Mar 31, 2023
The Board of Directors hereby present their 69th report on the business and operations of your Company along with the audited financial statements for the financial year ended 31 March 2023.
The financial statements include:
1. Standalone financial statements of the Company, Akzo Nobel India Limited; and
2. Consolidated financial statements of the Group including the operational results of ICI India Research & Technology Centre, on which the Company exercises effective control.
The highlights of the performance during the year are: |
(H million) Standalone Consolidated |
|||
2022-23 |
2021-22 2022-23 |
2021-22 |
||
Revenue from Operations |
38,021 31,486 |
38,021 31,486 |
||
Operating Profit (EBITDA)* |
5,251 4,324 |
5,251 4,325 |
||
Depreciation |
(825) (759) |
(825) (759) |
||
Other Income net of finance costs |
133 82 |
133 82 |
||
Exceptional items |
- 20 |
- 20 |
||
Profit before tax |
4,559 3,667 |
4,559 3,668 |
||
Tax |
(1,208) (767) |
(1,208) (767) |
||
Profit after tax |
3,351 2,900 |
3,351 2,901 |
||
*Before exceptional items |
||||
Key financial ratios |
Standalone Consolidated |
|||
2022-23 |
2021-22 2022-23 |
2021-22 |
||
Debtors Turnover |
7.3 6.9 |
7.3 6.9 |
||
Inventory Turnover |
3.6 3.3 |
3.6 3.3 |
||
Interest Coverage |
37.3 29.9 |
37.3 29.9 |
||
Current Ratio |
1.5 1.5 |
1.5 1.5 |
||
Operating Profit Margin (%) |
13.8 13.7 |
13.8 13.7 |
||
Net Profit Margin (%) |
8.8 9.2 |
8.8 9.2 |
||
Return on Net Worth (%) |
26.0 22.8 |
26.0 22.8 |
||
5.3 5.6 |
5.3 5.6 |
There is no significant change (i.e. change of 25% or more as compared to the immediately preceding financial year) in the key financial ratios except for Interest Coverage ratio, which has improved on account of increase in Operating Profit and lower Finance Cost.
In the financial year 2022-23, Company achieved remarkable performance, surpassing all previous records and showcasing robust growth across all key metrics. Despite facing challenges arising from cost inflation and currency fluctuations, we successfully delivered double-digit revenue growth (21%) and sustained profitability for the fourth consecutive year. This outstanding performance is a testament to our resilient business model.
The Decorative Paints segment witnessed notable growth driven by strategic product launches, strong traction in urban markets, and a thriving projects business. Our focus on understanding consumer preferences and delivering innovative solutions contributed to this success. Furthermore, the Coatings business experienced robust demand in key sectors such as infrastructure, power, mining, and automotive industries, enabling growth and market share expansion.
To maintain our competitive edge, we continue to leverage global R&D and technologies, ensuring a steady stream of innovative products tailored specifically for the Indian market.
Our commitment to innovation remains unwavering as we strive to bring differentiated and value-added solutions to meet the evolving needs of our consumers.
The Company is following a Dividend Distribution Policy as approved by the Board while distributing profits to its shareholders. In compliance with the requirements under Regulation 43A of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 (Listing Regulations), the Dividend Distribution Policy has been uploaded on the Company''s website and can be accessed from https:// akzonobel.co.in/pdf/policy/Dividend-Distribution-Policy.pdf.
The Board of Directors at its meeting held on 9 February 2023, approved payment of interim dividend of H25 per equity share. This dividend was paid on 6 March 2023 to those shareholders whose names were appearing in the Register of Members as on 21 February 2023, being the Record Date. Your Directors are pleased to recommend a Final Dividend of H40 per equity share for the year ended 31 March 2023 in addition to the interim dividend paid during the financial year 2022-2023. The Final Dividend, subject to the approval of Members at the Annual General Meeting scheduled on 3 August 2023, will be paid to those Members whose names appear in the Register of Members, as on 27 July 2023 (Record Date). The total dividend for the financial year, including the proposed Final Dividend, amounts to H65 per equity share.
Pursuant to the provisions of the Income-tax Act 1961, dividend income is taxable in the hands of the Shareholders and the Company is required to deduct tax at source from such dividend at the prescribed rates. A communication providing detailed information and instructions with respect to tax on the Final Dividend for the financial year ended 31 March 2023 is being sent separately to the Shareholders. Company shall, accordingly, deduct tax, as applicable, before making dividend payments.
During the financial year, there was no amount transferred to the Reserves.
The Paints & Coatings industry''s prospects are intricately connected to the overall growth of the country''s economy, which is influenced by several factors including income levels, industrial production, and infrastructure development. While
the industry faces potential risks stemming from fluctuating crude prices, macro-economic environment, and inflationary pressures, the overall outlook remains promising. This optimism is fuelled by India''s projected medium-term growth rate of 6-7%, which sets a favorable backdrop for the industry''s expansion and development. By focusing on innovation, customer-centric strategies, and leveraging its strengths, the Company is well-positioned to capitalize on the anticipated growth opportunities and overcome potential challenges.
Pursuant to section 129(3) of the Act read with rule 5 of the Companies (Accounts) Rules, 2014, and other applicable provisions, if any, of the Companies Act 2013 (âthe Act''), a statement containing salient features of the financial statement of the subsidiary of the Company viz. ICI India Research & Technology Centre, viz. Form AOC-1 forms part of this Annual Report. The consolidated financial statements presented in this annual report include financial results of the subsidiary pursuant to Rule 8(1) of the Companies (Accounts) Rules, 2014.
In accordance with section 136 of the Act, the financial statements of the subsidiary are available for inspection by the members at the registered office of the Company during business hours on all days up to the date of the Annual General Meeting (âAGM''). Members are requested to email a request for obtaining a copy of the said financial statements at investor.india@ akzonobel.com so that necessary arrangements can be made at the registered office of the Company. The financial statements including the Consolidated Financial Statement and all other documents required to be attached to this report have been uploaded on the website of the Company at www.akzonobel.co.in.
The paid-up share capital of the Company as on 31 March 2023 was H455.40 million comprising 45.54 million equity shares of H10 each (Previous year H455.40 million comprising 45.54 million equity shares of H10 each).
Management Discussion and Analysis
Paints & Coatings industry in India encompasses a diverse range of products and applications, catering to architectural and industrial segments. With a strong emphasis on aesthetics, protection, and sustainability, the industry plays a crucial role in enhancing the visual appeal and longevity of surfaces across these segments. The size of the industry is estimated to grow from H62,000 crores to H1 lakh crore in the next five years.
Architectural segment dominates the industry, accounting for approximately 69% of the paint consumption on a volume basis. This segment primarily caters to the needs of residential, commercial, and institutional constructions, as well as repainting and renovation projects.
Industrial segment represents the remaining 31% of the paints & coatings consumed in the country. This segment has been witnessing a growing share due to multiple factors. The industrial sector''s robust growth, coupled with strong fundamentals of consumer durables, automobiles, and allied industries, has fuelled the demand for industrial coatings. These coatings find applications in sectors viz. automotive, infrastructure, machinery and equipment, functional and domestic appliances, packaging, etc.
Digitalization and technology adoption have emerged as game-changers in the industry. Companies are leveraging digital platforms and tools to streamline operations, enhance customer
experience, and optimize supply chain management. From online color selection tools to virtual reality simulations for visualizing paint finishes, technology is revolutionizing how consumers interact with paints and coatings.
As the industry moves forward, sustainability, innovation, and digitalization are expected to remain key focus areas. Manufacturers will continue to explore new raw materials, improve application techniques, and introduce cutting-edge solutions to address emerging challenges and meet the ever-evolving demands of customers.
During the financial year 2022-23, the Paints & Coatings industry experienced a favorable development with the softening of raw material prices from their previous highs. As raw materials account for approximately 55-60% of the input costs, price corrections in crude oil and other essential components resulted in improved margins for the industry.
Paints & Coatings industry has emerged as an attractive sector, as indicated by the entry of several new players in recent times. These new entrants are actively investing in infrastructure, technology, and marketing to establish their presence and capture a share of the market. This heightened competition has prompted existing players to further bolster their capabilities and differentiate themselves in order to maintain their market position, leading to a surge in investment activity within the industry.
2022-23 summary
Decorative paints, which include interior and exterior paints, enamels, and varnishes, play a crucial role in enhancing the appearance and protecting surfaces in residential, commercial, and industrial buildings.
With a rapidly expanding urban population and increasing disposable incomes, demand for aesthetically pleasing and visually appealing living spaces has soared. India''s diverse cultural heritage and preference for vibrant colors have further fuelled the demand for decorative paints in the country. The government''s emphasis on infrastructure development and the growing real estate sector are also driving the demand for decorative paints.
Your Company''s Decorative Paints business offers a wide variety of essential products for every situation and surface, including paints, lacquers and varnishes. The business also supplies a range of tinting machines, color concepts and training initiatives to the building and renovation industry.
Two startups - HyperReality Technologies and Fluid AI - won our Paint the Future India awards and will work with us to enhance the digital consumer experience for Dulux paints in India.
2022-23 summary
Delivering cutting-edge coating solutions to a variety of industries, our Automotive and Specialty Coatings (âASC'') in India comprises of Automotive OEM Coatings, Consumer Electronics Coatings, Vehicle Refinishes and Specialty Coatings.
Strengthening premium
In the passenger vehicle segment, both Sikkens and Lesonal brands are approved for Tata Motors network refinishing requirements. This year, Lesonal surpassed growth expectations with new brand penetration in Tata Motors'' total volumes.
The business had a strong year of performance as a result of robust brand performances, increased market penetration, a surge in customer acquisitions, and the overall expansion of the automobile industry. These achievements were attained despite certain supply chain disruptions and raw material inflation.
The Indian passenger vehicle industry demonstrated significant progress, producing approximately 3.6 million units, representing an impressive 20% growth. This development further contributed to Automotive and Specialty coatings growth, particularly in the Auto Interior and Vehicle Refinish segments.
Wanda, our reliable international brand is addressing the retail demand in India''s refinish market, supported by widespread demand creation and product demonstration initiatives at retail garage cluster tiers. Also aiding the robust volume growth were engagement with channel associates, fresh geographic growth, and painter loyalty schemes.
Sikkens Autowave 2.0 - a waterborne basecoat - has performed exceptionally well within the Original Equipment Manufacturers (OEM) Authorized Dealerships bodyshop segment. Based on our latest waterborne approval profile, we have now achieved a 100% conversion for all Hyundai India bodyshops across India from solvent basecoat to Sikkens waterborne basecoat.
With a strong growth ambition in the Indian market, our value brands - Wanda, Duco and Autostar - are now transitioning to a distribution model as a route-to-market change to enhance our numeric reach and cater to demand beyond Tier I and metro geographies.
2022-23 summary
Our Powder coatings are a first-class and sustainable alternative to liquid paint. These find application in architecture, general industries, automobiles, functional and domestic appliances.
The Powder Coatings market in India is projected to grow at a CAGR of approximately 6% from 2022 to 2026. This growth is primarily driven by industrial and automotive OEMs transitioning to sustainable options and the architectural sector, particularly commercial and middle-income residential segments, emphasizing the adoption of higher-quality products.
Leading the Charge
Received approvals from multiple leading electric vehicle original equipment manufacturers and battery manufacturers to apply our superior Resicoat and Interpon technologies and solutions.
We are experiencing growth in the Electric Vehicle (EV) sector and Domestic Appliance market, driven by the Make in India initiative. Supportive policies for infrastructure development, including airports and metro projects, are expected to boost the demand for powder coatings in the coming years.
Despite raw material cost inflation over last 2 years and supply disruptions in the post-covid era, Interpon & Resicoat powder coatings have delivered growth and continue to witness strong demand from the industrial & automotive OEMs.
Updated our Interpon Low E product range, for sustainably minded businesses seeking greater energy efficiencies.
Interpon D2525 Stone Effect:
Reputations built in stone
We launched our new Interpon D2525 Stone Effect powder coatings, which delivers a natural finish to aluminum girders. This super durable innovation is available in seven styles and offers up to 25-years warranty. This more sustainable solution is backed by an Environmental Product Declaration (EPD).
We have strengthened our leading position to remain as innovator in the powder coatings market in India through our strategic capacity investment in the production of metallics range of powder coatings through bonded technology in 2022.
2022-23 summary
Serving the buildings and infrastructure industries, consumer goods, the Industrial Coatings business includes Coil and Extrusion Coatings, Packaging Coatings, and Wood Finishes and Adhesives.
Coil and Extrusion Coatings provides high performance coatings to the metal construction industry including roofing, building construction, aluminium composite panels (âACP'') and Domestic Appliance (âDA'') segment.
The coated steel market in India benefited from government infrastructure initiatives and private sector capital expenditure. Extrusion and ACP coatings, catering to Aluminium facades, door and window frames, and high-end infrastructure, experienced significant growth due to projects such as airports, metro construction, high-speed rail, and high-rise buildings.
However, the export segment was impacted by the slowdown in developed countries and the imposition of export duties. Although the removal of these duties in November did not lead to significant improvement as global steel prices declined.
In the coming year, demand for coil coatings is expected to remain robust with the government receiving multiple entries with an investment potential of more than H42,500 crore under the PLI scheme to boost specialty steel production in the country.
Our key focus in the coming years would be to launch robust and sustainable products, like Animal Husbandry, Chrome-free primer offerings, new functional and aesthetic finishes for our topcoats.
Packaging Coatings provide coatings and inks for the metal packaging industry including Food, Caps & Closures, General Line and Beer & Beverage industry.
The business faced softened demand particularly in the Aerosol and Monobloc segments, which are more discretionary in nature. However, demand for seasonal crop packaging remained steady for exports to Europe, USA, and the Middle East.
A significant portion of edible oil and fat packaging moved to other retail packaging formats due to pricing pressures. Although demand remained conducive for Beer and Beverage segments for both domestic and export markets.
Metal Impacts (P) Ltd., one of the leading producers of aluminum cans in India, considers Akzo Nobel India as their preferred partner for complete monobloc offerings. Mr MD Sundar Rajan, Production & Quality Head ( left) says, âAkzoNobel was quick in adapting products to sharp price inflations experienced in 2022 and maintaining the same performance levels, thereby helping Metal Impacts meet their customer expectations with minimal cost disruptions.â
2022-23 summary
This business is about protecting and beautifying assets, both in and out of water. Through our flagship âInternational'' brand, Marine & Protective Coatings find applications in a variety of end-industries including Oil & Gas, Power, Infrastructure projects and Wind Energy.
The Marine Coatings market is witnessing strong demand for drydocks and sea-stores supply. The Make in India initiative is expected to drive new build requirements, leading to new projects in Indian shipyards and drydock opportunities at key ports worldwide.
The Protective Coatings industry is projected to grow at a CAGR of approximately 7% from 2023 to 2026. This growth will be driven by major infrastructure investments, including airports, commercial buildings, ports, shipping, waterways, and power generation (renewable and thermal). Increased investment in data centers is also fuelling the demand for passive fire protection solutions. The Oil & Gas, Chemicals, and mining sectors are experiencing increased capital expenditure, further boosting demand. The market is shifting towards sustainable coatings, low VOC emitting paint solutions, and water-based paints. We are committed to developing new technologies that support our customers in a sustainable manner.
Product stewardship is our commitment to ensuring product safety and considering sustainability aspects throughout the entire value chain, from raw material extraction and R&D to manufacturing, transport, marketing, and application.
To determine the sustainability value we provide to our customers, we utilize the Sustainable Product Portfolio Assessment (âSPPA'') framework, which we have developed in collaboration with other chemical companies and the World Business Council for Sustainable Development (âWBCSD''). This framework offers a comprehensive view of the sustainability characteristics of our product portfolio.
Our products are categorized into three groups: Sustainable Solutions, Performers, and Transitioners.
In 2020, we set a target to generate over 50% of our revenue from sustainable solutions by 2030. Currently, approximately 30% of our revenue is derived from sustainable solutions.
We are not only focusing on our eco-premium solutions that offer superior sustainability benefits compared to mainstream alternatives but also on all solutions that bring sustainability advantages to our customers.
Our innovative products exemplify our commitment to sustainability, from Dulux Weathershield with SunReflect technology that reduces surface temperature by up to 5 degrees, to Intersleek 1100SR, which improves shipping vessel performance while being biocide-free. Our Interpon D technology enhances architectural longevity, and products like Dulux Better Living provide antibacterial properties and durability for asset beautification.
We believe that sustainability and innovation go hand in hand for a better tomorrow. With two state-of-the-art R&D centers in Mumbai and Bengaluru, equipped with world-class facilities and talented professionals, we are well-equipped to develop an innovation roadmap for years to come.
Our key focus areas revolve around building a sustainable business for long-term value creation, benefiting all our stakeholders. Currently, we are placing our focus on the following strategic areas:
⢠Margin Management: We aim to maintain and expand our margins by effectively holding on to pricing gains.
⢠Operating Expense (OPEX): We are actively adjusting our cost base to align with market realities, ensuring efficient expense management.
⢠Working Capital: Our focus is on reducing working capital to enhance cash flow and improve overall financial stability.
⢠Integrated Supply Chain: We are dedicated to enhancing demand planning and resolving supply chain issues to achieve a streamlined and efficient supply chain process.
The Company has implemented internal control systems that are tailored to the nature of its business and the scale and complexity of its operations. Our robust internal control framework allows us to stay ahead of evolving challenges and changing risk profiles, enabling us to achieve predictable and desired outcomes. We have established necessary policies and procedures to safeguard assets, prevent and detect frauds/errors, to ensure the orderly and efficient conduct of our business.
These Internal Financial Controls are designed at both the entity and process levels in accordance with the requirements of the Companies Act, 2013. Regular testing and review of the internal control systems are conducted at specified intervals, covering major processes across our offices and sites. The effectiveness of these internal financial controls is assured through management reviews, self-assessment, and independent testing by the Statutory Auditors. Any audit observations and subsequent actions are reported to the Audit Committee, which evaluates the adequacy and effectiveness of the Company''s internal control environment and monitors the implementation of audit recommendations, including those related to strengthening the Company''s risk management policies and systems.
Our Company is dedicated to upholding the highest standards of ethics and compliance throughout our business processes.
We utilize robust IT tools to drive and enforce compliance across various areas. As required under the listing regulations, the Board of Directors periodically reviews the compliance report pertaining to all applicable laws for the entity.
Furthermore, the Board has established a Risk Management Committee with clearly defined roles and responsibilities. The committee is entrusted with the responsibility of monitoring the execution of the risk management plan and providing updates to the Board on a regular basis.
(a) Risks and Concerns
Risk management plays a crucial role in corporate governance and strategy development. We recognize that risk assessment and mitigation are ongoing processes that must adapt to the evolving risk landscape, encompassing short-term, medium-term, and long-term challenges.
At AkzoNobel, we believe that implementing systematic risk management practices is essential for effectively navigating towards our business objectives and ensuring sustainable growth in a volatile and complex environment. These risks continually evolve and change, both in terms of their impact and the likelihood of their occurrence.
We understand the importance of operating within the dynamics of the paints and coatings industry and taking calculated risks to maintain our relevance in the market.
Our responsible management teams and functional experts identify risks, followed by the formulation of appropriate mitigating actions.
Through our risk management framework, we strive to provide reasonable assurance that our business objectives can be achieved, and our obligations to various stakeholders can be fulfilled. The Board oversees the implementation of risk mitigation measures for key risks, as identified by the Risk Management Committee, which meets at least twice a year. Additionally, the Audit Committee provides additional oversight in the realm of financial risks and controls.
Company''s policy on Risk Management is available on Company website www.akzonobel.co.in and can be accessed from https://akzonobel.co.in/pdf/policy/ RiskManagementPolicy.pdf.
We endeavor to lead our industry by spearheading a world of possibilities to engage individuals and decrease our impact on planet, while reliably developing to convey the most supportable answers for our clients. People being our most significant resource, we strive to give them an ideal workplace to engage, develop and grow. At the end of FY 2022-23, we had 1,494 Full time Employees (FTEs) of which 165 were women.
The following are our key areas of focus in line with our purpose:
D&I: Overview & Achievements
Your Company prioritizes diversity and inclusion (âD&I''), ensuring that all employees feel valued. Our Diversity and Inclusion program focuses on investing in our people, attracting top talent, and fostering individual growth. We understand that retaining talent is crucial, and we continuously improve our processes to support their development. Through our D&I efforts, we aim to create an inclusive culture that enhances competitiveness and innovation. Whether it is recruitment, promotion, talent management, or performance, we strive to build a culture where everyone can excel and support each other''s success.
Here are some notable achievements:
⢠Diversity representation (Women as % of FTEs) has increased from ~8.5% to ~11% in the last year;
⢠Creating awareness through Unconscious bias workshops to enable inclusion;
⢠Mentoring program for Women/ Launching Coaching Circles;
At present, we have three networks and a committee, all of which fall under our Diversity and Inclusion umbrella: Women Inspired Network, True Colours Network and the Diverse Abilities committee. As an organization we truly believe and work towards creating an inclusive environment for our employees and providing equal opportunities to shape a high-performance culture where people grow, collaborate, feel included, adapt quickly, and deliver with pride on our promises.
Employee Engagement
Your Company fosters a culture that maximizes human potential through a leadership focus on employee development and wellbeing. We firmly believe that our people are the most valuable asset of the organization.
Our workplace principles of Employee Engagement revolve around the 4 Cs - Care, Connect, Capability and Culture. We encourage transparent communication within and across teams in the organization - ensuring that everyone is aligned towards the common objectives. This approach cultivates and increases trust and helps create and foster collaboration, not just within the organization in our region, but also globally. We also propagate creating a culture of learning within the organization, that fosters constructive debates and out of the box thinking, leading to innovation and continuous success in the business, despite the numerous constraints and challenges.
Apart from Care, Connect, and Capability, we also have great focus on creating a fun and engaged environment for employees and their families.
Employee Wellness
Employee well-being, both physical and mental, is a core focus for us. We offer high-standard medical care policies and benefits, which serve as our unique selling point (USP). Our initiatives include prompt time off, OPD claims, voluntary medical top-up, and a comprehensive WeCare program designed to support the overall well-being of our employees.
Capability Building
The Capability building agenda is focused on several talent management programs for different talent segments. The overall framework for all the identified leadership development or talent management program remains aligned to the AkzoNobel framework of Align - Execute - Renew.
