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Notes to Accounts of Asian Paints Ltd.

Mar 31, 2015

Company Background

Asian Paints Limited (the ''Company'') is a public limited company incorporated under the Indian Companies Act, 1913. The Company is engaged in the business of manufacturing, selling and distribution of paints, coatings, products related to home decor, bath fittings and providing related services.

b) Terms/rights attached to equity shares

The Company has only one class of shares referred to as equity shares having a par value of Rs.1 per share. Each holder of equity shares is entitled to one vote per share. The Company declares and pays dividends in Indian Rupees. Payment of dividend is also made in foreign currency to shareholders outside India. The final dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting.

As per the Companies Act, 2013, the holders of equity shares will be entitled to receive remaining assets of the company, after distribution of all preferential amounts in the event of liquidation of the company. However no such preferential amounts exist currently. The distribution will be in proportion to the number of equity shares held by the shareholders.

"The Board of Directors at its meeting held on 17th September, 2014 declared an interim dividend of Rs. 1.80 (Rupee one and paise eighty only) per equity share of Rs. 1 each. A final dividend of Rs. 4.30 (Rupees four and paise thirty only) per equity share has been recommended by the Board of Directors at its meeting held on 18th May, 2015, subject to the approval by the shareholders at the ensuing Annual General Meeting. If approved, the total dividend (interim and final dividend) for the financial year 2014-15 will be Rs. 6.10 per equity share of Rs. 1 each (Rs. 5.30 per equity share of Rs. 1 each was paid as total dividend for the previous year). The total dividend appropriation for the year ended 31st March, 2015 amounted to Rs. 698.07 crores including corporate dividend tax of Rs. 112.95 crores. (Previous year Rs. 590.39 crores including corporate dividend tax of Rs. 82.02 crores)."

NOTE 5 : DEFERRED TAX LIABILITIES (NET)

The Company has recognized deferred tax arising on account of timing differences, being the difference between the taxable income and accounting income, that originates in one period and is capable of reversal in one or more subsequent period(s) in compliance with Accounting Standard (AS - 22) - Accounting for Taxes on Income.

NOTE 2 : CONTINGENT LIABILITIES AND COMMITMENTS

(Rs. in Crores)

a. Contingent Liabilities As at As at 31.03.2015 31.03.2014

1. Letters of comfort issued to banks on behalf of some of its operating subsidiary companies. 37.29 233.26

2. Claims against the Company not acknowledged as debts

i. Tax matters in dispute under appeal 98.37 78.85

ii. Others 12.99 12.07

The Company enters into forward exchange contracts to hedge against its foreign currency exposures relating to the underlying transactions and firm commitments. The Company does not enter into any derivative instruments for trading or speculative purposes.

NOTE 3 : Interest includes income from investment in fixed deposits of Rs. 1.51 crores (Previous year - Rs. 1.43 crores) and interest received of Rs. 0.73 crores (Previous year - Rs. 0.55 crores) on account of completion/disposal of various assessments/appeals during the year.

NOTE 4 : The Company enters into forward exchange contracts to hedge against its foreign currency exposures relating to the underlying transactions and firm commitments. The Company does not enter into any derivative instruments for trading or speculative purposes.

NOTE 5 : DISCLOSURE AS PER CLAUSE 32 OF THE LISTING AGREEMENT ENTERED INTO WITH THE STOCK EXCHANGES

Loans and advances in the nature of loans given to subsidiaries, associates and others and investment in shares of the Company by such parties:

NOTE 6 : Pursuant to Accounting Standard (AS-19) - Leases, the following information is given A. Assets given on operating lease

a. The Company has provided tinting systems to its dealers on an operating lease basis. The lease period varies between four to nine years. Lease rentals are payable monthly by the dealers. A refundable security deposit is collected at the time of signing the agreement. During the year, the said lease has expired and hence no amounts are receivable as at 31st March, 2015.

b. Future minimum lease rentals receivable as at 31st March, 2015 as per the lease agreements:

The information pertaining to future minimum lease rentals receivable is based on the lease agreements entered into between the Company and the dealers and variation made thereto. Lease rentals are reviewed periodically taking into account prevailing market conditions.

c. Total amount of contingent rents recognised as income - NIL. (Previous Year - NIL)

d. The initial direct cost relating to acquisition of tinting system is capitalized.

e. The information on gross amount of leased assets, depreciation and impairment is given in Note 10.

B. Assets taken on operating lease

a. The Company has taken certain assets such as Vehicles, Computers and Information Technology hardware on an operating lease basis. The lease rentals are payable by the Company on a monthly or quarterly basis.

NOTE 7 : Pursuant to Accounting Standard (AS-27) - Financial Reporting of Interests in Joint Ventures, the disclosures relating to the two Joint Venture Companies viz., PPG Asian Paints Private Limited and Asian Paints PPG Private Limited (both hereinafter referred to as JVs) are as follows:

a) The proportion of interest of the Company in the JVs is by way of equal equity participation with PPG Industries Securities Inc., U.S.A.

NOTE 8 : EMPLOYEE BENEFITS

1) Short term employee benefits:

The liability towards short-term employee benefits for the year ended 31st March, 2015 has been recognized in the Statement of Profit and Loss.

