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Berger Paints India Ltd.

BSE: 509480 Sector: Consumer
NSE: BERGEPAINT ISIN Code: INE463A01038
BSE 00:00 | 17 May 768.70 16.05
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NSE 00:00 | 17 May 768.05 15.30
(2.03%)
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OPEN 760.00
PREVIOUS CLOSE 752.65
VOLUME 68197
52-Week high 824.80
52-Week low 431.55
P/E 108.12
Mkt Cap.(Rs cr) 74,664
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00
OPEN 760.00
CLOSE 752.65
VOLUME 68197
52-Week high 824.80
52-Week low 431.55
P/E 108.12
Mkt Cap.(Rs cr) 74,664
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

Berger Paints India Ltd. (BERGEPAINT) - Director Report

Company director report

Your Directors have pleasure in presenting the Annual Report of theCompany together with the audited accounts for the financial year ended on 31st March2020.

FINANCIAL RESULTS
(Rs in Crore)
Financial Year ended
Particulars Standalone Consolidated
2019-2020 2018-2019 2019-2020 2018-2019
Profit before Exceptional Items Depreciation Finance Cost and Tax 1108.62 916.27 1129.51 995.57
Add: Exceptional Item - (28.60) - -
Add: Share of Profit/Loss from Joint Ventures - - (8.30) (0.90)
Less:
Depreciation and Amortisation Expense 170.52 165.45 191.01 182.27
Finance Cost 32.68 34.87 47.04 47.24
Profit Before Tax 905.42 687.35 883.16 765.16
Less:
Provision for Taxation 206.37 251.50 227.06 271.27
Profit After Taxation 699.05 435.85 656.10 493.89
Add:
Other comprehensive income (loss for the year net of tax) (6.52) (2.05) (19.00) (10.73)
Total comprehensive income 692.53 433.80 637.10 483.16

Notes: Figures have been restated on account of implementation ofIND AS 116

FINANCIAL PERFORMANCE Highlights of the Standalone Results: a.Revenue from Operations for the year ended 31st March 2020 was Rs5691.69 crore as againstRs5515.55 crore in the corresponding period of the previous year representing anincrease of 3.19%. b. EBIDTA (excluding other income) for the year ended 31st March 2020was Rs957.80 crore as against Rs862.64 crore in the corresponding period of the previousyear representing an increase of 11.03%. c. Net profit for the year ended 31st March2020 was Rs699.05 crore as against Rs435.85 crore in the corresponding period of theprevious year representing an increase of 60.39%. The net profit for the year ended 31stMarch 2020 includes Rs100.09 crore as other income from dividend.

Highlights of the Consolidated Results: a. Revenue from operationsfor the year ended 31st March 2020 was Rs6365.82 crore as against Rs6061.86 crore in thecorresponding period of the previous year representing an increase of 5.01%. b. EBIDTA(excluding other income) for the year ended 31st March 2020 was Rs1060.98 crore asagainst Rs935.54 crore in the corresponding period of the previous year representing anincrease of 13.41%. c. Net profit for the year ended 31st March 2020 was Rs656.10 croreas against Rs493.89 crore in the corresponding period of the previous year representingan increase of 32.84%. d. It is to be noted that the Company acquired 95.53% of the paidup equity share capital of STP Ltd. during the year. Accordingly the consolidatedfinancial results incorporate the financial results of STP Ltd. for the relevant period.

The Board of Directors have recommended a final dividend of Rs0.30(30%) per equity share of Rs1/- each for the financial year ended 31st March 2020.Together with the interim dividend of Rs1.90 (190%) per equity share paid on 16th March2020 the total dividend for the financial year ended 31st March 2020 aggregates toRs2.20 (220%) per equity share of Rs1/- each. Final dividend is subject to approval of theshareholders.

MANAGEMENT DISCUSSION AND ANALYSIS

PAINT INDUSTRY STRUCTURE AND DEVELOPMENT

The Indian paint industry can be broadly divided into two segments– decorative and industrial. Decorative paints include higher end acrylic exteriorand interior emulsions medium range exterior and interior paints low end distemperswall putty wood coatings cement paints primers and thinners. These account for almost70% of the paint market in India. Decorative paints can be either water based or solventbased the latter being commonly known as enamels. The category share of water basedpaints (or emulsions) is on the rise in India owing to superior aesthetics durabilitywashability and environmental reasons. Solvent based paints or enamels continue to attractattention in certain traditional market segments though the percentage share of overallpaint consumption in both volume and value terms seem to be on the decline. Industrialpaints essentially comprise general industrial automotive protective powder glass canand pipe coatings. The Company is present in all these areas. In addition there are nichesegments such as coil coatings automotive refinish coatings and marine coatings and theCompany deals with many of these through its subsidiaries joint ventures and strategicalliances.

During the year India's economic growth slowed down somewhat toabout 4.2%. In the final quarter the growth rate of domestic product fell to 3.1%reflecting an impact of the first week of COVID 19 lockdown which began on 25th March2020. The markets were already affected before the lockdown due to the doubts surroundingthe situation. In spite of a lower overall growth and sharp lockdown related decline atthe end of the year the Company and the paint industry performed reasonably well. Thegood news is that the agricultural sector picked up steam in the last quarter growing at5.9% and once the unprecedented crisis is over and the world settles down with Governmentexpenditure particularly in the infrastructure sector supporting the economy theindustry will look forward to a steady recovery and release of pent up demand.

Going forward especially with the lockdown due to the COVID 19pandemic the growth will be dependent on a number of factors like disposable income inthe hands of the public urbanization economic development satisfactory monsoons thevolatility affecting raw material prices including crude oil growth in infrastructure andpossible recovery in the real estate and automobile sectors. With the Government'sinitiative on affordable housing and spending on infrastructure it is expected that thepaint industry will try and keep up with the projections made earlier and further innovatenew ranges of products so that it can keep pace with the growth achieved during the pastfew years. Additionally being a strong competitive market the players are utilizingdifferent strategies to tap demand in the market for a larger share. The reduction in GSTrates on paints in 2018 had a positive impact on demand. The benefits extended by theGovernment of India offering corporates the option to avail of reduced tax rates areexpected to yield further results. The paint and coating business is expected to grow andnew technologies are also expected to evolve which should contribute to better per capitaconsumption of paints in India.

The Industrial paints businesses serve various industrial customersincluding automobiles utility vehicles such as tractors general industrial goodsmachinery and household equipment such as fans washing machines refrigerators andconsumer durables structures and pipelines power plants and large factories andinstallations steel glass and every other items of daily use. These largely depend onthe growth of the manufacturing and infrastructure sectors. While there were signs offatigue in the automotive sector other industrial consumers performed well and theCompany believes that once the current uncertainties are overcome there will be a reboundin growth. India became the world's fifth largest economy last year according todata from various reports. When ranked by nominal GDP the country leapfrogged both Franceand the UK. This will look particularly dramatic if we remember that as recently as 2010India was in 9th place trailing countries such as Brazil and Italy and since 1995 thecountry's nominal GDP has jumped more than 700 per cent. This has been fueled by a numberof factors including urbanization and technologies that have improved efficiency andproductivity. Paints are an inseparable part of the overall growth and given a relentlessdrive towards a better future the demand should continue to favour the industry in thelong term.

COMPANY'S OPERATIONS

The CAGR of EBIDTA was 16.8% over the last five years (FY 2015-2016 toFY 2019-2020). The Decorative business contributed the most to this achievement.Protective Coatings business also did well and Powder Coatings business recorded apositive growth in the year under review. The Company's General Industrial andAutomotive earnings came under pressure particularly in the second half of the yearimpacted by the overall lack of demand in the automotive sector. The Company continued itspursuit for introducing new and innovative products through research and developmentrecasting its marketing strategies designed to suit specific sectors and areas launch newproduct lines and serve opportunities with specific programmes to identify and addressmarket needs through tailor-made solutions.

