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Kansai Nerolac Paints Ltd.

BSE: 500165 Sector: Consumer
NSE: KANSAINER ISIN Code: INE531A01024
BSE 00:00 | 30 Jan 408.65 1.05
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NSE 00:00 | 30 Jan 408.00 -2.35
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OPEN 402.15
PREVIOUS CLOSE 407.60
VOLUME 4026
52-Week high 576.80
52-Week low 358.05
P/E 49.53
Mkt Cap.(Rs cr) 22,022
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00
OPEN 402.15
CLOSE 407.60
VOLUME 4026
52-Week high 576.80
52-Week low 358.05
P/E 49.53
Mkt Cap.(Rs cr) 22,022
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

Kansai Nerolac Paints Ltd. (KANSAINER) - Auditors Report

Company auditors report

To the Members of Kansai Nerolac Paints Limited

Report on the Audit of the Standalone Financial Statements Opinion

We have audited the accompanying standalone financial statements ofKansai Nerolac Paints Limited ("the Company") which comprise the Balance sheetas at March 31 2022 the Statement of Profit and Loss including the statement of OtherComprehensive Income the Cash Flow Statement and the Statement of Changes in Equity forthe year then ended and notes to the standalone financial statements including a summaryof significant accounting policies and other explanatory information.

In our opinion and to the best of our information and according to theexplanations given to us the aforesaid standalone financial statements give theinformation required by the Companies Act 2013 as amended ("the Act") in themanner so required and give a true and fair view in conformity with the accountingprinciples generally accepted in India of the state of affairs of the Company as at March312022 its profit including other comprehensive income its cash flows and the changesin equity for the year ended on that date.

Basis for Opinion

We conducted our audit of the standalone financial statements inaccordance with the Standards on Auditing (SAs) as specified under section 143(10) of theAct. Our responsibilities under those Standards are further described in the 'Auditor'sResponsibilities for the Audit of the Standalone Financial Statements' section of ourreport. We are independent of the Company in accordance with the 'Code of Ethics' issuedby the Institute of Chartered Accountants of India together with the ethical requirementsthat are relevant to our audit of the financial statements under the provisions of the Actand the Rules thereunder and we have fulfilled our other ethical responsibilities inaccordance with these requirements and the Code of Ethics. We believe that the auditevidence we have obtained is sufficient and appropriate to provide a basis for our auditopinion on the standalone financial statements.

Key Audit Matters

Key audit matters are those matters that in our professional judgmentwere of most significance in our audit of the standalone financial statements for thefinancial year ended March 31 2022. These matters were addressed in the context of ouraudit of the standalone financial statements as a whole and in forming our opinionthereon and we do not provide a separate opinion on these matters. For each matter belowour description of how our audit addressed the matter is provided in that context.

We have determined the matters described below to be the key auditmatters to be communicated in our report. We have fulfilled the responsibilities describedin the Auditor's responsibilities for the audit of the standalone financial statementssection of our report including in relation to these matters. Accordingly our auditincluded the performance of procedures designed to respond to our assessment of the risksof material misstatement of the standalone financial statements. The results of our auditprocedures including the procedures performed to address the matters below provide thebasis for our audit opinion on the accompanying standalone financial statements.

