Company Information

Here Are a Few Relevant Results "TATA"

More    →
GO

Directors Reports

Asian Paints Ltd (INDUSTRY : Paints/Varnish)

  • BSE Code: 500820
  • NSE Symbol: ASIANPAINT
  • ISIN Demat: INE021A01026
  • Book Value ( ₹ ) 139.17
  • Face Value ( ₹ ) 1
  • Market Cap ( ₹ Cr. ) 264,748.18
  • P/E (TTM): 84.20
  • EPS (TTM): 32.78
  • Div Yield (%): 0.69

Dear Members,

The Board of Directors are pleased to present the 76th Integrated Annual Report of the Company along with the audited financial statements (standalone and consolidated) for the financial year 2021-22.

FINANCIAL RESULTS

The Companys financial performance for the year ended 31st March, 2022 is summarised below:

(Rs. in crores)

Standalone

Consolidated

2021-22 2020-21# Growth (%) 2021-22 2020-21# Growth (%)
Revenue from Operations 25,188.51 18,516.86 36.0% 29,101.28 21,712.79 34.0%
Earning Before Interest, Taxes, Depreciation and Amortisation 5,039.68 4,858.80 3.7% 5,183.62 5,158.65 0.5%
Less : Finance Costs 70.25 71.66 - 95.41 91.63 -
Less : Depreciation and Amortisation Expense 721.56 697.47 - 816.36 791.27 -
Profit for the period before share of profit in associate 4,247.87 4,089.67 3.9% 4,271.85 4,275.75 (0.1%)
Share of profit of Associate - - - 31.57 28.60 -
Profit before exceptional items & tax 4,247.87 4,089.67 3.9% 4,303.42 4,304.35 (0.0%)
Exceptional Items** 53.73 - 115.70 -
Profit before Tax 4,194.14 4,089.67 2.6% 4,187.72 4,304.35 (2.7%)
Less : Tax Expense 1,059.43 1,037.87 1,102.91 1,097.60
Profit for the period 3,134.71 3,051.80 2.7% 3,084.81 3,206.75 (3.8%)
Attributable to:
Shareholders of the Company 3,134.71 3,051.80 2.7% 3,030.57 3,139.29 (3.5%)
Non-Controlling Interest - - 54.24 67.46
Other Comprehensive Income (net of tax) (72.31) 50.53 - (225.66) (5.68) -
Total Comprehensive Income 3,062.40 3,102.33 (1.3%) 2,859.15 3,201.07 (10.7%)
Attributable to:
Shareholders of the Company 3,062.40 3,102.33 (1.3%) 2,818.26 3,143.42 (10.3%)
Non-Controlling Interest - - - 40.89 57.65
Opening balance in Retained Earnings^ 7,556.03 4,973.44 - 7,874.02 5,204.64 -
Amount available for Appropriation^ 10,694.02 8,021.26 - 10,908.45 8,339.68 -
Dividend - - - -
Interim - FY 2021-22 350.11 - - 350.11 - -
Interim - FY 2020-21 - 321.35 - - 321.35 -
Final - FY 2020-21 1,390.84 - - 1,390.84 - -
Final - FY 2019-20 - 143.88 - - 143.88 -
Closing balance in Retained Earnings^ 8,953.07 7,556.03 - 9,167.34 7,874.02 -

** For standalone results, exceptional items comprise of provision for expected credit loss taken towards subsidy receivable. Additionally, exceptional items for consolidated results also include impairment provision towards goodwill in Causeway Paints Lanka (Pvt.) Limited, subsidiary company, and foreign exchange loss due to devaluation of Sri Lankan Rupees.

# Figures for FY 2020-21 have been restated to give impact of amalgamation of Reno Chemicals Pharmaceuticals and Cosmetics Private Limited with the Company, effective from 17th September, 2021, with the appointed date of 1st April, 2019. The accounting impact is not material.

* Includes re-measurement of defined benefit plans.

COMPANY PERFORMANCE OVERVIEW

During the financial year 2021-22:

• Revenue From operations on standalone basis increased to Rs.25,188.51 crores as against Rs.18,516.86 crores in the previous year - a growth of 36%.

• Cost of goods sold as a percentage to revenue from operations increased to 62% as against 54.5% in the previous year.

• Employee cost as a percentage to revenue from operations decreased to 5.2% Rs.1,310.14 crores) as against 6.1% Rs.1,128.66 crores) in the previous year.

• Other expense as a percentage to revenue from operations decreased to 14.6% Rs.3,681.62 crores) as against 15.2% Rs.2,812.89 crores) in the previous year.

• Profit before exceptional items and tax for the current year is Rs.4,247.87 crores as against Rs.4,089.67 crores in the previous year - a growth of 3.9%.

• Profit after tax for the current year is Rs.3,134.71 crores as against Rs.3,051.80 crores in the previous year - a growth of 2.7%.

• On a consolidated basis, the Group achieved revenue of Rs.29,101.28 crores as against Rs.21,712.79 crores - a growth of 34%.

• Net profit after non-controlling interest for the Group for the current year is Rs.3,030.57 crores as against Rs.3,139.29 crores in the previous year - a degrowth of 3.5%.

Exceptional items:

• An amount of Rs. 53.73 crores is recognised as an exceptional item based on re-assessment of expected timing of receipt of cash flow towards subsidy receivable from the State Governments under expected credit loss method. Further, subsidy income under other operating revenue for financial year 2021-22 is lower by Rs. 31.10 crores. The Company is confident about the ultimate realisation of the dues from the State Governments. This has resulted in lower profits in the standalone and consolidated statement of Profit and Loss.

