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Directors Report of Kansai Nerolac Paints Ltd.

Mar 31, 2015

Dear Members,

The Directors are pleased to present the 95th Annual Report and the Audited Accounts for the year ended 31st March, 2015.

1. Financial Highlights

1st April, 2014 1st April, 2013 to to 31st March, 2015 31st March, 2014 Rs. in Crores Rs. in Crores

Sales & Operating Revenue. 4211.64 3739.02

Net Sales/Income from operations (Net of excise and discounts) 3532.41 3145.77

Other Income 21.79 10.33

Profit before Interest, Depreciation, Tax and Appropriation 466.61 372.42

Interest 0.02 0.45

Depreciation 67.69 64.98

Profit Before Exceptional Item 398.9 306.99

Exceptional Item - -

Profit Before Tax. 398.9 306.99

Tax 127.23 100.42

Profit After Tax 271.67 206.57

Balance brought forward from previous year. 931.52 814.97

Balance available for appropriations 1203.19 1021.54

Appropriations:

Proposed Dividend 75.45 59.28

Tax on proposed dividend 15.78 10.08

General Reserve 27.17 20.66

Amount spent towards Corporate Social Responsibility Activities under Section 135 of the Companies Act, 2013. 4.51 -

Impact of depreciation pursuant to adoption of useful lives as per Part C of Schedule II of the Companies Act, 2013 and management estimate of useful lives 3.49 —

Deferred tax impact on the above 1.19 —

Balance retained in Profit and Loss Account. 1077.98 931.52

1203.19 1021.54

2. Dividend

The Directors recommend for consideration of the Members, a dividend of Rs. 1.40 (140%) per equity share of the nominal value of Rs. 1 each for the year ended 31st March, 2015 as against Rs. 11.00 per equity share (110%) paid last year on every equity share of the face value of Rs. 10 each.

4. Unclaimed Dividend

During the year, dividend amounting to Rs. 2.74 lacs that had not been claimed by the shareholders for the year ended 31st March, 2007, was transferred to the credit of Investor Education and Protection Fund as required under Section 205A read with Section 205C of the Companies Act, 1956. As on 31st March, 2015, dividend amounting to Rs. 57 lacs has not been claimed by shareholders of the Company. Shareholders are required to lodge their claims with the Registrar, Sharepro Services (India) Pvt. Ltd., for unclaimed dividend. Pursuant to the provisions of Investor Education and Protection Fund (Uploading of Information regarding unpaid and unclaimed amounts lying with Companies) rules, 2012, the Company has uploaded the details of unpaid and unclaimed amounts lying with the Company on 20th June 2014 (date of the last Annual General Meeting) on the website of the Company (www.nerolac.com), as also on the website of the Ministry of Corporate Affairs (www.mca.gov.in).

5. Collaboration

The Directors record their appreciation for the contribution made and support provided by Kansai Paint Co. Ltd., Japan (Kansai). Kansai continues to provide support on process design, quality improvement, world class technology which has helped the Company in maintaining market leadership in the industrial business including automotive coatings, by servicing existing customers better and adding new lines. Kansai also provides technology for manufacture of architectural coatings.

The Company also has Technical Assistance Agreement with Oshima Kogyo Co. Ltd., Japan, for manufacturing heat resistance coatings, Cashew Co. Ltd., Japan for manufacturing coatings products MICRON TXL SK-1 and Thinner for MICRON and with Protech Chemicals Limited, Canada for manufacturing powder coating products. The Directors record their appreciation for the co-operation from these collaborators.

6. Subsidiary in Nepal

The Company has 8,84,000 equity shares constituting 68% of the paid-up equity share capital of Kansai Paints Nepal Pvt. Ltd., Nepal (Kansai Paints Nepal).

Pursuant to provisions of Section 2(87) of the Companies Act, 2013, Kansai Paints Nepal is the subsidiary of our Company.

For the financial year ended 31st March, 2015, the Gross Turnover of Kansai Paints Nepal increased to Rs. 39.36 Crores as compared to Rs. 30.43 Crores for the financial year ended 31st March, 2014. Profit before Tax rose to Rs. 4.60 Crores from Rs. 2.95 Crores. Profit after Tax rose to Rs. 3.52 Crores from Rs. 2.20 Crores.

Consolidated financial statement of the Company and of the subsidiary, Kansai Paints Nepal, forms part of the Annual Report. A separate statement containing the salient features of the financial statement of Kansai Paints Nepal is part of this Annual Report.

Annual Audited Accounts of Kansai Paints Nepal are available on the website of the Company.

7. Proposed Joint venture in Sri Lanka

The Company has entered into a Joint Venture agreement with Capital Holdings Maharaja Pvt. Ltd., a group Company in Maharaja Group. Maharaja Group is a diversified group in Sri Lanka having presence in Businesses like Media, Hardware, FMCG products etc. The Company seeks to take advantage of Maharaja Group''s strong presence in hardware outlets. Our Company now intends to start a JV by incorporating a Company. The total project cost is estimated to be 65 Crores LKR. The equity contribution of the Company in this proposed JV would be 60% amounting to around 39 Crores LKR (INR 18.4 Crores).

8. Cost Audit

The Ministry of Corporate Affairs (MCA) vide Notification dated 31st December, 2014 made amendment in the Companies (Cost Records and Audit) Rules 2014, through Companies (Cost Records and Audit) Amendment Rules, 2014. As per the Amendment Rules, our Company is exempted from the requirement to conduct Cost Audit. Our Company has availed the exemption granted by the MCA.

9. Directors

During the year under review, Mr. Hidenori Furukawa and Mr. Shinji Asatsuma have been appointed as

Additional Directors of the Company with effect from 22nd July, 2014 and 30th January, 2015, respectively. Mr. Hidenori Furukawa and Mr. Shinji Asatsuma shall hold office of Director upto the date of the forthcoming Annual General Meeting. The Company has received letters from shareholders recommending the appointment of Mr. Hidenori Furukawa and Mr. Shinji Asatsuma as Directors of the Company. The proposal of their appointment has been put forth for approval of the shareholders of the Company in the Notice of the AGM. A brief resume of the Directors seeking appointment at the forthcoming Annual General Meeting and other details as required to be disclosed in terms of Clause 49 of the Listing Agreement forms part of the Notice.

Mrs. Brinda Somaya was appointed as an Additional Director with effect from 22nd July, 2014. Thus the Company has complied with the requirement of Section 149 of the Companies Act, 2013 read with Rule 3 of the Companies (Appointment and Qualifications of Directors) Rules, 2014, in regard to the appointment of a Woman Director. Mrs. Somaya also satisfies the criteria for being an Independent Director of the Company and has given a declaration to the Company of her independence as required under Section 149 of the Companies Act, 2013 read with Clause 49 of the Listing Agreement. In pursuance of Section 149 (10) of the Companies Act, 2013, read with Clause 49 of the Listing Agreement, Mrs. Brinda Somaya has been appointed as an Independent Director for a term of 5 years from 22nd July, 2014 to 21st July, 2019 vide shareholders'' approval obtained through Postal Ballot.