In both global and regional talent programs, numerous employees from different functions participated as emerging talent from Akzo
Nobel India. Focus has been on development of key talent for both technical and behavioral skillsets and succession plan for critical positions across verticals. Apart from these design-based interventions, there has been a high utilization of e-learning modules available on company''s platform for self-learning.
Rewards
Performance reviews were conducted for all employees. Annual Compensation Process for all employees was completed effectively per the guidelines.
Nomination and Remuneration Policy
The Nomination and Remuneration Policy relating to the Directors and Key Managerial Personnel (âKMP'') has been formulated by the Nomination and Remuneration Committee (âNRC'') and approved by the Board of Directors.
This policy, inter alia, stipulates the criteria for board diversity, appointment and remuneration of Directors and KMP which include determination of qualifications, positive attributes, independence of a director, reviewing succession plans, evaluation of Board performance. The terms of reference of the Nomination and Remuneration Committee is outlined in the Corporate Governance section (Annexure I to this report).
The NRC Terms of Reference cum Policy is available on company website at https://akzonobel.co.in/pdf/policy/NRC-Terms-of-Reference-Policy.pdf
Information required under section 197(12) of the Act read with rule 5(2) and rule 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, as amended, forms part of this report. However, in terms of the provisions of section 136 of the Act, the Annual Report is being sent to members excluding the aforementioned information. Any member interested in obtaining such particulars, may inspect the same at the registered office of the Company by writing an email to investor. [email protected]. The disclosures below are made in terms of Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 as amended:
(i) |
(ii) |
||
Name |
Status |
Ratio of the remuneration of each Director to the median remuneration of the employees of the Company for the financial year 2022-23 |
Percentage increase in remuneration during 2022-23 over 2021-22 |
Oscar Wezenbeek |
Non Executive Director and Chairman |
NA |
No remuneration was paid to him during his tenure as a Director |
Rajiv Rajgopal |
Managing Director |
33.67 |
11% increase in base salary based on Industry benchmarking. |
Krishna Rallapalli |
Wholetime Director and CFO |
15.40 |
9% increase in base salary based on Industry benchmarking |
Amit Jain |
Independent Director |
2.01 |
Reduction in sitting fee due to fewer meetings during the year |
Hemant Sahai |
Independent Director |
1.85 |
Reduction in sitting fee due to fewer meetings during the year |
Smriti Rekha Vijay |
Independent Director |
1.90 |
Reduction in sitting fee due to fewer meetings during the year |
Harshi Rastogi |
Company Secretary |
11.57 |
7.70% Increase in base salary based on industry benchmarking |
Description |
Remarks |
iii. Percentage increase in the median remuneration of employees in the financial year |
7.73% |
iv. Number of permanent employees on the rolls of the Company |
1,494 as on 31 March 2023 |
v. Average percentile increases already made in the salaries of employees other than the managerial personnel in the last financial year and its comparison with the percentile increase in the managerial remuneration and justification thereof and point out if there are any exceptional circumstances for increase in the managerial remuneration |
Average increase in base salary of non-managerial personnel was 7.73% which is considered in line with the prevailing market conditions and other relevant factors. |
It is hereby affirmed that the remuneration to managerial personnel referred to above is as per the remuneration policy of the Company.
Notes:
1. The aforesaid details are calculated on the basis of remuneration paid for the financial year 2022-23.
2. Median remuneration in the Company (Base Salary) for all its employees was H0.92 million for the financial year 2022-23.
3. Remuneration to Directors includes sitting fees paid to them for the financial year 2022-23.
4. Remuneration to Directors is within the overall limits approved by the shareholders.
Maintaining high standards of Corporate Governance has been fundamental to the business of your Company since its inception. In compliance with Regulation 34 read with Schedule V of the Listing Regulations, a Report on Corporate Governance for the year under review is presented in a separate section as Annexure I.
Your Company has a robust mechanism to evaluate the performance of all Board members. A detailed disclosure regarding the parameters and process of Board evaluation, along with the outcomes, has been provided in the Report on Corporate Governance.
Your Company has a Vigil Mechanism Whistle Blower Policy, which lays down the process to convey genuine concerns and seek resolution towards the same without fear of retaliation.
The Policy requires the Investigation team of the Company to investigate such incidents, when reported, in an impartial manner and take appropriate action to ensure that the requisite standards of professional and ethical conduct are always upheld. It is your Company''s Policy to ensure that no complainant is victimised or harassed for bringing such incidents to the attention of your Company, and to keep the information disclosed during the investigation as confidential. The implementation of the Vigil Mechanism Whistle Blower Policy is overseen by the Audit Committee and no employee was denied access to the Committee during the year.
A detailed update on the functioning of the Vigil Mechanism Whistle Blower Policy has been provided in the Report on Corporate Governance. The Policy is available on the company''s website www.akzonobel.co.in and can be accessed from https:// akzonobel.co.in/pdf/policy/Whistle_Blower_Policy_Jan2.pdf.
Sustainability is considered as a fundamental driver of value by the Board of your Company. We strongly believe that integrating the creation of societal value into our corporate strategy not only fosters innovation but also ensures sustainable growth for all stakeholders.
At the core of our operations is the People. Planet. Paint. approach, which guides everything we do. We are dedicated to delivering sustainable and innovative solutions that meet the increasing needs of our customers, communities, and the planet.
Your company recognizes its role in contributing to local communities and considers it a crucial aspect of its sustainability agenda. Through collaborations with organizations, corporates, government bodies, and partners, your company strives to make the AkzoNobel brand impactful.
1) Skill training
As part of our initiative, your company operates five skill training centers under the AkzoNobel Paint Academy (APA), two of which are recognized as International Training Centers by the National Skill Development Corporation. These centers, located in four states, provide skill training in Decorative Paints and Vehicle Refinish to over 3,000 youth and painters annually.
Additionally, in collaboration with other corporates, voluntary bodies and government, your company runs six more skill training centers, connecting trained individuals to employment opportunities with paint contractors and automobile body shops.
We are committed to pursuing economic growth while minimizing our ecological footprint and maximizing our positive social impact. This commitment forms the foundation of our company''s purpose, brands, core principles, and employee value proposition. It serves as a catalyst for growth, innovation, and productivity.
Company''s policy on Sustainability is available on Company website www.akzonobel.co.in and can be accessed from https:// akzonobel.co.in/pdf/policy/Sustainability-Policy.pdf
In terms of Regulation 34 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (âListing Regulations'') read with relevant SEBI Circulars, new reporting requirements on ESG parameters were prescribed under Business Responsibility and Sustainability Report (âBRSR'').
As per the SEBI Circulars, effective from the financial year 2022-23, filing of BRSR is mandatory for the top 1,000 listed companies by market capitalisation. Accordingly, BRSR for the financial year 2022-23 is annexed to this report as Annexure II-A
Your Company is dedicated to comprehensive educational development for underprivileged children in India. Our flagship project, ''Parivartan'' (meaning Progressive Change), operates in six States. The project includes a four-tier program:
a) Early childhood education
b) Non-formal education for out-of-school children
c) Remedial education for underprivileged children
d) Digital literacy
During the year, we also painted five government schools in Madhya Pradesh and Odisha, creating a clean and colorful environment for over 2,000 children.
In partnership with Government Health Departments, your company extends preventive and curative healthcare to over 60,000 villagers in Bengaluru (Karnataka) and Bhind (Madhya Pradesh) through telemedicine. This project utilizes advanced technologies like Artificial Intelligence (AI) for disease detection and offers free doorstep access to specialized diagnostic services.
To ensure healthcare access for the painter community and their families, your company has implemented the âArogya Sakha'' project since 2020-21. Over 1.5 million beneficiaries had access to telemedicine services from specialist doctors. In collaboration with the Genesis Foundation, your company supported surgical interventions for four young children afflicted with congenital heart disease.
Your Company continues to use its research and development base to bring to consumers new products with improved performance features and for special applications. The details of Energy Conservation, Technology Absorption and Foreign Exchange Earnings and Outgo as required under section 134(3) (m) of the Act, read with Rule 8(3) of the Companies (Accounts) Rules, 2014 is annexed as Annexure III to this report.
We have embraced digitalization as a means to maintain competitiveness and leverage emerging technologies. Our strategic initiatives have brought about transformative changes in our business cycle, resulting in factory automation, advanced analytics, and improved customer experiences. To optimize our supply chain, we have implemented the Advanced Planning Transformation (APT) tool, enabling enhanced connectivity and improving demand and supply planning. This has led to higher service levels, reduced inventory, and cost savings.
Automation and advanced analytics play a pivotal role in achieving our Distribution 2.0 goals. Our tailored replenishment tool enhances demand management, optimizes stock tracking, and ensures efficient network management, guaranteeing product availability even in remote locations.
We are focused on implementing smart factory initiatives to enhance manufacturing competitiveness. By incorporating Internet of Things (IoT) technologies, we are improving production efficiencies, enabling predictive debottlenecking, and enhancing safety measures across our sites.
Through collaborative efforts of AkzoNobel experts and winners of the Paint the Future India startup challenge, we are transforming the Dulux experience for Indian paint consumers through our innovative digital solutions.
To ensure compliance with the AkzoNobel Code of Conduct, industrial hygiene and occupational health standards, Insider Trading policy, and statutory requirements, we have established digital assurance platforms.
We remain committed to streamlining our systems and eliminating redundancies wherever necessary, allowing us to operate more efficiently and effectively.
The Company has implemented a comprehensive Prevention of Sexual Harassment at Workplace policy, applicable to all employees. This inclusive policy addresses governance mechanisms and prevention measures for all genders. It is accessible on the company''s website at www.akzonobel.co.in/ corporate-governance.php#policy. The policy aims to prevent and discourage sexual harassment, outlining procedures for resolution and settlement. The company has established an Internal Complaints Committee in compliance with the Sexual
Harassment of Women at Workplace Act, 2013. Awareness workshops and programs are conducted throughout the organization to promote understanding and prevent sexual harassment. Five complaints were reported during 2022-23, and further disclosures can be found in the Corporate Governance Report.
The Company''s Policy on Related Party Transactions (RPTs) can be found on the company''s website at www.akzonobel.co.in/ pdf/policy/Related_Party_Transactions_Policy.pdf. This policy ensures proper reporting, approval, and disclosure processes for all transactions between the Company and Related Parties.
All Related Party Transactions, along with any material modifications, are reviewed and approved by the Audit Committee. The Board of Directors has granted annual omnibus approval within the policy framework for Related Party Transactions for repetitive transactions in the ordinary course of business and at arm''s length.
Independent review by a reputable accounting firm is conducted to ensure compliance with the Companies Act, 2013, and Listing Regulations regarding Related Party Transactions.
During the review period, all related party transactions were conducted in the Ordinary Course of Business and at Arm''s Length basis. No Material Related Party Transactions, as per the Board''s materiality threshold, were entered into by the Company. No materially significant related party transactions were made with the Promoters, Directors, and Key Management Personnel that could potentially conflict with the Company''s interests at large.
Please refer note no. 34 in the financial statements for related party disclosures in accordance with IND AS 24. In compliance with Section 134(3)(h) of the Act and Rule 8(2) of the Companies (Accounts) Rules, 2014, the details of contracts/arrangements with related parties, including certain arm''s length transactions, are disclosed in Form AOC-2, which is included in this report.
There are no loans given or guarantees issued that are covered under Section 186 of the Act read with the Rules made thereunder. Details of investments made under the said section are covered in Note 5.1 of the financial statements.
Statutory Auditors
M/s Price Waterhouse Chartered Accountants LLP hold office till conclusion of the Annual General Meeting to be held in 2026 and will continue as the Statutory Auditors of the Company and have confirmed that they duly fulfil the requirements under applicable laws and regulations to continue as the Auditors of the Company.
The Auditors'' Report for the financial year 2022-23, does not contain any qualification, reservation or adverse remark.
The Statutory Auditors of the Company have not reported any Fraud as specified under Section 143(12) of the Act.
Secretarial Auditors
In terms of Section 204 of the Act, Secretarial Audit was conducted for the financial year 2022-23 by M/s A K Labh &
Co., Company Secretaries, Kolkata. Their report is appended. The Secretarial Audit Report does not contain any qualification, reservation or adverse remark.
The Board has re-appointed M/s A K Labh & Co., Company Secretaries, Kolkata to conduct Secretarial Audit for the financial year 2023-24.
Cost Auditors
In terms of Section 148 of the Companies Act 2013, Cost Audit was conducted for the year 2022-23 by M/s Chandra Wadhwa & Co., New Delhi. The Cost Audit report for the year 2021-22 was filed with MCA within the stipulated time.
The Board has re-appointed M/s Chandra Wadhwa & Co.,
New Delhi as the Cost Auditors for conducting Cost Audit for the financial year 2023-24, whose remuneration is subject to ratification by the shareholders at the forthcoming AGM.
The Cost Accounts and records as required under Section 148(1) of the Act are duly maintained by the Company and audited by the Cost auditors.
In terms of Section 92(3) of the Companies Act, 2013 and Rule 12 of the Companies (Management and Administration) Rules, 2014, as amended, the Annual Return of the Company is available on the website of the Company at www.akzonobel. co.in, and can be accessed from www.akzonobel.co.in/investors. php#anr.
The Board composition remained unchanged since the last Directors'' report. Mr Krishna Rallapalli will retire by rotation at the upcoming Annual General Meeting (AGM) and has offered himself for re-appointment. The current term of Mr Hemant Sahai as an Independent Director ends on August 2, 2023. The Board recommends his re-appointment for another three-year term, subject to shareholder approval. The AGM Notice includes the appointments of Mr Krishna Rallapalli and Mr Hemant Sahai, along with their profiles as required by Listing Regulations.
Mr Rajiv Rajgopal, Managing Director, Mr Krishna Rallapalli, Wholetime Director and CFO, and Mrs Harshi Rastogi, Company Secretary, serve as the whole-time Key Managerial Personnel of the Company under Section 203 of the Act.
The terms of reference and composition of all the Committees of the Board has been provided in the Corporate Governance Report.
There were 4 Board Meetings held during the year under review. The Board Meeting Dates and the attendance of the Directors at the meetings have been provided in the Corporate Governance Report.
As required under section 134(5) of the Act, the Directors confirm that:
a) in the preparation of the annual accounts for the year ended 31 March 2023, the applicable Indian accounting standards have been followed and with proper explanation relating to material departures, if any;
b) 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 your Company for that period;
c) the Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act 2013 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;
d) the Directors have prepared the annual accounts on a going concern basis;
e) the Directors have laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and were operating effectively; and
f) the Directors have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.
⢠Most Trusted Brand of India 2023: Two centuries of AkzoNobel''s colour expertise, innovation, the power of science, and above all, our commitment to delight consumers with high-quality products is inside every can of Dulux. That''s why, we''re even more thrilled to share that Dulux is now among the Most Trusted Brands of India 2023 powered by Marksmen Daily!
⢠Best Campaign in Home Improvement & Decor segment by the International Advertising Association (India Chapter) Award: âThe two-episode digital campaign âParul aur Painter- A Love Story'', a fun take on love stories
due to water seepage in homes, was awarded the Best Campaign in Home Improvement & Decor segment by the International Advertising Association (India Chapter)
⢠2021 FICCI CSR Awards- special Jury Recommendation for its CSR projects undertaken in Skill Development & livelihood. Award was presented by the Minister of SC/ST Welfare, Government of India
⢠2022 ICSI CSR Excellence Award - Small and emerging category.
⢠2022 CII ITC Sustainability Award - Commendation for Significant Achievement in Corporate Social Responsibility
Your Directors state that no disclosure or reporting is required in
respect of the following items, as there were no transactions on
these items during the year under review:
1. The Company has issued only one class of equity shares with equal voting rights.
2. The Company has not issued shares with differential voting rights and sweat equity shares during the year under review.
3. The Managing Director or Whole time Directors of the Company did not receive any remuneration or commission from any other company belonging to AkzoNobel Group or associate companies.
4. No significant or material orders were passed by the Regulators or Courts or Tribunals, which could impact the going concern status and its future operations.
5. There has been no change in the nature of business of your Company during the financial year.
6. There have been no material changes and commitments affecting the financial position of the Company between the end of the financial year and date of this report.
7. Your Company did not accept any public deposit within the meaning of the Companies (Acceptance of Deposits) Rules, 2014 and accordingly no amount on account of principal or interest on public deposits was outstanding as on the date of the balance sheet.
8. Your Company has complied with the applicable Secretarial Standards, issued by The Institute of Company Secretaries of India.
9. Your Company has neither made any application nor any proceeding is pending under the Insolvency and Bankruptcy Code, 2016 with any Tribunals.
10. Your Company has not made any one-time settlement against loans taken from the Banks or Financial Institutions.
11. Independent Directors have confirmed that they meet the criteria of independence in terms of Section 149(6) of the Companies Act, 2013.
Some of the statements in this report, describing your Company''s objectives and expectations expressed in good faith, may constitute âforward-looking statements'' within the meaning of applicable laws and regulations and may involve risks and uncertainties. Actual results, performances or achievements could differ materially from those expressed or implied in such forward-looking statements. Readers are cautioned not to place undue reliance on these forward-looking statements that speak only as of their dates. This Report should be read in conjunction with the financial statements included herein and the notes thereto.
All amounts in this report and annexures thereto are in Rupees (''H'') million, unless specified otherwise.
The Directors express deep appreciation to employees for their hard work and dedication. They also acknowledge the parent company''s valuable contributions in technology and marketing, enabling improved products and customer satisfaction. The Board appreciates the ongoing support and cooperation from suppliers, distributors, retailers, investors, bankers, government authorities, regulatory bodies, stock exchanges, business partners, and stakeholders.
On behalf of the Board Oscar Wezenbeek
Place: Singapore Chairman
Date: 23 May 2023 DIN 08432564
Mar 31, 2022
The Board of Directors hereby present their 68th report on the business and operations of your Company along with the audited financial statements for the financial year ended 31 March 2022.
Although the year witnessed two waves of Covid-19, the industry was able to stage a strong comeback with supportive economic environment, fast pace of vaccination, and improving consumer sentiment.
While Paints & Coatings industry has always been at the forefront of innovations, the pandemic has further accelerated advancement in technology, usage, services and aesthetics. During the year, the decorative paints industry further expanded its offerings under health & wellness proposition, increased breadth in adjacent spaces and improved consumer experience.
After softened demand due to the pandemic, the real estate market has been on an upswing since the second half of the previous year. Sustained infrastructure investments, increased connectivity, and better job opportunities are fuelling broad-based real estate growth. This has translated into strong double-digit growth for the Projects business.
Infrastructure development remains a government priority in the medium term. The National Infrastructure Pipeline (âNIP''), which has launched many projects in core sectors like power, roads, railways, and urban projects is a beneficiary trend for Industrial Coatings which find applications in all these sectors.
There has been significant inflation in crude derivatives and critical raw materials like titanium dioxide and monomers. While the industry has taken price increases, the cost inflation has softened margins of the industry players.
Pursuant to section 129(3) of the Act read with rule 5 of the Companies (Accounts) Rules, 2014, and other applicable provisions, if any, of the Companies Act 2013 (âthe Act''), a statement containing salient features of the financial statement of the subsidiary of the Company viz. ICI India Research & Technology Centre, viz. Form AOC-1 forms part of this Annual Report. The consolidated financial statements presented in this annual report include financial results of the subsidiary pursuant to Rule 8(1) of the Companies (Accounts) Rules, 2014.
In accordance with section 136 of the Act, the financial statements of the subsidiary are available for inspection by the members at the registered office of the Company during business hours on all days up to the date of the Annual General Meeting (âAGM''). Members are requested to email a request for obtaining a copy of the said financial statements at [email protected] so that necessary arrangements can be made at the registered office of the Company. The financial statements including the Consolidated Financial Statement and all other documents required to be attached to this report have been uploaded on the website of the Company at www.akzonobel.co.in.
The paid-up share capital of the Company as on 31 March 2022 was H 455.40 million comprising 45.54 million equity shares of H 10 each (Previous year H 455.40 million comprising 45.54 million equity shares of H 10 each).
The Board of Directors at its meeting held on 11 February 2022, approved payment of interim dividend of H 40 per equity share. This dividend was paid on 7 March 2022 to those shareholders whose name was registered in the Register of Members as on 23 February 2022, being the record date. Your Directors are pleased to recommend a Final Dividend of H 35 per equity share for the year ended 31 March 2022 in light of India''s 75th anniversary of Independence. The Final Dividend, subject to the approval of Members at the Annual General Meeting on 5 August 2022, will be paid to those Members whose names appear in the Register of Members, as on the record date 29 July 2022. The total dividend for the financial year, including the proposed Final Dividend, amounts to H 75 per equity share.
In view of the changes made under the Income-tax Act, 1961, by the Finance Act, 2021, dividends paid or distributed by the Company shall be taxable in the hands of the Shareholders. Your Company shall, accordingly, deduct tax, if any, before making dividend payments.
The Company is in compliance with its Dividend Distribution Policy as approved by the Board. In compliance with the
requirements under Regulation 43A of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 (Listing Regulations), the Policy has been uploaded on the Company''s website at www. akzonobel.co.in and may be accessed from www.akzonobel. co.in/corporate-governance.php#policy.
During the financial year, there was no amount transferred to the Reserves.
The financial statements include:
1. Standalone financial statements of the Company, Akzo Nobel India Limited; and
2. Consolidated financial statements of the Group including the operational results of ICI India Research & Technology Centre, on which the Company exercises effective control.
The highlights of the performance during the year are:
(H million) |
||||
Standalone |
Consolidated |
|||
2021-22 |
2020-21 |
2021-22 |
2020-21 |
|
Revenue from Operations |
31,486 |
24,214 |
31,486 |
24,214 |
Operating Profit (EBITDA)* |
4,323 |
3,407 |
4,325 |
3,408 |
Depreciation |
(759) |
(755) |
(759) |
(755) |
Other Income net of finance costs |
83 |
130 |
83 |
130 |
Exceptional items |
20 |
- |
20 |
- |
Profit before tax |
3,667 |
2,782 |
3,668 |
2,782 |
Tax |
(767) |
(706) |
(767) |
(706) |
Profit after tax |
2,900 |
2,076 |
2,901 |
2,076 |
*before exceptional items |
||||
Standalone |
Consolidated |
|||
Key financial ratios |
2021-22 |
2020-21 |
2021-22 |
2020-21 |
Debtors Turnover |
6.9 |
6 |
6.9 |
6 |
Inventory Turnover |
3.3 |
2.9 |
3.3 |
2.9 |
Interest Coverage |
29.9 |
33.2 |
29.9 |
33.2 |
Current ratio |
1.5 |
1.6 |
1.5 |
1.6 |
Operating Profit Margin (%) |
14 |
14 |
14 |
14 |
Net Profit Margin (%) |
9 |
9 |
9 |
9 |
Return on Networth (%) |
23 |
16 |
23 |
16 |
Debt/ Equity |
5.6 |
5.0 |
5.6 |
5.0 |
There is no significant change (i.e. change of 25% or more as compared to the immediately previous financial year) in the key financial ratios except for Return on Networth, which was increased from last year as the net profit during the year increased by 40%.