• The current economic crisis in Sri Lanka has led to currency devaluation. Consequently, this has resulted in recognition of the following exceptional items:

• Expense of Rs. 48.50 crores towards exchange loss recognised on foreign currency obligations of Causeway Paints Lanka (Pvt.) Limited ("Causeway Paints"); and

• Impairment provision of Rs. 13.47 crores on goodwill on consolidation recognised on acquisition of Causeway Paints.

• Consequent to the currency devaluation, foreign currency translation loss of Rs.139.87 crores has been recognised on consolidation of financial results of Causeway Paints in other comprehensive income of the consolidated financial results of the Company.

TRANSFER TO RESERVES

During the year under review, there was no amount transferred to any of the reserves by the Company.

DIVIDEND

The Board of Directors at their meeting held on 10th May, 2022, has recommended payment of Rs.15.50 (Rupees fifteen and paise fifty only) (1550%) per equity share of Rs.1 (Rupee one only) each as final dividend for the financial year 2021-22. The payment of final dividend is subject to the approval of the shareholders at the ensuing Annual General Meeting ("AGM") of the Company.

During the year under review, the Board of Directors of the Company at their meeting held on 21st October, 2021, declared an interim dividend of Rs.3.65 (Rupees three and paise sixty-five only) (365%) per equity share of Rs.1 (Rupee one only) each. The interim dividend was paid to the shareholders on 10th November, 2021.

The total dividend for the financial year 2021-22, including the proposed final dividend, amounts to Rs.19.15 (Rupees nineteen and paise fifteen only) per equity share of Rs.1 (Rupee one only) each would involve a total outflow of Rs.1,836.87 crores (Rupees one thousand eight hundred thirty-six crores and eighty-seven lakhs only) resulting in a dividend payout of 58.6% of the standalone profits of the Company.

In view of the changes made under the Income Tax Act, 1961, by the Finance Act, 2020, dividends paid or distributed by the Company shall be taxable in the hands of the shareholders. The Company shall, accordingly, make the payment of the final dividend after deduction of tax at source.

The dividend recommended is in accordance with the Dividend Distribution Policy of the Company. The Dividend Distribution Policy, in terms of Regulation 43A of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 ("Listing Regulations") is available on the Companys website at https:// www.asianpaints.com/DDPolicy.html.

SUBSIDIARIES AND JOINT VENTURES

The Company has 22 subsidiaries and 2 joint-venture companies as on 31st March, 2022.

Financial Performance

A list of bodies corporates which are subsidiaries/ associates/joint ventures of the Company is provided as part of the notes to Consolidated Financial Statements ("CFS").

A separate statement containing the salient features of financial statements of subsidiaries, associates, joint ventures of the Company in the prescribed Form AOC-1 forms a part of CFS, in compliance with Section 129(3) and other applicable provisions, if any, of the Companies Act, 2013 ("the Act") read with the Rules issued thereunder.

The Company does not have a material subsidiary.

The Companys Policy for determining material subsidiaries is available on the Companys website at https://www. asianpaints.com/PolicyforMaterialSubsidiaries.html.

CONSOLIDATED FINANCIAL STATEMENTS

In accordance with the provisions of the Act, Regulation 33 of the Listing Regulations and applicable Accounting Standards, the audited CFS of the Company for the financial year 2021-22, together with the Auditors Report forms part of this Annual Report.

In accordance with Section 136 of the Act, the audited financial statements, including the CFS and related information of the Company and the separate financial statements of each of the subsidiary companies, are available on the Companys website at https://www. asianpaints.com/AnnualReports.html. Any Member desirous of inspecting or obtaining copies of the said CFS may write to the Company Secretary at investor.relations@ asianpaints.com.

Amalgamation of Reno Chemicals Pharmaceuticals and Cosmetics Private Limited with the Company

During the year under review, the Mumbai Bench of the Honble National Company Law Tribunal vide its Order dated 2nd September, 2021, approved the Scheme of Amalgamation of Reno Chemicals Pharmaceuticals and Cosmetics Private Limited, Companys wholly owned subsidiary, with the Company ("the Scheme").

Pursuant to necessary filings with the Registrar of Companies, Maharashtra at Mumbai, the Scheme became effective from 17th September, 2021, with the appointed date of 1st April, 2019.

Formation of a subsidiary in Qatar

Asian Paints International Private Limited, Singapore, wholly owned subsidiary of the Company, formed a company with limited liability namely AP International Doha Trading W.L.L, Qatar, on 29th July, 2021.

Continuing the journey of Home Decor

As part of its strategic vision of becoming the most inspirational home decor brand empowering the consumer to create her dream home, the Company has identified lighting products and uPVC windows and doors space as key opportunity areas to transition from share of surface to share of space.

i. In April, 2022, the Company has acquired 49% of the equity share capital of Obgenix Software Private Limited (popularly known by the brand name "White Teak").

White Teak is engaged in the business of decorative lighting products and fans. Its tech-enabled web platform www.whiteteak.com. is one of the strongest platforms offering customers an extensive range of decorative lighting products and fans, further supplemented by its excellent store network across many key urban cities in India. It has been at the forefront of creating cutting-edge designs and ideas

in this space and bringing international standard design and quality to customers.

