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

Akzo Nobel India Ltd.

BSE: 500710 Sector: Consumer
NSE: AKZOINDIA ISIN Code: INE133A01011
BSE 00:00 | 06 Jul 1856.00 -12.50
(-0.67%)
OPEN

1892.80

HIGH

1915.95

LOW

1840.00

NSE 00:00 | 06 Jul 1850.50 -22.30
(-1.19%)
OPEN

1882.20

HIGH

1920.80

LOW

1821.10

OPEN 1892.80
PREVIOUS CLOSE 1868.50
VOLUME 1564
52-Week high 2368.75
52-Week low 1685.00
P/E 29.31
Mkt Cap.(Rs cr) 8,452
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00
OPEN 1892.80
CLOSE 1868.50
VOLUME 1564
52-Week high 2368.75
52-Week low 1685.00
P/E 29.31
Mkt Cap.(Rs cr) 8,452
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

Akzo Nobel India Ltd. (AKZOINDIA) - Director Report

Company director report

Dear Members

The Board of Directors hereby present their 67th report on the business and operationsof your Company along with the audited financial statements for the financial year ended31 March 2021.

Business Environment Economy

The fiscal year 2020-21 was among the most volatile years in terms of economic growthdemand commodity prices and forex.

The impact of Covid-19 induced lockdowns dented India's economy with GDP declining24.4% in Q1 and 7.3% in Q2 followed by a gradual and slow recovery in H2.

Private consumption (accounting for ~57% of GDP) witnessed a sharp decline of -24.5% inQ1 2020-21 recovering gradually to 2.7% in the fourth quarter. Investments too contracted48% during the first quarter but concluded the year with 11% growth.

Brent crude prices fell to $9.12 per barrel in April 2020 as the world went under alockdown. But with the global economy and trade picking up Brent crude prices steadilyrose brie_y crossing $70 a barrel in March 2021 for the first time since the pandemic.

With the weakening global sentiment Rupee depreciated to almost 77 to a dollar beforeRBI interventions and gradual economic recovery strengthened it to average 74 for theyear.

While the second wave of Covid-19 infections and associated localized lockdowns made aneconomic impact and remain a concern increase in inoculation should allow restrictions tobe eased significantly towards the end of 2021 and in 2022. A pick-up in privateconsumption investment by Government agricultural performance and revival ofmanufacturing construction banking and real estate activity should provide a fillip torecovery.

Despite the challenges brought by the second Covid-19 wave India's economy iscurrently projected to grow 8-10% in the coming year.

Industry

The pandemic also brought about shifts in the Paints & Coatings industry with2020-21 being a year of two halves. The first Covid-19 wave in H1 2020 impacted Tier 2/3/4towns relatively lesser than Metros and Tier 1 towns. Consequently the industry witnessedrecovery being led by these markets with volume growth exceeding value growth. With theunlock in H2 recovery was led by pent up demand opening of metros festive season andrevival in the real estate industry.

In the backdrop of the Covid-19 pandemic health and hygiene became the focal point forgovernment businesses and individuals alike. Paints & Coatings industry was noexception. The year saw many players expanding their portfolio to include offerings withantimicrobial properties sanitizers and disinfectants. In addition Paint makersincreased their focus on adjacent products in waterproo_ng construction chemical puttyand adhesives segments.

Projects business also revived with recovery in real estate sector. Rise in real estateregistrations not just in smaller towns but even in cities and urban areas bode well forpaint demand in CY21. Considering projects account for ~10% of paint consumption in Indiawe believe revival in projects business will augur well for FY22.

The second Covid-19 wave has brought about near-term challenges due to regionallockdowns particularly impacting rural and semi-urban markets. Short-term paint demandwas therefore impacted.

However long-term fundamentals of the industry continue to be buoyant and strong andthe industry should see high double-digit growth driven by an increase in the disposableincome of individuals and families various housing schemes and upside potential from lowper capita consumption.

On the industrial business although things may take a little time to recover thereare signs of capex cycle turning with increased government spending in H2 2020-21.Infrastructure development is anticipated to remain government priority in the mediumterm. The National Infrastructure Pipeline (NIP) has identified 7000 projects thatrequire over H 111 lakh crore in investment in core sectors like power roads railwaysand urban projects over the next five years.

While Passenger vehicle volumes brie_y turned positive after declining for 23 monthsthe second Covid wave again hit the industry. Gradual revival in auto sector and pricehikes (if any) by auto companies could help drive demand for auto refinish segment too.

A significant risk to the industry comes from Raw material prices which have startedexerting inflationary pressures. Most players have taken price increases and continue tomonitor raw material cost trend and its impact.