In pursuance of Section 149 (10) of the Companies Act, 2013, read with General Circular No. 14/ 2014 dated 9th June, 2014 issued by the Ministry of Corporate Affairs (MCA) and Clause 49 of the Listing Agreement :

(a) Mr. P. P. Shah, Independent Director on the Board of the Company has been appointed for a term of 5 years from 30th January, 2015 to 29th January, 2020, vide shareholders approval obtained through Postal Ballot;

(b) Mr. N. N. Tata, Independent Director on the Board of the Company has been appointed for a term of 5 years from 30th January, 2015 to 29th January, 2020, vide shareholders approval obtained through Postal Ballot.

All the Independent Directors on the Board have given a declaration of their independence to the Company as required under section 149(6) of the Companies Act, 2013.

In accordance with Articles of Association of the Company, Mr. P. D. Chaudhari and Mr. Masaru Tanaka retire by rotation at this Annual General Meeting and are eligible for re-appointment.

Dr. J. J. Irani retired from the Board with effect from 20th June, 2014.

Mr. H. Nishibayashi, nominee of Kansai Paint Co., Ltd., Japan, on the Board, resigned from the directorship with effect from 22nd July, 2014.

Mr. Y. Takahashi, nominee of Kansai Paint Co., Ltd., Japan, on the Board, resigned from the directorship with effect from 30th January, 2015.

The Board of Directors has placed on record its sincere appreciation and gratitude for the very valuable and outstanding contribution made by Dr. J. J. Irani, Mr. H. Nishibayashi and Mr. Y. Takahashi during their association with the Company as Directors.

None of the Directors is disqualified for appointment/ re-appointment under Section 164 of the Companies Act, 2013. As required by law, this position is also reflected in the Auditors'' Report.

The composition of the Board, meetings of the Board held during the year and the attendance of the Directors thereat have been mentioned in the Report on Corporate Governance in the Annual Report.

Mr. H. M. Bharuka, Managing Director, is a member of the Global Steering Committee of Kansai Paints Co. Ltd., Japan, the holding Company. Mr. H. M. Bharuka received a remuneration of Rs. 57.61 lacs during the year as a member of the Global Steering Committee.

10. Key Managerial Personnel

As required under Section 203 of the Companies Act, 2013, the Company has noted that Mr. H. M. Bharuka, Managing Director, Mr. P. D. Chaudhari, Wholetime Director, Mr. P. D. Pai, Chief Financial Officer and Mr. G. T. Govindarajan, Company Secretary are the Key Managerial Personnel of the Company.

11. Board Evaluation

The evaluation of all the Directors and the Board as a whole was conducted based on the criteria and framework adopted by the Board. The evaluation process has been explained in the Report on Corporate Governance in the Annual Report. The Board noted the evaluation results that were collated and presented to the Board.

12. Remuneration Policy

The Board of Directors of the Company has adopted a Remuneration Policy for determining qualifications, positive attributes and independence of a Director and criteria for Director''s appointment and remuneration. The features of the Policy are as follows:

- The Company, while constituting the Board shall draw members from diverse fields such as finance, law, management, architecture, technical, marketing, manufacturing, corporate governance, operations or other disciplines related to the Company''s business. There shall be no discrimination on the basis of gender, while determining the Board composition.

- A director shall be a person of integrity, who possesses relevant expertise and experience. He shall uphold ethical standards of integrity and probity and act objectively and constructively. He shall exercise his responsibilities in a bona-fide manner in the interest of the Company. Devote sufficient time and attention to his professional obligations for informed and balanced decision making. Assist the Company in implementing the best corporate governance practices.

- An Independent director should meet the requirements of the Companies Act, 2013 and Clause 49 of the Listing Agreement concerning independence of directors. The Company shall also obtain certification of independence from the Independent Director in accordance with the Companies Act and the Listing Agreement.

- The objective of the policy is to have a compensation framework that will reward and retain talent.

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

- Remuneration to Key Managerial Personnel, Senior Management and other employees will involve a balance between fixed and variable pay reflecting short and long term performance objectives of the employees in line with the working of the Company and its goals.

- For Directors, the Performance Pay will be linked to achievement of Business Plan.

- For Heads of Department, the Performance Pay will be linked to achievement of functional plan which is derived from the business plan. The functional plan includes both, short-term and long-term objectives.

- The above will take into consideration industry performance, customer performance and overall economic environment.

- For other management personnel, the Performance Pay will be linked to achievement of individual set objectives and part of this will also be linked to overall Company performance.

13. Risk Management Policy

Risk profiling is put in place for all the areas of operations in the Company and well integrated in the business cycle. The Company has identified the risk areas in its operations along with its probability and severity, department wise. The various risks to which the Company is exposed are as mentioned in the Management and Discussion Analysis Report under the relevant heading. An effective Risk Management Framework is put in place in the Company in order to analyze, control and mitigate risk.

The Risk Management Framework comprises of Risk Management Committee and the Risk Officers. The composition of the Risk Management Committee and its functions are mentioned in the Report on Corporate Governance under the heading "Risk Management". The Risk Officers have been appointed by the functional heads and represent the various functions. The Board of Directors and the Audit Committee review the effectiveness of the Risk Management framework and provide advice to the Risk Management Committee at regular intervals. The composition and functions of the Risk Management Committee are given in the

Report on Corporate Governance forming part of the Annual Report.

The Risk Management Framework aims to:

(a) address our Company''s strategies, operations and compliances and provide a unified and comprehensive perspective;

(b) establish the risk appetite;

(c) be simplistic and intuitive to facilitate a speedy and appropriate identification of potential and actual risks and its communication;

(d) seek escalation of the identified risk events to the appropriate persons to enable a timely and satisfactory risk response;

(e) reduce surprises and losses, foresee opportunities and improve deployment of resources; and

(f) develop a mechanism to manage risks.

Through the Risk Management Framework, system and process are set to identify, gauge and mitigate any potential risk promptly and efficiently in order to manage and control them effectively. Clearly defined work profiles and assigned responsibilities are well at place, throughout the organization, at all levels and all functions, ensuring smooth flow of information across various levels within the organization.

