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Kansai Nerolac Paints Ltd.

BSE: 500165 Sector: Consumer
BSE 10:56 | 07 Feb 409.05 -5.75






NSE 10:44 | 07 Feb 410.45 -4.15






OPEN 417.95
52-Week high 558.40
52-Week low 358.05
P/E 51.98
Mkt Cap.(Rs cr) 22,044
Buy Price 409.05
Buy Qty 4.00
Sell Price 409.30
Sell Qty 4.00
OPEN 417.95
CLOSE 414.80
52-Week high 558.40
52-Week low 358.05
P/E 51.98
Mkt Cap.(Rs cr) 22,044
Buy Price 409.05
Buy Qty 4.00
Sell Price 409.30
Sell Qty 4.00

Kansai Nerolac Paints Ltd. (KANSAINER) - Director Report

Company director report

Dear Members

The Directors of your Company are pleased to present the 102nd AnnualReport and the Audited Financial Statements (Standalone and Consolidated) for the yearended 31st March 2022 ("year under review / FY 2021-22"). The section onManagement Discussion and Analysis includes a review of the financial performance of theCompany – Financial Highlights of the Company?s standalone financial resultskey financial ratios and the dividend recommended by the Directors. It also includes theparticulars of the subsidiaries of the Company including overseas subsidiaries and theirperformance during the year under review.

1. Management Discussion and Analysis


Established in 1920 Kansai Nerolac Paints Limited ("KNPL")is a subsidiary of Kansai Paint Co. Ltd. Japan ("KPJ"). Apart from operationsin India KNPL has subsidiaries in Nepal Sri Lanka and Bangladesh through acquisitionsand joint ventures.

KNPL ("the Company") is one of India?s largest Coatingscompanies with leadership in industrial coatings. It is an acknowledged leader inAutomotive Coating and Powder Coatings and has a sizeable presence in General Industrialand High Performance coatings as well. In the Decorative segment KNPL is a leading playerand is amongst the top 3 players in the country. It has steadily grown its presence in newand niche segments that the Company entered such as High-End Wood finish Constructionchemicals Auto Refinish and Coil coatings. These forays have helped KNPL expand itsportfolio of products and offerings in the market.

With IT R&D and Manufacturing Technology as strategic driversKNPL has been making rapid progress on driving an organisation-wide agenda to boostcustomer responsiveness efficiency speed and productivity. It has rolled out several ITapplications for internal and external stakeholders (channel partners painters andemployees) for deeper connect and engagement. The Company launched a new brand proposition"Paint +" as part of its offering to consumers.

KNPL is one of the most trusted brands in the industry and stands forquality ingenuity and excellence. It further plans to advance towards the future withthe purpose vision and brand promise of KNPL. With an intention of winning the hearts ofthe customers through an expanded product portfolio and through a focus on sustainabilityit displays its evolution into a better Company - the Nerolac of tomorrow.

Industry Progress

FY 2021-22 came with a wave of incidents including the effect ofCOVID-19 pandemic. The year began in a positive manner in April but as we moved aheadthrough the month the second wave of COVID-19 hit us. The first quarter was impacted dueto the pandemic. In the 4th quarter the world encountered war between Ukraine and Russia.Due to this businesses encountered high inflationary pressures on account of crude oilas well as high volatility in Forex. The global Chip Shortage in the Auto Industry led toreduced production of cars ultimately impacting the automotive paint industry.


A summary of the Company?s standalone financial results for theyear ended 31st March 2022 (FY 2021-22) vis-?-vis standalone financial results for theprevious year FY 2020-21 is as under:

Rs. in Crores

2021-22 2020-21
Revenue from Operations 5948.90 4770.90
Profit before Depreciation Interest Exceptional item and Tax 647.34 843.53
Less: Depreciation and Amortisation 153.82 149.01
Profit Before Interest Exceptional Item and Tax 493.52 694.52
Less: Interest 9.87 8.48
Add: Other Income 32.86 38.85
Profit before Exceptional item and Tax 516.51 724.89
Less : Exceptional Item 11.39 10.82
Profit Before Tax or material orders passed by 505.12 714.07
Less : Tax Expenses 130.79 183.47
Profit After Tax 374.33 530.60
Other Comprehensive Income 2.51 0.27
Total Comprehensive Income for the year 376.84 530.87

Revenue from Operations for the year aggregated to

Rs. 5948.90 Crores as compared to Rs. 4770.90 Crores for the previousyear reflecting a growth of 24.7%

Unprecedented very high inflation was seen in all major categories ofraw materials resulting in substantial increase in material cost. Raw material pricesalso increased due to global shortages and invoking of force majeure clause by globalMNCs. Currency also depreciated during the year which further impacted raw materialprices.

Gross margins were severely affected mainly in case of industrialbusiness due to high inflation not compensated by corresponding increase in sales price.

Operating costs were kept under control by various cost reductioninitiatives across all functions. Employee Benefits

Expense includes provision made towards retirement benefits toExecutive Directors ofRs. 24.22 Crores for the year. Overheads as a percentage of netrevenue were lower at 13.9% compared to 14.2% of previous year.

PBDIT for the year was lower at Rs. 647.34 Crores compared to Rs.843.53 Crores reflecting a de-growth by 23.3%.

Depreciation for the year was at Rs. 153.82 Crores which is slightlyhigher compared to the previous year.

Other income was lower at Rs. 32.86 Crores as compared to Rs. 38.85Crores of the previous year.

Exceptional item represents impairment of investment in subsidiary viz.Kansai Paints Lanka (Private) Limited amounting to Rs. 11.39 Crores (Previous Year: Rs.10.82 Crores) after taking into account its past performance current change in economicand market conditions consequent to the severe detoriation of political and economiccondition currency devaluation and very high inflation.

PBT for the year before exceptional item was Rs. 516.51 Crores ascompared to Rs. 724.89 Crores of the previous year reflecting a de-growth of 28.7% overprevious year.

PAT is lower at Rs. 374.33 Crores compared to Rs. 530.60

Crores reflecting de-growth of 29.5%.

There is no amount proposed to be transferred to any reserves.

The Company has not accepted any deposits covered under Chapter V ofthe Companies Act 2013 during the year.

There are no significant

Regulators Courts or Tribunals against the Company which could impactthe going concern status and Company?s operations in future. There is no corporateinsolvency resolution process initiated under the Insolvency and Bankruptcy Code 2016.There has been no failure to implement any Corporate Action.

There has been no change in the nature of business during the year.There have been no material changes and commitments affecting the financial position ofthe Company which have occurred between the end of the financial year of the Company towhich the financial statements relate and the date of this Report.


The Board has recommended a final dividend of 100% (Rs. 1.00 per share)for the year in addition the Company had declared interim dividend of 125% (Rs. 1.25 pershare) paid on 22nd November 2021. Accordingly the total dividend is 225% (Rs. 2.25 pershare) for the financial year ended 31st March 2022 as compared to total dividend of 525%(Rs. 5.25 per share) including Special Dividend of 200% (Rs. 2.00 per share)declared last year.


The National Company Law Tribunal Mumbai Bench and Ahmedabad Benchhave approved the Scheme of Amalgamation ("the Scheme") of Marpol PrivateLimited and Perma Construction Aids Private Limited (‘Transferor Companies?)wholly-owned subsidiaries with the Company (‘Transferee Company?). Pursuant tonecessary filings the concerned Registrar of Companies the Scheme has become effectivefrom 21st October 2021. The appointed date of the Scheme is 1st July 2019. Accordinglythe amalgamation has been accounted under the ‘pooling of interests? method inaccordance with Appendix C of Ind AS 103 ‘Business Combinations under commoncontrol? and comparatives have been restated to give effect of the amalgamation fromthe beginning of the previous year. The impact of amalgamation is not material to thestandalone financial results of the Company.

Key Financial Ratios

Key Ratios 2021-22 2020-21 Difference %Change
(No. of Days) 41 43 -2 -4.7%
(No. of Days) 117 127 -10 -7.9%
Coverage Ratio 66 99 -33 -33.3%*
Current Ratio 2.91 2.96 -0.05 -1.65%
Debt Equity Ratio 0.02 0.02 0.0 8.1%
Profit Margin (%) 10.9% 17.7% -6.8% -38.4%*
Net Profit Margin (%). 6.4% 11.2% -4.8% -43.0%*
Return on Equity 9.1% 13.5% -4.4% -32.6%*

*Change is mainly due to unprecedented inflation resulting incompression in margins during the financial year

Subsidiaries and Consolidated Financial Statements

In terms of the provisions of Securities and Exchange Board of India(Listing Obligations and Disclosure Requirements) Regulations 2015 ("SEBI ListingRegulations") the Board has approved a Policy for determining material subsidiaries.The same is also available on the website of the Company at Further interms of the said policy the Company does not have a material subsidiary.

Indian Subsidiaries

Nerofix Private Limited

The Company?s turnover was at Rs. 110.42 Crores compared to Rs.69.98 Crores of the previous year. EBDITA for the year de-grew to 1.7% as compared to 3.1%of the previous year. The Company incurred a net loss of Rs. 3.69 Crores as compared toRs. 3.71 Crores during the previous year. Company has the plans to expand this businessand become a noticeable player in this category.