2021-22 was a year of strong progress on our Grow & Deliver ambitions. Your company achieved its highest revenue till date with 30% YoY growth. This was underpinned by strong double-digit growth across all the businesses. Decorative Paints growth was led by launches, urban markets and Projects business. Customer-centric solutions for infrastructure, power, mining, automotive industries resulted in good order books for Coatings business. With access to global R&D technology, your Company continues to focus on innovations by bringing best in class differentiated products to the Indian consumer. Raw material inflation continued to adversely impact Gross Margins. However, your company implemented judicious price increases, which helped to safeguard margins. This in conjunction with opex management helped your company achieve its highest profitability till date. We are also proud to have sustained double-digit profitability for three consecutive years.
Industry structure and developments
India''s Paints & Coatings industry is approximately a H 55,000 Crore market, with organized players accounting for over 75% of the industry. The decorative paint category constitutes almost 70% of the organised market and includes multiple categories like exterior wall paints, interior wall paints, wood finishes and enamels, as well as ancillary products like primers, putties, etc. The industrial paint category includes a broad array of segments like automotive, marine, packaging, powder, protective and other general industrial coatings.
The country''s paints and coating industry is poised to grow at a healthy rate in the medium and long run. There have been shifts in the consumer behaviour with demand being led by shorter repainting cycles, digital initiatives, construction activity, and industrial & infrastructure development. As a result, the industry is witnessing significant investment in capacity expansions and greenfield plants by existing paints and coating producers, and forays by new entrants.
AkzoNobel''s Decorative Paints business offers a wide variety of essential products for every situation and surface, including paints, lacquers and varnishes. The business also supplies a range of tinting machines, color concepts and training initiatives to the building and renovation industry.
Some of the success stories of the year are as follows:
⢠Relaunched super premium offering Velvet Touch with the all new Tru Color technology promising intense rich colors, further strengthening the luxury Interior Emulsion range. With this, the brand also unveiled a new campaign âFeels like Homeâ with an emotionally connecting father-daughter story, painting a progressive narrative. The campaign was live on TV in April 2022;
⢠Fortified its presence in Health & Well-being segment with the launch of its first ever Anti-Viral offering in Premium Interior Emulsions'' category - Dulux SuperClean Range;
⢠Strengthened our Affordable segment portfolio of brands - Smart Choice with addition of new markets & channel;
⢠Foray into a new category/surface with the launch of our inhouse product - Dulux FloorPlus with a compelling ready to use shades offering;
⢠Waterproofing category strengthened with a comprehensive offering across price tiers with expansion of Aquatech DampProtect Basecoat across all geographies;
⢠Strengthened our play in Adjacent category with the launch of Sadolin Luxurio PU - Premium Italian Finish for woodcare category;
⢠Fortified our play in Professional segment with focus on Super Premium products especially our distinct 15-year warranty offering - Weathershield TRE-2000 & Elastomeric products. Both helped build a very strong pipeline across segments & drive growths across Government & Repainting segments.
Delivering cutting-edge coating solutions to a variety of industries, Automotive and Specialty Coatings (âASC'') in India comprises Automotive OEM Coatings, Consumer Electronics Coatings, Vehicle Refinishes and Specialty Coatings.
The auto industry was impacted by supply-side challenges and semiconductor shortages, but witnessed growth in Passenger Vehicles, Commercial Vehicles and Three-wheeler segments for the year. This was driven by normalization of economic activities, launch of new models and growing infrastructure building activity. Favourable government policies such as the extension of FAME-II scheme and launch of the production-linked incentive (âPLIâ) scheme for auto and auto component sector should bode well for the industry.
During the year, the ASC business was pleased to leverage its global partnership with McLaren in India by shipping in its 1st order. McLaren Cars operate under Super Premium luxury sports car segment and our brand Sikkens is exclusively approved and used as OEM finishes as well as for their Aluminium, Carbon fiber and other composite substrate.
Value Brand Wanda too made great strides in expanding geographic footprint.
Our Powder coatings are a first-class and sustainable alternative to liquid paint. These find application in architecture, general industries, automobiles, functional and domestic appliances.
Powder Business had a strong performance in the year 2021-22 with a strong pickup in Real Estate and Automotive industries supported by Atmanirbhar Bharat and Manufacture in India Initiatives of the Government. Our bonded technology for high architectural finishes is seeing lot of traction in the market.
During the year, we launched new Futura range of contemporary colour scheme for Building Facades. We gained some good project
wins in Airport and Real Estate projects. We have also localized Interpon AM, a high-quality powder with anti-microbial technology with applications in Medical/Dental Equipment, Public Transport and Construction.
The focus on green technology is rising as India and the world get more sustainability conscious. Our Powder Coatings business has switched on to the growing needs of its customers by developing advanced technologies to help power the industry into the future. Accordingly, we launched several exciting products for the Electric Vehicle (EV) sector to help protect motors, battery system and electrical storage units.
Serving the consumer goods, buildings and infrastructure industries, the Industrial Coatings business includes Coil and Extrusion Coatings, Packaging Coatings, Wood Finishes and Adhesives.
Coil and Extrusion Coatings provides high performance coatings to the metal construction industry including roofing, building construction, aluminium composite panels (âACP'') and Domestic Appliance (âDA'') segment.
Coated steel market saw a major recovery in the current year after a slowdown in the previous year. It was majorly supported by the infrastructure push by the government and pent-up demand from capex investments from private players. Extrusion Coatings which mainly supplies coatings for aluminium facades, door and window frames and high end infrastructure, too saw a good growth from several projects taken up in the previous year, like high rise buildings, airports, etc.
This year saw a significant increase in the steel prices globally and India was no different. This was primarily because of the stimulus package and monetary easing policy by most of the countries. Unlike last year, most of the customers were ready to run the operations smoothly without much supply chain issues or labour shortage. The industry witnessed a strong growth from both domestic and export markets. Demand for this segment is likely to remain strong supported by various government initiatives and PLI schemes for the steel sector.
Our key focus in the coming years would be to launch robust and sustainable products, like Chrome free primer offerings, new functional products and highly durable Coil topcoats.
Packaging Coatings provides coatings and inks for the metal packaging industry including Food, Caps & Closures, General Line and Beer & Beverage industry. Packaging Coatings business in 2021-22 saw a steady growth both in domestic as well as in the exports market. This year we witnessed a good recovery in the non-essential category like deodorant, aerosols, general line etc which were impacted in the previous year due to Covid led lockdown. Beer & beverage segment continued to perform better than other segments supported by export demand and consumer inclination to move towards cleaner and renewable form of metal packaging. Our company successfully launched BPANI (BPA Non-Intended) Internal Spray Lacquer last year and saw good growth from all types of beverage cans in the current year. Metal packaging products being supplied to domestic packaged food and beverages, hotels, restaurants, and caterers, came back to prepandemic levels and is witnessing good growth.
This business is all about protecting and beautifying assets, both in and out of water.
Through our flagship âInternational'' brand, Marine & Protective Coatings find applications in a variety of end-industries including Oil & Gas, Power, Infrastructure projects and Wind Energy.
Marine & Protective Coating business had a very strong growth during the year, led by project wins in Infrastructure, Mining, Power and Coastal & Navy businesses. With the pickup in business activity, demand for fire protection solutions and long-lasting corrosion protection from harsher environments is seeing higher demand across the country. We provided fire proofing solutions to commercial buildings, Covid Hospitals, Data Centres and Airports.
Some of the innovations during the year included Spray Master Aerosol Cans, enabling easy-to-use repairs; Interplus 4102 Odin gel, an effective and safer alternative for rust removal; localization of topcoats for windmill blades, which were hitherto imported; and Chromoscan tinting machines for our network expansion. We remain the preferred partners for many industry majors.
Your Company''s strategic objective is to build a sustainable business for long-term value creation as part of the Grow and Deliver strategy embarked by AkzoNobel Group. To achieve this objective, your company is focusing on:
In preparation of financial statements for the year ended 31 March 2022, the Company has taken into account the possible impact of COVID-19 and the related internal and external factors known to the management upto the date of approval of these financial statements to assess the carrying amount of its assets and liabilities. Accordingly, no material impact is anticipated in these financial statements.
The Company''s internal control systems are commensurate with the nature of its business and the size and complexity of its operations. Appropriate internal control policies and procedures have been laid down for ensuring an efficient conduct of the business, accuracy and completeness of accounting records, compliance with applicable laws and regulations, safeguarding of its assets, prevention and detection of frauds and errors and reliability of financial reporting.
Effectiveness of internal financial controls is ensured through management reviews, self-assessment and independent testing by the Statutory Auditors. The internal control systems are regularly tested and reviewed at regular intervals and cover all offices, factories, and key business areas. Any audit observations and follow up actions thereon are reported to the Audit Committee. The Audit Committee reviews adequacy and effectiveness of the Company''s internal controls environment and monitors the implementation of audit recommendations, including those relating to strengthening of the Company''s risk management policies and systems.
The Board periodically reviews the state of compliance with all relevant laws applicable to the Company. The Company uses a robust IT tool incorporating all applicable legal compliances with owners and approvers across functions.
The Board has also constituted a Risk Management Committee clearly defining its Terms of Reference besides roles and responsibilities. The Board has delegated the monitoring and reviewing of the risk management plan to the committee which updates the Board from time to time.
At AkzoNobel, we believe that systematic risk management practices ensure effective navigation to achieve business objectives and enable sustainable growth in a volatile and complex environment. These risks are constantly evolving and changing, in terms of their impact & probability of their occurrence.
Doing business inherently involves taking risks. By seeking to take balanced risks, we strive to be a successful and respected company. Risk management is an essential element of corporate governance and strategy development. We continuously strive to foster a high awareness of business risks to provide transparency in our processes and operations. Your Company constantly scans the internal and external environment to identify the emerging risks and also assesses them for impact on your Company''s objectives.
The Board monitors the implementation of Risk Mitigation measures for the key risks as identified by Risk Management Committee during the year. The Audit Committee has additional oversight in the area of financial risks and controls. We consider risk assessment and mitigation to be a continuous process. Our risk management framework provides reasonable assurance that our business objectives can be achieved and our obligations to various stakeholders can be met.
Company''s policy on Risk Management is available on Company website www.akzonobel.co.in and can be accessed from https:// akzonobel.co.in/corporate-governance.php#policy.
Our success as an organisation depends on our ability to identify risks and exploit opportunities generated by our business and the markets we operate in. Listed below are some of the opportunities before the Company.
Opportunity description |
Our response to opportunities |
|
Growing in Channels for the future: With advent of technology enabled distribution models there has been a hyper fragmentation of channels. Accelerated growth of e-Commerce has brought about a huge opportunity to tap into these channels and drive business growth. |
i |
Several new initiatives have been launched which include digitisation, collaborating with key players in e-Commerce: V Do it Yourself (âDIY'') range of product V Aggregator tie ups |
Digital Transformation: Opportunities arising from rapidly emerging digital technologies present a chance to make meaningful interventions and develop capabilities across the value chain redefining the way we do business. |
f |
¦/ Launch of Global Gaudi CRM ¦/ Launch of Barcode for tracking products |
Human Resources
We strive to lead our industry by pioneering a world of possibilities to empower people and reduce our impact on the planet, while consistently innovating to deliver the most sustainable solutions for our customers. That''s why we call our new purpose - People. Planet. Paint. We grew by 2% from last year with total number of employees on rolls of the Company as at 31 March 2022 being 1,467 (previous year 1,436). Our People being our most important asset, we ensure to provide them an optimum work environment to engage, develop and grow.
The uniqueness in our work culture remains in creating a leadership ladder within the organisation with principles based on empowering, decision making, agility in actions, cultivating right behaviors, recognizing and rewarding performance. During this year, employee participation moved to top Decile score in the Organizational Health Index Survey (âOHIâ) which depicts our employees trust on company direction & leadership and initiatives focusing on their development, growth, motivation, etc. Your Company links itself to the 4 C''s of workplace principles; Care, Connect, Capability and Culture.
The year saw a continual trend of Covid disruptions, but we stood strong and leveraged virtual modes to support employees through launching companywide initiatives like AkzoCares Covid Squad, a benevolent initiative aimed at helping employees and their families in need of support, Covengers Initiative, wherein we dedicatedly aimed interventions on mental wellbeing sessions, fun and entertainment sessions and positive connect within the organization.
As an organization, we believe in strengthening two-way communication. We launched several initiatives such as Spotlight series, wherein we had different themes for celebrating People & their achievements. Employee Brand Advocacy Program brought forward 30 Brand champions who shared their views under #MyBrandMyPride campaign. Similarly, we created different forums for our employees to connect with Leadership and their peers to share their experience and learn from each other''s journey.
We focused on strengthening the sense of belonging among employees and their families through several engagement events conducted during the year. Some of the successful events conducted included Rangmanch, Q for Qurious, Flying Colors, etc. where we had massive participation and a high engagement level. We rolled out Annual engagement calendar at the start of the year and accordingly executed the aforementioned events as planned.
Employee Wellness
Wellness of our employees was a key focus area during the year. Special programs were curated to support our employees and their families during these trying times, such as the Akzo Cares Oxygen Support, CovidSquad, Covengers initiative for physical & mental wellbeing, and Visit - The Telehealth Support programme, etc. Vaccination drives were conducted at various sites and offices.
A benefits Insurance Top up plan was also rolled out for employees to enhance the medical insurance coverage sighting increase in medical expenses due to pandemic.
Rewards
Performance reviews were conducted for all employees. Annual Compensation Process for all employees was completed effectively per the guideline.
While standard training programs on Code of Conduct, Diversity & Inclusion (Unconscious Bias, Diversity Equity & Inclusion - DEI Sensitization and Awareness) are done each year, this year''s capability building agenda focused on several talent management programs for different talent segments. The overall framework for all the identified leadership development or talent management programs remains aligned to the AkzoNobel framework of Align-Execute-Renew.
In the global talent program, we witnessed more than 100 employees from different functions participating as the Emerging Talent from India. Similarly, in the regional South APAC program, we observed highest number of participants from India under various streams such as Leading Self and Leading Team(s). Both the programs have blended approach, projects, workshops and learning assignments aimed at engaging and building future ready talent. Several other programs were launched which are primarily focused on upskilling participants keeping succession planning in mind, and in developing talents on key functional and technical skillsets needed for the team to enhance performance. Apart from these design-based interventions, there has been high utilization of e-learning modules available on Company''s platform for self-learning.
D&I has been one of the key focus areas throughout the year. From rolling out initiatives to strike the right mix of Diversity in our employees through several recruitment focus initiatives, there are many actions done to develop the right Infra and create a no gender bias environment. Women Inspired Network (WIN), India chapter which was launched to drive focus on diversity last year continued to create awareness & sensitization through several initiatives & interventions throughout the year. WIN India Led the #MenasAllies Campaign Globally during April-May 2021. Akzo Nobel India has tied up with the UN Global Compact group and is now part of Target gender equality.
Company''s policy on Diversity & Inclusion is available on Company website www.akzonobel.co.in and can be accessed from https://akzonobel.co.in/corporate-governance.php#policy
The Nomination and Remuneration Policy relating to the Directors and Key Managerial Personnel (âKMP'') has been formulated by the Nomination and Remuneration Committee (âNRC'') and approved by the Board of Directors.
This policy, inter alia, stipulates the criteria for board diversity, appointment and remuneration of Directors and KMP which include determination of qualifications, positive attributes, independence of a director, reviewing succession plans, evaluation of Board performance. The terms of reference of the Nomination and Remuneration Committee is outlined in the Corporate Governance Report which forms part of this Report.
The NRC Terms of Reference cum Policy is available on company website at https://akzonobel.co.in/corporate-governance.php#policy
Information required under section 197(12) of the Act read with rule 5(2) and rule 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, as amended, forms part of this report. However, in terms of the provisions of section 136 of the Act, the Annual Report is being sent to members excluding the aforementioned information. Any member interested in obtaining such particulars, may inspect the same at the registered office of the Company by writing an email to [email protected].
The disclosures below are made in terms of Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 as amended:
(i) |
(ii) |
||
Name |
Status |
Ratio of the remuneration of each Director to the median remuneration of the employees of the Company for the financial year 2021-22 |
Percentage increase in remuneration during 2021-22 over 2020-21 |
Oscar Wezenbeek |
Non Executive Director |
- |
NA - no remuneration was paid to him during his tenure as a Director |
Rajiv Rajgopal |
Managing Director |
38.30 (Refer Note 5 below) |
11% increase in base salary based on Industry benchmarking. |
R Krishna |
Wholetime Director and CFO |
NA - only part of the year in 2021-22 |
NA |
Lakshay Kataria |
Wholetime Director and CFO |
NA - only part of the year in 2021-22 |
NA |
Amit Jain |
Non Executive -Independent Director |
2.29 |
30% |
Arvind Uppal |
Non Executive -Independent Director |
NA - only part of the year in 2021-22 |
NA |
Hemant Sahai |
Non Executive -Independent Director |
2.18 |
32% |
Rahul Bhatnagar |
Non Executive -Independent Director |
NA - only part of the year in 2021-22 |
NA |
Smriti Rekha Vijay |
Non Executive -Independent Director |
2.24 |
36% |
Harshi Rastogi |
Company Secretary |
11.35 |
8.0% Increase in base salary based on industry benchmarking |
Description |
Remarks |
|
(iii) |
Percentage increase in the median remuneration of employees in the financial year |
6.7% |
(iv) |
Number of permanent employees on the rolls of the Company |
1,467 as on 31 March 2022 |
(v) |
Average percentile increases already made in the salaries of employees other than the managerial personnel in the last financial year and its comparison with the percentile increase in the managerial remuneration and justification thereof and point out if there are any exceptional circumstances for increase in the managerial remuneration. |
Average increase in base salary of non-managerial personnel was 6.7%, which is considered in line with the prevailing market conditions and other relevant factors. |
It is hereby affirmed that the remuneration to managerial personnel referred to above is as per the remuneration policy of the Company.
Notes:
1. The aforesaid details are calculated on the basis of remuneration for the financial year 2021-22.
2. Median remuneration in the Company (Base Salary) for all its employees was H 0.85 million for the financial year 2021-22.
3. Remuneration to Directors includes sitting fees paid to them for the financial year 2021-22.
4. Remuneration to Directors is within the overall limits approved by the shareholders.
5. In the previous year Managing Director got a one time performance incentive payout for 15 by 20 target achievement.
Maintaining high standards of Corporate Governance has been fundamental to the business of your Company since its inception. In compliance with Regulation 34 read with Schedule V of the Listing Regulations, a Report on Corporate Governance for the year under review is presented in a separate section as Annexure I.
Your Company has a mechanism to evaluate the performance of all Board members. Details of the evaluation are given in the Corporate Governance report.
Your Company has adopted a Vigil Mechanism Whistle Blower Policy as detailed in the Corporate Governance Report. The Policy is available on the company''s website www.akzonobel. co.in and can be accessed from www.akzonobel.co.in/corporate-governance.php#policy.
The Board views sustainability as an intrinsic value driver.
Guided by our People. Planet. Paint. approach, which lies at the heart of everything we do, we''ve made it our business to deliver the sustainable and innovative solutions that our customers, communities - and the planet - are increasingly relying on. We''re fully focused on ensuring that the pioneering paints and coatings we supply today can help to safeguard our world far beyond tomorrow.
Company''s policy on Sustainability is available on Company website www.akzonobel.co.in and can be accessed at https:// akzonobel.co.in/corporate-governance.php#policy
SEBI vide its Notification dated 5th May, 2021, has discontinued the requirement of submitting a Business Responsibility Report (âBRR'') after the financial year 2021-22 and with effect from the financial year 2022-23, the top one thousand listed entities, based on market capitalization as on the 31st day of March of every financial year, have been mandated to submit a Business Responsibility and Sustainability Report (âBRSR'') in the format as specified from time to time.
The disclosure requirement in BRSR is based on National Guidelines on Responsible Business Conduct Principles (âNGRBC''). In compliance with Regulation 34 of the Listing Regulations, your Company has voluntarily provided a BRSR, and the same forms part of this Annual Report, and is attached as Annexure II-A
Sustainability for the Company also means delivering long-term value for all our stakeholders while effectively handling financial, social and environmental aspects. We are committed to pursuing our economic growth while concurrently watching our ecological footprint and increasing our positive social impact. It underpins your Company''s purpose and brands, its core principles and employee value proposition. It also acts as the driver of growth, innovation and productivity.
Some highlights of the CSR activities conducted during the year are as under:
Company fully understands its role and responsibilities when it comes to society and contributing to the communities in which it operates. This forms an integral part of its sustainability agenda. Your Company engages with people and partners with various like-minded organizations, corporates, government bodies to help bring the AkzoNobel brand to life, while also supporting deserving and sustainable projects and causes. The CSR agenda of your Company is based on economic development through pillars of skill building, education and community healthcare and is governed by policies duly approved by the CSR Committee, Board and the Companies Act 2013.
As a part of this initiative, your Company runs 5 own skill training centres (2 recognized by National Skill Development Corporation as International Training Centres) of AkzoNobel Paint Academy (âAPA'') in four states of India offering skill training to more than 2,000 youth and painters per year in Decorative Paints and Vehicle Refinish. In partnership with like-minded corporates it is also running 5 more skill training centres. Post the training these youth are linked to employment with paint contractors and automobile body shops.
