AND MANAGEMENT DISCUSSION AND ANALYSIS
Your Directors have pleasure in presenting the Annual Report of the Company togetherwith the audited accounts for the financial year ended on 31st March 2018.
| || |
Financial Year ended
|Particulars || |
| ||2017-18 ||2016-17 ||2017-18 ||2016-17 |
|Profit before Exceptional Items Depreciation Finance Cost and Tax ||789.93 ||710.43 ||852.86 ||773.10 |
|Add: Exceptional Items ||- ||58.67 ||- ||44.20 |
|Add: Share of Profit from Joint Ventures ||- ||- ||0.64 ||10.05 |
|Less: || || || || |
|Depreciation ||111.92 ||98.00 ||124.21 ||108.05 |
|Finance Cost ||16.20 ||7.76 ||24.55 ||16.22 |
|Profit Before Tax ||661.81 ||663.34 ||704.74 ||703.08 |
|Less: || || || || |
|Provision for Taxation ||229.97 ||219.25 ||243.91 ||229.42 |
|Profit After Taxation ||431.84 ||444.09 ||460.83 ||473.66 |
|Add: || || || || |
|Other comprehensive income (loss for the year net of tax) ||1.16 ||(1.44) ||34.44 ||(18.94) |
|Total comprehensive income ||433.00 ||442.65 ||495.27 ||454.72 |
Highlights of the Standalone Results:
a. Revenue from Operations (excluding GST and excise duty on sales as applicable) forthe year ended 31st March 2018 was '4705.09 crore (previous year: '4228.86 crore)representing an increase of 11.3%.
b. PBDIT (Profit Before Exceptional Items Depreciation Interest and Tax) for the yearended 31st March 2018 was '789.93 crore against '710.43 crore inthe year 2016-17representing an increase of 11.2%.
c. Profit before tax and net profit for the year ended 31st March 2018 are notcomparable with those for the year 2016-17 since the same included exceptional items viz.profit on transfer of the Company's paint division relating to 4 wheeler passengercars and SUV's 3 wheelers and related ancillaries and impairment provision on thecarrying value of investment in a wholly owned subsidiary.
Highlights of the Consolidated Results:
a. Revenue from operations (excluding GST and excise duty on sales as applicable) forthe year ended 31st March 2018 was '5147.16 crore (previous year: '4555.79 crore) - anincrease of 13.0%.
b. PBDIT (Profit Before Exceptional Items Depreciation Interest and Tax) for the yearended 31st March 2018 was '852.86 crore against '773.10 crore inthe year 2016-17representing an increase of 10.3%.
c. Profit before tax and net profit for the year ended 31st March 2018 are notcomparable with those for the year 2016-17 since the same included the exceptional itemsof profit on transfer of the Company's paint division relating to 4 wheelerpassenger cars and SUV's 3 wheelers and related ancillaries.
d. It is to be noted that the Company acquired 100% of the paid up equity share capitalof Saboo Coatings Private Limited ("SCPL") after close of business hours on 5thJune 2017. Accordingly the consolidated financial results incorporate the financialresults of SCPL for the relevant period and are not as such comparable with those forthe same period previous year.
MANAGEMENT DISCUSSION AND ANALYSIS PAINT INDUSTRY STRUCTURE AND DEVELOPMENT
Paint industry is classified into two broad categories viz. decorative orarchitectural and industrial paints. Decorative paints include higher end acrylic exteriorand interior emulsions medium range exterior and interior paints low end distemperswall putty wood coatings cement paints primers thinners and putties - accounting foralmost 80% of the paint market in India. These are either water based or solvent based.Water based paints (or emulsions) are increasingly getting popular owing to superioraesthetics durability washability and for environmental reasons. Water based paintsconstitute the fastest growing segment in the Indian paint industry.
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 can coatings and marinecoatings. The Company has been able to mark its presence in some of these niche and hightechnology areas - as detailed elsewhere in this Report.
The paint industry continued to grow at a much higher clip than the overall real GDPgrowth rate. In the previous year the demonetisation had affected the growth ratesresulting in some contraction in demand mainly in the retail market. The market hadrevived but once again there was a sharp decline in overall growth rates consequent uponthe rolling out of GST which was expected. The change-over was essential and justifiedand this time too the Company believed that the effect would be short lived given thecountry's innate resilience to a transforming environment. Predictably the GDP once againtook an upturn from the second half of 2017-18 and it is estimated that it has been morethan 6.5% in the financial year. The prognosis for FY 2018-19 is around 7.5%. The percapita consumption of paints in India slightly higher than 3 kgs is much lower incomparison to the developed economies around the world and this accounts for higher shareof the total paint consumption by the decorative sector compared to the industrial paintbusiness unlike in those countries. In the decorative business too there are thesegments of fresh painting and repainting and the latter accounts for a much higher shareof the total demand. New build painting would depend on real estate growth which has seena dip in the recent times.
Industrial paints as a block serves automobiles utility vehicles such as tractorsgeneral industrial goods machinery and household equipment such as fans andrefrigerators structures and pipelines steel glass and every other item of daily use.These depend on the growth of the manufacturing and infrastructure sectors. India isexpected to become the fifth largest manufacturing country in the world by the end of year2020. Under the Make in India initiative the Government of India aims to increase theshare of the manufacturing sector to the gross domestic product (GDP) to 25 per cent by2022 from the existing 16 per cent. The manufacturing sector of India has the potentialto reach USS 1 trillion by 2025 and India is expected to rank amongst the top three growtheconomies and manufacturing destination of the world by the year 2020. These factors areexpected to significantly boost industrial paint consumption.