Overseas Subsidiaries:

Operations in Nepal

During the year the turnover of KNP Japan Private Limited thesubsidiary of our Company in Nepal was at Rs. 84.00 Crores as compared to Rs. 68.46Crores of the previous year.

EBDITA for the year decreased to 13.6% from 16.1% on Y-o-Y basis. PATis Rs. 9.08 Crores as compared to Rs. 10.24 Crores in the previous year.

Operations in Sri Lanka

The turnover of our subsidiary in Sri Lanka Kansai Paints LankaPrivate Limited for the year was Rs. 23.71 Crores as compared to Rs. 15.17 Crores duringthe previous year. The Company?s net loss has been widened to Rs. 17.64 Crores duringthe year as compared to net loss of Rs. 7.68 Crores during the previous year due tounprecedented inflation and economy crises in Sri Lanka.

Operations in Bangladesh

The turnover of our subsidiary in Bangladesh Kansai Paints(Bangladesh) Limited (Formerly known as RAK Paints Limited) for the year was Rs. 230.54Crores as compared to Rs. 163.52 Crores in the previous year. EBDITA for the year de-grewto -1.7% from 2.9% on Y-o-Y basis. The Company incurred a net loss of Rs. 22.41 Croresduring the year as compared to net loss of Rs. 6.09 Crores during the previous year.

Consolidated financial statements of the Company as on 31st March2022 are prepared in accordance with applicable Accounting Standards and form a part ofthis Annual Report. All the subsidiaries of the Company as on 31st March 2022 have beenconsidered in the preparation of consolidated financial statements. Further a separatestatement in Form AOC-1 containing the salient features of the respective financialstatements of subsidiaries of the

Company forms part of this Annual Report. Also Annual AuditedFinancial Statements of all subsidiaries of the Company are available on the website ofthe Company i.e.

Segment-wise performance

KNPL has only one segment of activity namely "paints" inaccordance with the definition of "Segment" covered under Indian AccountingStandards (Ind AS) 108 on Operating Segments. The performance of the Company is discussedin this Report.

Marketing Decorative

The Nerolac Brand focusses on continuing to expand its productportfolio as per the evolving preferences of the consumer. Numerous new high-end productsat premium and economy segments have been launched and promoted through a lot of uniquemarketing initiatives in the FY 2021-22.

The Company focussed on increasing its distribution network withopening of new dealers and also accelerating the CCD machine (Colorant Dispenser)installations. In the rural markets the Company introduced distributor model fordeeper penetration.

In the influencer category it rolled out initiatives to be apreferred partner through enhanced loyalty programs training workshops and painter meets.It also rolled out an app for influencers digitise the painter journey includingreal-time redemption of loyalty points.

Based on consumer insights the Company?s new product strategycentred on evolving consumer needs and preferences and as a result a new brand expression"Paint+" was introduced during the year.

The Company witnessed high material price inflation during theyear and had to take series of price increases to offset the inflation and maintainprofitability.

Unique Brand Positioning

This year the Company has envisioned its new brand expression asPAINT+. This expression stands for its sentiment to offer more to its customers i.e.paint with added benefits. Paint+ is KNPL?s commitment to provide its consumers withunique products that go beyond offering thousands of colourful options. The features builtinto the Company?s world-class products offer benefits that resonate with emergingconsumer needs and preferences.

The Company has positioned the brand with unique products that live upto the Paint+ promise enabled by Japanese technology. It has also brought back the popularand memorable Nerolac jingle. The Japanese woman and couple showcase an active roleplayed by the lady - acknowledging the growing role of women in decision-making inall aspects around home.

New Products

Understanding the needs of customers and their unique requirements theCompany launched multiple products with characteristics that are combining the brandpromise of "Healthy Home Paints" and the new brand expression "PAINT+".KNPL?s efforts in R&D and new product development is focussed not just on paintperformance but also the safety and well-being of the consumer and the environment.

As part of KNPL?s new product strategy it launched "ExcelMica Marble Stretch & Sheen" a product that offers a 6-year waterproofingwarranty at a compelling price point and solves a very pertinent problem of cracks onexterior walls.

In the Interior space KNPL launched Beauty Gold Washable whichoffers unique anti-bacterial and stain resistance properties.

In enamels KNPL has launched a revolutionary product "NerolacPU Enamel 10 in 1". The product offers excellent gloss and finish and offers ahost of relevant benefits never offered in this category. KNPL is focussing on efforts toadapt to the changing market and ensuring it develops sustainable products. As a resultit has recently launched Zinc Yellow Metal Primer (Chrome Free). The product giveslong-lasting rust-free performance.

KNPL has introduced a paint for ceilings i.e. Beauty CeilingsEmulsion which imparts a smooth finish and has low spatter thus resulting in reducedwastage during application.

Strengthening New Business

KNPL has been steadily making investments in the new businesses ofAdhesives Construction Chemicals and High-end Wood Finishes. It has adopted a multi-prongedapproach to strengthen them and increase market share.

The Company focussed on increasing product range introduce newapplications expand distribution network enhance influencer programmes and deepenengagement with consumers.

For Wood Coatings KNPL has a complete range of products and arepresent in PU Polyester Melamine and NC Coatings. The PU range has been expandedby introducing 2K PU Interior. Tinting machines were installed at dealer countersfor tintable range of products. The Company plans to launch more products in PUrange leveraging its collaboration with the Italian company ICRO Coatings. For its NCrange KNPL developed sustainable and environment-friendly products which were awarded REACHcertification. The distribution to network was expanded and influencer participationwas significantly increased.

For Construction Chemicals KNPL with its acquisition of Permais focussed on providing a holistic product range to the customers through synergybetween its paint and construction chemical portfolio. During the year KNPL has launched3 new products under general waterproofing category. With this it has an entire range ofconstruction chemicals consisting of General waterproofing General repairs TilingAdmixture High end waterproofing sealants structural repairs flooring industrialgrouts and Waterproof putty. During the year drives were undertaken for increasingchannel participation as well as increasing reach through expanded dealer network. Alsoinitiatives were launched for influencers their participation. Going forward the brand– Nerolac Perma will focus on both retail & projects with an enhanced productrange channel expansion and adding newer waterproofing technologies to provide superiorsolutions to the customers.

For Adhesives KNPL has a complete range of products coveringboth white-based and rubber-based adhesives. Under white-based it is present in premiummid-tier and economy segments with distinctive product features such as heatresistant water resistant and waterproof. The brand includes Nerofix GoldNerofix Super Smart & Aqua Smart. Masking tape was also launched during the year.Aggressive penetration in infrastructure projects with focus on new applications forretail and industrial segments helped drive growth. Initiatives were undertaken toincrease channel expansion and extraction.

Launch of the carpenter app (Nerofix Super Carpenter App)attracted several carpenters to be on board and resulted in faster disbursements. Thelaunch of company website ( enhanced visibility andestablished better customer connect. Digital marketing and engagement on socialmedia drove lead generation. Process optimisation initiatives were undertaken inmanufacturing to increase the capacity. Also packaging artworks were revamped forenhanced visibility and acceptance by customer.

Marketing Campaigns

KNPL took a focussed market approach for this year?s marketingplans ensuring high brand visibility in the key markets which would also act as anenabler for the sales team. Also the focus this year was to build product offerings andproduct propositions in the minds of consumers and drive awareness for key products.

Multiple brand-building campaigns were initiated throughout the yearfor "Beauty Gold Washable" and "Excel Mica Marble Stretch andSheen" products.

A high decibel 360 media campaign for Beauty Gold washable wasinitiated to build sustained salience for the brand to build on the key proposition of "AbWalls Rahe Saaf aur Safe" and highlight the importance of stain reduction.

Nerolac also launched a new Television commercial for Excel MicaMarble Stretch & Sheen. The key proposition of the brand – ‘Chamak pena aaye Crack only Nerolac? highlights the importance of No cracks on wallsthrough the 2X stretch ability feature backed by Japanese Technology.

Apart from this an amplification plan was implemented for highlightingthe protection features of exterior products – Excel Mica Marble & Suraksha bythe means of strategic associations of weather branding with top news channels in HindiTelugu & Tamil thus reinforcing KNPL?s product proposition and drivingclutter-free on-air presence.

KNPL partnered with big ticket properties on television like IPLBig Boss etc. during the brand campaigns to deliver high impact with partners such asStar Sports

Asianet and other leading channels. In its focus markets outdooradvertising FM radio Newspaper and other ambient media were used to drive salienceof the products being advertised.

Digital marketing also delivered higher reach and frequency for thecampaigns by targeting unique audiences via YouTube Facebook Google and othercontent providers. Social media marketing was topical and focussed on building productfeature and benefits in sync with the Paint+ approach. SEO (Search EngineOptimisation) and SEM (Search Engine Marketing) played a crucial role in providinga quantum jump in driving consumer traffic Nerolac assets and building its productpropositions.