As a part of Diversity & Inclusion initiative, APA has put special focus on disadvantaged groups and sections of society to bridge inequality. The following initiatives have been taken in this regard during the year:
⢠310 women have been trained and placed in jobs as painters
⢠147 prison inmates and juveniles have been trained out of which 35 have gained a fresh lease of life by resuming work as painters
⢠Women empowerment programme for rural women under which 180 women have been trained in Decorative Paints and linked with employment as painters
⢠APA has conducted deco training for 25 youth at Imphal as livelihood rehabilitation for youth recovered from drug addiction as a pilot project
⢠MOU with Apna (professional networking and job app/ portal for blue collared work force) for providing professional development of painters
Your Company is committed towards all round educational development of under privileged children in India. Our flagship education project named âParivartan'' (meaning Progressive Change) is being implemented in six states and is instrumental in transforming the lives of more than 2,400 children during the year by using education as a medium. In this project, we offer a three-tier program-
a) Early childhood education to children from 2-6 years
b) Non-formal education to out-of-school children to bring them back to formal school, and
c) Remedial education to under privileged children to improve their grades and stop them from dropping out of school.
d) Digital Literacy
In Bhind district of Madhya Pradesh, your Company continued the education program for adult women who have never attended school.
To ensure continuing education for under privileged children in Government schools during COVID19, AkzoNobel provided 270 digital tablets to support more than 500 children to prepare for class 10th board exams.
To provide better and colorful ambiance, your Company has painted 19 Government schools across Delhi, Haryana, Maharashtra, Kerala and Telangana which has helped more than 15,000 children in 5 states.
Your Company in partnership with Government Health Departments provides preventive and curative health care to more than 60,000 villagers around Bengaluru (Karnataka) and in Bhind (Madhya Pradesh) through tele medicine. The project uses latest technology like Artificial Intelligence (AI) to detect diseases and provide access to specialized diagnostic services.
The project is a boon for the villagers as it provides free of cost diagnostic services and ensures access of specialized health care at their doorstep.
As an extension of Tele-health project of Bengaluru, your Company kicked off a new project pan India during COVID 19 viz. âArogya Sakha'' (health''s best friend) exclusively for the painter community and their families. In this project, more than 1.5 million beneficiaries get access to specialist doctors through tele-medicine.
Your Company provided 5 motorized wheelchairs to under privileged people with muscular dystrophy in Kerala.
In order to support food security for the most vulnerable sections of society, AkzoNobel provided support to community kitchen which provided nutritious food to 250 women and children across 4 villages of Mayurbhanj district of Odisha.
Your Company continues to use its research and development base to bring to consumers new products with improved performance features and for special applications. Particulars in respect of conservation of energy, technology absorption and foreign exchange earnings and outgo, pursuant to Section 134 of the Act, are given in Annexure III to this report.
Your Company has always been on the forefront in terms of leveraging technology for the business, which enabled us to accept the new normal and the challenges of the time which enabled us to accept the new normal.
Pandemic hastened the use of technology to enable us to conduct the business in a hybrid manner.
Investment in digital technologies such as Artificial Intelligence (âAI''), Advanced Analytics, Robotic Process Automation (âRPA'') continued to create immense customer experiences and aid in organisational productivity.
Your Company continued to rationalise systems to remove redundancies where they exist.
The Company has instituted a policy on Prevention of Sexual Harassment at Workplace, which has been disseminated amongst all employees. The Policy is available on the company''s website www.akzonobel.co.in and can be accessed from www. akzonobel.co.in/corporate-governance.php#policy. It seeks to prevent and deter acts of sexual harassment and communicate procedures for their resolution and settlement. Your Company has constituted an Internal Complaints Committee in compliance with the provisions of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 and is accordingly fully compliant. To build awareness in this area, the Company has conducted induction / training programmes in the organisation. There were no complaints reported during 202122. Other mandatory disclosures related to this are given in the Corporate Governance Report.
All related party transactions which were entered into during the year under review were on arm''s length basis and in the ordinary course of business. There were no materially significant related party transactions made by the Company with the Promoters, Directors and KMP which may have a potential conflict with the interests of the Company at large.
The Board of Directors of the Company has approved the criteria to grant omnibus approval by the Audit Committee within the overall framework of the policy on related party transactions. Prior omnibus approval is obtained for related party transactions which
are of repetitive nature and entered in the ordinary course of business and at arm''s length.
All related party transactions are placed before the Audit Committee for review and approval.
Your Company''s Policy on materiality of RPTs and dealing with RPTs is available on the company''s website www.akzonobel.co.in and can be accessed from www.akzonobel.co.in/corporate-governance.php#policy .
Members may refer to note no. 34 to the financial statements which sets out related party disclosures pursuant to IND AS 24.
Pursuant to Clause (h) of sub-section (3) of Section 134 of the Act and Rule 8(2) of the Companies (Accounts) Rules, 2014, the particulars of contracts/arrangements entered into by the Company with related parties referred to in sub section (1) of Section 188 of the Act including certain arm''s length transactions under third proviso thereto are required to be disclosed in Form AOC-2 which forms part of this report.
There are no loans given or guarantees issued that are covered under Section 186 of the Act read with the Rules made thereunder. Details of investments made under the said section are covered in Notes 5.1 and 8.1 of the financial statements.
M/s Price Waterhouse Chartered Accountants LLP hold office till conclusion of the Annual General Meeting to be held in 2026 and will continue as the Statutory Auditors of the Company and have confirmed that they duly fulfil the requirements under applicable laws and regulations to continue as the Auditors of the Company.
The Auditors'' Report for the financial year 2021-22, does not contain any qualification, reservation or adverse remark.
The Statutory Auditors of the Company have not reported any Fraud as specified under Section 143(12) of the Act.
In terms of section 204 of the Act, Secretarial Audit was conducted for the financial year 2021-22 by M/s A K Labh &
Co., Company Secretaries, Kolkata. Their report is appended.
The Secretarial Audit Report does not contain any qualification, reservation or adverse remark.
The Board has re-appointed M/s A K Labh & Co., Company Secretaries, Kolkata to conduct Secretarial Audit for the financial year 2022-23.
In terms of Section 148 of the Companies Act 2013, Cost Audit was conducted for the year 2021-22 by M/s Chandra Wadhwa & Co., New Delhi. The Cost Audit report for the year 2020-21 has been filed with MCA within the stipulated time.
The Board has re-appointed M/s Chandra Wadhwa & Co.,
New Delhi as the Cost Auditors for conducting Cost Audit for the financial year 2022-23, whose remuneration is subject to ratification by the shareholders at the forthcoming AGM.
The Cost Accounts and records as required under Section 148(1) of the Act are duly maintained by the Company and audited by the Cost auditors.
In terms of Section 92(3) of the Companies Act, 2013 and Rule 12 of the Companies (Management and Administration) Rules, 2014, as amended, the Annual Return of the Company is available on the website of the Company at www.akzonobel. co.in, and can be accessed from www.akzonobel.co.in/investors. php#anr.
There were following changes in the composition of the Board since last Director report:
1) Mr Lakshay Kataria, Wholetime Director and CFO resigned w.e.f. 1 October 2021
2) Mrs Harshi Rastogi, Company Secretary, was in the board from 1 October 2021 to 30 November 2021
3) Mr R Krishna, Wholetime Director and CFO, joined the Board from 1 December 2021.
Mr Oscar Wezenbeek will be retiring by rotation at the forthcoming Annual General Meeting (AGM) and has offered himself for re-appointment.
The present term of appointment of Mrs Smriti Rekha Vijay as an Independent Director of the Company ends on 15 August 2022. Pursuant to the recommendations of the Nomination and Remuneration Committee, the Board resolved to recommend her re-appointment for another term of three years subject to the approval of the shareholders.
The appointment of Mr Oscar Wezenbeek and Mrs Smriti Rekha Vijay are included in the Notice convening the AGM for seeking your approval. A brief profile of Mr Oscar Wezenbeek and Mrs Smriti Rekha Vijay as required under regulation 36 of the Listing Regulations is also given as an annexure to the Notice.
Mr Rajiv Rajgopal, Managing Director, Mr R Krishna, Wholetime Director and CFO and Mrs Harshi Rastogi, Company Secretary are the whole-time Key Managerial Personnel of the Company in terms of Section 203 of the Act.
The terms of reference and composition of all the Committees of the Board has been provided in the Corporate Governance Report.
Board Meeting Dates
There were 6 Board Meetings during the year under review.
The Board Meeting Dates and the attendance of the Directors at the meetings have been provided in the Corporate Governance Report.
Directorsâ Responsibility Statement
As required under section 134(5) of the Act, the Board states that:
a) in the preparation of the annual accounts, the applicable Indian accounting standards have been followed along with proper explanation relating to material departures;
b) 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 and loss of the Company for that period;
c) the Directors have taken proper and sufficient care 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;
d) the Directors have prepared the annual accounts on a going concern basis;
e) the Directors have laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and were operating effectively; and
f) the Directors have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.
General
Your Directors state that no disclosure or reporting is required in respect of the following items, as there were no transactions on these items during the year under review:
1. The Company has issued only one class of equity shares with equal voting rights.
2. The Company has not issued any shares during the year, under ESOPs or Sweat Equity or otherwise.
3. The Managing Director or Whole time Directors of the Company did not receive any remuneration or commission from any other company belonging to AkzoNobel Group or associate companies.
4. No significant or material orders were passed by the Regulators or Courts or Tribunals, which could impact the going concern status and the Company''s operations in future.
5. There has been no change in the nature of business of your Company during the financial year.
6. There have been no material changes and commitments affecting the financial position of the Company between the end of the financial year and date of this report.
7. Your Company has not accepted any public deposits during the year and no amount on account of principal or interest on public deposits was outstanding as on the date of the balance sheet.
8. Your Company has complied with the Secretarial Standards, as applicable, issued by The Institute of Company Secretaries of India.
9. Your Company has neither made any application nor any proceeding is pending under the Insolvency and Bankruptcy Code, 2016.
10. Your Company has not made any one-time settlement against loans taken from the Banks or Financial Institutions.
11. Independent Directors have confirmed that they meet the criteria of independency in terms of Section 149(6) of the Companies Act, 2013.
Some of the statements in this report, describing your Company''s objectives and expectations expressed in good faith, may constitute âforward looking statements'' within the meaning of applicable laws and regulations. Actual results might differ materially from those, in the event of changes in the assumptions/ market conditions.
All figures in this report and annexures thereto are in Rupees (''H'') million, unless specified otherwise.
Your Directors place on record their deep appreciation to employees at all levels for their hard work, dedication and commitment, in particular during this unprecedented year. Despite the challenges all our employees, especially the front-line employees working in our factories, sales and service, demonstrated unwavering commitment which helped us deliver our commitment to serve our consumers at all times. Your Directors would also like to acknowledge the excellent contribution by the parent company in providing the latest innovations, technological improvements and marketing inputs across categories in which it operates. This has enabled the Company to provide a higher level of consumer delight through continuous improvement in existing products, and introduction of new products.
The Board also wishes to place on record its appreciation for the support and co-operation that your company has been receiving from yourselves, suppliers, distributors, retailers, investors, bankers, agents, government and regulatory authorities, stock exchanges, other business partners and stakeholders.
On behalf of the Board Oscar Wezenbeek
Place: Singapore Chairman
Date: 27 May 2022 DIN 08432564
Mar 31, 2019
Directorsâ Report
Dear Members,
The Board of Directors hereby presents their 65th report on the business and operations of your Company along with the audited financial statements for the year ended 31 March,2019.
Business Environment
Indian Economy
India''s GDP for FY 2018 -19 is expected to grow around 7%. However, the industrial activity across sectors, measured by Index of Industrial Production (IIP), grew at 4 per cent during April-February 2018-19 as against 4.3 per cent in the same period of the previous fiscal year.
In the first half of the year, crude prices rose by more than 40% before tapering off in the second half. However, headline inflation remained soft at around 4%. Factoring in the challenges to economic growth and subdued inflation, RBI, appears to be moving towards a soft interest rate policy by cutting the reference interest rate in a calibrated manner.
India''s forex reserves as at end March,2019 was $412 billion, a drop of $12 billion compared to March,2018, after absorbing the steep increase in oil import bill during mid year; however, strong inflows from FIIs has helped maintain the reserves at above $400 billion level. INR-USD rate ended the year at 69.38, a depreciation of around 6% during the year, after witnessing significant volatility during mid year.
Outlook
India continues to be the fastest growing major economies in the world and this trend is expected to continue in FY 2019-20 also. India''s GDP for FY 2019-20 is expected to grow by ~7%. Macro economic data remains largely encouraging, with lead indicators pointing to a soft interest rate regime, which is positive for the industrial sector.
The highlights of the performance during the year are:
(Rs., million)
Standalone |
Consolidated |
|||
2018-19 |
2017-18 |
2018-19 |
2017-18 |
|
Revenue from operations |
29,184 |
29,653 |
29,184 |
29,653 |
Operating profit (EBITDA) |
3,424 |
3,165 |
3,424 |
3,160 |
Depreciation |
(652) |
(607) |
(652) |
(607) |
Other Income net of Finance costs |
377 |
403 |
377 |
403 |
Exceptional items |
7 |
2,462 |
7 |
2,462 |
Profit before tax |
3,156 |
5,423 |
3,156 |
5,418 |
Tax |
(1,046) |
(1,417) |
(1,046) |
(1,417) |
Profit after tax |
2,110 |
4,006 |
2,110 |
4,001 |
The interim Union Budget for 2019-20 announced in February 2019, focuses on supporting the farm sector and the weaker sections of the society, while at the same time continuing the push towards better physical and social infrastructure. A stable government, continuing diversification of economy and a good monsoon are expected to bring positive momentum to the economy. However, factors like inflation, exchange rate, crude oil, geopolitics, climate change, etc., could impact the economic growth.
Financial Statements
The financial statements include:
1. Stand-alone financial statements of the Company, Akzo Nobel India Limited; and
2. Consolidated financial statements of the Group including the operational results of ICI India Research and Technology Centre, on which the Company exercises effective control.
Revenue from operations for the year at RS,29,184 million is 5% ahead of previous year on a comparable basis. However, EBIT from business operations at RS,2,772 million grew 15% over the previous year, on the back of improved product mix, technological edge and sustainable cost management. After considering other income and tax adjustments, the net profit for the year at RS,2,110 million grew 3% over previous year on a comparable basis.
The revenue and results of the Specialty Chemicals business divested in 2017-18 have been reported as âDiscontinued Operations''.
A stable government, continuing diversification of economy and a good monsoon are expected to bring positive momentum to the economy.
Subsidiary
A statement containing the salient features of financial statements of subsidiary of the Company in the prescribed Form AOC - 1 forms part of this report in compliance with section 129 (3) and other applicable provisions, if any, of the Companies Act 2013 (âthe Act'') read with Rule 5 of the Companies (Accounts) Rules, 2014. The said Form also highlights the financial performance of the subsidiary included in the Consolidated Financial Statements (âCFS'') of the Company pursuant to Rule 8(1) of the Companies (Accounts) Rules, 2014.
In accordance with section 136 of the Act, the financial statements of the subsidiary are available for inspection by the members at the registered office of the Company during business hours on all days except Saturdays, Sundays and public holidays up to the date of the Annual General Meeting (âAGM''). Any member desirous of obtaining a copy of the said financial statements may write to the Company Secretary at the registered office of the Company. The financial statements including the CFS, and all other documents required to be attached to this report have been uploaded on the website of the Company at www.akzonobel.co.in.
Share buyback
Basis shareholder and other regulatory approvals received on 22 May 2018, 1.12 million shares of the Company aggregating to 2.4% of the issued, subscribed and paid-up Equity Capital of the Company were bought back from all eligible shareholders as on the notified Record Date on a proportionate basis at a price of RS,2,100 per equity share. The Promoters did not participate in the buyback. Consequent to this buyback, the paid-up capital of the Company has been reduced to H 455 million from H 466 million, with the promoter holding going up from 72.96% to 74.76%.
The financial statements for the year ended 31 March,2019 include the impact of the above share buyback.
Share Capital
The paid up share capital of the Company as on 31 March,2019 was H 455,403,140 comprising 45,540,314 of equity shares of RS,10 each (Previous year H 466,603,140 comprising 46,660,314 equity shares of RS,10 each).
Dividend
Keeping in view the current year''s performance and other relevant considerations, the Board is pleased to recommend a dividend of RS,24 per share for the financial year 2018-19, compared to RS,22 per share in the previous year.
Company''s Dividend Distribution policy is annexed to this report. The Policy is also uploaded on company''s website www.akzonobel.co.in
Management Discussion and Analysis
Industry structure
India''s Paints & Coatings industry is a fairly structured one, with organized players accounting for 65-70% of the industry''s sales. âPaints'' account for around 75% of the overall market and âCoatings'' account for the rest. Product quality, performance and service levels continue to be the key differentiators across this market. While Paints is a B2C business, Coatings is essentially a B2B business and is technology intensive with a diverse set of growth drivers, with strong emphasis on selling a solution rather than a product. Entry of several new players in recent years has intensified the competition in the market.
The GST slab applicable to the Company''s product lines has been reduced to 18% in July 2018, from 28% prevailing till then. The benefit arising from the rate reduction has been passed on to the consumers by adjusting the retail price (MRP).
Per capita paints and coatings consumption in India continues to be low compared to developed economies. With the economy poised to grow ~7%, consumer spending is expected to get a boost, resulting in higher demand for paints and coatings. India''s burgeoning young population represents a huge opportunity as more and more youngsters join the workforce and have disposable income. The trend towards nuclear family provides a tail wind for the industry to grow further.
Demand for Paints depends on the housing sector and good monsoons whereas Coatings demand is linked to user industries like auto, engineering, infrastructure projects and consumer durables and is dependent on business cycle and economic conditions. The Government''s push towards rural infrastructure spends and higher minimum support prices are expected to significantly improve rural consumption, which is good for the industry.
Demand for Coatings is also expected to increase going forward because of higher investments in infrastructure and increased consumer spending. While the overall business outlook for 2019-20 remains positive for the industry, concerns would remain on the raw materials front if crude oil prices were to increase.
Business Performance
While the strength of our brands and products helped in overall performance, we continued to invest in technologies and digital solutions to service the growing needs of our customers. Sales growth was driven by premium as well as mass market products.
Highlights of different businesses are given below:
Paints business has a presence in premium as well as mass market segments, with strong positioning in the premium segment. It is focused on the buildings and infrastructure end-user segment, serving both consumers and professional painters. To enhance its market reach, the Company expanded its contractor/ Painter outreach programme to drive trials with the premium interior portfolio, with special products to address the Professional Painter customers.
A Digital and Print campaign on Dulux Weather shield Power flexx
- âHomes of the Braveâ in a tie up with CRPF and NDTV, Color Futures 2019 was launched with âSpiced Honey'' being chosen as the Color of the year for 2019.
The business has launched a series of innovative and enviro-friendly products during the year that have received encouraging response from the market. Some of them are:
- Dulux Testers, in an exclusive tie up with Amazon - first of its kind tool in India
- Next generation of Dulux Weather shield Max with improved anti-fungal, anti-algal properties
- Scale up of new Dulux Promise Enamel
- Sadolin by Dulux in the Wood care range
- Dulux Professional Weather shield TR2000
- Dulux Professional Weather shield Creation STONETEX âas stone like'' finish in premium exterior/Interior professional segment
- New metallic finishes in Dulux Velvet Touch Trends metallic range
- Premium exterior products âDulux Weather shield Power flexx
& Dulux Professional Weather shield Flexx'''' were launched during the year with new proposition â''SMART RELEASEâ to offer better customer experience
- Scaleup of new products under âDulux Aquatech'' waterproofing umbrella
The business has continued servicing its overseas customers with state-of-the-art Colorants and Tinters by leveraging its capabilities.
The main drivers for the growth of this business have been shortening of the repainting cycle and increased demand from smaller towns.
Going forward, macro developments like nuclear families, availability of easy finance for housing and government''s thrust on affordable housing are expected to push up the per-capita consumption of paints in the country and sustain the growth momentum of this business. However, upward trend in key input prices and depreciation of INR remain a concern in the near term.
Marine Coatings business mainly deals in providing anti-corrosive, fire protection, fouling control technologies and aesthetic solutions for on and offshore assets. Supported by high quality customer service and in-field support around the globe, our technologically advanced international product range strives to satisfy customer''s needs now and in the future. This business continued to experience tough market conditions, mainly in the new build category.
Protective Coatings business services a wide range of industrial sectors like oil & gas, power, infrastructure projects and wind energy. The main driving factors for the markets are boost in government projects for renewable energy and acceleration of infrastructure projects. âCoatIN'' range of products is being offered as a cost effective, technology driven range of protective coatings specifically designed to protect assets from corrosion while enhancing its aesthetic appeal.
Powder Coatings business caters to multiple segments like architectural, general trade coaters, general industries, automobiles, functional and domestic appliances. Our comprehensive range of powder coatings help protect a variety of metal surfaces in applications including window and door frames, pipes, car components, radiators, metal furniture, home appliances etc. Powder coating is also used on underbody-chassis, exterior trims, primers and clear for wheels and coatings for springs in the automobile segment. The new plant commissioned in the previous year at Thane has stabilized and has helped in meeting customer demand for high end products like metallic bonding etc.
Industrial Coatings (ICO) business covers coil, packaging and wood coatings. Coil coating is a continuous and highly automated process for coating metals before fabrication. Coil coatings market is dominated by roofing, building & construction product category, aluminum composite panels and domestic appliance & ACP segments. Packaging coatings business supplies coatings and inks for the protection and aesthetics of beverages, food, aerosol and general line cans, metal closures and collapsible tubes. Wood coatings is a relatively new business and offers a wide range of wood finishes and adhesive solutions that meet the unique specifications of our customers. Save for packaging coatings, ICO business has seen a declining trend, mainly due to difficulties faced by the steel sector.
Automotive and Specialty Coatings (ASC) business covers vehicle refinishes, commercial vehicles, railways and specialty coatings. With renowned brands like Sikkens, Lesonal, Wanda and Duco, ASC business has a strong presence in the market. This business has a strong correlation with the growth of automobile industry, which is currently going through a slowdown.
New business opportunities in the Coatings area are being continuously evaluated. Special product lines to service the prestigious projects of Railways and other high-profile public infrastructure projects are being developed basis their specifications.
Toner standardization and adoption of global quality control methods are being applied in the manufacturing and RD&I areas to help improve productivity. Efforts are also on hand to standardize/ rationalize the raw materials used and finished product SKUs to reduce complexity.
Companyâs Business Strategy
Your Company''s strategic objective is to build a sustainable business for long-term value creation. To achieve this objective, your company focus on;
a) Developing world class brands and color expertise and continue driving the digital and innovation agendas, and
b) Growing profitably, while increasing returns to all our stakeholders.
Corporate Governance
Your Company continues to uphold the highest standards of corporate governance and seeks to consistently enhance its corporate governance performance, emphasizing transparency and embedding a sustainable culture of long-term value creation.