Key audit matters How our audit addressed the key audit matter
Revenue recognition on sale of goods (as described in note 27 of the standalone financial statements)
Revenue is measured based on the transaction price which is the consideration adjusted for volume discounts rebates scheme allowances price concessions incentives and returns if any ('variable consideration') as specified in the contracts with the customers. Our audit procedures included amongst others:
An estimate of variable consideration payable to the customers is recorded as at the year-end. Such estimation is done based on the terms of contracts rebates and discounts schemes and historical experience. •We read and evaluated the Company's policies for revenue recognition and assessed its compliance with Ind AS 115 'Revenue from contracts with customers'; •We obtained an understanding evaluated the design and tested the operating effectiveness of internal controls related to sales including variable consideration;
We identified estimation of variable consideration as a key audit matter because the Company's management exercises judgment in calculating the said variable consideration. • We performed the following tests for a sample of transactions relating to variable consideration:
• Read the terms of contract including rebates and discounts schemes as approved by authorized personnel.
• Assessed computation of variable consideration by comparing it with the budget schemes past trends and evaluated the reasons for deviation if any.
• We read and assessed the relevant disclosures made within the standalone financial statements.
Assessment of impairment of investments in subsidiaries (as described in note 5 of the standalone financial statements)
The carrying values of the Company's investments in subsidiaries including corporate guarantees provided by the Company to the lenders of its subsidiaries are assessed annually by management for potential indicators of impairment. As a result an impairment assessment was required to be performed by the Company by comparing the carrying value of these investments and guarantees to their recoverable amount to determine whether an impairment was required. Our audit procedures included among others the following:
For the above impairment testing management has determined the value in use and the fair value less cost to sell as applicable. Value in use has been determined by forecasting and discounting future cash flows. • We evaluated the key judgements / assumptions underlying management's assessment of potential indicators of impairment;
The determination of value in use requires management to make estimates and judgments in respect of projected sales volume margins terminal growth rates and discount rates. • Where potential indicators of impairment were identified we evaluated management's impairment assessment and assumptions around the key drivers of the cash flow forecasts discount rates expected growth rates and terminal growth rates by comparison with available financial information including considerations of the economic conditions and audited financial statements of the subsidiaries;
We identified the assessment of potential impairment of investments including corporate guarantees as a key audit matter because impairment assessment involves significant degree of management judgement in determining the key assumptions and forecasting future cash flows. • We compared the forecast of future cash flows to business plan considering economic conditions and previous forecasts to the actual results;
• We performed sensitivity analysis to determine the impact of changes in current and estimated future uncertain economic conditions and key assumptions both individually and in aggregate;
• We involved our valuation specialists to assist in evaluating the key assumptions and methodology used by the Company in computing the recoverable amount;
• We read and assessed the relevant disclosures made within the standalone financial statements.

Other Information

The Company's Board of Directors is responsible for the otherinformation. The other information comprises the information included in the Annualreport but does not include the standalone financial statements and our auditor's reportthereon.

Our opinion on the standalone financial statements does not cover theother information and we do not express any form of assurance conclusion thereon.

In connection with our audit of the standalone financial statementsour responsibility is to read the other information and in doing so consider whethersuch other information is materially inconsistent with the financial statements or ourknowledge obtained in the audit or otherwise appears to be materially misstated. If basedon the work we have performed we conclude that there is a material misstatement of thisother information we are required to report that fact. We have nothing to report in thisregard.

Responsibilities of Management for the Standalone Financial Statements

The Company's Board of Directors is responsible for the matters statedin section 134(5) of the Act with respect to the preparation of these standalone financialstatements that give a true and fair view of the financial position financial performanceincluding other comprehensive income cash flows and changes in equity of the Company inaccordance with the accounting principles generally accepted in India including theIndian Accounting Standards (Ind AS) specified under section 133 of the Act read with theCompanies (Indian Accounting Standards) Rules 2015 as amended. This responsibility alsoincludes maintenance of adequate accounting records in accordance with the provisions ofthe Act for safeguarding of the assets of the Company and for preventing and detectingfrauds and other irregularities; selection and application of appropriate accountingpolicies; making judgments and estimates that are reasonable and prudent; and the designimplementation and maintenance of adequate internal financial controls that wereoperating effectively for ensuring the accuracy and completeness of the accountingrecords relevant to the preparation and presentation of the standalone financialstatements that give a true and fair view and are free from material misstatement whetherdue to fraud or error.

In preparing the standalone financial statements management isresponsible for assessing the Company's ability to continue as a going concerndisclosing as applicable matters related to going concern and using the going concernbasis of accounting unless management either intends to liquidate the Company or to ceaseoperations or has no realistic alternative but to do so.

The Board of Directors are also responsible for overseeing theCompany's financial reporting process.