14. Corporate Social Responsibility

The Board has constituted a Corporate Social

Responsibility (CSR) Committee as per the provisions of Section 135 of the Companies Act, 2013. The functions of the CSR Committee are to:

(a) formulate and recommend to the Board, a Corporate Social Responsibility Policy which shall indicate the activities to be undertaken by the Company as specified in Schedule VII of the Act;

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

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

The members of the CSR Committee are Mr. D. M. Kothari, Mr. H. M. Bharuka, Mr. N. N. Tata and Mrs. Brinda Somaya. Mr. D. M. Kothari is the Chairman of the CSR Committee. The Independent Directors on the CSR Committee are Mr. D. M. Kothari, Mr. N. N. Tata and Mrs. Brinda Somaya.

The CSR Committee meetings held during the year and attendance of the members of the CSR Committee at the meetings are as follows:

Date of Meeting Members Present at the Meeting

22nd October, Mr. D.M. Kothari 2014 Mr. H.M. Bharuka

Mr. N.N. Tata Mrs. Brinda Somaya

12th December, Mr. D.M. Kothari 2014 Mr. H.M. Bharuka

Mr. N.N. Tata Mrs. Brinda Somaya

9th March, 2015 Mr. D.M. Kothari Mr. N.N. Tata Mrs. Brinda Somaya

The Board has also framed a CSR Policy for the Company, on the recommendations of the CSR Committee. The Report on CSR activities as required under Companies (Corporate Social Responsibility) Rules, 2014 including a brief outline of the Company''s CSR Policy, total amount to be spent under CSR for the financial year, amount unspent and the reason for the unspent amount, is set out at Annexure-1 forming part of this Report.

15. Sub-division of share capital of the Company

In order to improve the liquidity of the Company''s shares in the Stock market and to make it affordable to the small investors, the Company has subdivided each equity share of the Company from face value of Rs.10 each to 10 equity shares of face value of Rs. 1 each vide shareholders approval obtained through Postal Ballot. The old shares having face value of Rs. 10 are no longer tradable on the Stock Exchanges. The shareholders holding share certificates in physical form have been issued new share certificates with face value of Rs. 1 each. Credit is given with the amount of sub-divided shares to the demat account of the shareholders holding shares in demat mode. The revised structure of the Authorised Capital, Subscribed Capital and Paid-up capital of the Company is reflected in the financial statements. Consequential amendments to the Clause V of the Memorandum of Association and Article 3 of the Articles of Association of the Company is also made to give effect to the subdivision of shares of the Company vide approval of shareholders obtained by the Company through Postal Ballot.

16. Particulars of Loans, Guarantee or Investments under Section 186 of the Companies Act, 2013

Loans, Guarantees and Investments covered under the provisions of Section 186 of the Companies Act, 2013, are given in the notes to the financial statements provided in this Annual Report.

17. Internal Financial Controls

The Board of Directors of the Company has laid down adequate internal financial controls which are operating effectively. During the year, policies and procedures are adopted by the Company for ensuring the orderly and efficient conduct of its business, including adherence to the Company''s policies, safeguarding of its assets, the prevention and detection of its frauds and errors, the accuracy and completeness of the accounting records and the timely preparations of reliable financial information.

18. Related Party Transactions

All transactions entered into with the Related Parties as defined under the Companies Act, 2013 and Clause 49 of the Listing Agreement during the financial year were in the ordinary course of business and on arm''s length basis and do not attract the provisions of Section 188 of the Companies Act, 2013. There were no Material Related Party transactions during the year. Thus, disclosure in Form AOC-2 is not required.

19. Audit Committee

The Company has an Audit Committee in place, constituted as per the provisions of Section 177 of the Companies Act, 2013. The members of the Audit Committee, its terms of reference, the meetings of the Audit Committee and attendance thereat of the members of the Committee is mentioned in the Corporate Governance Report under the appropriate heading.

20. Whistle Blower Policy

The Company has a Whistle Blower Policy to report genuine concerns and grievances. The implementation of the Whistle Blower Policy has been mentioned in the Report of Corporate Governance.

21. Postal Ballot

During the year, pursuant to the provisions of Section 110 of the Companies Act, 2013 read with Companies (Management and Administration) Rules, 2014, the Company has passed certain resolutions through Postal Ballot. In pursuance of the provisions of Clause 35 B (i) of the Listing Agreement, the shareholders were also provided with the facility of e-voting through CDSL for the Postal Ballot.

Mrs. Ragini Chokshi, Partner of Ragini Chokshi & Co., Practicing Company Secretaries, was appointed as the Scrutinizer for conducting the Postal Ballot/e-voting process in a fair and transparent manner. The Postal Ballot Notice dated 30th January, 2015 was dispatched to all the shareholders on 12th February, 2015. The e-voting period was open from 14th February, 2015 to 15th March, 2015. The Postal Ballot forms received upto the close of working hours on 15th March, 2015 were considered and the Results of Postal Ballot were announced on 16th March, 2015 at the Registered Office of the Company.

The resolutions passed by Postal Ballot with requisite majority are as under:

1. Ordinary Resolution for sub-division of 1 Equity Share of the face value of Rs. 10 into 10 Equity Shares of face value of Rs. 1 each.

2. Special Resolution for alteration of Capital Clause of Memorandum of Association to facilitate sub-division of shares.

3. Special Resolution for alteration of Capital Clause of Articles of Association to facilitate sub-division of shares.

4. Ordinary Resolution for appointment of Mr. Pradip P. Shah as an Independent Director for a term of five consecutive years from 30th January, 2015 to 29th January, 2020.

5. Ordinary Resolution for appointment of Mr. Noel N. Tata as an Independent Director for a term of five consecutive years from 30th January, 2015 to 29th January, 2020.

6. Ordinary Resolution for appointment of Mrs. Brinda Somaya as an Independent Director for a term of five consecutive years from 22nd July, 2014 to 21st July, 2019.

22. Corporate Governance

As required by the existing Clause 49(X) of the Listing Agreement entered into with the Stock Exchanges, a detailed report on Corporate Governance is given as a part of the Annual Report. The Company is in full compliance with the requirements and disclosures that have to be made in this regard. The Auditors'' Certificate of the compliance with Corporate Governance requirements by the Company is attached to the Report on Corporate Governance.

23. General Shareholder Information

General Shareholder Information is given in Item No. 9 of the Report on Corporate Governance forming part of the Annual Report.

24. Particulars regarding Employees Remuneration

The statement containing particulars of employees as required under Section 197 (12) of the Companies Act, 2013 read with Rule 5 (2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 forms part of this Report as Annexure-2.

25. Directors'' Responsibility Statement

As stipulated in the provisions contained in Section 134 (3) (c) read with Section 134 (5) of the Companies Act, 2013, the Directors hereby state that:

(i) in the preparation of the annual accounts, the applicable accounting standards have been followed along with proper explanation relating to material departures;

(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 of the Company for that period;

(iii) the Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

(iv) the Directors have prepared the annual accounts on a going concern basis;

(v) the Directors have laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and are operating effectively; and

(vi) the Directors have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems are adequate and operating effectively.

