You are here » Home » Companies » Company Overview » Berger Paints India Ltd

Berger Paints India Ltd.

BSE: 509480 Sector: Consumer
NSE: BERGEPAINT ISIN Code: INE463A01038
BSE LIVE 15:59 | 12 Dec 251.45 -0.75
(-0.30%)
OPEN

252.20

HIGH

255.40

LOW

246.85

NSE 15:23 | 12 Dec 251.70 -0.70
(-0.28%)
OPEN

253.00

HIGH

255.50

LOW

246.85

OPEN 252.20
PREVIOUS CLOSE 252.20
VOLUME 77756
52-Week high 285.75
52-Week low 189.70
P/E 60.74
Mkt Cap.(Rs cr) 24,416
Buy Price 251.50
Buy Qty 804.00
Sell Price 0.00
Sell Qty 0.00
OPEN 252.20
CLOSE 252.20
VOLUME 77756
52-Week high 285.75
52-Week low 189.70
P/E 60.74
Mkt Cap.(Rs cr) 24,416
Buy Price 251.50
Buy Qty 804.00
Sell Price 0.00
Sell Qty 0.00

Berger Paints India Ltd. (BERGEPAINT) - Director Report

Company director report

Your Directors have pleasure in presenting the Annual Report of the Company togetherwith the audited accounts for the financial year ended on 31st March 2017.

FINANCIAL RESULTS

(Rs in crores)

Particulars Financial Year ended
Standalone Consolidated
2016-17 2015-16 2016-17 2015-16
Profit before Exceptional Items Depreciation Finance Cost and Tax 711.51 643.81 773.10 679.42
Add: Exceptional Items 58.67 - 44.20 -
Add: Share of Profit from Joint Ventures - - 10.05 5.69
Less:
Depreciation 97.07 88.07 108.05 98.65
Finance Cost 7.41 17.05 16.22 27.28
Profit Before Tax 665.70 538.69 703.08 559.18
Less:
Provision for Taxation 219.25 182.43 229.42 188.62
Profit After Taxation 446.45 356.26 473.66 370.56
Add:
Other comprehensive income (loss for the year net of tax) (1.20) (0.44) (18.94) (14.55)
Total comprehensive income 445.25 355.82 454.72 356.01

FINANCIAL PERFORMANCE

During the financial year ended 31st March 2017 the Company achieved net consolidatedrevenue from operations of Rs 5050.45 crores as against Rs 4638.85 crores in the previousyear registering a growth of 8.9%. The profit before exceptional items depreciationinterest and tax was Rs 773.10 crores as against Rs 679.44 crores in the previous yearrecording an improvement of 13.8%. The profit before tax wasRs 703.08 (2015 16 : Rs 559.18crores) and the profit after tax wasRs 473.66 crores (2015 16 : Rs 370.56 crores)representing an increase of 25.7% and 27.83% respectively. The consolidated profit beforetax would be Rs 658.88 crores (18% of growth) without considering the proportionate shareof profit beingRs 44.20 crores arising out of the transfer of a business to BNPA asmentioned below.

The Exceptional Items in the statement for the standalone results above comprise aprofit of Rs 86.67 crores on account of transfer of business and Rs 28 crores ofimpairment in the carrying value of investment in Berger Paints Cyprus Limited. Theaforesaid impairment has no impact on consolidated results.

The Company's paint division ("the Business") relating to 4 wheeler passengercars and SUVs 3 wheelers and related ancillaries was transferred to BNB Coatings IndiaPrivate Limited (now renamed Berger Nippon Paint Automotive Coatings Private Limited or"BNPA") an existing joint venture between Berger Paints India Limited andNippon Paint Automotive Coatings Co. Ltd. Japan after the close of business hours of30th June 2016 on a slump sale basis at a consideration of Rs 90 crores paid in cash.The annual turnover of the Business was about Rs 29 crores in the year ended 31st March2016. BNPA does not belong to the promoter group. By virtue of being a joint venture whereBerger Paints India Limited holds 49% of the paid up share capital BNPA may be deemed tobe a related party and the transaction was done at an arm's length basis. The"Exceptional Item" head in standalone results for the year ended 31st March2017 includes profitof Rs 86.7 crores on transfer of the business which is subject to tax.In June 2016 the Company had acquired 896700 equity shares of BNPA at the face value ofRs 1000 each aggregating Rs 89.67 crores to finance 49% of the acquisition of the"Business" from a third party by BNPA.

During the quarter ended 31st March 2017 the Company has provided for impairment inthe standalone financial statements in the carrying value of its investment in its whollyowned subsidiary Berger Paints Cyprus Limited (BPCL) on account of losses sustained bythe ultimate wholly owned subsidiary Berger Paints Overseas Limited (BPOL) due todownturn in Russian economy which were hitherto only reflected in the consolidatedfinancial position of the Company. The Company had made an assessment of the fair value ofthe investments in Berger Paints Overseas Limited taking into account past businessperformance prevailing business conditions and revised expectations about futureperformance. Based on the above factors and as matter of prudence a provision of Rs 28crores towards impairment of such investment has been recognised in the standaloneaccounts.

MANAGEMENT DISCUSSION AND ANALYSIS

PAINT INDUSTRY STRUCTURE AND DEVELOPMENT

Paint industry is classified into two broad categories viz. Decorative and Industrial.Decorative paints include higher end acrylic exterior and interior emulsions medium rangeexterior and interior paints low end distempers wood coatings cement paints primersthinners and putties accounting for over 70% of the paint market in India and growing at afaster pace than Industrial paints. These are either water based or solvent based. Waterbased paints are increasingly preferred by customers because of superior aestheticsdurability and environmental reasons and constitute the fastest growing segment.Industrial paints essentially comprise general industrial automotive protective andpowder coatings. The Company is present in all these areas. In addition there are smallersegments such as automotive refinish coatings coil coatings and marine coatings. TheCompany is present in the coil coatings segment as well through its joint venture BergerBecker Coatings Private Limited.

The growth prospects of the industry continue to be optimistic and the industry expectsthe demand to exceed Rs 70000 crores by 2019-20. Considering the estimated per capitaconsumption of 3.34 Kg. this seems to be achievable and the entire value chain willbenefit from the growth providing employment opportunities to a large number of peoplespread all across the country. Much of the growth will depend on the overall consumptionpattern and demand generation from the top by Government initiatives and from belowthrough focussed campaign for increased use not only for visual effect but also forprotection of assets. The industry expects the decorative paint market to witness aCompounded Annual Growth Rate (CAGR) of over 14 percent by value and the industrial paintmarket a CAGR of about 9.5 percent. In the past the industry is estimated to have grownat a CAGR of 12.9 percent from 2011-12 to 2014-15 in terms of value.

The demonetisation resulted in lower IIP growth rates and contraction in demandparticularly in the rural markets and impacted the paint industry as well. While there wasa negative effect on the retail market the effect on industrial markets depended on theultimate customer of the consumer industries. However the Company does not believe thevariations to be of permanent nature and the markets across all sectors areshowing signs of recovery from the initial impact. Market research specialists havementioned that consumer demand peaked in the

March 2017 quarter recording the highest sales surge in daily groceries home andpersonal products in the past two years. The Company is of the view that the intendedtransparency in monetary transactions would be beneficial for the economy including thereal estate sector which would in turn strengthen the paint industry in the long run.The Company received the 1st Prize in National Energy Conservation from the Government ofIndia New Delhi in the paints and allied products sector and the CII Green Pro Award.

The Vallabh Vidya Nagar factory of the Company's wholly owned subsidiary BeepeeCoatings Private Limited received the Special Jury Award in Total Quality Management fromCII Gujarat.

COMPANY'S OPERATION

The Decorative Business continued to be the mainstay and recorded consistent growth interms of volume and value. All other Businesses viz. General Industrial and AutomotiveProtective Coatings and Powder also grew at a healthy clip. EBIDTA for all the Businesseswere along the expected lines. This consistent growth is attributable to providingtailor-made products and services chosen after careful attention to customer needshigher sales of value added products innovation at all levels expansion of footprint innew geographies and market segments better distribution and logistics and empowering ofsales and service teams through specially deployed tools. The production capabilitiescontinued to be expanded restructured and reoriented to meet business requirements. TheCompany believes that in a fast changing world innovation is the key. To this extent theCompany introduced new premium products such as Weathercoat Anti Dustt with unique dustguard technology which doesn't allow dust to settle on exterior walls Silk Glamor aluxury finish for interior walls with crystal reflective technique and Luxol XTRA SuperGloss Enamel which provides a long lasting glossy finish with superior coverage. All thenew products have generated considerable interest in the market. Easy Clean known for itswashability continued to receive support from the customers. Others such as BisonButterfly Walmasta Luxol HiGloss and Tartaruga textured coatings performed well.

The Company's construction chemicals business grew at a rapid pace. The new offeringsincluded Waterproof Putty with distinctive water resistance for mild dampness and DampStop for severe dampness. The efficacy of these products can be easily demonstrated. Inthe wood coatings range Imperia a high end coating with polyurethane finish WoodkeeperPU an all-purpose exterior coating Imperia a water based luxury polyurethane range forexteriors interiors and floor coatings continued to receive market support. Two yearsback the Company had launched Express Painting a hassle free solution for paintinghouses which is 40 per cent faster than traditional painting much cleaner and can becarried out at the same cost. Last year the Company launched XP Advanced with speciallyformulated paints. Other than specifically designed paints the XP services involvetrained painters and carefully selected tools. The services have been focussed to engageextensively trained painters and contractors to constantly communicate with the customersand provide a packaged solution to ensure maximum customer satisfaction and make ExpressPainting the preferred solution for Indian homes. This has been confirmed by thesatisfaction surveys conducted by the Company. The Company received the recognition forthe Best Social Media Home and Living (Decor) Brand from Social Samosa. The Company alsofeatured in the Super 50 Companies list issued by Forbes India. Its rank moved up from 117to 103 in Business Today's list of 500 India's most valuable Companies for 2016.

The Company's General Industrial and Automotive Business comprise paints for generalindustrial purposes two wheelers commercial vehicles tractors etc. The Businesscontinued to post growth both in terms of volume and value despite the dampening effect ofdemonetisation on some of the customer industries such as two wheelers and commercialvehicles. This was possible through increase in business share with existing customersmore supplies to industry segments which continued to perform well introduction of newproducts and shades based on identified customer needs and development of new customers.The Company received Special Appreciation Award for Customer Satisfaction from TataHitachi Limited. The Powder Coatings Business continued to perform well through increasein business from new customers and addition of existing customers.

The Company continues to be a leader in Protective Coatings area despite presence of alarge number of competitors including global corporations in this segment. There wasdampening of business in this area particularly in regard to demands from theinfrastructure sector. However the Company's business development efforts helped it tostay on course and add business both in terms of products and customers. The Company'sproduct portfolio helps it to supply to almost all the user industries includinginfrastructure metals oil and power railways steel and OEM.