Subsidiary

Pursuant to section 129(3) of the Act read with rule 5 of the Companies (Accounts)Rules 2014 and other applicable provisions if any of the Companies Act 2013 (‘theAct') a statement containing salient features of the financial statement of thesubsidiary of the Company viz. ICI India Research & Technology Centre in Form AOC-1forms part of this Annual Report. The consolidated financial statements presented in thisannual report include financial results of the subsidiary pursuant to Rule 8(1) of theCompanies (Accounts) Rules 2014.

In accordance with section 136 of the Act the financial statements of the subsidiaryare available for inspection by the members at the registered office of the Company duringbusiness hours on all days except Saturdays Sundays and Public holidays up to the date ofthe Annual General Meeting (‘AGM'). Due to prevailing COVID-19 situation members arerequested to email a request for obtaining a copy of the said financial statements atinvestor.india@akzonobel.com so that necessary arrangements can be made at the registeredoffice of the Company. The financial statements including the Consolidated FinancialStatement and all other documents required to be attached to this report have beenuploaded on the website of the Company at www.akzonobel.co.in.

Share Capital

The paid up share capital of the Company as on 31 March 2021 was H 455.40 millioncomprising 45.54 million equity shares of H 10 each (Previous year H 455.40 millioncomprising 45.54 million equity shares of H 10 each).

Dividend

The Board of Directors at its meeting held on 9 February 2021 approved payment ofinterim dividend of H 20 per share. This dividend was paid on 5 March 2021 to thoseshareholders whose name was registered in the Register of Members as on 19 February 2021being the record date. Your Director's are pleased to recommend a Final Dividend of H 30per share for the year ended 31 March 2021. The Final Dividend subject to the approval ofMembers at the Annual General Meeting on Friday 13 August 2021 will be paid to thoseMembers whose names appear in the Register of Members as on the record date 6 August2021. The total dividend for the financial year including the proposed Final Dividendamounts to H 50 per equity share.

In view of the changes made under the Income-tax Act 1961 by the Finance Act 2020dividends paid or distributed by the Company shall be taxable in the hands of theShareholders. Your Company shall accordingly deduct tax if any before making dividentpayments.

The Company is in compliance with its Dividend Distribution Policy as approved by theBoard. In compliance with the requirements under Regulation 43A of the Securities andExchange Board of India (Listing Obligations and Disclosure Requirements) Regulations2015 (Listing Regulations) the Policy has been uploaded on the Company's website at www.akzonobel.co.in and may be accessed from www.akzonobel.co.in/corporate-governance.php#policy.

Transfer to Reserve

During the financial year there was no amount proposed to be transferred to theReserves.

Management Discussion and Analysis Financial Statements

The financial statements include:

1. Stand-alone financial statements of the Company Akzo Nobel India Limited; and

2. Consolidated financial statements of the Group including the operational results ofICI India Research & Technology Centre on which the Company exercises effectivecontrol.

The highlights of the performance during the year are:

Standalone Consolidated
2020-21 2019-20 2020-21 2019-20
Revenue from Operations 24214 26618 24214 26618
Operating Profit (EBITDA)* 3408 3791 3408 3792
Depreciation (755) (790) (755) (790)
Other Income net of finance costs 129 283 129 283
Exceptional items - (52) - (52)
Profit before tax 2782 3284 2782 3284
Tax (706) (858) (706) (858)
Profit after tax 2076 2374 2076 2374

*before exceptional items

Key financial ratios

Standalone Consolidated
2020-21 2019-20 2020-21 2019-20
Debtors Turnover 5.9 6.7 5.9 6.7
Inventory Turnover 2.7 3.4 2.7 3.4
Interest Coverage 33.2 40.6 33.2 40.6
Current ratio 1.6 1.6 1.6 1.6
Operating Profit Margin (%) 14 14 14 14
Net Profit Margin (%) 9 9 9 9
Return on Investment (%) 15 18 15 18

Ratios are not comparable on YoY basis due to lockdown impact of H1 2020.

Debt equity ratio not covered as the Company does not have debt.

There is no significant change (i.e. change of 25% or more as compared to theimmediately previous financial year) in the key financial ratios.

While the first quarter was a washout the Company made steady recovery with eachconsecutive quarter making a strong finish to the year.

The focus of your company for the first couple of quarters was – Customer PeopleCash and Cost as the vectors on which your management pivoted actions.

Revenue declined 9% during 2020-21 with Metros and Tier-1 towns seeing higher impact.Performance in H2 partially offset the adverse impact of H1. This was supported throughproduct launches across health & hygiene categories at different price points andcustomer centric B2B solutions when the industry got back to growth. With access to globalR&D technology your

Company continues to focus on innovations by bringing best in class differentiatedproducts to the Indian consumer. Although challenges remained in Oil & Gas and Powersectors Decorative Paints Auto and Steel sectors brought growth opportunities in Q42020-21.