2) Post-employment benefits:

The following disclosures are made in accordance with AS - 15 (Revised) pertaining to Defined Benefit Plans:

i) Discount rate: The discount rate is based on the prevailing market yields of Indian government securities as at the balance sheet date for the estimated term of the obligations.

ii) Expected Rate of Return on Plan Assets: This is based on the expectation of the average long-term rate of return expected on investments of the fund during the estimated term of the obligations.

iii) Salary Escalation Rate: The estimates of future salary increases, considered in actuarial valuation, takes into account the inflation, seniority, promotion and other relevant factors such as supply and demand in the employment market.

3) Other Long term employee benefits:

The liability towards compensated absences (annual leave and sick leave) for the year ended 31st March, 2015 based on actuarial valuation carried out by using Projected Accrued Benefit Method resulted in increase in liability by Rs. 19.12 crores. (Previous year - Rs. 3.03 crores)

Annual Leave and Sick Leave assumptions

NOTE 9:

The Company''s manufacturing facility at Khandaia, Maharashtra has been granted "Mega Project Status" by Government of Maharashtra and hence is eligible for Industrial Promotion Subsidy (IPS) under Package Scheme of Incentive, 2007 in the form of refund of VAT paid to Maharashtra Government, exemption on electricity duty and stamp duty within a period of 9 years from the date of commencement of commercial production, restricted to a maximum of 100% of fixed capital investment as per the Eligibility Certificate issued by Director of Industries, Government of Maharashtra. In terms of the Accounting Standard (AS 12) "Accounting for Government Grants" prescribed by Companies (Accounting Standards) Amendment Rules, 2006, eligible incentive as mentioned above amounting to Rs. 108.96 crores for year ended 31st March, 2015 (Previous Year - Rs. 65.59 crores) is credited to Statement of Profit and Loss under the head "Other operating income" on accrual basis.

NOTE 10 : ACQUISITION OF ESS ESS BATHROOM PRODUCTS PRIVATE LIMITED

During the year, the Company acquired the entire front end sales business including brands, network and sales infrastructure of Ess Ess Bathroom Products Private Limited effective 1st June, 2014 for a consideration of Rs. 36.48 crores. As a result of this transaction, intangible assets consisting of Goodwill of Rs. 38.58 crores and Brand of Rs. 4.28 crores has been recognized in the Financials of the Company. The financial results of this business for the period ended 31st March, 2015 are reported as a separate segment under ''Home Improvement'' in Segment Reporting (Refer Note 49).

NOTE 11 : INFORMATION ON RELATED PARTY TRANSACTIONS AS REQUIRED BY ACCOUNTING STANDARD (AS - 18) ON RELATED PARTY DISCLOSURES FOR The YEAR ENDED 31st March, 2015.

a) Joint Venture: (In which the Company has 50% equity interest)

i. PPG Asian Paints Private Limited

Wholly owned subsidiaries of PPG Asian Paints Private Limited:

a) Faaber Paints Private Limited.

b) PPG Asian Paints Lanka Private Limited

ii. Asian Paints PPG Private Limited

(c) Key Managerial Personnel:

Name of the Director Designation

K.B.S. Anand Managing Director & CEO

(d) Promoters and their relatives having control:

Directors:

Shri Ashwin Choksi Non-Executive Chairman

Shri Ashwin Dani Non-Executive Vice Chairman

Shri Mahendra Choksi Non-Executive Director

Shri Abhay Vakil Non-Executive Director (w.e.f. from 22nd July, 2014)

Shri Amar Vakil Non-Executive Director (retired on 26th June, 2014)

Shri Malav Dani Non-Executive Director

Ms. Amrita Vakil Non-Executive Director (w.e.f. from 21st May, 2014)

Relatives of promoters who are under the employment of the Company:

Shri Jalaj Dani*

Shri Manish Choksi**

Shri Jigish Choksi Shri Varun Vakil Shri Vivek Vakil

* Shri Jalaj Dani, a relative of Company''s Non-Executive Vice Chairman is also a Non-Executive Chairman of Berger International Limited, Director on the Board of some of the subsidiary companies and one of the joint venture companies.

** Shri Manish Choksi, a relative of Company''s Non-Executive Director is also on the Board of some of the subsidiary companies and one of the joint venture companies.

(f) Employee Benefit Funds where control exists:

Asian Paints Office Provident Fund

Asian Paints Factory Employees'' Provident Fund

Asian Paints Management Cadres'' Superannuation Scheme

Asian Paints (India) Limited Employees'' Gratuity Fund

(g) Other entity over which there is a significant control: Asian Paints Charitable Trust

As per the requirements of Accounting Standard 17 - Segment Reporting, the Company has identified Paints and Home Improvement as its business segments with effect from the current financial year. Home Improvement business represents bath fittings business acquired by the Company effective 1st June, 2014. During the previous year the Company had only one business segment. Hence, comparative figures for the previous period are not reported.

