial year ended 31st March 2017 onthe financial statements of the Company is a part of this Annual Report. During thefinancial year ended 31st March 2017 there has been no delay in depositingamounts required to be transferred to the Investor Education and Protection Fund (IEPF)other than one instance of delay in transferring the unclaimed final dividend for thefinancial year 2008-09 to the IEPF which has been explained in detail in Note 46 tothe Standalone Financial Statements of the Company.
The Board of Directors of the Company on the recommendations made by the AuditCommittee at their meeting held on 11th May 2017 has approved theappointment of M/s. RA & Co. Cost Accountants (Firm Registration No. 000242)as the Cost Auditor of the Company to conduct the audit of cost records for the financialyear 2017-18. The remuneration proposed to be paid to the Cost Auditor subject toratification by the shareholders of the Company at the ensuing 71st AGM wouldnot exceed Rs. 5.50 lakhs (Rupees five lakhs and fifty thousand only) excluding taxes andout of pocket expenses if any.
The Company has received consent from M/s. RA & Co. Cost Accountants to act asthe Cost Auditor for conducting audit of the cost records for the financial year 2017-18along with a certificate confirming their independence and arm's length relationship.
In terms of Section 204 of the Companies Act 2013 the Board of Directors of theCompany at their meeting held on 11th May 2017 has appointed Dr. K. R.Chandratre Practicing Company Secretary (Certificate of Practice No. 5144) as theSecretarial Auditor to conduct an audit of the secretarial records for the financial year2017-18.
The Company has received consent from Dr. K. R. Chandratre to act as the auditor forconducting audit of the Secretarial records for the financial year ending 31stMarch 2018.
The Secretarial Audit Report for the financial year ended 31st March2017 is set out in the Annexure [C] to this report. The Secretarial Audit Reportdoes not contain any qualification reservation or adverse remark.
None of the Auditors of the Company have reported any fraud as specified under thesecond proviso of Section 143 (12) of the Companies Act 2013 (including any statutorymodification(s) or re-enactment(s) thereof for the time being in force).
POLICIES OF THE COMPANY
The Company is committed to good corporate governance and has consistently maintainedits organizational culture as a remarkable confluence of high standards of professionalismand building shareholder equity with principles of fairness integrity and ethics.
The Board of Directors of the Company have from time to time framed and approvedvarious Policies as required by the Companies Act 2013 read with the Rules issuedthereunder and the Listing Regulations. These Policies and Codes are reviewed by the Boardand are updated if required.
Some of the key policies adopted by the Company are as follows:
|Sr. No. ||Name of the Policy |
|1. ||Dividend Distribution Policy |
|2. ||Policy on Determination of materiality of events/ information |
|3. ||Code of Conduct for Board Members and Senior Management Personnel |
|4. ||Policy on Archival of Information |
|5. ||Code of Conduct for Employees |
|6. ||Code of Practices and Procedures for Fair Disclosure of |
| ||Unpublished Price Sensitive Information |
|7. ||Code of Conduct to Regulate Monitor and Report trading by Insiders |
|8. ||Policy on Related Party Transactions |
|9. ||Policy on Materiality of Subsidiaries |
|10. ||Whistle Blower Policy |
|11. ||Corporate Social Responsibility Policy |
|12. ||Nomination and Remuneration Policy |
The above mentioned policies and code are also available on the website of the Company(www.asianpaints.com).
EXTRACT OF ANNUAL RETURN
The details forming part of the extract of the Annual Return as on 31stMarch 2017 in Form MGT - 9 in accordance with Section 92 (3) of the Companies Act 2013read with Companies (Management and Administration) Rules 2014 are set out in theAnnexure [D] to this report.
RELATED PARTY TRANSACTIONS
During the financial year 2016-17 the Company entered into transactions with relatedparties as defined under Section 2 (76) of the Companies Act 2013 read with Companies(Specification of Definitions Details) Rules 2014 all of which were in the ordinarycourse of business and on arm's length basis and in accordance with the provisions of theCompanies Act 2013 read with the Rules issued thereunder and the Listing Regulations.Further there were no transactions with related parties which qualify as materialtransactions under the Listing Regulations.