Auditor's Responsibilities for the Audit of the Standalone FinancialStatements

Our objectives are to obtain reasonable assurance about whether thestandalone financial statements as a whole are free from material misstatement whetherdue to fraud or error and to issue an auditor's report that includes our opinion.Reasonable assurance is a high level of assurance but is not a guarantee that an auditconducted in accordance with SAs will always detect a material misstatement when itexists. Misstatements can arise from fraud or error and are considered material ifindividually or in the aggregate they could reasonably be expected to influence theeconomic decisions of users taken on the basis of these standalone financial statements.

As part of an audit in accordance with SAs we exercise professionaljudgment and maintain professional skepticism throughout the audit. We also:

•Identify and assess the risks of material misstatement of thestandalone financial statements whether due to fraud or error design and perform auditprocedures responsive to those risks and obtain audit evidence that is sufficient andappropriate to provide a basis for our opinion. The risk of not detecting a materialmisstatement resulting from fraud is higher than for one resulting from error as fraudmay involve collusion forgery intentional omissions misrepresentations or the overrideof internal control.

•Obtain an understanding of internal control relevant to the auditin order to design audit procedures that are appropriate in the circumstances. Undersection 143(3)(i) of the Act we are also responsible for expressing our opinion onwhether the Company has adequate internal financial controls with reference to financialstatements in place and the operating effectiveness of such controls.

•Evaluate the appropriateness of accounting policies used and thereasonableness of accounting estimates and related disclosures made by management.

•Conclude on the appropriateness of management's use of the goingconcern basis of accounting and based on the audit evidence obtained whether a materialuncertainty exists related to events or conditions that may cast significant doubt on theCompany's ability to continue as a going concern. If we conclude that a materialuncertainty exists we are required to draw attention in our auditor's report to therelated disclosures in the financial statements or if such disclosures are inadequate tomodify our opinion. Our conclusions are based on the audit evidence obtained up to thedate of our auditor's report. However future events or conditions may cause the Companyto cease to continue as a going concern.

•Evaluate the overall presentation structure and content of thestandalone financial statements including the disclosures and whether the standalonefinancial statements represent the underlying transactions and events in a manner thatachieves fair presentation.

We communicate with those charged with governance regarding amongother matters the planned scope and timing of the audit and significant audit findingsincluding any significant deficiencies in internal control that we identify during ouraudit.

We also provide those charged with governance with a statement that wehave complied with relevant ethical requirements regarding independence and tocommunicate with them all relationships and other matters that may reasonably be thoughtto bear on our independence and where applicable related safeguards.

From the matters communicated with those charged with governance wedetermine those matters that were of most significance in the audit of the standalonefinancial statements for the financial year ended March 312022 and are therefore the keyaudit matters. We describe these matters in our auditor's report unless law or regulationprecludes public disclosure about the matter or when in extremely rare circumstances wedetermine that a matter should not be communicated in our report because the adverseconsequences of doing so would reasonably be expected to outweigh the public interestbenefits of such communication.

Report on Other Legal and Regulatory Requirements

1.As required by the Companies (Auditor's Report) Order 2020("the Order") issued by the Central Government of India in terms of sub-section(11) of section 143 of the Act we give in the "Annexure 1" a statement on thematters specified in paragraphs 3 and 4 of the Order.

2.As required by Section 143(3) of the Act we report that:

(a)We have sought and obtained all the information and explanationswhich to the best of our knowledge and belief were necessary for the purposes of ouraudit;

(b)In our opinion proper books of account as required by law have beenkept by the Company so far as it appears from our examination of those books;

(c)The Balance Sheet the Statement of Profit and Loss including theStatement of Other Comprehensive Income the Cash Flow Statement and Statement of Changesin Equity dealt with by this Report are in agreement with the books of account;

(d)In our opinion the aforesaid standalone financial statements complywith the Accounting Standards specified under Section 133 of the Act read with Companies(Indian Accounting Standards) Rules 2015 as amended;