A report on Corporate Governance of the Company, along with a certificate from a practicing Company Secretary confirming compliance with the conditions of corporate governance, is attached as Annexure I to this report.
Board Evaluation
Your Company has a mechanism to evaluate the performance of all Board members. Details of the evaluation are given in the Corporate Governance report.
Vigil Mechanism / Whistleblower Policy
Your Company has adopted a Vigil Mechanism / Whistleblower Policy as detailed in the Corporate Governance Report. The Policy may be accessed on the company''s website www.akzonobel.co.in
Corporate Social Responsibility
As a responsible corporate citizen, your Company has been focusing on education of underprivileged children, skill development of youth and road safety in different parts of India. Many of its employees actively participate in these programs as volunteers. An overview of your Company''s current CSR projects is given below:
- Four Mobile Training Vans (Kaushal Vahan) have been commissioned in Vehicle Refinish at Bangalore. Till date, the Kaushal Vahan provided up-skill training to more than 1,000 painters in 249 garages across four regions of India.
Sustainability
Sustainability for the Company means delivering long-term value for all our stakeholders. It underpins your Company''s purpose and brands, its core principles and employee value proposition.
It also acts as the driver for growth, innovation and productivity.
Your Company focuses on resource productivity and value selling as key drivers of sustainability, with verifiable goals.
A Business Responsibility Report is attached as Annexure II-A.
- In May 2019, AkzoNobel Paint Academy participated in a âCareer Mela'' organized by UNDP (United Nations Development Programme) along with Govt. of Delhi for high school students. In the Mela, the Paint Academy sensitized around 2,400 high school children about career opportunities in Paint sector by undergoing vocational skill training as a career option.
Details of the CSR policy of the Company is available on our website at www.akzonobel.co.in
A report on the CSR activities undertaken by your Company during the fiscal year 2018-19 is attached as Annexure II-B. It is pertinent to note that significant part of CSR spend is incurred in local areas where your Company has its operations.
Human Resources
Your Company had cordial relations with employees across all locations during the year. The total number of employees on the rolls of the Company as at 31 March,2019 was 1,695 (previous year 1,869), reflecting the impact of Specialty Chemicals business divestment and participation in a shared services organization for handling of routine business processes.
Information as per section 197 of the Act, read with the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, as amended, forms part of this report. However, as permitted under the provisions of section 136 of the Act, the Report and Financial Statements are being sent to the members excluding the statement containing the said information. Any member interested in obtaining such particulars, may inspect the same at the registered office of the Company or write to the Company Secretary for a copy.
The disclosures below are made in terms of Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 as amended:
(i) |
(ii) |
||
Name |
Ratio of the remuneration of each Director to the median remuneration of the employees of the Company Status for the financial year 2018-19 |
Percentage increase in remuneration during 2018-19 over 2017-18 |
|
Mr Amit Jain |
Non Executive |
2.43 |
NA - only part of the year in 2017-18 |
Mr Rajiv Rajgopal From 1 Nov 2018 |
Managing Director |
39.561 |
NA - only part of the year in 2018-19 |
Mr Lakshay Kataria From 1 Feb 2019 |
Whole time Director and CFO |
22.94* |
NA - only part of the year in 2018-19 |
Mr Rajasekaran Guha From 10 Sep 2018 to 8 Feb 2019 |
Whole time Director |
25.34* |
NA - only part of the year in 2018-19 |
Mr Jayakumar Krishnaswamy Up to 11 Sep 2018 |
Managing Director |
37.58* |
NA - only part of the year in 2018-19 |
Mr Pradip Menon Up to 2 Aug 2018 |
Whole time Director and CFO |
23.89* |
NA - only part of the year in 2018-19 |
Mr R Gopalakrishnan Up to 22 Jul 2018 |
Non Executive -Independent |
1.63* |
NA - only part of the year in 2018-19 |
Mr Arabinda Ghosh Up to 2 Aug 2018 |
Non Executive |
- |
NA - as no remuneration was paid to him during his tenure as a Director |
Mr Raj S Kapur |
Non Executive -Independent |
2.35 |
I4% - mainly due to change in rates of sitting fees |
Dr Sanjiv Misra Up to 22 Jul 2018 |
Non Executive -Independent |
1.60* |
NA - only part of the year in 2018-19 |
Ms Kimsuka Narsimhan |
Non Executive -Independent |
2.20 |
30% - mainly due to change in rates of sitting fees |
Mr Arvind Uppal |
Non Executive -Independent |
2.13 |
7% - mainly due to change in rates of sitting fees |
Mr Hemant Sahai From 3 Aug 2018 |
Non Executive -Independent |
2.05* |
NA - only part of the year in 2018-19 |
Mr Jeremy Rowe From 6 Apr 2018 to 30 Nov 2018 |
Non Executive |
- |
NA - as no remuneration was paid to him during his tenure as a Director |
Mr Rajasekaran Guha |
Company Secretary |
NA |
NA |
Description |
Remarks |
|
(iii) |
Percentage increase in the median remuneration of employees in the financial year |
7.3% |
(iv) |
Number of permanent employees on the rolls of the Company |
1,695 as on 31 March,2019 |
(v) |
Average percentile increases already made in the salaries of employees other than the managerial personnel in the last financial year and its comparison with the percentile increase in the managerial remuneration and justification thereof and point out if there are any exceptional circumstances for increase in the managerial remuneration. |
Average percentage increase in base salary of non-managerial personnel was 7.4%, which is considered in line with the prevailing market conditions and other relevant factors. |
It is hereby affirmed that the remuneration to managerial personnel referred to above is as per the remuneration policy of the Company.
Notes:
1. The aforesaid details are calculated on the basis of remuneration for the financial year 2018-19.
2. Remuneration to Directors includes sitting fees paid to them for the financial year 2018-19.
3. Median remuneration in the Company (on cost to company basis) for all its employees was H 6,80,016 for the financial year 2018-19.
4. Remuneration to Directors is within the overall limits approved by the shareholders.
Conservation of Energy, Technology Absorption and Forex Earnings and Outgo
Your Company continues to use its research and development base to bring consumers new products with improved performance features and products for special applications. Particulars in respect of conservation of energy, technology absorption and foreign exchange earnings and outgo, pursuant to Section 134 of the Act, are given in Annexure III to this report.
Information Technology
Your Company continues to leverage IT for efficient management of its business operations and enhancing customer experience.
A project for consolidating and migrating various ERP systems of the company into a single system of SAP is in progress and expected to complete by first half of 2019.
Apart from traditional product promotion through advertising campaigns, the company also put new creative of Dulux Visualizer & Tester Campaign on Television and social media platforms like YouTube and face book. As an on-going initiative, the Company has revamped its digital properties viz. âakzonobel. co.in'', dulux.in'' and âDulux Visualizer app'' and made them more user friendly.
Internal Control Systems
Your Company has an effective risk management framework, which helps the Board to monitor the state of controls in key business processes. Your Company has well-established procedures for internal controls, commensurate with its size and operations. The organization is appropriately staffed with qualified and experienced personnel for implementing and monitoring the internal control environment.
The Board periodically reviews the state of compliance with all laws applicable to the Company. The Company has an IT enabled tool incorporating all applicable legal compliances which are marked to their respective owners. The compliance library is updated periodically covering all changes with respect to Laws/Regulations.
The Board has constituted a Risk Management Committee clearly defining its role and responsibilities. The Board has also delegated the monitoring and reviewing of the risk management plan to the committee and report to the Board from time to time.
Policy against Sexual Harassment
Your Company has formulated a policy for the prevention of sexual harassment within the Company. It seeks to prevent and deter acts of sexual harassment and communicate procedures for their resolution and settlement. Internal Complaints Committees have
been constituted in accordance with the requirements of the law. There was one complaint reported during 2018-19 which has been investigated and resolved to the satisfaction of the complainant as per the guidelines. A copy of the Policy against sexual harassment has been disseminated amongst all employees and is posted on the Company website, which can be accessed from www. akzonobel.co.in.
Related Party Transactions (RPTs)
Your Company enters into various transactions with related parties as defined under section 2(76) of the Act. All the RPTs are undertaken in compliance with the provisions set out in the Act and the Listing Regulations. Your Company has a robust process for RPTs and the transactions with related parties are referred to the audit committee for its approval at the scheduled quarterly meetings or as may be called upon from time to time along with all relevant information.
Your Company''s Policy on materiality of RPTs and dealing with RPTs may be accessed on the Company''s website at www.akzonobel.co.in.
All contracts / arrangements / transactions entered by the Company during the financial year with related parties were in the ordinary course of business and on an arm''s length basis and/ or have been duly approved as required under law. During the year, the Company had not entered into any contract / arrangement/ transaction with related parties, which could be considered material in accordance with the policy of the Company on materiality of RPTs.
Your Directors draw attention of the members to Note 33 to the financial statements which contains the requisite disclosures in respect of RPTs.
Loans, Guarantees & Investments
There are no loans given or guarantees issued that are covered under Section 186 of the Act read with the Rules made thereunder. Details of investments made under the said section are covered in Notes 5.1 and 8.1 of the financial statements.
Auditors Statutory Auditors
M/s Price Waterhouse Chartered Accountants LLP have been continuing as the Auditors of the Company for a term Up to the conclusion of the Annual General Meeting in 2021. They have informed the Company that they duly fulfil the requirements under applicable laws and regulations to function as the Auditors of the Company for the financial year 2019-20.
Pursuant to amendment to section 139 of the Act effective
7 May 2018, ratification by shareholders every year for the appointment of the statutory auditors is no longer required and accordingly the Notice of ensuing AGM does not include any proposal for seeking shareholders'' approval / ratification in this regard.
The Statutory Auditors of the Company have not reported any Fraud as specified under Section 143(2) of the Act.
Secretarial Auditors
In terms of section 204 of the Act, Secretarial Audit was conducted for the financial year 2018-19 by M/s A K Labh & Co., Kolkata. Their report is appended.
Secretarial audit report for financial year 2018-19 contained one area of non compliance by a promoter entity in respect of dematerialization of its shareholding. This has been referred to the shareholding entity for suitable action and compliance.
The Board has re-appointed M/s A K Labh & Co., Kolkata to conduct Secretarial Audit for the financial year 2019-20.
Cost Auditors
In terms of Section 148 of the Companies Act 2013, Cost Audit was conducted for the year 2018-19 by M/s Chandra Wadhwa & Co., New Delhi. Their report for the year 2017-18 has been filed with MCA within the stipulated time.
The Board has re-appointed M/s Chandra Wadhwa & Co.,
New Delhi as the Cost Auditors for conducting Cost Audit for the financial year 2019-20, whose remuneration is subject to ratification by the shareholders at the forthcoming AGM.
Cost Records
The Cost Accounts and records as required under section 148(1) of the Act are duly maintained by the Company.
Extracts of the Annual Return
Extracts of annual return in Form MGT-9 as required under the provisions of Section 92(3) of the Act and Rule 12 of the Companies (Management and Administration) Rules, 2014, is annexed as Annexure IV to this Annual Report. The same has also been placed at the Company''s website www.akzonobel.co.in in terms of the provisions of the Act.
Directors & Key Management Personnel
The following changes were made in the composition of the Board during 2018-19:
Mr R |
Independent |
Resigned with effect from |
Gopalakrishnan |
Director |
23 Jul 2018 |
Dr Sanjiv Misra |
Independent |
Resigned with effect from |
Director |
23 Jul 2018 |
|
Mr Hemant |
Independent |
Appointed with effect |
Sahai |
Director |
from 3 Aug 2018 |
Mr A B Ghosh |
Non Executive |
Resigned with effect from |
Director |
3 Aug 2018 |
|
Mr Pradip |
Whole time |
Resigned with effect from |
Menon |
Director and Chief Financial Officer |
3 Aug 2018 |
Mr Rajasekaran |
Whole time |
Appointed with effect |
Guha |
Director |
from 10 Sep 2018 and stepped down on 9 Feb 2019 on completion of tenure |
Mr Jayakumar |
Managing Director |
Resigned with effect from |
Krishnaswamy |
11 Sep 2018 |
|
Mr Rajiv |
Managing Director |
Appointed with effect |
Rajgopal |
from 1 Nov 2018 |
|
Mr Jeremy Paul |
Non Executive |
Resigned with effect from |
Rowe |
Director |
1 Dec 2018 |
Mr Lakshay |
Whole time |
Appointed with effect |
Kataria |
Director and Chief Financial Officer |
from 1 Feb 2019 |
Mr Amit Jain will be retiring by rotation at the forthcoming Annual General Meeting (AGM) and has offered himself for re-election.
Mr Oscar Christian Maria Jozef Wezenbeek has been appointed as an Additional Director with effect from 4 May 2019 and will be holding office till the forthcoming AGM. His appointment will be placed for shareholders'' approval at the forthcoming AGM.
Mr Lakshay Kataria has been appointed as an Additional Director of the company with effect from 1 February 2019 (to be designated as Whole-time Director for a period of 5 years with effect from 1 February 2019) and will be holding office till the forthcoming AGM. His appointment will be placed for shareholders'' approval at the forthcoming AGM.
Mr Arvind Uppal, Independent Director, will be completing his tenure of 5 years on 13 August 2019. Considering Mr Uppal''s experience and other relevant factors, the Board has recommended appointing Mr Arvind Uppal for another tenure of 5 years commencing from 14 August 2019 as an Independent Director.
Mr Raj Kapur, Independent Director, will be completing his tenure of 5 years on 13 August 2019. Mr Kapur will not be seeking re-appointment as an Independent Director of the Company when his present tenure comes to an end on 13 August 2019.
The Board wishes to place on record Mr Raj Kapur''s significant contribution in guiding the Company during his tenure on the Board.
A brief resume of M/s Amit Jain, Oscar Wezenbeek, Lakshay Kataria and Arvind Uppal, as required under regulation 36 of the Listing Regulations, is given in the Notice convening the AGM.
Committees of the Board
The composition of all the Committees of the Board has been provided in the Corporate Governance Report.
Board Meeting Dates
The Board Meeting Dates and the attendance of the Directors at the meetings have been provided in the Corporate Governance Report.
Declaration by Independent Directors
The Company has received necessary declarations from each Independent Director that he/ she meets the criteria of independence, as laid down in Section 149(6) of the Act and the Listing Regulations.
Familiarization Programme for Independent Directors
The Company has adopted a policy on familiarization programme for independent directors. All new Independent Directors (IDs) inducted into the Board are presented with an overview of the Company''s business operations, products, organization structure and about the Board procedures. Details of the familiarization programme for Independent Directors can be accessed at www.akzonobel.co.in.
Directorsâ Responsibility Statement
As required under section 134(5) of the Act, the Board states that:
a) in the preparation of the annual accounts, the applicable Indian accounting standards had been followed along with proper explanation relating to material departures;
b) the Directors had 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 and loss of the Company for that period;
c) the Directors had taken proper and sufficient care 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;
d) the Directors had prepared the annual accounts on a going concern basis;
e) the Directors had laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and were operating effectively; and
f) the Directors have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.
General
Your Directors state that no disclosure or reporting is required in respect of the following items, as there were no transactions on these items during the year under review:
1. The Company has issued only one class of equity shares with equal voting rights.
2. The Company has not issued any shares during the year, under ESOPs or Sweat Equity or otherwise.
3. The Managing Director or Whole time Directors of the Company did not receive any remuneration or commission from any other company belonging to Akzo Nobel Group or associate companies.
4. No significant or material orders were passed by the Regulators or Courts or Tribunals, which could impact the going concern status and the Company''s operations in future.
5. There has been no change in the nature of business of your Company during the financial year under report, save to the extent of discontinuation of Specialty Chemicals business which was divested in 2017-18.
6. Your Company has not accepted any public deposits during the year and no amount on account of principal or interest on public deposits was outstanding as on the date of the balance sheet.
7. Your Company has complied with the Secretarial Standards, as applicable, issued by The Institute of Company Secretaries of India.
Cautionary Statement
Some of the statements in this report, describing your Company''s objectives and expectations expressed in good faith, may constitute âforward looking statements'' within the meaning of applicable laws and regulations. Actual results might differ materially from those, in the event of changes in the assumptions/ market conditions.
Acknowledgment
The Board of Directors conveys their gratitude and appreciation to all the employees of your Company for their valuable contribution during the year. They also wish to place on record their appreciation for the customers, shareholders, investors, bankers, agents, suppliers, distributors and other business associates for their cooperation and support.
On behalf of the Board
Amit Jain
Place: Gurugram Chairman
Date: 3 May 2019 DIN 01770475
Mar 31, 2018
Directorsâ report
Dear Members,
The Board of Directors hereby presents their report on the business and operations of your Company along with the audited financial statements for the year ended 31 March 2018.
Business Environment
Indian Economy
FY 2017-18 had a challenging environment with the combined effect of demonetization (November 2016) and GST implementation (July 2017) leading to subdued economic activity and consumer sentiments. Rise in crude oil prices and inflationary pressures led to widening of the fiscal deficit of the country. Growth in private investment in the country continues to be a challenge. While the economy did witness a revival in the second half of FY 2017-18, overall annual growth is estimated at around 6.6%, lower than 7.1% of the previous year.
Despite the challenges, economic reforms continued with significant steps being taken towards resolution of problems associated with non-performing assets of the banks, further liberalization of FDI, introduction of the Indian Bankruptcy Code, implementation of Real Estate Regulations (RERA), etc.
Outlook
India continues to be the fastest growing major economies in the world and this trend is expected to continue in FY 2018 -19 also. Indiaâs GDP for FY 2018 -19 is expected to grow more than 7%. Macro economic data remains largely encouraging, with lead indicators showing the recovery carrying over into the final quarter of the fiscal year. The union budget for 2018 -19 reflected higher public capital outlays and investment in social sector,
The highlights of the performance during the year are:
(RS, million)
Stand-alone |
Consolidated |
|||
2017-18 |
2016-17 |
2017-18 |
2016-17 |
|
Revenue from operations |
29,653 |
28,248 |
29,653 |
28,248 |
Operating profit (EBITDA) |
3,165 |
3,488 |
3,160 |
3,488 |
Depreciation |
(607) |
(565) |
(607) |
(565) |
Other Income net of Finance costs |
403 |
461 |
403 |
461 |
Exceptional item |
2,462 |
39 |
2,462 |
39 |
Profit before tax |
5,423 |
3,423 |
5,418 |
3,423 |
Tax |
(1,417) |
(953) |
(1,417) |
(953) |
Profit after tax |
4,006 |
2,470 |
4,001 |
2,470 |
Note: Revenue figures have been re-stated on net of excise/GST basis, to facilitate comparison.
which more than offset a moderation in private spending growth. Governmentâs efforts to streamline GST rates and minimize the compliance burden are likely to facilitate economic recovery, specifically for small and medium enterprises. FMCG market continues to offer sizeable headroom for growth by increasing penetration and higher consumption. Legislations like RERA are expected to support growth in the house construction sector - a growth opportunity for the companyâs business.
However, factors like inflation, exchange rate, crude oil, political situation, climate change, etc., could impact the economic recovery and growth. On the positive side, record level of Forex Reserves at USD 424 billion as on 31 March, 2018 reflects the positive outlook of global investors on India.
Financial Statements
The financial statements include:
1. Stand-alone statements of the Company, Akzo Nobel India Limited; and
2. Consolidated statements of the Group including the operational results of ICI India Research and Technology Centre, on which the Company exercises effective control.
Total revenue for the year at RS,29,653 million is 5% ahead of previous year on a comparable basis. However, EBITDA from business operations at RS,3,165 million de-grew 9% over the previous year. After considering exceptional income and tax, the net profit for the year at RS,4,006 million grew 62% over previous yearâs RS,2,470 million, mainly on account of exceptional income from sale of Specialty Chemicals business.
The revenue and results of the divested Specialty Chemicals Business have been included in the financial statements and reported as âDiscontinued Operationsâ.
Divestment of Specialty Chemicals
As approved by the shareholders through postal ballot on 18 December 2017, the Specialty Chemicals business, including the manufacturing facility at Mahad, Maharashtra was divested to Akzo Nobel Chemicals India Private Limited, an affiliate of Akzo Nobel N.V, on 31 March 2018, with commercial effect from 1 January 2018, for a value of RS,3,200 million. The net consideration received after agreed adjustments for working capital and tax was RS,3,098 million.
Share buyback
The Board at its meeting held on 6 April 2018 approved a proposal for the Company to buy back its equity shares from all eligible shareholders (Equity shareholders as on the Record Date to be announced in due course) on a proportionate basis for an amount not exceeding RS,2,352 million. The buyback proposal comprised a purchase of 1.12 million fully paid-up equity shares of the Company aggregating to 2.4% of the issued, subscribed and paid-up Equity Capital of the Company at a price of RS,2,100 per equity share. The shareholders approval for the proposal through postal ballot is in progress and further steps will be taken post shareholder approval.
Transfer to General Reserve
The Company proposes to transfer RS,400 million to the General Reserve out of the net profit for the year ended 31 March 2018.
Dividend
Keeping in view the current yearâs performance and other relevant considerations, and in line with the Companyâs Dividend Distribution Policy, the Board is pleased to recommend a dividend of RS,22 per share for the financial year 2017-18, maintaining the dividend compared to the previous year.
Management Discussion and Analysis
Industry structure
With the divestment of Specialty Chemicals business, your Company is now operating in a single segment i.e. Coatings.
The Coatings industry is dominated by organized players accounting for about 65% of the industryâs value and the unorganized players accounting for the rest. Decorative paints (âPaintsâ) account for around 75% of the overall market in India and Performance coatings (âCoatingsâ) account for the rest. Product quality, performance and service levels continue to be the key differentiators across this market. While Paints is a B2C business, Coatings is essentially a B2B business and is technology intensive with a diverse set of growth drivers, with strong emphasis on selling a solution rather than a product.
With the implementation of GST, Paints have been placed under the highest tax rate slab of 28% which is higher than the sum of taxes paid through excise, value added tax (VAT), entry taxes, etc., earlier.
The per capita paints and coatings consumption in India continues to be low compared to the developed economies.
As India develops and modernizes, the per capita consumption is bound to increase. With the economy poised to grow 7%, consumer spending is expected to get a boost, resulting in higher demand for paints and coatings. India''s burgeoning young population represents a huge opportunity as more and more young Indians join the workforce and will have disposable income available. The trend toward nuclear family provides a tail wind for the industry to grow further.