NOTE 12 : During the year, the Board of Directors of the Company approved the conversion of outstanding loan to Maxbhumi Developers Limited (a wholly owned subsidiary) amounting to Rs.14.99 crores into 3,57,084 equity shares of Maxbhumi Developers Limited of face value Rs. 10 per equity share at a premium of Rs. 410 per equity share based on an independent valuation carried out. In addition to the above, the Company also subscribed to an additional 11,916 equity shares of the face value of Rs. 10 per equity share at a premium of Rs. 410 per equity share.

NOTE 13 : EXCEPTIONAL ITEMS:

A. The Company has discontinued the manufacturing activities at its Bhandup Plant with effect from 5th May, 2014. A "Voluntary Retirement/Separation Scheme" along with an alternate option of relocation to other factories/establishments of the Company was offered to all the workmen at the plant in the month of April, 2014. All workmen have accepted either the Voluntary Retirement/Separation Scheme or relocation to another factory/establishment of the Company. The liability on account of the above amounting to Rs. 25.16 crores is recognized and disclosed in "Exceptional Items" in the Statement of Profit and Loss for the year ended 31st March, 2015.

B. The Company has recognized provision for impairment in respect of Fixed Assets at Bhandup Plant for an amount of Rs. 2.41 crores (Previous year Rs. 9.96 crores). The same is included under "Impairment" in Note 10 and disclosed in "Exceptional Items" in the Statement of Profit and Loss.

C. The Company was carrying a provision of Rs. 14.04 crores in respect of the diminution in carrying value of its investment in Asian Paints (International) Limited, Mauritius in the earlier years. Based on the assessment of the fair value of the investment as at 31st March 2015, the provision for diminution has been reversed in the current year. The same is disclosed in "Exceptional items" in the Statement of Profit and Loss.

A. Gross amount required to be spent by the Company during the year 2014-15 - Rs. 29.87 crores

B. Amount spent during the year on:

NOTE 14 : Previous year''s figures have been regrouped, reclassified wherever necessary to correspond with the current year classification/disclosure.


Mar 31, 2013

A) Terms/rights attached to equity shares

The company has only one class of shares referred to as equity shares having a par value of Rs. 10 per share. Each holder of equity shares is entitled to one vote per share. The company declares and pays dividends in Indian Rupees. Payment of dividend is also made in foreign currency to shareholders outside India. The final dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting, except in the case of interim dividend.

The Board of Directors at its meeting held on 25th October, 2012 declared an interim dividend of Rs. 9.50 (Rupees Nine and Paise Fifty only) per equity share of Rs. 10 each. A final dividend of Rs. 36.50 (Rupees Thirty Six and Paise Fifty only) per share has been recommended by the Board of Directors at its meeting held on 9th May, 2013, subject to the approval by the shareholders at the ensuing Annual General Meeting. If approved, the total dividend (interim and final dividend) for the financial year 2012-13 will be Rs. 46 per equity share; Rs. 40 per equity share was paid as dividend for the previous year. The total dividend appropriation for the year ended 31st March, 2013 amounted to Rs. 515.52 crores including corporate dividend tax of Rs. 74.29 crores (Previous year Rs. 445.93 crores including corporate dividend tax of Rs. 62.24 crores).

As per the Companies act 1956, the holders of equity shares will be entitled to receive remaining assets of the company, after distribution of all preferential amounts in the event of liquidation of the company. However no such preferential amounts exist currently. The distribution will be in proportion to the number of equity shares held by the shareholders.

Notes:

# Interest free Term loan from the Pradeshiya Industrial Corporation of U.P. Limited (PICUP) under Sales Tax Deferment Scheme of Government of U.P. is secured by a first charge on the Company''s immovable properties pertaining to the paint plant at Kasna and by way of hypothecation of all movable properties at the above location. This interest free loan has a deferment period of 10 years and is repayable in 9 yearly installemts starting from May, 2007 as per repayment schedule. Out of the total sales tax deferment loan of Rs. 30.60 crores the company has already repaid Rs. 18.23 crores till 31st March, 2013 and balance amount of Rs. 12.37 crores is repayable in next 3 years upto May, 2015.

## The company is also eligible to avail interest free loan in respect of 50% of VAT paid within Haryana on the sale of goods produced at Rohtak plant for a period of 7 financial years beginning from April, 2010. For the period ended 31st March, 2011 the company has received the eligibility certificate from the Government of Haryana sanctioning an interest free loan of Rs. 3.40 crores on 2nd April, 2012, of which Rs. 1.98 crore has been received by the company in March, 2013. This loan is secured by way of a bank guarantee issued by the Company and is repayable after a period of 5 years from the date of receipt of interest free loan. For the year ended 31st March, 2012, the company has made the necessary application to the Haryana Government for the issue of eligibility certificate and for the year ended 31st March, 2013 the company is in the process of making the necessary application.

### Sales tax deferment - State of Andhra Pradesh represents interest free loan availed under the Sales Tax Deferment Scheme of the Government of Andhra Pradesh. This interest free loan has a deferement period of 14 years and is repayable in 9 years starting from April, 2012 as per repayment schedule . Out of the total sales tax deferement loan of Rs. 40.70 crores the company has already repaid Rs. 0.96 crores till 31st March, 2013 and balance amount of Rs. 39.74 crores is repayable in next 7 years upto February, 2020.

