You are here » Home » Companies » Company Overview » Asian Paints Ltd

Asian Paints Ltd.

BSE: 500820 Sector: Consumer
NSE: ASIANPAINT ISIN Code: INE021A01026
BSE 00:00 | 15 Jun 3041.85 93.75
(3.18%)
OPEN

2961.25

HIGH

3048.95

LOW

2961.25

NSE 00:00 | 15 Jun 3042.20 92.30
(3.13%)
OPEN

2970.00

HIGH

3050.00

LOW

2960.95

OPEN 2961.25
PREVIOUS CLOSE 2948.10
VOLUME 465270
52-Week high 3048.95
52-Week low 1575.00
P/E 96.02
Mkt Cap.(Rs cr) 291,774
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00
OPEN 2961.25
CLOSE 2948.10
VOLUME 465270
52-Week high 3048.95
52-Week low 1575.00
P/E 96.02
Mkt Cap.(Rs cr) 291,774
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

Asian Paints Ltd. (ASIANPAINT) - Director Report

Company director report

Dear Members

The Board of Directors are pleased to present the Seventy-Fourth Annual Report of AsianPaints Limited along with the audited financial statements (standalone and consolidated)for the financial year ended 31st March 2020.

FINANCIAL RESULTS

The Company's financial performance for the year ended 31st March 2020 issummarized below:

Rs. crores

Standalone

Consolidated

Year ended 31.03.2020 Year ended 31.03.2019* Growth (%) Year ended 31.03.2020 Year ended 31.03.2019* Growth (%)
Revenue from Operations* 17194.09 16391.78 4.9% 20211.25 19248.45 5.0%
Earning Before Interest Taxes Depreciation and Amortisation 4214.58 3789.62 11.2% 4466.08 3998.58 11.7%
Less : Finance Cost 78.38 78.60 102.33 105.27
Less : Depreciation and Amortisation Expense 689.97 540.77 780.50 622.14
Profit For the period before share of profit in associate 3446.23 3170.25 8.7% 3583.25 3271.17 9.5%
Share of profit of Associate - - 50.74 40.73
Profit before exceptional items & tax 3446.23 3170.25 8.7% 3633.99 3311.90
Exceptional Items** 33.20 - - -
Profit Before Tax 3413.03 3170.25 7.7% 3633.99 3311.90 9.7%
Less : Tax Expense 759.08 1038.08 854.85 1098.06
Profit for the period from continuing operations 2653.95 2132.17 24.5% 2779.14 2213.84 25.5%
Profit before tax from discontinued operations - - (5.73) (7.28)
Tax expense of discontinued operations - - (0.78) (1.48)
Profit for the period from discontinued operations - - (4.95) (5.80)
Profit for the period 2653.95 2132.17 24.5% 2774.19 2208.04 25.6%
Attributable to:
Shareholders of the Company 2653.95 2132.17 24.5% 2705.17 2155.92 25.5%
Non Controlling Interest - - 69.02 52.12
Other Comprehensive Income (net of tax) 50.40 (18.18) 58.31 (13.76)
Total Comprehensive Income 2704.35 2113.99 27.9% 2832.50 2194.28 29.1%
Attributable to:
Shareholders of the company 2704.35 2113.99 27.9% 2755.61 2132.97 29.2%
Non-Controlling Interest - - 76.89 61.31
Opening balance in Retained Earnings 4424.53 3345.90 4604.60 3502.31
Amount available for Appropriation 7068.66 5451.71 7299.35 5632.52
Dividend - Interim - FY 2019-20 1007.16 - 1007.16 -
Interim - FY 2018-19 - 273.37 - 273.37
Final- FY 2018-19 733.79 - 733.79 -
Final- FY 2017-18 - 580.31 - 580.31
Tax on Dividend 353.07 173.50 353.07 173.50
Transfer to General Reserve - - - -
Transfer to Other Reserve - - 0.69 0.74
Closing balance in Retained Earnings 4974.64 4424.53 5204.64 4604.60

* Restated figures after adjusting for retrospective application of Ind AS 116 -Leases.

**Comprise of impairment provision towards investment made in Sleek InternationalPrivate Limited & Maxbhumi Developers Limited of ' 29.7 crores and ' 3.5 croresrespectively.

COMPANY PERFORMANCE OVERVIEW During the financial year 2019-20:

• During the financial year 2019-20 revenue from operations on standalone basisincreased to Rs. 17194.09 crores as against Rs. 16391.78 crores in the previous year - agrowth of 4.9%.

• Even with the loss of sales in the last fortnight of March 2020 the Companymanaged to end the year with a double digit volume growth of 11.2% for domestic decorativebusiness. Against this double digit volume growth for the year the value growth was insingle digit as we continue to focus on growing the bottom of the pyramid withconcentrated push on the upgradation of emulsions as well as large undercoats market.