In the Decorative business new products were well received in themarket and contributed to the overall growth of the business line. This business can bebroadly classified into the following categories - interior wall coatings exterior wallcoatings metal finishes wood finishes undercoats and construction chemicals. Some ofthe premium exterior emulsions introduced earlier continued their strong run in themarket. These include WeatherCoat Anti Dustt WeatherCoat Long Life WeatherCoat All Guardand WeatherCoat Smooth. The benefits of WeatherCoat Anti Dustt and WeatherCoat Long Lifewith 10 year guarantee were acknowledged by the market. Superior resistance to dust onaccount of advanced dust guard technology long lasting protection against exterior wallissues absence of stains and black strike marks and a rich soft sheen finish and itssuitability for dusty and dry areas have made WeatherCoat Anti Dustt a popular product.WeatherCoat Long Life with a high sheen has been proven to be suitable for heavyrainfall areas. The interior emulsion offerings include Silk Glamor Silk Luxury EmulsionEasy Clean and Easy Clean Fresh. Easy Clean Fresh has a rich luxurious finish backed upby cross-linking polymers. Other Decorative coatings products including the Luxol line ofsolvent based paints and wood coatings performed well. The year under review witnessedintroduction of a newly formulated product - Silk BreatheEasy under the popular Silk brandof luxury interior wall coatings. Silk BreatheEasy comes in the anti-pollution paintcategory and is loaded with certified features like being anti-bacterial (99% efficacyagainst over 29 strains) and abatement of harmful formaldehyde sulphur oxides andnitrogen oxides. It has the certification by the Singapore Green Label as a low VOC"Green" paint. The Company is currently testing for anti-viral efficacy of SilkBreatheEasy. Another product introduced was the WeatherCoat Champ to cater to therequirement of a durable value for money product. It is reinforced to enhance the tensilestrength and weatherability of the paint film. Other new products developed were LuxolXtra which economizes tinting cost and Luxol 7in1 a quick drying high gloss corrosionresistant durable PU enhanced enamel aimed at consumers in high rainfall and coastalmarkets for protecting metal grills gates shutters etc. The Company's constructionchemicals business continued to grow at a rapid pace with introduction of new products inthe last two years. The Company's waterproof putty with unique hydrophobicproperties continued to be appreciated by the customers. The Company launched newproducts like Wall Shield 2k a white cement based product with high waterproofing abilityand crystalline effect and Damp Shield Elasto a high-build barrier coat for extendeddurability of paint with 200% elongation anti-carbonation property and 7 years exteriorwaterproofing warranty. Water proofing business has considerable growth potential and theCompany along with its subsidiary STP Ltd. is taking all measures to become a leadingplayer in this segment.

The Company's pioneering home painting solutions business underthe style Berger Express Painting™ endeavours to make home painting a hassle freeend to end solution for the customers and is drawing good response across the country. TheCompany has adopted various new tools and methods to make the process beneficial andcost-effective for the end customer. From a platform of "FASTER CLEANER &BETTER" it has transcended to "FASTER CLEANER & SAFER" with the use ofconsumer app safety kits protective equipment cleaners sanitizers and disinfectants bythe painters for protection against spread of infection. The Company'sProlinks Business aimed towards painting of large housing projects continued to growsatisfactorily.

The Company has just forayed into the Sanitizer and Home Hygiene spacewith the introduction of ‘BreatheEasy Sanitizer' and ‘BreatheEasy FloorCleaner'. The common characteristic of all products under the "BreatheEasy"umbrella is to protect the consumers from germs bacteria viruses etc. so that they canbreathe easy.

The Company retained its position as the leader in Protective Coatingsbusiness in the country. The Business registered strong growth in sales and reached newlevels in spite of surge in raw material prices and depressed industrial conditions duringthe year. The Business continues to supply paints to the OEM's contractors dealersand fabricators in Government and railway infrastructural projects and is widely accepteddue to its quality and after sales services. As reported in the previous year theCompany's businesses of supply of fire proof coatings by itself as well as incollaboration with Promat International Limited NV of Belgium with which it has aMemorandum of Understanding and supply of marine coatings in terms of its Memorandum ofUnderstanding with Chugoku Marine Paints Ltd of Japan were satisfactorily enhanced.

The General Industrial & Automotive paint business managed toidentify potential customers with whom business has started. The General Industrialbusiness line performed comparatively better and the Company continued to address thissegment with developed products and new applications. As reported last time the Companycommenced manufacturing epoxy CED resin and paste at one of its factories at HindupurAndhra Pradesh in collaboration with Nippon Paint Automotive Coatings Co. Ltd of Japan("NPAU") which is known for its quality. The Powder coatings business registereddecent growth and is expected to do better this year by concentrating on improvements inproductivity higher value added sales developing new and innovative products tested andcertified by accrediting agencies moving into new segments focusing on special areashaving potential and exploring new avenues of exports and reduction of costs. TheManufacturing services supported the growing needs by catering to the demands of thebusinesses with adequate and timely supply from all the factories with improvedproductivity. Dedicated workforce with upgradation of equipment process improvement andcontinuous refinement of technology installation of energy management systems designingmethods to reduce costs especially energy costs training and re-training implementationof best practices and refurbishment of storage facilities allowing higher and moreorganized capacities were few of the enablers. As a continuous practice housekeepingsafety and environment were emphasized and monitored round the clock during the year. TheVallabh Vidyanagar plant ("VVN") belonging to Beepee Coatings Private Limited awholly owned subsidiary of the Company received Environment Award organized by GreentechFoundation New Delhi National Energy Efficiency Circle Award organized by CII NewDelhi Occupational Health and Safety Award organized by Indian Chamber of CommerceKolkata National Award for Excellence in Water Management organized by CII-Triveni WaterInstitute New Delhi National Energy Conservation Award organized by Ministry of Powerand Bureau of Energy Efficiency. The Human Resources team at the VVN plant received HRConvention Award "Creating a Quality Centric Role of HR" organized by QualityCouncil Forum of India Vadodara Chapter. The Jammu plant received AppreciationCertificate in large business category from ICC Environment Excellence Award 2019 -Greentech Environment Award 2019 and Greentech Safety Award 2019 from GreentechFoundation. The positive effects of softening of crude oil prices were partially offset bya depreciating Rupee and increase in prices of some of the raw materials especiallyduring the second half of the year. The Company's efforts of vendor development andraw material substitution were supplemented by enhancement of systems and processescontinuous coordination and collaboration with suppliers and strengthening of processingcapabilities of emulsions and resins. Striving for innovation to achieve differentiatedand value-added products is the core of the Research and Development (R & D) function.Since last few years R & D had been working on many unique technology platforms tobring in new products for various applications. Pollution scavenging and anti-bacterialperformance of interior coatings high dirt pick up resistant exterior coatings airdrying anti-yellowing resin mono coat systems for industrial surfaces polyurethanefinish to extend service life of construction equipment being some of them. These conceptsand technologies got their final shape in the year 2019-2020. Various new products werelaunched during the year which were the result of these new ideas. Many new industrialproducts were also developed. There were significant breakthroughs/ opportunities achievedin the form of pollution abatement technology for architectural paints anti-bacterialacrylic paint for interior wall application development of direct to metal finish forindustrial coatings and automotive application and a few others. The process of inventionand development is an ongoing exercise in R & D and the Company expects many moreinteresting outcomes from the Function in the future.

FOCUS AND OUTLOOK FOR 2020-2021

As mentioned earlier in this report there was some slowing down in theeconomic growth during the year – but the Company's overall growth in revenuecontinued unabated and would have recorded further improvements but for the year-endmarket disruptions arising out of the COVID 19 pandemic. It is necessary to keep in viewthat the global growth in the year 2019 is estimated at 2.9 per cent and in spite ofstrong external headwinds the country continued on its growth path and the paintindustry as a whole continued to push the boundaries of innovation and use.

At the time of this writing the entire world is in the throes of apandemic which is unprecedented in its nature at least in the last 100 years but the factthat the Central and the State Governments their agencies the industry and the people ofIndia have together strived to keep the wheels of economy turning speaks volumes about thecountry's ability to unitedly overcome major crises. The Government has implemented anumber of stimulus measures. Besides steps taken by the Reserve Bank of India likereducing the repo rate by a further 40 basis points to 4% extending the moratorium periodand facilitating working capital financing will also help stimulate the momentum. Anyfiscal stimulus will give a leg up to the industry and will help both GDP and householdincome. It is hoped that the efficacy and duration of all these measures will besufficient to ensure a steady supply and importantly a recovery in demand. To a largeextent it will also be up to the industry both in the private and public sector to riseto the challenges and create opportunities for increase in demand. As regards theagriculture sector it has performed better than the other sectors has been relativelylesser affected by the pandemic so far and is likely to once again contribute to thecountry's recovery – with the necessary support – for which a number ofactions have been taken by the Government. Forecasts of a normal monsoon adds to theoptimism. If the Rabi crop harvest pans out as estimated it will boost the rural wagegrowth and demand.

The Company's strength lies in the quality of its products thevast repository of experience and knowledge among its employees and stakeholders whoparticipate in the business the confidence in the entire supply chain and the trust thatit has generated over the years among the customers and the painting community. TheCompany's operations cover the entire panoply of the coatings industry and it willcontinue to focus on its existing business. Based on the reaction so far the Companybelieves as and when the infection rate of COVID 19 wanes India will bounce back to dailynormal life and will set out to complete the pending tasks – which will includepainting of houses infrastructure industrial equipment and white goods among others.The Company will thus continue to attend to its reach in terms of customers and geographyand product diversity. At the same time the COVID 19 attack has taught us to be vigilantabout self-care and cleanliness at home and at workplace. Regular painting of houses hasbeen a part of tradition also – probably to ward off microbes insects and vermin. Inthe recent past there has been additionally a marked interest towards aesthetics. TheCompany will cater to these needs as warranted by economic position demographygeographical location and other preference patterns. While the demand for protectivegeneral industrial and powder coatings is expected to revive on the back of pent up demandand infrastructural investments automotive sector which was lagging behind in the year2019-2020 may take some time to come round. However the Company will be vigilant in allthese areas and is prepared to cater to the needs of the industry as and when the same isrequired. With the increase in demand of hand sanitizers in the post COVID 19 scenariothe Government had reached out to various established players with a reputation ofsupplying quality products and having a strong distribution network to manufacture handsanitizers in the time of shortfall. There was also a demand among the Company'scustomers and the painting fraternity of such products. As mentioned earlier the Companyhas risen to the challenge and within the shortest possible time had started supplyingBreatheEasy+ Hand Sanitizers in the market. The Company is entering into the Home Hygienesegment too as an extension of the BreatheEasy brand. Since painting involves activitiesinside and outside houses over a long period of time these are considered to be anextension and an integral part of the Company's existing business.