@ Default in terms of repayment of principal and interest - NIL

Note 1: DEFERRED TAX LIABILITY (NET)

The Company has recognized deferred tax arising on account of timing differences, being the difference between the taxable income and accounting income, that originates in one period and is capable of reversal in one or more subsequent period(s) in compliance with Accounting Standard (AS 22) - Accounting for Taxes on income.

NOTE 2 : Purchase of stock-in-trade includes paints, putty, colourworld machines and other miscellaneous sales promotional items.

NOTE 3 : Interest includes income from investment in debt instruments and interest received of Rs. 0.77 crores (Previous year - Rs. 1.11 crores) on account of completion/disposal of various assessments/appeals during the year.

Dues to Micro and Small Enterprises have been determined to the extent such parties have been identified on the basis of information collected by the Management. This has been relied upon by the auditors.

NOTE 4 : Dividend received from subsidiary companies includes nil (Previous year - Rs. 15.83 Crores) received from Asian Paints (International) Ltd. Mauritius (wholly owned subsidiary of the Company)

NOTE 5 : The Company uses forward exchange contracts to hedge against its foreign currency exposures relating to the underlying transactions and firm commitments. The Company does not enter into any derivative instruments for trading or speculative purposes.

NOTE 6 :

I. Pursuant to Accounting Standard (AS-19) - Leases, the following information is given:

a) The Company has provided tinting systems to its dealers on an operating lease basis. The lease period varies between four to ten years. Lease rentals are payable monthly by the dealers. A refundable security deposit is collected at the time of signing the agreement.

The information pertaining to future minimum lease rentals receivable is based on the lease agreements entered into between the Company and the dealers and variations made thereto. Lease rentals are reviewed periodically taking into account prevailing market conditions.

c) Total amount of contingent rents recognised as income - NIL. (Previous Year - NIL)

d) The initial direct cost relating to acquisition of tinting system is capitalised.

e) The information on gross amount of leased assets, depreciation and impairment is given in Note 11 of Notes to Accounts.

II. a) The Company has taken certain assets such as Cars, Computers and Systems hardware on an operating lease basis. The lease rentals are payable by the company on a monthly or quarterly basis.

NOTE 7 : INTEREST IN JOINT VENTURES

Pursuant to Accounting Standard (AS-27) - Financial Reporting of interests in Joint Ventures, the disclosures relating to the two Joint Ventures viz., PPG Asian Paints Private Limited and Asian Paints PPG Private Limited (both hereinafter referred to as JVs) are as follows:

a) The proportion of interest of the Company in the JVs is by way of equal equity participation with PPG Industries Securities LLC., U.S.A.

NOTE 8 : EMPLOYEE BENEFITS:

1) Short term employee benefits :

The liability towards short-term employee benefits for the year ended 31st March, 2013 has been recognized in the statement of Profit and Loss.

2) Post-employment benefits :

The following disclosures are made in accordance with AS 15 (Revised) pertaining to Defined Benefit Plans:

i) Discount rate : The discount rate is based on the prevailing market yields of Indian Government securities as at the Balance Sheet date for the estimated term of the obligations.

ii) Expected Rate of Return on Plan Assets : This is based on the expectation of the average long-term rate of return expected on investments of the fund during the estimated term of the obligations.

iii) Salary Escalation Rate : The estimates of future salary increases, considered in actuarial valuation, takes into account the inflation, seniority, promotion and other relevant factors such as supply and demand in the employment market.

Notes :

i) The gratuity fund assets and liabilities are managed by Asian Paints (India) Ltd. Employees'' Gratuity Fund.

ii) The company estimates that the balance amount to be contributed to the gratuity fund during the financial year 2013-2014 will be Rs. 6.10 crores and hence is shown as current.

b) Provident Fund:

The Provident Fund assets and liabilities are managed by ''Asian Paints Office Provident Fund'' and ''Asian Paints Factory Employees Provident Fund'' in line with The Employees'' Provident Fund and Miscellaneous Provisions Act, 1952.

The guidance on implementing AS 15, Employee Benefits (revised 2005) issued by Accounting Standards Board (ASB) states that benefits involving employer established provident fund, which require interest shortfalls to be recompensated, are to be considered as defined benefit plans. The plan guarantees minimum interest at the rate notified by the Provident Fund Authorities. The contribution by the employer and employee together with the interest accumulated thereon are payable to employees at the time of separation from the Company or retirement, whichever is earlier. The benefits vests immediately on rendering of the services by the employee. In terms of the guidance note issued by the Institute of Actuaries of India for measurement of provident fund liabilities, the actuary has provided a valuation of provident fund liability and based on the assumption provided below there is no shortfall as at 31st March, 2013 and 31st March, 2012.

The company contributed Rs. 7.57 crores and Rs. 6.79 crores towards Asian Paints Office Provident Fund during the year ended 31st March, 2013 and 31st March, 2012 respectively. The company contributed Rs. 4.81 crores and Rs. 4.62 crores towards Asian Paints Factory Employees Provident Fund during the year ended 31st March, 2013 and 31st March, 2012 respectively. During the financial year 2012-2013, the Company also contributed Rs. 4.00 crores as advance contribution to ''Asian Paints Office Provident fund'' to meet its temporary liquidity requirements, to be adjustable against future contribution.