The Company has also agreed to acquire the balance 51% stake in White Teak in a phased manner.

ii. In April, 2022, the Company has entered into definitive agreements with Weatherseal Fenestration Private Limited ("Weatherseal Fenestration") and its existing promoters, agreeing to acquire 51% stake by subscription to equity share capital of Weatherseal Fenestration, subject to certain conditions.

Weatherseal Fenestration is engaged in the business of uPVC windows and doors space and has established reputable presence in the retail and project customer segment, primarily in South of India. It has a strong tech-enabled platform that has facilitated to provide a seamless customer experience in a scalable way.

As per the definitive agreements, the Company has agreed to further acquire 23.9% stake in Weatherseal Fenestration in a phased manner.

ASIAN PAINTS EMPLOYEE STOCK OPTION PLAN 2021 ("2021 PLAN")

The shareholders of the Company at their 75th AGM held on 29th June, 2021, have authorised the Board to offer, issue and provide stock options to the eligible employees of the Company and its subsidiaries under the 2021 Plan.

The 2021 Plan was introduced to incentivise, retain and attract key talent through this performance-based stock option grant program, and consequently enhance shareholder value. The 2021 Plan aims to create a sense of ownership among the eligible employees and to align their medium and long-term compensation with the Companys performance.

The maximum number of stock options to be granted to eligible employees under the 2021 Plan shall not exceed 25,00,000 equity shares (as may be adjusted for any changes in capital structure of the Company), issued by the Company under primary market route and/or acquisition of equity shares from the secondary market route, at a price decided by the Board, or by the Nomination and Remuneration Committee.

The vesting criteria is primarily based on achievement of annual performance parameters by the eligible employees, number of years of service and such other criteria as may be prescribed by the Nomination and Remuneration Committee from time to time. The exercise price for stock options granted to eligible employees shall be at 50% of the "Reference Share Price" of the Company (as defined under the 2021 Plan).

The certificate from the Secretarial Auditor on the implementation of the 2021 Plan in accordance with the Securities and Exchange Board of India (Share Based Employee Benefits and Sweat Equity) Regulations, 2021 (including any statutory modification(s) and/or re-enactment(s) thereof for the time being in force)

("SEBI SBEB Regulations"), has been uploaded on the website of the Company at https://www.asianpaints.com/AnnualReports.html.

The 2021 Plan is being implemented in accordance with the provisions of the Act and SEBI SBEB Regulations.

The details of the stock options granted under the 2021 Plan and the disclosures in compliance with SEBI SBEB Regulations and Section 62(1)(b) of the Act read with Rule 12(9) of the Companies (Share Capital and Debentures) Rules, 2014 are set out in Annexure (A) and are available on the website of the Company at https://www.asianpaints.com/AnnualReports.html.

DIRECTORS AND KEY MANAGERIAL PERSONNEL

Board of Directors

Sad Demise of Mr. Abhay Vakil, erstwhile Non-Executive Director of the Company.

Mr. Abhay Vakil, erstwhile Non-Executive Director of the Company, left for heavenly abode on 2nd November, 2021.

Late Mr. Abhay Vakil was associated with the Company since 1974. He was the Whole-time Director of the Company from 1983 to 1998 and he held the position of Managing Director from 1998 to 2009. He was appointed as a Non-Executive Director of the Company in 2009.

During his tenure as the Managing Director of the Company, late Mr. Vakil was overseeing the Companys decorative business and was in charge of the supply chain/ sales and marketing functions of the decorative business. His sad demise is an irreparable loss to the Company.

The Board of Directors of the Company express their deep condolences and pay tribute to late Mr. Abhay Vakil. The Board places on record profound appreciation for his valuable contribution for channelising the growth of the Company.

Change in Directorate

i. Retirement of Independent Directors

Dr. S. Sivaram (DIN: 00009900) and Mr. M.K. Sharma (DIN: 00327684) retired as an Independent Director(s) of the Company with effect from closure of business hours on 30th September, 2021 and 31st March, 2022, respectively, upon completion of their tenure as Independent Directors in terms of Section 149(11) of the Act.

Dr. S. Sivaram joined the Board as an Independent Director in the year 2001 and since then the Company has immensely benefitted from his guidance in the areas of technology, governance, risk management, etc. The Board places on record appreciation for his thoroughness, dedication and commitment.

Mr. M.K. Sharma joined the Board as an Independent Director in the year 2012. The Board places on record appreciation for the outstanding contribution of

Mr. M.K. Sharma during his tenure as an Independent Director of the Company. As the Chairman of the Audit Committee and Member of the Nomination and Remuneration Committee, Mr. Sharmas contribution has been immensely valuable and has further strengthened the Companys governance standards.

ii. Re-appointment of Independent Director

The shareholders of the Company at their 75th AGM held on 29th June, 2021, based on the (i) outcome of performance evaluation; (ii) recommendations of the Board and Nomination and Remuneration Committee; and (iii) experience and significant contributions made by Mr. R. Seshasayee (DIN: 00047985), have, inter alia, approved his re-appointment as an Independent Director for the second term of 5 (five) consecutive years with effect from 23rd January, 2022 to 22nd January, 2027.