The Company has entered into Memoranda of Understanding with :

- ROCK PAINT CO. LTD ("ROCK PAINT) of Japan for marketing of automotive refinishpaints in India. The products were launched in the month of May 2017. While the Companyis already present in all areas of automotive paints in India ROCK PAINT offers a widerange of high-quality easy-to-use coatings suited to the diverse needs of today'sauto-refinishmarket. The companies are optimistic that the superior automotive refinishpaints will have considerable demand in the automotive refinish market in India. Thecompanies may discuss establishment of a joint venture in India at a later date. ROCKPAINT is a leading manufacturer of automotive refinishpaints in Japan and is well known inthe industry for the quality and utility of its products.

- Promat International Limited NV of Belgium ("Promat") for cooperation inthe field of passive fire protection and high performance insulation coatings in India andcertain neighbouring territory. The MOU envisages production distribution and supply ofspecialised fire resistant coatings which may range from lightweight and thin films tocement based wet mix products suitable for steel and concrete offering various degrees ofefficiency in fire resistance. Promat and the Company together have considerable strengthin technical expertise product market knowledge and relevant skills and infrastructureand the depth of these attributes are expected to considerably benefit the territory'smarket requirements in fire proof coatings. Promat is a USD 3 billion companyheadquartered in Belgium.

- Chugoku Marine Paints Ltd. of Japan for cooperation and collaboration in the field ofmarine and related industrial paints in India. The MOU envisages joint efforts inmarketing supplying and purchasing marine related industrial paints. Subsequently theparties have a view towards establishing a joint venture company. The companies lookforward to jointly becoming leading players in marine coatings in India. Since itsestablishment in 1917 Chugoku Marine Paints Ltd. have uniquely developed marine paints asa core product and is one of the global leaders in the area.

All the factories of the Company operated at a satisfactory level and provided therequired support to the Businesses. Improvement of productivity and quality relentlessfocus on manufacturing cost and energy efficiency sharing of intelligent practices andbenchmarking them against global standards and total compliance with environment healthand safety standards and norms helped the factories to maintain an almost faultless supplyto the Businesses. All the factories continued to enhance their capabilities by adding newproducts. Standardisation of new products and efficient manufacturing practices were thekey to this success. The declining trend in raw material costs reversed in the year withincreases in certain major raw materials. Crude oil which was USD 40 in the beginning of2016-17 touched USD 55 a barrel at the end of the year. There were resultant effects onall raw materials which are dependent on crude prices. Prices of key raw materials such astitanium dioxide and those required for manufacture of resins (which are the foundation ofsolvent based paints) and emulsions (which are the binders for water based paints)increased substantially impacting the cost of all products across the board. Thisnecessitated some increase in prices of Decorative paints. Exploration of alternatesources for all major raw materials informed and intelligent buying and effectivenegotiation continued to provide savings. The Company recognises that in a competitiveenvironment innovation is the key. The Company continues to strengthen its R & Dfacilities and technological capabilities by adding suitable manpower and new equipmentand interactions with academic institutions. The objective is to build a collaborativeresearch oriented environment in not only the Company's R & D Centre but across themanufacturing and product development centres throughout the Company's operations andbusinesses. The Company's employees participated in international symposiums and seminars.The Vice President R & D received the AkzoNobel Award for Excellence in CoatingsResearch and Promotion granted by the Society for Surface Protective Coatings –India. The Company's R & D scientists also received the second prize in the ResearchCategory from the Indian Paint Association.

FOCUS AND OUTLOOK FOR 2017-18

As mentioned in the section under "Opportunities and Threat" the Governmenthas announced various measures which will provide a fillip to the real estate sectorwhich is expected to maintain a double digit CAGR. Traditionally the paint industry hasbeen influenced by both GDP and IIP – which are likely to perform well. Most of allincreased urbanisation better access to educational facilities and social media aided byinternet and the country's historical and deep founded sense of aesthetics prompt thedemand for well painted houses and environmentally better products.

The Government of India along with its investment promotion agency Invest India arein discussion with around 300 Indian and foreign companies to channelize investments worthUS$ 62 billion which will help create over 1.7 million job opportunities in India. TheUnion Cabinet has approved Rs 10000 crore initial corpus for the Funds for Start-ups(FFS) established in June 2016. This too is likely to generate considerable employment.As a result the demand pull is likely to continue through the year. The Companyrecognises that the pattern will vary across regions and economic strata. The Company willcontinuously innovate to provide solutions which are suited to the needs of market segmentin Decorative and Industrial. It is important to not only train but actually provideopportunities to trained persons to utilise their skills in areas where their expertise isneeded. The Company will try to provide such opportunities in its various programmes underExpress Painting and Prolinks. It will also engage information technology to the fullestpossible extent in managing its business processes.

PROJECTS AND EHS

The Company has commenced commercial production of its paint and putty plants atNaltali Nagaon Assam on 30th March 2017. The plant has an annual capacity of 48000KL/MT of water based paints 24000 KL of solvent based paints 14000 MT of resin and24000 MT of wall putty.

The British Paints Division of the Company has commenced commercial production of itsdistemper and putty manufacturing facility in Nalbari near Guwahati on 29th March 2017with a capacity of 6600 KL / MT and 7200 MT per annum respectively.

Both the plants have the latest environment protection and safety related measures.Finished goods warehouses having Automatic Storage and Retrieval System (ASRS) are on theverge of completion at Jammu and the Beepee Coatings Plant at Vallabh Vidya Nagar. Thenewly constructed Automotive and General Industrial paints plant at Jejuri near Punewith a capacity of 4800 KL/MT per annum commenced production on 27th March 2017.

The Company has set up a processing unit at Vallabh Vidya Nagar Gujarat mainly forprocessing of automotive paints for Berger Nippon

Paint Automotive Coatings Private Limited during the year. The capacity of the plant is2400 KL per annum.

The Company is setting up an emulsion plant with a final capacity of 44160 metrictonnes per annum in Rishra West Bengal in phases. The implementation of the first phasewill be completed in the year 2017-18. At Rishra the Company will also set up its firstplant for producing colourants vital ingredients for manufacturing paints with acapacity of 2640 KL per annum. The plant is expected to start production in early 2018.

EHS practices are continuously improved across different operations. The EHS team isactively working to mitigate the organizational risks associated with theEnvironment-Health-Safety related to all aspects of Company operations. Safeguarding theenvironment protection of people property and health of the workforce is the primaryfocus.

OPPORTUNITIES AND THREATS

India is emerging as one of the fastest growing major economy in the world as per theCentral Statistics Organisation (CSO) and International Monetary Fund (IMF). TheGovernment has forecasted that the economy has grown by 7.1 per cent in FY 2016-17.India's consumer confidence index - at 136 in the fourth quarter of 2016 topped the globallist of countries on the same parameter as a result of consumer sentiment according tomarket research agency Nielsen. Moody's has affirmed the Government of India's statedthat the reform measures will enable the country perform better compared to its peers overthe medium term. India's industry output grew 2.74 per cent year-on-year in January 2017led by a good performance in the capital goods sector which registered a 10.7 per centyear-on-year growth.

India's gross domestic product (GDP) grew by 7 per cent year-on-year inOctober-December 2016 quarter which is the strongest among G-20 countries as perOrganisation for Economic Co-operation and Development (OECD) Economic Survey of India2017. According to IMF World Economic Outlook Update (January 2017) Indian economy isexpected to grow at 7.2 per cent during FY 2016-17 and further accelerate to 7.7 per centduring FY 2017-18. India's labour force is expected to touch 160-170 million by 2020based on rate of population growth increased labour force participation and highereducation enrolment among other factors according to a study by ASSOCHAM and ThoughtArbitrage Research Institute.

A number of initiatives have been undertaken in India to keep it firmly on this ongrowth track fulfilling the ambitions of its people and providing them with the means ofnot only sustenance but also enabling them to foster ambitions for their families. TheIndian population is family and future oriented where education savings and improvementof living standards are given a priority. The aspirations are led by the middle class– which is growing as a percentage of the population. Given a fairly successfulimplementation of GST and numerous schemes which have been initiated including those forproviding affordable housing curbing black money digitalisation of economy Mahatma

Gandhi National Rural Employment Guarantee Act (MGNREGA) Scheme Urban Developmentstrategy formulated by the Government of India for the next 20 years aimed at developmentof rural and urban areas providing housing for the urban poor as an objective amongothers development of 100 smart cities as well as Atal Mission for Rejuvenation and UrbanTransformation (AMRUT) for 500 cities with an outlay of Rs 48000 crore and leap in the Rs50000crorerespectively Indiaispoised to take a significant future. These will beassociated with upsurge in demand for consumer goods including paints.

While this is a major opportunity the business prospect may not be lost on otherplayers both international and within the country. The Company continues to prepareitself for any challenge with superior product line up better services unique solutionsand relentless focus on cost and other factors such as distribution logistics and ITenabled intelligence.

RISKS AND CONCERNS

The Company has devised a risk policy approved by the Business Process and RiskManagement Committee Audit Committee and the Board of Directors. The Policy seeks toidentify risks inherent in the business operations of the Company and lays down themitigation methods which are periodically reviewed and modified in a manner commensuratewith the size and complexity of the business. The Policy can be viewed at the followingweblink : https://www.bergerpaints.com/about-us/risk-management-policy.html Based on thePolicy the Business Process and Risk Management Committee regularly monitors the variousrisks facing the Company discusses the risks involved business processes in detail andsteps taken to mitigate the same covering each of the business processes of the Companyin turn. Demand for paints and for that matter much of the consumer goods depends ongood monsoon and at the time of writing is predicted to be normal while weak El Nioconditions are likely to develop in the second half of 2017. As mentioned earlier therehas been a rise in key raw material prices in the later part of 2017-18. The Companytries to soften their impact through informed buying development of alternate sources andimprovement in formulations. Better distribution of income alleviation of poverty andcreation of employment – both formal and informal will be needed for long termsuccess initiated by the growth in economy. It is expected that the concerns will beaddressed by the social protection measures such as Pradhan Mantri Ujjwala Yojana (PMUY)aimed at providing subsidised LPG to 50 million below the poverty line households housingfor all by 2022 Pradhan Mantri Mudra Bank Yojana (PMMBY) for micro credit loans up to Rs1 million which can be repaid in five to seven years to small business owners and lowpremium state sponsored accident and life insurance schemes.

At the time of writing the Company is preparing itself for smooth implementation ofGST across all its operations. The industry business will depend on the impact of GST inthe short term.

INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY

Your Company is committed to ensure that its operations are carried out within a welldefined internal control framework. Good governance well defined systems and processes avigilantfinancefunction and an independent internal audit function are the foundations ofthe internal control systems. The Company has a well established internal control systemcommensurate with its size and spread with defined guidelines on compliance which enableit to run its factories offices and depots with a reasonable degree of assurance. Thecontrol environment ensures commitment towards integrity and ethical values andindependence of the Board of Directors from the management. The control activitiesincorporate among others continuous monitoring routine reporting checks and balancespurchase policies authorization and delegation procedures audits including complianceaudits which are periodically reviewed by the Audit Committee and the Business Processand Risk Management Committee. The Internal Audit Department maintains a regularsurveillance over the entire operations. The data generated is shared with the Board andvarious committees evaluated and corrected and recommendations are implemented.

The Company's Enterprise Resource Management Systems with Standard Operating Proceduresbased on work flows and process flow charts also provide a comfort in this regard. TheCompany is fully geared to implement any statutory recommendation which may be made inthis regard.

INDIAN ACCOUNTING STANDARDS (Ind AS) – IFRS Converged Standards

The Company has adopted Indian Accounting Standards (Ind AS) with effect from 1stApril 2016 pursuant to the notification of Companies (Indian Accounting Standards)Rules 2015 issued by the Ministry of Corporate Affairs. Previous years' figures have beenrestated and audited by the Company's statutory auditors.

The principal adjustments have been detailed in Note 39 First time adoption of Ind ASin the financial statements.

ADEQUACY OF INTERNAL FINANCIAL CONTROLS RELATED TO FINANCIAL STATEMENTS

The Company has policies and procedures for ensuring orderly and efficient conduct ofits business including adherence to the Company's policies the safeguarding of itsassets the prevention and detention of frauds and errors the accuracy and completenessof accounting records and the timely preparation of reliable financial disclosures whichare reviewed by the Board and Audit Committee from time to time.

BONUS ISSUE

Pursuant to the approval accorded by the members by postal ballot on 11th July 2016277391165 equity shares of Rs 1/- each were allotted on 19th July 2016 as fully paidup bonus shares in proportion of 2 bonus shares for every existing 5 equity shares held bythe Members of the Company on the Record Date i.e. 18th July 2016. The Authorised Capitalof the Company was increased to an amount of Rs 1100000000 (Rupees One Hundred and TenCrores) and necessary amendments were made in Clause V of Memorandum of Association of theCompany and Article 3 of the Articles of Association of the Company to reflect theincreased capital.

EMPLOYEE STOCK OPTION SCHEME

Your Company had framed an Employee Stock Option (ESOP) Scheme ("the 1999Scheme") for its employees and some of its Directors. The Board had formulated theESOP Scheme in accordance with the SEBI (Employee Stock Option Scheme and Employee StockPurchase Scheme) Guidelines 1999 and the shareholders had approved the ESOP scheme at theAnnual General Meeting held on 29th July 2010 to issue shares not exceeding 5% of thepaid up capital of the Company as on 31st March 2010. In practice ESOP is granted toemployees and whole time Directors. Pursuant to the 1999 Scheme no fresh options weregranted to employees during the year under review. During the year the Company allotted83942 shares to 97 employees on their exercising earlier grants which includes 3044equity shares to Mr. Abhijit Roy 2342 equity shares to Mr. Srijit Dasgupta and1562 equity shares to Mr. Aniruddha Sen. The equity shares as mentioned herein above areof face value of Rs 1/- (Rupee one only) each fully paid.

For the purpose of making a fair and reasonable adjustment for all vested stockoptions on account of the bonus issue mentioned above the Compensation & Nomination& Remuneration Committee on 21st November 2016 granted 34653 options to eligibleemployees in the proportion of two options for every five options held on record date on18th July 2016. Out of these 33628 options were exercised by 97 employees and theequity shares of face value Rs 1/- each were allotted to them on 3rd February 2017. Thisincludes 1218 equity shares to Mr. Abhijit Roy 937 equity shares to Mr. Srijit Dasguptaand 625 equity shares to Mr. Aniruddha Sen of face value of Rs 1/- (Rupee one only) eachfully paid.

The Company re-introduced the ESOP Scheme ("the 2016 Scheme") aligned withthe Securities and Exchange Board of India (Share Based in accordance EmployeeBenefits)with the approval of the members granted at the Annual General Meeting held on 3rd August2016 to reward eligible employees. Pursuant to the 2016 Scheme the RemunerationCommittee had approved grant of 140811 options convertible into equity shares to 138employees. One-third of the options granted to the employees will vest on 8th November2017 2018 and 2019 each year which they are entitled to exercise on or after the saiddates as per the 2016 Scheme. This includes allotment of 3600 equity shares to Mr.Abhijit Roy 2769 equity shares to Mr. Srijit Dasgupta and 1848 equity shares to Mr.Aniruddha Sen.

The information required to be disclosed in terms of the provisions of the SEBI (ShareBased Employee Benefits) enclosed as per Annexure A to this report. Please alsovisit the weblink https://www.bergerpaints.com/investors/esop-disclosure. html fordisclosures under Regulation 14 of the aforesaid Regulations.

HUMAN RESOURCES

The Company believes that people are its most valuable assets. To this extent theCompany provides a fair and inclusive environment that promotes new ideas respect for theindividual and equal opportunity to succeed. Experience merit and performance leadershipabilities strategic vision collaborative mindset teamwork and result orientation areactively promoted and rewarded through an objective appraisal process. Identifying andrecruitment of appropriate candidates and retention of employees continue to be thegreatest challenges faced by the Indian industry. Apart from the usual methods such ascampus interview and taking services of placement consultants the Company adoptsinnovative processes which include referral schemes. Training including on the jobtraining is given the highest priority and the Company measures the time and efficacy ofall kinds of training provided to the employees which includes e-learning modules. Being amulticultural and multi-location company diversity is encouraged.

The number of people employed as on 31st March 2017 was 2993 (31st March 2016:2808). A strike was called by the workers' union at the Company's Goa factory on 10thMay 2017. At the time of writing the Goa factory is operating at a reduced scale and thestrike is not likely to significantly affect the Company's operations.

Other than the above the Industrial Relations were satisfactory during the year.

Your Company wishes to put on record its deep appreciation of the co-operation extendedand efforts made by all employees.

SEXUAL HARASSMENT POLICY

Your Company has also framed a policy on Sexual Harassment of Women at workplace whichcommits to provide a workplace that is free from all forms of discrimination includingsexual harassment. The Policy can be viewed at the following weblink :www.bergerpaints.com/ about-us/sexual-harassment-policy.html.

As per the Policy any complaint received shall be forwarded to an Internal ComplaintCommittee ("ICC") formed under the Policy for redressal. The investigation shallbe carried out by ICC constituted for this purpose. There was no such complaint during theyear. ICC comprises the following members as appointed by the Board:

1. Mrs. Rishma Kaur (The Presiding Officer)

2. Mr. Srijit Dasgupta

3. Mr. Aniruddha Sen

4. Ms. Suparna Mitra (NGO representative).

SUBSIDIARY AND JOINT VENTURES

Your Company has the following 4 wholly-owned subsidiaries :- (i) Beepee CoatingsPrivate Limited ("Beepee Coatings") in Gujarat; (ii) Berger Jenson &Nicholson (Nepal) Private Limited ("BJN") in Nepal; (iii) Berger Paints (Cyprus)Limited ("Berger Cyprus") in Cyprus; (iv) Lusako Trading Limited ("LusakoTrading") in Cyprus.

The following companies are wholly-owned subsidiaries of the Company's above namedsubsidiaries: - (i) BJN Paints India Limited wholly-owned subsidiary of Beepee Coatings;(ii) Bolix S.A. Poland wholly-owned subsidiary of Lusako Trading; (iii) Berger PaintsOverseas Limited ("BPOL") Russia - wholly-owned subsidiary of Berger Cyprus.Bolix S.A. Poland has 4 subsidiaries viz.: Bolix UKRAINA sp z.o.o. Ukraine BUILD-TRADEBIS sp. z o.o. Poland Soltherm External Insulations Limited UK and Soltherm InsulationsThermique Exterieure France.

The statement relatingtotheabovecompaniesasspecifiedin Sub-section (3) of Section 129of the Companies Act 2013 is attached to the Report and Accounts of the Company.

BJN-India is a wholly owned step down subsidiary of the Company. It is engaged in thebusiness of manufacturing and processing architectural paints and coatings which it hadacquired from Sherwin Williams Paints India Private Limited with effect from the close ofbusiness hours on 31st March 2013. The Boards of BJN-India and Berger Paints IndiaLimited consider that the business of BJN-India can now be combined with and carried on inconjunction with the business of the Company (i.e. Berger Paints India Limited) moreconveniently and efficiently. Accordingly the Boards of BJN-India and the Company attheir respective meetings held in April 2017 have approved a Scheme of Amalgamation ofBJN-India as Transferor Company with Berger Paints India Limited as Transferee Companypursuant to the provisions of Sections 230 and 232 of the Companies Act 2013. Theappointed date for the purpose is 1st April 2017 ("Appointed Date"). Theproposed amalgamation will enable appropriate consolidation of the activities of BJN Indiaand the Company with pooling and more efficient utilization of their resources greatereconomies of scale reduction in overheads and other expenses and improvement in variousoperating parameters.

The aforesaid Scheme is conditional upon and subject to the approval by the requisitemajority of the members of BJN-India and sanction of the same by the Hon'ble NationalCompany Law Tribunal at Kolkata. Accordingly it is provided that the aforesaid Schemealthough operative from the Appointed Date shall become effective upon filing ofcertified copies of the aforesaid order of the Hon'ble NCLT sanctioning the aforesaidScheme as and when received with the Registrar of Companies by BJN-India and BergerPaints India Limited. During the year under review BJN-Nepal showed robust performancewith a turnover of Rs 135.32 crores.

Bolix S.A. also posted encouraging results with a turnover of Rs 190.22 crores.

NBCC (India) Ltd. and Bolix SA of Poland have signed a Memorandum of BusinessExploration (MoBE) for jointly promoting developing and adopting External ThermalInsulation and Composite Systems (ETICS) Solutions Technology in construction of highlyenergy efficient green/smart buildings in India. ETICS Technology is a robust and longlasting building energy performance solution developed to current standards over the last40 years. It has proven to be highly cost effective safe for inhabitants living ininsulated houses and hugely beneficial for the environment. This technology is already inuse in a big way in European countries and the experience suggests that officeshospitals hotels schools etc. built in those countries by using this technology hassubstantially contributed towards reduction in energy consumption and carbon emission bothin cold and hot climatic conditions. ETICS Technology conforms to a set of globallyacknowledged standards which also take into account the procedures and installationtechniques related with application. These standards were historically established inEurope and now being taken to all parts of the globe.