3) Long term employee benefits:

The liability towards compensated absences (annual leave and sick leave) for the year ended 31st March, 2013 based on actuarial valuation carried out by using Projected Accrued Benefit Method resulted in increase in liability by Rs. 11.42 crores. (Previous year - Rs. 2.21 crores)

NOTE 9 : Note on the Composite Scheme of Restructuring to Give Effect to formation of the Second Joint Venture with PPG Industries Inc., USA

A Composite Scheme of Restructuring ("the Scheme") filed with the Hon''ble High Court of Judicature at Bombay, in February, 2012 was approved on 6th July, 2012 and the "Appointed Date" under the Scheme had been fixed as 1st April, 2012. As per the Scheme, AP Coatings Limited (wholly owned subsidiary of the Company) and PPG Coatings India Private Limited (a subsidiary of PPG Industries Securities LLC. (PPG) in India) have merged with PPG Asian Paints Private Limited (formerly known as Asian PPG Industries Limited) (first Joint Venture between Asian Paints Limited and PPG). Further, the Scheme provides for the demerger of the Liquid Industrial Paints, Powder Coatings and Protective Coatings businesses from PPG Asian Paints Private Limited into Asian Paints PPG Private Limited (formerly known as Asian Paints PPG Limited) (second Joint Venture Company between Asian Paints Limited and PPG, incorporated in August, 2011). Consequently, AP Coatings Limited ceased to exist.

In accordance with the Scheme, the Company has been allotted 1,23,59,500 equity shares of PPG Asian Paints Private Limited of face value Rs. 10 each and 44,97,417 equity shares of Asian Paints PPG Private Limited of face value Rs. 10 each. The total investment cost of erstwhile AP Coatings Limited and PPG Asian Paints Private Limited has been apportioned between PPG Asian Paints Private Limited and Asian Paints PPG Private Limited on the basis of net worth of businesses on demerger mentioned above.

NOTE 10 : INFORMATION ON RELATED PARTY TRANSACTIONS AS REQUIRED BY ACCOUNTING STANDARD - 18 ON RELATED PARTY DISCLOSURES FOR THE YEAR ENDED 31st MARCH, 2013.

a. Joint Venture: (In which the company has 50% equity interest)

i. PPG Asian Paints Private Limited (Formerly known as Asian PPG Industries Limited)

Subsidiaries of PPG Asian Paints Private Limited:

a) Faaber Paints Pvt. Limited

b) PPG Asian Paints Lanka Pvt. Limited

ii. Asian Paints PPG Private Limited (Formerly known as Asian Paints PPG Limited)

1. Key management personnel and relatives of promoters who are under the employment of the company are entitled to post employment benefits and other long term employee benefits recognised as per AS-15 (Revised) Employee Benefits in the financial statements. As these employee benefits are lump sum amounts provided on the basis of actuarial valuation, the same is not included above.

2. Remuneration paid to relatives of promoters who are under the employment of the Company pursuant to the necessary approvals from the shareholders and the Central Govt., under Section 314 of the Companies Act, 1956.

The Company has issued letters of comfort/support to banks on behalf of some of its subsidiaries from time to time and the financial support/comfort based on such letters is limited to Rs. 224.48 crores as on 31st March, 2013 (Rs. 207.70 crores as on 31st March, 2012). The Company has also issued a letter to the Board of a subsidiary informing its commitment to continue extending letters of comfort for banking facilities as included in the above for a period upto 15th May, 2014.

*Others include Company''s business units manufacturing Phthalic Anhydride and Pentaerythritol.

Inter Segment Transfer Pricing Policy - Phthalic Anhydride and Pentaerythritol supplied to Paints is based on market prices.

NOTE 11 : Previous year''s figures have been regrouped, reclassified wherever necessary to correspond with the current year''s classification/disclosure.


Mar 31, 2012

Note 1 : DEFERRED TAX LIABILITY (NET)

The Company has recognized deferred tax arising on account of timing differences, being the difference between the taxable income and accounting income, that originates in one period and is capable of reversal in one or more subsequent period(s) in compliance with Accounting Standard (AS 22) - Accounting for Taxes on income.

note 2: contingent LIABILITIES AND COMMITMENTS

(Rs in Crores) As at As at

a) Contingent Liabilities 31.03.2012 31.03.2011

1. Guarantee given on behalf of Company's dealers in respect of loans granted to them 2.49 5.33 by a bank for acquiring dealer tinting systems.

2. Corporate guarantees issued by the Company to certain banks on behalf of some of - 130.60 its subsidiaries (converted to Letter of Comfort/ Support during the year)

3. Letters of comfort/support to banks on behalf of some of its subsidiaries, limited to: 207.70 63.11 The Company has also issued a letter to the board of a subsidiary informing its commitment to continue extending letters of comfort for banking facilities as included in the above for a period upto 15th May, 2013.