KNPL is an acknowledged leader in industrial coatings and specialisesin providing unique and sustainable solutions to its customers. It has astate-of-the-art R&D set up and has multiple technical collaborations which areleveraged to provide innovative products and solutions to customers.

KNPL has invested in setting up integrated plants across thecountry to service its customers. Strong intellectual capital coupled with multi-locationalmanufacturing set up has helped KNPL maintain its leadership position in theindustrial paint segment. product range During the year there was unprecedentedinflation in material prices and the Company had to seek a price increase from itscustomers. However the price increase realised has been insufficient to offset theinflation for industrial segment.

Industrial Marketing

This year KNPL participated in the Global Chemical Expo Conferenceand B2B sessions organised by the Indian Chemical Council (ICC). The exhibition wasattended by business heads technocrats policy makers industry associations and tradedelegations from India and abroad.

KNPL sponsored the International Automotive Design Conclave 2021an event organised by CII and participated as a Silver Partner. The discussion wasfocussed on "AUTOMOTIVE DESIGN Creating Self Reliant India".

KNPL participated inPowdertech Organised by Paint India in March2022. This was a conference for powder coating manufacturers where KNPL presented anddiscussed on changing trends in powder coating.

Colour Trends & Promotions toKNPL participated in ColourPromotions at most of the key accounts and new colours were launched for newvehicles introduced in FY 2021-22. While achromatic tints are the most popular customersare increasingly gravitating toward chromatic colours such as red and blue. Metalliccolours are becoming more popular in the PV and 2W segments. In Greens and Blues the EVcategory has developed new notions of medium saturation shades.


During the year as the market revived post COVID KNPL continued tostrengthen its position in major key accounts in the Automotive Ancillary and AlloyWheels segment.

The organisation continues to work on offering innovative intechnologyand entry into diversified

Auto segment to expand horizon. Introduction of coating technologiesfor new substrates like Plastic Aluminium Die Castings are leading concepts inAuto Segment and KNPL product innovations continue to lead the market.

KNPL continued to set higher benchmarks in various parameters of QualityCost and Delivery and this resulted in it being considered as the priority supplieracross many Automotive OEMs and Ancillaries. KNPL also received Best Supplier Awardsfrom major OEMs like Honda Motorcycles and Scooters and Isuzu Motors during the year.

In the Electric vehicle category KNPL is present across allsegments i.e. two-wheeler three-wheeler passenger vehicle and commercial vehicle. Intractor segment the penetration of electric vehicle has been low.

In two-wheeler segment which has witnessed highest growth of EV KNPLhas a formidable presence and has tapped into both existing and new entrants and partneredfor paint supplies. Also in the PV segment the Company has partnered with major playersfor paint supplies.

KNPL is a strong player in the EV (Electric Vehicle) segment in thecountry and will continue to focus on this high growth segment with value-added productsand solutions.

Performance Coatings

Under Performance Coatings the Company offers powder coatings forpowder segment and liquid coatings for General Industrial segment & High Performancesegments. In inFY 2021-22 the Company witnessed significant all three segments andgained market share.

In Powder coatings KNPL is present in premium popular and economysegments. In General Industrial it caters to customers across all segments viz. Drums& Barrels PEB Electrical appliances construction equipment and helmets. UnderHigh performance coatings it has a range of products like the C5 Fluoro PolymerCoatings IPNet Polysiloxane and anti-carbonation systems to meet customer needs andrequirements.

Niche Business

KNPL has also witnessed significant growth in niche segments that itentered i.e. rebar coatings super durable powder in the powder coatings. It addednew customers marketin rebar coatings and have achieved a significant share. It achievedgood growth in powder coating for alloy wheel segment as well. In pipe coatingsamongst the new products developed this year was "Neropoxy Solvent FreeCoating" for Water Pipeline Internal coatings which has been certified by WaterRegulations Approval Scheme Ltd UK. This development places KNPL on a strong footing toenter this segment.

Auto Refinish

Auto Refinish business was designated as a major thrust area for theCompany. It has developed a complete range of products catering to the Premium Economyand Retail market. The key elements include new products launches OEM approvals andgreater reach through the development of the retail distribution network and body shops.The Company has created state-of-the-art Training Centres at its plants of Bawaland Hosur and conducted several Skill Improvement and Training Activities for OEMs andBody Shop painters. Also Digital colour matching instrument was installed atR&D.

Coil Coatings

In coil coatings KNPL has introduced a collection of products thatprovide clients with unique value. Despite the fact that the Company entered this market afew years ago its products have gained widespread acceptance. In line with itsstrategy to enter premium segment in coil coatings KNPL introduced coil coatingproducts for appliance industries. This has gained good momentum in the marketassisted by increased service availability and targeted client base expansion. Also KNPLnow has a dedicated manufacturing facility for coil coating at Sayaka.

Research and Development

Innovation and Sustainable products have been the fundamentalendeavours of KNPL?s existence. With a devoted facility at Mumbai along with asatellite facility at its plants R&D is at the core of KNPL?s strategy. Thisfacility is directed towards creating innovative solutions catering to the ever-changingneeds of its customers along with fulfilling the organisation?s sustainabilityagenda.

KNPL is making progress in this area by continuing to developsustainable products that have a lower carbon footprint during their manufacturingand use phase.

It is building a portfolio time and again that offers new unique-to-categoryproducts which offer long-term value to its esteemed customers. KNPL has offered avariety of new shades and health-conscious products offering the best value propositionto its customers. The Company has also pioneered many new concepts and innovations indecorative paints. Its technology-based products are customised for various operatingenvironments which offer protection to many key industries like metals chemicals andpetrochemicals among others. KNPL has also delivered on the promise to develop healthyhome paints – 100% heavy metal free by design and low VOC products.

KNPL has decades of experience in designing and commissioning variouscustomer lines to successfully run various paint products in the automotive and OEM spacesfor both liquid and powder coatings. Together with deep expertise in resin technologyand keen working with suppliers over many decades KNPL has introduced many technologicalinnovations over the years which have helped customers improve finish film thicknessproductivity and reduce resource use based on its deep expertise and R&Dstrength.

Along with its technical prowess KNPL also has a flair forever-changing consumer preferences. KNPL?s research and development facility has adedicated colour design studio has been designed and built especially for thecolour development process. The studio gives easy access to more than 7000 new shades.The studio space is used for design research and helps in mind mapping for a bettertrend analysis and report. Customer presentation and shade selection takes placesmoothly in the studio.

value to customers

Collaboration with Kansai Paint Japan Kansai Paint Group Companiesand other Partner

KNPL has maintained its technological leadership in industrial coatingsby staying ahead of the curve with support and technical guidance from Kansai Paint Co.Ltd. Japan (KPJ) one of the global leaders in the category with decades of experience indesigning and developing technology.

KNPL works closely with KPJ in developing paint and resinformulations customised to Indian customers.

They also offer insights to customers on emerging shade trends acrossthe globe with world-class technical support to Indian customers based on experiencesacross the globe.

KNPL also collaborates with Kansai Group companies across theglobe to offer Indian customers differentiated technologies across a spectrum of end-userindustries in the areas of industrial coatings coil coatings ARF and decorative paints.

The Company has a technical collaboration with Oshima Kogyo Co.Ltd. Japan. This year the product Pyrosin Stack F150 Pyrosin PX 3103 & Stack Act250 were developed from M/s Oshima. These products offer protection from high heat andenhance the life of the substrate. The Company has a technical collaboration with CashewCo. Ltd. Japan to manufacture coating for interior car application and with M/sProtech Chemicals Limited Canada to manufacture powder-coating products.

Development in Automotive Coatings:

In the Automotive paints sector KNPL?s in-house R&Dexpertise paired with support from Kansai Paint Japan gives it a substantial competitiveadvantage. The R&D team focusses on subject expertise and collaborates closely withclients to create long-term product roadmaps and shade designs. When combined with productand line knowledge it also leads the effort to work closely with customers to developunique and customised value-added and value-engineering projects that have added significantin areas such as finish consumption reduction productivity and energy savings.

The Company has focussed its research efforts on sealants forpassenger automobiles which is one of the business segments it has decided to forayinto. To that extent the Company has developed and received approval for sealants forautomotive clients.

Passenger Vehicle Segment

KNPL has developed high solid anti-chip primer and introduced toone of our Key customer end. This product has given VOC reduction as well as it hasexcellent anti-chip performance.

KNPL is a lead supplier for Metallic colours in PV Segment and various newshades have been introduced in this year. The product range is introduced in 3C-1BTechnology which offers lean process energy conservation and high productivity.

Two-wheeler Segment

In this segment where high-end bikes are on the rise coatingsperformance demands are far higher than traditional coatings in terms of durability andscratch resistance. KNPL has introduced Matt Lacquer for petrol tanks ofmotorcycles with superior mar & scrub resistance as advancement in the segment.Its characteristics are petrol stain marks resistance silky finish suitability for dualtone painting adhesion in multiple recoat system and Alkali resistance.

KNPL has launched a Coating for Rotamould Nylon Petrol tank. Itis an adhesion promoter primer with High Crosslink polymeric resin system with betteradhesion Low VOC system lower baking temperature and excellent surface fillingproperty as it is a porous substrate.