(e)On the basis of the written representations received from thedirectors as on March 31 2022 taken on record by the Board of Directors none of thedirectors is disqualified as on March 31 2022 from being appointed as a director in termsof Section 164 (2) of the Act;

(f)With respect to the adequacy of the internal financial controls withreference to these standalone financial statements and the operating effectiveness of suchcontrols refer to our separate Report in "Annexure 2" to this report;

(g)In our opinion the managerial remuneration for the year ended March31 2022 has been paid / provided by the Company to its directors in accordance with theprovisions of section 197 read with Schedule V to the Act;

(h)With respect to the other matters to be included in the Auditor'sReport in accordance with Rule 11 of the Companies (Audit and Auditors) Rules 2014 asamended in our opinion and to the best of our information and according to theexplanations given to us:

i.The Company has disclosed the impact of pending litigations on itsfinancial position in its standalone financial statements - Refer Note 35 to thestandalone financial statements;

ii.The Company did not have any long-term contracts includingderivative contracts for which there were any material foreseeable losses;

iii.There has been no delay in transferring amounts required to betransferred to the Investor Education and Protection Fund by the Company

iv.a) The management has represented that to the best of its knowledgeand belief and as disclosed in

the note 48 to the standalone financial statements no funds have beenadvanced or loaned or invested (either from borrowed funds or share premium or any othersources or kind of funds) by the company to or in any other person(s) or entity(ies)including foreign entities ("Intermediaries") with the understanding whetherrecorded in writing or otherwise that the Intermediary shall whether directly orindirectly lend or invest in other persons or entities identified in any manner whatsoeverby or on behalf of the company ("Ultimate Beneficiaries") or provide anyguarantee security or the like on behalf of the Ultimate Beneficiaries;

b)The management has represented that to the best of its knowledge andbelief and as disclosed in the note 48 to the standalone financial statements no fundshave been received by the company from any person(s) or entity(ies) including foreignentities ("Funding Parties") with the understanding whether recorded inwriting or otherwise that the company shall whether directly or indirectly lend orinvest in other persons or entities identified in any manner whatsoever by or on behalf ofthe Funding Party ("Ultimate Beneficiaries") or provide any guarantee securityor the like on behalf of the Ultimate Beneficiaries; and

c)Based on such audit procedures that were considered reasonable andappropriate in the circumstances nothing has come to our notice that has caused us tobelieve that the representations under sub-clause

(a)and (b) contain any material misstatement.

v.The final dividend paid by the Company during the year in respect ofthe same declared for the previous year is in accordance with section 123 of the Act tothe extent it applies to payment of dividend.

The interim dividend declared and paid by the Company during the yearand until the date of this audit report is in accordance with section 123 of the Act.

As stated in note 16 to the standalone financial statements the Boardof Directors of the Company have proposed final dividend for the year which is subject tothe approval of the members at the ensuing Annual General Meeting. The dividend declaredis in accordance with section 123 of the Act to the extent it applies to declaration ofdividend.

For S R B C & CO LLP

Chartered Accountants

ICAI Firm Registration Number: 324982E/E300003

per Anil Jobanputra

Partner

Membership Number: 110759

UDIN: 22110759AISCNF7123

Place of Signature: Mumbai

Date: May 10 2022

Annexure 1 Independent Auditor?s Report

Annexure ‘1? referred to in paragraph under the heading"Report on other legal and regulatory requirements" of our report of even date

Re: Kansai Nerolac Paints Limited ("the Company")

In terms of the information and explanations sought by us and given bythe company and the books of account and records examined by us in the normal course ofaudit and to the best of our knowledge and belief we state that:

(i)(a) (A) The Company has maintained proper records showing fullparticulars including quantitative details and situation of Property Plant andEquipment.

(B) The Company has maintained proper records showing full particularsof intangibles assets.

(b)All Property Plant and Equipment have not been physically verifiedduring the year by the management but there is a regular programme of verification whichin our opinion is reasonable having regard to the size of the Company and the nature ofits assets. No material discrepancies were noticed on such verification.