Gross Margins began to experience some pressure since the beginning of 2021 due torising raw material costs. However the impact was somewhat mitigated through valueengineering initiatives.

During the most unprecedented global health emergency your Company swiftly tookmeasures to strengthen its own health. While efficiencies had already been brought in withour transformation initiatives in prior years the pandemic opened new avenues of costoptimization. As a result we were able to maintain our profitability at 11% EBIT%.However at no point were employee interests impacted. We honoured all offers hikes andrewards and we continue to keep people welfare our topmost priority.

Industry structure

India's Paints & Coatings industry is approx. H 55000 Crore market and a fairlystructured one with organized players accounting for over ~ 70% of the industry's sales.As per Indian Paints Association estimates ‘Paints' account for around 75% of theoverall market and ‘Coatings' account for the rest. Product performancedifferentiation and quality service continue to be the key differentiators across thismarket. While Paints is a B2C business Coatings is essentially a B2B business and istechnology intensive with a diverse set of growth drivers with strong emphasis on sellinga solution rather than a product. Entry of several new players in recent years hasintensi_ed the competition in the market.

Business Performance

Decorative Paints:

AkzoNobel's Decorative Paints business offers a wide variety of essential products forevery situation and surface including paints lacquers and varnishes. The business alsosupplies a range of mixing machines color concepts and training initiatives to thebuilding and renovation industry.

Some of the success stories of the business during the year are as follows:

• Launch of Dulux Assurance a first-of-its-kind consumer program for PremiumEmulsions. The program promises perfect colour uniform finish and coverage from DuluxPaints. The initiative was supported with big scale Print and TV Media campaigns to takethe proposition to end consumers.

• Other launches in the Premium category included new SuperClean (with superiorwashability property) upgrade of Dulux Weathershield Protect premium exterior paint(offering 6 years protection) and a refreshed Weathershield UltraClean proposition.

• Offerings in affordable segment included Promise

SmartChoice Exterior & Interior entry level emulsion Promise Interior relaunchedwith Anti-Bacterial formula and Promise Sheen (a high sheen finish at an affordable pricerange).

• Waterproo_ng category was extended to economy segment with launch of AquatechDampProtect Basecoat.

• Dulux Professional Weathershield Anti-Carb a specialist Anti-Carbonation paintwas introduced to support Indian government's efforts towards building world classinfrastructure. This water-based coating protects steel reinforcement in concrete fromcorrosion while complying with the specifications of the Ministry of Road Transport andHighways.

Automotive & Specialty Coatings (ASC):

Delivering cutting-edge coating solutions to a variety of industries Automotive andSpecialty Coatings in India comprises Automotive OEM Coatings Consumer ElectronicsCoatings Vehicle Refinishes and Specialty Coatings.

The auto industry which was already facing headwinds from NBFC crisis in the previousyear experienced its worst-ever challenge with the pandemic. However the industry made acommendable turnaround in the second half of the fiscal year driven by an increasingpreference for personal mobility demand from e-commerce festive season and new launches.

During the year the ASC business received OEM approvals from players like Citroen andMG which reinforces the trust and preference for AkzoNobel's premium Sikkens brand. TheValue Brand Wanda too made great strides in expanding geographic footprint.

During the year the business was awarded Best Innovation Award by the World AutoForum one of the most aspirational awards across the Automotive & Mobility ecosystemin India.

Powder Coatings:

Our Powder coatings are a first-class and sustainable alternative to liquid paint.These find application in architecture general industries automobiles functional anddomestic appliances.

Post Unlock segments like Hospital infrastructure Furniture and General industrialsaw some green shoots. Last two quarters of the fiscal year saw Automotive come backstrongly. Growth has been supported by innovative Liquid to Powder conversion inIndustrial and Automotive Markets.

During the year the business launched Interpon Redox a new range of corrosionprotection for a variety of substrates surfaces and environments – from swimmingpools to chemical plants and high humidity to highly corrosive areas. With infrastructureactivity picking up Powder business also made inroads in Bonded metallics forArchitecture facades which find applications in Airports Residential and Commercialbuildings.

Industrial Coatings:

Serving the consumer goods buildings and infrastructure industries the IndustrialCoatings business includes Coil and Extrusion Coatings Packaging Coatings and WoodFinishes and Adhesives.

Coil and Extrusion Coatings provides high performance coatings to the metalconstruction industry including roo_ng building construction aluminium composite panels(ACP) and Domestic Appliance (DA) segment.