Commercial Vehicle Segment

High Weatherable Topcoat for three-wheelers was launched withSuperior Gloss & Finish Enhanced light fastness with improved weather ability andSuperior Gloss retention and Colour retention.

KNPL has a High performance Solid Monocoat technology with highdurability and chemical resistance in the CV Segment. This has resulted in betteraesthetic performance of the vehicles in the field for a longer time.

Further innovation in Solid monocoat technology has reducedcuring temperature by 20oC. This has reduced carbon footprint by lowerenergy consumption productivity improvement and savings to customers without any impacton performance properties. This product technology is appreciated by customers and evolvedas a trendsetter in the CV Segment.

Conventional medium solids PU technology is upgraded to High SolidsPU technology. This has offered low consumption VOC reduction and productivityimprovement. This has helped customers receive superior performance without losingproductivity.

Key Developments in Decorative Paints:

The market forces are heavily influenced by the surroundingenvironment which is hyper-dynamic in today?s world. Customer expectations in thedecorative paint category are constantly evolving along with the surroundings. The demandcurve has evolved from better to customised and now from customised to customised &sustainable. Innovating its way to adopt product standards that match the regulations ofthe European Union KNPL has launched

REACH certified products in the Wood Coatings

Division. This certification is intended to improve the protectionof human health and the environment through the better and earlier identification of theintrinsic properties of chemical substances.

KNPL has introduced products using heavy metal free and low VOCdesign technology. KNPL is working on a new array of products to address the risingtrend of functional products and has now developed Chrome free Yellow Metal primer forretail market. This year the Company also introduced many products in both constructionchemicals wood finishes and adhesives which have gained good acceptance in themarket.

Key developments in Performance Coatings:

Performance Coatings are used by a range of OEMs and end-userindustries to protect and enhance surfaces. a wideKNPL has exhibited great skills andproficiency range of end-user sectors. M/s Water Regulations Approval Scheme Ltd UK(WRAS) has approved KNPL?s product "Neropoxy Solvent Free Coating"for Water Pipeline Internal Coating. Its suitability for use on coming in contact withwater on the basis of impact on water quality such that the water could be utilised forhousehold purposes fulfilled the standards of "BS6920-1:2000 and/or 2014." Theproduct also gives thickness of 400 microns in one coat & meets Zero VOC regulations.To offer to the society its "bit" and "best" KNPL has also had theprivilege to coat the Mumbai trans harbour bridge for which a five coat anticorrosivesystem was developed and commercialised. Its top cost is Fluoro polymer based whichhas exterior durability. Celatect F Series Product demonstrates a strong interatomicbonding power resulting in superior weatherability that is a step above other resins. Inparticular Celatect F Series of Product features as its principal chain to providestrong binding energy to prevent degradation caused by ultraviolet light & coatingsthat offer long-term protection.

The Company is also working on areas such as new coatings solutions fordemanding infrastructure categories like bridges metro-rail and pipelines.

Key developments in Powder Coatings

Technological leadership in this segment has helped KNPL be the marketleader in powder coatings serving a vast array of industries such as white goodsfurniture auto ancillaries and electricals besides others.

The Company continues to be at the forefront of working closely withcustomers in Auto as it continues to convert a range of liquid coatings to powdercoatings. KNPL has achieved chrome finish on the ceiling fans with powder coatingssuccessfully removing plating and thereby reducing the toxicity caused due to the platingprocess. The Company has also developed a product with better UV transmissionconfirming with REACH requirements for one of its customers. R&D efforts are alsofocussed on developing various resin backbones for powder coatings for superiorperformance.

Key developments in Coil Coatings

New technological products such as Low Bake Coil CoatingsUni-coats and Super Durable Coil Coatings have been developed to createdistinctiveness in this segment.

The R&D efforts of the Company are committed to ensuringmarket-share gain in this space even further.

Key developments in Auto Refinish

The R&D function developed products with superior performance interms of finish drying time coverage and environment-friendly. The R&D team hasdeveloped a unique product Anti-Viral Clear Coat High Gloss PU Clear withAnti-Viral Property a novel product which is first of its kind providing

Health Safety to our Customers.

Collaboration with Vendors

KNPL views its vendors as partners with whom it works to reach awin-win outcome. It works closely with its key global supplier base numerous researchinstitutes and universities to generate new ideas products and innovations for thefuture through a systematic coordinated programme.

A number of futuristic collaborative projects are undertakenwith the suppliers to create mutual value.

Going forward KNPL?s focus will be to increase range ofsustainable products using raw material based on renewable sources.

Instrument analysis and analytical capabilities

KNPL has a robust and high-end instrumentation laboratory for analysingcomplicated substances and providing systematic solutions. It also has a strong R&Dteam to analyse such data and add to the intellectual capital of the Company. Suchanalytical capabilities enables high end product development and aids in providingcustomer specific solutions.

Supply Chain

The pandemic continues to affect the world. In the midst of the worldreturning to normalcy the Russia-Ukraine war has also caused significant uncertaincircumstances keeping operations running has been a challenge. The above-mentionedcircumstances have led to extremely volatile crude oil prices and exchange rates and majordisruption in the global supply chain. KNPL has initiated a series of measures to cope upwith the situation. In line with its strategy of being an integrated player with in-houseresin intermediate & paint manufacturing facility KNPL has commissioned the resinfacility for Industrial coating segment at Sayakha plant. An emulsion manufacturingfacility for Decorative segment was also commissioned at Goindwal plant. This yearthe Company focussed on ensuring high OTIF

(On Time in Full) for its Industrial customers. In Decorative businessnew RDCs (Regional Distribution Centre) and efficient logistics resulted in betterservice standards for the customers. This was achieved while maintaining an overallbalanced inventory.

On import and logistics side KNPL received AEO certification andalso introduced container tracking for increased controls.

Even with volatile and uncertain circumstances KNPL ensured continuityof operations for all its customers. KNPL aims "deliver on time every time" andtherefore strongly focusses on offering customers world-class supply-chain capabilitieswith a customer-centric approach backed by data-driven planning systems.

Information Technology

Investments in technology have been the hallmark of Nerolac?sjourney throughout. With the influx of digital technology KNPL embarked on its digitaljourney a couple of years back during the pre-COVID times. The organisation was preparedto reap the benefits from use of these technologies when the pandemic accelerated theprocess of adoption of digital technologies in the organisation.

KNPL has been making rapid progress on pushing "anorganisation-wide" digitisation agenda to improve consumer responsivenessreliability speed and productivity. Digital initiatives have been introduced during theyear across

internal and external stakeholders like Dealers

Influences Customers Suppliers

More details about these initiatives can be referred under theIntellectual Capital section.

KNPL upgraded its IT infrastructure moved to a new data centreand set up disaster recovery capabilities. The Company focussed on governance throughenhanced cyber security and mobile security.

Bulletins on IT & cyber security were shared with employees onbest security practices. Also External Verification

Analysis was conducted during the year under review.


KNPL continued to cultivate a culture of trust confidence andtransparency in which its people can thrive and prepare themselves for the future.Employee well-being has evolved into a key priority. Through the year the Company adopteda systematic approach and a range of tools and engagement initiatives to ensure thewell-being and health of its employees.

As a testimony to the initiatives taken towards making KNPL a congenialworkplace it was recognised as a "Great Place to Work" by the GreatPlace to Work Institute for the 2nd time. The first certification was given in the yearthe second was given in 2021.

Total number of permanent employees as on 31st March 2022 is3105.

Pandemic and Employee Well-Being:

From the COVID-induced remote model KNPL has seamlessly transitionedto on-site model. It has published an advisory guide on travel & work preparing itsemployees for the "New normal".

The organisation actively held vaccination drives pan-India

(at all depots offices plants) and allotted reimbursements ifvaccinated through private hospitals to accelerate the national vaccination coverage.Employees were prepared for the "New normal" by publishing an advisory guide onthe coronavirus and travel to work. As per government regulations offices were onlyopened to limited individuals regular sanitisation of the premises was done and wearing amask was made mandatory.

Competency and Capability Building:

KNPL commits to training and development of its employees right frominception as it believes in "building careers".

It has developed extensive offline and online learning programmes andtraining modules to help its employees not just upskill and reskill for their roles atKNPL but also to prepare them for the changing workplace. 2019 and To make its peoplefuture-ready and purpose-driven KNPL continues to expand organisational skills with aclear focus on functional learning priorities. Several new training modules wereintroduced in terms of competency enhancement. Interactive Digital Workshop washeld for Decorative Sales & Marketing for improving adoption of ML App (Saathi).Learning programmes on Innovation and Design Thinking as well as Business Acumenwere undertaken for identified employees.

Trainings related to fire-fighting & life after accident wasimparted to manufacturing personnel. Also Project Management training was impartedto employees for cost control and timely delivery.

A rigorous training system has been developed and executed for R&Dpersonnel to improve their skills and competencies. Various employee groups are alsogiven leadership training. KNPL has external interventions in several functionalareas where needed either through external training or through initiatives withbest-in-class organisations to update its personnel knowledge and capability. Theseinitiatives enlighten employees about new ideas and concepts allowing them to better copewith environmental problems.