In accordance with Regulation 17(1A) of the Listing Regulations, consent of the shareholders was accorded by way of Special Resolution for continuation of directorship of Mr. R. Seshasayee beyond the age of 75 (seventy-five) years, as he would attain the said prescribed age limit on 31st May, 2023, during the midst of his second term.

iii. Appointment of Non-Executive Directors

The Board of Directors at their meetings held on 21st October, 2021 and 1st March, 2022 based on recommendations of the Nomination and Remuneration Committee, inter alia, approved the following changes to the Board of Directors of the Company, subject to approval of shareholders of the Company:

(a) Appointment of Mr. Milind Sarwate (DIN: 00109854) as an Additional and Independent Director of the Company for a period of 5 (five) consecutive years from 21st October, 2021 upto 20th October, 2026.

Mr. Milind Sarwate is a Chartered Accountant (1983), Cost Accountant (1983), Company Secretary (1984) and a CII-Fulbright Fellow (Carnegie Mellon University, USA, 1996).

He is the Founder & CEO of Increate Value Advisors LLP. He provides advice & mentorship in business & social value creation, governance, and capability-building, leveraging his 38-year experience including long stints as CFO and CHRO of Marico Limited and Godrej Group.

He invests in promising businesses and social enterprises.

Mr. Sarwate serves on the Boards of listed and unlisted companies and has Chaired Audit Committees in these companies since 2005.

(b) Appointment of Ms. Nehal Vakil (DIN: 00165627) as a Non-Executive Promoter Director with effect from 1st March, 2022, to fill the casual vacancy created on the Board on account of the sad demise of Mr. Abhay Vakil.

Ms. Nehal Vakil holds Bachelor of Arts degree with specialisation in Finance from Eli Broad College of Business, Michigan State University - East Lansing, Michigan, USA.

She commenced her career with the Company in the year 1999 and was, inter alia, responsible for monitoring budgets, revenue, and variance trends in the corporate center.

She is presently the Director in charge of the operations of Vikatmev Containers Limited ("Vikatmev"), a leading container manufacturer in Mumbai. At Vikatmev, she heads a team that strategises and devises new approaches to boost customer numbers, growth and revenue.

Ms. Nehal Vakil also manages the other family businesses and investments along with the wealth advisors. She also serves as a Director on the Board of few other public and private limited companies.

Ms. Nehal Vakil is the daughter of late Mr. Abhay Vakil and is a Member of the Promoter(s)/ Promoter(s) Group of the Company. She is also the cousin of Ms. Amrita Vakil, Non-Executive Director of the Company.

In the opinion of the Board, Mr. Milind Sarwate and Ms. Nehal Vakil bring on board the required experience, integrity, expertise and relevant proficiency which will add tremendous value to the Board of Directors in exercising their role effectively.

In accordance with Regulation 17(1C) of the Listing Regulations with effect from 1st January, 2022, approval of the shareholders for appointment of a person on the Board of Directors should be taken at the next general meeting or within a time period of 3 (three) months from the date of appointment, whichever is earlier. Further, in accordance with Regulation 25(2A) of the Listing Regulations, effective 1st January, 2022, consent of the shareholders by way of Special Resolution shall be required for appointment of an Independent Director on the Board of Directors of the Company.

The approval of the shareholders of the Company was required within 3 (three) months for appointment of Ms. Nehal Vakil as a Non-Executive Director of the Company.

Mr. Milind Sarwate was appointed as an Additional and Independent Director prior to the Notification of the provisions of Regulation 17(1C) and 25(2A) of the Listing Regulations.

The approval of the shareholders of the Company was sought by postal ballot notice dated 1st March, 2022 for the aforementioned appointments on the Board, in good governance for Mr. Milind Sarwate.

The shareholders by way of postal ballot, have approved their appointments with requisite majority. The results of postal ballot were declared on 20th April, 2022.

iv. Re-appointment of Managing Director & CEO

The Board of Directors at their meeting held on 10th May, 2022, subject to approval of the shareholders, approved the re-appointment of Mr. Amit Syngle (DIN: 07232566) as the Managing Director & CEO of the Company for a further period of 5 (five) years commencing from 1st April, 2023 to 31st March, 2028.

Appropriate resolution for re-appointment of Mr. Amit Syngle as the Managing Director & CEO of the Company is being placed for the approval of the shareholders of the Company at the ensuing AGM. The Board of Directors, Nomination and Remuneration Committee and Audit Committee of the Company recommends his re-appointment as the Managing Director & CEO of the Company.

v. Retirement by rotation and subsequent re-appointment

In accordance with the provisions of Section 152 and other applicable provisions, if any, of the Act and the Articles of Association of the Company, Mr. Malav Dani (DIN: 01184336) and Mr. Manish Choksi (DIN:00026496), Non-Executive Directors of the Company, are liable to retire by rotation at the ensuing AGM and being eligible have offered themselves for re-appointment.

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

Key Managerial Personnel

Mr. Amit Syngle, Managing Director & CEO, and

Mr. R J Jeyamurugan, CFO & Company Secretary, are the

Key Managerial Personnel of the Company.

During the year under review, there were no changes to the Key Managerial Personnel of the Company.