Coated steel market saw a major downturn due to the pandemic with the constructionindustry declining almost 10-11%. Extrusion Coatings which mainly supplies coatings foraluminium facades door and window frames high end infrastructures too saw muted growthas many projects were stalled by the pandemic and labour migration. However the industrycoped up well in the second half with a strong growth in the steel sector both fromdomestic and export volumes. Demand for this segment is likely to remain strong supportedby various government focusing on housing urbanization and other infrastructure projects.

Packaging Coatings provides coatings and inks for the metal packaging industryincluding Food Caps & Closures General Line and Beer & Beverage industry.

Packaging Coatings business in 2020-21 remained relatively insulated from the adverseimpact of the pandemic as it mainly serves the essentials category. Beer & beveragesegment entered growth trajectory in the second half of the year with major volumes comingfrom exports. Your company successfully launched the BPANI (BPA Non-Intended) InternalSpray Lacquer a protection solution for all types of beverage cans. Demand for thedomestic packaged food and beverages and products catering the sanitizers industryremained robust.

Marine & Protective Coatings:

This business is all about protecting and beautifying assets both in and out of water.Through our flagship International brand Marine & Protective Coatings findapplications in a variety of end-industries including Oil & Gas Power Infrastructureprojects and Wind Energy.

Innovation and customer focused solutions remained a theme for the year and thesegment launched many pioneering products. Some of these were Intersmooth 7200Si SPC

Intersmooth 7476Si SPC (antifouling solutions specially designed for Deep Sea Vessels)Interthane 990E (finding application in new construction and maintenance) Interzinc 52E(providing maximum corrosion protection for aggressive environments) and Intershield 4000USP (a universal primer intended for both anticorrosive and passive fire protectionsystems).

Although near-term challenges persist market seems poised for a strong comeback in2021 with Infrastructure Power Oil & Gas and Chemical sector maintenance and repairlooking strong.

This year has been a testimony to the resilience of our people partners and customersand intrinsic excellence of our products.

Company's Business Strategy

Your Company's strategic objective is to build a sustainable business for long-termvalue creation as a part of the Grow and Deliver strategy embarked by AkzoNobel Group. Toachieve this objective your company is focusing on:

a) Leveraging world class global brands and colour expertise to develop relevantofferings for the Indian market to create sustainable profitable growth

b) Growing profitably while increasing returns to all our stakeholders

c) Creating new business models to enhance reach and enhance Customer service

d) Driving digital and sustainable innovation.

Covid-19 Update

The outbreak of Covid-19 pandemic has created economic disruption throughout the worldincluding India. The operations of the Company were significantly impacted earlier duringthe year due to supply chain disruptions caused by lock down of plants offices andwarehouses. The Company continues to carry its operations in a manner consistent with thedirectives from the government and local authorities and continues to ensure compliancewith the necessary protocols.

The Company has evaluated the effects of Covid-19 on its operations and financialposition. Based on its review of the macro economic conditions and current outlook for theIndian economy there is no additional impact on financial statements apart from thosealready considered in the financial statements of the Company as at 31 March 2021.However given the evolving scenario and uncertainties with respect to its nature andduration the impact may be different from estimates as on the date of approval offinancial statements. The Company will continue to monitor any material changes to itsfuture business and economic conditions.

Risks and Concerns

At AkzoNobel we believe that systematic risk management practices ensure effectivenavigation to achieve business objectives and enable sustainable growth in a volatile andcomplex environment. Your Company truly believes that business will always involve risks.These risks are constantly evolving and changing in terms of their impact &probability of their occurrence. Your Company constantly scans the external environment toidentify the emerging risks and also assesses them for impact on your Company'sobjectives.

The Board is responsible for monitoring and reviewing the risk management plan andensuring its effectiveness. In this process the Board is ably guided by its RiskManagement Committee which reviews the enterprise-wide risk management efforts of themanagement. The Audit Committee has additional oversight in the area of financial risksand controls. The major risks identified by the Company are systematically addressedthrough mitigating plans further drilled into actions on a continuing basis. Listed beloware some of the key risks their anticipated impact on the Company and mitigationmeasures:

Raw Material risk: Prices of several raw materials used by the Companyare driven by crude oil price and foreign exchange movement. A risk to the industry comesfrom Raw material prices which have started exerting inflationary pressures. The Companymonitors this based on international forecasts and price trends.

Cyber security risk: Digital security breach or disruption to digitalinfrastructure due to intentional or unintentional actions such as cyberattacks databreaches or human error could lead to serious financial loss business disruption and/ ordamage to our reputation

End user awareness campaigns have been done to maintain awareness and implementation ofSecurity Operating Centre (SOC) for real time monitoring of (cyber) security risks.

Statutory Compliance: The Indian regulatory environment is evolving andwe have witnessed considerable increase in regulatory scrutiny as well as stakeholderexpectations vis--vis compliance. We recognise that non-compliance with applicable lawsand regulations poses a threat to our financial and reputational standing.

