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Directors Report of Berger Paints (India) Ltd.

Mar 31, 2014

Dear Members,

The Directors have pleasure in presenting the Annual Report of the Company, together with the audited accounts for the financial year ended on 31st March, 2014.

FINANCIAL RESULTS & APPROPRIATIONS

(Rs. in crores) Particulars BPIL Consolidated

2013-14 2012-13 2013-14 2012-13

Profit before Depreciation, Finance Cost 420.23 367.08 467.32 402.62 and Tax

Less:

Depreciation 58.27 46.28 70.71 56.72

Finance Cost 34.26 27.67 46.63 37.66

Profit Before Tax 327.70 293.13 349.98 308.24

Less:

Provision for Taxation 93.45 83.33 100.59 89.84

Profit After Taxation 234.25 209.80 249.39 218.40

Add:

Profit brought forward from the previous 510.80 394.91 519.12 394.63 year

Available for appropriation 745.05 604.71 768.51 613.03

Appropriations:

Transfer to General Reserve 23.42 20.98 23.42 20.98

Dividend (Proposed) 76.23 62.33 76.23 62.33

Tax on dividend 12.95 10.60 12.95 10.60

Balance carried to Balance Sheet 632.45 510.80 655.91 519.12

745.05 604.71 768.51 613.03

FINANCIAL PERFORMANCE

During the financial year ended 31st March, 2014, the Company achieved net consolidated revenue from operations of Rs. 3,870 crores as against Rs. 3,346 crores in the previous year registering a growth of 16%. The profit before depreciation, interest and tax was Rs. 467 crores as against Rs. 403 crores in the previous year, recording an improvement of 16%. The profit before tax was Rs. 350 crores (2012 – 13 : Rs. 308 crores) and the profit after tax was Rs. 249 crores (2012 – 13 : Rs. 218 crores), representing increases of 14% in each case.

DIVIDEND

Your Directors recommend a dividend of Rs. 2.20 per share i.e. @ 110 % for the year under review. This, if approved, will absorb an amount of Rs. 76.23 crores (compared to Rs. 62.33 crores in the previous year), net of Dividend Distribution Tax, and will be paid to those members whose names appear in the Register of Members as on the conclusion of the book closure on 1st August, 2014.

In terms of the provisions of Section 205C of the Companies Act, 1956, (equivalent to Section 124 of The Companies Act, 2013), your Company transferred an amount of Rs. 60,05,389 to the Investor Education and Protection Fund, in respect of dividend amounts lying unclaimed / unpaid for more than seven years from the date they became due i.e., for the year ended 31st March, 2007.

SUBSIDIARY AND JOINT VENTURES

Your Company has the following 4 wholly-owned subsidiaries :- (i) Beepee Coatings Private Limited ("Beepee Coatings") in Gujarat; (ii) Berger Jenson & Nicholson (Nepal) Private Limited ("BJN") in Nepal; (iii) Berger Paints (Cyprus) Limited ("Berger Cyprus") in Cyprus; (iv) Lusako Trading Limited ("Lusako Trading") in Cyprus.

The following companies are wholly-owned subsidiaries of the Company''s above named subsidiaries:- (i) BJN Paints India Limited – wholly-owned subsidiary of Beepee Coatings; (ii) Bolix S.A., Poland – wholly-owned subsidiary of Lusako Trading; (iii) Berger Paints Overseas Limited ("BPOL"), Russia - wholly-owned subsidiary of Berger Cyprus. Build Trade sp z.o.o., Poland, Bolix Ukraine Limited Liability, Ukraine and Build Trade SKA, Poland are three subsidiaries of Bolix S.A.

The statement relating to the above companies as specified in Sub-section (3) of Section 129 of The Companies Act, 2013 is attached to the Report and Accounts of the Company.

The name of Brushworks Paints Limited, wholly-owned subsidiary of Beepee Coatings Private Limited has been changed to BJN Paints India Limited w.e.f. 31st October, 2013.

The Ministry of Corporate Affairs vide General Circular No. 2/2011, dated 8th February, 2011 had granted general exemption to companies from seeking approval of Central Government under Section 212 of the Companies Act, 1956 from annexing to this Report, the Annual Reports of the subsidiaries subject to compliance of certain conditions specified therein. Hence, the Annual Reports of the subsidiary companies have not been annexed herewith. The Consolidated Financial Statement includes the results of these subsidiary companies duly audited by their respective statutory auditors. Annual Accounts of the subsidiary companies and related detailed other information shall be made available to the members seeking such information and shall also be kept open for inspection at the Head office of the Company by any investor during working hours.

Results of BJN-Nepal, a wholly owned subsidiary of the Company, were encouraging and the Company, with two factories and a distribution network, continues to fourish. During the year under review, BJN-Nepal achieved a turnover of Rs. 78.71 crores and net profit of Rs. 12.20 crores.

There was improvement in margin for Bolix S.A. The net profit posted by Bolix S.A. during the year was Rs. 5.78 crores.

The performance of Beepee Coatings, a wholly owned subsidiary with its entire manufacturing facilities dedicated to processing the Company''s products, was satisfactory. The new emulsion plant has stabilised. The company posted a net profit of Rs. 2.15 crores.

Berger Cyprus is a special purpose vehicle for the purpose of making investments in your Company''s interests abroad. So is Lusako Trading. These companies are not affected by recent banking related problems in Cyprus.

The actions to correct the performance of Berger Paints Overseas Limited ( BPOL) in Russia have commenced and this Company (i.e., Berger Paints India Limited) is now also exporting paints to BPOL for sale in Russia.

Berger Becker Coatings Private Limited, the Company''s joint venture with Becker Industrifarg, Sweden, posted a net profit of Rs. 7.84 crores (48.98% of the same is considered in the consolidated accounts of your Company).