PROJECTS

The capacity of the epoxy CED resin and paste project set up atHindupur with technical support from NPAU was enhanced by 600 MT per annum in February2020.

The Powder coating manufacturing capacity at Jejuri was expanded from2400 MT per annum to 4200 MT per annum in August 2019. Facilities are put up formanufacture of sag control resin an important intermediary at the same place. Theexpansion projects in regard to automotive industrial and protective coatings and resinmanufacturing capacity at Jejuri will be completed shortly subject to obtaining allrequired statutory clearance from the Government authorities. The colorant manufacturingfacility with a capacity of 2640 KL/MT per annum was commissioned at Rishra West Bengalin February 2020. The water based paint manufacturing capacity at Rishra West Bengal wasincreased from 36000 MT per annum to 48000 MT per annum in March 2020.

The installation of water and solvent based decorative industrial andprotective coatings resin putty emulsion and construction chemical manufacturingfacility at Sandila Industrial Area in Uttar Pradesh is in progress. Subject to theCompany obtaining all required consents and approvals in time the Project is likely to becommissioned in the year 2022.

Apart from these a number of projects for reducing cost of energy andfuel (like installing of solar power projects use of bio briquette) spares andconsumables and enhancing efficiency of equipment installation of Automatic Storage andRetrieval Systems were either commissioned or are being implemented during the year.

OPPORTUNITIES AND THREATS

Though India is one of the world's largest economy it has someway to go to catch up with the top three viz. China the European Union and the UnitedStates of America. This is essentially an opportunity which affords tremendous potentialof growth in view of its strengths which include low cost of living presence ofwell-educated technology workers whose number is increasing an increasing middle classwho seek higher education and better quality of life rising level of urbanization andunderstanding of English and international laws and customs.

These factors coupled with many others leads the Company to believethat once the short term difficulties are over there will be an upsurge in India'sconsumer spending and economic growth. Such progresses have always been accompanied withgrowth in sectors like infrastructure real estate white goods appliances agriculturalequipment furniture and fixtures automobiles etc. All these need coatings and theCompany is well poised to take benefit of the favourable demand swing which it expects totake place in the medium term.

Moreover arising out of turn of events in the international arenathere may be increasing interests in establishing global manufacturing and service centresin the country which will of course need swift and flexible responses from the Governmentagencies and given a conducive environment there is likely to be an additional demandpull from these industries also.

The Indian coatings industry will always attract attention of newinvestors. The only way to counter this is to always update the Company's competencein terms of technology human resources products services and market presence –which are continuously addressed.

RISKS AND CONCERNS

The Company has a Risk Management and Materiality Policy approved bythe Business Process and Risk Management Committee Audit Committee and the Board ofDirectors. The Policy provides a framework for identification of risks inherent in thebusiness operations of the Company and devise mitigation methods in a dynamic manner andon a continuous basis which are periodically reviewed and modified considering the sizeand complexity of the business and the regulatory as well as business requirements. TheRisk Management Policy has been renamed as Risk Management and Materiality Policy whichcan be viewed at the following web link: https://www.bergerpaints.com/about-us/risk-management-policy.html.

One of the biggest concerns of the country the industry and theCompany and indeed the entire firmament is the challenge posed by the COVID 19 pandemic.These have been addressed in a separate section on COVID 19 and has been disclosed to theStock Exchanges under Regulation 30 of the SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015 ("the Listing Regulations").

With the entire world grappling with the effects of COVID 19 attackthere will be some uncertainties in the areas of demand supply of raw materials andforeign exchange rates. These will need flexibilities of operation quick decision making.The Company continues to provide special attention to these areas.

INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY

Your Company's Internal Control Systems are commensurate with thenature size and complexity of its business. The Board of Directors have laid downinternal financial control measures to be followed by the Company and such policies andprocedures have been adopted by the Company for ensuring the orderly and efficient conductof its business including adherence to Company's policies safeguarding of itsassets prevention and detection of frauds and errors accuracy and completeness ofaccounting records and timely preparation of reliable financial information. Goodgovernance well defined systems and processes risk assessment a vigilant controlfunction communication and monitoring and an independent internal audit function are thefoundation of the internal control systems. Internal Audit department provides assuranceon functioning and quality of internal controls along with adequacy and effectivenessthrough periodic reporting. Internal Risk and Control function also evaluatesorganisational risk along with controls required for mitigating those risks. The controlactivities continue to incorporate among others continuous monitoring routinereporting digital business environment with minimum possible interference checks andbalances purchase policies authorization and delegation procedures audits includingcompliance audits which are periodically reviewed by the Audit Committee and the BusinessProcess and Risk Management Committee. Your Company has a Code of Conduct for allemployees and a clearly articulated and internalized delegation of financial authority.Your Company also takes prompt action on any violations of the Code of Conduct by itsemployees. The Company's Enterprise Resource Management Systems with StandardOperating Procedures based on work flows and process flow charts also provide a comfort inthis regard. The Company is fully geared to implement any statutory recommendation whichmay be made in this regard.

Key Financial Ratios

Standalone Consolidated
Ratios FY 2019-2020 FY 2018-2019 FY 2019-2020 FY 2018-2019
Debtors Turnover 10.05 9.41 9.19 8.89
Inventory Turnover (on material cost of goods sold) 2.91 3.27 2.97 3.30
Interest Coverage Ratio $ 28.71 21..53 19.77 17.20
Current Ratio 1.49 1.60 1.52 1..64
Debt Equity Ratio 0.08 0.09 0.20 0.20
Operating Profit Margin % 19.48 16.61 17.61 16.41
Net Profit Margin # 12.28 7.90 10.31 8.15
Return on Net Worth (RONW) @ 28.08 19.44 25.71 21.40

$ There was a 33.32% change in the Company's standalone interestcoverage ratio. Increase in interest coverage ratio was due to increase in Profit beforeInterest and Tax (PBIT) on account of increase in other income from dividend.

# There was a 55.42% change in the Company's standalone net profitmargin as well as 26.50% change in Company's consolidated net profit margin. Increasein net profit margin was due to increase in other income from dividend.

@ The change in return on net worth was on account of increase in otherincome from dividend.

ACQUISITION OF EQUITY SHARES IN STP LTD.

During the year the Company had acquired 18863180 equity shares ofSTP Ltd. representing 95.53% of the paid up equity share capital of a face value of Rs10/-each at a consideration of Rs125.20 crore by virtue of a share purchase agreement enteredinto between the Company and STP Ltd. Most of these shares were acquired after the closeof business hours on 31st October 2019. The entire process of share purchase wascompleted in the month of November 2019. The balance 4.47% of share capital remains withexisting shareholders. STP Ltd. is thus a subsidiary of the Company. STP Ltd. is into thebusiness of manufacturing and supplying construction chemicals flooring compoundsbitumen and coal tar based products sealants and adhesives protective and anti-corrosivecoatings etc. These are specially formulated and have a strong brand image. STP Ltd. hassix manufacturing units located in Chennai

(Tamil Nadu) Goa Jamshedpur (Jharkhand) Kosi in Mathura (UttarPradesh) Hooghly (West Bengal) and Panoli (Gujarat). It has two R&D centers andoffices and warehouses located all over India. The business and the expertise of STP Ltd.can significantly support the Company's existing construction chemicals waterproofing and protective coatings business where the two entities can complement each otherin various areas such as manufacturing selling distribution procurement technologyetc. thus resulting in significant benefits to the group. The Company's intimationin this regard pursuant to Regulation 30 of the Listing Regulations to the Stock Exchangescan be viewed at the following web link : https://www.bergerpaints.com/media/media.

ADEQUACY OF INTERNAL FINANCIAL CONTROLS RELATED TO FINANCIAL STATEMENTS

The Company has policies and procedures for ensuring orderly andefficient conduct of its business including adherence to the Company's policies thesafeguarding of its assets the prevention and detention of frauds and errors theaccuracy and completeness of accounting records and the timely preparation of reliablefinancial disclosures which are reviewed by the Board and Audit Committee from time totime.

EMPLOYEE STOCK OPTION SCHEME

Your Company had earlier re-introduced the ESOP Scheme aligned withthe Securities and Exchange Board of India (Share Based Employee Benefits) Regulations2014 in the year 2016 in accordance with the approval of the members granted at the AnnualGeneral Meeting held on 3rd August 2016 to reward eligible employees.

In accordance with the aforesaid scheme of 2016 and the earlier schemeof 2010 the Compensation and Nomination and Remuneration Committee has granted 94224options on 09/11/2019 to 171 eligible employees ( including 2035 to Mr Abhijit Roy and1565 to Mr Srijit Dasgupta being Key Managerial Personnel) and also allotted90069 equity shares ofRs Rs1 each (face value) to eligible employees (including KeyManagerial Personnel as per details below) upon exercise of their options earlier grantedto them. The allotment of the aforesaid shares were made on 24th December 2019.