26. Energy, Technology Absorption & Foreign Exchange

Statement giving the particulars relating to conservation of energy, technology absorption and foreign exchange earnings and outgo, as required under Section 134(3)(m) read with Rule 8 (3) of the Companies (Accounts) Rules, 2014 is enclosed as Annexure-3 to this Report.

27. Extract of Annual Return

In accordance with Section 134 (3)(a) of the Companies Act, 2013, an extract of the Annual Return in the prescribed format is appended as Annexure-4 to this Report.

28. Statutory Auditors

The Company Auditors, B S R & Co. LLP, Chartered Accountants, have been appointed for a period of 5 years from the 94th AGM till the 99th AGM. Pursuant to provisions of Section 139(1) of the Companies Act, 2013 read with the Companies (Audit and Auditors) Rules, 2014, the appointment of B S R & Co. LLP, as Auditors of the Company for a period of 5 years shall be subject to ratification by shareholders at every AGM. Accordingly, the appointment of B S R & Co. LLP, as the Auditors of the Company from this AGM till the conclusion of next AGM is put forth for your approval.

The Auditors'' Report is clean and there are no qualifications in their Report.

29. Secretarial Auditor

Pursuant to the provisions of Section 204 of the Companies Act, 2013, the Company has appointed M/s Ragini Chokshi & Co., Practicing Company Secretaries, as the Secretarial Auditor of the Company for the year 2014-15 to conduct secretarial audit and to ensure compliance by the Company with various Acts applicable to the Company. The Secretarial Audit Report for the financial year 2014-15 issued by M/s Ragini Chokshi & Co. is annexed to this Report as Annexure-5. There are no qualifications or adverse remarks in their Report.

30. Acknowledgements

Your Directors wish to express their grateful appreciation for the co-operation and support received from customers, parent company, collaborators, vendors, shareholders, financial institutions, banks, regulatory authorities and the society at large.

Deep appreciation is also recorded for the dedicated efforts and contribution of the employees at all levels, as without their focus, commitment and hard work, the Company''s consistent growth would not have been possible, despite the challenging environment.

For and on behalf of the Board

P. P. Shah Chairman

Mumbai, 8th May, 2015


Mar 31, 2014

Dear Members,

The Directors are pleased to present the 94th Annual Report and the Audited Accounts for the year ended 31st March, 2014.

1. Financial Highlights

1st April, 2013 1st April, 2012 to to 31st March, 2014 31st March, 2013 Rs. in Million Rs. in Million

Sales & Operating Revenue 37390.18 33756.49

Net Sales/Income from operations (Net of excise and discounts) 31543.54 28566.19

Other Income 103.31 163.17

Profit before Interest, Depreciation, Tax and Appropriation 3724.18 3524.15

Interest 4.51 0.16

Depreciation 649.76 471.07

Profit Before Exceptional Item 3069.91 3052.92

Exceptional Item (Reversal of excess depreciation in respect of earlier years) - 1,149.25

Profit Before Tax 3069.91 4202.17

Tax 1004.20 1280.35

Profit After Tax 2065.71 2921.82

Balance brought forward from previous year 8149.65 6213.57

Balance available for appropriations 10215.36 9135.39

Appropriations:

Proposed Dividend 592.81 592.81

Tax on proposed dividend 100.75 100.75

General Reserve 206.57 292.18

Balance retained in Profit and Loss Account 9315.23 8149.65

10215.36 9135.39

2. Dividend

The Directors recommend for consideration of the Members a dividend of Rs. 11 (110 %) per equity share of the nominal value of Rs. 10 each for the year ended 31st March, 2014 as against Rs. 11.00 per equity share (110%) paid last year.

3. Unclaimed Dividend

During the year, dividend amounting to Rs. 0.34 million that had not been claimed by the shareholders for the year ended 31st March, 2006, was transferred to the credit of Investor Education and Protection Fund as required under Section 205A read with Section 205C of the Companies Act, 1956. As on 31st March, 2014, dividend amounting to Rs. 4.84 million has not been claimed by shareholders of the Company. Shareholders are required to lodge their claims with the Registrars, Sharepro Services (India) Pvt. Ltd., for unclaimed dividend.

4. Collaboration

The Directors record their appreciation for the contribution made and support provided by Kansai Paint Co. Ltd., Japan (Kansai). Kansai continues to provide support on process design, quality improvement, world class technology which has helped the Company in maintaining market leadership in the industrial business including automotive coatings, by servicing existing customers better and adding new lines. Kansai also provides technology for manufacture of architectural coatings.

The Company also has Technical Assistance Agreement with Oshima Kogyo Co. Ltd., Japan, for manufacturing heat resistance coatings, Cashew Co. Ltd., Japan for manufacturing coatings products MICRON TXL SK-1 and Thinner for MICRON and with Protech Chemicals Limited, Canada for manufacturing powder coating products. The Directors record their appreciation for the co-operation from these collaborators.

5. Subsidiary in Nepal

The Company has 8,84,000 equity shares constituting 68% of the paid up equity share capital of Kansai Paints Nepal Pvt. Ltd., Nepal. Pursuant to provisions of section 2(87) of the Companies Act, 2013, as well as section 4 (1) (b) (ii) of the Companies Act, 1956, Kansai Paints Nepal Pvt Ltd. is the subsidiary of our Company.

The Ministry of Corporate Affairs through their General Circular No. 8/ 2014 dated 4th April, 2014 have notified that the financial statements (and documents required to be attached thereto) in respect of financial year 2013-2014 shall be governed by the relevant provisions/schedules/ rules of the Companies Act, 1956.

Pursuant to provisions of Section 212 (8) of the Companies Act, 1956, read with Circular no. 2/ 2011 dated 8th February, 2011 of the Ministry of Corporate Affairs, the Board of Directors of the Company has passed the requisite resolution and consented for not attaching the balance sheet of the subsidiary with the Annual Report of the Company. However the Annual Accounts of the subsidiary and the related detailed information shall be available to the shareholders of our Company as well as the shareholders of the subsidiary seeking such information at any point of time. The annual accounts of the subsidiary company are available for inspection by any shareholder of our Company as well as of the subsidiary company at the registered office of the Company on any working day except Saturday during the business hours of the Company. The consolidated financial statements are presented in this Annual Report.

6. Auditors'' Report

The Auditors'' Report is clean and there are no qualifications in their Report.