DIRECTORS RESPONSIBILITY STATEMENT

Pursuant to Section 134 of the Act (including any statutory modification(s) and/or re-enactment(s) thereofnfor the time being in force), the Directors of the Company state that:

i. in the preparation of the annual accounts for the financial year ended 31st March, 2022, the applicable Accounting Standards have been followed and there are no material departures from the same;

ii. the Directors have selected such accounting policies and applied them consistently and made judgements and estimates that are reasonable and prudent so

as to give a true and fair view of the state of affairs of the Company as at 31st March, 2022 and of the profits of the Company for the financial year ended 31st March, 2022;

iii. proper and sufficient care has been taken for the maintenance of adequate accounting records

in accordance with the provisions of the Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

iv. the annual accounts have been prepared on a going concern basis;

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

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

Declaration From Directors

The Company has, inter alia, received the following declarations from all the Independent Directors confirming that:

• they meet the criteria of independence as prescribed under the provisions of the Act, read with the Schedule and Rules issued thereunder, and the Listing Regulations. There has been no change in the circumstances affecting their status as Independent Directors of the Company;

• they have complied with the Code for Independent Directors prescribed under Schedule IV to the Act; and

• they have registered themselves with the Independent Directors Database maintained by the Indian Institute of Corporate Affairs.

None of the Directors of the Company are disqualified for being appointed as Directors as specified under Section 164(2) of the Act read with Rule 14(1) of the Companies (Appointment and Qualification of Directors) Rules, 2014.

NUMBER OF MEETINGS OF THE BOARD

During the year under review, 10 (ten) meetings of the Board of Directors were held. The details of the meetings of the Board of Directors of the Company held and attended by the Directors during the financial year 2021-22 are given in the Corporate Governance Report which forms part of this Annual Report.

The maximum interval between any two meetings did not exceed 120 days, as prescribed by the Act and the Listing Regulations.

NOMINATION AND REMUNERATION POLICY

The Nomination and Remuneration Policy of the Company, inter alia, provides that the Nomination and Remuneration Committee shall: (i) formulate the criteria for board membership, including the appropriate mix of Executive & Non-Executive Directors; (ii) approve and recommend compensation packages and policies for Directors and Senior Management; and (iii) lay down the effective manner of performance evaluation of the Board, its Committees and the Directors.

The salient features of the Nomination and Remuneration Policy of the Company along with highlights of changes made during the year are outlined in the Corporate Governance Report which forms part of this Report. The Policy is also available on the website of the Company at https://www.asianpaints.com/NRCPolicy.html.

REMUNERATION OF DIRECTORS,

KEY MANAGERIAL PERSONNEL AND SENIOR MANAGEMENT

The remuneration paid to the Directors, Key Managerial Personnel and Senior Management is in accordance with the Nomination and Remuneration Policy formulated in accordance with Section 178 of the Act and Regulation 19 read with Schedule II of the Listing Regulations. Further details on the same are given in the Corporate Governance Report which forms part of this Annual Report.

The information required under Section 197 of the Act read with the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 in respect of directors and employees of the Company is set out in Annexure (B) to this Report and is also available on the website of the Company at https://www.asianpaints.com/AnnualReports.html. BOARD EVALUATION

The Nomination and Remuneration Policy of the Company empowers the Nomination and Remuneration Committee to formulate a process for effective evaluation of the performance of individual directors, Committees of the Board and the Board as a whole.

The Board formally assesses its own performance based on parameters which, inter alia, include performance of the Board on deciding long term strategy, rating the composition and mix of Board members, discharging of governance and fiduciary duties, handling critical and dissenting suggestions, etc.

The parameters for the performance evaluation of the Directors include contribution made at the Board meeting, attendance, instances of sharing best and next practices, domain knowledge, vision, strategy, engagement with senior management, etc.

The Chairperson(s) of the respective Committees based on feedback received from the Committee members on the outcome of performance evaluation of the Committee, share a report to the Board.

The Independent Directors at their separate meeting review the performance of: Non-Independent Directors and the Board as a whole, Chairman of the Company after taking into account the views of Executive Director and Non-Executive Directors, the quality, quantity and timeliness of flow of information between the Company management and the Board that is necessary for the Board to effectively and reasonably perform their duties.

The Chairman of the Nomination and Remuneration Committee, leads the performance evaluation exercise.

The outcome of the performance evaluation of Committees of the Board and the Board is presented to the Nomination and Remuneration Committee and the Board of Directors of the Company and key outcomes, actionable areas are discussed and acted upon. The details of the evaluation process and the outcomes are set out in the Corporate Governance Report which forms a part of this Annual Report.

The outcome of evaluation of individual directors is shared on one-on-one basis with the Director being evaluated.

The Board of Directors have decided to engage an external expert to carry out the evaluation of performance of the Board, Committees and individual directors, once in every 3 (three) financial years. The Company had engaged Egon Zehnder, external consultants, to conduct performance evaluation for the financial year 2020-21 of the Board, Committees of the Board and individual directors.

FAMILIARISATION PROGRAM FOR INDEPENDENT DIRECTORS

All Independent Directors are familiarised with the operations and functioning of the Company at the time of their appointment and on an ongoing basis. The details of the training and familiarisation program are provided in the Corporate Governance Report and is also available on the website of the Company at https://www.asianpaints. com/FamiliarisationProgramme.html.

REGISTRAR AND TRANSFER AGENT

The name of the Companys Registrar and Transfer Agent, TSR Darashaw Consultants Private Limited, has been changed to TSR Consultants Private Limited with effect from 13th April, 2022.

MANAGEMENT DISCUSSION AND ANALYSIS

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

AUDITORS AND AUDITORS REPORT

Statutory Auditor

Deloitte Haskins & Sells LLP, Chartered Accountants (Firm Registration No. 117366W/W-100018), were appointed as Statutory Auditors of the Company at the 75th AGM held on 29th June, 2021, to hold office till the conclusion of the 80th AGM.