4. Claims against the Company not acknowledged as debts

i. Tax matters in dispute under appeal 63.15 59.63

ii. Others 7.38 6.11

Dues to Micro and Small Enterprises have been determined to the extent such parties have been identified on the basis of information collected by the Management. This has been relied upon by the auditors.

Note 3. Dividend received from subsidiary companies includes Rs 15.83 crores received from Asian Paints (International) Ltd. Mauritius (wholly owned subsidiary of the Company) (Previous year - NIL)

note 4: I. Pursuant to Accounting Standard (AS 19) - Leases, the following information is given:

a) The Company has provided tinting systems to its dealers on an operating lease basis. The lease period varies between four and ten years. Lease rentals are payable monthly by the dealers. A refundable security deposit is collected at the time of signing the agreement.

The information pertaining to future minimum lease rentals receivable is based on the lease agreements entered into between the Company and the dealers and variation made thereto. Lease rentals are reviewed periodically taking into account prevailing market conditions.

c) Total amount of contingent rents recognised as income - NIL. (Previous year - NIL)

d) The initial direct cost relating to acquisition of tinting system is capitalised.

e) The information on gross amount of leased assets, depreciation and impairment is given in Note 11 of Notes to Accounts.

II. a) The Company has taken certain assets such as cars, computers and systems hardware on an operating lease basis. The lease rentals are payable by the Company on a monthly or quarterly basis.

c) Lease payments recognised in the Statement of Profit or Loss for the period are Rs 5.13 crores. (Previous year Rs 4.78 crores).

Note 5: Pursuant to Accounting Standard (AS 27) - Financial Reporting of Interests in Joint Venture, the disclosures relating to the two Joint Ventures viz., Asian PPG Industries Limited and Asian Paints PPG Ltd. (both hereinafter referred to as JV) are as follows:

a) The proportion of interest of the Company in the JV is by way of equal equity participation with PPG Industries Securities Inc., U.S.A.

c) No contingent liabilities and capital commitments have been incurred as at 31st March, 2012 in relation to the Company's interests in the JV along with the other venture (Previous year Rs Nil).

Note 6: Employee Benefits

(1) Short term employee benefits:

The liability towards short term employee benefits for the year ended 31st March, 2012 has been recognised in the Statement of Profit and Loss.

(2) Post-employment benefits:

The following disclosures are made in accordance with AS 15 (Revised) pertaining to Defined Benefit Plans:

Notes:

i) The gratuity fund assets and liabilities are managed by Asian Paints (India) Ltd. Employees' Gratuity Fund.

ii) The estimates of future salary increases, considered in actuarial valuation, takes into account the inflation, seniority, promotion and other relevant factors such as supply and demand in the employment market.

iii) The Company estimates that the balance amount to be contributed to the gratuity fund during the financial year 2012-2013 will be Rs 4.14 crores.

(b) Provident Fund:

The Provident fund assets and liabilities are managed by 'Asian Paints Office Provident Fund' and 'Asian Paints Factory Employees Provident Fund'.

The Company contributed Rs 6.79 crores and Rs 5.69 crores towards Asian Paints Office Provident Fund during the year ended 31st March, 2012 and 31st March, 2011 respectively. The Company contributed Rs 4.62 crores and Rs 3.79 crores towards Asian Paints Factory Employees Provident Fund during the year ended 31st March, 2012 and 31st March, 2011 respectively. During the financial year 2011-2012, the Company also contributed Rs 1.35 crores as advance contribution to 'Asian Paints Office Provident Fund' to meet its temporary liquidity requirements, to be adjustable against future contributions.

The guidance note on implementing AS 15, Employee Benefits (revised 2005) issued by Accounting Standards Board (ASB) states that benefits involving employer established provident fund, which require interest shortfalls to be recompensed, are to be considered as defined benefit plans. Till 31st March, 2011, pending the issuance of the guidance note from Institute of Actuaries of India, the Company's actuary had expressed an inability to reliably measure provident fund liabilities. Accordingly the Company was unable to exhibit the related information. The Institute of Actuaries of India has issued the final guidance for measurement of provident fund liabilities during the quarter ended 31st December, 2011. The actuary has accordingly provided a valuation and based on the below provided assumptions there is no shortfall as at 31st March, 2012. (This being the first year of valuation, comparatives of previous period is not available.)

(a) Note on AP Coatings Limited (APCL)

APCL was incorporated on 30th November, 2010 as a wholly owned subsidiary of the Company. On 1st June, 2011, net current assets aggregating to Rs 55.79 crores, pertaining to the Company's industrial business was transferred to APCL for which the Company was allotted 5,00,00,000 equity shares of Rs 10 each aggregating Rs 50 crores in APCL and the balance was received in cash.