Your Company has adequate coverage to ensure complete adherence to the compliancerequirements and to report compliance to the Board. Independent assessments are alsoundertaken to gain assurance.

Corporate Governance

Maintaining high standards of Corporate Governance has been fundamental to the businessof your Company since its inception. In compliance with Regulation 34 read with Schedule Vof the Listing Regulations a Report on Corporate Governance for the year under review ispresented in a separate section as Annexure I.

Board Evaluation

Your Company has a mechanism to evaluate the performance of all Board members. Detailsof the evaluation are given in the Corporate Governance report.

Vigil Mechanism / Whistle blower Policy

Your Company has adopted a Vigil Mechanism / Whistle blower Policy as detailed in theCorporate Governance Report. The Policy is available on the company's websitewww.akzonobel. co.in and can be accessed fromwww.akzonobel.co.in/corporate-governance.php#policy.

Sustainability

Sustainability for the Company means delivering long-term value for all ourstakeholders. It underpins your Company's purpose and brands its core principles andemployee value proposition. It also acts as the driver of growth innovation andproductivity.

Your Company focuses on resource productivity and value selling as key drivers ofsustainability with verifiable goals.

SEBI vide its Notification dated 5th May 2021 has discontinued the requirement ofsubmitting a Business Responsibility Report after the financial year 2021–22 and witheffect from the financial year 2022–23 the top one thousand listed entities basedon market capitalization as on the 31st day of March of every financial year have beenmandated to submit a Business Responsibility and Sustainability Report in the format asspecified from time to time.

Hence as per the existing provisions the Company has provided Business ResponsibilityReport attached as Annexure II-A and the same shall be replaced with BusinessResponsibility and Sustainability Report in the prescribed format from the next FY2022-23.

Corporate Social Responsibility

The year 2020-21 has been one of the most challenging year for India and the entireworld. During these unprecedented times your Company has tried to put its efforts toprovide innovative solutions and create a more equitable and inclusive society.

Some highlights of the CSR activities conducted during the year are as under:

Fight against Covid-19

In continuation of last year's efforts this year your Company continued its reliefwork against Covid-19. One of the main highlights of this year's initiative was to extendthe Tele-health project of Bengaluru and kick off a new project pan India during Covid-19named ‘Arogya Sakha' (health's best friend) exclusively for the painter community andtheir families. In this project more than 1.5 million beneficiaries from across Indiareceived access to specialist doctors through tele-medicine. In synergy with thisinitiative we have also started a Covid-19 helpline for painters and their families whichfacilitated vaccination drive treatment of Covid-19 patients and provided host of otherservices. Apart this year we provided more than 8000 PPE kits to daily wage labourers tohelp them to resume their work safely.

AkzoNobel Paint Academy

In line with Government of India's flagship programme viz. ‘Skill India' yourcompany continued its skill training in painting to promote employability amongst youth.This year it offered skill training to 1130 youth and painters in Decorative Paints andVehicle Refinish and linked them with employment.

This year two training centres were recognized by National Skill DevelopmentCorporation (NSDC) as International Training Centres.

As a part of Diversity & Inclusion initiative AkzoNobel Paint Academy is focussingon disadvantaged groups and underprivileged sections of society to bridge inequality. Thefollowing initiatives have been taken in this regard:

• 51 women were trained as painters and placed in jobs to help them participate asequals in the work force ensuring female reprecentation in a male dominated Industry

• As a part of rehabilitation programme for prison inmates and children inconflict with law 76 prison inmates and juveniles were trained as decorative painters

• Initiated a skill training programme for transgenders (LGBT community) andhelped them start a career as decorative painters.

Kaushal Vahan/Skill on Wheels (Mobile Training Centres)

This year through the project your Company trained more than 5000 painters on paintapplication skills from rural parts of Bihar Madhya Pradesh and Punjab besides creatingCOVID awareness for the painters in these states.

E Arogya Kendra Project:

Your Company continued its two E Arogya Kendra's at Hoskote Bengaluru. These centresfocussed on carrying out symptom based Covid-19 screening for the villagers and providedspecialised health consultations through Tele Medicine.

Education Projects:

Your Company in partnership with Government Education Department through itsnon-formal schools continued to support education to 6450 underprivileged children insix states of India. Due to ongoing Covid-19 pandemic the classes were conducted throughdigital mediums and home visits by the teachers. In order to bridge the digital divide andensure continuity of education for underprivileged children your company provided digitaltabs to the children this year.

The CSR policy of the Company is available on the company's website www.akzonobel.co.inand can be accessed from www.akzonobel.co.in/corporate-governance.php#policy.