Demand for Paints depends on the housing sector and good monsoons whereas Coatings demand is linked to user industries like auto, engineering, infrastructure projects and consumer durables. Paints segment is expected to witness higher growth going forward. The Governmentâs push towards rural infrastructure spends are expected to significantly improve rural consumption. Further, rural economy could get a boost from the increased minimum support prices farm produce and normal monsoon which is good for the industry.
Coatings business is dependent on business cycle and economic conditions. Demand for Coatings is expected to increase going forward on account of higher investments in infrastructure and increased consumer spending.
While the overall business outlook remains positive for Coatings industry for 2018 -19, concerns would remain on the raw materials front if crude oil prices continue to increase.
Business Performance
Operating in such a dynamic, competitive environment has its own challenges. While the strength of our brands and products helped in overall performance as we leveraged our scale and continued to invest in technologies and digital solutions to support the growing needs of our customers.
Total revenue for FY 2017-18 at H29,653 million reflected a growth of 5% over previous yearâs comparable figure, whereas EBITDA at 3,165 million de-grew 9%, reflecting cost pressures faced by the business. Top-line growth was driven by premium as well as mass market products and price increases. EBITDA was impacted by higher raw material costs, partly offset by increased selling prices, continuous improvement and cost control. During the first quarter of 17-18, the Coatings industry, especially the consumer facing businesses, experienced de-stocking ahead of GST rollout, followed by a gradual recovery in the subsequent quarters.
Your Company has achieved a seamless transition to GST regime.
Highlights of different businesses are given below:
Paints business has a presence in premium as well as mass market and economy segments, with strong positioning in the premium segment and is focused on the buildings and infrastructure end-user segment, serving both consumers and professional painters.
The business has launched a series of innovative and enviro-friendly new products during the year that have received encouraging response from the market. Some of them are:
Dulux Aquatech - water proofing range,
Weather shield Flash - two coat system, revolutionary technology for exterior walls,
Super cover Sheen - entry level sheen product in premium emulsion.
The business has also established itself as a manufacturing hub for Colorants and Tinters to neighboring countries by leveraging its capacities.
The main drivers for the growth of this business have been shortening of the repainting cycle and increased demand from smaller towns.
Going forward, macro developments like nuclear families, availability of easy finance for housing, govtâs thrust on affordable housing, etc., are expected to push up the per-capita consumption of paints in the country and sustain the growth momentum of this business. However, upward trend in key input prices and depreciation of INR remain a concern in the near term.
Marine Coatings business mainly deals in providing coating solutions to coastal and Navy vessels. It serves customers in deep sea, dry docks, sea stores, new build and coastal docking (i.e. offshore supply, service & transport vessels and fishing, etc.) sectors. This business continued to experience tough market conditions, mainly in the new build category.
Protective Coatings business services a wide range of industrial sectors like oil & gas, power, infrastructure projects and wind energy.
The main driving factors for the markets are boost in government projects for renewable energy and acceleration of infrastructure projects.
Powder Coatings business caters to multiple segments like architectural, general trade coaters, general industries, automobiles, functional and domestic appliances. In architecture, this business offers coatings for exterior facades, interior, windows of residential & commercial buildings. Powder coating is also used on underbody-chassis, exterior trims, primers and clear for wheels and coatings for springs in the automobile segment. Our Interpon brand is well-recognized at a global level.
With the commissioning of a new plant in Thane, the capacity has increased significantly.
Industrial Coating (ICO) business covers coil coatings, packaging and wood coatings. Coil coatings market is dominated by roofing, domestic appliance and ACP segments, building & construction product category, aluminum composite panels and domestic appliances. Packaging coatings market can be broadly classified into beer & beverage, general line, closures and food. General line segment holds the biggest chunk of the market. Wood coatings is a relatively new business and offers a wide range of wood finishes and adhesive solutions
Auto and Specialty Coatings (ASC) business covers vehicle refinishes and specialty coatings. Vehicle refinishes business has a strong presence in mid-market range of vehicle refinish products. This business has a strong correlation with the growth of automobile industry. New car/commercial vehicle companies setting up operations in India as well as expansion plans of existing companies indicate a positive growth trend for this business.
In Specialty coatings, your Company is present mainly in the auto interiors and wireless segments supported by the new facility operating at Noida, Uttar Pradesh.
Companyâs Business Strategy
Your Companyâs strategic objective is to build a sustainable business for long-term value creation. This includes focus to develop world class brands and color expertise and continue driving the digital and innovation agendas.
The focus will be to accelerate growth and profitability, while increasing returns to all our stakeholders. Our financial target for the business is to achieve 15% return on sales and over 25% return on investment by year 2020.
Corporate Governance
Your Company continues to uphold the highest standards of corporate governance and seeks to consistently enhance and improve corporate governance performance, emphasizing transparency and embedding a sustainable culture of long-term value creation.
A report on Corporate Governance of the Company, along with a certificate from a practicing Company Secretary confirming compliance with the conditions of corporate governance, is attached as Annexure I to this report.
Board Evaluation
Your Company has a mechanism to evaluate the performance of all Board members. Details of the evaluation are given in the Corporate Governance report.
Sustainability
Sustainability for the Company means delivering long-term value for all our stakeholders. It underpins your Companyâs purpose and brands, itâs core principles and employee value proposition. It also act as the driver for growth, innovation and productivity.
Your Company focuses on resource productivity and value selling as key drivers of sustainability, with explicit goals.
Resource productivity
Your Company is driving resource productivity to make the most of valuable raw materials, reducing environmental impact, while strengthening its business. Initiatives to improve material efficiency, right-first-time and first quality production throughout our operations are integrated in the AkzoNobel Leading Performance System (ALPS). This systematic approach drives increased raw material efficiency and reduces waste, while better planning processes help to reduce slow-moving and obsolete stocks. Your Company use a range of best practice manufacturing indicators to monitor progress, as well as the operational eco-efficiency parameters.
In order to make the most productive use of resources, especially raw materials, your Company works closely with suppliers, identifying and minimizing supply chain risks, creating value through continuous improvement and seeking out collaboration and joint development opportunities to ensure secure and sustainable supply of products.
Value selling
Your Company works closely with customers to deliver solutions that will make their business more sustainable, while delivering economic value to all parties in the chain by assessing the entire product range in sustainability terms to help customers make choices that deliver competitive advantage and also benefit to society.
Your Companyâs portfolio approach promotes the use of safer and more sustainable products. Your Company takes action to manage harmful substances in advance of legislation, future proofing its products against changes in regulations.
A Business Responsibility Report is attached as Annexure II-A.
Corporate Social Responsibility
As a responsible corporate citizen, your Company is committed to make a difference in the communities it operates in. For the past few years, it has been focusing on education of underprivileged children, skill development of youth and road safety in different parts of India. Many of its employees actively participate in these programs as volunteers. An overview of your Companyâs current CSR projects is given below:
Vocational Skill Training
In synergy with Govt. of Indiaâs flagship programme âSkill Indiaâ, Akzo Nobel have initiated skill training in decorative paints and vehicle refinish to promote employability among youth for the past two years. Currently Akzo Nobel Paint Academy has presence in eight cities of India - Delhi, Kolkata, Mohali, Bengaluru, Luck now, Pune, Gorakhpur and Kolhapur. In the past one year, 1,475 youth have been trained and linked with employment. The training includes modules focusing on modern painting techniques, knowledge of paint surfaces and use of safety tools and PPE (Personal Protective Equipment). The Academy is also focusing on developing soft skills of the painters to ensure higher level of customer satisfaction and better client relationship.
Education
Your Company believes, there can be no innovation without education. In pursuance of this belief, your Company has been supporting and investing in education of more than 10,000 children across seven States of India.
The flagship education project of Akzo Nobel India is âParivartanâ which is being implemented in Delhi, Madhya Pradesh, Maharashtra, Telangana and Karnataka. In the past one year Parivartan transformed the lives of more than 3,000 children using education as a medium. In this project your Company offer early childhood education to children from 2-6 years, non-formal education to out of school children to bring them back to the school and remedial education to under privilege children to improve their grades and stop them from dropping out of school.
Your Company is specially committed for promotion of girlsâ education and therefore in Disha Pari Udan Project it is promoting girls education for more than 1,000 girls from 12 Govt. schools of Hyderabad and Bengaluru. The main objective of the project is to ensure that girls are able to complete 10 years of schooling with a sound orientation on health education, sports/ co-curricular activities and life skill education. As part of the project, your Company has established toilets, library and science labs in the schools to ensure availability of basic facilities to promote education for girls. Your Company also provides after school hours supplementary education to needy students and sensitization on life skills and reproductive health.
Road Safety
Your Company identifies the critical need to promote awareness about road safety in the country, especially among children and vehicle drivers. With this objective Akzo Nobel India has joined hands with Mohali and Navi Mumbai Traffic Police to conduct comprehensive road safety awareness programme. In the year 2017-18 more than 7,000 school children, citizens, and commercial/school and private vehicle drivers were sensitized on road safety.
Details of the CSR policy of the Company is available on our website at www.akzonobel.co.in
A report on the CSR activities undertaken by your Company during the fiscal year 2017-18 is attached as Annexure II-B. It is pertinent to note that over 90% of CSR spend is incurred in local areas where your Company has its operations.
Human Resources
Your Company had cordial relations with employees across all locations during the year. The total number of employees on the rolls of the Company as at 31 March 2018 was 1,869 (previous year 1,902).
Information as per Section 197 of the Companies Act, 2013, read with the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, forms part of this report. However, as permitted under the provisions of Section 136 of the Act, the Report and Financial Statements are being sent to the members excluding the statement containing the said information.
Any member interested in obtaining such particulars may inspect the same at the Registered Office of the Company or write to the Company Secretary for a copy.
The disclosures below are made in terms of Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014:
(i) |
(ii) |
|||
Name |
Status |
Ratio of the remuneration of each Director to the median remuneration of the employees of the Company for the financial year 2017-18 |
Percentage increase in remuneration during 2017-18 over 2016-17 |
|
Mr Nihal Kaviratne CBE (upto 14 August 2017) |
Non Executive |
1.36 |
NA - only part of the year |
|
Mr Amit Jain |
Non Executive |
0.54 |
NA - no payment in previous year |
|
Mr Jayakumar Krishnaswamy |
Managing Director |
31.91 |
15% of base salary |
|
Mr Pradip Menon |
Whole time Director and CFO |
23.88 |
10% of base salary |
|
Mr R Gopalakrishnan |
Non Executive - Independent |
1.61 |
18% mainly due to revision in sitting fees |
|
Mr Arabinda Ghosh |
Non Executive |
- |
Nil |
|
Mr Raj S Kapur |
Non Executive - Independent |
1.88 |
32% mainly due to revision in sitting fees |
|
Dr Sanjiv Misra |
Non Executive - Independent |
1.81 |
41% mainly due to revision in sitting fees |
|
Ms Kimsuka Narsimhan |
Non Executive - Independent |
1.54 |
15% mainly due to revision in sitting fees |
|
Mr Arvind Uppal |
Non Executive - Independent |
1.81 |
44% mainly due to revision in sitting fees |
|
Mr Jeremy Rowe |
Non Executive |
- |
Nil |
|
Mr R Guha |
Company Secretary |
NA |
8% of base salary |
|
Description |
Remarks |
|||
(iii) Percentage increase in the median remuneration of employees in the financial year |
6% |
|||
(iv) Number of permanent employees on the rolls of the Company |
1,869 as on 31 March 2018 |
|||
(v) Average percentile increase already made in the salaries of employees other than the managerial personnel in the last financial year and its comparison with the percentile increase in the managerial remuneration and justification thereof and point out if there are any exceptional circumstances for increase in the managerial remuneration. |
Average percentage increase in base salary of non-managerial personnel was 6%, which is considered in line with the prevailing market conditions and other relevant factors. |
It is hereby affirmed that the remuneration to managerial personnel referred to above is as per the remuneration policy of the Company.
Notes:
1. The aforesaid details are calculated on the basis of remuneration for the financial year 2017-18.
2. Remuneration to Directors includes sitting fees paid to them for the financial year 2017-18.
3. Median remuneration in the Company (on cost to company basis) for all its employees was H744,594 for the financial year 2017-18.
4. Remuneration to Directors is within the overall limits approved by the shareholders.
Conservation of Energy, Technology Absorption and Forex Earnings and Outgo
Your Company continues to use its research and development base to bring consumers new products with improved performance features and products for special applications. Particulars in respect of conservation of energy, technology absorption and foreign exchange earnings and outgo, pursuant to Section 134 of the Companies Act, 2013, are given in Annexure III to this report.
Information Technology
Your Company continues to leverage IT for efficient management of its business operations and enhancing customer experience.
Your Company along with its business partners transitioned smoothly to the GST platform on 1st July 2017.
Dulux Visualizer continued its success story helping people to play with color ideas and see what rooms will look like, before anything is applied to the wall. Regularly upgraded with new features, itâs just one of the ways in which your Company shares itâs global expertise in color and design with customers and consumers.
Internal Control Systems
Your Company has an effective risk management framework, which helps the Board to monitor the state of controls in key business processes. Your Company has well-established procedures for internal controls, commensurate with its size and operations. The organization is appropriately staffed with qualified and experienced personnel for implementing and monitoring the internal control environment.
The Board periodically reviews the state of compliance with all laws applicable to the Company. The Company has an IT enabled tool incorporating all applicable legal compliances which are marked to their respective owners. The compliance library is updated periodically covering all changes with respect to Laws/Regulations.
Policy against Sexual Harassment
Your Company has formulated a policy for the prevention of sexual harassment within the Company. It seeks to prevent and deter acts of sexual harassment and communicate procedures for their resolution and settlement. Internal Complaints Committees have been constituted in accordance with the requirements of the law. There were no cases/ complaints reported in this regard during 2017-18. A copy of the Policy against sexual harassment has been disseminated amongst all employees and is posted on the Company website, which can be accessed from www.akzonobel.co.in.
Related Party Transactions (RPTs)
Your Company enters into various transactions with related parties as defined under Section 2(76) of the Companies Act, 2013. All the RPTs are undertaken in compliance with the provisions set out in Companies Act, 2013 and the Listing Regulations. Your Company has a robust process for RPTs and the transactions with related parties are referred to the audit committee for its approval at the scheduled quarterly meetings or as may be called upon from time to time along with all relevant information.
Your Companyâs Policy on materiality of RPTs and dealing with RPTs may be accessed on the Companyâs website at www.akzonobel.co.in.
All contracts / arrangements / transactions entered by the Company during the financial year with related parties were in the ordinary course of business and on an armâs length basis and/ or have been duly approved as required under law. During the year, the Company had entered into contracts / arrangements / transactions with related parties, which could be considered material in accordance with the policy of the Company on materiality of RPTs, with requisite approvals.
Your Directors draw attention of the members to Note 34 to the financial statements which contains the requisite disclosures.
Loans, Guarantees & Investments
There are no loans given or guarantees issued that are covered under Section 186 of the Act read with the Rules made there under. Details of investments made under the said section are covered in Notes 5.1 and 8.1 of the financial statements.
Extracts of the Annual Return
As required under Section 134(3)(a) of the Act, read with the Companies (Management and Administration) Rules, 2014, an extract of the Annual Return in the prescribed form is attached as Annexure IV.
Directors & Key Management Personnel
Mr Pradip Menon will be retiring by rotation at the forthcoming Annual General Meeting (AGM) and has offered himself for re-election.
Mr Jeremy Paul Rowe joined the board as an additional director with effect from 6 April 2018 and will be holding office till the forthcoming AGM. His appointment will be placed for shareholdersâ approval at the forthcoming AGM.
A brief resume of M/s Pradip Menon and Jeremy Paul Rowe, as required under regulation 36 of the Listing Regulations, is given in the Notice convening the AGM.
Declaration by Independent Directors
The Company has received necessary declarations from each Independent Director that he/ she meets the criteria of independence, laid down in Section 149(6) of the Act and the Listing Regulations.
Auditors
Statutory Auditors
M/s Price Waterhouse Chartered Accountants LLP will retire as the Auditors of the Company at the conclusion of the forthcoming AGM and, have offered themselves for re-appointment. Their appointment is proposed to be extended in terms of section 139 of the Companies Act, 2013, and is placed for shareholder approval at the forthcoming AGM.
Cost Auditors
In terms of Section 148 of the Companies Act 2013, Cost Audit was conducted for the year 2017-18 by M/s Chandra Wadhwa & Co., New Delhi. Their report for the year 2016-17 has been filed with MCA within the stipulated time.
The Board has re-appointed M/s Chandra Wadhwa & Co.,
New Delhi as the Cost Auditors for conducting Cost Audit for the financial year 2018-19, whose remuneration is subject to ratification by the shareholders at the AGM.
Secretarial Auditors
In terms of Section 204 of the Companies Act 2013, Secretarial Audit was conducted for the year 2017-18 by M/s A K Labh & Co., Kolkata. Their report is appended.
The Board has re-appointed M/s A K Labh & Co., Kolkata to conduct Secretarial Audit for the financial year 2018-19.
Directorsâ Responsibility Statement
As required under Section 134(5) of the Companies Act 2013, the Board states that:
a) in the preparation of the annual accounts, the applicable Indian accounting standards had been followed along with proper explanation relating to material departures;
b) the Directors had 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 and loss of the Company for that period;
c) the Directors had 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;
d) the Directors had prepared the annual accounts on a going concern basis;
e) the Directors had laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and were operating effectively; and
f) the Directors have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.
General
Your Directors state that no disclosure or reporting is required in respect of the following items, as there were no transactions on these items during the year under review:
1. The Company has issued only one class of equity shares with equal voting rights.
2. The Company has not issued any shares during the year, under ESOPs or Sweat Equity or otherwise.
3. The Managing Director or Whole time Directors of the Company did not receive any remuneration or commission from any other company belonging to Akzo Nobel Group or associate companies.
4. No significant or material orders were passed by the Regulators or Courts or Tribunals, which could impact the going concern status and the Companyâs operations in future.
5. Your Company has not accepted any public deposits during the year, and no amount on account of principal or interest on public deposits was outstanding as on the date of the balance sheet.
Cautionary Statement
Some of the statements in this report, describing your Companyâs objectives and expectations expressed in good faith, may constitute âforward looking statementsâ within the meaning of applicable laws and regulations. Actual results might differ materially from those, in the event of changes in the assumptions/ market conditions.
Acknowledgment
The Board of Directors wish to convey their gratitude and appreciation to all the employees of your Company for their valuable contribution during the year. They also wish to place on record their appreciation for the customers, shareholders, investors, bankers, agents, suppliers, distributors and other business associates for their cooperation and support.
On behalf of the Board
Place: Gurugram Amit Jain
Date: 10 May 2018 Chairman
Mar 31, 2017
Dear Members,
The Board of Directors are pleased to present their report on the business and operations of your Company along with the audited financial statements for the year ended 31 March 2017.
Business Environment
Indiaâs GDP for FY 2016-17 is expected to grow by ~7% compared to the previous yearâs 7.6%. Headline inflation based on Consumer Price Index was 3.8% in March 2017, versus previous year''s 4.8%. Interest rates dropped significantly during the year, on account of lower inflation and excess liquidity in the banking system triggered by demonetization announced in November 2016. Forex reserves have shown growth during the year indicating confidence of international investors in India. INR has appreciated against the USD by 2% towards the end of the year, after remaining subdued for most part of the year.
Various credit rating agencies have affirmed India''s rating with a positive outlook stating that the reforms initiated by the government will enable the country to improve its performance over the medium term.
(Rs, million)
Stand-alone |
Consolidated |
|||
2016-17 |
2015-16 |
2016-17 |
2015-16 |
|
Revenue from operations |
31,344 |
29,347 |
31,344 |
29,347 |
Operating profit (EBITDA) |
3,488 |
3,035 |
3,488 |
3,035 |
Depreciation |
(565) |
(537) |
(565) |
(537) |
Other Income net of Finance costs |
461 |
545 |
461 |
545 |
Exceptional item |
39 |
99 |
39 |
99 |
Profit before tax |
3,423 |
3,142 |
3,423 |
3,142 |
Tax |
(953) |
(1,000) |
(953) |
(1,000) |
Profit after tax |
2,470 |
2,142 |
2,470 |
2,142 |
Global economic activity is also seen to be picking up in tandem with a long awaited cyclical recovery in investment, manufacturing, and trade. Stronger activity and expectations of robust global demand have also resulted in commodity prices recovering from the troughs of 2016.
The year saw a limited upward movement in crude oil prices and demonetization impacting the consumption and economic activity albeit temporarily. Economic activity has since recovered to normal levels, with a modest industrial growth reported in March 2017.
Several measures have been initiated by the government to promote affordable housing, digitalization of the economy and improved tax compliance. Rollout of GST scheduled for July 2017 is expected to act as a âBoosterâ to drive higher rate of economic growth. With GST replacing multiple indirect taxes, ease of doing business is expected to improve. While the future outlook on business is positive, in the short term GST implementation could be disruptive as companies reorganize their business processes to adapt to the new environment.
Finance and Accounts
The financial statements have been prepared in compliance with the Indian Accounting Standards (IndAS) which have become mandatory from 1 April 2016. Figures for the previous year have been re-stated to facilitate comparison.
As required under IndAS, the financial statements include:
- Stand alone statements of the Company, Akzo Nobel India Limited; and
- Consolidated statements of the Group including the operational results of ICI India Research and Technology Centre, on which the Company exercises effective control.
Revenue for the year at H 31,344 million is 7% ahead of previous year, with contribution from all segments. EBITDA from business operations at H 3,488 million grew 15% over the previous year. After considering exceptional income and tax, the net profit for the year at H 2,470 million showed a growth of 15%, over previous year''s H 2,142 million, mainly on account of improved business performance. It was a year of record for the Company with revenue and PBT (before exceptional item) crossing H 30 billion and H 3.3 billion respectively.
The highlights of the performance during the year are:
Transfer to General Reserve
The Company proposes to transfer H 250 million to the General Reserve out of the net profit for the year ended 31 March 2017.
Dividend
In accordance with Regulation 43A of the SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 (the Listing Regulations''), the Board has formulated a Dividend Distribution Policy. The text of the policy is available on the Company''s website www.akzonobel.co.in
Keeping in view the current year''s performance and other relevant considerations, and in line with the Company''s Dividend Distribution Policy, the Board is pleased to recommend a dividend of H 22 per share for the financial year 2016-17, compared with the dividend of H 20 per share and a special dividend of H 50 per share in the previous year.
Management Discussion and Analysis
Industry structure
The Company is present in Coatings and Specialty Chemicals segments.