• Cost of goods sold as a percentage to revenue from operations decreased to 55.3% as against 57.4% in the previous year.

• Employee cost as a percentage to revenue from operations increased to 5.7%(Rs.5.43 crores) against 5.5% (Rs.900.14 crores) in the previous year.

• Other expense as a percentage to revenue from operations increased to 16.6%(Rs.2845.44 crores) as against 15.7% (Rs.2576.21 crores) in the previous year.

• The Company has contributed Rs. 25 Crores towards COVID-19 pandemic relatedrelief activities.

• The Profit After Tax for the current year is Rs. 2653.95 crores against Rs.2132.17 crores in the previous year - a growth of 24.5%. Higher growth was due toreduction in tax rate during the year.

• On a consolidated basis the group achieved revenue of Rs.211.25 crores asagainst Rs. 19248.45 crores - a growth of 5.0%. Net profit after non-controlling interestfor the group for the current year is Rs. 2705.17 crores as against Rs. 2155.92 croresin the previous year - a growth of 25.5%.

IMPACT OF COVID-19

The country witnessed lockdown being implemented in India in the second fortnight ofMarch 2020. There were also restrictions of varying extent across larger part of theworld due to the COVID-19 pandemic. This impacted the business operations of the Companysignificantly. Since May 2020 the Company started resuming operations in itsmanufacturing plants and warehouses after taking requisite permissions from Governmentauthorities.

By staying true to its purpose and its values the top-most priority for the Companywas to ensure the safety of its employees. The Company has taken several measures toensure their well-being including leveraging the power of technology to enable them towork from home. For those employees who are working in sales offices and manufacturinglocations their safety is being ensured by stringent use of protective gear abiding bysocial distancing norms and taking all safety precautions.

Standing by its core commitment the Company is navigating through these unprecedentedtimes by building stronger and deeper relationships with consumers and its partners. TheCompany is supporting various Government Initiatives and helping communities around tofight the pandemic.

Detailed information on the same has been included under the Management Discussion& Analysis report forming part of this Annual Report.

TRANSFER TO RESERVES

The Company has not transferred any amount to the Reserves for the year ended 31stMarch 2020.

DIVIDEND

During the year under review the Company paid to its shareholders:

• First interim dividend of Rs. 3.35 (Rupees three and paise thirty-five only)(335%) per equity share of the face value of Rs. 1 (Rupee one only) each in the month ofNovember 2019; and

• Second interim dividend of Rs. 7.15 (Rupee seven and paise fifteen only) (715%)per equity share of the face value of Rs. 1 (Rupee one only) each in the month of March2020.

The Board of Directors at their meeting held on 23rd June 2020 hasrecommended payment of Rs. 1.50 (Rupees one & paise fifty only) per equity share ofthe face value of Rs. 1 (Rupee one only) each as final dividend for the financial yearended 31st March 2020. The payout is expected to be Rs. 143.88 crores (Rupeesone hundred fourty three crores and eighty eight lakhs). The payment of final dividend issubject to the approval of the shareholders of the Company at the ensuing Annual GeneralMeeting (AGM).

If approved the total dividend (interim and final dividend) for the financial year2019 - 20 will be Rs. 12 (Rupees Twelve only) per equity share of the face value of Rs. 1each (Rupee one only) [Dividend payout for the FY 2019-20 totals to Rs. 1151.04 crores(Rupees one thousand one hundred fifty one crores and four lakhs)] as against the totaldividend of Rs. 10.50 (Rupees ten and paise fifty only) per equity share of the face valueof Rs. 1 each (Rupee one only) paid for the previous financial year 2018-19 [Dividendpayout for the FY 2018-19 totals to Rs. 1007.16 crores (Rupees One Thousand and SevenCrores and Sixteen Lakhs)].

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. The Company shall accordingly make the payment of the final dividend afterdeduction of tax at source.

The dividend recommended is in accordance with the Dividend Distribution Policy of theCompany. The Dividend Distribution Policy of the Company is set out as Annexure [A] and isalso uploaded on the Company's website:https://www.asianpaints.com/more/investors/policies- programs.html.

INVESTOR EDUCATION AND PROTECTION FUND (IEPF)

In accordance with the applicable provisions of Companies Act 2013 (hereinafterreferred to as "the Act") read with Investor Education and Protection Fund(Accounting Audit Transfer and Refund) Rules 2016 (hereinafter referred to as the"IEPF Rules") all unclaimed dividends are required to be transferred by theCompany to the IEPF after completion of seven (7) years. Further according to IEPFRules the shares on which dividend has not been claimed by the shareholders for seven (7)consecutive years or more shall be transferred to the demat account of the IEPF Authority.The details relating to amount of dividend transferred to the IEPF during the FY 2019-20and corresponding shares on which dividends were unclaimed for seven (7) consecutiveyears are provided in the General Shareholders Information section of CorporateGovernance report forming part of this Annual Report.