Over the last five years (FY 13-14 to FY 17-18) the CAGR of EBIDTA was 17.2% .Consistent with the overall distribution pattern in the industry Decorative paintscontinue to be the largest business segment for the Company. The second half of the yearwitnessed better results than the first half boosted by the overall revival in theeconomy. All other Businesses viz. General Industrial and Automotive Protective Coatingsand Powder also posted consistent growth in terms of volume value and EBIDTA. Drivingthese efforts were deployment of right marketing strategies suited to specific needs ofthe individual Businesses network expansion innovation based on market needs andexpansion of product range implementation of correct systems improvement ofproductivity and empowering teams comprising the right people - equipping them withappropriate business tools. Implementation of the GST in the ERP system and outside in aseamless manner without majorly impacting business was carried out in seamless fashion.
The Company's premium Decorative products can be classified into interior wallcoatings exterior wall coatings metal finishes wood finishes and undercoats. Theofferings include Silk Glamor Luxury Interior Emulsion formulated with crystal reflectivetechnology to give an ultra-smooth finish to the walls which retains its freshness for along time WeatherCoat Long Life a luxury category exterior emulsion using polyurethaneand silicone technology designed for heavy rainfall areas WeatherCoat Anti Dustt -protecting against settlement of dust on the walls - for dry and dusty regions Luxol XTRASuper Gloss Enamel with superior mirror like gloss which can be used both for exterior andinterior surfaces mainly on mild steel wooden and suitably prepared masonry surfaces anda wide array of other water based and solvent based products such as Silk Luxury EmulsionEasy Clean WeatherCoat All Guard Luxol Satin Enamel and Luxol High Gloss Enamel. Allthese together with products like Bison and Butterfly Distemper texture finishesincluding WeatherCoat Hi-Build and WeatherCoat Tartaruga performed well. Wood finishessuch as Imperia Luxury Polyurethane Woodkeeper Easyclean 2K PU and Woodkeeper MelamineFinish found widespread acceptance with the customers.
In the area of construction chemicals Waterproof Putty - targeted to counter milddampness and Dampstop for extremely moist areas grew well. So did others such asCementmix Plus Crack Fill Paste Latex Plus etc. The Construction Chemicals Businesscontinued on a high growth curve. Waterproof Putty won the Innovative Product of the YearAward from Construction Times and Inex Realty +.
The Company's Prolinks Business targeted towards large housing projects clockedsatisfactory growth. Express Painting - a hassle free solution for painting housesand flats for individual consumers which is 40 per cent faster than traditional paintingand can be carried out at the same cost also continued to perform well with more than90% of the customers satisfied with the services and the paints. The services encompassdedicated customer executive engagement of automatic machines ascertainment of paintingrequirements faster cleaning and actual painting and damage protection measures sitesupervision on site delivery of paints and call centre access. The Company continuouslyprovides training to the people who are involved in the whole process for the purpose ofproviding the best services.
Despite somewhat sluggish progress among the customer industries the Company's GeneralIndustrial and Automotive Business could increase its sales both in terms of volume andvalue through higher share of business in existing customers and enrichment of customerbase. The Business comprise paints for general industrial purposes two wheelerscommercial vehicles and ACE (agricultural and commercial equipment) etc. The PowderCoatings Business continued to perform well. It started exporting its products to othercountries.
The Company's leadership position in protective coatings continued despite increasingcompetition from both domestic and international companies. The Business serves varioussectors which include OEM's contractors dealers and fabricators and commands a premiumbecause of its quality and experience in the field. In this area also the prospects amongits customers were somewhat dampened because of slow industrial and infrastructure growth.The Company's paints were approved by major customers and it developed an array ofinteresting products such as floor coatings and fluoro-polymer based paints for coaches.As had been reported in the previous year the Company had entered into Memorandum ofUnderstanding with Promat International Limited NV of Belgium ("Promat") forcooperation in the field of passive fire protection and high performance insulationcoatings in India and certain neighbouring territory. The MOU envisages productiondistribution and supply of specialised fire resistant coatings which may range fromlightweight and thin films to cement based wet mix products suitable for steel andconcrete offering various degrees of efficiency in fire resistance. The Company had alsoentered into another Memorandum of Understanding with Chugoku Marine Paints Ltd. of Japanfor cooperation and collaboration in the field of marine and related industrial paints inIndia. The MOU envisages joint efforts in marketing supplying and purchasing marinerelated industrial paints. The Company has started supplying these paints to prestigiouscustomers.
It was reported in the previous year that the Company had entered into a Memorandum ofUnderstanding with ROCK PAINT CO. LTD ("ROCK PAINT") of Japan for marketing ofautomotive refinish paints in India. ROCK PAINT is a leading manufacturer of automotiverefinish paints in Japan and is well known in the industry for the quality and utility ofits products. These paints have been tested in the market and accepted by the consumers.Based on the marketing results both the companies may move towards a strategic alliancein the future.
The factories of the Company provided all out support to the Sales in a market whichfluctuated during the year at times in an unpredictable manner. The internal customersatisfaction index of manufacturing function stands on the pillars of timely deliveryaccurate quality and desired quantity. Equal stress is applied on cost effective energyefficient manufacturing process environment management safety and housekeeping. All thefactories scored well on these parameters. The Company is continuously attempting toenhance the manufacturing flexibility of the factories and has been successful in thisrespect. Among the newer plants both the larger Naltoli plant near Tezpur and the Nalbariplant of the British Paints Division near Guwahati in Assam have fully stabilised. InJejuri located near Pune in Maharashtra the general industrial and automotive coatingmanufacturing facilities have been standardised. The Vallabhvidya Nagar ("VVN")plant belonging to Beepee Coatings Private Limited a wholly owned subsidiary of theCompany was awarded the second prize for energy conservation by the Ministry of PowerGovernment of India. It also won the first prize in the 8th Asia Regional 3R Forumorganised by the Ministry of Housing and Urban Development Government of India. Team VVNwon the TQM award from Quality Circle of India. Beepee Coatings has also won the CIINational Energy Efficiency
Circle Award 2018 as the Best Energy Efficient Organisation Operators. Employees fromPuducherry and Rishra factories participated in State level conventions and competitionson quality.
