Asian Paints Ltd
Directors Reports
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 Company's 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 Company's 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 Company's Policy for determining material subsidiaries is available on the
Company's 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 Company's 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 Hon'ble National Company Law
Tribunal vide its Order dated 2nd September, 2021, approved the Scheme of
Amalgamation of Reno Chemicals Pharmaceuticals and Cosmetics Private Limited, Company's
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 Company's 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 Company's 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. Sharma's contribution has been immensely valuable and has further strengthened the
Company's 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 Director's 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 Company's 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 Auditor's 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 Company's 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 arm's
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 Company's 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 Company's 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
Company's objectives. Risk management, which aims at managing the impact of these
uncertainties, is an integral part of the Company's 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
Company's 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 Company's 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 Company's 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 management's 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 Company's 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 Company's 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 doesn't 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 Board's 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 |
|
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