CONSOLIDATED FINANCIAL STATEMENTS

In accordance with the provisions of the Act Regulation 33 of the Securities andExchange Board of India (Listing Obligations and Disclosure Requirements) Regulations2015 (hereinafter referred to as "Listing Regulations") and applicableAccounting Standards the Audited Consolidated Financial Statements of the Company for thefinancial year 2019-20 together with the Auditors' Report form part of this AnnualReport.

SUBSIDIARIES & ASSOCIATE COMPANIES

Financial Performance

The Management Discussion and Analysis report forming part of the Annual Reportprovides a detail overview of the operations of the subsidiaries of the Company.

A statement containing the salient features of financial statements ofsubsidiaries/joint venture companies of the Company in the prescribed Form AOC - 1 forms apart of Consolidated Financial Statements (hereinafter referred to as "CFS") incompliance with Section 129 (3) and other applicable provisions if any of the Act readwith Rules.

In accordance with Section 136 of the Act the audited financial statements includingthe CFS and related information of the Company and the financial statements of each of thesubsidiary and associate companies are available on our website www.asianpaints.com

The Company's Policy for determining material subsidiaries may be accessed on thewebsite of the Company at https://www.asianDaints.com/more/investors/Dolicies-Droarams.html .

The Company does not have a material subsidiary.

During the year under review:

a. The Board of Directors of the Company at their meeing held on 22ndJanuary 2020 approved the Scheme of Amalgamation of Reno Chemicals Pharmaceuticals &Cosmetics Private Limited (Reno) wholly owned subsidiary of the Company with the Companysubject to necessary statutory and regulatory approvals including approval of theNational Company Law Tribunal Mumbai.

The proposed Amalgamation is inter alia to maintain a simple corporatestructure eliminate duplicate corporate procedures and reduce multiplicity of legal andregulatory compliances between both the companies.

There is no consideration involved as the entire share capital of Reno is held by theCompany along with its nominees. The appointed date for the Scheme of Amalgamation is 1stApril 2019 or such other date as may be approved by the National Company Law Tribunal(NCLT) and the Scheme shall be effective from the last date of receipt of all approvalspermissions as may be required or filing of necessary certified copies of Orders under theapplicable section(s) of the Act with the Registrar of Companies Maharashtra at Mumbai.

The NCLT vide its Orders dated 22nd April 2020 and 27th April2020 inter alia admitted the Scheme of Amalgamation.

b. Asian Paints International Private Limited Singapore (APIPL) wholly ownedsubsidiary of the Company divested its entire stake in Berger Paints Singapore PteLimited Singapore (BPS) wholly owned subsidiary of APIPL to Omega Property InvestmentsPty Ltd Australia for a consideration of approx Rs. 20.81 crores (Rupees twenty croresand eighty one lakhs) on 17th September 2019. BPS had a limited presence inthe Singapore coatings market and was not material in overall Company's internationaloperations.

c. The Company has made an assessment of the recoverable value of investment in itssubsidiaries taking into account the past business performance prevailing businessconditions and revised expectations of the future performance. Accordingly an impairmentloss of approximately Rs. 29.70 crores (Rupees twenty nine crores and seventy lakhs) andRs. 3.50 crores (Rupees three crores and fifty lakhs) have been recognised towardsinvestment in Sleek International Private Limited and Maxbhumi Developers Limited (anasset holding Company having land held for sale) respectively.

DIRECTORS AND KEY MANAGERIAL PERSONNEL

Board of Directors

Retirement of Mr. KBS Anand as the Managing Director & CEO of the Company

The term of Mr. KBS Anand as the Managing Director and CEO came to an end on 31stMarch 2020 and consequently he ceased to be a Director of the Company.

Mr. KBS Anand had joined the Company in the year 1979 and has held various positions inDecorative Industrial and Chemical business functions of the Company. He was appointed asthe Managing Director & CEO of the Company w.e.f. 1st April 2012. Duringhis tenure as the Managing Director & CEO he has transformed the Company from being aPaints' major towards a complete decor solutions provider to help customers create theirdream homes.

The Board of Directors place on record their deep sense of gratitude and appreciationfor the invaluable contribution rendered by Mr. KBS Anand during his four decades longillustrious career with the Company in many roles and recently as the Managing Director& CEO of the Company for the past eight years.

Appointment of Mr. Amit Syngle as an Additional Director/Managing Director & CEO ofthe Company

The Board of Directors of the Company at their Meeting held on 28th March2020 based on the recommendations of the Nomination and Remuneration Committee of theBoard of Directors of the Company approved the appointment and remuneration of Mr. AmitSyngle as an Additional Director/Managing Director & CEO (Key Managerial Person) ofthe Company for a period of three years effective from 1st April 2020 up to 31stMarch 2023 subject to the approval of the shareholders at ensuing AGM of the Company.