Crude oil and crude oil linked derivatives such as monomers and solvents are key rawmaterials of the Company. The average price of crude rose by about 17% in the last yearwith a cascading effect on monomer prices. Titanium dioxide another key raw material forthe paint industry also saw a sharp rise in prices. While some of these were absorbedthe Company was constrained to seek price rises to offset a part of the impact. The priceincrease in raw materials was coupled with global supply constraints in some major items.The Company continues its efforts to source raw materials from new suppliers expand itsvendor base introduce alternate raw materials and pro-actively engage with the suppliersfor ensuring smooth supplies and exploring means of reducing costs of raw materials.
The Company with its dedicated team of scientists and technologists continues toinvest in research and development (R&D) in terms of manpower equipment andfacilities to first churn out ideas and then turn these ideas into commercially viabletechnologies. The majority of the Company's research focuses on the near term to help theexisting businesses to offer new solutions lower capital and operating costs providealternate raw materials and to enhance customer products and services. For the longerterm the Company aims to build up strength on futuristic applications which may sparkfresh insights in the field of coatings and construction chemicals and may become usefulat a later stage. In the process the Company also collaborates with public or privateentities including universities Government organisations vendors technology start-upsand incubators. A number of new products were introduced during the year including highgloss exterior paints water based exterior sealer and top coat in wood coatings siliconeenriched PU coatings for exteriors various primers and topcoats including monocoatfluoro polymer based topcoat etc. Wherever necessary these are certified by the testingagencies. A number of exciting products are lined up by the Company for roll out in thenear future.
During the year the Company acquired 100% of the paid up equity shares of SabooCoatings Private Limited details of which are provided in a separate section.
The Company had also entered into an agreement for acquisition of 10303580 equityshares of Saboo Hesse Wood Coatings Private Limited ("SHWCPL") representing 51%ofthepaidup share capital of SHWCPL. The balance 49% is held by Hesse Shares GmbH ofGermany. SHWCPL manufactures imports and sells a wide variety of wood coatings. Duediligence for the transaction is in process. The intimation made by the Company pursuantto Regulation 30 of SEBI (Listing Obligations and Disclosure Requirements) Regulations2015 can be viewed at the following weblink: https://www.bergerpaints.com/media/media.
Pursuant to the approval accorded by the shareholders by postal ballot on 17th July2017 in terms of the provisions of Sections 13 and 110 of the Companies Act 2013 and therelevant Rules the Memorandum of Association of the Company stands amended to includecertain businesses such as manufacture and sale of items relating to home improvementetc.
FOCUS AND OUTLOOK FOR 2018-19
As mentioned in the earlier part of the Report while the first quarter of the year2017-18 saw the impact of demonetisation settling down in the next quarter introductionof the landmark Goods and Services Tax (GST) brought in some uncertainties as businessesadjusted to the new regime. However from the third quarter onwards signs of growthreturning were evident and the lack of enthusiasm seen at the beginning of2017 bottomedout as2018 set in. Currently the bellwether indicators of industrial production stockmarket index and exports are showing some uptick. The IMF expects India to grow at 7.4%during 2018 which could increase further to 7.8% during 2019 in contrast to 6.7% during2017. The Economic Survey for 2017-18 pegs the figure at 7-7.5% for the financial yearahead. In the World Economic Outlook Update it also estimated that the Indian economywould grow by 7.8 per cent in 2019 which will make the country the world'sfastest-growing economy in2018 and 2019 the top ranking it briefly lost in2017 to China.
The challenges for 2018 and ahead will be to maintain the economic trajectory in theface of increasing inflationary pressures coupled with a higher fiscal deficit as well asan increasing debt burden. The key to this question possibly lies in the revival ofconsumer demand investments in infrastructure and private investment. The sustainabilityof the recovery will also depend on effective implementation of key reforms such as GSTe-Waybills the Real Estate (Regulation and Development) Act 2016 or RERA etc. rolledout in the last few years. The Government is keen upon rural development and implementinga number of projects such as Mission Antodaya MGNREGA etc.
The above when they happen are bound to increase consumption of paints. Moreover thehuge and increasing young population is inclined towards experimenting with new and valueadded products. The Company will continuously strive to assure supplies and fulfil demands- which are diverge and disparate across seasons geographical locations demography andcultures - through targeted production logistics and distribution strategies.
After completion of major projects at Assam and Maharashtra in the previous year theCompany completed installation of the facility for production of colorants an essentialingredient for manufacturing paints at Rishra West Bengal in October 2017. Theinstallation of the finished goods warehouse at Jammu with an Automatic Storage andRetrieval System (ASRS) was concluded during the year. The Company's superfine texturecoating manufacturing capability was enhanced by 4200 MT/annum at the factory of theBritish Paints Division at Gollapuram in Hindupur.
The first phase of the emulsion plant with a final capacity of 44160 Metric Tonnes perannum in Rishra West Bengal was completed in May 2018.
The fourth line of the powder coating plant at Jejuri in Maharashtra with an estimatedcapacity of 325 MT/month is expected to be installed during the year.
The phase II expansion of the automotive and general industrial and protective coatingsplant at Jejuri at Maharashtra has commenced. The plant will have an estimated capacity of27000 KL of paints per annum and 12000 MT of resin per annum. This is likely to becompleted in the year 2019-20.