Deloitte Haskins & Sells LLP has confirmed that they are not disqualified from continuing as Auditors of the Company.

The Auditors have issued an unmodified opinion on the Financial Statements for the financial year 2021-22 and the Auditors Report forms part of this Annual Report.

Cost Auditor

The Company has maintained cost records for certain products as specified by the Central Government under Section 148(1) of the Act. RA & Co., Cost Accountants (Firm Registration No. 000242), have carried out the cost audit for applicable products during the financial year 2021-22.

The Board of Directors of the Company, on the recommendation made by the Audit Committee, have appointed RA & Co., as the Cost Auditors of the Company to conduct the audit of cost records of products for the financial year 2022-23. RA & Co., being eligible, have consented to act as the Cost Auditors of the Company for the financial year 2022-23.

The remuneration proposed to be paid to the Cost Auditors, subject to ratification by the members of the Company at the ensuing 76th AGM, would not exceed Rs.9 lakhs (Rupees nine lakhs only) excluding taxes and out-of-pocket expenses, if any.

The Cost Audit Report for the financial year 2020-21 does not contain any qualification, reservation, or adverse remark.

Secretarial Auditor

The Board of Directors of the Company, on the recommendation made by the Audit Committee, have appointed Dr. K.R. Chandratre, Practicing Company Secretary (Certificate of Practice No. 5144), as the Secretarial Auditor to conduct an audit of the secretarial records for the financial year 2022-23, based on consent received from Dr. K.R. Chandratre.

The Secretarial Audit Report for the financial year 2021-22 under the Act read with Rules made thereunder and Regulation 24A of the Listing Regulations, is set out in Annexure (C-1) to this Report.

The Secretarial Compliance Report received from Dr. K.R. Chandratre, for the financial year 2021-22, in relation to compliance of all applicable Securities and Exchange Board of India ("SEBI") Regulations/Circulars/ Guidelines issued thereunder, pursuant to requirement of Regulation 24A of the Listing Regulations, is set out in Annexure (C-2) to this Report. The Secretarial Compliance Report has been voluntarily disclosed as good disclosure practice.

As required by Schedule V of the Listing Regulations, the Auditors Certificate on Corporate Governance received from Dr. K.R. Chandratre is annexed to the Corporate Governance Report forming part of this Annual Report.

The Secretarial Audit Report and Secretarial Compliance Report for the financial year 2021-22, does not contain any qualification, reservation, or adverse remark.

COMMITTEES

As on 31st March, 2022, the Board has 7 (seven) Committees: Audit Committee, Nomination and Remuneration Committee, Corporate Social Responsibility Committee, Risk Management Committee, Stakeholders Relationship Committee, Investment Committee and Shareholders Committee.

The Board of Directors of the Company have dissolved the Shareholders Committee and the terms of reference of the said Committee have been merged with the Stakeholders Relationship Committee. The said changes were effective from 1st April, 2022.

During the year, all recommendations of the Committees of the Board which were mandatorily required have been accepted by the Board.

A detailed note on the composition of the Board and its Committees, including its terms of reference is provided in the Corporate Governance Report. The composition and terms of reference of all the Committees of the Board of Directors of the Company is in line with the provisions of the Act and the Listing Regulations.

CORPORATE SOCIAL RESPONSIBILITY (CSR)

During the financial year 2021-22, the Company has spent Rs.71.01 crores (Rupees seventy-one crores and one lakh only) towards CSR expenditure. The CSR initiatives of the Company were under the thrust area of health & hygiene, enhancing vocational skills, water conservation and disaster management. The CSR Policy of the Company is available on the website of the Company at https://www.asianpaints.com/CSRPolicy.html.

The Companys CSR Policy statement and annual report on the CSR activities undertaken during the financial year ended 31st March, 2022, in accordance with Section 135 of the Act and the Companies (Corporate Social Responsibility Policy) Rules, 2014 ("CSR Rules") is set out in Annexure (D) to this Report.

Synopsis of the report of the independent agency for the CSR projects to which impact assessment is applicable in terms of the provisions of Section 135 of the Act and CSR Rules, has been annexed to the said annual report on CSR.

CORPORATE GOVERNANCE REPORTAND BUSINESS RESPONSIBILITY AND SUSTAINABILITY REPORT

In compliance with Regulation 34 of the Listing Regulations, a separate report on Corporate Governance and the Business Responsibility and Sustainability Report, forms part of this Annual Report.

ANNUAL RETURN

The Annual Return of the Company as on 31st March, 2022 in Form MGT-7 in accordance with Section 92(3) of the Act read with the Companies (Management and Administration) Rules, 2014, is available on the website of the Company at https://www.asianpaints.com/AnnualReports.html.

RELATED PARTY TRANSACTIONS

All transactions with related parties were reviewed and approved by the Audit Committee and were in accordance with the Policy on dealing with and materiality of related party transactions and the related party framework, formulated and adopted by the Company.

The SEBI vide amendments to the Listing Regulations had introduced substantial changes in the related party transaction framework, inter alia, by enhancing the purview of the definition of related party, and overall scope of transactions with related parties effective 1st April, 2022 or unless otherwise specified in the amendment.

The Board of Directors on recommendations of the Audit Committee approved the revised Policy on dealing with and materiality of related party transactions and related party framework of the Company to align it with the amendments notified by SEBI.

All contracts/arrangements/transactions entered into by the Company during the year under review with related parties were in the ordinary course of business and on arms length basis in terms of provisions of the Act.