In accordance with Rule 12 of the Companies (Share Capital andDebenture) Rules 2014 the Company had allotted shares to Key Managerial Personnel (KMPs)on 24th December 2019 on their exercising the options earlier granted to them and thedetails of the allotments made are given herein-

NAME OF KMPs DESIGNATION NO. OF EQUITY SHARES ALLOTTED
MR ABHIJIT ROY MANAGING DIRECTOR & CEO 2448 shares
MR SRIJIT DASGUPTA DIRECTOR-FINANCE & CFO 1883 shares
MR ANIRUDDHA SEN * SR. VICE PRESIDENT & COMPANY SECRETARY 1256 shares

* Mr Aniruddha Sen Senior Vice President and Company Secretary retiredfrom the services of the Company w.e.f. the close of business hours of 31st March 2020.

For further details please refer to Annexure II to this reportwhere detailed information required to be disclosed in terms of the provisions of the SEBI(Share Based Employee Benefits) Regulations 2014 are enclosed.

Please also visit the weblink: https://www.bergerpaints.com/investors/esop-disclosure.htmlfor disclosures under Regulation 14 of the aforesaid Regulations.

HUMAN RESOURCES

Berger Paints India Limited has been an organization which has alwaysattracted and retained good talent. The Company continued on the same path providing auniform platform to all its employees for contributing creatively towards the growth ofits business. The culture that has been nurtured in the organization over years is uniqueas it has helped the Company to grow and create more value for its customers stakeholdersand employees. The Company has four strong pillars known as "Berger Values" i.e.Performance Customer First Ethical Practices and Valuing People - which are thefoundation of its unique culture.

This year the Company has embarked upon an approach to focus on talentacquisition to ensure that the Company is ready and fully resourced with talent as per itsrequirements at the entry level. This has been done across the country with a focus onfrontline sales talent to ensure availability of ready talent throughout the year. Goingforward the Company will through focused training initiatives strengthen its leadershippipeline for mid and senior level roles both existing and anticipated as the businessgrows. The Human Resources team plans to leverage technology to digitize HR workstreamsthereby creating seamless employee experience and enhanced process efficiencies.

The number of people employed as on 31st March 2020 was 3600 (31stMarch 2019:3450). The Industrial Relations were generally satisfactory during the year.Your Company wishes to put on record its deep appreciation of the cooperation extended andefforts made by all employees.

TRANSFER OF SHARES TO THE INVESTOR EDUCATION AND PROTECTION FUND

The Ministry of Corporate Affairs (MCA) vide notification no. S.O.2866(E) dated 5th September 2017 enforced Sections 124(6) and 125 of the Companies Act 2013("the Act") read with the Investor Education and Protection Fund [IEPF](Accounting Audit Transfer and Refund) Rules 2016 which require companies to transferthe underlying shares to the IEPF in respect of which the dividends have remainedunclaimed for a consecutive period of seven years. Accordingly during the year underreview on 25th October 2019 the Company had transferred 340856 equity shares (0.04%of paid up capital) to the IEPF.

PREVENTION OF SEXUAL HARASSMENT

Your Company had framed a policy on Prevention of Sexual Harassment ofWomen at workplace pursuant to the Sexual Harassment of Women at Workplace (PreventionProhibition and Redressal) Act 2013 which commits to provide a workplace that is freefrom all forms of discrimination including sexual harassment. The Policy can be viewed atthe following weblink:www.bergerpaints.com/about-us/sexual-harassment-policy.html.

Pursuant to 134(3)(q) read with the Companies (Accounts) Rules 2014the Company has complied with the provisions relating to constitution of InternalComplaint Committee (ICC) under the Sexual Harassment of Women at Workplace (PreventionProhibition and Redressal) Act 2013. As per the Policy any complaint received shall beforwarded to an Internal Complaint Committee ("ICC") formed under the Policy forredressal. The investigation shall be carried out by ICC constituted for this purpose.From the date of inception there has been no such complaint received.

Till 19th September 2019 the ICC comprised the following members whohad been reappointed by the Board for another period of 3 years with effect from1st February 2018 as per the Regulations:

1. Ms Rishma Kaur (Presiding Officer)

2. Mr Srijit Dasgupta

3. Mr Aniruddha Sen

4. Ms Suparna Mitra (NGO representative).

The ICC was reconstituted on 19th September 2019 due to the inabilityof Ms Suparna Mitra to continue as a member of the Committee and accordingly Ms KakoliDey Assistant Director of Child In Need Institute CINI an NGO representative wasappointed in place of Ms Mitra. Currently the ICC comprises the following members:-

1. Ms Rishma Kaur (Presiding Officer)

2. Mr Srijit Dasgupta

3. Mr Aniruddha Sen

4. Ms Kakoli Dey (NGO representative)

SUBSIDIARY AND JOINT VENTURES

Your Company has the following 5 wholly-owned subsidiaries as on thedate of this report: - (i) Beepee Coatings Private Limited ("Beepee Coatings")in Gujarat; (ii) Berger Paints (Cyprus) Limited ("Berger Cyprus") in Cyprus;(iii) Lusako Trading Limited ("Lusako Trading") in Cyprus; (iv) Berger Jenson& Nicholson (Nepal) Private Limited Nepal ("BJN") and (v) SBL SpecialtyCoatings Private Limited ("SCPL") in Chandigarh.

The following companies are wholly-owned subsidiaries of theCompany's above named subsidiaries: - (i) Bolix S.A. Poland – wholly-ownedsubsidiary of Lusako Trading; (ii) Berger Paints Overseas Limited ("BPOL")Russia - wholly-owned subsidiary of Berger Cyprus. Bolix S.A. Poland has 4 subsidiariesviz.: Bolix UKRAINA sp.z.o.o.Ukraine ("Bolix Ukraine") BUILD-TRADEsp.z.o.o.Poland ("Build Trade Poland") Soltherm External Insulations LimitedU.K. ("Soltherm U.K.") Soltherm Insolations Thermique Exterieure SAS France("Soltherm France").

Surefire Management Services Ltd. UK ("SMS") (classified asa subsidiary in the year 2018-2019) is determined to be a joint venture of Bolix S.A.Poland with Agility Eco Systems Limited UK based on the criteria of joint control.Details in respect of SMS are provided in Part B of AOC-1 forming a part of the FinancialStatements.

The Company has three other subsidiaries viz. Berger Rock PaintsPrivate Limited (the other shareholder being Nippon Paint Automotive Coatings Co. LtdJapan) Berger Hesse Wood Coatings Private Limited (the other shareholder being HesseShares GmbH Germany) and STP Ltd. The statement relating to the above companies asspecified in Sub-Section (3) of Section 129 of the Act is attached to the Report andAccounts of the Company.

The performance of Beepee Coatings Private Limited was satisfactorywith a revenue from operations of Rs24.14 crore.

Berger Paints Cyprus Limited ("BPCL") is a special purposevehicle for the purpose of making investments in your Company's interests abroad. Sois Lusako Trading Limited.

Bolix S.A.(including its subsidiaries) also posted encouraging resultswith a revenue from operations of Rs274.40 crore. During the year under review BJN-Nepalshowed good performance with a revenue from operations of Rs214.51 crore.

SBL Specialty Coatings Private Limited (earlier known as Saboo CoatingsPrivate Limited) continued to perform well with a revenue from operations of Rs105.35crore during the year 2019-2020. The revenue from operations of Berger Paints OverseasLimited ("BPOL") was Rs13.59 crore.

Berger Rock Paints Private Limited ("Berger Rock") which hadrecently started operations recorded revenue from operations of Rs8.29 crore during theyear ended 31st March 2020. Berger Hesse Wood Coatings Private Limited("BHWCPL") (earlier known as Saboo Hesse Wood Coatings Private Limited) recordedrevenue from operations of Rs9.71 crore during the year ended 31st March 2020.

STP Ltd. recorded revenue from operation of Rs173.57 crore during theyear ended 31st March 2020. Out of this Rs77.75 crore being the revenue generated afteracquisition of its shares by the Company has been considered for the purpose ofconsolidation of the Company's financial statements. Berger Becker Coatings PrivateLimited the Company's joint venture with Becker Industrifarg Sweden showed goodperformance with revenue from operations of Rs262.35 crore.

Berger Nippon Paint Automotive Coatings Private Limited("BNPA") the Company's joint venture with NPAU Japan posted revenue fromoperations of Rs155.04 crore. Its performance will improve once the overall automotivebusiness picks up.

The salient features of the financial statements of subsidiariesassociate companies and joint ventures are given in the Statement in Form AOC-1 forming apart of the financial statement attached to this Directors' Report and pursuant tofirst proviso to Sub-section (3) of Section 129 of the Act read with Rule 5 of theCompanies (Accounts) Rules 2014.

Pursuant to Regulation 16(1)(c) of the Listing Regulations a materialsubsidiary in a year shall be a subsidiary whose income or net worth exceeds 10% of theconsolidated income or net worth respectively of the Company and its subsidiaries in theimmediately preceding accounting year. At present there is no such material subsidiary ofthe Company within the meaning of the above Regulation.