7. Cost Audit

The Company had appointed N.I. Mehta and Co., Cost Accountants, to audit its cost accounting records relating to synthetic resins, paints and varnishes for the financial year 2012-13. The due date for fling the Cost Audit Report with the Ministry of Corporate Affairs was 27th September, 2013. The Cost Audit Report was fled with Ministry of Corporate Affairs on 25th September, 2013.

The Company is seeking the ratification of the Shareholders for the appointment of N.I. Mehta and Co., Cost Accountants as the Cost Auditors of the Company for the financial year 2014-15 vide resolution No. 6 of the Notice of AGM.

8. Directors

In accordance with the Articles of Association of the Company, Dr. J. J. Irani, Mr. D. M. Kothari and Mr. H. Nishibayashi retire by rotation at this Annual General Meeting and are eligible for re-appointment.

Dr. J. J. Irani has informed the Board that he does not seek re-appointment. The Board of Directors has placed on record its sincere appreciation and gratitude for the very valuable and outstanding contribution made by Dr. J. J. Irani during his association with the Company as a Director and then as the Chairman.

However Mr. D. M. Kothari and Mr. H. Nishibayashi offer themselves for re-appointment. In terms of Section 149, 150, 152 and other applicable provisions of the Companies Act, 2013, Mr. Kothari being eligible and offering himself for appointment, is proposed to be appointed as an Independent Director for a term of five consecutive years from the date of this Annual General Meeting.

Mr. H. Ishino, a nominee of Kansai Paint Co. Ltd., Japan, on the Board, resigned from the Directorship with effect from 31st May, 2013. The Directors have placed on record their sincere appreciation for the very valuable contribution made by Mr. Ishino during his tenure as a Director.

None of the Directors of the Company is disqualified under Section 274(1) (g) of the Companies Act, 1956. As required by law, this position is also reflected in the Auditors'' Report.

In accordance with provisions of section 149 of the Companies Act, 2013 and the Listing agreement with the Stock Exchanges, Dr. J. J. Irani, Mr. D. M. Kothari, Mr. P. P. Shah and Mr. N. N. Tata have given a declaration to the Company that they meet the criteria of independence as mentioned in Section 149 (6) of the Companies Act, 2013 read with Clause 49 (I) (A) (iii) of the Listing Agreement.

9. Corporate Governance

As required by the existing Clause 49 VII of the Listing Agreements entered into with the Stock Exchanges, a detailed report on Corporate Governance is given as a part of the Annual Report. The Company is in full compliance with the requirements and disclosures that have to be made in this regard. The Auditors'' Certificate of the compliance with Corporate Governance requirements by the Company is attached to the Report on Corporate Governance.

The Company is in compliance with the Secretarial Standards issued by the Institute of Company Secretaries of India.

10. General Shareholder Information

General Shareholder Information is given in Item No. 9 of the Report on Corporate Governance forming part of the Annual Report.

11. Particulars regarding Employees

Particulars of Employees as required under Section 217(2A) of the Companies Act, 1956, and the Companies (Particulars of Employees) Rules, 1975, as amended by the Companies (Particulars of Employees) Amendment Rules, 2011, forms part of this Report. As per the provisions of Section 219(1)(b)(iv) of the Companies Act, 1956, the Report and Accounts are being sent to the shareholders excluding the statement of particulars of employees under Section 217(2A) of the Companies Act, 1956. Any shareholder interested in obtaining a copy of the said statement may write to the Company Secretary at the Registered Office of the Company.

12. Directors'' Responsibility Statement

As stipulated under the provisions contained in Section 217(2AA) of the Companies Act, 1956, the Directors hereby confirm as under:

(i) that in the preparation of the annual accounts, the applicable accounting standards have been followed along with proper explanation relating to material departures;

(ii) that 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 of the Company for that period;

(iii) that the Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

(iv) that the Directors have prepared the annual accounts on a going concern basis.

In accordance with the Corporate Governance Voluntary Guidelines, 2009 issued by the Ministry of Corporate Affairs, Government of India, it is hereby confirmed that proper systems are in place to ensure compliance of all laws applicable to the Company.

13. Energy, Technology Absorption & Foreign Exchange

Statement giving the particulars relating to conservation of energy, technology absorption and foreign exchange earnings and outgo, as required under the Companies (Disclosures of particulars in report of the Board of Directors) Rules, 1988, is annexed.

14. Auditors

The Company Auditors, B S R & Co. LLP, Chartered Accountants, retire at the conclusion of the forthcoming Annual General Meeting and are eligible for re- appointment. In accordance with Section 139 (1) of the Companies Act, 2013 read with the Companies (Audit and Auditors) Rules, 2014, it is proposed to appoint B S R & Co. as statutory auditors of the Company for a term of 5 consecutive years at this Annual General Meeting.

15. Acknowledgements

Your Directors wish to express their grateful appreciation for the co-operation and support received from customers, parent company, collaborators, vendors, shareholders, financial institutions, banks, regulatory authorities and the society at large.

Deep appreciation is also recorded for the dedicated efforts and contribution of the employees at all levels, as without their focus, commitment and hard work, the Company''s consistent growth would not have been possible, despite the challenging environment.