BNB Coatings India Limited (BNB), the Company''s joint venture with Nippon Bee Chemicals Co. Ltd. of Japan (NBC) for manufacture of coatings for plastic substrates performed well and posted a net profit of Rs. 2.49 crores during the year (49% of the same is considered in the consolidated accounts of your Company).

CONSOLIDATED FINANCIAL STATEMENTS

The duly audited Consolidated Financial Statements as required under the Accounting Standards 21 and 27, provisions of Clause 32 of the Listing Agreement and Section 136 of The Companies Act, 2013 have been prepared after considering the audited financial statements of your Company''s subsidiaries and appear in the Annual Report of the Company for the year 2013-14.

CORPORATE GOVERNANCE

Your Company re-affirms its commitment to the standards of corporate governance. This Annual Report carries a Section on Corporate Governance and benchmarks your Company with the provisions of Clause 49 of the Listing Agreement (Annexures I & II).

During the year under review, your Company has voluntarily carried out a Secretarial Audit. The Secretarial Audit Report forms a part of the Annual Report.

Also, the Company has voluntarily adopted the Secretarial Standards 1 to 8 and 10 published by the Institute of Company Secretaries of India, as far as may be practicable, in the best interest of the Company, its members and the stakeholders. The Company has also carried out a voluntary audit of the adoption of the Secretarial Standards and such audit report forms a part of the Annual Report.

The Company has a Whistle Blower Policy (Vigil Mechanism), copy of which is available on the Company''s website.

TEChNICAL LICENSE AGREEMENT

Your Company has a Technical License Agreement with Axalta Coating Systems, LLC in the area of Automotive Coatings. Products manufactured with the know-how of the collaborator have been well received by the concerned customers.

FOREIGN EXChANGE

Your Company earned foreign exchange of Rs. 3.23 crores from export of goods and consultancy fees/royalty. Details of Foreign Exchange outgo and earnings appear in notes 36 and 39 of the Accounts for the year under review.

FIXED DEPOSIT

There is no outstanding public deposit in the Company as on 31st March, 2014, except those lying unclaimed. The Company had earlier discontinued acceptance of fresh deposits and renewal of deposits.

INFORMATION PURSUANT TO SECTION 217 OF ThE COMPANIES ACT, 1956 ("the Act")

A. Conservation of Energy & Technology Absorption

Information pursuant to Section 217(1)(e) of the Act, read with the Companies (Disclosures of Particulars in the Report of Board of Directors) Rules, 1988 and forming part of the Directors'' Report for the financial year ended 31st March, 2014 are given in Annexure III to the Report.

B. Particulars of Employees

In terms of the provisions of Section 217(2A) of the Act and the Companies (Particulars of Employees) Rules, 1975, particulars of a certain category of employees have been set out in annexure IV of this report.

C. Directors'' Responsibility Statement

Your Directors wish to inform that the Audited Accounts containing Financial Statements for the financial year ended 31st March, 2014 are in full conformity with the requirements of the Act. They believe that the Financial Statements refect fairly, the form and substance of transactions carried out during the year and reasonably present your Company''s financial condition and results of operations.

Your Directors further confirm that in preparation of the Annual Accounts:

i) The applicable accounting standards have been followed and wherever required, proper explanations relating to material departures have been given,

ii) The Directors have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profit or loss of the Company for that period,

iii) Proper and suffcient 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 Accounts have been prepared on a going concern basis.

DIRECTORS

Pursuant to Article 112 of the Articles of Association of the Company, Mr. Kuldip Singh Dhingra retires by rotation and being eligible, offers himself for re-appointment.

Mr. Kuldip Singh Dhingra is a Science Graduate from Delhi University and an industrialist. He is a promoter of the Company and holds the position of Chairman of the Board of Directors and has considerable experience in the paint industry. He was appointed as a Director on the Board of the Company on 17th July, 1991 and became the Chairman of the Company on 17th June, 1994. He is on the Board of various other companies. Mr. Dhingra holds 1,07,385 equity shares of the Company.

For the purpose of compliance with the provisions of The Companies Act, 2013, Mrs. Rishma Kaur, wholetime employee and erstwhile Alternate Director to Mr. Kuldip Singh Dhingra and Mr. Kanwardip Singh Dhingra, wholetime employee and erstwhile Alternate Director to Mr. Gurbachan Singh Dhingra, have resigned from their respective offices of Alternate Directors with effect from 1st April, 2014. They continue to be in wholetime employment of the Company. The Board wishes to place on record their deep appreciation for the valuable contribution made by them during their tenure as Alternate Directors.

RELATED PARTY TRANSACTIONS

A Statement of related party transactions pursuant to Accounting Standard 18 forms a part of this Annual Report.

LISTING WITh STOCK EXChANGES

Your Company is listed with The Calcutta Stock Exchange Limited, BSE Limited and National Stock Exchange of India Limited and the Company has paid the listing fees to each of the Exchanges. The addresses of these Stock Exchanges and other information for shareholders are given in this Annual Report.

COST AUDITORS

The Board of Directors have re-appointed M/s N. Radhakrishnan & Co., 11A, Dover Lane, Flat B1/34, Kolkata - 700029, for conducting cost audit at Howrah, Rishra and Goa factories of the Company, Mr. Gopalakrishnan, 12 Third Street, Jeyanagar, Reddiar Palayam, Puducherry – 605010, for conducting cost audit at its Puducherry factory and M/s Shome & Banerjee & Co., 2nd Floor, 5A Narulla Doctor Lane, West Range, Kolkata - 700017, for conducting cost audit at its Jammu factory and for the factories of British Paints Division having their factories at Jammu, Surajpur and Sikandrabad under Section 233B of the Companies Act, 1956, subject to the approval of the Central Government for the year 2014-15. The due date for fling Cost Auditors'' report for the year 2012-13 was 30th September, 2013. The said reports for the year 2012-13 for Company''s factories at Jammu, Goa, Howrah, Rishra and Puducherry and for the Company''s British Paints Division factories at Jammu, Sikandrabad and Surajpur were fled on 27th September, 2013.