Accordingly, the Company's financial statements for the current year do not include the results of industrial business for the period from 1st June, 2011 to 31st March, 2012 except for revenue of Rs 40.32 crores of inventory sold to APCL as part of the net current assets of Rs 55.79 crores as stated above. Further, this does not have any material impact on the Company's results for the current year

(b) Formation of Second Joint Venture with PPG Industries Inc., USA:

To give effect to the formation of the Second Joint Venture, a Composite Scheme of Restructuring has been filed with the Hon'ble High Court of Judicature at Bombay in February, 2012 whereby AP Coatings Limited and PPG Coatings India Private Limited (subsidiary of PPG industries Securities Inc. in India) will merge with Asian PPG Industries Limited (APPG) (first Joint Venture between Asian Paints and PPG). The Scheme then provides for the demerger of the Liquid Industrial Paints, Powder Coatings and Protective Coatings businesses from APPG into Asian Paints PPG Limited (second Joint Venture Company between Asian Paints and PPG, incorporated in August, 2011). The "Appointed Date" to give effect to the above has been fixed as 1st April, 2012. The same is subject to the approval of the the Hon'ble High Court of Judicature at Bombay and other regulatory approvals as may be required.

Note 7: Information on related party transactions as required by Accounting Standard - 18 on Related Party Disclosures for the year ended 31st March, 2012.

a) Joint Venture: (In which the Company has 50% equity interest)

i. Asian PPG Industries Ltd.

Subsidiary of Asian PPG Industries Ltd:

a) Faaber Paints Pvt. Ltd.

b) PPG Asian Paints Lanka Pvt. Ltd. (Incorporated in April, 2011)

ii. Asian Paints PPG Ltd. (Incorporated in August, 2011)

* Mr. Jalaj Dani, a relative of Company's Non-Executive Vice Chairman is also Executive Chairman of Berger International Limited and Director on some of the subsidiary companies.

** Mr. Manish Choksi, a relative of Company's Non-Executive Director is also on the board of a subsidiary company and a joint venture.

(f) Employee Benefit Funds where control exists:

Asian Paints Office Provident Fund

Asian Paints Factory Employees' Provident Fund

Asian Paints Management Cadres' Superannuation Scheme

Asian Paints (India) Limited Employees' Gratuity Fund

(g) Other entities over which there is a significant control:

Asian Paints Charitable Trust.

1. Key management personnel and relatives of promoters who are under the employment of the Company are entitled to post employment benefits and other long term employee benefits recognised as per AS 15 (Revised) Employee Benefits in the financial statements. As these employee benefits are lump sum amounts provided on the basis of actuarial valuation, the same is not included above.

2. Remuneration paid to relatives of promoters who are under the employment of the Company pursuant to the necessary approvals from the shareholders and the Central Government, under Section 314 of the Companies Act, 1956. Corporate Guarantee issued by the Company on behalf of its subsidiaries is NIL as at 31st March, 2012, as the same was converted to Letter of Comfort/ Support during the year (Previous year Rs 130.60 crores).

The Company has issued letters of comfort/support to banks on behalf of some of its subsidiaries from time to time and the financial support/comfort based on such letters is limited to Rs 207.70 crores as on 31st March, 2012 (Rs 63.11 crores as on 31st March, 2011).

The Company has also issued a letter to the Board of a subsidiary informing its commitment to continue extending letters of comfort for banking facilities as included in the above for a period upto 15th May, 2013.

Note 8: The previous year's figures have been re-grouped / re-classified to conform to this year's classification which is as per Revised Schedule VI. This adoption does not impact recognition and measurement principles followed for preparation of financial statements as at 31st March, 2011.


Mar 31, 2011

(Rs. in Crores) 2010-2011 2009-2010

1. Estimated amount of contracts remaining to be executed on capital account and not provided for. 298.81 36.87

2. Letters of Credit and Bank guarantees issued by bankers and outstanding as on 31st March, 2011. 54.86 33.19

3. Contingent Liabilities:

a) Guarantee given on behalf of Companys dealers in respect of loans granted to them by a bank for acquiring dealer tinting systems. 5.33 11.41

b) Corporate guarantees issued by the Company to certain banks on behalf of some of its subsidiaries. 130.60 128.79

c) The Company has issued letters of comfort/support to banks on behalf of some of its subsidiaries from time to time and the financial support/comfort based on such letters is limited to: 63.11 77.18

The Company has also issued a letter to the Board of a subsidiary informing its commitment to continue extending corporate guarantees and letters of comfort for banking facilities as included in the above for a period upto 15th May, 2012.

d) Claims against the Company not acknowledged as debts

i. Tax matters in dispute under appeal 65.02 41.50

ii. Others. 6.11 5.23

16. Interest income includes interest received of Rs. 5.05 crores on account of completion/disposal of various assessments/ appeals during the year (Previous year - ^ 3.47 Crores).

17. Disclosure under the Micro, Small and Medium Enterprises Development Act, 2006 are provided as under for the year 2010-11, to the extent the Company has received intimation from the "Suppliers" regarding their status under the Act.

18. Profit on sale of fixed assets includes Rs. 1.34 crores (Previous year ^ 6.06 crores) arising out of the sale of colour world machines on expiry of lease period.

19. Exceptional Item of previous year includes :

a) Rs. 5.77 crores being the write back of provision for diminution in the value of investments in the Companys wholly owned subsidiary Asian Paints (International) Limited, Mauritius in consequent to the buy back of 41,00,000 shares at US$ 1 per share by Asian Paints (International) Limited.

b) Rs. 19.69 crores being the reversal of provision made towards diminution in the value of investments.