The Board of Directors recommend the appointment of Mr. Amit Syngle as the ManagingDirctor and CEO of the Company. Mr. Amit Syngle has spent 30 years with the Company andhas headed Supply Chain Sales & Marketing and Research & Technology funtions. Inaddition he also spearheaded the newly acquired businesses of the Kitchens and Bathspaces in the Home Improvement venture of the Company.

Before being appointed as an Additional Director/ Managing Director & CEO Mr. AmitSyngle held the position of Chief Operating Officer of the Company.

He has been appointed as the Key Managerial Personnel of the Company in accordance withSection 203 of the Act w.e.f. 1st April 2020.

Appointment of Mr. Manish Choksi as NonExecutive Director of the Company

The Board of Directors of the Company at their meeting held on 22nd October2018 based on the recommendations of the Nomination & Remuneration Committee approvedthe appointment of Mr. Manish Choksi as a Non - Executive Promoter Director to fill thecasual vacancy created on the Board on account of the sad demise of Mr. Ashwin Choksierstwhile Chairman. The shareholders had thereafter approved the same.

In terms of sub-section (4) of Section 161 of the Act Mr. Manish Choksi holds officeupto to the date of this AGM.

The Board of Directors of the Company based on the recommendation of Nomination andRemuneration Committee have recommended the appointment of Mr. Manish Choksi as a Non -Executive Director of the Company from the date of ensuing AGM subject to approval of theshareholders in terms of Section 152 read with Section 160 of the Act liable to retireby rotation.

Retirement by rotation and subsequent reappointment

In accordance with the provisions of Section 152 and other applicable provisions ifany of the Act (including any statutory modification(s) or re-enactment(s) thereof forthe time being in force) and the Articles of Association of the Company Mr. Ashwin Daniand Ms. Amrita Vakil Non-Executive Directors are liable to retire by rotation at theensuing AGM and being eligible have offered themselves for re-appointment.

The Managing Director & CEO and Independent Directors of the Company are not liableto retire by rotation.

Mr. Ashwin Dani Chairman and Non - Executive Director of the Company having attainedthe prescribed age limit of 75 years Special Resolution is proposed in accordance withRegulation 17(1A) of Listing Regulations for approval by the Shareholders of the Company.

The Shareholders had earlier approved the continuation of directorship of Mr. AshwinDani beyond 75 years of age by passing a Special Resolution.

In the opinion of the Nomination & Remuneration Committee and Board of Directors ofthe Company considering his seniority role played by Mr. Ashwin Dani towards the growthof this Company and to reap the benefits of his rich and varied experience approval ofshareholders is sought for continuation of Mr. Ashwin Dani as a Non-Executive Directorliable to retire by rotation.

Declaration of independence from Independent Directors

The Company has received the following declarations from all the Independent Directorsconfirming that:

• They meet the criteria of independence as prescribed under the provisions of theAct read with the Schedules and Rules issued thereunder as well as of Regulation 16 ofthe Listing Regulations.

• In terms of Rule 6(3) of the Companies (Appointment and Qualification ofDirectors) Rules 2014 they have registered themselves with the Independent Director'sdatabase maintained by the Indian Institute of Corporate Affairs Manesar.

• In terms of Regulation 25(8) of the Listing Regulations they are not aware ofany circumstance or situation which exist or may be reasonably anticipated that couldimpair or impact their ability to discharge their duties.

In terms of Regulation 25(9) of the Listing Regulations the Board of Directors hasensured the veracity of the disclosures made under Regulation 25(8) of the ListingRegulations by the Independent Directors of the Company.

CHANGE IN KEY MANAGERIAL PERSON Retirement of Mr. Jayesh Merchant as CFO & CompanySecretary President - Industrial JVs from the Company

Mr. Jayesh Merchant retired from the services of the Company w.e.f. 26thNovember 2019.

Mr. Jayesh Merchant had joined the Company in the year 2002 as Vice President- Finance& Company Secretary. The Board of Directors designated him as the Chief FinancialOfficer of the Company in 2006. Since November 2012 he also headed the Industrialbusinesses of the Company operated in India through two joint ventures companies with PPGInc. USA.

The Board places on record its appreciation of the contribution of Mr. Jayesh Merchantduring his association with the Company.

Appointment of Mr. R J Jeyamurugan as the CFO

6 Company Secretary of the Company

Mr. R J Jeyamurugan was appointed as the CFO & Company Secretary of the Companyw.e.f. 27th November 2019.

Mr. R J Jeyamurugan is an associate member of the Institute of Chartered Accountants ofIndia (ICAI) and the Institute of Company Secretaries of India (ICSI). He joined theCompany in the year 1991. He has considerable experience in the areas of financeaccounts secretarial and taxation matters. He has held important positions in theorganization including Assistant Company Secretary during August 1997 to May 1999. Heheads the Finance Accounts Shared Service Centre Tax Legal Secretarial & Investorrelations functions of the Company.