The Coatings segment has two main components: Decorative Paints and Performance Coatings and is served by both organised and unorganised sectors.
Decorative Paints account for a major part of the industry. The main drivers for the growth of this sector have been shortening of the repainting cycle and increased demand from smaller towns.
Performance Coatings is essentially a B2B business and is technology intensive with a diverse set of growth drivers, with strong emphasis on selling a solution rather than a product.
Product quality, performance and service levels will continue as the key differentiators in this market.
In Specialty Chemicals segment, the Company operates in Polymer Chemistry and Surface Chemistry businesses, which cater to oil & gas, personal care and agrochemical industries.
Business Performance
Coatings
Overall market for Coatings was moderately positive barring demonetization blues during the third quarter of the fiscal year. The segment recorded a revenue of H 28,703 million during the year 2016-17, compared to the previous year''s H 27,382 million, a growth of 5%. Segment Profit, however, improved by 12% to H 2,860 million, reflecting impact of cost control and productivity improvement.
Top-line growth was driven by premium as well as mass market products. Margins were impacted by drop in realization in the previous year, which was partly mitigated by better mix, productivity improvement and value creation initiatives.
Your Company will continue to stay focused on growing ahead of the market. Positive outlook on macro-economic factors like GDP indicates a boost in revenue growth in the medium term.
Highlights of different businesses within the Coatings segment are given below:
Decorative Paints business has presence in premium as well as mass market and economy segments, with strong positioning in the premium segment. The business has launched a series of innovative new products during the year that have received encouraging response from the market. Some of them are:
- Dulux Stay Bright Gloss - a water based alternative to solvent based enamel
- Dulux Quick drying water based Primer for wood & metal substrate as an alternative to solvent based primers
- Dulux Weather shield Crack Bridging primer
- Velvet Touch Platinum Glo in the Super Premium Interior category
- Dulux Enamel Gloss Small Packs and Universal Stainers
- Dulux Weather Shield Express - a 2 coat system that eliminates the need for a primer
The business has also established itself as a manufacturing hub for Colorants and Tinters to neighboring countries by leveraging its capacities.
Going forward, macro developments like nuclear families, availability of easy finance for housing, govt''s thrust on affordable housing etc are expected to push up the per-capita consumption of Paints in the country and sustain the growth momentum in this business. However, upward trend in key RM prices and possible disruptions due to GST implementation remain a concern in the near term.
Protective Coatings business services a wide range of industrial activity like, oil & gas (including downstream expansion projects/ offshore exploration, etc), power, waste water management, mining, high value infrastructure (HVI), chemical and general industries. The major driving factors for the markets are boost in government projects and investment in infrastructure like 100 smart cities, freight and industrial corridors, âMake in Indi'' etc.
Expanding the distribution reach, duly supported by a robust cost efficient mid-tier product portfolio, is also planned for gaining market share in protective coatings market.
Industrial Coatings business of BASF India Limited, which was acquired for a consideration of Rs, 119 million during the year, has been seamlessly integrated with the existing Protective Coatings operations.
Marine Coatings business mainly deals in Biocidal Antifouling, Slime Release, Foul Release, Sea stores, Cargo Hold Coatings, Cargo Tank Coatings and Universal Primers. It serves customers in Deep Sea, Dry Docks, Sea Stores, New building and Coastal docking (i.e. offshore supply, service & transport vessels and fishing, etc.) sectors.
Although the ship building industry has been affected by global economic conditions, the outlook for Indian shipping industry appears positive.
Powder Coatings market can be broadly classified under General Trade Coaters, General Industries, Automobiles, Functional, Domestic Appliances, Architectural and Information Technology. The market is highly fragmented with over 40% of the market is estimated as being serviced by unorganized sector. Work on a new powder coatings facility at the Company''s Thane site is in progress.
Metal Coatings business can be broadly classified under coil coatings and packaging coatings.
Coil Coatings market is dominated by Building & Construction product category, besides Extrusion, Aluminum Composite Panels and Domestic Appliances.
Packaging coatings market can be broadly classified into Inks, beer & beverage, general line, closures and food. General line segment holds the biggest chunk of the market.
The business has also built up an export portfolio of value added products to neighboring countries by leveraging its manufacturing capacities.
Vehicle Refinishes business is present in the Refinish segment and has a strong foothold in mid-market range of products which is served through the retail network of the Decorative Paints business.
New car/commercial vehicle companies setting up operations in India as well as expansion plans of existing companies indicate a positive growth trend for this business. The Company is also working on plans to strengthen its retail portfolio and expand distribution.
Specialty Coatings market can be broadly classified into 2-wheelers, Domestic Appliances, Consumer Electronics, Helmets, Auto Exteriors, Auto Interiors and Wireless. At present the Company is present mainly in auto interiors segment.
The Company will continue to leverage its strengths in Auto interiors segment, even as it seeks to penetrate and enter new market segments.
The business opened a first-of-its-kind Specialty Coatings production facility and colour laboratory in Noida, Uttar Pradesh.
Specialty Chemicals
This segment, recorded a turnover of H 2,641 million, compared to previous year''s H 1,965 million, a growth of 34%. The growth is attributable mainly to a change in business model where the Company has taken up
the distribution of products sourced from overseas manufacturers. Profit from the segment improved by 42% to H 214 million over the previous year.
Corporate Governance
A report on Corporate Governance, along with a certificate from a practicing Company Secretary confirming compliance with the conditions of corporate governance, is attached as Annexure I to this report.
Responsible Care / Corporate Social Responsibility
Your Company is committed to conduct its business in a socially and environmentally responsible way for the benefit of all its stake-holders. Planet Possible is your Company''s approach to sustainability, which focuses on creating more value from fewer resources across the value chain.
The company has adopted the Hoshin Kanri approach in formulating the HSE&S improvement plans. This promotes a sense of direction and alignment between different functions and / or levels of an organization, ensuring that improvement and transformation efforts are oriented to the business objectives.
Our sustainability agenda aims to create value for our customers by providing products with excellent functionality that generate resource or performance benefits ahead of competitive products.
A Business Responsibility Report is attached as Annexure II-A.
During the year, your Company implemented several CSR projects on its own with employee volunteers, as well as in partnership with implementing agencies. Such activities were mainly executed in the areas of health, education, skil development and environment protection. A report on the CSR activities undertaken by your Company is attached as Annexure II-B.
Human Resources
Your Company had cordial relations with employees across all locations during the year. The total number of employee on the rolls of the Company as at 31 March 2017 was 190 (previous year 1830).
Information as per Section 197 of the Companies Act, 2013, read with the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, forms part of this report. However, as permitted under the provisions of Section 137 of the Act, the Report and Accounts are being sent to the members excluding the statement containing the said information.
Any member interested in obtaining such particulars may inspect the same at the Registered Office of the Company or write to the Company Secretary for a copy.
Remarks
9%
1902 as on 31 March 2017
Average percentage increase in base salary of non-managerial personnel was 9%, which is comparable with the increase in the managerial remuneration
The disclosures alongside are made in terms of Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014:
(i) |
(ii) |
||
Name |
Ratio of the remuneration of each Director to the median remuneration of the employees of the Company for the Status financial year 2016-17 |
Percentage increase in remuneration during 2016-17 |
|
Mr Nihal Kaviratne CBE |
Non Executive |
4.2 |
161% increase as commission was enhanced from H 0.8 m to H 2.3 m with approval of the Board, in order to compensate for the time and effort expended by the Chairman on companyâs affairs over and above what is normally expected from a non-executive chairman. |
Mr Jayakumar Krishnaswamy |
Managing Director |
30.8 |
11% of fixed pay |
Mr Pradip Menon |
Wholetime Director |
22.3 |
Nil |
Mr R Gopalakrishnan |
Non Executive -Independent |
1.8 |
Nil |
Mr Amit Jain |
Non Executive |
- |
Nil |
Mr Arabinda Ghosh |
Non Executive |
- |
Nil |
Mr Raj S Kapur |
Non Executive -Independent |
1.8 |
Nil |
Dr Sanjiv Misra |
Non Executive -Independent |
1.7 |
Nil |
Ms Kimsuka Narsimhan |
Non Executive -Independent |
1.7 |
Nil |
Mr Arvind Uppal |
Non Executive -Independent |
1.6 |
Nil |
Mr R Guha |
Company Secretary |
NA |
10% of fixed pay |
Description
(iii) Percentage increase in the median remuneration of employees in the financial year
(iv) Number of permanent employees on the rolls of the Company
(v) Average percentile increase already made in the salaries of employees other than the managerial personnel in the last financial year and its comparison with the percentile increase in the managerial remuneration and justification thereof and point out if there are any exceptional circumstances for increase in the managerial remuneration
It is hereby affirmed that the remuneration to managerial personnel referred to above is as per the remuneration policy of the Company. Notes:
1. The aforesaid details are calculated on the basis of remuneration for the financial year 2016-17.
2. Remuneration to Directors includes sitting fees paid to them for the financial year 2016-17.
3. Median remuneration in the Company (on cost to company basis) for all its employees was H 574,872 for the financial year 2016-17.
4. Remuneration to Directors is within the overall limits approved by the shareholders.
Conservation of Energy, Technology Absorption and Forex Earnings and Outgo
Your Company continues to use its research and development base to bring consumers new products with improved performance features and products for special applications. Particulars in respect of conservation of energy, technology absorption and foreign exchange earnings and outgo, pursuant to Section 134 of the Companies Act, 2013, are given in Annexure III to this report.
Information Technology
Your Company continues to leverage IT for efficient management of its business operations and enhancing customer experience.
CRM has been further enhanced to help expedite resolution of customer complaints.
All efforts are on hand to make the Company''s IM systems GST compliant to ensure zero business interruption on migration to the GST platform.
Internal Control Systems
Your Company has an effective risk management framework, which helps the Board to monitor the state of controls in key business processes. Your Company has well-established procedures for internal controls, commensurate with its size and operations. The organization is appropriately staffed with qualified and experienced personnel for implementing and monitoring the internal control environment.
The Board periodically reviews reports of compliance with all laws applicable to the Company. The Company has an IT enabled tool incorporating all applicable legal compliances which are marked to their respective owners. The compliance library is updated periodically covering all changes w.r.t. Laws/Regulations.
Policy Against Sexual Harassment
Your Company has formulated a policy for the prevention of sexual harassment within the Company. It seeks to prevent and deter acts of sexual harassment and communicate procedures for their resolution and settlement. Internal Complaints Committees have been constituted in accordance with the requirements of the law. There were no cases/ complaints reported in this regard during 2016-17.
A copy of the Policy against sexual harassment has been disseminated amongst all employees and is posted on the Company website, which can be accessed from www.akzonobel.co.in.
Related Party Transactions (RPTs)
Your Company enters into various transactions with related parties as defined under Section 2(76) of the Companies Act, 2013. All the RPTs are undertaken in compliance with the provisions set out in Companies Act, 2013 and the Listing Regulations. Your Company has a robust process for RPTs and the transactions with Related Parties are referred to the Audit Committee for its approval at the scheduled quarterly meetings or as may be called upon from time to time along with all relevant information of such transactions.
The Policy on materiality of RPTs and dealing with RPTs as approved by the Board may be accessed on the Company''s website at www.akzonobel.co.in.
All contracts / arrangements / transactions entered by the Company during the financial year with related parties were in the ordinary course of business and on an arm''s length basis. During the year, the Company had not entered into any contract / arrangement / transaction with related parties, which could be considered material in accordance with the policy of the Company on materiality of RPTs.
Your Directors draw attention of the members to Note 34 to the financial statement which contains the requisite disclosures.
Loans, Guarantees & Investments
There are no loans given or guarantees issued that are covered under Section 186 of the Act read with the Rules made thereunder. Details of investments made under the said section are covered in Notes 5.1 and 8.1 of the financial statements.
Extracts of the Annual Return
As required under Section 134(3)(a) of the Act, read with the Companies (Management and Administration) Rules, 2014, an extract of the Annual return in the prescribed form is attached as Annexure IV.
Directors & Key Management Personnel
Mr Nihal Kaviratne CBE and Mr Amit Jain will be retiring by rotation at the forthcoming Annual General Meeting (AGM). Mr Kaviratne is not seeking re-election while Mr Jain has offered himself for re-election.
A brief resume of Mr Amit Jain, as required under regulation 36 of the Listing Regulations, is given in the notice convening the AGM.
The Board wishes to place on record its deep appreciation of the contribution of Mr Nihal Kaviratne CBE during his tenure with the Company.
Declaration by Independent Directors
The Company has received necessary declarations from each Independent Director that he/ she meets the criteria of independence, laid down in Section 149(6) of the Act and the Listing Regulations.
Auditors Statutory Auditors
M/s Price Waterhouse Chartered Accountants LLP will retire as the Auditors of the Company at the conclusion of the forthcoming AGM and, being eligible, have offered themselves for re-appointment.
Cost Auditors
In terms of Section 148 of the Companies Act 2013,
Cost Audit was conducted for the year 2016-17 by M/s. Chandra Wadhwa & Co., New Delhi. Their report for the year 2015-16 has been filed with MCA within the stipulated time.
The Board has re-appointed M/s Chandra Wadhwa & Co. New Delhi as the Cost Auditors for conducting Cost Audit for the financial year 2017-18, whose remuneration is subject to the approval of the shareholders at the AGM.
Secretarial Auditors
In terms of Section 204 of the Companies Act 2013, a
Secretarial Audit was conducted for the year 2016-17 by
M/s A K Labh & Co., Kolkata. Their report is appended.
The Board has re-appointed M/s A K Labh & Co., Kolkata to conduct Secretarial Audit for the financial year 2017-18.
Directorsâ Responsibility Statement
As required under Section 134(5) of the Companies Act 2013, the Board states that:
(a) in the preparation of the annual accounts, the applicable accounting standards had been followed along with proper explanation relating to material departures;
(b) the Directors had 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 and loss of the Company for that period;
(c) the Directors had 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;
(d) the Directors had prepared the annual accounts on a going concern basis;
(e) the Directors had laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and were operating effectively; and
(f) the Directors have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.
General
Your Directors state that no disclosure or reporting is required in respect of the following items, as there were no transactions on these items during the year under review:
1. The Company has issued only one class of equity shares with equal rights.
2. The Company has not issued any shares during the year, under ESOPs or Sweat Equity or otherwise.
3. The Managing Director or Whole time Directors of the Company did not receive any remuneration or commission from any other company belonging to Akzo Nobel Group or associate companies.
4. No significant or material orders were passed by the Regulators or Courts or Tribunals, which could impact the going concern status and the Company''s operations in future.
5. Your Company has not accepted any public deposits during the year, and no amount on account of principal or interest on public deposits was outstanding as on the date of the balance sheet.
Cautionary Statement
Some of the statements in this report, describing your Company''s objectives and expectations expressed in good faith, may constitute âforward looking statements'' within the meaning of applicable laws and regulations. Actual results might differ materially from those, in the event of changes in the assumptions/ market conditions.
Acknowledgment
The Directors wish to convey their gratitude and appreciation to all the employees of your Company for their valuable contribution during the year. They also wish to place on record their appreciation of your Company''s customers, shareholders, investors, bankers, agents, suppliers, distributors and other business associates for their cooperation and support.
On behalf of the Board
18 May 2017 N Kaviratne CBE
Mumbai Chairman
Mar 31, 2015
Dear Members,
The Directors are pleased to present their report for the year ended
31 March 2015.
All references to 'the Act' in this report refer to the Companies
Act, 2013 unless stated otherwise.
Business Environment
GDP for the financial year 2014-15 is expected to grow over 7% on the
2011-12 base. The estimate is led by strong growth in service sector,
followed by industry and agriculture. IIP data, which reflects the
manufacturing industry's performance, registered a growth of 2.7%
during 2014-15, compared to 0.1% in 2013-14.
From a macro-economic perspective, RBI had recognised the downward
trend in inflation and announced a rate cut in April 2015 on top of
liquidity enhancement measures taken during 2014-15. INR remained
fairly stable through most part of the year but has shown some weakness
in recent months.
The Union Budget for 2015-16 indicates the Government's committment to
support infrastructure sector and offer a stable and predictable tax
regime. It has also taken positive steps to implement Goods and Service
Tax (GST), to replace several state and central tax laws on indirect
taxation.
Taken together, the above factors point to a favourable business
environment for your Company to progress its growth plans with cautious
optimism.
Finance and Accounts
Revenue for the year at Rs 25,270 million is 5% ahead of previous year,
with contribution from all segments. EBITDA from business operations at
2,614 million grew 36% over the previous year; after considering
Exceptional Income and tax, the profit after tax for the year at
Rs 1,863 million showed a growth of 24%, compared to previous year's
Rs 1,502 million, mainly on account of improved business performance.
The highlights of the performance during the year are:
(Rs million)
2014-15 2013-14
Revenue from operations 25,270 24,179
Operating profit (EBITDA) 2,614 1,919
Depreciation (526) (437)
Other Income net of Finance costs 635 552
Exceptional item - income 27
Profit before tax 2,750 2,034
Tax (887) (532)
Profit after tax 1,863 1,502
Surplus brought forward from previous year 1,763 5,015
Total available for appropriation 3,626 6,517
Appropriations
Transfer to general reserve (190) (660)
Proposed dividend (933) (699)
Proposed special dividend - (2,800)
Tax on proposed dividend (187) (595)
Balance carried to Balance Sheet 2,316 1,763
Dividend
Keeping in view the current year's performance, the Board is pleased to
recommend a dividend of Rs 20 per share for the financial year 2014-15
(previous year Rs 15 per share special dividend of Rs 60 per share, to
commemorate the 60th year of the Company).
Public Deposits
Your Company has not accepted any public deposits during the year, and
no amount on account of principal or interest on public deposits was
outstanding as on the date of the balance sheet.
Corporate Governance
A report on Corporate Governance, along with a certificate from a
practicing Company Secretary confirming compliance with the conditions
of corporate governance, is attached as Annexure I to this report.
Your Company is also participating in an initiative 'Women on
Corporate Boards' by mentoring and grooming suitable woman candidates
to familiarise themselves with the operation and process of Corporate
Boards. Under this programme, the Board has selected Ms Shalini Hinduja
to participate in the board/committee meetings under the mentorship of
the Chairman.
Responsible Care / Corporate Social Responsibility
Your Company recognises that its business activities have direct and
indirect impact on the environment in which it operates and is firmly
committed to conduct its business in a socially and environmentally
responsible way for the benefit of
all its stake-holders viz. shareholders, consumers, employees, and the
community at large. Towards this objective, various programmes were
conducted to create safety awareness and reinforce the Company's vision
of Zero injury.
During the year, your Company implemented several CSR initiatives on
its own with employee volunteers, as well as in partnership with
external agencies. Such activities covered the areas of health,
education and development of the society's underprivileged sections and
environment protection. A report on the CSR activities and initiatives
undertaken by the Company during the year is attached as Annexure II.
Conservation of Energy, Technology Absorption and Foreign Exchange
Earnings and Outgo
Your Company continues to use its research and development base to
bring new products with improved performance features and products for
special applications. Particulars in respect of conservation of energy,
technology absorption and foreign exchange earnings and outgo, pursuant
to Section 134 of the Act, are given in Annexure III to this report.
Information Technology
During the year, multiple businesses of your Company across the country
have been brought under a common Global ERP platform at the respective
business unit level to facilitate implementation of global processes.
It has helped the Company to achieve synergy on the use of assets and
resources.
To automate and streamline critical processes, the Company has gone
live with Global Master Data solution for its raw materials code
creation and validation process. This system will be able to help the
Company integrate its master data across all its businesses and
countries, which will in turn ensure a single source of master data,
thereby providing full visibility of materials sourced from vendors
across business units.
To facilitate collaboration with the Company's suppliers, an interface
has been setup, connecting the Company's SAP system with the supplier's
ERP systems. This interface helps in automating the operational
transactions between the Company and the supplier. This process has
been initiated with some of the Company's biggest vendors, covering
majority of the category spend. Plans are underway to extend it further
to cover all major vendors.
Human Resources
Your Company had cordial relations with employees across all locations
during the year. Your Company's Human Resources agenda for the year was
focused on strengthening four key areas:
- building a robust and diverse talent pipeline,
- enhancing individual and organisational capabilities for future
readiness,
- driving greater employee engagement; and
- capability building at the grass root level.
The Company has seen a significant improvement in the engagement score
(which indicates the level of engagement, and hence commitment to the
Company's goals and values) of its employees through sustained
communication and development programmes. The total number of employees
on the rolls of the Company as at 31 March 2015 was 1,792 (previous
year 1,854).
Information as per section 197 of the Act, read with the Companies
(Appointment and Remuneration of Managerial Personnel) Rules, 2014,
forms part of this Report. However, as permitted under the provisions
of section 137 of the Act, the Report and Accounts are being sent to
the members excluding the statement containing the said information.
Any member interested in obtaining such particulars may inspect the same
at the Registered Office of the Company or write to the Company Secretary
for a copy.
In accordance with Section 178 and other applicable provisions of the
Act, the Board has formulated the Nomination and Remuneration Policy of
the Company by suitably defining the terms of reference of the
Nomination and Remuneration Committee. More details in this regard
have been outlined in the Corporate Governance report annexed to this
report (Annexure I).
The following further disclosures are made in terms of Rule 5 of the
Companies (Appointment and Remuneration of Managerial Personnel) Rules,
2014:
(i) Ratio of the remuneration of each Director to the median
remuneration of the employees of the Company for the financial year
2014-15:
Name Status Ratio
Mr Nihal Kaviratne CBE Non-Executive 16
Mr Jayakumar Krishnaswamy Managing Director 22.7
Mr Himanshu Agarwal Wholetime Director 18.9
Mr R Gopalakrishnan Non-Executive 1.8
Mr Amit Jain Non-Executive -
Mr Raj S Kapur Non-Executive 19
Dr Sanjiv Misra Non-Executive 17
Ms Kimsuka Narasimhan Non-Executive 0.2
Mr Arvind Uppal Non-Executive 1.7
(ii) Details of percentage increase in the remuneration of each
Director and Company Secretary in the financial year 2014-15:
Name Status Percentage increase
Mr Nihal Kaviratne CBE Non-Executive 14% increase in Commission
Mr Jayakumar Krishnaswamy Managing Director 5% of Annual Base salary
with effect from
15 January 2015
Mr Himanshu Agarwal Wholetime Director 5% of Annual Base salary,
prorated from the date of
joining the Company
(Actual: 3% with effect
from 1 April 2014)
Mr R Gopalakrishnan Non-Executive 14% increase in Commission
Mr Amit Jain Non-Executive Nil
Mr Raj S Kapur Non-Executive 14% increase in Commission
Dr Sanjiv Misra Non-Executive 14% increase in Commission
Ms Kimsuka Narasimhan Non-Executive Joined the Board on 30
January 2015 hence, not
applicable
Mr Arvind Uppal Non-Executive 14% increase in Commission
Mr R Guha Company Secretary 8% of Annual Base salary
with effect from 1 April
2014
Description Remarks
(iii) The percentage increase in the median remuneration of employees
in the financial year : 9.1%
iv) The number of permanent employees on the rolls of the Company
1,792 as on 31 March 2015
(v) The explanation on the relationship between average increase in
remuneration and the Company performance Company PAT, after considering
the salary increases referred to above, improved by 24% in 2014-15,
compared to previous year. Increase in remuneration levels take into
account relevant market factors.