20. The Company uses forward exchange contracts to hedge against its foreign currency exposures relating to the underlying transactions and firm commitments. The Company does not enter into any derivative instruments for trading or speculative purposes.

22. The Company has recognised deferred tax arising on account of timing differences, being the difference between the taxable income and accounting income, that originates in one period and is capable of reversal in one or more subsequent period(s) in compliance with Accounting Standard (AS 22) - Accounting for Taxes on income.

23. I. Pursuant to Accounting Standard (AS-19) - Leases, the following information is given :

a) The Company has provided tinting systems to its dealers on an operating lease basis. The lease period varies between four and ten years. Lease rentals are payable monthly by the dealers. A refundable security deposit is collected at the time of signing the agreement. The equipment shall be used only to tint products of the lessor.

24. Pursuant to Accounting Standard (AS-27) - Financial Reporting of Interests in Joint Venture, the disclosures relating to the Joint Venture viz. Asian PPG Industries Limited (hereinAfter referred to as JV) are as follows:

a) The proportion of interest of the Company in the JV is by way of equal equity participation with PPG Industries Inc., U.S.A.

c) The Companys share of capital commitments of the JV as at 31st March, 2011 is Rs. 1.22 crores (Previous year Rs. 0.98 crores).

d) The Companys share of contingent liabilities of the JV as at 31st March, 2011 is Rs. 6.71 crores (Previous year Rs. 6.02 crores).

e) No contingent liabilities and capital commitments have been incurred as at 31st March, 2011 in relation to the Companys interests in the JV along with the other venturer (Previous year ^ Nil).

25. Employee Benefits:

(1) Short term employee benefits:

The liability towards short-term employee benefits for the year ended 31st March, 2011 has been recognised in the Profit and Loss Account.

(a) Joint Venture : Asian PPG Industries Ltd. Subsidiary of Joint Venture: Faaber Paints Pvt. Ltd.

(b) Subsidiaries : Direct Subsidiaries :

Asian Paints (Nepal) Pvt. Limited

Asian Paints (International) Limited

Asian Paints Industrial Coatings Limited

Maxbhumi Developers Limited

Multifacet Infrastructure (India) Limited

AP Coatings Limited (Incorporated on 30th November, 2010)

Subsidiaries of the wholly owned subsidiary, Asian Paints (International) Limited, Mauritius:

Asian Paints (South Pacific) Limited

Samoa Paints Limited (Acquired during the year from Taubmans Paints (Fiji) Limited)

Asian Paints (Tonga) Limited

Asian Paints (S.I.) Limited

Asian Paints (Vanuatu) Limited

Asian Paints (Lanka) Limited

Asian Paints (Bangladesh) Limited

Asian Paints (Middle East) LLC.

SCIB Chemicals S.A.E., Egypt

Berger International Limited, Singapore

Subsidiary of Asian Paints (South Pacific) Limited :

Taubmans Paints (Fiji) Limited *

* The Company ceased trading and has transferred its assets, liabilities and business to shareholder Asian Paints (South Pacific) Limited, but it still continues to remain a separate legal entity pending legal formalities.

Subsidiaries of Berger International Limited, Singapore :

Berger Paints Singapore Pte. Ltd.

Berger Building Services (Singapore) Pte. Ltd.

Enterprise Paints Limited

Universal Paints Limited

Lewis Berger (Overseas Holdings) Ltd.

Subsidiary of Berger Building Services (Singapore) Pte. Ltd. :

Berger Contractor (Singapore) Pte. Ltd.

Subsidiary of Enterprise Paints Limited :

Nirvana Investments Ltd.

Subsidiary of Nirvana Investments Ltd. :

Berger Paints Emirates Ltd.

Subsidiaries of Lewis Berger (Overseas Holdings) Ltd. :

Berger Paints Jamaica Ltd. Berger Paints Trinidad Ltd. Berger Paints Barbados Ltd.

Subsidiary of Universal Paints Limited :

Berger Paints Bahrain W.L.L.

(c) Key managerial person :

Name of the Director Designation

P. M. Murty Managing Director & CEO

(d) Promoters and their relatives having control :

Directors: Designation:

Ashwin Choksi Non-Executive Chairman

Ashwin Dani Non-Executive Vice Chairman

Abhay Vakil Non-Executive Director

Mahendra Choksi Non-Executive Director

Amar Vakil Non-Executive Director

Ina Dani* Non-Executive Director

Hasit Dani Non-Executive Director (resigned on 3rd June, 2010)

* Mrs. Ina Dani has been appointed as an Additional Director w.e.f. 27th July, 2010.

Relatives of promoters, who are under the employment of the Company :

Jalaj Dani

Manish Choksi

Jigish Choksi

Nehal Vakil (resigned on 30th July, 2010)

Varun Vakil (w.e.f 16th July, 2010)

(f) Employee Benefit Funds where control exists :

Asian Paints Office Provident Fund

Asian Paints Factory Employees Provident Fund

Asian Paints Management Cadres Superannuation Scheme

Asian Paints (India) Limited Employees Gratuity Fund

(g) Other entities over which there is a significant control:

Asian Paints Charitable Trust

29. Previous years figures have been regrouped, wherever necessary.

 
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