(c)The title deeds of immovable properties (other than properties wherethe Company is the lessee and the lease agreements are duly executed in favour of thelessee) disclosed in note 2 to the financial statements included in property plant andequipment are held in the name of the Company. Certain title deeds of the immovableProperties in the nature of leasehold land disclosed in note 2B to the financialstatements included in Right of use assets (ROU) as indicated in the below mentionedcases which were acquired pursuant to a Scheme of Amalgamation approved by NationalCompany Law Tribunal (NCLT) are not individually held in the name of the Company.

Description of Property Gross carrying value (Rs. in Crores) Held in name of Whether promoter director or their relative or employee Period held - indicate range where appropriate Reason for not being held in the name of Company
Leasehold land at Goa 0.30 Marpol Private Limited No Less than 1 year These properties were acquired pursuant to a scheme of amalgamation and continue to be registered in the name of amalgamating Companies.
Leasehold land at Vapi 0.12 Perma Construction Aids Private Limited No Less than 1 year

(d)The Company has not revalued its Property Plant and Equipment(including Right of use assets) or intangible assets during the year ended March 31 2022.

(e)There are no proceedings initiated or are pending against theCompany for holding any benami property under the Prohibition of Benami PropertyTransactions Act 1988 and rules made thereunder.

(ii)(a) The inventory has been physically verified by the managementduring the year except for inventories lying with third parties and discrepancies of 10%or more in aggregate for each class of inventory were not noticed in respect of suchphysical verification. In our opinion the frequency of verification by the management isreasonable and the coverage and procedure for such verification is appropriate.Inventories lying with third parties have been confirmed by them as at March 31 2022 anddiscrepancies of 10% or more in aggregate for each class of inventory were not noticed inrespect of such confirmations.

(b)The Company has not been sanctioned working capital limits in excessof ' five crores in aggregate from banks or financial institutions during any point oftime of the year on the basis of security of current assets. Accordingly the requirementto report on clause 3(ii)(b) of the Order is not applicable to the Company.

(iii)(a) During the year the Company has not provided loans advancesin the nature of loans stood guarantee or provided security to companies firms LimitedLiability Partnerships or any other parties. Accordingly the requirement to report onclause 3(iii)(a) of the Order is not applicable to the Company.

(b)During the year the Company has not made investment providedguarantees provided security and granted loans and advances in the nature of loans tocompanies firms Limited Liability Partnerships or any other parties. Accordingly therequirement to report on clause 3(iii)(b) of the Order is not applicable to the Company.

(c)The Company has not granted loans and advances in the nature ofloans to companies firms Limited Liability Partnerships or any other parties.Accordingly the requirement to report on clause 3(iii)(c) of the Order is not applicableto the Company.

(d)The Company has not granted loans or advances in the nature of loansto companies firms Limited Liability Partnerships or any other parties. Accordingly therequirement to report on clause 3(iii)(d) of the Order is not applicable to the Company.

(e)There were no loans or advance in the nature of loan granted tocompanies firms Limited Liability Partnerships or any other parties. Accordingly therequirement to report on clause 3(iii)(e) of the Order is not applicable to the Company.

(f)The Company has not granted any loans or advances in the nature ofloans either repayable on demand or without specifying any terms or period of repaymentto companies firms Limited Liability Partnerships or any other parties. Accordingly therequirement to report on clause 3(iii)(f) of the Order is not applicable to the Company.

(iv)There are no loans investments and securities given in respect ofwhich provisions of section185 and 186 of the Companies Act 2013 are applicable.Guarantees in respect of which provisions of sections 185 and 186 of the Companies Act2013 are applicable have been complied with by the Company.

(v)The Company has neither accepted any deposits from the public noraccepted any amounts which are deemed to be deposits within the meaning of sections 73 to76 of the Companies Act and the rules made thereunder to the extent applicable.Accordingly the requirement to report on clause 3(v) of the Order is not applicable tothe Company.

(vi)We have broadly reviewed the books of account maintained by theCompany pursuant to the rules madeby the Central Government for the maintenance of costrecords under section 148(1) of the Companies Act 2013related to the manufacture ofpaints and are of the opinion that prima facie the specified accounts and records havebeen made and maintained. We have not however made a detailed examination of the same.