Various assessment tools were employed as part of the programmeto provide a formal opportunity for managers and staff to grow themselves as well ascourses to pursue to improve competency in specified areas.

For all managers a three-day Annual Learning Conference (ALC)was held online. "Good to Great" was the theme of the Annual LearningConference. The learning conference was important because it provided a forum forrepresentatives from all functions to communicate about the Company?s success as wellas future plans and direction.

KNPL has strengthened the talent management programme by evaluation ofcritical positions and creating consideration set for succession planning.

Communication Platforms:

Transparency in communication has always been a priority for theCompany. The management concentrated on building a friendly and inclusive environment inthe organisation by ensuring frequent connect programmes with employees to discussvarious subjects with the aid of digital initiatives and strategies. These wereinteractive sessions that took place both in person and virtual mode.

Performance Management:

KNPL seeks to attain the highest levels of transparency in goal-settingand objective-setting as well as constant feedback to our employees. It supports thisgoal by providing employees with KRAs and performance dashboards that show how their KPIsand performance affect the overall organisation.

Community Development

KNPL as an organisation holds itself to considerable standards when itcomes to the responsibility it owes to the community. It believes that takingcollaborative action and generating answers to common problems is how it can fulfil itssocial obligation.

KNPL?s CSR efforts are not limited to the locations in which itworks but also extends to society at large. The Company is guided by the philosophy ofcontributing meaningfully to humanity?s progress by acting as a good neighbour beingthoughtful of others and operating as a responsible corporate citizen with fervour andcompassion. KNPL aspires to be a responsible corporate citizen by proactively contributingto society?s social and economic advancement through the use of practices that gobeyond traditional industry?s bounds.

The Company participates in Corporate Social Responsibility (CSR)activities that promote social advancement with a focus on events that benefit theunderprivileged and disadvantaged. Encouraging employee participation in CSR initiativesacross the country also fosters a sense of societal duty on an individual level while alsoimproving the Company?s image.

KNPL has linked its CSR programmes to the Sustainability DevelopmentGoals defined by United Nation (UNSDG?s).

The following are broad definitions for all programmes:

Rural Development / Community Development

The objective is to reach out to people by providing basic services andamenities. To do so the organisation contributes to the local community by constructionand refurbishment of school and other basic infrastructure. During the year KNPL carriedout multiple such activities. The highlight for the same during the year are CommunityHall Painting Work Community Room and construction of Boundary Wall Pick-up Sheds WomenEmpowerment. KNPL carried out a key project of "Women Empowerment in farming throughlivelihood intervention" which was initiated three years ago. This project dealtwith the development of farming activity amongst small marginal land holder &landless women farmers which helped them to be financially self-dependent and also to getsocial recognition.

Preventive Health Care and Sanitation

The purpose of this initiative is to create amenities that improvegeneral health and sanitation. Multiple Good Health & Well-Being camps were held;toilets provided in schools initiatives to provide clean drinking water were organised.

KNPL extended support considering the pandemic scenario OxygenConcentrators were distributed. Personal Protective Equipment (PPE kits) were provided toFrontline Health workers (Equipment to Hospitals) at multiple community health centres.

Promoting Education

KNPL runs a range of programmes in schools around its factories anddepots to raise educational levels and support education in rural regions. Construction ofclassrooms and science laboratories providing computers solar inverters clean wateretc. are few initiatives carried out under the said programme.

Ensuring Environmental Sustainability

The Company is dedicated to helping the community conserve naturalresources and maintain the environment.

It has worked on a number of projects aimed at preserving theenvironment?s balance. Tree Plantations Solar Energy Use Cleanliness drive andPainting activities were created to contribute to the quality of life on the land. In viewof KNPL?s aim to become "Water Positive Organisation" by 2024-25 PondRejuvenation projects were carried out near the Plants. The project included pondcleaning desilting / deepening of the pond disposal of silt making protection wall andtree plantation in the surrounding area.

Environment Health and Safety

Environment Health and Safety have always been a corner stone ofKNPL?s business strategy and value system. As a socially and environmentallyresponsible organisation it imbibes practices and encourage programmes that ensure socialwell-being and promote environmental conservation & protection. KNPL has been placedin the top Quartile in Manufacturing Space and Rated No.1 in Paint Sector in the CRISILESG compendium. It has also been recognised by S&P Global and ranked in TopQuartile of Global Chemical Industry S&P ESG Index in CSA 2021.


KNPL believes in building safety-first mindset among employees andconsistent efforts are made to sensitise and raise awareness among employees in regards tovaried aspects of safety. Robust Environmental and Safety Management System is in place atall KNPL industrial units. All plants have ISO 45001 certification and are equippedwith adequate requisites for emergency situations. To improve emergency preparedness andfoster safety culture; various drills thematic safety trainings contests and assessmentsare undertaken on a regular basis. In order to encourage open-feedback culture KNPLconducted a Safety Culture Survey for management-level and operator-level employees duringthe reporting period. Further details are provided in the Occupational Health and Safetysection of Human Capital.

Water Management

KNPL has set an inspiring target of becoming water positive by FY2024-25. To do so it has set exacting standards and management goals to achieve waterstewardship and minimise overall water consumption across the firm.

The Company?s aim is to reduce freshwater consumption increaserainwater usage within factory premises and restore water in operating areas throughwater replenishment initiatives. In FY 2021-22 several measures have been launched toreduce freshwater consumption and improvewater which has helped KNPL to reduce specificwater consumption by 7% over the last FY. Special emphasis was laid on waterreplenishment in community areas where KNPL operates. Efforts towards water conservationare detailed out in the Water Management section of Natural Capital.

Waste Management

Judicious waste management has become a major feature and of paramountimportance as the regulatory landscape is constantly evolving and new requirements areemerging.

All major plants are Zero Liquid Discharge facilities. KNPL hasset up Recovery units at its plants for solvent recovery and also collect powder dustemitted during charging through dust collector and powder recovery system.

KNPL follows the 3R principle for management of all types of wastes:REDUCE REUSE & RECYCLE.

Special precautions are taken to handle store and dispose of hazardouswastes. Continuous efforts are made to minimise industrial waste through adopting andimplementing varied initiatives focussing on reduction of hazardous as well asnon-hazardous waste. During the year specific hazardous waste generation decreased by7% from the previous year.

Plastic Waste Management

In regards to plastic waste management KNPL is abreast of the changingregulatory requirements. In terms of post-consumer plastic waste it has initiated effortsunder the provision of Extended Producer Responsibility. to The Company also takensignificant limit incoming plastic waste from suppliers by replacing alternativematerials for plastic or utilising a supplier-set take-back system. KNPL has alsoinitiated use of recycled plastic content in certain packing materials.

Further details on efforts to reduce waste generation and disposal areoutlined in the Waste Management Section under Natural Capital.

Energy and Emission Management

During the reporting period KNPL continued its energy-saving goal toreduce its carbon footprint by implementing a variety of energy-saving initiatives andmoving to environment-friendly and cost-effective options KNPL?s aim is to graduallyadopt new concepts and technologies which further lead to diversification of energy mixto reduce carbon emissions and improve air quality.

In conclusion KNPL aims to become more and more energy efficient.

In FY 2021-22 52% of total energy (power + fuel + heat and steam)consumed is from renewable sources.

KNPL was also able to sustain its Scope 1 and Scope 2 GHG emissionintensity as a result of energy saving initiatives and increasing the share of greenenergy. The Company has also on-boarded experts to conduct a detailed Scope 3inventorisation in order to achieve completeness in GHG reporting and as a resultconstruct a carbon reduction action plan.

Climate Change

During the reporting period KNPL has taken concerted steps to tackleclimate change. It has instituted a framework to identify risks and opportunities relatedto climate change. The Company is working to align and improve its disclosures withgrowing frameworks such as the TCFD and set a science-based target. Going forwardKNPL intends to have a robust strategy and deploy an action plan to mitigate climatechange risks.

Other Air Emissions

Ambient air quality stack emissions and VOC levels on the shop floorand at other plant sites are evaluated on a regular basis to limit other air emissions.

Additional details on energy and emission reduction are stated inNatural Capital under the section of Energy and Emission Management.

Greenbelt Development

As a responsible organisation KNPL conducts tree-plantation driveswithin and outside factory premises on various occasions round the year. The Companyhas a total of 53811 trees planted within factory premises of which 6564 trees wereplanted during the reporting period. In addition 6760 trees were planted outside factorypremises through CSR initiatives in FY 2021-22.

Opportunities and Threats

Information for this section can be found in the "Opportunitiesand Threats" section of the Corporate Overview.

Risks and Concerns

Information for this section can be found in the "Risk andConcerns" section of the Corporate Overview.


KNPL expects demand to remain positive for the year.

Many favourable factors like demographics urbanisation .infrastructure thrust and lower per capita paint consumption by global standards make theoutlook positive over the long term.

The industry is seeing renewed action with the entry of newer players.This augurs well for the industry as it will lead to more innovation. KNPL has taken manystrategic initiatives in the areas of Branding Technology Products

Manufacturing Distribution Service People Digital and Governanceand is confident of meeting the challenges of the emerging tomorrow.