All transactions with related parties were reviewed and approved by the Audit Committeeand are in accordance with the Policy on Related Party Transactions formulated inaccordance with the provisions of Companies Act 2013 read with the Rules issuedthereunder and the Listing Regulations.
Prior omnibus approvals are granted by the Audit Committee for related partytransactions which are of repetitive nature entered in the ordinary course of businessand are on arm's length basis in accordance with the provisions of Companies Act 2013read with the Rules issued thereunder and the Listing Regulations.
The details of the related party transactions as per Indian Accounting Standards (IndAS) - 24 are set out in Note 43 to the Standalone Financial Statements of the Company.
The Form AOC - 2 pursuant to Section 134 (3) (h) of the Companies Act 2013 read withRule 8(2) of the Companies (Accounts) Rules 2014 is set out in the Annexure [E] tothis report.
LOANS AND INVESTMENTS
Details of loans guarantees and investments under the provisions of Section 186 of theCompanies Act 2013 read with the Companies (Meetings of Board and its Powers) Rules2014 as on 31st March 2017 are set out in Note 38 to the StandaloneFinancial Statements of the Company.
The Company has a well defined process to ensure risks are identified and steps totreat them are put in place at the right level in the management. The operating managersare responsible for identifying and putting in place mitigation plan for operational andprocess risks. Key strategic and business risks are identified and managed by the seniorleadership team in the organization.
The risks identified are updated along with the mitigation plans as part of the annualplanning cycle. The mitigation plans are then woven into the plans/initiatives for eachfunction and are monitored accordingly. The senior leadership team reviews the status ofthe initiatives as part of business review meetings.
The key strategic and business risks which are significant in terms of their impact tothe overall objectives of the Company along with status of the mitigation plans areperiodically presented and discussed at the Risk Management Committee meetings. Inputsfrom the Committee are duly incorporated in the action plans. During these meetings briefsynopsis of risks with low to medium impact on the objectives of the Company are alsoshared for the perusal of the Committee. The details of the Committee are set out in theCorporate Governance Report. There are no risks which in the opinion of the Board threatenthe existence of the Company. However some of the risks which may pose challenges are setout in the Management Discussion and Analysis which forms a part of this report.
The Board of Directors has formulated a Whistle Blower Policy which is in compliancewith the provisions of Section 177 (10) of the Companies Act 2013 and Regulation 22 ofthe Listing Regulations.
As a part of the Policy the Company has engaged a third party for managing an 'EthicsHotline' which can be used by employees and business associates of the Company to interalia report any violations fraud unfair trade practices discrimination to the Codeof Conduct in an anonymous manner.
In line with the commitment of the Company to open communications the Policy providesprotection to the employees and business associates reporting unethical practices andirregularities and also encourages employees and business associates to report incidencesof fraud.
Any incidents that are reported are investigated and suitable action is taken in linewith the whistle blower policy.
POLICY ON PREVENTION OF SEXUAL HARASSMENT AT WORKPLACE
The Company has in place a Policy on Prevention of Sexual Harassment at Workplace inline with the requirements of the Sexual Harassment of Women at Workplace (PreventionProhibition and Redressal) Act 2013 ("Prevention of Sexual Harassment of Women atWorkplace Act") and Rules framed thereunder and an Internal Complaints Committee hasalso been set up to redress complaints received regarding sexual harassment.
The Company has ensured organisation wide dissemination of the Policy and theprovisions of Prevention of Sexual Harassment of Women at Workplace Act by conductingsessions throughout the Company.
During the financial year 2016-17 4 (four) complaints were received by the Company andthe same were investigated in accordance with the procedure prescribed and adequate stepswere taken to resolve them.
The Company is committed to providing a safe and conducive work environment to all ofits employees and associates.
CORPORATE SOCIAL RESPONSIBILITY (CSR)
The CSR expenditure incurred by the Company during the financial year 2016-17 was Rs.47.84 crores which was higher than the statutory requirement of 2% of the average profitfor the last three financial years.
The CSR initiatives of the Company were under the thrust areas of health & hygieneeducation water management and enhancement of vocational training.