Before his appointment as the CFO & Company Secretary he held the position of VicePresident - Finance of the Company. He has also been the Compliance Officer of the Companysince May 2018.

NUMBER OF MEETINGS OF THE BOARD

7 (seven) meetings of the Board of Directors were held during the financial year 2019 -20. The details of the meetings of the Board of Directors of the Company convened andattended by the Directors during the financial year 2019-20 are given in the CorporateGovernance Report which forms part of this Annual Report.

NOMINATION AND REMUNERATION POLICY

The salient features of the Nomination and Remuneration Policy of the Company are setout in the Corporate Governance Report which forms part of this Annual Report.

The said Policy of the Company inter alia provides that the Nomination andRemuneration Committee shall formulate the criteria for appointment & re-appointmentof Directors on the Board of the Company and persons holding Senior Management positionsin the Company including their remuneration and other matters as provided under Section178 of the Act and Listing Regulations.

The Policy is also available on the website of the Companyhttps://www.asianpaints.com/more/investors/ policies-programs.html .

REMUNERATION OF DIRECTORS KEY MANAGERIAL PERSONNEL AND SENIOR MANAGEMENT

The remuneration paid to the Directors Key Managerial Personnel and Senior Managementis in accordance with the Nomination and Remuneration Policy formulated in accordance withSection 178 of the Act and Regulation 19 of the Listing Regulations.

The information required under Section 197 of the Act read with Companies (Appointmentand Remuneration of Managerial Personnel) Rules 2014 in respect of Directors/employees ofthe Company is set out in the Annexure [B] to this report and is also available on thewebsite of the Company (www.asianpaints.com ).

PERFORMANCE EVALUATION

The Nomination and Remuneration Policy of the Company empowers the Nomination andRemuneration Committee to formulate a process for effective evaluation of the performanceof Individual Directors Committees of the Board and the Board as a whole.

The Board formally assesses its own performance based on parameters which interalia include performance of the Board on deciding long term strategy rating thecomposition and mix of Board members discharging of governance and fiduciary dutieshandling critical and dissenting suggestions etc.

The parameters for the performance evaluation of the Directors include contributionmade at the Board meeting attendance instances of sharing best and next practicesdomain knowledge vision strategy engagement with senior management etc.

The Chairperson(s) of the respective Committees based on feedback received from theCommittee members on the outcome of performance evaluation exercise of the Committeeshares a report to the Board.

The Independent Directors at their separate meeting review the performance of:non-independent directors and the Board as a whole Chairperson of the Company aftertaking into account the views of Executive Director and non-executive directors thequality quantity and timeliness of flow of information between the Company management andthe Board that is necessary for the Board to effectively and reasonably perform theirduties.

Based on the outcome of the performance evaluation exercise areas have been identifiedfor the Board to engage itself with and the same would be acted upon.

The details of the evaluation process are set out in the Corporate Governance Reportwhich forms a part of this Annual Report.

FAMILIARIZATION PROGRAM FOR INDEPENDENT DIRECTORS

All new independent directors inducted into the Board are familiarized with theoperations and functioning of the Company. The details of the training and familiarizationprogram are provided in the Corporate Governance report.

DIRECTORS' RESPONSIBILITY STATEMENT

Pursuant to Section 134 of the Act (including any statutory modification(s) orre-enactment(s) thereof for the time being in force) the Directors of the Company statethat:

a. in the preparation of the annual accounts for the financial year ended 31stMarch 2020 the applicable Accounting Standards and Schedule III of the Act have beenfollowed and there are no material departures from the same;

b. the Directors have selected such accounting policies and applied them consistentlyand made judgements and estimates that are reasonable and prudent so as to give a true andfair view of the state of affairs of the Company as at 31st March 2020 and ofthe profits of the Company for the financial year ended 31st March 2020;

c. proper and sufficient care has been taken for the maintenance of adequate accountingrecords in accordance with the provisions of the Act for safeguarding the assets of theCompany and for preventing and detecting fraud and other irregularities;

d. the annual accounts have been prepared on a Rs.going concern' basis;

e. proper internal financial controls laid down by the Directors were followed by theCompany and that such internal financial controls are adequate and operating effectively;and

f. proper systems to ensure compliance with the provisions of all applicable laws werein place and that such systems are adequate and operating effectively.

MANAGEMENT DISCUSSION AND ANALYSIS

Management Discussion and Analysis as stipulated under the Listing Regulations ispresented in a separate section forming part of this Annual Report.

AUDITORS AND AUDITORS' REPORT Statutory Auditor

M/s. Deloitte Haskins & Sells LLP Chartered Accountants (Firm Registration No.117366W/W-100018) were appointed as Statutory Auditors of the Company at the 70thAGM held on 28th June 2016 to hold office till the conclusion of the 75thAGM.