There are challenges expected in the immediate term due to theRussia-Ukraine war scenario. However the Company?s view is that the supply chainchallenges and inflation pressures will ease off once the war subsides.

Internal Control Systems and their Adequacy

KNPL?s Internal Control Systems are designed to track and reporton its day-to-day operations in order to monitor and control them. These systems alsoeffectively monitor compliance to numerous concepts regulations and norms as well asadherence to methodology requirements.

The Company has implemented an Internal Financial Control system incompliance with the provisions of Section 134(5) (e) of The Companies Act 2013 toimprove internal control systems and give the Board of Directors with additional capacityto review internal controls. Implementation of these systems has been guided by theframework suggested in the Guidance Note on Audit of Internal Financial Controls inFinancial Reporting issued by The Institute of Chartered Accountants of India to addressthe Company?s operational and financial risks. In addition the statutory auditorstest the Company?s systems using automated techniques.

Control Efficiency Index and Robust Control Index:

The Control Index (RCI) are still used by the Company to track itsinternal audit success. KNPL?s control measures are benchmarked against the industrystandards for effective control mechanisms. The internal audit programme of the Companyfocusses on determining whether gaps exist as a result of control design policy designcontrol or process deviation IT or regulatory compliances. It also considers whichcontrols are capable of automation. The results of the audit are then used by the Companyto improve its internal controls.


KNPL has developed a dashboard of key legislation changes that arenotified by various government authorities and is tracked by the management with respectto requirements and implementation. The Company tracks all regulatory compliances onlinethrough the Legatrix system. The system is updated regularly with all the changes incompliances as they occur. Online tracking and tracing of completion helps ensure strictadherence to regulations.

In addition the Company also tracks any legal cases through theRoznama system.

Index (CEI) and the Robust Control

Awards & Recognition (FY 2021-22)

Name of Award Award Description Category Awarded By Company/ Location
Best Supplier Award Honoured with Best Supplier award from HMSI consecutively for the 4th time in the annual Supplier Conference Supply chain HMSI KNPL
Prestigious Award Continual efforts on "100% delivery and Zero PPM" for year 2019 & 2020 Quality M/s Daimler India (Bharat Benz) Hosur
Gold Award India Manufacturing Excellence Award 2021 Manufacturing Excellence Frost & Sullivan Hosur
Platinum & Gold Award National Poka-Yoke and Kaizen Competition Quality Hosur Lote
Platinum and Silver Award Innovative & Renovate Category in National Kaizen Competition Innovation Goindwal Sahib
Platinum Award Improvement Projects in Operation Category of 15th Six Sigma National Competition Operations Bawal
Star Challenger Award Awarded in the Innovative Category Innovation Hosur
Gold Award Case Study Preparation Competition Quality Confederation of Indian Industry (CII) Sayakha
Silver Award Allied Circle and Quality Circle Concept Quality Bawal
Silver Award National Poka Yoke Competition - The project presented was "Prevention of Hazardous Material Overflow from Seal Tank" Environment Health & Safety Bawal
Energy Efficient Energy Efficient Unit Award in 22nd CII National Award for Excellence in Energy Bawal
Unit Award Energy Management 2021 Conservation
Greenpreneur Award Exemplary work and best practices in water management to build a sustainable future Environment FICCI Amritsar Goindwal Sahib
Rotary Award Excellence award in large scale chemicals sector category EHS Excellence Rotary Award Sayakha
Platinum Award Outstanding projects in "Safety Excellence" in chemical category Environment Health & Safety Golden Bird National Award Bawal
Bronze Award Best use of Regional entertainment channel Marketing Prime Time Awards KNPL- Marketing

Cautionary Statement

Statements in this Management Discussion and Analysis section of thisreport describing the Company?s objectives estimates and expectations may be"forward-looking statements" actual results might differ materially from thoseeither expressed or implied.

2. Directors? Responsibility Statement

As stipulated under the provisions contained in Section134(3)(c) read with Section 134(5) of the Companies Act 2013 ("theAct") the Board of Directors to the best of its knowledge and belief and accordingto the information and explanations obtained by it hereby states that: i. in thepreparation of the annual accounts the applicable accounting standards have been followedand there are no material departures; 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 profit of the Company for that period; iii. thedirectors have taken proper and for the maintenance of adequate accounting records inaccordance with the provisions of the Act for safeguarding the assets of the Company andfor preventing and detecting fraud and other irregularities; iv. the directors haveprepared the annual accounts of the Company on a going concern basis; v. the directorshave laid down internal financial controls to be followed by the Company and that suchinternal financial controls are adequate and are operating effectively; vi. the directorsrequired have devised for the proper role performance evaluation systems toensure compliance with the provisions of all applicable laws and that such systems areadequate and operating effectively.

3. New Projects

During financial year 2021-22 the Company has commissioned emulsionresin manufacturing facility at Goindwal Sahib Punjab.

4. Directors

In terms of the provisions of the Act and the Articles of Associationof the Company Mr. Shigeki Takahara (holding Director Identification Number 08736626)Non-Executive Director and Mr. Takashi Tomioka (holding Director Identification Number08736654) Non-Executive Director are liable to retire by rotation at the ensuing AnnualGeneral Meeting ("AGM") of the Company and being eligible offer themselves forre-appointment.

Mr. H. M. Bharuka (holding Director Identification Number00306084) retired as the Vice Chairman and Managing Director of the Company on completionof his term from the close of business on 31st March 2022 and also resigned as amember of the Board of Directors of the Company from the same date. The Board placed onrecord its sincere appreciation and gratitude for the very valuable and outstandingcontribution made by Mr. Bharuka during his long and fruitful association with theCompany including his tenure as Deputy Managing Director then as the Managing Directorand subsequently as the Vice Chairman and Managing Director of the Company.

The Board of Directors of the Company at its meeting held on 18thFebruary 2022 pursuant to the recommendation of Nomination and Remuneration Committee ofthe Board approved the appointment of Mr. Anuj Jain (holding Director IdentificationNumber 08091524) as the Managing Director of the Company for a period of 5 (five)years commencing from 1st April 2022 and ending on 31st March 2027 (both days inclusive)on the remuneration and perquisites as set out in the draft Agreement between the Companyand Mr. Jain referred to in the Resolution at Item no. 6 of the Notice of AGM. Inaccordance with the Articles of Association of the Company Mr. Jain as the Managing andof the Director will not be liable to retire by rotation. sufficientcare The Board ofDirectors of the Company at its meeting held on 10th May 2022 pursuant to therecommendation of the Nomination and Remuneration Committee of the Board approved there-appointment of Ms. Sonia Singh (holding Director Identification Number 07108778) as anIndependent Director of the Company not being liable to retire by rotation for a secondterm of 5 (five) 29th July 2022 and ending on 28th July 2027 (both days inclusive)subject to the approval of Shareholders of the Company vide a Special Resolution. TheBoard considered her rich experience and vast knowledge in the field of brand strategysales and marketing the skills capabilities and proficiency and her contribution to theBoard during her firstterm for her re-appointment.

None of the Director is disqualified as on 31st March 2022 from beingappointed as a Director under Section 164 of the Act. All the Independent Directorson the Board have given a declaration of their independence to the Company as requiredunder Section 149(6) of the Act and Regulation 16(1)(b) of the Securities andExchange Board of India (Listing Obligations and Disclosure Requirements) Regulations2015 ("SEBI Listing Regulations"). In the opinion of the Board all theIndependent Directors possess integrity expertise and experience including proficiencyrequired to be Independent Directors of the Company.

They fulfill the conditions of independence as specified in the Act andSEBI Listing Regulations comply with the Code for Independent Directors asprescribed in Schedule IV of the Act and are independent of the Management.

The Company has a Code of Conduct for Directors and Senior Management.All the Directors and Senior Management have confirmed compliance with the Code.

Details with respect to the composition of the Board the meetings ofthe Board held during the year and the attendance of the Directors thereat have beenprovided separately in the Annual Report as a part of the Report on Corporate Governance.

5. Key Managerial Personnel

Mr. H. M. Bharuka retired as the Vice Chairman and Managing Director ofthe Company on completion of his term from the close of business on 31st March 2022. TheBoard of Directors of the Company pursuant to the recommendation of Nomination andRemuneration Committee of the Board appointed Mr. Anuj Jain as the Managing Director ofthe Company for a period of 5 (five) years commencing from 1st April 2022 and ending on31st March 2027 (both days inclusive).

In terms of Section 203 of the Act the Company has the following KeyManagerial Personnel: Mr. Anuj Jain Managing Director Mr. P. D. Pai Chief FinancialOfficer and Mr. G. T. Govindarajan Company Secretary.

6. Meetings of the Board

The Board met 5 (five) times during the financial year ended 31stMarch 2022. The meeting details are provided separately in the Annual Report as a partof the Report on Corporate Governance. The maximum interval between any two meetings didnot exceed 120 days as prescribed in the Act and the SEBI Listing Regulations.