The Company has just started preliminary work for installation of water and solventbased decorative industrial and protective coatings resin putty emulsion andconstruction chemical manufacturing facility at an estimated investment of '200 crore atSandila Industrial Area in Uttar Pradesh. Subject to the Company obtaining all requiredconsents and approvals in time the Project is likely to be completed in the year 2021.
Installation of an acrylic CED Project mainly for two wheelers with a capacity of3000 KL per annum is in progress at Howrah and is likely to be completed in the year. Thefinished goods warehouse at the VVN factory is being revamped with ASRS for enhancingstorage capacity.
OPPORTUNITIES AND THREATS
India is one of the world's largest economies and the phenomenal growth rate hasconsiderably reduced poverty in the last decade within a democratic framework. Thecountry's 130 crore people come from a wide range of economic and cultural background. Avery large percentage of the population is young educated and ambitious. Annually morethan 1 crore people leave the rural areas to live in the cities for a higher quality oflife. The Indian middle class is almost 25 crore people and is rapidly expanding. It willcontinue to accelerate India's consumer spending and economic growth. India's attempt toimprove its investment climate appears to be paying off. The country's ranking in theWorld Economic Forum's Global Competitiveness Report climbed to 39 in the 2016-17 fiscalyear a 16-place improvement over the previous year. India saw the largest increase amongthe 138 countries on the list. These should translate to great opportunities for allbusinesses including paint business.
The Government is actively making efforts to contain food inflation strategicallycreate more jobs through campaigns such as "Make in India" simplify taxesincrease investment in agriculture and support the rural population set up industrialregions particularly along the Dedicated Freight Corridors and Industrial Corridorscreate single-window system of clearances at both the centre and the states and promoteurbanisation through 100 smart cities ease labour market regulations and land acquisitionprocedures. The Make in India initiative is a multi-pillar development push which isalready spurring building projects. Investment innovation and entrepreneurship are morelikely to happen if the right physical and technological contexts exist and India ismoving in that direction. In this environment upgrading skills and capabilities andsupporting microenterprise and self-employment are important and the Company attempts tocontribute in this respect through its iTrain Centres spread across the country. TheseCentres are accessible driven by demand linked to employment opportunities (many of thetrainees start independent business and get absorbed by painting contractors who providethe Xpress Painting services) and enable individuals to quickly up-skill and re-skill.
Such opportunities have and will attract competition from international paint majors.The Company is well prepared to face this challenge with its diverse range of products andtechnologies deeply entrenched distribution and logistics network modern factoriestrained and skilled human resource innovative solutions and focus on cost.
RISKS AND CONCERNS
The Company has formulated a risk policy approved by the Business Process and RiskManagement Committee Audit Committee and the Board of Directors. The Policy seeks to laydown a mechanism for identification of risks inherent in the business operations of theCompany and devise mitigation methods in a dynamic manner which are periodically reviewedand modified considering the size and complexity of the business. The Policy can be viewedat the following web link: https://www.bergerpaints.com/about-us/risk-management-policy.html.
Based on the Policy the Business Process and Risk Management Committee regularlymonitors the various risks facing the Company. In addition to considering these in theform a matrix the Committee discusses the risks involved in business processes in detailand steps taken to mitigate the same covering each of the business processes in turn.Actions taken on progress on the recommendations of the Committee are reported at everymeeting.
As mentioned earlier there is a pressure on costs on account of rise in prices of somekey raw materials. The availability of some of the raw materials has also tightened acrossthe globe. The Company continuously attempts to counter such risks through continuousvendor development efforts replacement of existing raw materials by alternativesimprovement of formulations and tie up with major suppliers.
Under the GST regime paints attract a rate of 28%. Belying expectations this rate hasnot been revised so far. It is to be noted that paint is not a luxury product. It is formass consumption which is essential for the construction and other industries. Paints areconsumed by over 110 crore common people in rural and semi-rural population in India.Painting of houses and infrastructures is done to protect them from deterioration undereffects of environment especially in the hot and humid climate of India. If leftunpainted houses and infrastructures become dilapidated easily and maintenance costsincrease. Similarly industrial and automotive paints provide protection to machinery andautomobiles which would otherwise get oxidised and lead to destruction of such goods at amuch faster rate. Wood coatings are used for protection of wood from rotting as well astermite attacks and aids conservation of wood. Hence a higher rate of GST on paints wouldadversely impact infrastructure (including housing and automobiles like bikes and cars ofcommon people) lead to increase in input costs for other industries like automobiles andconstruction and lead to deterioration of overall infrastructure. In India an authenticstudy conducted by scientific institutes show that the global cost of corrosion for 2011to 2012 was US$65.9 Billion (direct cost - US$26.1 billion and indirect cost - US$39.8billion). The avoidable cost of corrosion was US$9.8 billion or 35% of the direct cost ofcorrosion much of which can be done through application of protective paint coatings. Thesheer utility of paints its position in a growing economy and its employment generatingability justifies a reduction and it is hoped that this will receive the attention of theGovernment. Representations have been made to the Government through Indian PaintAssociation of which the Company is a part.
One other cause of concern has been the volatile Indian Rupee rate and any adversemovement would affect the Company's cost of imported raw materials.
Demand for paints partly depends on good monsoon and till the time of this writing itis predicted to be normal this year.
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 avigilant control function and an independent internal audit function are the foundation 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 comfort. 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 respect.