The system contains components including the basic insulation material (EPS - orExpanded Polystyrene Foam or Mineral Wool) layers of adhesive mechanical fasteners areinforcing layer with fibre glass mesh reinforcements and accessories primers andplasters. Addition of the system to the wall of a structure can create a major impacttowards reducing the amount of electricity needed for cooling/heating the interior of thebuilding.

The benefits of using ETICS solution include:

• Electricity consumption reduction (even up to 35% in moderate climates) forcooling/heating emission and other pollutants arising out of the generation of electricityin

Environment protection effect due to the reduction of CO2

thermal power plants/diesel generating sets

• Improvement of the aesthetics of the building faade

• Increased comfort improved microclimate.

• Extended life of the building and increased weather resistance.

• ETICS installations typically do not need any cement plastering beforeapplication of the installation envelope and accordingly this cost too can be saved.

• Where the source of electricity is diesel generating sets this also impliessavings of foreign exchange against crude oil imports.

• ETICS reduces the fluctuation of surface wall temperatures leading to fewertendencies to form cracks.

It reduces the capital cost of HVAC (Heating Ventilation and Air-conditioning) costsby downsizing the initial requirement. The MoBE between NBCC and Bolix shall facilitateimport of this technology and its application in India and its neighbouring countriesthrough NBCC which is a Govt. of India Navratna Enterprise and a leader in IndianConstruction Industry. The performance of Beepee Coatings was satisfactory with aturnover of Rs 24.9 crores.

Berger Paints Cyprus Limited is a special purpose vehicle for the purpose of makinginvestments in your Company's interests abroad. So is Lusako Trading Limited.

The turnover of Berger Paints Overseas Limited (BPOL) was Rs 5.36 crores.

Berger Becker Coatings Private Limited the Company's joint venture with BeckerIndustrifarg Sweden showed impressive performance with turnover of Rs 294.06 crores. anda net profit ofRs 14.56 crores.

BNB Coatings India Private Limited (BNB) renamed as "Berger Nippon PaintAutomotive Coatings Private Limited" ("BNPA") the Company's joint venturewith Nippon Paint Automotive Coatings Co. Ltd. of Japan (NPAU) posted turnover of Rs106.11 crores and total comprehensive income of Rs 6.21 crores.

Pursuant to Regulation 16(c) of SEBI (Listing Obligation and Disclosure Requirements)Regulations 2015 a material subsidiary in a year shall be a subsidiary whose income ornet worth exceeds 20% of the consolidated income or net worth respectively of the Companyand its subsidiaries in the immediately preceding accounting year. At present there isno such material subsidiary of the Company within the meaning of the above regulation.

CONSOLIDATED FINANCIAL STATEMENTS

The duly audited Consolidated Financial Statements as required under the AccountingStandards 21 and 27 provisions of Regulation 36 of Securities and Exchange Board of India(Listing Obligations and Disclosure Requirements) Regulations 2015 and Section 136 of theCompanies Act 2013 have been prepared after considering the audited financial statementsof your Company's subsidiaries and appear in the Annual Report of the Company for the year2016-17.

CORPORATE GOVERNANCE

Your Company re-affirms its commitment to the standards of corporate governance. ThisAnnual Report carries a Section on Corporate Governance and benchmarks your Company withthe provisions of Regulations 17 to 27 clauses (b) to (i) of sub-regulation (2) ofregulation 46 and Para C D and E of Schedule V of Securities and Exchange Board of India(Listing Obligations and Disclosure Requirements) Regulations 2015 (Annexures-B &C).

During the year under review your Company has carried out the Secretarial Auditpursuant to Section 204 of the Companies Act 2013. The Secretarial Audit Report isattached as Annexure 4 to this Report.

TECHNOLOGY AGREEMENTS

Your Company has Technology Agreements in the area of Automotive Coatings.

FIXED DEPOSIT

The Company had earlier discontinued acceptance of fixed deposits since 2002 andaccordingly no fresh deposit was accepted during the year. As per the provisions ofSection 125 of the Companies Act 2013 all unclaimed deposits have been transferred toInvestor Education and Protection (IEPF) Account.

EXTRACT OF ANNUAL RETURN

Pursuant to Section 92 (3) of the Companies Act 2013 extract of Annual Return isattached as Annexure 1 to the Directors' Report.

MEETINGS OF THE BOARD OF DIRECTORS AND ATTENDANCE THEREAT

The details of meetings of the Board and attendance of Directors are given in theReport on Corporate Governance – Annexure B.

A. AUDIT COMMITTEE

The details of Audit Committee are given in the Report on Corporate Governance – AnnexureB. The Board has accepted and implemented all recommendations of the Audit Committee.

VIGIL MECHANISM

Pursuant to Section 177 of the Companies Act 2013 the Company alongwith with itssubsidiaries have complied with the laws and the codes of conduct applicable to them andhave ensured that the business is conducted with integrity and that the Company'sfinancial information flow is accurate. In case of any violation or complaint a reportmay be made under the Vigil Mechanism system established by the Company. The said policyis uploaded on the Company's website and can be accessed at: https://www.bergerpaints.com/about-us/whistleblower-policy.html.

B. CORPORATE SOCIAL RESPONSIBILITY COMMITTEE

The Company has constituted a Corporate Social Responsibility Committee in accordancewith the terms of reference of Section 135 of the Companies Act 2013. The details of theCommittee are given in the Report on Corporate Governance Annexure B. The requireddetails as specified in Companies CSR Policy Rules 2014 is given inAnnexure 2.

C. COMPENSATION & NOMINATION & REMUNERATION COMMITTEE

The details of the Committee are given in the Report on Corporate GovernanceAnnexure B.

D. SHAREHOLDERS' COMMITTEES

The details of the Committees are given in the Report on Corporate Governance AnnexureB.

BUSINESS RESPONSIBILITY REPORT

SEBI has made it mandatory to publish a Business Responsibility Report (BRR) by the top500 companies based on market capitalization in their Annual Report in terms of Regulation34(2)(f) of the Listing Regulations with the stock exchanges. The Company accordinglycomplied with the requirement and had framed a Business Responsibility Policy in line withthe suggested framework as provided by SEBI based on the National Voluntary Guidelines onSocial Environmental and Economic Responsibilities of Businesses published by theMinistry of Corporate Affairs. The said Policy was adopted at the Board Meeting held on10th February 2017 and can be viewed at https://www.bergerpaints.com/about-us/business-responsibility-policy.html. Mr. Abhijit RoyManaging Director and CEO has been nominated as the director responsible for implementingthe Business Responsibility Policy and Mr. Aniruddha Sen Senior Vice President andCompany  Secretary has been nominated as the Business Responsibility Head. Asrequired the BRR for 2016-17 is attached to this report as

Annexure 6.

DIRECTORS' RESPONSIBILITY STATEMENT

Your Directors wish to inform that the Audited Accounts containing Financial Statementsfor the financial year ended 31st March 2017 are in full conformity with the requirementsof the Act. They believe that the Financial Statements reflect fairly the form andsubstance of transactions carried out during the year and reasonably present yourCompany's financial condition and results of operations. Your Directors further confirmthat in preparation of the Annual Accounts:

i) The applicable accounting standards have been followed and wherever required properexplanations relating to material departures have been given

ii) The Directors have 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 or loss of the Company for that period

iii) Proper and sufficientcare has been taken for the maintenance of adequateaccounting records in accordance with the provisions of the

Act for safeguarding the assets of the Company and for preventing and detecting fraudand other irregularities

iv) The Accounts have been prepared on a going concern basis.

v) The Directors have laid down internal financial controls to be followed by theCompany and that such internal financial controls are adequate and operating effectively.

vi) The Directors have devised proper systems to ensure proper compliance with theprovisions of all applicable laws and that such systems were adequate and operatingeffectively.

STATEMENT OF DECLARATION BY INDEPENDENT DIRECTORS

The following are the Independent Directors of your Company:-

1) Mr. Dhirendra Swarup;

2) Mr. Gopal Krishna Pillai;

3) Mr. Pulak Chandan Prasad;

4) Mr. Kamal Ranjan Das;

5) Mr. Naresh Gujral.

The Company has received declarations from all the Independent Directors confirmingthat they meet the criteria for independence in the required format under the CompaniesAct 2013.

POLICY ON APPOINTMENT AND REMUNERATION OF DIRECTORS KEY MANAGERIAL PERSONNEL AND OTHEREMPLOYEES

The Company has formulated a Remuneration Policy pursuant to the provisions of Section178 and other applicable provisions of the Companies Act 2013 and Rules thereof.

The Policy is available at the following weblink :www.bergerpaints.com/about-us/remuneration-policy.html.

QUALIFICATION OR RESERVATIONS IN STATUTORY AUDIT REPORTS

Your Board has the pleasure in confirming that no qualification reservation adverseremark or disclaimer has been made by the Statutory

Auditors or Company Secretary in Practice in their Audit Reports issued to the Company.

LOANS COMMITMENTS AND CONTINGENCIES INVESTMENTS

Particulars of loans given investments made guarantees given and securities providedif any along with the purpose for which the loan or guarantee or security is proposed tobe utilised by the recipient are provided in the standalone financial statement (pleaserefer Notes 5a 8a and 33 of the standalone financial statement).

RELATED PARTY TRANSACTIONS

The Company has always been committed to good corporate governance practices includingin matters relating to Related Party Transactions (RPTs). Endeavour is consistently madeto have only arm's length transactions with all parties including Related Parties. TheBoard of

Directors of the Company has adopted the Related Party Transaction policy regardingmateriality of related party transactions and also on dealings with Related Parties interms of Regulation 23 of Securities and Exchange Board of India (Listing Obligations andDisclosure Requirements) Regulations 2015 with Stock Exchanges and Section 188 of theCompanies Act 2013. The policy is available at the following weblink :https://www.bergerpaints.com/about-us/rpt-policy.html

All related party transactions have been carried out at arms' length basis in theordinary course of business. However the transfer of "the Business" to BNPA wasnot in the ordinary course and was therefore approved by the Board of Directors and theAudit Committee.

The transaction did not require approval of the shareholders under section 188 of theCompanies Act 2013 read with the provision of the Companies (Meetings of Board and itsPowers) Rules 2014 since the amount involved in the sale of goods was much lower than thethreshold limits mentioned in the said Rules. There is no material related partytransaction i.e. transaction exceeding 10% of the annual consolidated turnover as per thelast audited financial statements entered during the year by your Company andaccordingly the disclosure of Related Party Transaction as required under section134(3)(h) of the Companies Act. 2013 in Form AOC-2 is not applicable.

MATERIALITY POLICY

As per the SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 theCompany has framed a policy for determination of materiality based on criteria specifiedin the regulations. The Policy is available at the followingweblink:-https://www.bergerpaints.com/ about-us/policy-determine-material-events.html.