For and on behalf of the Board

J. J. Irani

Chairman

Mumbai, 30th April, 2014


Mar 31, 2013

Dear Members, The Directors are pleased to present the 93rd Annual Report and the Audited Accounts for the year ended 31st March, 2013. 1. Financial Highlights 1st April, 2012 1st April, 2011 to to 31st March, 2013 31st March, 2012 Rs. in Million Rs. in Million Sales & Operating Revenue 33756.49 30198.84 Net Sales/Income from operations (Net of excise and discounts) 28566.19 26005.72 Other Income 163.17 242.66 Profit before Interest, Depreciation, Tax and Appropriation 3524.15 3615.67 Interest 0.16 0.86 Depreciation 471.07 563.53 Profit Before Exceptional Item 3052.92 3051.28 Exceptional Item (Reversal of excess depreciation in respect of earlier years) 1149.25 - Profit Before Tax 4202.17 3051.28 Tax 1280.35 892.43 Profit After Tax 2921.82 2158.85 Balance brought forward from previous year 6213.57 4959.59 Balance available for appropriations 9135.39 7118.44 Appropriations: Proposed Dividend 592.81 592.81 Tax on proposed dividend 100.75 96.17 General Reserve 292.18 215.89 Balance retained in Profit and Loss Account 8149.65 6213.57 9135.39 7118.44 2. Dividend The Directors recommend for consideration of the Members a dividend of Rs. 11.00 (110%) per equity share of the nominal value of Rs. 10 each for the year ended 31st March, 2013 as against Rs. 11.00 per equity share (110%) paid last year. 3. Unclaimed Dividend During the year, dividend amounting to Rs. 0.19 Million that had not been claimed by the shareholders for the year ended 31st March, 2005, was transferred to the credit of Investor Education and Protection Fund as required under Section 205A read with Section 205C of the Companies Act, 1956. As on 31st March, 2013, dividend amounting to Rs. 4.46 Million has not been claimed by shareholders of the Company. Shareholders are required to lodge their claims with the Registrars, Sharepro Services (India) Pvt. Ltd., for unclaimed dividend. 4. Collaboration The Directors record their appreciation for the contribution made and support provided by Kansai Paint Co. Ltd., Japan (Kansai). Kansai continues to provide support on process design, quality improvement, world class technology which has helped the Company in maintaining market leadership in the industrial business including automotive coatings, by servicing existing customers better and adding new lines. Kansai also provides technology for manufacture of architectural coatings. The Company also has Technical Assistance Agreements with Oshima Kogyo Co. Ltd., Japan, for manufacturing heat resistance coatings and with Cashew Co. Ltd., Japan for coatings products MICRON and Thinner for MICRON. The Directors record their appreciation for the co-operation from these collaborators. 5. Subsidiary in Nepal During the year, the Company acquired 8,84,000 equity shares constituting 68% of the paid up equity share capital of Nepal Shalimar Paints Pvt. Ltd., Nepal, now known as Kansai Paints Nepal Pvt. Ltd. amounting to Rs. 78.63 Million. The Company has also advanced loan to Kansai Paints Nepal Pvt. Ltd. amounting to Rs. 63.81 Million to fund its working capital requirement. Pursuant to provisions of section 4(1)(b)(ii) of the Companies Act, 1956, Kansai Paints Nepal Pvt. Ltd. has become the subsidiary of our Company. Pursuant to provisions of section 212 (8) read with Circular no. 2/2011 dated 8th February, 2011 of the Ministry of Corporate Affairs, the Board of Directors of the Company has passed the requisite resolution and consented for not attaching the balance sheet of the subsidiary with the Annual Report of the Company. However the Annual Accounts of the subsidiary and the related detailed information shall be available to the shareholders of our Company as well as the shareholders of the subsidiary seeking such information at any point of time. The annual accounts of the subsidiary company are available for inspection by any shareholder of our Company as well as of the subsidiary company at the registered office of the Company on any working day except Saturday during the business hours of the Company. The consolidated financial statements are presented in this Annual Report. 6. Auditors' Report The Auditors' Report is clean and there are no qualifications in their Report. 7. Cost Audit Report The Company had appointed N.I. Mehta and Co., Cost Accountants, to audit its cost accounting records relating to synthetic resins, paints and varnishes for the financial year 2011-12. The due date for filing the Cost Audit Report with the Ministry of Corporate Affairs was 31st January, 2013. The Cost Audit Report was filed with Ministry of Corporate Affairs on 4th January, 2013. 8. Directors In accordance with the Articles of Association of the Company, Mr. P. P. Shah, Mr. N. N. Tata and Mr. Y. Takahashi retire by rotation and being eligible, offer themselves for re-appointment. Mr. M. Tanaka, a nominee of Kansai Paint Co. Ltd., Japan, has been appointed as an Additional Director on the Board from 4th May, 2013. Pursuant to section 260 of the Companies Act, 1956, Mr. Tanaka holds office till the ensuing Annual General Meeting but being eligible, offers himself for re-appointment and the Company has received notices in writing from some Shareholders proposing his candidature for the office of Director of the Company. None of the Directors of the Company is disqualified under Section 274(1 )(g) of the Companies Act, 1956. As required by law, this position is also reflected in the Auditors' Report. 9. Corporate Governance As required by the existing Clause 49 VII of the Listing Agreements entered into with the Stock Exchanges, a detailed report on Corporate Governance is given as a part of the Annual Report. The Company is in full compliance with the requirements and disclosures that have to be made in this regard. The Auditors' Certificate of the compliance with Corporate Governance requirements by the Company is attached to the Report on Corporate Governance. The Company is in compliance with the Secretarial Standards issued by the Institute of Company Secretaries of India. 10. General Shareholder Information General Shareholder Information is given in Item No. 9 of the Report on Corporate Governance forming part of the Annual Report. 11. Particulars regarding Employees Particulars of Employees as required under Section 217(2A) of the Companies Act, 1956, and the Companies (Particulars of Employees) Rules, 1975, as amended by the Companies (Particulars of Employees) Amendment Rules, 2011, forms part of this Report. As per the provisions of Section 219(1)(b)(iv) of the Companies Act, 1956, the Report and Accounts are being sent to the shareholders excluding the statement of particulars of employees under Section 217(2A) of the Companies Act, 1956. Any shareholder interested in obtaining a copy of the said statement may write to the Company Secretary at the Registered Office of the Company. 12. Directors' Responsibility Statement As stipulated under the provisions contained in Section 217(2AA) of the Companies Act, 1956, the Directors hereby confirm as under: (i) that in the preparation of the annual accounts, the applicable accounting standards have been followed along with proper explanation relating to material departures; (ii) that 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 of the Company for that period; (iii) that the Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; (iv) that the Directors have prepared the annual accounts on a going concern basis. In accordance with the Corporate Governance Voluntary Guidelines, 2009 issued by the Ministry of Corporate Affairs, Government of India, it is hereby confirmed that proper systems are in place to ensure compliance of all laws applicable to the Company. 13. Energy, Technology Absorption & Foreign Exchange Statement giving the particulars relating to conservation of energy, technology absorption and foreign exchange earnings and outgo, as required under the Companies (Disclosures of particulars in report of the Board of Directors) Rules, 1988, is annexed. 14. Auditors The Company Auditors, M/s B S R & Co., Chartered Accountants, retire at the conclusion of the forthcoming Annual General Meeting and are eligible for re- appointment. 15. Acknowledgements Your Directors wish to express their grateful appreciation for the co-operation and support received from customers, parent company, collaborators, vendors, shareholders, financial institutions, banks, regulatory authorities and the society at large. Deep appreciation is also recorded for the dedicated efforts and contribution of the employees at all levels, as without their focus, commitment and hard work, the Company's consistent growth would not have been possible, despite the challenging environment. For and on behalf of the Board J. J. Irani Chairman Mumbai, 4th May, 2013


Mar 31, 2012

The Directors are pleased to present the 92nd Annual Report and the Audited Accounts for the year ended 31st March, 2012.