Further, there are no contracts or arrangements entered into under Section 188(1) of the Act, hence no justification have been separately provided in that regard.

The Companys Policy on dealing with and materiality of related party transactions is available on the website of the Company at https://www.asianpaints.com/RPTPolicy.html.

There are no materially significant related party transactions that may have potential conflict with interest of the Company at large. There were no transactions of the Company with any person or entity belonging to the Promoter(s)/Promoter(s) Group which individually holds 10% or more shareholding in the Company.

The details of the related party transactions as per Indian Accounting Standards (IND As) - 24 are set out in Note 41 to the standalone financial statements of the Company.

The Company in terms of Regulation 23 of the Listing Regulations submits within the stipulated time from the date of publication of its standalone and consolidated financial results for the half year, disclosures of related party transactions on a consolidated basis, in the format specified in the relevant accounting standards to the stock exchanges. The said disclosures are available on the website of the Company at https://www.asianpaints.com/StatutorvFilings.html.

Form AOC-2 pursuant to Section 134(3)(h) of the Act read with Rule 8(2) of the Companies (Accounts) Rules, 2014 is set out in Annexure (E) to this Report.

LOANS AND INVESTMENTS

Details of loans, guarantees and investments under the provisions of Section 186 of the Act read with the Companies (Meetings of Board and its Powers) Rules, 2014, as on 31st March, 2022, are set out in Note 47(C) to the standalone financial statements of the Company.

RISK MANAGEMENT

Risk management is integral to the Companys strategy and for the achievement of the long-term goals. Our success as an organisation depends on our ability to identify and leverage the opportunities while managing the risks.

With the continuation of the COVID-19 pandemic, the challenges of uncertain lockdowns, unlock phases, health hazards and supply chain disruptions across the globe continued to impact the business.

These challenges have brought a mix of opportunities and uncertainties impacting the Companys objectives. Risk management, which aims at managing the impact of these uncertainties, is an integral part of the Companys strategy setting and decision making process. The Company regularly identifies uncertainties and after assessing them, devises short-term and long-term actions to mitigate any risk which could materially impact your Companys longterm goals. This process of identifying and assessing the risks is a two-way process with inputs being taken from employees across the organisation.

The Company engages regularly with various stakeholders to foresee changing/emerging expectations and proactively tries to integrate the same with the overall plans and priorities of the Company.

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

Our approach to risk management is designed to provide reasonable assurance that our assets are safeguarded, the risks facing the business are being assessed and mitigated and all information that may be required to be disclosed is reported to Companys Senior Management including, where appropriate, the Managing Director & CEO, the Chief Financial Officer, the Audit Committee, the Risk Management Committee, and the Board.

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

The Company endeavours to continually sharpen its risk management systems and processes in line with a rapidly changing business environment. There are no risks which in the opinion of the Board threaten the existence of the Company. However, some of the risks which may pose challenges are set out in the Management Discussion and Analysis which forms part of this Annual Report.

The Board of Directors of the Company on the recommendation of the Risk Management Committee has developed Risk Management Policy for the Company including identification therein of elements of risk, if any, which in the opinion of the Board may threaten the existence of the Company and which articulates the Companys approach to address the uncertainties in its endeavour to achieve its stated and implicit objectives.

The Risk Management Policy of the Company is available on the website of the Company at https://www.asianpaints.com/RMPolicy.html.

VIGIL MECHANISM

The Company promotes ethical behaviour in all its business activities and in line with the best governance practices. The Company has a robust vigil mechanism through its Whistle Blower Policy approved and adopted by Board of Directors of the Company in compliance with the provisions of Section 177(10) of the Act and Regulation 22 of the Listing Regulations.

The Company has engaged an agency for managing the Ethics Hotline which can be used to, inter alia, report any instances of financial irregularities, breach of code of conduct, abuse of authority, disclosure of financial/ unpublished price sensitive information other than for legitimate purposes, unethical/unfair actions concerning Company vendors/suppliers, malafide manipulation of Company records, discrimination to the Code of Conduct in an anonymous manner.

The Policy also provides adequate protection to the Directors, employees and business associates who report unethical practices and irregularities.

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

The Whistle-Blower Policy aims to:

• allow and encourage stakeholders to bring to the managements notice concerns about unethical behavior;

• ensure timely and consistent organisational response;

• build and strengthen a culture of transparency and trust; and

• provide protection against victimisation.

No person was denied access to the Audit Committee.

The Whistle Blower Policy has been appropriately communicated within the Company across all levels and is available on the website of the Company at https://www.asianpaints.com/WBPolicy.html.

POLICY ON PREVENTION OF SEXUAL HARASSMENT AT WORKPLACE

As per the requirements of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 ("Prevention of Sexual Harassment Act"), the Company has formulated a Policy on Prevention of Sexual Harassment at Workplace for prevention, prohibition and redressal of sexual harassment at workplace and an Internal Complaints Committee has also been set up to redress any such complaints received.

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

The Company periodically conducts sessions for employees across the organisation to build awareness about the Policy and the provisions of Prevention of Sexual Harassment Act.

Complaints of sexual harassment received during the financial year 2021-22 by the Company were investigated in accordance with the procedures prescribed and adequate steps were taken to resolve them.

The policy formulated by the Company for prevention of sexual harassment is available on the website of the Comany at https://www.asianpaints.com/POSHPolicy.html.