ACQUISITION OF SABOO COATINGS PRIVATE LIMITED
The Company acquired 100% of the paid-up equity shares of Saboo Coatings PrivateLimited ("SCPL") at a total cash consideration of '82.85 crore on 5th June2017. SCPL is thus a wholly owned subsidiary of the Company. SCPL is engaged in thebusiness of manufacturing specialty liquid coatings in the segments of agricultural andconstruction equipment fans electronics general industrial elevators handicrafts andhome furnishing hardware automotive parts and specially the clear coatings used byindustrial dealers for substrates such as metal glass and fibre-reinforced plastic (FRP)etc. It has a factory at Dera Bassi near Chandigarh and a manufacturing set up in Chennai.It is known for its quality and delivery standards. The business and the expertise of SCPLwill gainfully supplement the Company's industrial coatings business where the twoentities can support each other in various areas such as manufacturing sellingdistribution procurement technology etc. thus resulting in mutual benefit to both thecompanies. The Company's intimation in this regard pursuant to Regulation 30 of the SEBI(Listing Obligation and Disclosure Requirements) Regulations 2015 can be viewed at thefollowing weblink: https://www.bergerpaints.com/media/media.
AMALGAMATION WITH BJN PAINTS INDIA LIMITED
In terms of its Order dated 27th February 2018 the Hon'ble National Company LawTribunal Kolkata Bench ("NCLT") sanctioned the Scheme of Amalgamation of BJNPaints India Limited ("the Transferor Company") a wholly owned subsidiary ofBeepee Coatings Private Limited (which itself is a wholly owned subsidiary of the Company)with the Company with effect from 1st April 2017 being the Appointed Date for thepurpose. The Company and BJN Paints India Limited have submitted the necessary forms INC28 with certified copies of the said Order to the Registrar of Companies West Bengal. Theamalgamation will enable appropriate consolidation of the activities of BJN Paints IndiaLimited and the Company with pooling and more efficient utilisation of their resourcesgreater economies of scale reduction in overheads and other expenses and improvement invarious operating parameters. The same will result inter alia from better inventorymanagement reduction of working capital requirements and lower cost of production andbetter integration of operations which will be facilitated by and will follow theamalgamation which has taken place. The business of the BJN Paints India Limited standsfully integrated with the business of the Company consequent to the amalgamation. Thiswill enable the potential of the said businesses to be realized more fully.
INCREASE OF AUTHORISED SHARE CAPITAL
Consequent to and as part of the said amalgamation as approved by the Hon'ble NCLTthe Authorised Share Capital of BJN Paints India Limited stands merged into and combinedwith the Authorised Share Capital of the Company without any further act or deed andwithout payment of any registration or filing fee on such combined Authorised ShareCapital the respective companies having already paid such fees. Accordingly theAuthorised Share Capital of the Company is now '1200000000/- divided into 110.00.00.000 Equity Shares of'1/- each and 10000000 Equity Shares of'10/- each. Further suchresulting Authorised Share Capital of'1200000000/- stands reorganized into1200000000 Equity Shares of'1/- each and Clause V of the Memorandum of Association andArticle 3 of the Articles of Association of the Transferee Company stand alteredaccordingly as under:
Clause No. V of the Memorandum of Association of the Company stands substituted asunder:
"The Authorised Share Capital of the Company is '1200000000 (Rupees One Hundredand Twenty Crore only) divided into 120.00. 00.000 Equity Shares of'1/- (Rupee One)each."
Article 3 of the Articles of Association of the Transferee Company stands substitutedas under:
"The Authorised Share Capital of the Company is '1200000000 (Rupees One Hundredand Twenty Crore only) divided into
120.00. 00.000 Equity Shares of'1/- (Rupee One) each."
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.
EMPLOYEE STOCK OPTION SCHEME
Your Company re-introduced the ESOP Scheme aligned with the Securities and ExchangeBoard of India (Share Based Employee
Benefits) Regulations 2014 in the year 2016 in accordance with the approval of themembers granted at the Annual General Meeting held on 3rd August 2016 to reward eligibleemployees. Pursuant to the said scheme the Remuneration Committee had approved a freshgrant of 161184 options convertible into equity shares to 157 employees. One-third ofthe options granted to the employees will vest on 8th November 2018 2019 and 2020 eachyear which they are entitled to exercise on or after the said dates as per the ESOPScheme. This includes the following options granted to the Key Managerial Personnel:
|NAME OF KMP ||DESIGNATION ||NO. OF OPTIONS GRANTED |
|MR. ABHIJIT ROY ||MANAGING DIRECTOR & CEO ||3744 options |
|MR. SRIJIT DASGUPTA ||DIRECTOR-FINANCE & CFO ||2880 options |
|MR. ANIRUDDHA SEN ||SR. VICE PRESIDENT & COMPANY SECRETARY ||1920 options |
In accordance of the aforesaid scheme of 2016 the Remuneration Committee approvedallotment of 44781 equity shares of face value of'1/- each to 130 employees upon exerciseof their options earlier granted to them. The allotment of the said shares was made on 7thDecember 2017.
Further in accordance with Rule 12 of the Companies (Share Capital and Debenture)Rules 2014 the Company also allotted shares to Key Managerial Personnel (KMPs) on 7thDecember 2017 on their exercising the options earlier granted to them and the details ofthe allotments made are as follows:
|NAME OF KMP ||DESIGNATION ||NO. OF EQUITY SHARES ALLOTTED |
|MR. ABHIJIT ROY ||MANAGING DIRECTOR & CEO ||1200 shares |
|MR. SRIJIT DASGUPTA ||DIRECTOR-FINANCE & CFO ||923 shares |
|MR. ANIRUDDHA SEN ||SR. VICE PRESIDENT & COMPANY SECRETARY ||616 shares |
The information required to be disclosed in terms of the provisions of the SEBI (ShareBased Employee Benefits) Regulations 2014 is enclosed as per Annexure A to thisreport. Please also visit the weblink: https://www.bergerpaints.com/investors/esop-disclosure.html. for disclosures under Regulation 14 of the aforesaid Regulations.