(vii)(a) Undisputed statutory dues including goods and services taxprovident fund employees' state insurance income- tax sales-tax service tax duty ofcustom duty of excise value added tax cess and other statutory dues have generally beenregularly deposited with the appropriate authorities though there has been a slight delayin a few cases. According to the information and explanations given to us and based onaudit procedures performed by us no undisputed amounts payable in respect of thesestatutory dues were outstanding at the year end for a period of more than six monthsfrom the date they became payable.

(b)The dues of goods and services tax provident fund employees' stateinsurance income-tax sales-tax service tax duty of custom duty of excise value addedtax cess and other statutory dues which have not been deposited on account of anydispute are as follows:

Name of the statute Nature of the dues Amount unpaid* (' Crores) Period to which the amount relates Forum where dispute is pending
The Central Excise Act 1944 Tax Penalty and Interest 0.19 2000-01 Commissioner (Appeals)
Sales Tax and Value Added Tax Act Tax Penalty and Interest 5.56 1980-81 1991-92 2007-08 to 2011-12 2014-15 and 2017-18 Assistant Commissioner
45.62 1991-92 1995-96 2001-02 2004-05 to 2006-07 2009-10 to 2017-18 Deputy Commissioner
1.50 1996-97 2004-05 2008-09 2009-10 2011-12 Additional Commissioner
21.16 2001-02 2003-04 2005-06 2012-13 2015-16 2017-18 Joint Commissioner
2.45 2005-06 2008-09 2009-10 2015-16 2016-17 Senior Additional Commissioner (Revision Board)
0.05 2002-03 Joint Commissioner (Appeals)
0.03 2006-07 Commissioner
0.58 2014-15 Senior Additional Commissioner
The Finance Act 1994 Tax Penalty and Interest 9.54 2009-10 2012-13 to 2016-17 CESTAT
0.38 2016-17 and 2017-18 Commissioner (Appeals)
Goods and Services Tax Act Tax Penalty and Interest 0.02 2017-18 Superintendent

* Net off amount paid under protest

(viii)The Company has not surrendered or disclosed any transactionpreviously unrecorded in the books of account in the tax assessments under the Income TaxAct 1961 as income during the year. Accordingly the requirement to report on clause3(viii) of the Order is not applicable to the Company.

(ix)(a) The Company has not defaulted in repayment of loans or otherborrowings or in the payment of interest thereon to any lender.

(b)The Company has not been declared willful defaulter by any bank orfinancial institution or government or any government authority.

(c)The Company did not have any term loans outstanding during the yearhence the requirement to report on clause (ix)(c) of the Order is not applicable to theCompany.

(d)The Company did not raise any funds during the year hence therequirement to report on clause (ix)(d) of the Order is not applicable to the Company.

(e)On an overall examination of the financial statements of theCompany the Company has not taken any funds from any entity or person on account of or tomeet the obligations of its subsidiaries associates or joint ventures.

(f)The Company has not raised loans during the year on the pledge ofsecurities held in its subsidiaries joint ventures or associate companies. Hence therequirement to report on clause (ix)(f) of the Order is not applicable to the Company.

(x)(a)The Company has not raised any money during the year by way ofinitial public offer / further public offer (including debt instruments) hence therequirement to report on clause 3(x)(a) of the Order is not applicable to the Company.

(b)The Company has not made any preferential allotment or privateplacement of shares / fully or partially or optionally convertible debentures during theyear under audit and hence the requirement to report on clause 3(x)(b) of the Order isnot applicable to the Company.

(xi)(a)No fraud by the Company or no material fraud on the Company hasbeen noticed or reported during the year.

(b)During the year no report under sub-section (12) of section 143 ofthe Companies Act 2013 has been filed by cost auditor/ secretarial auditor or by us inForm ADT - 4 as prescribed under Rule 13 of Companies (Audit and Auditors) Rules 2014with the Central Government.