STATUTORY AUDITORS

The Statutory Auditors, Messrs Lovelock & Lewes, retire at the conclusion of the ensuing Annual General Meeting and being eligible under Section 141 of The Companies Act, 2013, offer themselves for re-appointment.

APPRECIATION

Your Directors place on record their deep appreciation of the assistance and guidance provided by the Central Government and the Governments of the States of India, its suppliers, technology providers and all other stakeholders. Your Directors thank the financial institutions and banks associated with your Company for their support as well. Your Directors also thank the Company''s dealers and its customers for their unstinted commitment and valuable inputs.

Your Directors acknowledge the support received from you as shareholders of the Company.

On behalf of the Board of Directors Kolkata Kuldip Singh Dhingra

Dated: 30th May, 2014 Chairman


Mar 31, 2013

The Directors have pleasure in presenting the Annual Report of the Company, together with the audited accounts for the financial year ended on 31st March, 2013.

FINANCIAL RESULTS & APPROPRIATIONS

(Rs. in crores)

Particulars BPIL Consolidated

2012-13 2011-12 2012-13 2011-12

Profit before Depreciation, Finance Cost, 367.08 308.10 402.62 333.97 Exceptional Items and Tax

Less:

Depreciation 46.28 37.56 56.72 47.18

Finance Cost 27.67 22.37 37.66 32.36

Exceptional Items - - - -

Profit Before Tax 293.13 248.17 308.24 254.43

Less:

Provision for Taxation 83.33 70.78 89.84 74.39

Profit After Taxation 209.80 177.39 218.40 180.04

Add:

Profit brought forward from the previous 394.91 291.57 394.63 288.64 year

Available for appropriation 604.71 468.96 613.03 468.68

Appropriations:

Transfer to General Reserve 20.98 17.73 20.98 17.73

Dividend (Proposed) 62.33 48.46 62.33 48.46

Tax on dividend 10.60 7.86 10.60 7.86

Balance carried to Balance Sheet 510.80 394.91 519.12 394.63

604.71 468.96 613.03 468.68

FINANCIAL PERFORMANCE

During the financial year ended 31st March, 2013, the Company achieved net consolidated revenue from operations of Rs. 3,346 crores as against Rs. 2,948 crores in the previous year, registering a growth of 14%. The profit before depreciation, interest and tax was Rs. 403 crores as against Rs. 334 crores in the previous year, recording an improvement of 21%. The profit before tax was Rs. 308 crores (2011 - 12 : Rs. 254 crores) and the profit after tax was Rs. 218 crores (2011 - 12 : Rs. 180 crores), representing increase of 21% in each case.

EMPLOYEE STOCK OPTION SCHEME

Your Company had framed an Employee Stock Option Scheme (ESOP Scheme) for its employees and its Directors. The Board had formulated the ESOP Scheme in accordance with the SEBI (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999 and the shareholders had approved the said scheme at the Annual General Meeting held on 29th July, 2010 to issue shares not exceeding 5% of the paid up capital of the Company as on 31st March, 2010. In practice, ESOP is granted to employees and wholetime Directors. Pursuant to the aforesaid scheme, the Compensation Committee of the Board of Directors at its meeting held on 1st August, 2012 has approved grant of 1,91,397 options (2011-12 : 1,88,064 options and 2010-11 : 2,88,750 options) convertible into equity shares to 105 employees including grant of 5,001 options each to Mr. Abhijit Roy, Managing Director and Mr. Srijit Dasgupta, Director and Chief Financial Officer. During the year 2012-13, 1,36,684 equity shares were allotted to 106 employees on their exercising the options. This includes allotment of 4,000 equity shares to Mr. Abhijit Roy, Managing Director and 4,000 equity shares to Mr. Srijit Dasgupta, Director and Chief Financial Officer.

The information required to be disclosed in terms of the provisions of the SEBI (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999 is enclosed as per Annexure ''A'' to this report.

HUMAN RESOURCES

The number of people employed as on 31st March, 2013 was 2,464. The Industrial Relations were satisfactory during the year.

Your Company recognises the fact that talent and skills are increasingly becoming scarce and it requires considerable effort to identify, engage and retain such talents. Your Company is paying increasing attention to these aspects and also to training. Per employee training hours in the year was 15. The Company recognises the fact that salary alone is not the criteria for satisfaction of deserving employees and offers a participative work environment and an open culture. The attrition rate in the Company was much lower than the national average. During the year, the Company implemented the Human Resources Management Systems (HRMS), which is commensurate with the size of its operations and should facilitate processes to a great degree.

Your Company continues to place highest importance to environment, occupational health and safety. The Risk Assessment and Minimization Committee of your Company monitors the situation obtaining in the Company and makes recommendations, which are implemented.

Your Company wishes to put on record its deep appreciation, co-operation and efforts of all employees for the betterment of the organization.

CORPORATE SOCIAL RESPONSIBILITY

The Company is a multi-locational and multi-cultural company having plants and branches all over India. The Company is commit- ted to discharging its obligations to its stakeholders. The Company believes that operating with accountability and transparency all over India and elsewhere in the globe, respecting the customs, practices and laws, providing honest means of livelihood to people and adding to wealth of nations, are by themselves self-fulfilling.

As part of the Company''s social responsibilities, following are few of the activities carried out during the year:

- Child sponsorship programmes

- Education materials for schools

- Renovation and painting of schools in the vicinity of our presence

- Supporting children with special needs

- Organizing Health Camps

- Assistance to the aged

- Developing areas around the manufacturing sites/offices in the form of upkeep of roads, parks, water pumps, tube wells, etc.