7. Board Evaluation

In terms of the applicable provisions of the Act and the SEBI ListingRegulations Nomination and Remuneration Committee and the Board of Directors haveapproved a framework which lays down a structured approach guidelines and processes tobe adopted for carrying out an evaluation of the performance of the Directors the Boardas a whole and its Committees. The evaluation process has been separately explained in theAnnual Report as a part of the Report on Corporate Governance.

For the year under review the Board carried out the evaluation of itsown performance its Committees and individual Directors. Evaluation results as collatedand presented were noted by the Nomination and Remuneration Committee and Board.

8. Audit Committee

In terms of the provisions of Regulation 18 of SEBI Listing Regulationsread with Section 177 of the Act the Audit Committee is constituted as follows:

Names of the Members Designation
Mr. P. P. Shah (Chairman of the Audit Committee) Chairman and Independent Director
Mr. N. N. Tata Independent Director
Ms. Sonia Singh Independent Director

The recommendations made by the Audit Committee to the Board from timeto time during the year under review have been accepted by the Board. Other details withrespect to the Audit Committee such as its terms of reference the meetings of theAudit Committee and attendance thereat of the members of the Committee areseparately provided in the Annual Report as a part of the Report on Corporate Governance.

9. Statutory Auditors

At the 99th Annual General Meeting of the Company the Shareholders hadapproved the appointment of S R B C & CO LLP Chartered Accountants (Firm RegistrationNo. 324982E / E300003) as the Statutory Auditors of the Company to hold office for aperiod of 5 (five) years from the 99th Annual General Meeting of the Company till theconclusion of the 104th Annual General Meeting of the Company in terms of theapplicable provisions of Section 139(1) of the Act read with the Companies (Auditand Auditors) Rules 2014. Details of the remuneration paid to S R B C & CO LLPChartered Accountants Statutory Auditors during financial year 2021-22 are disclosed inthe Financial Statements of Company which are part of the Annual Report.

The Auditors? Report on the Financial Statements (Standalone andConsolidated) of the Company for the year under review is clean and there are noqualifications in their Report. Also no frauds in terms of the provisions of Section143(12) of the Act have been reported by the Auditors in their Report for the year underreview. The Notes to the Financial Statements (Standalone and Consolidated) areself-explanatory and do not call for any further comments.

10. Particulars of Loans Guarantees or Investments under Section 186of the Companies Act 2013

Details of Loans Guarantees and Investments covered under theprovisions of Section 186 of the Act are separately disclosed in the Annual Report as apart of the Notes to the Financial Statements.

11. Related Party Transactions

The Company has in place a Policy on dealing with Related PartyTransactions and on Materiality of Related Party Transactions which is available on thewebsite of the Company at In terms of thesame a statement in summary form of transactions with related parties in the ordinarycourse of business and arm?s length basis is periodically placed before the AuditCommittee for its review. Omnibus approval was obtained for transactions which wererepetitive in nature. Transactions entered into pursuant to omnibus approval were placedbefore the Audit Committee for its review during the year. Related party transactions havebeen disclosed in Note no. 37 to the Standalone Financial Statements. In terms of theprovisions of Section 188(1) of the Act read with the Companies (Meetings of Board and itsPowers) Rules 2014 and Regulation 23 of the SEBI Listing Regulations all contracts/arrangements/ transactions entered into by the Company with its related parties duringthe year under review were in the ordinary course of business of the Company and on anarm?s length basis. There were no material related party transactions during theyear. Accordingly Form No. AOC-2 prescribed under the provisions of Section 134(3)(h) ofthe Act and Rule 8 of the Companies (Accounts) Rules 2014 for disclosure ofdetails of Related Party Transactions which are "not at arm?s lengthbasis" and also which are "material and at arm?s length basis" is notprovided as an annexure to this Report as it is not applicable.

12. Corporate Governance

The Company is in full compliance with the requirements and disclosuresthat have to be made in terms of the requirements of Corporate Governance specified inSEBI Listing Regulations.

In terms of the provisions of Schedule V(C) of the SEBI ListingRegulations a detailed Report on Corporate Governance forms part of the Annual Report.Further a CompanyCertificate confirming compliance with the requirements of Corporate Governanceas specified in SEBI Listing Regulations is provided together with the Report on CorporateGovernance the same shall be considered to be an annexure to this Report.

13. Remuneration Policy

The Board of Directors has adopted a ("Remuneration Policy")which deals with (i) criteria for determining qualifications positive attributes andindependence of Director and (ii) remuneration for Directors Key ManagerialPersonnel and other employees.

The features of the Remuneration Policy are as follows:

? The Company while constituting the Board shall draw members fromdiverse fields such as finance law management sales marketing architectureadministration research corporate governance operations or other disciplines related tothe Company?s business. There shall be no discrimination on the basis of genderrace ethnicity and nationality while determining the Board composition.

? A Director shall be a person of integrity who possesses relevantexpertise and experience. He shall uphold ethical standards of integrity and probity andact objectively and constructively. He shall exercise his responsibilities in a bona-fidemanner in the interest of the Company; devote time and attention to his professionalobligations for informed and balanced decision making; and assist the Company inimplementing the best corporate governance practices.

? An Independent Director should meet the requirements of the Act andthe SEBI Listing Regulations concerning independence of directors. The Company shall alsoobtain certification of independence from the Independent Director in accordance with theAct and SEBI Listing Regulations.

? The remuneration paid to Whole-time Directors is subject to thelimits laid down under

Section 197 and Schedule V to the Act and in accordance with the termsof appointment approved by the Shareholders of the Company.

The remuneration of the Whole-time Directors is determined by theNomination and Remuneration Committee based on factors such as the Company?sperformance and performance/ track record of the Whole-time Directors. The remunerationconsists of Salary Commission Company?s contribution to Provident Fund andSuperannuation Fund House Rent Allowance (HRA) Leave Travel Allowance (LTA) and otherperquisites and allowances in accordance with the rules of the Company applicable fromtime to time.

? The Non-Executive Independent Directors are paid commission withinthe ceiling of 1% of net profits of the Company as specified in Section 197 of the Act.The commission payable to Non-Executive Independent Directors is decided by theBoard on recommendation of the Nomination and Remuneration Committee based on a numberof factors including number of Board and Committee meetings attended individualcontribution thereat etc.

? The objective of the policy is to have a compensation framework thatwill reward and retain talent.

? The remuneration will be such as to ensure that the correlation ofremuneration to performance is clear and meets appropriate performance benchmarks.

? Remuneration to Key Managerial Personnel

Senior Management and other employees will involve a balance betweenfixed and variable pay reflecting short and long term performance objectives of theemployees in line with the working of the Company and its goals. The short and longterm performance objectives cover amongst various aspects industry performance customerperformance overall economic environment financial performance and performance onEnvironment Social and Governance objectives. sufficient

? For Directors the Performance Pay will be linked to achievement ofBusiness Plan (achievement of short term and long-term business objective).

? For Heads of Department the Performance Pay will be linked toachievement of functional plan which is derived from the business plan. Thefunctional plan includes both short-term and long-term objectives.

? The above will take into consideration industry performance customerperformance and overall economic environment.

? For other management personnel the Performance Pay will be linked toachievement of individual set objectives and part of this will also be linked to overallCompany performance.

? The Remuneration Policy is also available on the website of theCompany at financial/policies.html .

14. Risk Management Policy

The Company has identified the risk areas in its operations along withits probability and severity department wise. An effective Risk Management Framework isput in place in the Company in order to analyze control and mitigate risk. Risk profilingis also put in place for all the areas of operations in the Company and well integrated inthe business cycle. The various risks to which the Company is exposed are disclosed as apart of Management Discussion and Analysis here in above.

The Risk Management Framework of the Company comprises of RiskManagement Committee and the Risk Officers.

In terms of the provisions of Regulation 21 of SEBI ListingRegulations the constitution of Risk Management Committee as on 31st March 2022 asfollows:

Names of the Members Designation
Mr. H. M. Bharuka* (Chairman of the Risk Management Committee) Vice Chairman and Managing Director
Ms. Sonia Singh Independent Director
Mr. Anuj Jain Executive Director
Mr. Jason Gonsalves Non-board member on the Committee
Mr. P. D. Pai Chief Risk Officer and Non-board member on the Committee

* Mr . H. M. Bharuka retired as the Vice Chairman and Director of theCompany on completion of his term from close of business on 31st March 2022 and resignedas a member of the Board of Directors of the Company from the same date.

Ms. Sonia Singh Independent Director has been appointed as a memberof the Risk Management Committee in accordance with SEBI Listing Regulations alongwith Mr. P. D. Pai appointed as the Chief Risk Officer and member with effect from5th May 2021.

Mr. P. P. Shah Independent Director has been appointed as theChairman of the Risk Management Committee with effect from 1st April 2022.