To celebrate 75 years of Excellence at Asian Paints Kaleidoscope was launched to begina wonderful journey to touch multiple lives and inspire even more. The key objective ofKaleidoscope is to provide infrastructure support development oriented activities andevents across health and education areas centered around schools and communities alongwith activate employee contribution and participation.
The Company's CSR Policy statement and annual report on the CSR activities undertakenduring the financial year ended 31st March 2017 in accordance withSection 135 of the Companies Act 2013 and Companies (Corporate Social ResponsibilityPolicy) Rules 2014 (including any statutory modification(s) or re-enactment(s) thereoffor the time being in force) is set out in the Annexure [F] to this report.
DETAILS ON INTERNAL FINANCIAL CONTROLS RELATED TO FINANCIAL STATEMENTS
The Company has put in place adequate internal financial controls over financialreporting. These are reviewed periodically and made part of work instructions or processesin the Company. The Company continuously tries to automate these controls to increase itsreliability.
The Company has adopted accounting policies which are in line with the IndianAccounting Standards notified under Section 133 of the Companies Act 2013 read togetherwith the Companies (Indian Accounting Standards) Rules 2015. These are in accordance withGenerally Accepted Accounting Principles in India. Changes in policies if any areapproved by the Audit Committee in consultation with the Statutory Auditors.
The Company has identified inherent reporting risks for each major element in thefinancial statements and put in place controls to mitigate the same. These risks and themitigation controls are revisited periodically in the light of changes in business ITsystems regulations and internal policies. Corporate accounts function is involved indesigning large process changes as well as validating changes to IT systems that have abearing on the books of account.
International subsidiaries provide information required for consolidation of accountsin the format prescribed by the Company. These are certified by the respective statutoryauditors for being compliant with the group accounting policies for the purpose of annualconsolidation of accounts.
The Company periodically conducts physical verification of inventory fixed assets andcash on hand and matches them with the books of account. Explanations are sought for anyvariance noticed from the respective functional heads.
The Company has a robust financial closure self-certification mechanism wherein theline managers certify adherence to various accounting policies accounting hygiene andaccuracy of provisions and other estimates.
The Company in preparing its financial statements makes judgements and estimates basedon sound policies and uses external agencies to verify/validate them as and whenappropriate. The basis of such judgements and estimates are also approved by the AuditCommittee of the Board of Directors of the Company in consultation with the JointStatutory Auditors of the Company. The management periodically compares the actual spendsagainst the estimates and makes necessary adjustments to the same based on changesnoticed.
The Company has a Code of Conduct applicable to all its employees along with a WhistleBlower Policy which requires employees to update accounting information accurately and ina timely manner. Any non-compliance noticed is to be reported and actioned upon in linewith the Whistle Blower Policy.
The Company gets its Standalone accounts audited every quarter by its Joint StatutoryAuditors.
SIGNIFICANT/MATERIAL ORDERS PASSED BY THE REGULATORS
There are no significant material orders passed by the Regulators or Courts orTribunals impacting the going concern status of the Company and its operations in future.
a. During the year under review the Company has not accepted any deposit within themeaning of Sections 73 and 74 of the Companies Act 2013 read with the Companies(Acceptance of Deposits) Rules 2014 (including any statutory modification(s) orre-enactment(s) thereof for the time being in force);
b. The Company has complied with Secretarial Standards issued by the Institute ofCompany Secretaries of India on Board and General Meetings;
c. The information on conservation of energy technology absorption and foreignexchange earnings and outgo as stipulated under Section 134 of the Companies Act 2013read with the Companies (Accounts) Rules 2014 is set out in the Annexure [G] tothis report;
d. The Company does not have any scheme or provision of money for the purchase of itsown shares by employees/ Directors or by trustees for the benefit of employees/ Directors;and
e. The Company has not issued equity shares with differential rights as to dividendvoting or otherwise.
The Board of Directors wish to convey their gratitude and place on record theirappreciation for all the employees at all levels for their hard work solidaritycooperation and dedication during the year.
Further the Board sincerely conveys its appreciation for its customers shareholderssuppliers as well as vendors bankers business associates regulatory and governmentauthorities for their continued support.
| ||For and on behalf of the Board |
|Place: Mumbai ||Ashwin Choksi |
|Date:11th May 2017 ||Chairman |