POLICY FOR PRESERVATION OF DOCUMENTS

As per Regulation 9 of SEBI (Listing Obligations and Disclosures requirements)Regulations 2015 the Company has framed a policy for Preservation of Documents based oncriteria specified in the said Regulations. The Policy is available at the followingweblink:-https:// www.bergerpaints.com/about-us/policy-preservation-documents.html.

SIGNIFICANT CHANGES

During the Financial Year 2016-17 no significant change has taken place which couldhave an impact over the financialposition of the Company.

TRANSFER TO RESERVE AND DIVIDEND

The total comprehensive income of the Company is Rs 445.25 crores for the year 2016-17.

Your Directors recommend a dividend of Rs 1.75 per share i.e. @ 175% for the year underreview. This if approved will absorb an amount of Rs 169.93 crores (compared to Rs114.43 crores in the previous year) net of Dividend Distribution Tax based on thecurrent paid-up capital of the Company and will be paid to those members holding shares inthe physical mode whose names appear in the Register of Members as on 4th August 2017 andfor shares held in electronicformtothosewhosenamesappearinthelistofbeneficialholdersfurnished by respective Depositories as at the end of business hours on 28th July 2017.

In accordance with Regulation 43A of the SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015 the Company has formulated a Dividend DistributionPolicy. The Policy is available at the following weblink:-https://www.bergerpaints.com/about-us/ dividend-distribution-policy.html.

In terms of the provisions of Section 124 of the Companies Act 2013 your Company hastransferred an amount of Rs 1650033 to the

Investor Education and Protection Fund in respect of dividend amounts lying unclaimed/ unpaid for more than seven years from the date they became due i.e. for the year ended31st March 2008.

Pursuant to the provisions of the Investor Education and Protection Fund (Uploading ofinformation regarding unpaid and unclaimed amounts lying with Companies) Rules 2012 theCompany has filed the necessary form and uploaded the details of unclaimed amounts lyingwith the Company as on 7th November 2016 with the Ministry of Corporate Affairs.

Conservation of Energy & Technology Absorption

Information pursuant to Section 134(3) (m) of the Companies Act 2013 read with theCompanies (Accounts) Rules 2014 is annexed to Annexure 5 of this report.

Particulars of Employees

In terms of the provisions of Section 134 read with Rule 5(2) of Companies (Appointmentand Remuneration of Managerial Personnel) Rules 2014 particulars of certain category ofemployees have been set out in Annexure 3 of this report.

STATEMENT OF EVALUATION OF BOARD OF DIRECTORS AND COMMITTEES THEREOF

The Company follows the provisions of the Companies Act 2013 and Securities &Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations2015 ("Listing Regulations") in relation to Directors' appointmentsqualifications and independence. Pursuant to Section 178(3) of the Companies Act 2013 andRegulation 17(10) of Listing Regulations the Compensation and Nomination andRemuneration Committee is entrusted with responsibility of formulatingcriteriafordeterminingqualificationspositive attributes and independence of a Director.The same is available at the following link:https:/bergerpaints.com/about-us/criteria-policy.html.

The Compensation and Nomination and Remuneration Committee have laid down the followingcriteria for evaluating the performance of the Board of Directors. The same is availableat the following link: https:/bergerpaints.com/about-us/criteria-policy.html.

SIGNIFICANT AND MATERIAL ORDER PASSED BY REGULATORS OR COURTS OR TRIBUNALS IMPACTINGTHE GOING CONCERN STATUS AND OPERATIONS OF THE COMPANY

Pursuant to Section 134(3)(q) of the Companies Act 2013 read with Companies (Accounts)Rules 2014 it is stated that no material order has been passed by any regulator courtor tribunal impacting the Company's operations and its going concern status during theFinancial Year 2016-17.

DIRECTORS

Pursuant to Article 112 of the Articles of Association of the Company Mr. GurbachanSingh Dhingra retires by rotation and being eligible offers himself for re-appointment.

Mr. Gurbachan Singh Dhingra is a graduate from Delhi University and an industrialistpromoter of the Company and the Vice-Chairman of the Board of Directors of the Company. Hehas considerable experience in paint and related industries particularly their technicalaspects.

Structure of the Board of Directors

Name of Director Non-executive Executive Independent Lady
Mr. Kuldip Singh Dhingra Y N N N
Mr. Gurbachan Singh Dhingra Y N N N
Mr. Abhijit Roy N Y N N
Mrs. Rishma Kaur N Y N Y
Mr. Kanwardip Singh Dhingra N Y N N
Mr. Kamal Ranjan Das Y N Y N
Mr. Naresh Gujral Y N Y N
Mr. Gopal Krishna Pillai Y N Y N
Mr. Pulak Chandan Prasad Y N Y N
Mr. Dhirendra Swarup Y N Y N

FAMILIARISATION PROGRAMME OF INDEPENDENT DIRECTORS

The Company believes that the best training is imparted when dealing with actual rolesand responsibilities on the job. To this extent the Company arranges detailedpresentation by Business and Functional Heads on various aspects including the businessenvironment economy performance of the Company industry scenario sales and marketingproduction raw materials research and development financial controls the Company'sstrategy etc. Visits to factories are also undertaken from time to time. This can be seenat the following weblink :https://www.bergerpaints.com/about-us/familiarization-program.html.

INFORMATION AS TO REMUNERATION OF DIRECTORS AND EMPLOYEES

Pursuant to Section 197 of the Companies Act 2013 read with Companies (Appointment andRemuneration of Managerial Personnel) Rules 2014 the following disclosures are made:-

1) Ratio of remuneration of Directors / KMP to the median remuneration of theemployees:

Name of Director / KMP Remuneration received (Rs) Ratio as to that of the median employee Percentage increase in remuneration
Mr. Kuldip Singh Dhingra 1000000 2.02:1 0
Mr. Gurbachan Singh Dhingra 1000000 2.02:1 0
Mr. Abhijit Roy 21049348* 42.56:1 26.62
Mr. Kanwardip Singh Dhingra 2647855 5.35:1 13.28
Mrs. Rishma Kaur 2658265 5.37:1 13.03
Mr. Kamal Ranjan Das 275000 0.56:1 10
Mr. Pulak Chandan Prasad - - -
Mr. Naresh Gujral 660000 1.33:1 10
Mr. Dhirendra Swarup 660000 1.33:1 10
Mr. Gopal Krishna Pillai 660000 1.33:1 10
Mr. Srijit Dasgupta 12125275* 24.52:1 23.26
Mr. Aniruddha Sen 8295013* 16.77:1 13.31

*Remuneration does not include value of ESOP's granted.

Note – The median employee remuneration for 2016-17 is Rs 494560 p.a.

2) Percentage (%) increase in remuneration during the Financial year 2016-17 :- Pleasesee (1) above.

3) Percentage (%) increase in the median remuneration of employees during the Financialyear 2016-17 :- 3.53%

4) Number of permanent employees on the rolls of the Company as on 31st March 20172993

5) Average percentile increase already made in the salaries of employees other than themanagerial personnel in the last financial year and its comparison with the percentileincrease in the managerial remuneration and justification thereof and point out if thereare any exceptional circumstances for increase in the managerial remuneration The averagepercentile increase of employee was 16.74% as compared to a average percentile increase of23.65% of managerial remuneration. The increase of managerial remuneration is based ongrowth criteria.

6) Pursuant to the requirement of Section 197(14) the following disclosure is made inrespect to remuneration received by Directors:-

Name Nature of Transaction Amount (Rs)
Mrs. Rishma Kaur Director and National Consultancy fees received from
Business Development Manager - Retail and also a Director in U.K.Paints India Private Limited (Holding Company) U.K.Paints India Private Limited for consultancy rendered to U.K.Paints India Private Limited 33 Lakhs
Mr. Kanwardip Singh Dhingra Director and National Business Development Manager-Industrial and also a Director in U.K.Paints India Private Limited (Holding Company) Consultancy fees received from U.K.Paints India Private Limited for consultancy rendered to U.K.Paints India Private Limited 27 Lakhs

7) Affirmation

It is hereby affirmed by the Chairperson of the Company that the remuneration paid toall the employees Directors and Key Managerial Personnel of the Company during theFinancial Year 2016-17 are as per the Remuneration policy framed by the Compensation andNomination and Remuneration Committee of the Company.

LISTING WITH STOCK EXCHANGES

Your Company is listed with The Calcutta Stock Exchange Limited BSE Limited andNational Stock Exchange of India Limited and the Company has paid the listing fees to eachof the Exchanges. As per Regulation 109(2) of the SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015 every issuer or the issuing company which has previouslyentered into agreement(s) with a recognised stock exchange to list its securities shallexecute a fresh listing agreement with such stock exchange within six months of the dateof notification of Securities and Exchange Board of India (Listing Obligations andDisclosure Requirements) Regulations 2015.The Company executed fresh agreements with thefollowing Stock Exchanges where its shares are listed :-

NSE - On 17th December 2015
BSE - On 4th January 2016
CSE - On 17th February 2016

The addresses of these Stock Exchanges and other information for shareholders are givenin this Annual Report.

COST AUDITORS

The Board of Directors have re-appointed/appointed M/s N. Radhakrishnan & Co. 11ADover Lane Flat B1/34 Kolkata - 700029 for conducting cost audit at the Company'sfactories at Howrah Rishra Goa Puducherry Jejuri at the newly set up plant at Naltaliand Hindupur factory of the Company's British Paints Division and M/s Shome & Banerjee& Co. 2nd Floor 5A Narulla Doctor Lane West Range Kolkata - 700017 for conductingcost audit at its Jammu factory and for the factories of British Paints Division havingtheir factories at Jammu Surajpur and Sikandrabad under Section 148 of the Companies Act2013 read with Companies (Cost Records and Audit) Rules 2014 for the year 2017-18. Thedue date for filing Cost Auditors' report for the year 2015-16 was 30th September 2016.The said reports for the year 2015-16 were filed on 20th October 2016.

STATUTORY AUDITORS

The Statutory Auditors Messrs. S.R. Batliboi & Co. LLP Chartered Accountantswere appointed pursuant to the provisions of Sections 139 142 of the Companies Act 2013and the Rules made thereunder from the conclusion of the 91st Annual General Meeting up tothe conclusion of the Sixth Annual General Meeting to be held after the 91st AnnualGeneral Meeting . This year's notice includes a proposal for ratification of suchappointment.

APPRECIATION

Your Directors place on record their deep appreciation of the assistance and guidanceprovided by the Central Government and the Governments of the States of India itssuppliers technology providers and all other stakeholders. Your Directors thank thefinancial institutions and banks associated with your Company for their support as well.Your Directors also thank the Company's dealers and its customers for their unstintedcommitment and valuable inputs. Your Directors acknowledge the support received from youas shareholders of the Company.