M/s. Deloitte Haskins & Sells LLP has confirmed that they are not disqualified fromcontinuing as Auditors of the Company.

The Auditors have issued an unmodified opinion on the Financial Statements for thefinancial year ended 31st March 2020. The Auditors' Report for the financialyear ended 31st March 2020 on the financial statements of the Company is apart of this Annual Report.

Cost Auditor

The Company has maintained cost records for certain products as specified by theCentral Government under sub-section (1) of Section 148 of the Act. M/s. R A & Co.Cost Accountants (Firm Registration No. 000242) carried out the cost audit for applicablebusinesses during the financial year 2019 - 20.

The Board of Directors of the Company on the recommendations made by the AuditCommittee have appointed M/s. RA & Co. Cost Accountants (Firm Registration No.000242) as the Cost Auditor of the Company to conduct the audit of cost records of certainproducts for the financial year 2020 - 21. M/s. RA & Co. being eligible haveconsented to act as the Cost Auditors of the Company for the FY 2020 - 21.

The remuneration proposed to be paid to the Cost Auditor subject to ratification bythe members of the Company at the ensuing 74th AGM would not exceed Rs. 8lakhs (Rupees Eight Lakhs only) excluding taxes and out of pocket expenses if any.

Secretarial Auditor

The Board of Directors of the Company has appointed Dr. K R Chandratre PracticingCompany Secretary (Certificate of Practice No. 5144) as the Secretarial Auditor toconduct an audit of the secretarial records for the financial year 2020 - 21. The Companyhas received consent from Dr. K. R. Chandratre to act as the auditor for conducting auditof the secretarial records for the financial year ending 31st March 2021.

The Secretarial Audit Report for the financial year ended 31st March 2020under Act read with Rules made thereunder and Regulation 24A of the Listing Regulations(including any statutory modification(s) or re-enactment(s) thereof for the time being inforce) is set out in the Annexure [C-1] to this report.

The Secretarial Compliance Report for the financial year ended 31st March2020 in relation to compliance of all applicable SEBI Regulations/circulars/ guidelinesissued thereunder pursuant to requirement of Regulation 24A of Listing Regulations isset out in Annexure [C-2] to this report. The Secretarial Compliance Report has beenvoluntarily disclosed as part of Annual Report as good disclosure practice.

The Secretarial Audit Report and/or Secretarial Compliance Report does not contain anyqualification reservation or adverse remark.

COMMITTEES

As on 31st March 2020 the Board has six committees: Audit CommitteeCorporate Social Responsibility Committee Nomination and Remuneration Committee RiskManagement Committee Stakeholders Relationship Committee and Shareholders Committee.

During the year all recommendations made by the committees were approved by the Board.

A detailed note on the composition of the Board and its committees is provided in theCorporate governance report.

CORPORATE SOCIAL RESPONSIBILITY (CSR)

During the financial year ended 31st March 2020 the Company incurred CSRExpenditure of Rs. 74.64 crores (Rupees seventy four crores and sixty four lakhs). The CSRinitiatives of the Company were under the thrust area of health & hygiene educationwater management and vocational training. The CSR Policy of the Company is available onthe website of the Company at https://www. asianDaints.com/about-us.html .

The Company's CSR Policy statement and annual report on the CSR activities undertakenduring the financial year ended 31st March 2020 in accordance with Section135 of the Act and Companies (Corporate Social Responsibility Policy) Rules 2014(including any statutory modification(s) or re- enactment(s) thereof for the time being inforce) is set out in Annexure [D] to this report.

The Company has committed Rs. 35 crores towards COVID-19 pandemic related reliefactivities out of which Rs. 15 crores was spent as CSR in the FY 2019-20. Thecontribution was made to the Central as well as other Disaster Relief State funds tocombat COVID-19 pandemic.

CORPORATE GOVERNANCE REPORTAND BUSINESS RESPONSIBILITY REPORT

In compliance with Regulation 34 of the Listing Regulations a separate report onCorporate Governance along with a certificate from the Auditors on its compliance and aBusiness Responsibility Report as per Regulation 34 of the Listing Regulations detailingthe various initiatives taken by the Company on the environmental social and governancefront forms part of this Annual Report.

EXTRACT OF ANNUAL RETURN

The extract of the Annual Return of the Company as on 31st March 2020 in Form MGT - 9in accordance with Section 92 (3) of the Act read with Companies (Management andAdministration) Rules 2014 is available on the website of the Company athttps://www.asianpaints.com/more/ investors/financial-results.html and is set out inAnnexure [E] to this Rport.

RELATED PARTY TRANSACTIONS

AH contracts/arrangements/transactions entered into by the Company during the yearunder review with Related Parties were in ordinary course of business and on arm's lengthbasis in terms of provisions of the Act.