15. Vigil Mechanism – Whistle Blower Policy

The Company has a Whistle Blower Policy to report genuine concerns andgrievances. The Policy provides adequate safeguards against victimisation of persons whouse the Whistle Blower mechanism. Details with respect to implementation of the WhistleBlower Policy are separately disclosed in the Annual Report as a part of theReport on Corporate Governance. The same is also available on the website of theCompany at

16. Corporate Social Responsibility

In terms of Section 135 of the Act the constitution of the CorporateSocial Responsibility ("CSR") Committee as on 31st March 2022 is as follows :

Names of the Members Designation
Mr. H. M. Bharuka* (Chairman of the CSR Committee) Vice Chairman and Managing Director
Mr. N. N. Tata Independent Director
Mr. Anuj Jain Executive Director

* Mr . H. M. Bharuka retired as the Vice Chairman and Managing Directorof the Company on completion of his term from close of business on 31st March 2022 andresigned as a member of the Board of Directors of the Company from the same date.

Ms. Sonia Singh Independent Director has been appointed as theChairperson of the CSR Committee with effect from 1st April 2022.

The functions of the CSR Committee are to:

(a) formulate and recommend to the Board a Corporate SocialResponsibility Policy which shall indicate the activities to be undertaken by the Companyin areas or subject specified in Schedule VII of the

(b) recommend the amount of expenditure to be incurred on theactivities referred to in clause (a); and

(c) monitor the CSR policy of the Company from time to time.

There was 1 (one) meeting of the CSR Committee during the financialyear on 17th March 2022 which was attended by all members of the Committee.

The Board on recommendation of CSR Committee has framed a CSR Policyand the same is available on the website of the Company at .

The Annual Report on CSR activities as required under Companies(Corporate Social Responsibility Policy) Rules 2014 as amended including a briefoutline of the Company?s CSR Policy is annexed to this Report as Annexure 1.

17. Particulars on the Committees of the Board

The details with regard to the Composition of the Committees of theBoard and the number of meetings held during the year of such committees as requiredunder SEBI Listing Regulations is separately provided in the Annual Report aspart of the Report on Corporate Governance.

18. Dividend Distribution Policy

The Dividend Distribution Policy of the Company has been formulated toensure compliance with the provisions of Regulation 43A of SEBI Listing Regulations.

The Dividend Distribution Policy of the Company is also available onthe website of the Company at

The declaration of dividend by the Company is in compliance with theDividend Distribution Policy.

19. Prevention of Sexual Harassment at workplace

In line with the provisions of the Sexual Harassment of Women atWorkplace (Prevention Prohibition and Redressal) Act 2013 ("POSH Act") theCompany has adopted a "Policy on Appropriate Social Conduct at Workplace". ThePolicy is applicable for all employees of the organization which includes corporateoffice manufacturing locations branches depots etc. The Policy is applicable tonon-employees as well i.e. business associates vendors trainees etc.

The Company has complied with provisions relating to the constitutionof Internal Complaints Committee under the POSH Act to redress complaints received onsexual harassment as well as other forms of verbal physical written or visualharassment.

During the year under review the Company did not receive anycomplaints of sexual harassment and no cases were filed under the POSH Act.

20. General Shareholder Information

General Shareholder Information is given as Item no. 11 of the Reporton Corporate Governance forming part of the Annual Report.

21. Particular regarding Employees Remuneration

Disclosure comprising particulars with respect to the remuneration ofdirectors and employees as required to be disclosed in terms of the provisions of Section197(12) of the Act and Rule 5 of the Companies (Appointment and Remuneration of ManagerialPersonnel) Rules 2014 is annexed to this Report as Annexure 2.

22. Conservation of Energy Technology Absorption and Foreign Exchangeearnings and outgo

The statement giving the particulars relating to conservation ofenergy technology absorption and foreign exchange earnings and outgo as required interms of Section 134(3)(m) of the Act read with Rule 8(3) of the Companies(Accounts) Rules 2014 is annexed to this Report as Annexure 3.

23. Share Capital

The paid up Equity Share Capital as at 31st March 2022 stood at53.89 Crores. In terms of the Scheme of Merger by absorption of Marpol Private Limited andPerma Construction Aids Private Limited both wholly-owned subsidiaries of the Companywith the Company and as directed by the National Company Law Tribunal Mumbai

Bench the Authorised Share Capital of the Company increased from600000000 (Rupees Sixty Crores) to 665000000 (Rupees Sixty Six Crores FiftyLakhs).

During the year under review the Company did not issue any EquityShares. Further the Company has not issued any convertible securities or shares withdifferential voting rights nor has granted any stock options or sweat equity orwarrants.

24. Annual Return

Pursuant to Section 92(3) read with Section 134(3)(a) of the Act theAnnual Return as on 31st March 2022 is available on the website of the Company in thefollowing link

25. Details of Unclaimed Suspense Account

Details pertaining to Unclaimed Suspense Account of the Company areseparately provided in the Annual Report as part of the Report on Corporate Governance.

26. Investor Education and Protection Fund ("IEPF")

Transfer of Unclaimed Dividend to IEPF

During the year under review dividend amounting to 9.64 Lakhsthat had not been claimed by the shareholders for the year ended 31st March 2014 wastransferred to the credit of IEPF as required under Sections 124 and 125 of the Act.

Unclaimed dividend as on 31st March 2022

As on 31st March 2022 dividend amounting to

2.46 Crores has not been claimed by shareholders of the Company.Shareholders are required to lodge their claims with the Registrar and Share TransferAgents of the Company i.e. TSR Consultants Private Limited (formerly knownas TSR Darashaw Consultants Private Limited) for unclaimed dividend.

Pursuant to the provisions of Investor Education and Protection FundAuthority (Accounting Audit Transfer and Refund) Rules 2016 (as amended) the Companyhas uploaded the details of unpaid and unclaimed amounts lying with the Company ason 31st March 2021 on the website of the Company i.e. The same are alsoavailable with the Ministry of Corporate Affairs.

Transfer of Equity Shares

As required under Section 124 of the Act 61790 Equity Shares inrespect of which dividend has not been claimed by the members for 7 (seven) consecutiveyears or more have been transferred by the Company to the IEPF Authority during thefinancial year 2021-22. Details of such shares transferred have been uploaded on thewebsite of the Company i.e. The same are also available with theMinistry of Corporate Affairs.

Nodal Officer

The Company has appointed Mr. G. T. Govindarajan Company Secretary asthe Nodal Officer for the purpose of verification of claims filed with the Company interms of IEPF Rules and for co-ordination with the IEPF Authority.

The said details are also available on the website of the Company

27. Secretarial Audit

Pursuant to thefrom D. C. Dave & Co. Cost Accountantsprovisionsof Section 204 of the Act the Company had appointed JHR & Associates CompanySecretaries as the Secretarial Auditor for the year under review to conduct theSecretarial Audit of the Company.

The Secretarial Audit Report for the year under review issued bySecretarial Auditor is annexed to this Report as Annexure 4. There is no qualification oradverse remark in their Report.

Further in terms of the provisions of the Circular No. CIR/CFD/CMD1/27/2019 dated 8th February 2019 issued by Securities and Exchange Board ofIndia the Company has obtained the Annual Secretarial Compliance Report for the financialyear ended 31st March 2022 confirming compliance of the applicable SEBI Regulations andcirculars/ guidelines issued thereunder by the Company.

The Company has complied with the applicable Secretarial Standardsissued by the Institute of Company Secretaries of India.

28. Cost Audit

The Company has maintained cost records as specified by the CentralGovernment under Section 148(1) of the Act. Further the Company had appointed D. C. Dave& Co. Cost Accountants (Registration No.000611) as the Cost Auditor to conduct anaudit of its Cost Accounting Records for the financial year 2020-21 pertaining toproducts of the Company as required by the law.

The Cost Audit Report submitted by the Cost Auditor for theprevious year was clean and there was no qualification in their Report. The same was dulyfiled with Ministry of Corporate Affairs on 19th October 2021. The Company hadre-appointed D.C. Dave & Co. Cost Accountants as the Cost Auditor for the year ended31st March 2022 and the Cost Audit Report when submitted by them will be duly filedwith Ministry of CorporateAffairs. Further the Company has re-appointed D.C. Dave &Co. Cost Accountants as the Cost Auditor for the Financial Year 2022-23 to conduct anaudit of its cost accounting records pertaining to said products at a remunerationof 300000 plus Goods and Service tax and out of pocket expenses. The Company is seekingthe approval of the Shareholders by means of ratification for the remuneration to be paidto D. C. Dave & Co. Cost Accountants vide Item no. 5 of the Notice of theAGM. hasCertificate been received to the effect that their appointment as Cost Auditor ifmade would be in accordance with the limits specified under Section 141 of the Act andRules framed thereunder.

29. Business Responsibility Report

A Business Responsibility Report describing the initiatives taken bythe Company from an environmental social and governance perspective as required in termsof the provisions of Regulation 34(2)(f) of SEBI Listing Regulations separately formspart of the Annual Report.

30. Acknowledgements

Your Directors wish to express their grateful appreciation for theco-operation and continued support received from customers parent company collaboratorsvendors investors shareholders financial institutions banks regulatory authoritiesand the society at large during the year.

We also place on record our appreciation for the contribution made byour employees at all levels and for their commitment hard work and support in achallenging environment.

For and on behalf of the Board

P. P. Shah


Mumbai 10th May 2022