- Celebration of Environment Day

- Plantation of saplings and gifting plants to local communities

- Spreading awareness of a greener environment through schools and educational institutions

- Organization and participation of awareness programmes at the adjacent areas/vicinity of the manufacturing locations

- Supporting seminars, research work in regard to environment.

DIVIDEND

Your Directors recommend a dividend of Rs. 1.80 per share i.e. @ 90% for the year under review. This, if approved, will absorb an amount of Rs. 62.33 crores (compared to Rs. 48.46 crores in the previous year), net of Dividend Distribution Tax, and will be paid to those Members whose names appear in the Register of Members as on the conclusion of the book closure on 2nd August, 2013.

In terms of the provisions of Section 205C of the Companies Act, 1956, your Company transferred an amount of Rs. 39,15,543 to the Investor Education and Protection Fund, in respect of final and interim dividend amounts lying unclaimed / unpaid for more than seven years from the date they became due i.e., for the year ended 31st March, 2005 and 31st March, 2006 respectively.

ACQUISITION OF SHERWIN WILLIAMS PAINTS INDIA PRIVATE LIMITED

Your Company acquired the architectural operations of Sherwin Williams Paints India Private Limited, through Brushworks Paints Limited, with effect from the close of business hours on 31st March, 2013. Beepee Coatings Private Limited, a 100% subsidiary of your Company, holds 99.90% of the paid up capital of Brushworks Paints Limited. Thus, Brushworks Paints Limited is a subsidiary of the Company. This transaction significantly increases the Company''s presence in key markets and builds on the Company''s strat- egy to grow its architectural paint business throughout India. It brings a high quality, committed team of employees to the Berger Paints family, a 24,000 MTPA paints plant at Taloja in Maharashtra and relevant brands. The integration process with the erstwhile architectural paints business of Sherwin Williams Paints India Private Limited was carried out at a fast pace and Mr. Jairaj Hegde, who was in charge of that company earlier, continues to be the CEO of Brushworks Paints Limited.

SUBSIDIARY AND JOINT VENTURES

Your Company has the following 4 wholly-owned subsidiaries :- (i) Beepee Coatings Private Limited ("Beepee Coatings") in Gujarat; (ii) Berger Jenson & Nicholson (Nepal) Private Limited ("BJN") in Nepal; (iii) Berger Paints (Cyprus) Limited ("Berger Cyprus") in Cyprus; (iv) Lusako Trading Limited ("Lusako Trading") in Cyprus.

The following companies are wholly-owned subsidiaries of the Company''s above named subsidiaries:- (i) Brushworks Paints Limited - wholly-owned subsidiary of Beepee Coatings; (ii) Bolix S.A., Poland - wholly-owned subsidiary of Lusako Trading; (iii) Berger Paints Overseas Limited ("BPOL"), Russia - wholly-owned subsidiary of Berger Cyprus. Build Trade sp z.o.o., Poland and Bolix Ukraine Limited Liability, Ukraine are two subsidiaries of Bolix S.A.

The statement relating to the above companies as specified in Sub-section (3) of Section 212 of the Companies Act, 1956 is attached to the Report and Accounts of the Company.

The Ministry of Corporate Affairs vide General Circular No. 2/2011, dated 8th February, 2011 has granted general exemption to companies from seeking approval of Central Government under Section 212 of the Companies Act, 1956 from annexing to this Report, the Annual Reports of the subsidiaries subject to compliance of certain conditions specified therein. Hence, the Annual Reports of the subsidiary companies have not been annexed herewith. The Consolidated Financial Statement includes the results of these subsidiary companies duly audited by their respective statutory auditors. Annual Accounts of the subsidiary companies and related detailed other information shall be made available to the members seeking such information and shall also be kept open for inspection at the Head Office of the Company by any investor during working hours.

Results of BJN-Nepal, a wholly-owned subsidiary of the Company, were encouraging and the Company, with two factories and a distribution network, continues to flourish. During the year under review, BJN-Nepal achieved a turnover of Rs. 66.15 crores and net profit of Rs. 9.45 crores.

There was improvement in margin for Bolix S.A. though the sales remained somewhat flat. This was a conscious step to shore up profitability once the market share was strengthened in the previous year. The net profit posted by Bolix S.A. during the year was Rs. 3.85 crores.

The performance of Beepee Coatings, a wholly owned subsidiary with its entire manufacturing facilities dedicated to processing the Company''s products, was satisfactory. The new emulsion plant has stabilised. The company posted a net profit of Rs. 0.26 crores.

Berger Cyprus is a special purpose vehicle for the purpose of making investments in your Company''s interests abroad. So is Lusako Trading. These companies are not affected by recent banking related problems in Cyprus.

The actions to correct the performance of Berger Paints Overseas Limited ( BPOL) in Russia have commenced and this Company (i.e., Berger Paints India Limited) is now exporting paints to BPOL for sale in Russia.

Berger Becker Coatings Private Limited, the Company''s joint venture with Becker Industrifarg, Sweden, posted a net profit of Rs. 8.03 crores (in consolidated accounts, 48.98% of the same is considered).

BNB Coatings India Limited (BNB), the Company''s joint venture with Nippon Bee Chemicals Co. Ltd. of Japan (NBC) for manufacture of coatings for plastic substrates performed well and posted a net profit of Rs. 1.31 crores during the year (in consolidated accounts, 49% of the same is considered).

INCREASE OF PUBLIC SHAREHOLDING

Pursuant to the directives of the Securities and Exchange Board of India (SEBI), members of the promoter group of your Company sold an aggregate of 18,72,222 shares through the Offer For Sale (OFS) method prescribed by SEBI. As a result of this sale of shares by promoters, public shareholding of the Company has come up to 25%.

CONSOLIDATED FINANCIAL STATEMENTS

The duly audited Consolidated Financial Statements as required under the Accounting Standards 21 and 27 and provisions of Clause 32 of the Listing Agreements has been prepared after considering the audited financial statements of your Company''s subsidiaries and appear in the Annual Report of the Company for the year 2012-13.