The Company's Policy on dealing with and Materiality of Related Party Transactions isavailable on the website of the Company at https://www.asianpaints.com/more/investors/policies-programs.html .

All transactions with related parties were reviewed and approved by the Audit Committeeand are in accordance with the Policy on dealing with and materiality of Related PartyTransactions and the Related Party Framework formulated and adopted by the Company.During the year under review the Related Policy Framework was suitably amended to giveeffect to the changes in the relevant provisions of law.

There are no materially significant related party transactions that may have potentialconflict with interest of the Company at large. There are no person(s) or entities formingpart of the Promoter(s)/Promoter(s) Group which individually hold 20% or more shareholdingin the Company.

The details of the related party transactions as per Indian Accounting Standards (INDAS) - 24 are set out in Note 43 to the Standalone Financial Statements of the Company.

The Company in terms of Regulation 23 of the Listing Regulations submits within 30 daysfrom the date of publication of its standalone and consolidated financial results for thehalf year disclosures of related party transactions on a consolidated basis in theformat specified in the relevant accounting standards for annual results to the stockexchanges. The said disclosures can be accessed on the website of the Company athttps://www.asianpaints.com/more/investors.html .

Form AOC - 2 pursuant to Section 134 (3) (h) of the Act read with Rule 8(2) of theCompanies (Accounts) Rules 2014 is set out in the Annexure [F] to this report.

LOANS AND INVESTMENTS

Details of loans guarantees and investments under the provisions of Section 186 of theAct read with the Companies (Meetings of Board and its Powers) Rules 2014 as on 31stMarch 2020 are set out in Note 37(B) to the Standalone Financial Statements of theCompany.

RISK MANAGEMENT

The Company operates in a volatile uncertain complex and ambiguous (VUCA) world withrapid changes. These changes bring a mix of opportunities and uncertainties impacting theCompany's objectives. Risk Management which aims at managing the impact of theseuncertainties is an integral part of the Company's strategy setting process. The Companyregularly identifies these uncertainties and after assessing them devises short-term andlong-term actions to mitigate any risk which could materially impact the Company'slong-term goals.

The Risk Management Committee of the Company has been entrusted by the Board with theresponsibility of reviewing the risk management process in the Company and ensuring thatthe risks are brought within acceptable limits.

Mitigation plans to significant risks are well integrated with functional and businessplans and are reviewed on a regular basis by the senior leadership.

The Company endeavors to continually sharpen its Risk Management systems and processesin line with a rapidly changing business environment. The Company through its riskmanagement process aims to contain the risks within its risk appetite. There are no riskswhich in the opinion of the Board threaten the existence of the Company. However some ofthe risks which may pose challenges are set out in the Management Discussion and Analysiswhich forms part of this Annual Report.

The Board of Directors of the Company on the recommendation of the Risk ManagementCommittee has developed risk management policy for the Company which articulates theCompany's approach to address the uncertainities in its endeavour to achieve its statedand implicit objectives.

VIGIL MECHANISM

The Company has a robust vigil mechanism through its Whistle Blower Policy approved andadopted by Board of Directors of the Company in compliance with the provisions of Section177 (10) of the Act and Regulation 22 of the Listing Regulations.

The Company has engaged an agency for managing an Rs.Ethics Hotline' which can be usedto inter alia report any instances of financial irregularities breach of code ofconduct abuse of authority disclosure of financial/unpublished price sensitiveinformation other than for legitimate purposes unethical/unfair actions concerningCompany vendors/suppliers mala-fide manipulation of Company records discrimination tothe Code of Conduct in an anonymous manner.

The Policy also provides protection to the directors employees and business associateswho report unethical practices and irregularities.

Any incidents that are reported are investigated and suitable action is taken in linewith the Whistle Blower Policy.

The Whistle Blower Policy of the Company can be accessed at website of the Company athttps://www.asianpaints. com/more/investors/Dolicies-Droorams.html .

POLICY ON PREVENTION OF SEXUAL HARASSMENT AT WORKPLACE

As per the requirements of the Sexual Harassment of Women at Workplace (PreventionProhibition and Redressal) Act 2013 (hereinafter referred to as "Prevention ofSexual Harassment Act") the Company has formulated a Policy on Prevention of SexualHarassment at Workplace for prevention prohibition and redressal of sexual harassment atworkplace and an Internal Complaints Committees has also been set up to redress any suchcomplaints received.

The Company is committed to providing a safe and conducive work environment to all ofits employees and associates.

The Company periodically conducts sessions for employees across the organization tobuild awareness about the Policy and the provisions of Prevention of Sexual HarassmentAct.

Complaints of sexual harassment received during the financial year 2019-20 by theCompany were investigated in accordance with the procedures prescribed and adequate stepswere taken to resolve them.