CONSOLIDATED FINANCIAL STATEMENTS

The duly audited Consolidated Financial Statements as required underthe Indian Accounting Standard 110 provisions of Regulation 36 of the Listing Regulationsand Section 136 of the Act have been prepared after considering the audited financialstatements of your Company's subsidiaries and appear in the Annual Report of theCompany for the year 2019-2020.

CORPORATE GOVERNANCE

Your Company re-affirms its commitment to the standards of corporategovernance. This Annual Report carries a Section on Corporate Governance and benchmarksyour Company with the relevant provisions of the Listing Regulations.

Pursuant to the Listing Regulations as amended a certificate obtainedfrom a Practising Company Secretary certifying that the Directors of the Company are notdebarred or disqualified from being appointed or to continue as directors of the companiesby the Securities and Exchange Board of India/Ministry of Corporate Affairs forms part ofthe report as Annexure B to the Corporate Governance Report.

In terms of Section 204 of the Act read with Rule 9 of the Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 (as amended) yourBoard at its meeting held on 30th May 2018 appointed Messrs Anjan Kumar Roy & Co.Company Secretaries (FCS-5684 CP No.4557) as the Secretarial Auditor to conduct audit ofthe secretarial records for the financial year ended 31st March 2020 and to submit theSecretarial Audit Report.

The Secretarial Audit Report as received from Messrs Anjan Kumar Roy& Co. Company Secretaries in the prescribed Form No. MR-3 is annexed to thisBoard's Report and marked as Annexure VI. The Secretarial Audit Report doesnot contain any qualification reservation or adverse remark.

The Board of Directors re-appointed Messrs Anjan Kumar Roy & Co.Company Secretaries as the Secretarial Auditor to conduct audit of the secretarial recordsfor the financial year 2020-2021 at its meeting held on 23rd June 2020. An AnnualSecretarial Compliance report as per Securities and Exchange Board of India circular dated8th February 2019 is also attached as Annexure VII as an additional disclosure.

COMPLIANCE WITH THE SECRETARIAL STANDARDS ON BOARD AND GENERAL MEETINGS

During the year under review the Company has duly complied with theapplicable provisions of the Secretarial Standards on meetings of the Board of Directors(SS-1) and General Meetings (SS-2) issued by the Institute of Company Secretaries of India(ICSI).

TECHNOLOGY AGREEMENTS

Your Company has a Technical License Agreement with Nippon PaintAutomotive Coatings Co Ltd. of Japan.

FIXED DEPOSIT

The Company had earlier discontinued acceptance of fixed deposits since2002 and accordingly no fresh deposit was accepted during the year. As per the provisionsof Section 125 of the Act all unclaimed deposits have been transferred to InvestorEducation and Protection Fund (IEPF).

EXTRACT OF ANNUAL RETURN

The extract of the Annual Return of the Company as on 31st March 2020in Form MGT 9 in accordance with Section 92(3) of the Act read with Companies (Managementand Administration) Rules 2014 (as amended) is available on the website of the Companyat https://www.bergerpaints.com/investors/annual-reports.html and is set out in AnnexureIII to this Report.

BUSINESS RESPONSIBILITY REPORT

SEBI had made it mandatory to publish a Business Responsibility Report(BRR) by the top 1000 listed companies based on market capitalization in their AnnualReport in terms of Regulation 34(2)(f) of the Listing Regulations with the stockexchanges. The Company accordingly complied with the requirement and had framed a BusinessResponsibility Policy in line with the suggested framework as provided by SEBI based onthe National Voluntary Guidelines on Social Environmental and Economic Responsibilitiesof Businesses published by the Ministry of Corporate Affairs. The said Policy was adoptedat the Board Meeting held on 30th May 2017 and can be viewed at https://www.bergerpaints.com/about-us/business-responsibility-policy.html.Mr Abhijit Roy Managing Director and CEO had been nominated as the Director responsiblefor implementing the Business Responsibility Policy and Mr Aniruddha Sen Senior VicePresident and Company Secretary had been nominated as the Business Responsibility Head.Mr Aniruddha Sen retired from the services of the Company w.e.f. the close of businesshours on 31st March 2020 and accordingly automatically ceased to be the BusinessResponsibility Head from that date. Mr Arunito Ganguly has been appointed as the VicePresident & Company Secretary w.e.f. 1st April 2020 and has also been nominated asthe Business Responsibility Head from that date. As required the BRR for 2019-2020 isattached to this report as Annexure IX.

DIRECTORS' RESPONSIBILITY STATEMENT

Your Directors wish to inform that the Audited Accounts containingFinancial Statements for the financial year ended 31st March 2020 are in full conformitywith the requirements of the Act. They believe that the Financial Statements reflectfairly the form and substance of transactions carried out during the year and reasonablypresent your Company's financial condition and results of operations. Your Directorsfurther confirm that in preparation of the Annual Accounts: i) The applicable accountingstandards have been followed and wherever required proper explanations relating tomaterial departures have been given ii) The Directors have selected such accountingpolicies and applied them consistently and made judgments and estimates that arereasonable and prudent so as to give a true and fair view of the state of affairs of theCompany at the end of the financial year and of the profit or loss of the Company for thatperiod 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 downinternal financial controls to be followed by the Company and that such internal financialcontrols are adequate and operating effectively vi) The Directors have devised propersystems to ensure proper compliance with the provisions of all applicable laws and thatsuch systems were adequate and operating effectively.

POLICY ON APPOINTMENT AND REMUNERATION OF DIRECTORS KEY MANAGERIALPERSONNEL AND OTHER EMPLOYEES

The Company has formulated a Remuneration Policy pursuant to theprovisions of Section 178 and other applicable provisions of the Act and Rules thereof.The policy is based on the guiding principle aimed towards retaining and rewardingperformers. There has been no change in the said policy during the financial year ended31st March 2020.

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

QUALIFICATION OR RESERVATIONS IN THE STATUTORY/SECRETARIAL AUDITREPORTS

Your Board has the pleasure in confirming that no qualificationreservation adverse remark or disclaimer has been made by the Statutory Auditors and theCompany Secretary in Practice in their Audit Reports issued to the members of the Company.

SHARE CAPITAL

The Authorised Share Capital of your Company as on March 31 2020 stoodat Rs1200000000 divided into 1200000000 equity shares of Rs1/- each. The IssuedShare Capital of your Company is Rs971311260 divided into 971311260 equity shares ofRs1/- each and the subscribed and paid-up capital is Rs971219780 divided into971219780 equity shares of Rs1/- each fully paid-up.

CREDIT RATING

During the year under review CRISIL Limited has reaffirmed the creditrating of AAA for Bank Loan Rating (pronounced as Triple A) and A1+ credit rating asreaffirmed by CARE Ratings Limited for short term credit facilities in the form ofCommercial Paper.

LOANS COMMITMENTS AND CONTINGENCIES INVESTMENTS

Particulars of loans given investments made guarantees given andsecurities provided if any along with the purpose for which the loan or guarantee orsecurity is proposed to be utilised by the recipient are provided in the standalonefinancial statement (please refer Notes 5a 5b 9a and 34 of the standalone financialstatement).

RELATED PARTY TRANSACTIONS

The Company has always been committed to good corporate governancepractices including in matters relating to Related Party Transactions (RPTs). Endeavouris consistently made to have only arm's length transactions with all partiesincluding Related Parties. The Board of Directors of the Company had adopted the RelatedParty Transaction policy regarding materiality of related party transactions and also ondealings with Related Parties in terms of Regulation 23 of the Listing Regulations andSection 188 of the Act. The policy is available at the following weblink: https://www.bergerpaints.com/about-us/rpt-policy.html

Pursuant to the amended Listing Regulations a policy on materiality ofrelated party transactions and on dealing with related party transactions has to includeclear threshold limit duly approved by the Board and such policy has to be reviewed by theBoard once in every three years and updated accordingly. Accordingly the Board hadamended and adopted a new policy and the said policy had been uploaded on the website ofthe Company at https://www.bergerpaints.com/about-us/rpt-policy.html

All related party transactions have been carried out at arms'length basis in the ordinary course of business. There is no material related partytransaction i.e. transaction exceeding 10% of the annual consolidated turnover as per thelast audited financial statements of the Company or a transaction involving payments madeto a related party with respect to brand usage or royalty which exceed 5% of the annualconsolidated turnover of the Company as per last audited financial statements of theCompany entered during the year by your Company and accordingly the disclosure ofRelated Party Transaction as required under Section 134(3)(h) of the Act in Form AOC-2 isnot applicable.

POLICY TO DETERMINE MATERIAL EVENTS

As per the Listing Regulations the Company has framed a policy fordetermination of materiality based on criteria specified in the regulations. The Policyis available at the following web link: https://www.bergerpaints.com/about-us/policy-determine-material-events.htmlPOLICY FOR PRESERVATION OF DOCUMENTS

As per Regulation 9 of Listing Regulations the Company has framed apolicy for Preservation of Documents based on criteria specified in the said Regulations.The Policy is available at the following web link: https://www.bergerpaints.com/about-us/policy-preservation-documents.htmlSIGNIFICANT CHANGES

During the financial year 2019-2020 no significant change has takenplace which could have an impact over the financial position of the Company.However during the year as reported earlier in this Report there was purchase of 95.53%of the equity shares of STP Ltd.