CORPORATE GOVERNANCE

Your Company re-affirms its commitment to the standards of corporate governance. This Annual Report carries a section on Corporate Governance and benchmarks your Company with the provisions of Clause 49 of the Listing Agreements (Annexures I & II).

During the year under review, your Company has voluntarily carried out a Secretarial Audit. The Secretarial Audit Report forms a part of the Annual Report.

Also, the Company has voluntarily adopted the Secretarial Standards 1 to 8 and 10 published by the Institute of Company Secretaries of India, as far as may be practicable, in the best interest of the Company, its members and the stakeholders. The Company has also carried out a voluntary audit of the adoption of the Secretarial Standards and such audit report forms a part of the Annual Report.

TECHNICAL LICENSE AGREEMENT

Your Company has a Technical License Agreement with DuPont Performance Coatings in the area of Automotive Coatings. Products manufactured with the know-how of the collaborators have been well received by the concerned customers.

FOREIGN EXCHANGE

Your Company earned foreign exchange of Rs. 4.24 crores from export of goods and consultancy fees/royalty. Details of Foreign Exchange outgo and earnings appear in note 36 and 39 of the Accounts for the year under review.

FIXED DEPOSIT

There is no outstanding public deposit in the Company as on 31st March, 2013, except those lying unclaimed. The Company had earlier discontinued acceptance of fresh deposits and renewal of deposits.

INFORMATION PURSUANT TO SECTION 217 OF THE COMPANIES ACT, 1956 ("the Act")

A. Conservation of Energy & Technology Absorption

Information pursuant to Section 217(1)(e) of the Act, read with the Companies (Disclosures of Particulars in the Report of Board of Directors) Rules, 1988 and forming part of the Directors'' Report for the financial year ended 31st March, 2013 are given in Annexure III to the Report.

B. Particulars of Employees

In terms of the provisions of Section 217(2A) of the Act and the Companies (Particulars of Employees) Rules, 1975, particulars of a certain category of employees have been set out in Annexure IV of this report.

C. Directors'' Responsibility Statement

Your Directors wish to inform that the Audited Accounts containing Financial Statements for the financial year ended 31st March, 2013 are in full conformity with the requirements of the Act. They believe that the Financial Statements reflect fairly, the form and substance of transactions carried out during the year and reasonably present your Company''s financial condition and results of operations.

Your Directors further confirm that in preparation of the Annual Accounts:

i) The applicable accounting standards have been followed and wherever required, proper explanations relating to material departures have been given;

ii) The Directors have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profit or loss of the Company for that period;

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 Accounts have been prepared on a going concern basis.

DIRECTORS

Mr. Abhijit Roy was appointed as the Managing Director of the Company for a period of 5 years with effect from 1st July, 2012 at the last Annual General Meeting, as approved by the Members at the Annual General Meeting held on 2nd August, 2012.

The term of appointment of Mr. Subir Bose ("Mr. Bose") as Managing Director expired on 30th June, 2012. Thereafter, he was appointed Director of the Company.

Pursuant to Article 112 of the Articles of Association of the Company, Mr. Kamal Ranjan Das and Mr. Pulak Chandan Prasad retire by rotation and being eligible, offer themselves for re-appointment.

Mr. Kamal Ranjan Das is a science graduate with honours. He joined the Company in 1975 and then after 20 years of service, retired in 1994 as Executive Director. He is a management consultant. Mr. Das holds 33,312 equity shares of the Company. He has a long standing experience in the paint industry. He is on the Board of various other companies.

Mr. Pulak Chandan Prasad has been the Director of the Company since 2009. Mr. Prasad is a B.Tech from IIT and an IIM Ahmedabad alumnus. He is Director of Nalanda Capital Pte Ltd. (Singapore), Bharti Airtel and some other companies.

RELATED PARTY TRANSACTION

A statement of related party transactions pursuant to Accounting Standard 18 forms a part of this Annual Report.

LISTING WITH STOCK EXCHANGES

Your Company is listed with The Calcutta Stock Exchange Limited, BSE Limited and National Stock Exchange of India Limited and the Company has paid the listing fees to each of the Exchanges. The addresses of these Stock Exchanges and other information for shareholders are given in this Annual Report.

COST AUDITORS

The Board of Directors have re-appointed M/s N. Radhakrishnan & Co., 11A, Dover Lane, Flat B1/34, Kolkata - 700029, for conducting cost audit at Howrah, Rishra and Goa factories of the Company and M/s Shome & Banerjee & Co., 2nd Floor, 5A Narulla Doctor Lane, West Range, Kolkata - 700017, for conducting cost audit at its Jammu factory and for the factories of its British Paints Division having their factories at Jammu, Surajpur and Sikandrabad under Section 233B of the Companies Act, 1956, subject to the approval of the Central Government for the year 2013-14. For the Puducherry factory of the Company, the Board of Directors had earlier appointed Mr. Gopalakrishnan, 12 Third Street, Jeyanagar, Reddiar Palayam, Puducherry - 605010 but due to his bad health, he had expressed his incapability to perform the audit, and accordingly, the Board has appointed M/s N. Radhakrishnan & Co. for conducting cost audit for its Puducherry factory for the years 2012-13 and 2013-14. The due date for filing Cost Auditors'' report for the year 2011-12 was 30th September, 2012 which was extended upto 28th February, 2013 by the Ministry of Corporate Affairs(MCA). The said reports for the year 2011-12 were filed on 12th March, 2013.

The Cost Auditors'' Reports for the year 2012-13 will be filed as per applicable rules.

STATUTORY AUDITORS

The Statutory Auditors, Messrs Lovelock & Lewes, retire at the conclusion of the ensuing Annual General Meeting and being eligible under Section 224 (1B) of the Act, offer themselves for re-appointment.