INTERNAL FINANCIAL CONTROLS RELATED TO FINANCIAL STATEMENTS

Internal financial control over financial reporting have been designed to providereasonable assurance with regards to recording and providing reliable financialinformation and complying with applicable accounting standards. These controls arereviewed periodically and the Company continuously tries to automate these controls toincrease its reliability.

The Company uses an established ERP system of SAP S/4 HANA to record day to daytransactions for accounting and financial reporting. The ERP system is configured toensure all transactions are integrated seamlessly with the underlying books of account.

During the year the Company upgraded its core Navision based ERP system to the latestSAP S/4 HANA version for its International business units except subsidiaries in South

Pacific. All key internal controls over financial reporting were thoroughly testedalong with the core functionalities before migrating to the new system.

The Shared Services Center (SSC) further increased the coverage of digital invoiceprocessing during the year. This has made the process touchless and seamless. Necessaryvalidations built in ensures compliance to statutes and internal policies are adhered to.

The Company has invested in an RPA (Robotic Process Automation) to help in doing theGST reconciliation with the data uploaded by the vendors. This has brought aboutsignificant efficiencies and enabled the Company to follow up with the vendors in a timelymanner so that GST credits taken are not lost.

The Company has a well-defined and documented delegation of authority with specifiedlimits for approval of expenditure both capital and revenue. The Company has workflows toensure adherence to the delegation of authority.

The Company has a commercial manual which lays down certain principles and proceduresthat are to be followed in commercial & purchase contracts transactions across theCompany. The SSC verifies the compliance to commercial manual before clearing thepayments.

The Company periodically tracks all amendments to Accounting Standards and makeschanges to the underlying systems processes and financial controls to ensure adherence tothe same. All resultant changes to the policy and impact on financials are disclosed afterdue validation with the Audit Committee.

Corporate accounts function is actively involved in designing large process changes aswell as validating changes to IT systems that have a bearing on the books of account.

The Company gets its Standalone financial statements audited every quarter by itsStatutory Auditors. The policies to ensure uniform accounting treatment are prescribed tothe subsidiary companies as well. International subsidiaries provide information requiredfor consolidation of accounts in the format prescribed by the Company. The accounts of thesubsidiary and joint venture companies are audited and certified by their respectiveStatutory Auditors for consolidation.

OTHER DISCLOSURES

a. There are no material changes and commitments affecting the financial position ofthe Company which have occurred between the end of the financial year 2019-20 and the dateof this report;

b. During the year under the review there was no change in the nature of business ofthe Company.

In the beginning of financial year 2020-21 the Company has expanded its health andhygiene segment by the launch of Viroprotek range of hand sanitisers and Surfacedisinfectants. This was with a view to address the growing requirement of hand and surfacesanitizers for increased protection and assist the Government in fighting against theCOVID-19 pandemic;

c. During the year under review the Company has not accepted any deposit within themeaning of Sections 73 and 74 of the Act read with the Companies (Acceptance of Deposits)Rules 2014;

d. The Company has complied with Secretarial Standards issued by the Institute ofCompany Secretaries of India on Meetings of the Board of Directors and General Meetings;

e. There are no significant material orders passed by the Regulators or Courts orTribunals impacting the going concern status of the Company and its operations in future;

f. The Competition Commission of India has passed a prima facie Order dated 14thJanuary 2020 directing the Director General to cause an investigation against theCompany under the provisions of Section 26(1) of the Competition Act 2002.

This Order is for initiating an investigation against the Company under the relevantprovisions of the Competition Act but it in no way affects the going concern status ofthe Company;

g. The Managing Director & CEO of the Company has not received any remuneration orcommission from any of the subsidiary companies. Further the Company doesn't have anyholding Company;

h. None of the Auditors of the Company have reported any fraud as specified under thesecond proviso of Section 143 (12) of the Act;

i. The information on conservation of energy technology absorption and foreignexchange earnings and outgo as stipulated under Section 134 of the Act read with theCompanies (Accounts) Rules 2014 is set out in the Annexure [G] to this report;

j. The Company does not have any scheme or provision of money for the purchase of itsown shares by employees/ Directors or by trustees for the benefit

of employees/ Directors;

k. The Company has not issued equity shares with differential rights as to dividendvoting or otherwise;

l. The Company has not issued any sweat equity shares to its directors or employees;and

m. There was no revision of financial statements and Boards report of the Companyduring the year under review.

APPRECIATION

The Board of Directors place on record sincere gratitude and appreciation for all theemployees at all levels for their hard work solidarity cooperation and dedication duringthe year.

The Board conveys its appreciation for its customers shareholders suppliers as wellas vendors bankers business associates regulatory and government authorities for theircontinued support.

For and on behalf of the Board of Directors
Ashwin Dani
Chairman
(DIN: 00009126)
Place : Mumbai
Date : 23rd June 2020