Human resources are considered to be the Company's most valuable assets and itrecognises that its growth would not have been possible without the dedication loyaltyand hard work of its people at all levels. In order to sustain these the Company offersan environment which promotes creativity fellowship teamwork strategic visionmeritocracy learning and ambition. An objective appraisal process takes into account allthe factors for determination of a reward considering the performances of the economy theindustry the Company and the individual concerned. This has enabled the Company todevelop an inclusive organisation which is multi-cultural and generates a sense ofcontentment and belonging which does not relate to monetary compensation only.
Identifying and recruitment of an appropriate candidate and retention of an employeecontinue to be the greatest challenges faced by the Indian industry. Apart from the usualmethods such as campus interview and taking services of placement consultants the Companyadopts innovative processes which include referral schemes and social media campaigns. TheCompany collaborates with recognised institutes for the purpose of specific projectrelated work and has programmes leading to awards. 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-leaming modules. As aresult of these the attrition rate and recruitment cost have been continuously climbingdown and employee satisfaction surveys are showing positive results.
The number of people employed as on 31st March 2018 was 3130 (31st March 2017:2993). The Industrial Relations were generally satisfactory during the year. The tradeunion at the Company's Goa factory had called a strike on 10th May 2017. The factory wasoperating at a reduced scale and the strike was withdrawn on 25th July 2017. There was nosignificant effect on the operations of the Company as a result of the strike.
Your Company wishes to put on record its deep appreciation of the co-operation extendedand efforts made by all employees.
TRANSFER OF SHARES TO INVESTOR EDUCATION AND PROTECTION FUND
The Ministry of Corporate Affairs (MCA) vide - notification no. S.0.2866 (E) dated 5thSeptember 2017 enforced sections 124(6) and 125 of the Companies Act 2013 read with theInvestor Education and Protection Fund (Accounting Audit Transfer and Refund) Rules2016 [IEPF] which require companies to transfer the underlying shares to the IEPF inrespect of which the dividends have remained unclaimed for a consecutive period of sevenyears. Accordingly during the year under review the Company had transferred 5627559equity shares (0.58% of paid up capital) covering 1362 folios to IEPF on 27th November2017. On 27th April 2018 the Company had further transferred 295496 equity shares(0.03% of paid up capital) to IEPF.
SEXUAL HARASSMENT POLICY
Your Company has 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 who have been reappointed by the Board foranother period of 3 years with effect from 1st February 2018as per the Regulations:
1. Mrs. Rishma Kaur (The Presiding Officer)
2. Mr. Srijit Dasgupta
3. Mr. AniruddhaSen
4. Ms. Supama Mitra (NGO representative).
SUBSIDIARY AND JOINT VENTURES
Your Company has the following 5 wholly-owned subsidiaries as on the date of thisreport: - (i) Beepee Coatings Private Limited ("Beepee Coatings") in Gujarat;(ii) Berger Paints (Cyprus) Limited ("Berger Cyprus") in Cyprus; (iii) LusakoTrading Limited ("Lusako Trading") in Cyprus; (iv) Berger Jenson & Nicholson(Nepal) Private Limited ("BJN") in Nepal; (v) Saboo Coatings Private Limited inChandigarh.
The following companies are wholly-owned subsidiaries of the Company's above namedsubsidiaries:- (i) Bolix S.A. Poland - wholly-owned subsidiary of Lusako Trading; (ii)Berger Paints Overseas Limited ("BPOL") Russia - wholly-owned subsidiary ofBerger Cyprus. Bolix S.A. Poland has 5 subsidiaries viz.: Bolix UKRAINA OOO UkraineBUILD-TRADE BIS sp.z.o.o. Poland Soltherm External Insulations Limited United KingdomSoltherm Insulations Thermique Exterieure SAS France and Surefire Management SystemsLtd. United Kingdom.
The statement relating to the above companies as specified in Sub-section (3) ofSection 129 of the Companies Act 2013 is attached to the Report and Accounts of theCompany.
During the year under review BJN-Nepal showed good performance with a revenue fromoperations of '170.82 crore.
Bolix S.A. also posted encouraging results with a revenue from operations of '199.90crore.
The performance ofBeepee Coatings was satisfactory with a revenue from operations of'24.44 crore.
On 17th November 2017 Bolix formed a joint venture company incorporated in the UnitedKingdom with Agility Eco Ltd. of the United Kingdom for the purpose of executing wallinsulation supply and application contracts compliant with the European regulatoryapprovals for procurement frameworks for specified public works by the name of SurefireManagement Services Ltd ("SMS"). Bolix currently holds 75% of the share capitalof SMS comprising 75 fully paid up equity shares of a face value of 1 GBP each aggregating75 GBP. By virtue of its voting power Bolix is a holding company of SMS. SMS has juststarted business.
Saboo Coatings Private Ltd acquired by the Company during the year as mentionedabove recorded revenue from operations of '87.29 crore during the full year 2017-18. Theconsolidated results of the Company take into account revenue from operations amounting to'71.51 crore for the relevant period after acquisition of SCPL.
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 revenue from operations ofBerger Paints Overseas Limited (BPOL) was '7.93 crore.
Berger Becker Coatings Private Limited the Company's joint venture with BeckerIndustrifarg Sweden showed good performance with revenue from operations of '293.66crore.