(c)We have taken into consideration the whistle blower complaintsreceived by the Company during the year while determining the nature timing and extent ofaudit procedures.

(xii)The Company is not a nidhi Company as per the provisions of theCompanies Act 2013. Therefore the requirement to report on clause 3(xii)(a) (b) and (c)of the Order is not applicable to the Company.

(xiii)Transactions with the related parties are in compliance withsections 177 and 188 of Companies Act 2013 where applicable and the details have beendisclosed in the notes to the financial statements as required by the applicableaccounting standards.

(xiv)(a) The Company has an internal audit system commensurate with thesize and nature of its business.

(b)The internal audit reports of the Company issued till the date ofthe audit report for the period under audit have been considered by us.

(xv)The Company has not entered into any non-cash transactions with itsdirectors or persons connected with its directors and hence requirement to report onclause 3(xv) of the Order is not applicable to the Company.

(xvi)(a) The provisions of section 45-IA of the Reserve Bank of IndiaAct 1934 (2 of 1934) are not applicable to the Company. Accordingly the requirement toreport on clause (xvi)(a) of the Order is not applicable to the Company.

(b)The Company is not engaged in any Non-Banking Financial or HousingFinance activities. Accordingly the requirement to report on clause (xvi)(b) of the Orderis not applicable to the Company.

(c)The Company is not a Core Investment Company as defined in theregulations made by Reserve Bank of India. Accordingly the requirement to report onclause 3(xvi)(c) of the Order is not applicable to the Company.

(d)There is no Core Investment Company as a part of the Group hencethe requirement to report on clause 3(xvi)(d) of the Order is not applicable to theCompany.

(xvii)The Company has not incurred cash losses in the current financialyear and in the immediately preceding financial year.

(xviii)There has been no resignation of the statutory auditors duringthe year and accordingly requirement to report on Clause 3(xviii) of the Order is notapplicable to the Company.

(xix)On the basis of the financial ratios disclosed in note 49 to thefinancial statements ageing and expected dates of realization of financial assets andpayment of financial liabilities other information accompanying the financial statementsour knowledge of the Board of Directors and management plans and based on our examinationof the evidence supporting the assumptions nothing has come to our attention whichcauses us to believe that any material uncertainty exists as on the date of the auditreport that Company is not capable of meeting its liabilities existing at the date ofbalance sheet as and when they fall due within a period of one year from the balance sheetdate. We however state that this is not an assurance as to the future viability of theCompany. We further state that our reporting is based on the facts up to the date of theaudit report and we neither give any guarantee nor any assurance that all liabilitiesfalling due within a period of one year from the balance sheet date will get dischargedby the Company as and when they fall due.

(xx)(a) In respect of other than ongoing projects there are no unspentamounts that are required to be transferred to a fund specified in Schedule VII of theCompanies Act (the Act) in compliance with second proviso to sub section 5 of section 135of the Act. This matter has been disclosed in note 40(c) to the financial statements.

(b)There are no unspent amounts in respect of ongoing projects thatare required to be transferred to a special account in compliance of provision of subsection (6) of section 135 of Companies Act. This matter has been disclosed in note 40(d)to the financial statements.

For S R B C & CO LLP

Chartered Accountants

ICAI Firm Registration Number: 324982E/E300003

per Anil Jobanputra

Partner

Membership Number: 110759

UDIN: 22110759AISCNF7123

Place of Signature: Mumbai

Date: May 10 2022

Annexure 2 Independent Auditor?s Report

Annexure 2 to the Independent Auditor's Report of even date on thestandalone financial statements of Kansai Nerolac Paints Limited

Report on the Internal Financial Controls under Clause (i) ofSub-section 3 of Section 143 of the Companies Act 2013 ("the Act")

We have audited the internal financial controls with reference tostandalone financial statements of Kansai Nerolac Paints Limited ("the Company")as of March 31 2022 in conjunction with our audit of the standalone financial statementsof the Company for the year ended on that date.