INTERNAL FINANCIAL CONTROLS RELATED TO FINANCIAL STATEMENTS

The Company has adequate Internal Financial Controls System over financial reporting which ensures that all transactions are authorised, recorded, and reported correctly in a timely manner. The Companys Internal Financial Controls over financial reporting provides reasonable assurance over the integrity of financial statements of the Company.

The Company has laid down Standard Operating Procedures, Policies and Authority/Commercial Manual to guide the operations of the business. Functional heads are responsible to ensure compliance with all laws and regulations and also with the policies and procedures laid down by the management.

The Corporate Accounts team has undertaken advanced digitalisation and automation initiatives in the current year. System based reports and automated accounting for various areas in financial statements have contributed to better accuracy and faster financial reporting. Further, the financial statement preparation has been automated to ensure end to end system driven reporting across Group reducing scope of manual errors. Such initiatives would be continued in the coming year as well.

The Shared Services Center continued the journey of digitalisation and touchless processing of vendor payments taking it to next level. Virtual Assistant for Processing Invoices, on the fly intelligence tool, has been deployed for better compliances to laws & regulation.

A mobile application has been developed for employee reimbursement with Optical Character Recognition enabled technology easing the process of raising claims as well as automating necessary controls for seamless processing. Car hiring process has been digitalised automating the entire process from booking a request to invoice processing along with tracking of distances travelled and time involved.

The Company tracks all amendments to Accounting Standards, the Act and makes changes to the underlying systems, processes and financial controls to ensure adherence to the same. During the current year, the Company assessed impact of changes in Schedule III under the Act and Accounting Standards on its financial

reporting and accordingly made necessary changes in its policies, processes and disclosures. All resultant changes to the policy and impact on financials are disclosed after due validation with the statutory auditors and the Audit Committee.

During the year, the Company has prepared Risk Assessment and Control Matrix for all processes involved in financial reporting and was tested for design and operating effectiveness.

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

OTHER DISCLOSURES

i. Unclaimed Dividend

In terms of applicable provisions of the Act read with the Investor Education and Protection Fund Authority (Accounting, Audit, Transfer and Refund) Rules, 2016 ("the IEPF Rules"), during the year under review, unpaid or unclaimed dividend amounting to Rs.1.34 crores (Rupees one crores and thirty-four lakhs only) was transferred by the Company to the Investor Education and Protection Fund ("IEPF"), established by the Government of India.

Further, 1,69,237 (One lakh sixty-nine thousand two hundred and thirty-seven) shares were transferred to the demat account of the IEPF Authority during the year, in accordance with the IEPF Rules, as the dividend(s) has not been paid or claimed by the shareholders for 7 (seven) consecutive years or more;

ii. None of the Directors of the Company have resigned during the year under review;

iii. The Company has not failed to implement any corporate action during the year under review;

iv. The disclosure pertaining to explanation for any deviation or variation in connection with certain terms of a public issue, rights issue, preferential issue, etc. is not applicable to the Company;

v. The Companys securities were not suspended during the year under review;

vi. There are no material changes and commitments affecting the financial position of the Company which have occurred between the end of the financial year 2021-22 and the date of this Report.

An overview of the paint industry, important changes in the paint industry during the last financial year, external environment, and economic outlook have been provided in detail in the separate section of Management Discussion and Analysis forming part of this Annual Report;

vii. During the year under review, there was no change in the nature of business of the Company;

viii. Key initiatives with respect to stakeholder relationship, customer relationship, environment, sustainability, health and safety have been provided in detail in the respective sections of this Annual Report;

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

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

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

The Competition Commission of India ("Commission") had passed a prima facie Order dated 14th January, 2020, directing the Director General ("DG") to cause an investigation against the Company, under the provisions of Section 26(1) of the Competition Act, 2002. Based on this Order, the DG initiated an investigation against the Company and on 17th December, 2021, submitted a consolidated Investigation Report to the Commission. The report in no way affects the going concern status of the Company. The Commission has now scheduled the matter for hearing.

xii. The Managing Director & CEO of the Company has not received any remuneration or commission from any of the subsidiary companies. Further the Company doesnt have any holding company;

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

xiv. The information on conservation of energy, technology absorption and foreign exchange earnings and outgo as stipulated under Section 134 of the Act read with the Companies (Accounts) Rules, 2014, is set out in the Annexure (F) to this Report;

xv. Company has not issued equity shares with differential rights as to dividend, voting or otherwise;

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

xvii. There was no revision of financial statements and Boards Report of the Company during the year under review;

xviii. No application has been made under the Insolvency and Bankruptcy Code; hence the requirement to disclose the details of application made or any proceeding pending under the Insolvency and Bankruptcy Code, 2016 (31 of 2016) during the year along with their status as at the end of the financial year is not applicable; and

xix. The requirement to disclose the details of difference between amount of the valuation done at the time of onetime settlement and the valuation done while taking loan from the Banks or Financial Institutions along with the reasons thereof, is not applicable.

APPRECIATION

The Board of Directors place on record sincere gratitude and appreciation for all the employees of the Company. Our consistent growth was made possible by their hard work, solidarity, cooperation, and dedication during the year.

The Board conveys its appreciation for its customers, shareholders, suppliers as well as vendors, bankers, business associates, regulatory and government authorities for their continued support.

For and on behalf of the Board of Directors
Deepak Satwalekar
Chairman
Place: Mumbai (DIN: 00009627)
Date: 10th May, 2022