Berger Nippon Paint Automotive Coatings Private Limited ("BNPA") theCompany's joint venture with Nippon Paint Automotive Coatings Co. Ltd. of Japan (NPAU)posted revenue from operations of'123.10 crore. BNPA now supplies coatings to 4 wheelerpassenger cars and SUVs 3 wheelers and related ancillaries apart from coatings forplastic automotive substrates. It plans to progressively enhance its capabilities in thisarea over the next few years.
The salient features of the financial statements of subsidiaries associate companiesand joint ventures are given in the Statement in Form AOC-1 forming a part of thefinancial statement attached to this Directors' Report pursuant to first proviso tosub-section (3) of Section 129 of the Companies Act 2013 read with Rule 5 of theCompanies (Accounts) Rules 2014.
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 7 provisions of Regulation 36 ofSecurities and Exchange Board oflndia(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 year2017-18.
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 Regulation 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 (Annexure-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.
The Board of Directors has appointed Messrs Anjan Kumar Roy & Co. PractisingCompany Secretaries (FCS No. 5684 CP. No. 4557) as the Secretarial Auditor to conductaudit of the secretarial records for the financial year 2018-19 and 2019-20.
Your Company has a Technical License Agreement with Axalta Coating Systems IndiaPrivate Limited LLC in the area of Automotive Coatings.
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.
Pursuant to Section 177 of the Companies Act 2013 the Company along 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. Therequired details as specified in Companies CSR Policy Rules 2014is given in Annexure2.
C. COMPENSATION & NOMINATION & REMUNERATION COMMITTEE
The details of the Committee are given in the Report on Corporate Governance - AnnexureB.
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 on30th May 2017 and can be viewed at https://www.bergerpaints.com/about-us/business-responsibility-policy.html.Mr. Abhijit Roy Managing Director and CEO has been nominated as the directorresponsible for implementing the Business Responsibility Policy and Mr. Aniruddha SenSenior Vice President and Company Secretary has been nominated as the BusinessResponsibility Head. As required the BRR for2017-18is attached to this report as Annexure6.
DIRECTORS' RESPONSIBILITY STATEMENT
Your Directors wish to inform that the Audited Accounts containing Financial Statementsfor the financial year ended 31st March 2018 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 confirm that 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 sufficient care has been taken 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
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 inPractice 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 5b 9a 34 & 35b 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 policyregarding materiality of related party transactions and also on dealings with RelatedParties in terms of Regulation 23 of Securities and Exchange Board of India (ListingObligations and Disclosure Requirements) Regulations 2015 and Section 188 of theCompanies Act 2013. The policy is available at the following weblink:https://www.bergerpamtsxom/about-us/rpt-policy.html.
All related party transactions have been carried out at arms' length basis in theordinary course of business. There is no material related party transaction i.e.transaction exceeding 10% of the annual consolidated turnover as per the last auditedfinancial statements entered during the year by your Company and accordingly thedisclosure of Related Party Transaction as required under section 134 (3)(h) of theCompanies Act 2013 in Form AOC-2 is not applicable.
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 following web link: 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.
During the Financial Year 2017-18 no significant change has taken place which couldhave an impact over the financial position of the Company. However the year under reviewobserved an amalgamation of BJN Paints India Limited with the Company and acquisition ofSaboo Coatings Private Limited which have been discussed earlier in this report.
The total comprehensive income of the Company is '433.00 crore for the year 2017-18.
Your Directors recommend a dividend of'1.80 per share i.e. @180% for the year underreview. This if approved will absorb an amount of'210.71 crore (compared to '204.52crore in the previous year) including Dividend Distribution Tax based on the currentpaid-up capital of the Company and will be paid to those members holding shares in thephysical mode whose names appear in the Register of Members as on 3rd August 2018 and forshares held in electronic form to those whose names appear in the list of beneficialholders furnished by respective Depositories as at the end ofbusiness hours on 27th July2018.
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 web link: 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 '3586899 to the Investor Education and Protection Fund inrespect of dividend amounts lying unclaimed/unpaid for more than seven years from the datethey became due i.e. for the year ended 31st March 2018.
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 2017 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) ofCompanies (Appointment and Remuneration of Managerial Personnel) Rules 2014 particularsof certain category of employees 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 andExchange 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 and RemunerationCommittee is entrusted with responsibility of formulating criteria for determiningqualifications positive attributes and independence of a Director. The same is availableat 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 ofDirectors. The same is available atthe 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 2017-18.
Pursuant to Article 112 of the Articles ofAssociationofthe Company Mr. Kuldip SinghDhingra (DIN: 00048406) and Mr. Gurbachan Singh Dhingra (DIN: 00048465) retire by rotationand being eligible offer themselves for re-appointment.
Mr. Kuldip Singh Dhingra is an industrialist and promoter of the Company. He has over50 years of experience in paint and related industries. Mr. Kuldip Singh Dhingra is ascience graduate from Hindu College University of Delhi and Chairman of the Board ofDirectors of the Company.
Mr. Gurbachan Singh Dhingra is a graduate from Punjab University and an industrialist.He is a promoter of the Company holds the position of Vice-Chairman of the Board ofDirectors and has 48 years of experience in the paint industry. He has practicalexperience in building and commissioning of many paint factories and also has experiencein the technical aspects of paint industry.