A report on the CSR activities undertaken by your Company during the fiscal year2020-21 is attached as Annexure II-B. It is pertinent to note that significant part of CSRspend is incurred in local areas where your Company has its operations.

Awards

During the year your Company was awarded with

• Best Innovation Award from World Auto Forum for its Auto Coatings product AutoExpress Clear and

• Logistics Technology Project of the Year in 33rd In_ection Web conference andAwards organised by Alden Global Value Advisors.

Human Resources

Your Company had cordial relations with employees across all locations during the year.The total number of employees on the rolls of the Company as at 31 March 2021 was 1436(previous year 1482). Your Company considers Human Resources as a vital asset and giveutmost importance to employee engagement development and wellbeing.

Employee Engagement: During the year employees' participation moved to 90% withtop Decile scores in the Organizational Health Index Survey (OHI) carried out worldwide byMcKinsey & Company. The year as an outcome of COVID saw several creative and digitallyenabled engagement initiatives such as learning programmes virtual talent competitionvirtual coffee sessions fitness challenges and virtual annual awards. To supportemployees overcome anxiety and vulnerability due to the pandemic regular leadershiptownhalls and interactions forums were conducted. Constant feedback was sought fromemployees through pulse surveys and AI chatbot to ensure corrective actions during theyear.

Employee Wellness: As health became a primary focus along with safety due to thepandemic. Employees leveraged our visit app that provides a digital experience for medicalconsultancy and purchasing medicines and booking lab tests. We also launched counsellingservices through our employee assistance program for emotional and financial wellness.Throughout the year several webinars on health related topics were held and personalfitness was encouraged. Detailed SOP's and protocols were put in place to manage thePandemic and resume offices.

Rewards: Annual Compensation Process (ACP) for all employees was fairly andeffectively executed.

Capability Building: Several curated online modules were conducted throughout theyear on various relevant topics especially focussed on leadership Competency and Leadingvirtual teams. There were structured learning interventions for select workforce.

Diversity & Inclusion: Women inspired Network India chapter was launched todrive focus on diversity. Several initiatives and interventions were executed throughoutthe year to create awareness & sensitization.

Over the year "Amber" an AI Engagement Bot regularly interacted withemployees and provided feedback on employee temperament and morale during their tenor inthe company. The questions framed were basis the recommendations from in Feedo's in-housepsychometric psychologists and the inputs provided by the HR leaders.

Information required under section 197(12) of the Act read with rule 5(2) and rule 5(3)of the Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014 asamended forms part of this report. However in terms of the provisions of section 136 ofthe Act the Annual Report is being sent to members excluding the aforementionedinformation. Any member interested in obtaining such particulars may inspect the same atthe registered office of the Company by writing an email to investor.india@akzonobel.com.

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

Name Status (i) Ratio of the remuneration of each Director to the median remuneration of the employees of the Company for the financial year 2020-21 (ii) Percentage increase in remuneration during 2020-21 over 2019-20
Mr Amit Jain Non Executive 1.81 Nil
Mr Rajiv Rajgopal Managing Director 62.90 (Refer Note 5 below) 10% increase in base salary based on Industry benchmarking.
Mr Lakshay Kataria Wholetime Director and CFO 22.52 9.3% increase in base salary based on Industry benchmarking
Mr Oscar Wezenbeek Non Executive - NA - no remuneration was paid to him during his tenure as a Director
Mr Arvind Uppal Non Executive – Independent 1.63 Nil
Mr Hemant Sahai Non Executive – Independent 1.69 Negligible
Mr Rahul Bhatnagar Non Executive – Independent 1.63 NA - only part of the year in 2019-20
Ms Smriti Rekha Vijay Non Executive – Independent 1.69 NA - only part of the year in 2019-20
Ms Harshi Rastogi Company Secretary 10.88 NA - only part of the year in 2019-20
Description Remarks
(iii) Percentage increase in the median remuneration of employees in the financial year 6.7%
(iv) Number of permanent employees on the rolls of the Company 1436 as on 31 March 2021
(v) Average percentile increases already made in the salaries of employees other than the managerial personnel in the last financial year and its comparison with the percentile increase in the managerial remuneration and justification thereof and point out if there are any exceptional circumstances for increase in the managerial remuneration. Average increase in base salary of non-managerial personnel was 6.7% which is considered in line with the prevailing market conditions and other relevant factors.

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

Notes:

1. The aforesaid details are calculated on the basis of remuneration for the financialyear 2020-21.

2. Median remuneration in the Company (Base Salary) for all its employees was H 0.83million for the financial year 2020-21.