1. Financial Highlights

1st April, 2011 1st April 2010 to to 31st March, 2012 31st March, 2011 Rs in Million Rs in Million

Sales & Operating Revenue 30198.84 24957.01

Net Sales/Income from operations (Net of excise and discounts) 26005.72 21412.39

Other Income 242.66 225.44

Profit before Interest, Depreciation, Tax and Appropriation 3615.67 3132.56

Interest 0.86 1.35

Depreciation 563.53 493.55

Profit Before Exceptional Item 3051.28 2637.66

Exceptional Item - 253.67

Profit Before Tax 3051.28 2891.33

Tax 892.43 831.48

Profit After Tax 2158.85 2059.85

Balance brought forward from previous year 4959.59 3732.07

Balance available for appropriations 7118.44 5791.92

Appropriations:

Proposed Dividend 592.81 538.92

Tax on proposed dividend 96.17 87.43

General Reserve 215.89 205.98

Balance retained in Profit and Loss Account 6213.57 4959.59

7118.44 5791.92

2. Dividend

The Directors recommend for consideration of the Members a dividend of Rs 11.00 (110%) per equity share of the nominal value of Rs 10 each for the year ended 31st March, 2012 as against Rs 10.00 per equity share (100%) paid last year.

4. Unclaimed Dividend

During the year, dividend amounting to Rs 0.13 million that had not been claimed by the shareholders for the year ended 31st March, 2004, was transferred to the credit of Investor Education and Protection Fund as required under Section 205A read with Section 205C of the Companies Act, 1956. As on 31st March, 2012, dividend amounting to Rs 5.46 million has not been claimed by shareholders of the Company. Shareholders are required to lodge their claims with the Registrars, Sharepro Services (India) Pvt. Ltd., for unclaimed dividend.

5. Collaboration

The Directors record their appreciation for the contribution made and support provided by Kansai Paint Co. Ltd., Japan (Kansai). Kansai continues to provide support on process design, quality improvement, world class technology which has helped the Company in maintaining market leadership in the industrial business including automotive coatings, by servicing existing customers better and adding new lines. Kansai also provides technology for manufacture of architectural coatings.

The Company also has Technical Assistance Agreement with Oshima Kogyo Co. Ltd., Japan, for manufacturing heat resistance coatings and with PPG International Performance Coatings & Finishes, USA ( formerly Ameron International Performance Coatings and Finishes ) for High Performance Coatings. The Directors record their appreciation for the co-operation from these collaborators.

6. Auditors' Report

The Auditors' Report is clean and there are no qualifications in their Report.

7. Cost Audit Report

The Company had appointed N.I. Mehta and Co., Cost Accountants, to audit its cost accounting records relating to synthetic resins, paints and varnishes for the financial year 2010-11. The due date for filing the Cost Audit Report with the Ministry of Corporate Affairs was 27th September, 2011. The Cost Audit Report was filed with Ministry of Corporate Affairs on 27th September, 2011.

8. Directors

In accordance with the Articles of Association of the Company, Dr. J.J. Irani and Mr. D.M. Kothari retire by rotation and being eligible, offer themselves for re-appointment.

Mr. H. Nishibayashi, a nominee of Kansai Paint Co. Ltd., Japan, was appointed as a Director on the Board in casual vacancy caused by the resignation of Mr. Y. Tajiri with effect from 30th July, 2010. Pursuant to Section 262 read with section 256 of the Companies Act, 1956, Mr. Nishibayashi holds office till the ensuing Annual General Meeting but being eligible, offers himself for re-appointment and the Company has received notice in writing from some Shareholders proposing his candidature for the office of Director of the Company.

None of the Directors of the Company is disqualified under Section 274(1)(g) of the Companies Act, 1956. As required by law, this position is also reflected in the Auditors' Report.

9. Corporate Governance

As required by the existing Clause 49 VII of the Listing Agreements entered into with the Stock Exchanges, a detailed report on Corporate Governance is given as a part of the Annual Report. The Company is in full compliance with the requirements and disclosures that have to be made in this regard. The Auditors' Certificate of the compliance with Corporate Governance requirements by the Company is attached to the Report on Corporate Governance.

The Company is in compliance with the Secretarial Standards issued by the Institute of Company Secretaries of India.

10. General Shareholder Information

General Shareholder Information is given in Item No. 9 of the Report on Corporate Governance forming part of the Annual Report.

11. Particulars regarding Employees

Particulars of Employees as required under Section 217(2A) of the Companies Act, 1956, and the Companies (Particulars of Employees) Rules, 1975, as amended by the Companies (Particulars of Employees) Amendment Rules, 2011, forms part of this Report. As per the provisions of Section 219(1)(b)(iv) of the Companies Act, 1956, the Report and Accounts are being sent to the shareholders excluding the statement of particulars of employees under Section 217(2A) of the Companies Act, 1956. Any shareholder interested in obtaining a copy of the said statement may write to the Company Secretary at the Registered Office of the Company.

12. Directors' Responsibility Statement

As stipulated under the provisions contained in Section 217(2AA) of the Companies Act, 1956, the Directors hereby confirm as under:

(i) that in the preparation of the annual accounts, the applicable accounting standards have been followed along with the explanation relating to material departures;

(ii) that 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 of the Company for that period;

(iii) that the Directors have taken proper care of the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

(iv) that the Directors have prepared the annual accounts on a going concern basis.

In accordance with the Corporate Governance Voluntary Guidelines, 2009 issued by the Ministry of Corporate Affairs, Government of India, it is hereby confirmed that proper systems are in place to ensure compliance of all laws applicable to the Company.

13. Energy, Technology Absorption & Foreign Exchange

Statement giving the particulars relating to conservation of energy, technology absorption and foreign exchange earnings and outgo, as required under the Companies (Disclosures of particulars in report of the Board of Directors) Rules, 1988, is annexed.

14. Auditors

The Company Auditors, M/s. B S R & Co., Chartered Accountants, retire at the conclusion of the forthcoming Annual General Meeting and are eligible for re-appointment.

15. Acknowledgements

Your Directors wish to express their grateful appreciation for the co-operation and support received from customers, parent company, collaborators, vendors, shareholders, financial institutions, banks, regulatory authorities and the society at large.

Deep appreciation is also recorded for the dedicated efforts and contribution of the employees at all levels, as without their focus, commitment and hard work, the Company's consistent growth would not have been possible, despite the challenging environment.

For and on behalf of the Board

J. J. Irani

Chairman

Mumbai, 2nd May, 2012


Mar 31, 2010

The Directors are pleased to present the 90th Annual Report and the Audited Accounts for the year ended 31st March, 2010.