APPRECIATION

Your Directors place on record their deep appreciation of the assistance and guidance provided by the Central Government and the Governments of the States of India, its suppliers, technology providers and all other stakeholders. Your Directors thank the financial institutions and banks associated with your Company for their support as well. Your Directors also thank the Company''s dealers and its customers for their unstinted commitment and valuable inputs.

Your Directors acknowledge the support received from you as shareholders of the Company.

On behalf of the Board of Directors

Kolkata Kuldip Singh Dhingra

Dated: 30th May, 2013 Chairman


Mar 31, 2012

The Directors have pleasure in presenting the Annual Report of the Company, together with the audited accounts for the financial year ended on 31st March, 2012.

FINANCIAL RESULTS & APPROPRIATIONS

(Rs in million)

Particulars BPIL Consolidated 2011-12 2010-11 2011-12 2010-11

Profit before Depreciation, Finance Cost, 3,082 2,533 3,340 2,805 Exceptional Items and Tax

Less:

Depreciation 376 300 472 401

Finance Cost 224 122 323 243

Exceptional Items - - - -

Profit Before Tax 2,482 2,111 2,545 2,161

Less:

Provision for Taxation 708 628 744 660

Profit After Taxation 1,774 1,483 1,801 1,501

Add:

Profit brought forward from the previous 2,916 2,104 2,886 2,056 year

Available for appropriation 4,690 3,587 4,687 3,557

Appropriations:

Transfer to General Reserve 177 148 177 148

Dividend

-Interim - 173 - 173

-Final (Proposed) 485 277 485 277

Tax on dividend 78 73 78 73

Balance carried to Balance Sheet 3,950 2,916 3,947 2,886

4,690 3,587 4,687 3,557

FINANCIAL PERFORMANCE

During the financial year ended 31st March, 2012, the Company achieved net consolidated revenue from operations of Rs 29,477 million as against Rs 23,407 million in the previous year registering a growth of 26%. The profit before depreciation, interest and exceptional items was Rs 3,340 million as against Rs 2,805 million in the previous year, recording an improvement of 19%. The profit before tax was Rs 2,545 million (2010 - 11 : Rs 2,161 million) and the profit after tax was Rs 1,801 million (2010 - 11 : Rs 1,501 million), representing increases of 18% and 20% respectively.

CORPORATE SOCIAL RESPONSIBILITY

Corporate Social Responsibility is the continuing commitment by business to behave ethically and contribute to economic development while improving the quality of life of the work force and their families as well as that of local communities and society at large.

As part of the above, the following are few of the activities carried out during the year:

a) Donation of medical equipment and installation of shallow pumps in villages and water coolers at various locations in the vicinity of its factories;

b) Partnering with India United to End Polio Now Campaign undertaken by Aidmatrix Foundation;

c) Partnering with SOS India for sponsorship of destitute children;

d) Donations to charitable institutions and social welfare organizations like Ramakrishna Mission, Missionaries of Charity, Tomorrow's Foundation and others working for the cause of the upliftment of the poor and the downtrodden;

e) Donation of books and reading materials for the students of pre-primary and primary school students in underdeveloped and tribal areas;

f) Clearing garbage dumps and development of green areas in the vicinity of the factories;

g) Spreading awareness for creating a greener tomorrow through celebration of Environment Day, plantation and distribution of saplings, awareness programmes, etc.

DIVIDEND

Your Directors recommend a dividend of Rs 1.40 per share i.e. @ 70% for the year under review. This, if approved, will absorb an amount of Rs 485 million (compared to Rs 450 million in the previous year), net of Dividend Distribution Tax, and will be paid to those members whose names appear in the Register of Members as on the conclusion of the book closure date on 2nd August, 2012.

In terms of the provisions of Section 205C of the Companies Act, 1956, your Company transferred an amount of Rs 89,000 to the Investor Education and Protection Fund, in respect of dividend amounts lying unclaimed / unpaid for more than seven years from the date they became due i.e., for the year ended 31st March, 2005.

SUBSIDIARY AND JOINT VENTURES

The Statement of the holding Company's interest in the Subsidiary Companies namely Beepee Coatings Private Limited ("Beepee Coatings"), Berger Jenson & Nicholson (Nepal) Private Limited ("BJN - Nepal"), Berger Paints (Cyprus) Limited ("Berger Cyprus"), Cyprus, subsidiary of its subsidiary company Berger Cyprus - namely, Berger Paints Overseas Limited ("BPOL"), Russia, Lusako Trading Limited (Lusako), Cyprus, and subsidiary of its subsidiary company Lusako - namely Bolix S.A., Poland and Build - Trade sp.z.o.o., Poland and Bolix Ukraine Limited Liability, subsidiaries of Bolix S.A., as specified in Sub-section (3)of Section 212 of the Companies Act, 1956 ('the Act') is attached to the Report and Accounts of the Company.

The Ministry of Company Affairs vide General circular No. 2/2011, dated: 8th February, 2011 has granted general exemption to companies from seeking approval of Central Government under Section 212 of the Companies Act, 1956 from annexing to this Report, the Annual Reports of the subsidiaries subject to compliance of certain conditions specified therein. Hence, the Annual Reports of the subsidiary companies have not been annexed herewith. The Consolidated Financial Statement includes the results of these subsidiary companies duly audited by their respective statutory auditors. Annual Accounts of the subsidiary Companies and related detailed other information shall be made available to the members seeking such information and shall also be kept open for inspection at the Head Office of the Company by any investor during working hours.

Results of BJN-Nepal, a wholly owned subsidiary of the Company, continued to show improvement. During the year under review, BJN-Nepal achieved a turnover of Rs 636 million and Profit Before Tax of Rs 106 million.