3. Remuneration to Directors includes sitting fees paid to them for the financial year2020-21.

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

5. As a realization of 15 by 20 ambition a onetime performance incentive plan payoutwas made at an at-target level. The ratio of remuneration to median remuneration excludingthis onetime performance incentive plan payout was 38.15.

Conservation of Energy Technology Absorption and Forex Earnings and Outgo

Your Company continues to use its research and development base to bring to consumersnew products with improved performance features and for special applications. Particularsin respect of conservation of energy technology absorption and foreign exchange earningsand outgo pursuant to Section 134 of the Act are given in Annexure III to this report.

Information Technology.

Your Company has always been on the forefront in terms of leveraging technology for thebusiness.

This year too the Company has continued to invest in digital technologies such as AI(Artificial Intelligence) Advanced Analytics Robotic Process Automation (RPA) to createimmense customer experiences and aid in organisational productivity.

Internal Control Systems

The Company's internal control systems are commensurate with the nature of itsbusiness size and complexity of its operations. Appropriate internal control policies andprocedures have been laid down for ensuring an efficient conduct of the business accuracyand completeness of accounting records compliance with applicable laws and regulationssafeguarding of its assets prevention and detection of frauds and errors and reliabilityof financial reporting. Effectiveness of internal financial controls is ensured throughmanagement reviews self assessment and independent testing by the Statutory Auditors. Theorganisation is appropriately staffed with qualified and experienced personnel forimplementing and monitoring the internal control environment.

The Board periodically reviews the state of compliance with all laws applicable to theCompany. The Company uses a robust allied IT tool incorporating all applicable legalcompliances with owners and approvers across functions. The compliance library is updatedperiodically covering all changes with respect to Laws/ Regulations.

The Board has constituted a Risk Management Committee clearly defining its Terms ofReference besides roles and responsibilities. The Board has also delegated the monitoringand reviewing of the risk management plan to the committee which updates the Board fromtime to time.

Policy against Sexual Harassment

The Company has instituted a policy on Prevention of Sexual Harassment at Workplacewhich has been disseminated amongst all employees. The Policy is available on thecompany's website www.akzonobel.co.in and can be accessed fromwww.akzonobel.co.in/corporate-governance.php#policy. It seeks to prevent and deter acts ofsexual harassment and communicate procedures for their resolution and settlement. YourCompany has constituted an Internal Complaints Committee in compliance with the provisionsof the Sexual Harassment of Women at Workplace (Prevention Prohibition and Redressal)Act 2013 and is accordingly fully compliant. To build awareness in this area the Companyhas conducted induction / training programmes in the organisation. There was one complaintreported during 2020-21 which was effectively resolved and closed to the satisfaction ofthe complainant as per the guidelines.

Related Party Transactions (RPTs)

All related party transactions which were entered into during the year under reviewwere on arm's length basis and in the ordinary course of business. There were nomaterially significant related party transactions made by the Company with the PromotersDirectors and KMP which may have a potential conflict with the interests of the Company atlarge.

The Board of Directors of the Company has approved the criteria to grant omnibusapproval by the Audit Committee within the overall framework of the policy on relatedparty transactions. Prior omnibus approval is obtained for related party transactionswhich are of repetitive nature and entered in the ordinary course of business and at arm'slength.

All related party transactions are placed before the Audit Committee for review andapproval.

Your Company's Policy on materiality of RPTs and dealing with RPTs may be accessed onthe Company's website at www.akzonobel.co.in.

Members may refer to note no. 33 to the financial statement which sets out relatedparty disclosures pursuant to IND AS 24.

Pursuant to Clause (h) of sub-section (3) of Section 134 of the Act and Rule 8(2) ofthe Companies (Accounts) Rules 2014 the particulars of contracts/arrangements enteredinto by the Company with related parties referred to in sub section (1) of Section 188 ofthe Act including certain arm's length transactions under third proviso thereto arerequired to be disclosed in Form AOC–2 which forms part of this report.

Loans Guarantees or Investments

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

Auditors

Statutory Auditors

M/s Price Waterhouse Chartered Accountants LLP will retire as the Auditors of theCompany at the conclusion of the forthcoming Annual General Meeting after completing aterm of five years. They have informed the Company that they are willing to continue asauditors for a second term of 5 years. Further they have confirmed that they duly fulfilthe requirements under applicable laws and regulations to function as the Auditors of theCompany for another term.

Appointment of the statutory auditors is included in the Notice of ensuing AGM forseeking your approval.

The Auditors' Report for the financial year 2020-21 does not contain anyqualification reservation or adverse remark.

The Statutory Auditors of the Company have not reported any Fraud as specified underSection 143(2) of the Act.

Secretarial Auditors

In terms of section 204 of the Act Secretarial Audit was conducted for the financialyear 2020-21 by M/s A K Labh & Co. Kolkata. Their report is appended. The SecretarialAudit Report does not contain any qualification reservation or adverse remark.