Management?s Responsibility for Internal Financial Controls

The Company's Management is responsible for establishing andmaintaining internal financial controls based on the internal control over financialreporting criteria established by the Company considering the essential components ofinternal control stated in the Guidance Note on Audit of Internal Financial Controls OverFinancial Reporting issued by the Institute of Chartered Accountants of India("ICAI"). These responsibilities include the design implementation andmaintenance of adequate internal financial controls that were operating effectively forensuring the orderly and efficient conduct of its business including adherence to theCompany's policies the safeguarding of its assets the prevention and detection of fraudsand errors the accuracy and completeness of the accounting records and the timelypreparation of reliable financial information as required under the Companies Act 2013.

Auditor?s Responsibility

Our responsibility is to express an opinion on the Company's internalfinancial controls with reference to these standalone financial statements based on ouraudit. We conducted our audit in accordance with the Guidance Note on Audit of InternalFinancial Controls Over Financial Reporting (the "Guidance Note") and theStandards on Auditing as specified under section 143(10) of the Act to the extentapplicable to an audit of internal financial controls both issued by ICAI. ThoseStandards and the Guidance Note require that we comply with ethical requirements and planand perform the audit to obtain reasonable assurance about whether adequate internalfinancial controls with reference to these standalone financial statements was establishedand maintained and if such controls operated effectively in all material respects.

Our audit involves performing procedures to obtain audit evidence aboutthe adequacy of the internal financial controls with reference to these standalonefinancial statements and their operating effectiveness. Our audit of internal financialcontrols with reference to standalone financial statements included obtaining anunderstanding of internal financial controls with reference to these standalone financialstatements assessing the risk that a material weakness exists and testing and evaluatingthe design and operating effectiveness of internal control based on the assessed risk. Theprocedures selected depend on the auditor's judgement including the assessment of therisks of material misstatement of the financial statements whether due to fraud or error.

We believe that the audit evidence we have obtained is sufficient andappropriate to provide a basis for our audit opinion on the internal financial controlswith reference to these standalone financial statements.

Meaning of Internal Financial Controls with Reference to theseStandalone Financial Statements

A company's internal financial controls with reference to standalonefinancial statements is a process designed to provide reasonable assurance regarding thereliability of financial reporting and the preparation of financial statements forexternal purposes in accordance with generally accepted accounting principles. A company'sinternal financial controls with reference to standalone financial statements includesthose policies and procedures that

(1) pertain to the maintenance of records that in reasonable detailaccurately and fairly reflect the transactions and dispositions of the assets of thecompany;

(2)provide reasonable assurance that transactions are recorded asnecessary to permit preparation of financial statements in accordance with generallyaccepted accounting principles and that receipts and expenditures of the company arebeing made only in accordance with authorisations of management and directors of thecompany; and

(3) provide reasonable assurance regarding prevention or timelydetection of unauthorised acquisition use or disposition of the company's assets thatcould have a material effect on the financial statements.

Inherent Limitations of Internal Financial Controls with Reference toStandalone Financial Statements

Because of the inherent limitations of internal financial controls withreference to standalone financial statements including the possibility of collusion orimproper management override of controls material misstatements due to error or fraud mayoccur and not be detected. Also projections of any evaluation of the internal financialcontrols with reference to standalone financial statements to future periods are subjectto the risk that the internal financial control with reference to standalone financialstatements may become inadequate because of changes in conditions or that the degree ofcompliance with the policies or procedures may deteriorate.

Opinion

In our opinion the Company has in all material respects adequateinternal financial controls with reference to standalone financial statements and suchinternal financial controls with reference to standalone financial statements wereoperating effectively as at March 31 2022 based on the internal control over financialreporting criteria established by the Company considering the essential components ofinternal control stated in the Guidance Note issued by the ICAI.

For S R B C & CO LLP

Chartered Accountants

ICAI Firm Registration Number: 324982E/E300003

per Anil Jobanputra

Partner

Membership Number: 110759

UDIN: 22110759AISCNF7123

Place of Signature: Mumbai

Date: May 10 2022

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