On behalf of the Board of Directors
Kolkata Kuldip Singh Dhingra
Dated: 30th May 2017 Chairman

Annexure A

DISCLOSURES WITH RESPECT TO EMPLOYEES STOCK OPTION SCHEME PURSUANT TO REGULATION 14 OFTHE SECURITIES AND EXCHANGE BOARD OF INDIA (SHARE BASED EMPLOYEE BENEFITS) REGULATIONS2014 AS ON MARCH 31 2017:

There was no material change in the ESOP Schemes. The ESOP Schemes are in compliancewith the regulations.

A) Relevant disclosures in terms of Indian Accounting Standard (Ind AS - 102)under Section 133 of the Companies Act 2013 read with the Companies (Indian AccountingStandards ) Rules 2015.

Members may refer to Note no.31 contained in the Notes to Financial Statements formingpart of Annual Financial Statements for the Financial Year ended on 31st March 2017.

B) Diluted EPS on issue of shares pursuant to all the schemes covered underthe regulations shall be disclosed in accordance with ‘Ind AS- 33'- Earnings perShare' under Section 133 of the Companies Act 2013 read with the Companies (IndianAccounting Standards) Rules 2015.

Diluted EPS before and after extraordinary items for the year ended 31st March 2017 isRs 4.60.

C) Details related to Employee Stock Option Scheme (ESOS) of the Company:

i) Description of each ESOS that existed at any time during the year including thegeneral terms and conditions of each ESOS including:

Particulars Employee Stock Option Scheme 2010 Employee Stock Option Scheme 2016
a) Date of shareholders' approval 29th July 2010 3rd August 2016
b) Total number of options approved under ESOP 17303623 options representing equity shares of a face value of Rs 2/- each i.e 34607246 options representing equity shares of a face value of Rs 1/- each consequent to sub-division of shares from face value of Rs 2/- to Rs 1/- as approved by the shareholders on 30th December 2014. 34678470 options representing equity shares of a face value of Rs 1/- each.
c) Vesting Requirements Options shall vest over a period of 3 years from the date of grant of options as under : a) 33% on first anniversary of Grant Date b) 33% on second anniversary of Grant Date and c) 34% on third anniversary of Grant Date rounded up to whole numbers. Options shall vest over a period of 3 years from the date of grant of options as under : a) 33% on first anniversary of Grant Date b) 33% on second anniversary of Grant Date and c) 34% on third anniversary of Grant Date rounded up to whole numbers. Rs 1
d) Exercise price/Pricing formula Rs 1 (Changed from Rs 2 effective from January 2015 consequent to sub-division of shares from face value of Rs 2/- to Rs 1/- and the number of outstanding options were doubled)
e) Maximum term of options granted 10 years 10 years
f) Source of shares (primary secondary or combination) Primary Primary
g) Variation in terms of options None during the year None during the year

ii) Method used to account for ESOP (Intrinsic or Fair value) : Fair value

iii) Where the Company opts for expensing of the options using the intrinsic value ofthe options the difference between the employee compensation cost so computed and theemployee compensation cost that shall have been recognized if it had used the fair valueof the options shall be disclosed. The impact of this difference on profits and on EPS ofthe Company shall also be disclosed.

Since the Company opts for expensing of the options using fair value so the Company isnot required to disclose impact of any difference arising due to intrinsic value and thefair value on profits and on EPS of the Company.

iv) Option Movement during the year (For each ESOS):

Particulars Employee Stock Option Scheme 2010 Employee Stock Option Scheme 2016
Grant III Grant IV Additional Grant (in lieu of bonus issues from ESOP 2016
ESOP 2010)
No. of options outstanding at the beginning of the period 2224 85452 - -
No. of options granted during the year - - 34653 140811
No. of options forfeited/lapsed during the year - 1172 - 2541
No. of options vested during the year - 84280 34653 -
No. of options exercised during the year (834 options of 834 83108 33628 -
Grant III of ESOP 2010 were vested in F.Y 2015-16 but were exercised during F.Y. 2016-17)
No. of shares arising as a result of exercise of options 834 83108 33628 -
Money realised by exercise of options (INR) if scheme is implemented directly by the Company 834 83108 33628 -
Loan repaid by the Trust during the year from exercise price received N.A N.A N.A N.A
No. of options outstanding at the end of the year 1390 1172 1025 138270
No. of options exercisable at the end of the year 1390 1172 1025 -
v) a. Weighted average exercise prices Rs 1 Rs 1 Rs 1 Rs 1
b. Weighted average fair values Rs 238.99 Rs 237.41 Rs 238.27 Rs 236.35

vi) Employee wise details of options granted to :-

a) Senior managerial personnel :-

Serial no. Senior Management Personnel Designation No. of options granted in 2016-17 Exercise price per option
i. Mr. Abhijit Roy Managing Director & CEO 3600 Rs 1
ii. Mr. Srijit Dasgupta Director- Finance & CFO 2769 Rs 1
iii. Mr. Aniruddha Sen Sr. Vice President & Company Secretary 1848 Rs 1

 

b) Any other employee who receives a grant in any one year of option amounting to 5% or more of options granted during that year None
c) Employees who were granted options during any one year equal to or exceeding 1% of the issued capital (excluding outstanding warrants and conversions) of the Company at the time of grant None

vii) A description of the method and significant assumptions used during the year toestimate the fair value of options including the following information: a) Weightedaverage values of share price exercise price expected volatility expected option lifeexpected dividends risk-free interest rate and any other inputs to the model;

Serial no. Particulars 2016-2017
i. Weighted average risk-free interest rate 6.69%
ii. Weighted average expected life of options 2.50 years
iii. Weighted average expected volatility 26.00%
iv. Weighted average expected dividends over the life of the option 4.37 per options
v. Weighted average share price Rs 242.10 per option
vi. Weighted average exercise price Rs 1 per share

b) Method used and assumptions made to incorporate effects of expected early exercise:Black-Scholes Options Pricing Model.

c) How expected volatility was determined including explanation of the extent to whichexpected volatility was based on historical volatility; Expected volatility is based onthe historical volatility of the Company's share price applicable to the total expectedlife of each option.

d) Whether and how any other features of the option grant were incorporated into themeasurement of fair value such as market condition.

None.

Annexure 3

PARTICULARS OF EMPLOYEES PURSUANT TO SECTION 134(3)(q) OF THE COMPANIES ACT 2013

READ WITH RULE 5(2) & 5(3) OF THE COMPANIES (APPOINTMENT AND REMUNERATION OF

MANAGERIAL PERSONNEL) RULES 2014

Name Designation/ Nature of Duties Remunera- tion (Rs) Nature of employment (whether contractual or other- wise) Qualification Experi- ence (years) Date of com- mencement of employment in the Company Age Previous employment / Position held
A. EMPLOYED THROUGHOUT THE YEAR AND IN RECEIPT OF REMUNERATION AGGREGATING Rs 10200000/- OR MORE
Mr. Abhijit Roy Managing Director & CEO 22011367 - BE (JU) MBA (IIM Banga- lore) B.Sc. (Hons.) 26 17.04.1996 51 L'OREAL India Limited
Mr. Srijit Dasgupta Director- Finance & CFO 12855879 - ACMA CS (Passed Final Exam) 32 01.09.1988 55 Machinery Manufactur- ers Corporation Limited

B. EMPLOYED FOR A PART OF THE YEAR AND IN RECEIPT OF REMUNERATION AGGREGATING Rs850000/- OR MORE PER MONTH - Nil

C. EMPLOYED THROUGHOUT THE YEAR OR PART THEREOF AND IN RECEIPT OF REMUNERATION IN THEYEAR WHICH IN AGGREGATE IS IN EXCESS OF THAT DRAWN BY MANAGING DIRECTOR OR WHOLETIMEDIRECTOR OR MANAGER Nil

Notes :

1. Gross remuneration includes salary commission value of perquisites medicalbenefits and Company's contribution to Provident Superannuation and Gratuity Funds andmarket value of ESOPs granted. Without ESOP the remuneration of Messrs Roy and

Dasgupta are Rs 21049348 and Rs 12125275 respectively.

2. The employee does not hold by himself or along with his spouse and dependentchildren 2% or more of the equity shares in the Company. None of them is a relative ofany Director or Manager of the Company.

"Annexure"

(To the Secretarial Audit Report of M/s. Berger Paints India Limited for the financialyear ended 31/03/2017)

To

The Members

M/s. Berger Paints India Limited Berger House

129 Park Street

Kolkata – 700 017

Our Secretarial Audit Report for the financial year ended 31/03/2017 of even date is tobe read along with this

1. Maintenance of secretarial record is the responsibility of the management of theCompany. Our responsibility is limited to expressing an opinion on existence of adequateboard process and compliance management system commensurate to the size of the Companybased on the secretarial records as shown to us during the said audit and also based onthe information furnished to us by the officers and agents of the Company during the saidaudit.

2. We have followed the audit practices and processes as were appropriate to the bestof our understanding to obtain reasonable assurance about the correctness of the contentsof the secretarial records. The verification was done on test basis to check as to whethercorrect factsarereflectedin secretarial records. We believe that the processes andpractices we followed provide a reasonable basis for our opinion.

3. We have not verified the correctness and appropriateness of financial records andbooks of accounts of the Company.

4. Wherever required we have obtained the management representation about thecompliance of laws rules and regulations and happening of events etc. and we have reliedon such representation in forming our opinion.

5. The compliance of the provisions of corporate and other applicable laws rulesregulations standards is the responsibility of management. Our examination was limited tothe verification of compliance procedures on test basis. We would not be liable for anybusiness decision or any consequences arising thereof made on the basis of our report.

6. The Secretarial Audit Report is neither an assurance as to the future viability ofthe Company nor oftheefficacyor effectiveness or accuracy with which the management hasconducted the affairs of the Company.

For ANJAN KUMAR ROY & CO.
Company Secretaries
ANJAN KUMAR ROY
Proprietor
Place : Kolkata FCS No. 5684
Date : 30th May 2017 CP. No. 4557

Annexure 5

ANNEXURE TO DIRECTORS' REPORT PURSUANT TO SECTION 134(3)(m) OF THE COMPANIES ACT 2013READ WITH RULE 8(3) OF COMPANIES (ACCOUNTS) RULES 2014

A) CONSERVATION OF ENERGY :

1) The steps taken or impact on conservation of energy :

i. Usage of alternative components in ball mills to reduce energy consumption

ii. Usage of timers in ball mills dispersers and other energy efficient equipment toreduce energy consumption

iii. Usage of translucent roof sheets at the plants

iv. Installation of a air compressor which is appropriate for production demand

v. Usage of timers

2) Energy conservation measures for plant & township lighting and alternativeenergy usage :

i. Replacement of high power consuming conventional lights with LED Lights

ii. Installation of solid fuel fired thermic fluid heater

3) Capital investment of energy conservation equipment :

Rs 4.65 crores

Benefits derived as a result of the above efforts in the year 2015 :

i. Reduction in specific power consumption along with specific fuelconsumption leadingto reduction in manufacturing cost.

ii. Increase in productivity & operational efficiency.

iii. Restriction of emissions.