DIVIDEND

The total comprehensive income of the Company is Rs692.53 crore for theyear 2019-2020.

Your Directors have recommended a final dividend of Rs0.30 (30%) perequity share of Rs1/- each for the financial year ended 31st March 2020. Togetherwith the interim dividend of Rs1.90 (190%) per equity share paid on 16th March 2020 thetotal dividend for the financial year ended 31st March 2020 aggregates to Rs2.20 (220%)per equity share of Rs1/- each. Final dividend is subject to approval of the shareholdersat the ensuing Annual General Meeting. The total dividend if the final dividend isapproved will absorb an amount of Rs251.20 crore (compared to Rs222.44 crore in theprevious year) based on the current paid-up capital of the Company. The final dividendwill be paid to those members holding shares in the physical mode whose names appear inthe Register of Members as on 25th September 2020 and for shares held in electronic formto those whose names appear in the list of beneficial holders furnished by respectiveDepositories as at the end of business hours on 18th September 2020.

In accordance with Regulation 43A of the Listing Regulations theCompany has formulated a Dividend Distribution Policy. The Dividend DistributionPolicy is annexed to this Report (marked as Annexure I). The Policy is available atthe following weblink: https://www.bergerpaints.com/about-us/dividend-distribution-policy.html

In terms of the provisions of Section 124 of the Act your Company hastransferred an amount of Rs4828397 (Final) to the Investor Education and ProtectionFund in respect of dividend amounts lying unclaimed or unpaid for more than seven yearsfrom the date they became due i.e. for the year ended 31st March 2012.

Pursuant to the provisions of the Investor Education and ProtectionFund Authority (Accounting Audit Transfer and Refund) Rules 2016 the Company has filedthe necessary form and uploaded the details of unclaimed amounts lying with the Companyas on 31st March 2012.

Pursuant to the changes introduced by the Finance Act 2020 in theIncome-tax Act 1961 the dividend paid or distributed by a Company shall be taxable inthe hands of the shareholders. Accordingly in compliance with the said provisions yourCompany shall make the payment after necessary deduction of tax at source.

Conservation of Energy & Technology Absorption

Information pursuant to Section 134(3)(m) of the Act read with theCompanies (Accounts) Rules 2014 (as amended) is annexed as Annexure VIII of thisreport.

Foreign Exchange Earnings and Outgo

Foreign Exchange Earnings and Outgo of the Company are Rs6.00 crore andRs714.37 crore respectively. Primarily earnings were from exports and consultancyservices and outgo was towards import payments.

Particulars of Employees

In terms of the provisions of Section 197(12) read with Rule 5(2) and5(3) of Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014particulars of certain category of employees have been set out in Annexure V ofthis report.

STATEMENT OF EVALUATION OF BOARD OF DIRECTORS AND COMMITTEES THEREOF

Your Company understands the requirements of an effective BoardEvaluation process and accordingly conducts the Performance Evaluation every year inrespect of the following: i. Board of Directors as a whole. ii. Committees of the Board ofDirectors. iii. Individual Directors including the Chairman of the Board of Directors.

In compliance with the requirements of the provisions of Section 178 ofthe Act the Listing Regulations and the Guidance Note on Board Evaluation issued by SEBIin January 2017 your Company has carried out a Performance Evaluation process internallyfor the

Board/Committees of the Board/Individual Directors including theChairman of the Board of Directors for the financial year ended 31st March 2020. Duringthe year under review the Company has complied with all the criteria of Evaluation asenvisaged in the SEBI Circular on ‘Guidance Note on Board Evaluation'.

The key objectives of conducting the Board Evaluation process were toensure that the Board and various Committees of the Board have appropriate composition ofDirectors and they have been functioning collectively to achieve common business goals ofyour Company. Similarly the key objective of conducting performance evaluation of theDirectors through individual assessment and peer assessment was to ascertain if theDirectors actively participate in the Board/Committee Meetings and contribute to achievethe common business goals of the Company.

The Directors carry out the aforesaid Performance Evaluation in aconfidential manner and provide their feedback on a rating scale of 1 - 5. Dulycompleted formats were sent to the Chairman of the Board and the Chairman/Chairperson ofthe respective Committees of the Board for their consideration. The Performance Evaluationfeedback of the Chairman was sent to the Chairman of the Compensation and Nomination andRemuneration Committee.

This year also the outcome of such Performance Evaluation exercise wasdiscussed at a separate meeting of the Independent Directors held on 5th February 2020and was later tabled at the Compensation and Nomination and Remuneration Committee meetingheld on the same day. The Compensation and Nomination and Remuneration Committee forwardedtheir recommendation based on such Performance Evaluation Process to the Board ofDirectors and the same was tabled at the Board Meeting held on 5th February 2020. Aftercompletion of internal evaluation process the Board of Directors at its Meeting held on5th February 2020 also discussed the Performance Evaluation of the Board its Committeesand individual directors. The performance evaluation of Independent Directors of theCompany were done by the entire Board of Directors excluding the Independent Directorsbeing evaluated and after being satisfied with the outcome it was noted that theCommittees were working effectively. Pursuant to Section 178(3) of the Act and Regulation19 of the Listing Regulations the Remuneration Committee is entrusted with responsibilityof formulating criteria for determining qualifications positive attributes andindependence of an Independent Director. This can be viewed at https://www.bergerpaints.com/about-us/criteria-policy.htmlSIGNIFICANT AND MATERIAL ORDER PASSED BY REGULATORS OR COURTS OR TRIBUNALS IMPACTING THEGOING CONCERN STATUS AND OPERATIONS OF THE COMPANY

Pursuant to Section 134(3)(q) of the Act 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 duringthe financial year 2019-2020.

BOARD OF DIRECTORS BOARD MEETINGS AND KEY MANAGERIAL PERSONNEL

Your Company's Board is duly constituted and in compliance withthe requirements of the Act the Listing Regulations and provisions of the Articles ofAssociation of the Company. Your Board has been constituted with requisite diversitywisdom expertise and experience commensurate to the scale of operations of your Company.

COMPOSITION OF BOARD

The Board comprises 10 Directors of which 3 are Executive Directors (2of whom are part of the promoter group) 2 are Non-Executive (both are part of thepromoter group) and 5 are Non-Executive Independent Directors. The composition of theBoard is in conformity with Regulation 17 of the Listing Regulations read with Section 149of the Act.

MEETINGS

During the year under review a total of seven Meetings of the Board ofDirectors of the Company were held i.e. on 16th April 2019 30th May 2019 5th August2019 15th October 2019 5th November 2019 5th February 2020 and 18th February 2020.Also the Board of Directors have passed 9 (nine) Resolutions by Circulation. Details ofBoard composition and Board Meetings held during the financial year 2019-2020 havebeen provided in the Corporate Governance Report – Annexure X which forms partof this Annual Report.

CHANGES IN BOARD COMPOSITION

Details of Directors' appointment/reappointment and change in boardcomposition during the financial year under review are as follows:

Sr No. Name of Director Designation & Category Reason and date of appointment/reappointment/retirement/ resignation
1. Mr Kuldip Singh Dhingra Non-Executive Chairman/ Promoter (Non-Independent) Mr Kuldip Singh Dhingra (DIN:00048406) Non-Executive Chairman Non-Independent Director of the Company retired by rotation and was re-appointed pursuant to Section 152(6) of the Act at the 95th Annual General Meeting held on 5th August 2019.
2. Mr Gurbachan Singh Dhingra Non-Executive Vice Chairman/ Promoter (Non-Independent) Mr Gurbachan Singh Dhingra (DIN: 00048465) Non-Executive Vice Chairman Non-Independent Director of the Company retired by rotation and was re-appointed pursuant to Section 152(6) of the Act at the 95th Annual General Meeting held on 5th August 2019.
3. Mr Naresh Gujral Non-Executive (Independent Director) Mr Naresh Gujral (DIN: 02878434) Non Executive - Independent Director of the Company was re-appointed for a second term as an Independent Director of the Company for 5 consecutive years with effect from 19th August 2019 at the 95th Annual General Meeting held on 5th August 2019 pursuant to Section 149(10) 150 and 152 read with Schedule IV of the Act and Regulation 16 of the Listing Regulations.
4. Mrs Sonu Halan Bhasin Non-Executive (Independent Director) Mrs Sonu Halan Bhasin (DIN 02872234) was appointed as a Non- Executive - Independent Director for a period of five consecutive years with effect from 1st February 2019 in accordance with Sections 149 and 160 of the Act and Regulation 17(1)(a) of Listing Regulations pursuant to shareholders' resolution passed at the 95th Annual General Meeting held on 5th August 2019.
5. Mr Anoop Hoon Non-Executive (Independent Director) Mr Anoop Hoon (DIN: 00686289) was appointed as a Non- Executive - Independent Director for a period of five consecutive years with effect from 1st February 2019 as per Sections 149 and 160 of the Act with effect to shareholders' resolution passed at the 95th Annual General Meeting held on 5th August 2019.
6 Ms Rishma Kaur Executive Director Ms Rishma Kaur (DIN: 00043154) was re-appointed as an Executive Director for a period of five consecutive years with effect from 3rd August 2019 pursuant to Section 152(6) and 160 of the Act at the 95th Annual General Meeting held on 5th August 2019.
7 Mr Kanwardip Singh Dhingra Executive Director Ms Kanwardip Singh Dhingra (DIN: 02696670) was re-appointed as an Executive Director for a period of five consecutive years with effect from 3rd August 2019 pursuant to Section 152(6) and 160 of the Act at the 95th Annual General Meeting held on 5th August 2019.
8. Mr Dhirendra Swarup Non-Executive (Independent Director) Mr Dhirendra Swarup (DIN: 02878434) had tendered his resignation as a Non-Executive Independent Director of the Company with effect from 13th June 2019 expressing his inability to devote time towards the Company. The Board recorded its sincere appreciation and gratitude for the services rendered and guidance provided by him during his tenure as a member of the Board and as the Chairman of the Audit Committee.
9. Mr Kamal Ranjan Das Non-Executive (Independent Director) Mr Kamal Ranjan Das (DIN: – 00048491) ceased to be Non – Executive Independent Director of the Company with effect from the close of business hours on 31st March 2020 after completion of his second term as an Independent Director of the Company. The Board recorded its sincere appreciation and gratitude for the services rendered by Mr Das in several capacities for more than three decades and the guidance provided by him as a long standing member of the Board of Directors and member/ Chairman of the various Committee positions he held.
10. Mr Gopal Krishna Pillai Non-Executive (Independent Director) Mr Gopal Krishna Pillai (DIN: 02340756) ceased to be Non – Executive Independent Director of the Company with effect from 12th September 2019 after completion of his tenure as an Independent Director of the Company. The Board recorded its sincere appreciation and gratitude for the services rendered and guidance provided by him during his tenure as a member of the Board and a member of the Audit Committee.
11. Dr Anoop Kumar Mittal Non-Executive (Independent Dr Anoop Kumar Mittal's appointment details are given below.
Director)

Details of Directors seeking appointment/reappointment at the ensuingAGM are as follows:

Sr Name of Director Designation & Category Reason and date of appointment/reappointment/retirement/ resignation
1. Mr Kuldip Singh Dhingra Non-Executive Chairman/ Promoter (Non-Independent) Mr Kuldip Singh Dhingra (DIN: 00048406) Chairman – Non Executive Non-Independent Director of the Company is due to retire by rotation at the ensuing Annual General Meeting and being eligible offers himself for re-appointment pursuant to Section 152(6) of the Act .
2. Mr Gurbachan Singh Dhingra Non-Executive Chairman/ Promoter (Non-Independent) Mr Gurbachan Singh Dhingra (DIN: 00048465) Vice Chairman – Non Executive Non-Independent Director of the Company is due to retire by rotation at the ensuing Annual General Meeting and being eligible offers himself for re-appointment pursuant to Section 152(6) of the Act .
3. Dr Anoop Kumar Mittal Non-Executive (Independent Director) Based on the recommendation of the Compensation and Nomination and Remuneration Committee the Board of Directors of the Company through a Resolution by Circulation dated 19th March 2020 approved the appointment of Dr Anoop Kumar Mittal (DIN: 05177010) as an Additional Director of the Company with effect from 19th March 2020 to hold office as a Non-Executive Independent Director of the Company for a term of 5 (five) consecutive years subject to approval of the Members of the Company at the ensuing AGM.
The Company has received a Notice under Section 160 of the Act from a Member of the Company signifying the candidature of Dr Mittal for his appointment as a Director of the Company at the ensuing AGM. Your Board recommends appointment of Dr Mittal as a Non-Executive Independent Director of the Company for a term of 5 (five) consecutive years commencing from 19th March 2020.

KEY MANAGERIAL PERSONNEL

Mr Aniruddha Sen Senior Vice President and Company Secretary retiredfrom the services of the Company with effect from close of business hours on 31st March2020 and Mr. Arunito Ganguly was appointed as the Vice President and Company Secretary ofthe Company with effect from 1st April 2020 in compliance with the provisions of Sections203 and 2(51) of the Act read with the Companies (Appointment and Remuneration ofManagerial Personnel) Rules 2014 (as amended) with effect from 1st April 2020. MrArunito Ganguly has also been appointed as the Nodal Officer under the IEPF Authority(Accounting Audit Transfer and Refund) Rules 2016 and designated as the ComplianceOfficer of the Company pursuant to the provisions of the Securities & Exchange Boardof India (Prohibition of Insider Trading) Regulations 2015 and all other applicable lawsrules and regulations pertaining to Securities and Exchange Board of India with effectfrom 1st April 2020.

Mr Abhijit Roy (DIN: 03439064) Managing Director & CEO and MrSrijit Dasgupta Director – Finance and Chief Financial Officer (DIN: 03439076) andMr Arunito Ganguly (FCS 9285) are the Key Managerial Personnel (KMP) of the Company.

Mr Aniruddha Sen continues as the Senior Vice President Legal &Corporate Affairs.

STATEMENT OF DECLARATION BY INDEPENDENT DIRECTORS

The following are the Independent Directors of your Company as on 31stMarch 2020:-

1) Mrs Sonu Halan Bhasin 2) Mr Anoop Hoon 3) Mr Naresh Gujral 4) DrAnoop Kumar Mittal* 5) Mr Pulak Chandan Prasad.

* Appointed with effect from 19th March 2020

The Company has received declarations from Independent Directors thatthey meet the criteria of independence as prescribed u/s 149(6) of the Act and as requiredunder the Listing Regulations. In the opinion of the Board they fulfil the condition forappointment/ re-appointment as Independent Directors on the Board.

The Board of Directors confirms that the Independent Directors haveaffirmed compliance with the Code for Independent Directors as prescribed in Schedule IVto the Act and also with the Company's Code of Conduct applicable to all the BoardMembers and Senior Management Personnel of the Company for the financial year ended on31st March 2020.

STATEMENT REGARDING OPINION OF THE BOARD WITH REGARD TO INTEGRITYEXPERTISE AND EXPERIENCE (INCLUDING THE PROFICIENCY) OF THE INDEPENDENT DIRECTORSAPPOINTED DURING THE YEAR

In the opinion of the Board the Independent Directors possess theattributes of integrity expertise and experience as required to be disclosed under Rule8(5)(iiia) of the Companies (Accounts) Rules 2014 (as amended).

Pursuant to Section 134(3)(m) of the Act read with the Companies(Accounts) Rules 2014 all the Independent Directors of the Company have registeredthemselves with the Indian Institute of Corporate Affairs (IICA) as was notified andrequired under Section 150(1) of the Act.

COMMITTEES OF THE BOARD

A. AUDIT COMMITTEE

The Board of Directors of your Company has duly constituted an AuditCommittee in compliance with the provisions of Section 177 of the Act the Rules framedthereunder read with Regulation 18 of the Listing Regulations. The terms of reference ofthe Audit Committee has been duly approved by the Board of Directors.

The Company has reconstituted the Audit Committee due to the cessationof Mr Kamal Ranjan Das as a member of Board of Directors w.e.f. the close of businesshours on 31st March 2020. The details of the changes are given in the Report on CorporateGovernance – Annexure X. The Board has accepted and implemented allrecommendations of the Audit Committee.

WHISTLE BLOWER POLICY

In terms of the provisions of Section 177 of the Act and the Rulesframed therein read with Regulation 22 of the Listing Regulations your Company has avigil mechanism in place for directors and employees of the Company through which genuineconcern regarding various issues relating to inappropriate functioning of the organisationcan be raised. The Whistle Blower Policy has been uploaded in the website of the Companyat www.bergerpaints.com.

B. CORPORATE SOCIAL RESPONSIBILITY COMMITTEE

The Company has reconstituted its Corporate Social ResponsibilityCommittee due to the cessation of Mr Kamal Ranjan Das as a member of Board of Directorsw.e.f the close of business hours on 31st March 2020. The details of the changes aregiven in the Report on Corporate Governance – Annexure X. Your Company hasspent an amount of Rs16.79 crore during the financial year 2019-2020 as against its 2%obligation amounting to Rs13.48 crore thereby exceeding its entire CSR obligation. Therequired details as specified in Companies CSR Policy Rules 2014 are given in AnnexureIV.

C. COMPENSATION AND NOMINATION AND REMUNERATION COMMITTEE

The Company has reconstituted the Compensation & Nomination &Remuneration Committee due to the cessation of Mr Kamal Ranjan Das as a member of Board ofDirectors w.e.f the close of business hours on 31st March 2020. The details of thechanges are given in the Report on Corporate Governance – Annexure X.

D. SHAREHOLDERS' COMMITTEES

The Company has reconstituted its Shareholders' Committees due tothe cessation of Mr Kamal Ranjan Das as a member of Board of Directors w.e.f close ofbusiness hours on 31st March 2020.The details of the changes are given in the Report onCorporate Governance – Annexure X.