Even though Bolix increased market share and grew sales by 18%, margins came under pressure because of steep increases in raw material prices and adverse foreign exchange fluctuations on imported raw material prices, resulting in a loss of Rs 14 million. However, cash profit for the year amounted to Rs 51 million. The selling prices have been subsequently taken up and the first quarter of calendar year 2012 shows an improvement in margins and profitability. It may be noted that since the Company acquired Bolix in August 2008, Bolix has paid back high interest long term debts of Rs 524 million. Bolix is now helping the Company to develop External Insulation Finishing Systems for India as well as the full range of mineral and acrylic plasters. During the year, Bolix Ukraine Limited Liability was incorporated as a subsidiary of Bolix to further its business in Ukraine at an appropriate time.

The performance of Beepee Coatings, a wholly owned subsidiary with its entire manufacturing facilities dedicated to processing the Company's products, was satisfactory. The processing income amounted to Rs 122 million and the Loss Before Tax was Rs 4 million. However, cash losses for the year was nil. Beepee Coatings successfully commissioned the new emulsion (raw materials for water-based paints) manufacturing facility with a capacity of 20,000 tonnes per annum and processed 5,893 tonnes of emulsion during the year.

Berger Cyprus is a special purpose vehicle for the purpose of making investments in your Company's interests abroad. So is Lusako.

The Company has taken several long term strategies to shore up the nascent operations of Berger Paints Overseas Limited in Russia. This includes export of different categories of paints from India and restructuring of sales. As of now, the operation size is small and the cash losses were Rs 12 million. The new strategies are expected to yield positive results.

Berger Becker Coatings Private Limited, the Company's joint venture with Becker Industrifarg, Sweden, posted a Profit Before Tax of Rs 58 million (in consolidated accounts, 48.98% of the same is considered).

BNB Coatings India Limited (BNB), the Company's joint venture with Nippon Bee Chemicals Co. Ltd. of Japan (NBC) for manufacture of coatings for plastic substrates of automobiles continued to do well and posted a net profit of Rs 13 million during the year (in consolidated accounts, 49% of the same is considered).

CONSOLIDATED FINANCIAL STATEMENTS

The duly audited Consolidated Financial Statements as required under the Accounting Standards 21 and 27 and provisions of Clause 32 of the Listing Agreement has been prepared after considering the audited financial statements of your Company's subsidiaries and appear in the Annual Report of the Company for the year 2011-12.

CORPORATE GOVERNANCE

Your Company re-affirms its commitment to the standards of corporate governance. This Annual Report carries a Section on Corporate Governance and benchmarks your Company with the provisions of Clause 49 of the Listing Agreement (Annexures I & II).

During the year under review, your Company has voluntarily carried out a Secretarial Audit. The Secretarial Audit Report forms a part of the Annual Report.

Also, the Company has voluntarily adopted the Secretarial Standards 1 to 8 and 10 published by the Institute of Company Secretaries of India, as far as may be practicable, in the best interest of the Company, its members and the stakeholders. The Company has also carried out a voluntary audit of the adoption of the Secretarial Standards and such audit report forms a part of the Annual Report.

TECHNICAL LICENSE AGREEMENT

Your Company has a Technical License Agreement with DuPont Performance Coatings in the area of Automotive Coatings. Products manufactured with the know-how of the collaborators have been well received by the concerned customers.

FOREIGN EXCHANGE

Your Company earned foreign exchange of Rs 3 million from export of goods and consultancy fees/royalty. Details of Foreign Exchange outgo and earnings appear in note 36 and 39 of the Accounts for the year under review.

FIXED DEPOSIT

There is no outstanding public deposit in the Company as on 31st March, 2012, except those lying unclaimed. The Company had earlier discontinued acceptance of fresh deposits and renewal of deposits. Deposits amounting to Rs 0.048 million which had matured for repayments are lying unclaimed, for which your Company has sent out reminders. During the year, an amount of Rs 89,000 has been transferred to the Investor Education and Protection Fund.

INFORMATION PURSUANT TO SECTION 217 OF THE COMPANIES ACT, 1956 ("the Act")

A. Conservation of Energy & Technology Absorption

Information pursuant to Section 217(1)(e) of the Act, read with the Companies (Disclosures of Particulars in the Report of Board of Directors) Rules, 1988 and forming part of the Directors' Report for the financial year ended 31st March, 2012 are given in Annexure III to the Report.

B. Particulars of Employees

In terms of the provisions of Section 217(2A) of the Act and the Companies (Particulars of Employees) Rules, 1975, particulars of a certain category of employees have been set out in annexure IV of this report.

C. Directors' Responsibility Statement

Your Directors wish to inform that the Audited Accounts containing Financial Statements for the financial year ended 31st March, 2012 are in full conformity with the requirements of the Act. They believe that the Financial Statements reflect fairly, the form and substance of transactions carried out during the year and reasonably present your Company's financial condition and results of operations.

Your Directors further confirm that in preparation of the Annual Accounts:

i) The applicable accounting standards have been followed and wherever required, proper explanations relating to material departures have been given,

ii) The Directors have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profit or loss of the Company for that period,

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 Accounts have been prepared on a going concern basis.

DIRECTORS

The term of appointment of Mr. Subir Bose ("Mr. Bose") as Managing Director expires on 30th June, 2012, when Mr. Bose will also lay down office as Director. Mr. Bose was first appointed Managing Director of the Company in the year 1994 when the Company's turnover was Rs 1,794 million. In the current year, as Mr. Bose passes the baton to the new generation, the Company's turnover is Rs 26,621 million. Berger is now a household name, the second largest paint producer in India and an even more respected brand in all sense of the term. The Board wishes to place on record its deep appreciation of the able guidance and leadership of Mr. Bose for almost two decades and wishes him an equally fruitful retired life. Mr. Bose has kindly agreed to be associated with the Company and accordingly has been appointed an Additional Director effective 1st July, 2012. Mr. Bose will hold office till the date of the next Annual General Meeting. A notice has been received from a member under Section 257 of the Companies Act, 1956 signifying his intention to propose the candidature of Mr. Bose for the office of a Director. Mr. Bose has done his B.Tech from IIT, Kanpur and Post Graduate Diploma in Business Management from IIM, Ahmedabad. He started his career with Larsen and Toubro Limited and held various positions in Asian Paints Limited and Abucon Nigeria Limited before joining the Company in the year 1984. The notice for the forthcoming Annual General Meeting includes an ordinary resolution for appointment of Mr. Bose as a Director of your Company.