B) TECHNOLOGY ABSORPTION

I. Research and Development (R&D)

1) Specific areas in which R&D carried out by the company:

• Development of new products and upgradation of existing products

Development of new resins and emulsions.

Reformulation for cost optimisation without compromising quality

Development of eco friendly products

Collaborative work with academic institutes and vendors

2) Benefits derived out of the above work :

Development of new products for different applications:

Decorative Products

• Premium Floor Coating for walk ways driveways & parking areas

High durable exterior emulsion

Top-end low VOC Luxury Emulsion paint for interior

Damp-stop for water proofing solution

Exterior painting system for affordable housing

Expansion in Illusion range of products

• Universal colorants for decorative coating

Wood Coatings :

• Water Based wood putty

• Solvent based wood stainers for wood finishes

Auto & GI

• Common painting system for plastics & metals (Two-Wheeler)

Metallic matt finish for two-wheelers

Anti-dust clear

Protective Coatings

Top Coat with long service life

• Painting system for transformers

Water based PU self-leveling floor coating

• Painting system for corrosive waste-water treatment plant

3) Future Plan of Action :

New products for retail protective coatings and automotive and general industrialsegments including premium emulsion low VOC paints and water based systems in Industrial.

4) Expenditure on R&D :

(Rs in Lakhs)
Capital Expenditure 351.12
Recurring Expenditure 1299.20
Total Expenditure 1650.32
Total R&D expenditure as a percentage of total turnover 0.36%

II. Technology Absorption Adaptation and Innovation:

(a) Efforts in brief made towards technology absorption adaptation & innovation:

• New products for specific OEM customer through collaborators' technology.

• Products of Powder Coating offered to General Industrial & other specificcustomers through absorption of collaborators' technology.

• Technology development with scientific and educationalinstitutionsinthecountry.

(b) Benefits derived as a result of the above efforts e.g. product improvement costreduction product development import substitution etc.

• Introduction of several new products in the area of Automotive Powder CoatingProtective Coating & Architectural Coating.

(c) Technology Imported during the last 5 years:

• None

On behalf of the Board of Directors
Kolkata Kuldip Singh Dhingra
Dated : 30th May 2017 Chairman

Annexure 6

Business responsiBility report for the financial year 2016-17

[As per Regulation 34(2)(f) of the Securities and Exchange Board of India (ListingObligation and Disclosure Requirements) Regulations 2015]

introduction

Pursuant to Regulation 34(2)(f) of SEBI (LODR) Regulations 2015 top 500 companiesbased on market capitalization as per NSE/BSE as on the 31st March of every financial yearare required to present as a part of the Annual Report a "Business ResponsibilityReport (BRR)". The following is the first BRR of your Company.

Section a: General information about the company

1. Corporate Identity Number (CIN) of the Company : L51434WB1923PLC004793
2. Name of the Company : BERGER PAINTS INDIA LIMITED
3. Registered address : Berger House 129 Park Street Kolkata - 700017
4. Website : www.bergerpaints.com
5. E-mail id : rajibde@bergerindia.com (Nodal Officer)
6. Financial Year reported : 2016-17
7. Sector(s) that the Company is engaged in (industrial activity code-wise) :

 

Group Description
2022 Manufacture of paints varnishes enamels or lacquers
2011 Manufacture of organic and inorganic chemical compounds

8. List three key products/services that the Company manufactures/provides (asin balance sheet) i. Manufacture of decorative (architectural) paints ii.Manufacture of automotive paints and industrial paints iii. Manufacture of protectivecoatings

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

Number of National Locations – a) Manufacturing Plants – 13* b) Sales Depots– 156* c) Registered office & Head office - Berger House 129 Park StreetKolkata - 700017

* includes British Paints division units

10. Markets served by the Company Local - India.

Section B: Financial Details of the company

1. Paid up Capital (INR) - Rs 97.10 crores (as on 31.03.2017)
2. Total turnover (INR) - Rs 4608.53 crores (2016-17)
3. Total profit after taxes (INR) - Rs 446.45 crores (2016-17)

4. Total spending on Corporate Social Responsibility (CSR) as percentage of profitafter tax (%) - 1.83

5. List of activities in which expenditure in 4 above has been incurred -Details as per Principle 8 section c: other Details

1. Does the Company have any subsidiary company/companies ? Yes

2. Do the subsidiary company/companies participate in the BR initiatives of the parentcompany ? If yes then indicate the number of such subsidiary company(ies): No

3. Do any other entity/entities (e.g. suppliers distributors etc.) that the Companydoes business with participate in the BR initiatives of the Company ? If yes thenindicate the percentage of such entity/entities [Less than 30% 30-60% More than 60%]: No

section D: Br information

1. Details of Director/Directors responsible for BR a) Details of the Directorresponsible for implementation of the BR policy/policies q DIN Number - 03439064 qName - Mr. Abhijit Roy q Designation - Managing Director and CEO b) Details ofthe BR head

Sl. No. Particulars Details
1. DIN Number (if applicable) Not Applicable
2. Name Mr. Aniruddha Sen
3. Designation Senior Vice President & Company Secretary
4. Telephone number 033-2229 9724-28
5. e-mail id aniruddhasen@bergerindia.com

2. Principle-wise (as per NVGs) BR policy/policies :

Principle 1: Businesses should conduct and govern themselves with Ethics Transparencyand Accountability [P1]

Principle 2: Businesses should provide goods and services that are safe and contributeto sustainability throughout their life cycle [P2]

Principle 3: Businesses should promote the well-being of all employees [P3]

Principle 4: Businesses should respect the interests of and be responsive towards allstakeholders especially those who are disadvantaged vulnerable and marginalized [P4]

Principle 5: Businesses should respect and promote human rights [P5]

Principle 6: Businesses should respect protect and make efforts to restore theenvironment [P6]

Principle 7: Businesses when engaged in influencing public and regulatory policyshould do so in a responsible manner [P7] Principle 8: Businesses should support inclusivegrowth and equitable development [P8] Principle 9: Businesses should engage with andprovide value to their customers and consumers in a responsible manner [P9]

a) Details of compliance (Reply in Y/N)

Sl. 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 being formulated in consultation with the relevant stakeholders ? Yes
3. Does the policy conform to any national /international standards ? If yes specify ? (50 words) Yes
4. Has the policy been approved by the Board ?
If yes has it been signed by MD/owner/CEO/ appropriate Board Director ? Yes
5. Does the Company have a specified committee of the
Board/ Director/Official to oversee the implementation of the policy ? Yes
6. Indicate the link for the policy to be viewed online ? https://www.bergerpaints.com/about-us/business- responsibility-policy.html
7. Has the policy been formally communicated to all relevant internal and external stakeholders ? Yes
8. Does the Company have in-house structure to implement the policy/policies ? Yes
9. Does the Company have a grievance redressal mechanism related to the policy/policies to address stakeholders' grievances related to the policy/policies ? Yes
10. Has the Company carried out independent audit/ evaluation of the working of this policy by an internal or external agency ? Yes. These policies and controls are continually evaluated through internal audit mechanism.

b) If answer to the question at Sl. No. 1 against any principle is ‘No' pleaseexplain why: (Tick up to 2 options)

Not applicable.

3. Governance related to BR

a) Indicate the frequency with which the Board of Directors Committee of the Board orCEO assesses the BR performance of the Company. Within 3 months 3-6 months AnnuallyMore than 1 year: Annually

b) Does the Company publish a BR or Sustainability Report ? What is the hyperlink forviewing this report ? How frequently it is published ?: The Company has a BR Report.

Section E: Principle-Wise Performance Principle 1

q Does the policy relating to ethics bribery and corruption cover only the Company? Yes/ No. Does it extend to the Group/Joint Ventures/ Suppliers/Contractors/NGOs /Others?

The Company maintains the highest standards of ethics in all spheres of its businessactivities. Apart from the code of conduct required as per various laws rules andregulations from time to time the Company additionally also has in place the code ofconduct for all its Directors and employees applicable across the Company. The Company andits subsidiaries are committed to complying with the laws that apply to them the code ofconduct of the Company and particularly to assuring that business is conducted withintegrity.

The Company has adopted the code of conduct which is applicable to all Directors andemployees of the Company. This code lays down standards of conduct and ethics for all itsemployees and Directors. q How many stakeholder complaints have been received inthe past financial by the management? If so provide details thereof in about 50 words orso. The Company has received no stakeholder complaints related to ethics or code ofconduct in the past financial year. principle 2

1. List up to 3 of your products or services whose design has incorporated social orenvironmental concerns risks and/or opportunities.

To create a greener future keeping customer satisfaction as its goal the Companyensures that every step taken towards this endeavour is guided by its responsibility andaccountability to the environment. This is applicable during development manufacturing aswell as supply chain management. To name a few of our products which have incorporatedenvironmental risks and concerns these will be:

a) Water based coatings

b) Lead mercury and chromium free products (heavy metal free)

c) Low VOC paints.

2. For each such product provide the following details in respect of resource use(energy water raw material etc.) per unit of product (optional):

i Reduction during sourcing/production/ distribution achieved since the previous yearthroughout the value chain: Please see item 2(ii) below.

ii. Reduction during usage by consumers (energy water) which has been achieved sincethe previous year:

a) Paint technology has advanced rapidly over the years to answer the problems ofenvironmental issues related to oil based paint and accordingly the Company has the mostimpressive array of water based paints. Water is used as a solvent in water based paintswhich considerably reduces the dependence on petroleum resources. Water based paintseliminate emission of Volatile Organic Compounds (VOC).

b) Use of lead in decorative paints is harmful for both the environment and humanhealth. To mitigate such risks the Company produces lead free/heavy metal free decorativepaints. c) Many of the Company's interior and exterior emulsions and undercoats in thedecorative segment are low VOC and are Green-Pro certified by CII. In addition some ofthe energy efficientproducts developed by the Company are Weathercoat Kool & Seal andWeathercoat Roof Guard which reflect high-energy infra-red rays and help to keep roomscooler and reduce energy consumption by air-conditioners. Other major green productslaunched by the Company are polysiloxane top coats which are isocyanate free for metrorailway stations and airports bridge coatings water-borne PU coatings and high solid lowVOC coatings.