The Board has re-appointed M/s A K Labh & Co. Kolkata to conduct Secretarial Auditfor the financial year 2021-22.

Cost Auditors

In terms of Section 148 of the Companies Act 2013 Cost Audit was conducted for theyear 2020-21 by M/s Chandra Wadhwa & Co. New Delhi. Their report for the year 2019-20has been filed with MCA within the stipulated time.

The Board has re-appointed M/s Chandra Wadhwa & Co. New Delhi as the Cost Auditorsfor conducting Cost Audit for the financial year 2021-22 whose remuneration is subject torati_cation by the shareholders at the forthcoming AGM.

Cost Records

The Cost Accounts and records as required under section 148(1) of the Act are dulymaintained by the Company.

Annual Return

In terms of Section 92(3) of the Companies Act 2013 and Rule 12 of the Companies(Management and Administration) Rules 2014 as amended the Annual Return of the Companyis available on the website of the Company at www.akzonobel. co.in and can be accessedfrom www.akzonobel.co.in/ investors.php#anr.

Directors & Key Management Personnel

There were no changes in the composition of the Board during 2020-21:

Mr Oscar Wezenbeek will be retiring by rotation at the forthcoming Annual GeneralMeeting (AGM) and has offered himself for re-election.

As approved by the Board Mr Amit Jain stepped down as the Chairman of the Company andMr Oscar Wezenbeek became the Chairman with effect from 23 May 2021.

The Board has recommended appointment of Mr Amit Jain as an Independent Director for aperiod of three years with effect from 14 August 2021.

Mr Arvind Uppal and Mr Rahul Bhatnagar resigned from the directorship of the Companyeffective 23 May 2021 due to their personal reasons and other professional commitments.The Board took on record its deep sense of appreciation for the services rendered by themduring their tenure as directors. The Board has decided not to fill these casualvacancies.

The appointments of Mr Oscar Wezenbeek and Mr Amit Jain are included in the Noticeconvening the AGM for seeking your approval. A brief profile of Mr Oscar Wezenbeek and MrAmit Jain as required under regulation 36 of the Listing Regulations is also given as anannexure to the Notice. Mr Rajiv Rajgopal Managing Director Mr Lakshay Kataria ChiefFinancial Officer and Ms Harshi Rastogi Company Secretary are the whole-time KeyManagerial Personnel of the Company in terms of Section 203 of the Act.

Committees of the Board

The composition of all the Committees of the Board has been provided in the CorporateGovernance Report.

Board Meeting Dates

The Board Meeting Dates and the attendance of the Directors at the meetings have beenprovided in the Corporate Governance Report.

Declaration by Independent Directors

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

Familiarization Programme for Independent Directors

The Company has adopted a policy on familiarization programme for independentdirectors. All new Independent Directors (IDs) inducted into the Board are presented withan overview of the Company's business operations products organization structure andabout the Board procedures. Details of the familiarization programme for IndependentDirectors is available on the company's website www.akzonobel.co.in and can be accessedfrom www.akzonobel.co.in/famialirization.php

Directors' Responsibility Statement

As required under section 134(5) of the Act the Board states that:

a) in the preparation of the annual accounts the applicable Indian accountingstandards had been followed along with proper explanation relating to material departures;

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

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

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

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

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

General

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

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

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

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

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

5. There has been no change in the nature of business of your Company during thefinancial year.

6. There have been no material changes and commitments affecting the financial positionof the Company between the end of the financial year and date of this report.

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

8. Your Company has complied with the Secretarial Standards as applicable issued byThe Institute of Company Secretaries of India.

9. Your Company has neither made any application nor any proceeding is pending underthe Insolvency and Bankruptcy Code 2016 (31 of 2016).

10. Your Company has not made any one-time settlement against loans taken from theBanks or Financial Institutions.

Cautionary Statement

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

Acknowledgments

Your Company has been able to operate efficiently because of the culture ofprofessionalism creativity integrity and continuous improvement across all functions andhas ensured efficient utilization of the Company's resources for sustainable andprofitable growth in the period of extreme uncertainty. The Directors hereby wish to placeon record their appreciation to each and every employee without which the overallsatisfactory performance would not have been possible. The Board also wishes to place onrecord its appreciation for the support and co -operation that your company has beenreceiving from yourselves suppliers distributors retailers investors bankers agentsgovernment departments stock exchanges and other business partners. The Directors regretthe loss of life due to Covid-19 and have immense respect for every person who riskedtheir life and safety to _ght this pandemic.

On behalf of the Board

Amit Jain
Place: Gurugram Chairman
Date: 22 May 2021 DIN 01770475

.