As announced earlier, at its meeting held on 30th May, 2012, the Board of Directors appointed Mr. Abhijit Roy ("Mr. Roy") as Managing Director of the Company for a period of 5 years with effect from 1st July, 2012. A separate resolution for appointment of and payment of remuneration to Mr. Roy has been put up in the Notice of the Annual General Meeting as a part of the special business for your approval. Mr. Roy is a Bachelor of Engineering (Mechanical) from Jadavpur University, Kolkata and holds Post Graduate Diploma in Business Management from Indian Institute of Management, Bangalore. Mr. Roy is currently the Director and Chief Operating Officer of the Company. Mr. Roy joined the Company in 1996 and has worked with the Company for 17 years. Prior to his appointment as Director, Mr. Roy was heading the Marketing function of the Company as Senior Vice President, Sales and Marketing. Mr. Roy has long and rich experience in the paint industry.

During the year, Mr. Naresh Gujral resigned as a Director of the Company effective from 25th August, 2011 on personal grounds. The Board wishes to place on record its deep appreciation for the valuable contribution made by Mr. Gujral during his tenure as a Director.

Pursuant to Article 112 of the Articles of Association of the Company, Mr. Gurbachan Singh Dhingra, Mr. Gurcharan Das and Mr. Anil Bhalla retire by rotation and being eligible, offer themselves for re-appointment.

Mr. Gurbachan Singh Dhingra is a graduate and an industrialist. He is a promoter of the Company and holds the position of Vice-Chairman of the Board of Directors. He has a long standing experience of over 4 decades in the paints and related industries and particularly, its technical aspects. He is on the Board of various other companies. Mr. Dhingra holds 864,960 equity shares of the Company.

Mr. Gurcharan Das is a Harvard graduate and was the CEO of Proctor & Gamble, India and the Managing Director of Proctor & Gamble, Worldwide. He is also a reputed author and management consultant and advises companies on various matters including sales & marketing and global strategies. Mr. Das is a well known figure in India and is also on the Board of various companies.

Mr. Anil Bhalla is a fellow member of the Institute of Chartered Accountants of India. He is the Senior Partner of J.C.Bhalla & Co. and also holds the position of a Director in many other companies. Mr. Bhalla holds 55,200 equity shares of the Company.

At the meeting of the Board of Directors held on 2nd August, 2011, the Board made changes in the remuneration of Mrs. Rishma Kaur, wholetime employee of the Company and Alternate Director to Mr. Kuldip Singh Dhingra, Chairman and Mr. Kanwardip Singh Dhingra, wholetime employee of the Company and Alternate Director to Mr. Gurbachan Singh Dhingra, Vice Chairman, subject to approval of the members at the next General Meeting. Accordingly, approval of the members has been sought for payment of revised remuneration to Mrs. Rishma Kaur and Mr. Kanwardip Singh Dhingra in the notice for the forthcoming Annual General Meeting.

RELATED PARTY TRANSACTION

A Statement of related party transactions pursuant to Accounting Standard 18 forms a part of this Annual Report.

LISTING WITH STOCK EXCHANGES

Your Company is listed with The Calcutta Stock Exchange Limited, BSE Limited and National Stock Exchange of India Limited and the Company has paid the listing fees to each of the Exchanges. The addresses of these Stock Exchanges and other information for shareholders are given in this Annual Report.

COST AUDITORS

The Board of Directors have re-appointed M/s N. Radhakrishnan & Co., 11A, Dover Lane, Flat B1/34, Kolkata - 700029, for conducting cost audit at Howrah, Rishra and Goa factories of the Company, Mr. Gopalakrishnan, 12 Third Street, Jeyanagar, Reddiar Palayam, Puducherry - 605010, for conducting cost audit at its Puducherry factory and M/s Shome & Banerjee & Co., 2nd Floor, 5A Narulla Doctor Lane, West Range, Kolkata - 700017, for conducting cost audit at its Jammu factory and for the factories of British Paints Division having their factories at Jammu, Surajpur and Sikandrabad under Section 233B of the Companies Act, 1956, subject to the approval of the Central Government for the year 2012-13. The due date for filing Cost Auditors' report for the year 2010-11 was 30th September, 2011. The said reports for the year 2010-11 were filed with Ministry of Corporate Affairs as per following details:-

For the Company's factories at Jammu, Goa, Howrah, Rishra and Puducherry - 27th September, 2011.

For the Company's British Paints Division factories at Jammu, Sikandrabad and Surajpur - 30th September, 2011.

The Cost Auditors' Reports for the year 2011-12 will be filed as per applicable rules.

STATUTORY AUDITORS

The Statutory Auditors, Messrs Lovelock & Lewes, retire at the conclusion of the ensuing Annual General Meeting and being eligble under Section 224(1B) of the Act, offer themselves for re-appointment.

APPRECIATION

Your Directors place on record their deep appreciation of the assistance and guidance provided by the Central Government and the Governments of the States of India, its suppliers, technology providers and all other stakeholders. Your Directors thank the financial institutions and banks associated with your Company for their support as well. Your Directors also thank the Company's dealers and its customers for their unstinted commitment and valuable inputs.

Your Directors acknowledge the support received from you as shareholders of the Company.

On behalf of the Board of Directors Kolkata Kuldip Singh Dhingra

Dated: 30th May, 2012 Chairman

 
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