3. Does the Company have procedures in place for sustainable sourcing (includingtransportation)? Yes.

i) If yes what percentage of your inputs was sourced sustainably ? Also providedetails thereof in about 50 words or so. The Company's mission is to conservenatural resource and to ensure the protection of the environment and in taking up thechallenge the Company has developed and sourced green raw materials to reduce the harmfuleffects on environment and natural resources. Some of the eco friendly RMs are: MEGderivatives from renewable agro feed stock with low carbon footprints environmentfriendly emulsions environment friendly coalescing agents organic pigments replacingchrome pigments greener defoamers replacing conventional defoamers low VOC RMs whichhave been developed.

The Company has specifically paid attention to reduce pollution while sourcing by wayof efficient packaging some of which are: improved specification of extender bagsimplemented by all vendors which reduces/eliminates spillage from bags and minimizes airpollution introduction of IMLs (In-mould Labelling) containers and switching over to HTL(heat transfer labels) thus eliminating usage of paints and solvents for screen printing.The packaging and the label consist of the same material and can therefore be fullyrecycled. Cartons with new specifications and with higher compression strength eliminateleakage in transit and storage.

4. Has the Company taken any steps to procure goods and services from local and smallproducers including communities surrounding their place of work ? If yes what steps havebeen taken to improve their capacity and capability of local and small vendors? Yes. TheCompany has identified several SSI units whom the Company provided all relevant inputsand training. The Company invites them to the R&D Centre to understand the Company'srequirements so that their system can be upgraded to produce in line with the Company'srequirements.

5. Does the Company have a mechanism to recycle products and waste? If yes what is thepercentage of recycling of products and waste (separately as <5% 5-10% >10%).Also provide details thereof in about 50 words or so.

The Company is committed to continuously improve environment performance and indoing so the Company strives to minimize the generation of wastes and optimize resourceutilization through recycling or reuse of waste.

Treatment of waste water through Effluent Treatment Plants (ETP) and reuse such waterreuse of waste powder materials through bag fitter etc. are examples of such efforts.

Principle 3

1. Please indicate the total number of employees : 2993

2. Please indicate the total number of employees hired on temporary/contractual/casualbasis : 2560

3. Please indicate the number of permanent women employees : 85

4. Please indicate the number of permanent employees with disabilities : Nil

5. Do you have an employee association that is recognized by management ? : Yes

6. What percentage of your permanent employees are members of recognized employeeassociation? : 20%

7. Please indicate the number of complaints relating to child labour forced labourinvoluntary labour and sexual harassment in the last financial year and pending as on theend of the financial year : Nil

8. What percentage of your under mentioned employees were given safety and skillupgradation training in the last year ?

Permanent Employees - 76%

Permanent Women Employees - 55%

Casual/ Temporary/Contractual Employees - 63%

Employees with Disabilities - Nil

Principle 4

1. Has the Company mapped its internal and external stakeholders ? Please see item3 below.

2. Out of the above has the Company identifiedthe disadvantaged vulnerable andmarginalized stakeholders ? Please see item 3 below.

3. Are there any special initiatives taken by the Company to engage with thedisadvantaged vulnerable and marginalized stakeholders? If so provide details thereofin about 50 words or so.

The Company in a systematic and structured way has identifiedits internal and externalstakeholders and the Company through various initiatives engages with these stakeholdersas it believes that it is imperative and essential for a responsible company to do so tounderstand their views on various environmental social corporate governance and economicissues and eventually take into consideration these views in the Company's strategicdecision making. The Company endeavours to maintain healthy stakeholder engagement allowstakeholders' participation wherever possible and promotes collective decision-makingprocess.

The Companyappreciatesthatallitsstakeholdersarenotequallyinfluentialor gets influencedand therefore it encourages to proactively engage with and respond to safeguard theinterest of those that are disadvantaged vulnerable and marginalized and who are at anunderdeveloped area. The Company has ensured that while formulating any policy theinterests of the stakeholders are not compromised. The Corporate Social Responsibilityinitiatives undertaken by the Company specifically addresses the problems of thedisadvantaged vulnerable and marginalized stakeholders. Initiatives undertaken by theCompany are elaborated in principle 8. principle 5

1. Does the policy of the Company on human rights cover only the Company or extendto the Group/Joint Ventures/Suppliers/ Contractors/NGOs/Others?

It covers the Company's subsidiaries.

2. How many stakeholder complaints have been received in the past financial year andwhat percent was satisfactorily resolved by the management?

The Company appreciates and believes that human rights are inherent universalindivisible and interdependent in nature. The Company understands and continuously strivesto promote human rights as mentioned in the Constitution of India in the provisions ofFundamental Rights and Directive Principles of State Policy and also the guidelines of theInternational Bill of Human Rights. The principles of non-discrimination zero toleranceto sexual harassment and human rights have been laid down in the Company's Code of Conductand the Business Responsibility Policy.

The Company has received no stakeholder complaint related to human rights.

Principle 6

1. Does the policy related to Principle 6 cover only the Company or extends to theGroup /Joint Ventures /Suppliers /Contractors / NGOs /others.

The policy related to Principle 6 covers and extends to all the employees of theCompany and its subsidiaries. Regular meetings are held to educate vendors aboutenvironmental risks and concerns and how to address them and the Company stronglyencourages and recommends non-ISO certified vendors to go for ISO certification.

2. Does the Company have strategies/initiatives to address global environmental issuessuch as climate change global warming etc.? Y/N. If yes please give hyperlink forwebpage etc.

Yes. Your Company is engaged in the production of paints and is committed tocontinually improving environmental performance and believes that it is its duty toresponsibly engage in sustainable methods and practices and accordingly the Company hasadopted an environmental policy which can be viewed at: https://www.bergerpaints.com/about-us/quality-policy.html.

3. Does the Company identify and assess potential environmental risks ? Y/N: Yes

4. Does the Company have any project related to Clean Development Mechanism? If soprovide details thereof in about 50 words or so. Also if yes whether any environmentalcompliance report is filed ?

The manufacturing units of the Company have inducted sound environment managementsystems (EMS) and practices in all its activities through adoption of ISO systems (ISO9001 and ISO 14001). With the adoption of EMS the management of the environmentalprograms are done in a comprehensive systematic planned and documented manner.

Manufacturing facilities also conduct environmental impact study and reviews the impacton environment systematically and periodically.

Environment management program relating to conservation waste management recyclingemissions etc. are held periodically at manufacturing facilities which create awarenessamongst the workers. All of the initiatives above are always in Continuous DevelopmentMode.

It is also pertinent to mention here that the Company has received "GreenPro"certificate from CII-Green Products and Services Council in respect of various water basedand solvent based products including Silk WeatherCoat Allguard and EasyClean."GreenPro" assesses ‘how green a product' is based on a holistic frameworkand highlights the way forward to achieve excellence in environmental performance. Thecertification system guides the manufacturers to position their products as green andeco-friendly. The GreenPro certification system adopts cradle to cradle approach forevaluation at par with international standards.

Beepee Coatings Private Limited (a wholly owned subsidiary of the Company) has beenawarded the 1st prize in the National Energy Conservation Award-2016 for its Gujaratplant.

5. Has the Company undertaken any other initiatives on clean technology energyefficiency renewable energy etc.? Y/N. If yes please give hyperlink for web page etc.

1) The steps taken on conservation of energy are detailed above at item 2 of Principle2. Further steps include:

i) Installation of capacitor banks and automatic power factor controlling panel;

ii) Use of energy efficient sand mills;

iii) Use of speed control devices.

2) Energy conservation measures for plant township lighting and alternative energyusage:

i) Installation of bio-briquette fired thermic fluid heater in place of HSD firedthermic fluid heater;

ii) Installation of energy efficient LED retrofit tube lights in place of high powerconsuming conventional tube lights;

iii) Installation of photo sensors for detecting ambient light level and determiningillumination required;

iv) Installation of energy efficient agitators in mixing tanks;

v) Use of natural lights by providing translucent sheets on roofs in manufacturingunits;

vi) Natural ventilation by use of air operated turbo vents at manufacturing units.

6. Are the emissions/waste generated by the Company within the permissible limits givenby CPCB/SPCB for the financial year being reported?

Emission/waste generated by the Company are within the permissible limits given byCPCB/SPCB.

7. Number of show cause/legal notices received from CPCB/SPCB which are pending (i.e.not resolved to satisfaction) as on end of Financial Year: Nil.

Principle 7

1. Is your Company a member of any trade and chamber or association? If yes name onlythose major ones that your business deals with:

a) Indian Paint Association (IPA)

b) The Bengal Chamber of Commerce & Industry (BCCI)

2. Have you advocated /lobbied through above associations for the advancement orimprovement of public good ? Yes/No; if yes specify the broad areas: The Company'semployees including its scientists and legal experts participate regularly in discussingvarious aspects of regulations relating to environment use of various materials in paintsand use of lead taxation economic reforms etc. and meeting regulatory bodies forframing guidelines /policies in respect of these issues.

Principle 8

1. Does the Company have specified programmes /initiatives /projects in pursuit of thepolicy related to Principle 8 ? If yes details thereof. Yes. The Company's policy in thisregard can be seen at the following weblink - https://www.bergerpaints.com/about-us/csr-policy.html.

2. Are the programmes/projects undertaken through in-house team/own foundation/externalNGO /government structures/any other organization? Through in-house team.

3. Have you done any impact assessment of your initiative?

Please see the Report on CSR Activities/initiative annexed with the Report of theDirectors.

4. What is your Company's direct contribution to community development projects -amount in INR and the details of the projects undertaken: Please see the Report on CSRActivities/initiative annexed with the Report of the Directors.

5. Have you taken steps to ensure that this community development initiative issuccessfully adopted by the community? Please explain in 50 words or so.

Please see the Report on CSR Activities/initiative annexed with the Report of theDirectors.

Principle 9

1. What percentage of customer complaints/consumer cases are pending as on the end offinancial year ?

21 consumer related legal cases were pending as at 31.03.2017.

2. Does the Company display product information on the product label over and abovewhat is mandated as per local laws? Yes/No/N.A.

/Remarks (additional information)

All product information displayed by the Company adheres to and conforms to norms asmandated by law. Additionally product information can be found in the Product InformationSheets which are available with the dealers of the Company and on the website of theCompany.

3. Is there any case filed by any stakeholder against the Company regarding unfairtrade practices irresponsible advertising and/or anticompetitive behaviour during thelast five years and pending as on end of financial words or so: NIL

4. Did your Company carry out any consumer survey/consumer satisfaction trends ?

To sustain its position it is essential to find out where the Company stands inthe competitive context. To this extent the Company with its dedicated resourcescarries out consumer surveys/customer satisfaction trends regularly to gauge the levels ofcustomer satisfaction with products and services provided by the Company. In additionregular market research studies are conducted by external agencies engaged by the Company.