1. Financial Highlights

1st April, 2009 1st April, 2008 to to 31 st March, 2010 31st March, 2009

Rs. in lacs Rs. in lacs

Gross Sales............. 197170.53 166373.85 Net Sales/ Income from operations

(Net of excise and discounts)............... 170638.36 137451.92

Other Income............. 2038.21 2219.50 Profit before Interest, Depreciation,

Tax and Appropriation...... 28406.91 17963.20

Interest................... 119.99 183.80

Depreciation............... 4425.98 3760.50

Profit Before Tax.......... 23860.94 14018.90

Tax........................ 7310.89 4160.00

Profit After Tax........... 16550.05 9858.90 Balance brought forward from previous year.......... 27143.88 22053.93

Balance available for appropriations............... 43693.93 31912.83 Appropriations: Proposed Dividend............ 4041.89 3233.52 Taxon Proposed Dividend...... 671.31 549.54

General Reserve............... 1660.00 985.89

Balance retained in Profit and Loss Account............ 37320.73 27143.88

43693.93 31912.83

2. Dividend

The Directors recommend for consideration of the Members a dividend of Rs. 15.00 (150%) per equity share of the nominal value of Rs. 10 each for the year ended 31 st March, 2010 as against Rs. 12.00 per equity share (120%) paid last year.

3. Bonus Shares

The Directors have recommended, subject to the approval of the Shareholders and such other approvals as may be required, an issue of Bonus Shares in the proportion of one New Equity Share for every one Equity Share held on a Record Date to be advised later. The approval of the Shareholders for the proposed issue of Bonus Shares is being sought by means of postal ballot.

4. New manufacturing facility at Hosur

During the last quarter of the year, commercial production commenced at the Companys green-field state-of-the-art paint manufacturing facility at Hosur.

6. Fixed Deposits

The Company has not accepted any Fixed Deposits (FD) during the year. Deposits aggregating to Rs. 1.75 lacs, due for re-payment have not been claimed by the FD holders as on 31st March, 2010. Barring these, the Company has refunded all the deposits, which were due for payment as on 31st March, 2010. During the year, unclaimed deposits amounting to Rs. 0.20 lac were transferred to the credit of the Investor Education and Protection Fund (IEPF) as required under Section 205C of the Companies Act, 1956.

7. Unclaimed Dividend

During the year, dividend amounting to Rs. 1,21,955 lacs that had not been claimed by the shareholders for the year ended 31st March, 2002, was transferred to the credit of Investor Education and Protection Fund as required under Section 205A read with Section 205C of the Companies Act, 1956. As on 31st March, 2010, dividend amounting to Rs. 43.90 lacs has not been claimed by shareholders of the Company. Shareholders are required to lodge their claims with the Registrars, Sharepro Services (India) Pvt. Ltd., for unclaimed dividend.

8. Collaboration

The Directors record their appreciation for the contribution made and support provided by Kansai Paint Co. Ltd., Japan (Kansai). Kansai continues to provide support on process design, quality improvement, world class technology which has helped the Company in maintaining market leadership in the industrial business including automotive coatings, by servicing existing customers better and adding new lines. Kansai also provides technology for manufacture of architectural coatings.

The Company also has Technical Assistance Agreement with Oshima Kogyo Co. Ltd., Japan, for manufacturing heat resistance coatings and with PPG International Performance Coatings & Finishes, USA (formerly Ameron International Performance coatings and Finishes) for High Performance coatings. The Directors record their appreciation for the co-operation from these collaborators.

9. Auditors Report

The Auditors Report is clean and there are no qualifications in their Report.

10. Directors

In accordance with the Articles of Association of the Company, Mr. D. M. Kothari, Mr. S. M. Datta and Mr. P. P. Shah retire by rotation and being eligible, offer themselves for re-appointment.

Mr. Y Kawamori, a nominee of Kansai Paint Co. Ltd., Japan, on the Board, resigned from the Directorship with effect from 26th March, 2010. The Directors have placed on record their sincere appreciation for the very valuable contribution made by Mr. Kawamori during his tenure as a Director. With effect from 26th March, 2010, Mr. Y. Takahashi, a nominee of Kansai Paint Co. Ltd., Japan, has been appointed as an Additional Director on the Board. Mr. Takahashi holds office upto the date of the Annual General Meeting, but being eligible, offers himself for re-appointment.

None of the Directors of the Company is disqualified under Section 274(1 )(g) of the Companies Act, 1956. As required by law, this position is also reflected in the Auditors Report.

11. Corporate Governance

As required by the existing Clause 49 VII of the Listing Agreements entered into with the Stock Exchanges, a detailed report on Corporate Governance is given as a part of the Annual Report. The Company is in full compliance with the requirements and disclosures that have to be made in this regard. The Auditors Certificate of the compliance with Corporate Governance requirements by the Company is attached to the Report on Corporate Governance.

The Company is in compliance with the Secretarial Standards issued by the Institute of Company Secretaries of India.

12. General Shareholder Information

General Shareholder Information is given in Item No. 9 of the Report on Corporate Governance forming part of the Annual Report.

13. Particulars regarding Employees

Particulars of Employees as required under Section 217(2A) of the Companies Act, 1956, and the Companies (Particulars of Employees) Rules, 1975, as amended, forms part of this Report. As per the provisions of Section 219(1 )(b)(iv) of the Companies Act, 1956, the Report and Accounts are being sent to the shareholders excluding the statement of particulars of employees under Section 217(2A) of the Companies Act, 1956. Any shareholder interested in obtaining a copy of the said statement may write to the Company Secretary at the Registered Office of the Company.

14. Directors Responsibility Statement

As stipulated under the provisions contained in Section 217(2AA) of the Companies Act, 1956, the Directors hereby confirm as under:

(i) that in the preparation of the annual accounts, the applicable accounting standards have been followed along with the explanation relating to material departures;

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

(iii) that the Directors have taken proper care of the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

(iv) that the Directors have prepared the annual accounts on a going concern basis.

In accordance with the Corporate Governance Voluntary Guidelines, 2009 issued by the Ministry of Corporate Affairs, Government of India, it is hereby confirmed that proper systems are in place to ensure compliance of all laws applicable to the Company.

15. Energy, Technology Absorption & Foreign Exchange

Statement giving the particulars relating to conservation of energy, technology absorption and foreign exchange earnings and outgo, as required under the Companies (Disclosures of particulars in report of the Board of Directors) Rules, 1988, is annexed.

16. Auditors

The Company Auditors, M/s BSR & Co. Chartered Accountants, retire at the conclusion of the forthcoming Annual General Meeting and are eligible for re-appointment.

17. Acknowledgements

Your Directors wish to express their grateful appreciation for the co-operation and support received from customers, parent company, collaborators, vendors, shareholders, financial institutions, banks, regulatory authorities and the society at large.

Deep appreciation is also recorded for the dedicated efforts and contribution of the employees at all levels, as without their focus, commitment and hard work, the Companys consistent growth would not have been possible, despite the challenging environment.

For and on behalf of the Board

J.J. Irani Chairman Mumbai, 3rd May, 2010.

 
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