Mr. Kamal Ranjan Das (DIN: 00048491) (Mr. Das') and Mr. Pulak Chandan Prasad(Mr. Prasad') (DIN: 00003557) are Independent Directors of the Company appointedpursuant to approval of Members under provisions of the Companies Act 2013 throughresolutions passed at the Annual General Meeting held on 3rd August 2015. Their firstterm upto five consecutive years on the Board ofDirectors of the Company would expire on31st March 2019. As per Section 149 of the Companies Act 2013 read with Schedule I ofthe Companies Act 2013 and SEBI (Listing Obligations and Disclosure Requirements)Regulations 2015 and pursuant to the recommendation of the Compensation and Nominationand Remuneration Committee the Board of Directors of the Company have proposed there-appointments of Mr. Das and Mr. Prasad for a second term from 1st April 2019 to 31stMarch 2020 and 1st April 2019 to 31st March 2024 respectively subject to the approvalof the Members of the forthcoming Annual General Meeting. Accordingly approval has beensought from the members at the forthcoming Annual General Meeting for re-appointment ofMr. Das and Mr. Prasad as Independent Directors for the aforesaid period. Mr. Das and Mr.Prasad will not be liable to retire by rotation.
Mr. Das is a science graduate with honours. He began his career in the year 1951. Mr.Das was appointed as a Wholetime Director on the Board with effect from 1st April 1989.Mr. Das retired in 1994 as Executive Director. Since then Mr. Das has been anon-executive Director of the Company. Mr. Das is now a Management Consultant and theCompany greatly benefits from his counsel and guidance in view of his experience in theindustry. Mr. Das is a member of the Audit Committee Compensation and Nomination andRemuneration Committee Business Process and Risk Management Committee Share TransferCommittee and Stakeholders' Relationship and Investor Grievance Committee of the Company.He is also the Chairman of Compensation and Nomination and Remuneration Committee andStakeholders' Relationship and Investor Grievance Committee of the Company. Mr. Das holds84272 equity shares of'1/- each of the Company.
Mr. Prasad is a B.Tech from IIT and IIM Ahmedabad alumni. He was the Managing Directorand co-head of the India office of Warbug Pincus and a Management Consultant with McKinsey& Company USA and South Africa prior to that. He was first appointed as an AdditionalDirector on 13thNovember 2009. Mr. Prasad is a Member of the Audit Committee andCompensation and
Nomination and Remuneration Committee of the Company. The Company greatly benefits fromthe advice and counsel of Mr. Prasad in view ofhis experience. Mr. Prasad does not holdany share in the Company.
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 ofDirectors / KMP to the median remuneration of the employees:
|Name of Director / KMP ||Remuneration Received (Rs.) ||Ratio as to that of the Median Employee ||Percentage increase in Remuneration |
|Mr. Kuldip Singh Dhingra ||1000000 ||1.91:1 ||0.00 |
|Mr. Gurbachan Singh Dhingra ||1000000 ||1.91:1 ||0.00 |
|Mr. Abhijit Roy ||25462345* ||48.52:1 ||20.97 |
|Mr. Kanwardip Singh Dhingra ||2331427 ||4.44:1 ||(11.95) |
|Mrs. Rishma Kaur ||2344057 ||4.47:1 ||(11.81) |
|Mr. Kamal Ranjan Das ||300000 ||0.57:1 ||9.10 |
|Mr. Pulak Chandan Prasad ||- ||- ||- |
|Mr. Naresh Gujral ||720000 ||1.37:1 ||9.10 |
|Mr. Dhirendra Swarup ||720000 ||1.37:1 ||9.10 |
|Mr. Gopal Krishna Pillai ||720000 ||1.37:1 ||9.10 |
|Mr. Srijit Dasgupta (KMP) ||13777021* ||26.25:1 ||13.62 |
|Mr. Aniruddha Sen (KMP) ||9220513* ||17.57:1 ||11.16 |
*Remuneration does not include value ofESOP's granted.
Note - The median employee remuneration for 2017-18 is - ' 524746 p.a.
2) Percentage (%) increase in remuneration during the financial year 2017-18: Pleasesee (1) above.
3) Percentage (%) increase in the median remuneration of employees during the financialyear 2017-18: 6.1
4) Number of permanent employees on the rolls of the Company as on31st March 2018:3130
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 there of and point out if thereare any exceptional circumstances for increase in the managerial remuneration - Theaverage percentile increase of employee was 11.69 % as compared to an average percentileincrease of 14.35% of managerial remuneration. The increase of managerial remuneration isbased on growth 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 Business Development Manager- Retail 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 ||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 |
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 2017-18 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. The addresses of these Stock Exchanges and other information forshareholders are given in this Annual Report.
The Board of Directors have re-appointed/appointed M/s N. Radhakrishnan & Co. 11ADover Lane Flat Bl/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 and Nalbari factories of the Company's British Paints Division and M/s Shome& Banerjee & Co. 2nd Floor 5A Narulla Doctor Lane West Range Kolkata - 700017for conducting cost audit at its Jammu factory and for the factories of British PaintsDivision at Jammu Surajpur and Sikandrabad under Section 148 of the Companies Act 2013read with Companies (Cost Records and Audit) Rules 2014 for the year 2018-19. Theremuneration payable to the respective Cost Auditors for conducting costaudit/certification engagement is required to be approved by the Members at the ensuringAGM and accordingly forms a part of the business to be transacted thereat. The due datefor filing Cost Auditors' Report for the year 2016-17 was 30th September 2017. The saidreports for the year 2016-17 were filed on 26th September 2017.
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 to the conclusion of the Sixth Annual General Meeting to be heldafter the 91st Annual General Meeting. Pursuant to the Companies Amendment Act 2017 madeeffective from 7th May 2018 ratification at every Annual General Meeting by Members isno longer necessary till the conclusion of the aforesaid Sixth Annual General Meeting. TheStatutory Auditors have furnished their eligibility to continue as Auditors from theconclusion of the ensuing Annual General Meeting till the subsequent Annual GeneralMeeting.
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 you as shareholders of theCompany.
| ||On behalf of the Board of Directors |
|Place: Kolkata ||Kuldip Singh Dhingra |
|Dated: 30th May 2018 ||Chairman |