E. BUSINESS PROCESS AND RISK MANAGEMENT COMMITTEE

The Company has reconstituted its Business Process and Risk ManagementCommittee due to the cessation of Mr Kamal Ranjan Das as a member of Board of Directorsw.e.f close of business hours on 31st March 2020.The details of the changes are given inthe Report on Corporate Governance – Annexure X.

Structure of the Board of Directors

Name of Directors 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
Ms Rishma Kaur N Y N Y
Mr Kanwardip Singh Dhingra N Y N N
Mr Kamal Ranjan Das** Y N Y N
Mr Gopal Krishna Pillai # Y N Y N
Mr Dhirendra Swarup @ Y N Y N
Mr Naresh Gujral Y N Y N
Mr Pulak Chandan Prasad Y N Y N
Mr Anoop Hoon Y N Y N
Mrs Sonu Halan Bhasin Y N Y Y
Dr Anoop Kumar Mittal* Y N Y N

** Mr Kamal Ranjan Das ceased to be a director of the Company w.e.f.close of business hours on 31st March 2020.

# Mr Gopal Krishna Pillai ceased to be a director of the Company w.e.f.12th September 2019.

@ Mr Dhirendra Swarup resigned as a director of the Company w.e.f. 13thJune 2019.

* Dr Anoop Kumar Mittal was appointed w.e.f. 19th March 2020.

FAMILIARIZATION PROGRAMME OF INDEPENDENT DIRECTORS

The Company believes that the best training is imparted when dealingwith actual roles and responsibilities on the job. To this extent the Company arrangesdetailed presentation by Business and Functional Heads on various aspects including thebusiness environment economy performance of the Company industry scenario sales andmarketing production raw materials research and development financial controls theCompany's strategy etc. Visits to factories business units are also undertaken fromtime to time. Details of Familiarization Programmes imparted during the year under reviewhas been uploaded on the Company's website and is available at 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 Act read with Companies (Appointment andRemuneration of Managerial Personnel) Rules 2014 (as amended) the followingdisclosures are made:

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

Name of Directors/KMPs Remuneration Received (Rs) Ratio as to that of the Median Employee Percentage increase in Remuneration
Mr Kuldip Singh Dhingra 1800000 3.18:1 80.00
Mr Gurbachan Singh Dhingra 1000000 1.77:1 0.00
Mr Abhijit Roy 39145702 * 69.30:1 30.03
Mr Kanwardip Singh Dhingra 5048016 8.94:1 11.38
Ms Rishma Kaur 5015977 8.88:1 10.59
Mr Kamal Ranjan Das ^ 300000 0.53:1 0.00
Name of Directors/KMPs Remuneration Received (Rs) Ratio as to that of the Median Employee Percentage increase in Remuneration
Mr Pulak Chandan Prasad - - -
Mr Naresh Gujral 720000 1.27:1 0.00
Mr Dhirendra Swarup @ - - -
Mr Gopal Krishna Pillai $ - - -
Mr Anoop Hoon 720000 1.27:1 0.00
Mrs Sonu Halan Bhasin 720000 1.27:1 0.00
Dr Anoop Kumar Mittal # - - -
Mr Srijit Dasgupta 16507478 * 29.22:1 11.13
Mr Aniruddha Sen + 12123552 * 21.46:1 12.54

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

^ Ceased to be a Director of the Company w.e.f. the close of businesshours of 31st March 2020.

@ Resigned as a Director of the Company w.e.f. 13th June 2019.

$ Ceased to be a Director of the Company w.e.f. 12th September 2019.

# Appointed as a Director wef 19th March 2020.

+ Retired as Sr Vice President and Company Secretary (and KMP) w.e.f.close of business hours of 31st March 2020.

Note – The median employee remuneration for 2019-2020 is:Rs564875.00 p.a.

2) Percentage (%) increase in remuneration during the financial year2019-2020: Please see (1) above.

3) Percentage (%) increase in the median remuneration of employeesduring the financial year 2019-2020: 3.37%

4) Number of permanent employees on the rolls of the Company as on 31stMarch 2020: 3600

5) Average percentile increase already made in the salaries ofemployees other than the managerial personnel in the last financial year and itscomparison with the percentile increase in the managerial remuneration and justificationthereof and point out if there are any exceptional circumstances for increase in themanagerial remuneration –The average percentile increase in salaries of employees was10.32% as compared to an average percentile increase of 25.62% of managerial remuneration.The increase of managerial remuneration is based on growth criteria.

6) Pursuant to the requirement of Section 197(14) of the Act thefollowing disclosure is made in respect to remuneration received by the Whole timeDirectors:

Particulars of Directors Nature of Transaction Amount (Rs)
Ms Rishma Kaur Executive Director and also a Director Consultancy fees received from U.K. Paints India
in U.K. Paints India Private Limited (Holding Company) Private Limited for consultancy rendered to U.K. 69 Lakhs
Paints India Private Limited
Mr Kanwardip Singh Dhingra Executive Director and also Consultancy fees received from U.K. Paints India
a Director in U.K. Paints India Private Limited (Holding Company) Private Limited for consultancy rendered to U.K. Paints India Private Limited 31 Lakhs

Affirmation

It is hereby affirmed by the Chairman of the Company that theremuneration paid to all the employees Directors and Key Managerial Personnel of theCompany during the Financial Year 2019-2020 are as per the Remuneration Policy framed bythe Compensation and Nomination and Remuneration Committee of the Company.

LISTING WITH STOCK EXCHANGES

Your Company is listed with National Stock Exchange of India LimitedBSE Limited and The Calcutta Stock Exchange Limited and has paid the listing fees to eachof the Exchanges. Your Company's short term debt instruments (Commercial Papers) werelisted with National Stock Exchange of India Limited as was required vide - SEBI CircularSEBI/HO/DDHS/DDHS/CIR/P/2019/115 dated 22nd October 2019 w.e.f 24th December 2019. Theaddresses of these Stock Exchanges and other information for shareholders are given inthis Annual Report.

COST AUDITORS

The Board of Directors at its Meeting held on 23rd June 2020re-appointed M/s N. Radhakrishnan & Co. (Firm Registration No. 000056) 11A DoverLane Flat B1/34 Kolkata - 700029 for conducting audit of the cost records maintainedunder Section 148(1) of the Act for the Company's factories situated at HowrahRishra Goa Puducherry Jejuri and Naltali and the factories of British Paints divisionlocated at Hindupur and Nalbari for the financial year 2020-2021. M/s Shome & Banerjee(Firm Registration No. 000001) 2nd Floor 5A Narulla Doctor Lane West Range Kolkata -700017 have been entrusted with the responsibility of conducting cost audit of the costrecords maintained under Section 148(1) of the Act for the Company's factory situatedat Jammu and the factories of British Paints division located at Jammu Sikandrabad andSurajpur for the financial year 2020-2021. The cost audit reports for the financial year2018-2019 were filed on 19th December 2019 on receipt of advice from the Ministry ofCompany Affairs as to the formats and enabling gateways.

STATUTORY AUDITORS

The Statutory Auditors Messrs. S. R. Batliboi & Co. LLP CharteredAccountants (ICAI Firm Registration No. 301003E/E300005) was appointed pursuant to theprovisions of Sections 139 142 of the Act and the Rules made thereunder from theconclusion of the 91st Annual General Meeting upto the conclusion of the 96th AnnualGeneral Meeting of the Company scheduled to be held in this financial year (2020-2021).The Auditors Messrs. S. R. Batliboi & Co. LLP Chartered Accountants will retire atthe conclusion of the ensuing Annual General Meeting and being eligible under Section139(2) of the Act offer themselves for re-appointment. The Board based on therecommendation of the Audit Committee and subject to the approval of the shareholdersrecommended the re-appointment of Messrs. S. R. Batliboi & Co. LLP CharteredAccountants based on their furnishing eligibility certificates confirming theireligibility to continue as auditors of the Company in terms of the Section 141 of the Actand the rules framed thereunder from the conclusion of the 96th Annual General Meetingtill the conclusion of 101st Annual General Meeting and accordingly the same forms a partof the business as contained in the Notice convening the ensuing Annual General Meeting.

CAUTIONARY STATEMENT

There are certain statements which have been made in the ManagementDiscussion and Analysis Report describing the estimates expectations or predictions whichmay be read as "forward-looking statement" within the meaning of applicable lawsand regulations. The actual results may differ materially from those expressed or implied.The important factors that would make difference to the Company's operations includedemand/supply conditions raw material prices changes in government policies governmentlaws tax regimes global economic developments and other factors such as litigations andlabour negotiations.

APPRECIATION

Your Directors place on record their deep appreciation of theassistance and guidance provided by the Central Government and the Governments of theStates of India its suppliers technology providers and all other stakeholders. YourDirectors thank the financial institutions and banks associated with your Company fortheir support as well. Your Directors also thank the Company's dealers and itscustomers for their unstinted commitment and valuable inputs.

Your Directors acknowledge the support received from you asshareholders of the Company.

On behalf of the Board of Directors
Kuldip Singh Dhingra
Place: Kolkata Chairman
Dated: 23rd June 2020 (DIN: 00048406)

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