(vi) Comparison of the remuneration of the Key Managerial Personnel
against the performance of the Company Company PAT, after considering
the salary increases referred to above, improved by 24% in 2014-15,
compared to previous year. Increase in remuneration levels of KMPs is
lower than the percentage increase at the median remuneration of the
employees.
(vii) Variations in the market capitalisation of the Company, price
earnings ratio as at the closing date of the current financial year and
previous financial year
The Company's market capitalisation increased by 55% to Rs 65.5
billion on 31 March 2015 from Rs 42.1 billion on 31 March 2014.
PE ratio was 35.2 times as on 31 March 2015, an increase of 25%
compared to 31 March 2014 (28 times).
Increase or Decrease in the market quotations of the shares of the
Company in comparison with the last public offer
The market quote (NSE) of the Company's share was Rs 1,405 as on 31
March 2015 and the last public offer was made at a price of Rs 10 in
1967. An amount of Rs 1,000 invested in the said public offer would be
worth Rs 1.85 lakh as on March 31, 2015 which translates to a Compounded
Annual Growth Rate of 12%, taking into account the bonus shares issued
and dividends paid during the period.
(viii) Average percentile increase already made in the salaries of
employees other than the managerial personnel in the last financial
year and its comparison with the percentile increase in the managerial
remuneration and justification thereof and point out if there are any
exceptional circumstances for increase in the managerial remuneration
Average percentage increase in Base salary of non-managerial personnel
is 10.3%
This is comparable with the increase in the managerial remuneration.
(ix) Comparison of the remuneration of the Key Managerial Personnel
against the performance of the Company
Company PAT improved by 24% in 2014-15, compared to the previous year.
Remuneration changes for each KMP is explained above
(x) The key parameters for any variable component of remuneration
availed by the Director
- Business profitability
- Business cash generation
- Sustainability parameters
- Specific personal goals
(xi) The ratio of the remuneration of the highest paid Director to that
of the employees who are not Directors, but receive remuneration in
excess of the highest paid Director during the year
Not applicable - there is no employee drawing remuneration higher than
the highest paid Director.
OAWTOO Ul LI It; I I It)I IOTI I^CTItl I_^11 tVjlVI tltll II It) li it;
y t;cii
(xii) It is hereby affirmed that the remuneration paid to directors and
managerial personnel referred to above is as per the remuneration
policy of the Company.
Notes:
1. The aforesaid details are calculated on the basis of remuneration
for the financial year 2014-15.
2. Remuneration to Directors includes sitting fees paid to them for the
financial year 2014-15.
3. Median remuneration of the Company for all its employees is Rs.
501,435 for the financial year 2014-15.
4. Commission to the Non-Executive Directors was increased commensurate
with the increase in the responsibility, considering their involvement
in strategy and changes in the regulatory environment.
5. Remuneration to Directors is within the overall limits approved by
the shareholders.
6. Ratios have been compared with reference to the Annual Base Salary
as applicable.
Internal Control Systems/Risk Management
Your Company has an effective risk management framework, which helps
the Board to monitor the state of controls in key business processes.
Your Company also has well-established procedures for internal
controls, commensurate with its size and operations. The organisation
is appropriately staffed with qualified and experienced personnel for
implementing and monitoring the internal control environment. The
internal audit function reports to the Audit Committee.
Vigil Mechanism
Your Company has a Vigil Mechanism in place as required under section
177 of the Act and the Listing Agreement. More details in this regard
have been outlined in the Corporate governance report annexed to this
report (Annexure I).
Policy Against Sexual Harassment
Your Company has formulated a policy for prevention and deterrence of
acts of sexual harassment. The Policy also defines the procedures for
the resolution and settlement of complaints, if any. Internal
Complaints Committees have been constituted in accordance with the
requirements under the Sexual Harassment of Women at Workplace
(Prevention, Prohibition and Redressal) Act, 2013, which ensures
implementation and compliance with the law, as well as the policy at
every unit. There were no cases/ complaints reported in this regard
during 2014-15. A copy of the policy against sexual harassment is
posted on the Company's website at
https://www.akzonobel.com/in/corporate_governance/ policies.
Related Party Transactions
All contracts / arrangements / transactions entered by the Company
during the financial year with related parties were in the ordinary
course of business and on an arm's length basis. During the year, the
Company had not entered into any contract / arrangement / transaction
with related parties, which could be considered material in accordance
with the policy of the Company on materiality of related party
transactions.
Your Directors draw attention of the members to Note 5.16 to the
financial statements which sets out related party disclosures.
Loans, Guarantees & Investments
There are no loans given or guarantees issued that are covered under
Section 186 of the Act read with the Rules made thereunder. Details of
investments made under the said section are covered in Notes 3.9 and
3.12 of the financial statements.
Extracts of the Annual Return
As required under section 134(3)(a) of the Act, read with the Companies
(Management and Administration) Rules, 2014, an extract of the Annual
return in the prescribed form is attached as Annexure IV.
Directors & Key Managerial Personnel
Mr Robert Molenaar, Director, resigned from the Board with effect from
9 September 2014. Mr Arabinda Ghosh was appointed as a Director with
effect from 28 May 2015 in the casual vacancy caused by the resignation
of Mr Robert Molenaar.
Ms Renu Karnad resigned from the Board with effect from 9 September
2014 to comply with certain regulatory restrictions. Ms Kimsuka
Narasimhan was appointed as a Director with effect from 30 January 2015
in the casual vacancy caused by Ms Renu Karnad's resignation.
Appointment of Mr R Gopalakrishnan and Mr Arvind Uppal as Independent
Directors for a term of five years with effect from 12 August 2014, Ms
Renu Karnad for the period from 12 August 2014 to 8 September 2014 and
Ms Kimsuka Narasimhan for a term of five years with effect from 30
January 2015 are subject to approval by the shareholders at the
forthcoming Annual General Meeting.
Mr Amit Jain will be retiring by rotation at the forthcoming Annual
General Meeting and is eligible for re-appointment.
Your board wishes to place on record its deep appreciation of the
contributions of Mr Robert Molenaar and Ms Renu Karnad during their
respective tenures.
Declaration by Independent Directors
Your Company has received necessary declarations from each Independent
Director under section 149(7) of the Act that he/ she meets the
criteria of independence, laid down in section 149(6) of the Act and
clause 49 of the Listing Agreement.
Auditors
Statutory Auditors
M/s B S R & Associates LLP will retire as the Auditors of the Company
at the conclusion of the forthcoming Annual General Meeting, and being
eligible have offered themselves for reappointment. The Auditors'
Report for the financial year 2014-15, does not contain any
qualification, reservation or adverse remark.
Cost Auditors
The Board has appointed M/s Chandra Wadhwa & Associates as the Cost
Auditors for conducting Cost Audit for the financial year 2014-15.
Their report for the previous year ended 31 March 2014, was filed with
MCA within the stipulated time.
Secretarial Auditors
In terms of section 204 of the Act, the Board has appointed M/s A K
Labh & Co, Kolkata to conduct a Secretarial Audit for 2014-15. Their
report is attached as Annexure V
Directors' Responsibility Statement
As required under section 134(5) of the Act, the Board states that:
(a) i n the preparation of the annual accounts, the applicable
accounting standards had been followed and there are no material
departures from the same;
(b) the Directors had 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 your Company at the end of the financial year and of the profit and
loss of the Company for that period;
(c) the Directors had taken pro
per and sufficient care 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;
(d) the Directors had prepared the annual accounts on a going concern
basis;
(e) the Directors had laid down proper internal financial controls to
be followed by the Company and that
such internal financial controls are adequate and were operating
effectively; and
(f) the directors have devised proper systems to ensure compliance with
the provisions of all applicable laws and that such systems were
adequate and operating effectively.
General
Your Directors state that no disclosure or reporting is required
in respect of the following items, as there were no transactions
on these items during the year under review:
1. The Company has issued only one class of equity shares with equal
rights.
2. The Company has not issued any shares during the year, under ESOPs
or Sweat Equity or otherwise.
3. The Company does not have any subsidiary; hence, the question of the
Managing Director or Wholetime Directors of the Company receiving any
remuneration or commission from any of its subsidiaries does not arise.
4
4. No significant or material orders were passed by the Regulators or
Courts or Tribunals, which could impact the going concern status and
the Company's operations in future.
Cautionary Statement
Some of the statements in this report, describing your Company's
objectives and expectations expressed in good faith, may constitute
'forward looking statements' within the meaning of applicable laws
and regulations. Actual results may differ materially from those, in
the event of changes in the assumptions/ market conditions.
Acknowledgement
Your Directors wish to convey their gratitude and appreciation to all
the employees of the Company for their valuable contribution during the
year. They also wish to place on record their appreciation of the
Company's customers, shareholders, investors, bankers, agents,
suppliers, distributors and other business associates for their
cooperation and support.
For and on behalf of the Board
28 May 2015 Nihal Kaviratne CBE
Gurgaon Chairman
Mar 31, 2014
Dear Members,
The Directors are pleased to present their report for the year ended
31 March 2014. This report has been prepared with reference to and in
compliance of section 217 of the Companies Act, 1956 in terms of the
General Circular no 8/2014 dated 4 April 2014 issued by the Ministry of
Corporate Affairs.
Business Environment
Indian economy faced another year of strong headwinds both from global
factors and domestic issues. GDP growth in fiscal year 2013-14 is
estimated at around 5% (previous year 4.5%). Overall industrial
activity slowed down with the Index of Industrial production (IIP)
refecting a marginal de-growth in 2013-14 compared to a growth of 1% in
the previous year and 3% in the earlier year (2011-12).
The year also saw significant volatility in foreign exchange rates in
mid-2013 which impacted business profitability; certain strong exchange
control measures were taken by RBI during that period, some of which
have since been rolled back.
On the positive side, the Companies Act, 2013 has replaced the
Companies Act, 1956 with several provisions to protect investor
interests, especially minority shareholders, improving governance
standards and mandating corporate participation in CSR etc.
Finance and Accounts
Revenue for the year at Rs. 24,179 million is 8% ahead of previous year,
with contribution from all segments. EBITDA from business operations at
Rs. 1,919 million grew marginally ahead of previous year; however, profit
after tax for the year at Rs. 1,502 million declined compared to previous
year''s Rs. 2,188 million mainly on account of lower income from
investments and certain non-recurring income included in the previous
year''s results.
The highlights of the performance during the year are:
(Rs. million)
2013-14 2012-13
Revenue from operations 24,179 22,320
Operating profit 1,919 1,885
Depreciation (437) (386)
Other Income net of Finance costs 552 1,292
Profit before tax 2,034 2,791
Tax (532) (603)
Profit after tax 1,502 2,188
The appropriations from the profit
are as follows:
Surplus brought forward from 5,015 8,214
previous year
Profit after tax for the year 1,502 2,188
Total available for appropriation 6,517 10,402
Appropriations
Transfer to general reserve (660) (1,050)
Proposed dividend (699) (933)
Proposed special dividend (2,800) (2,800)
Tax on proposed dividend (595) (634)
Write-back of previous year dividend
(excess provision) 30
Balance carried to Balance 1,763 5,015
Sheet
The Company has not accepted any public deposits during the year and no
amount on account of principal or interest on public deposits was
outstanding as on the date of the balance sheet.
Dividend
Keeping in view the current year''s performance, the Board is pleased to
recommend a dividend of Rs. 15 per share for the finanicial year 2013-14
(previous year Rs. 20 per share). In addition, the Board has, after
taking into account the fund requirements of the Company and other
relevant factors, recommended a special dividend of Rs. 60 per share for
approval of the members at the forthcoming Annual General Meeting.
(previous year Rs. 60 per share). The special dividend also signifies the
milestone of the Company completing sixty years since incorporation.
Investor Education and Protection Fund (IEPF)
A sum of Rs. 2.3 million was remitted to the IEPF of the Central
Government towards Dividend remaining unclaimed in respect of the
finanicial year ended 31 March 2006, in terms of section 205C of the
Companies Act, 1956 (which corresponds to section 124 of the Companies
Act, 2013).
significant development
During the year, your Company inaugurated its eco-efficient Greenfield
facility  its sixth factory in India  for manufacturing decorative
paints at Gwalior, Madhya Pradesh. This facility will help in servicing
the hitherto underserved markets of Central India in a cost efficient
way.
Corporate governance
Annexure II to this report summarises the details of compliance with
the corporate governance norms outlined in Clause 49 of the Listing
Agreements with BSE and National Stock Exchange.
Directors
Mr Partha Sarathi Basu, Wholetime Director resigned from the Board with
effect from 30 August 2013, consequent to his taking up an assignment
with Akzo Nobel N V, based in the Netherlands.
Mr Himanshu Agarwal joined the Board as a Wholetime Director with
effect from 2 September 2013.
Mr Amit Jain, Managing Director, resigned from the Board with effect
from 31 December 2013, consequent to his taking up an assignment with
Akzo Nobel NV based in the Netherlands. He was appointed as an
Additional Director with effect from 2 January 2014.
Mr Raj Kapur was appointed as an Additional Director of the Company
with effect from 1 March 2014.
Mr Jayakumar Krishnaswamy was appointed as the Managing Director of the
Company with effect from 1 March 2014.
Mr Nihal Kaviratne CBE, Mr Rob Molenaar and Dr Sanjiv Misra will be
retiring by rotation at the forthcoming Annual General Meeting and are
eligible for re-appointment.
The Board wishes to place on record its deep appreciation of the
contributions of Mr A Jain as Managing Director and
Mr P S Basu as Wholetime Director, during their respective tenures.
Auditors
M/s B S R & Associates LLP retire as the Auditors of the Company at the
conclusion of the forthcoming Annual General Meeting and being eligible
have offered themselves for reappointment.
Cost Auditors
The Board has appointed M/s Chandra Wadhwa & Associates as the Cost
Auditors for conducting Cost Audit for the finanicial year 2013-14. Their
report for the previous year ended 31 March 2013 was fled with MCA
within the stipulated time.
Directors'' responsibility statement The Directors confirm that:
a) in the preparation of the annual accounts, the applicable accounting
standards have been followed;
b) they 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 as on 31 March 2014 and the profit for the year ended on
that date;
c) they have taken proper and sufficient care for the maintenance of
adequate accounting records in accordance with the provisions of the
Companies Act, 1956, for safeguarding the assets of the Company and for
preventing and detecting fraud and other irregularities; and
d) they have prepared the annual accounts on a going concern basis.
Acknowledgment
The Directors wish to convey their gratitude and appreciation to all
the employees of your Company for their valuable contribution during
the year. They also wish to place on record their appreciation of our
Company''s customers, shareholders, investors, bankers, agents,
suppliers, distributors and other business associates for their
cooperation and support.
On behalf of the Board
New Delhi N Kaviratne CBE
16 May 2014 Chairman
Mar 31, 2013
Dear Members,
The Directors are pleased to present their report for the year ended 31
March 2013.
Business environment
GDP growth in fiscal year 2012-13 is estimated at around 5% (previous
year 6.2%). The overall slowdown in the economy was visible and
reflected in the low growth of just around 1% in the Index of
Industrial Production (IIP) for the year 2012-13.
During the financial year 2012-13, most of the markets your Company
operates in were impacted by the volatility in the macroeconomic
environment. Overall revenue growth in line with market could still be
achieved, thanks to the Company''s customer-centric approach, its
ability to innovate and strong internal processes.
Finance and Accounts
Revenue for the year at Rs 22,320 million is 12% ahead of previous
year, with contribution from all segments. Profit after tax for the
year at Rs 2,188 million is higher than previous year by 8%.
Keeping in view the current year''s performance, the Board is pleased to
recommend a dividend of Rs 20 per share for the financial year 2012-13
(previous year Rs 20 per share).
The highlights of the performance during the year are:
(Rs million)
2012-13 2011-12
Revenue from operations 22,320 19,878
Operating profit 2,942 2,737
Depreciation (386) (366)
Interest income (net) 235 93
Profit before tax 2,791 2,464
Tax (603) (446)
Profit after tax 2,188 2,018
The appropriations from the profit are
as follows:
Balance in Profit & Loss Account
brought forward from previous year 8,214 8,351
Profit after tax for the year 2,188 2,018
Total available for appropriation 10,402 10,369
Appropriations
Transfer to general reserve (1,050) (1,040)
Proposed dividend (933) (959)
Proposed special dividend (2,800)
Tax on proposed dividend (634) (156)
Write-back of previous year dividend
(excess provision) 30 -
Balance carried to Balance Sheet 5,015 8,214
In addition, the Board has, after taking into account the fund
requirements of the Company to support growth and other relevant
factors, also recommended a Special Dividend of Rs 60 per share for
approval of the members at the forthcoming Annual General Meeting.
A sum of Rs 1.9 million was remitted to the Investor Education and
Protection Fund of the Central Government towards Dividend remaining
unclaimed in respect of the financial year ended 31 March 2005, in
terms of section 205C of the Companies Act, 1956.
The Company has not accepted any public deposits during the year and no
amount on account of principal or interest on public deposits was
outstanding as on the date of the balance sheet.
Significant development Share buyback
As briefly reported last year, the share buyback programme initiated on
21 May 2012, was completed on 24 July 2012, after obtaining necessary
regulatory approvals. The Board notes with satisfaction that the
programme saw overwhelming participation from the shareholders. In all,
1.3 million shares were bought back by the Company at a price of Rs 920
per share at a total cost of Rs 1,209 million including expenses.
Responsible care
Health, Safety, Environment & Security (''HSE&S'') is always the top
priority of your Company in the conduct of its business. Your Company
continued to focus on people safety and process safety at all its
sites. Special attention was given during the year to the safety of
personnel while they commute to work. Some of the initiatives taken by
the Company during the year like Take-care programme, Behavior Based
Safety programme and Life Saving Rules have helped the Company to
conduct its activities in a safe and secure manner. The Company is
committed to provide a safe workplace to its employees and contractors;
and safety to the communities where it operates.
In line with global norms and regulatory requirements, the Company
continues to upgrade its standards of compliance of all applicable
(''HSE&S'') norms.
Conservation of energy, research, development and innovation
Your Company continues to use its research and development base to
bring consumers new products with improved performance features and
products for special applications. Particulars in respect of
conservation of energy, technology absorption and foreign exchange
earnings and outgo, pursuant to Section 217(1)(e) of the Companies Act,
1956, are given in Annexure I to this report.
Corporate Social Responsibility
Social welfare and community development continue to be a priority of
the Company. During the year, your Company implemented several CSR
initiatives in partnership with NGOs mainly in the areas of health,
education and development of the poor and underprivileged as well as
caring the environment.
Company''s employees actively participated in the welfare programmes in
and around the places where they operate.
Information technology
Your Company maintains a globally linked IT and communication network
and applications to support its business operations. During the year,
it has completed roll out of SAP SRM (Supplier Relationship Management)
to most of its factories to manage indirect spend and further working
towards its expansion to other locations. The Company continued to
focus on leveraging SAP functionality to improve business operations.
Human resources
Your Company had cordial relations with employees across all locations
during the year.
The Company saw improvement in its engagement score (which indicates
the level of engagement and hence commitment to the Company''s goals) of
its employees through sustained communication and development
programmes. The total number of employees on the rolls of the Company
as at 31 March 2013 was 1795 (previous year 1716).
Information as per Section 217 (2A) of the Companies Act, 1956, read
with the Companies (Particulars of Employees) Rules, 1975, as amended
from time to time, forms part of this report. However, as per the
provisions of Section 219(1) (b)(iv) of the Act, the report and
accounts are being sent to the members excluding the aforesaid
information. Any member interested in obtaining such particulars may
inspect the same at the Registered Office of the Company or write to
the Company Secretary for a copy.
Internal control systems
Your Company has an effective risk management framework, which helps
the Board to monitor the state of preparedness in key business
processes. Your Company has well-established procedures for internal
controls commensurate with its size and operations. The organisation is
appropriately staffed with qualified and experienced personnel for
implementing and monitoring the internal control environment. The
internal audit function reports to the Audit Committee.
Corporate governance
Annexure II to this report summarises the details of compliance with
the corporate governance norms outlined in Clause 49 of the Listing
Agreements with BSE and National Stock Exchange.
Directors
Mr G Armstrong resigned as a Director of the Company w.e.f. 29 March
2013. Mr R Molenaar joined the Board as a Director in the casual
vacancy caused by the resignation of Mr G Armstrong, w.e.f. 14 May
2013. The Board wishes to place on record its deep appreciation for the
contribution of Mr G Armstrong during his tenure as a Director of the
Company. Ms Sucheta Govil, Global Head of Marketing, Decorative Paints,
Akzo Nobel, has been appointed as the Alternate Director to Mr R
Molenaar.
Ms R S Karnad and Mr A Uppal, Directors, will be retiring by rotation
at the forthcoming Annual General Meeting and are eligible for
re-appointment.
Auditors
M/s B S R & Associates retire as the Auditors of the Company at the
conclusion of the forthcoming Annual General Meeting and being eligible
have offered themselves for reappointment.
Cost Auditors
The Board has appointed M/s Chandra Wadhwa & Associates as the Cost
Auditors for conducting Cost Audit for the financial year 2012-13.
Their report for the previous year ended 31 March 2012 was filed with
MCA within the stipulated time.
Directors'' responsibility statement
The Directors confirm that:
a) in the preparation of the annual accounts, the applicable accounting
standards have been followed;
b) they 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 as on 31 March 2013 and the profit for the year ended on
that date;
c) they have taken proper and sufficient care for the maintenance of
adequate accounting records in accordance with the provisions of the
Companies Act, 1956, for safeguarding the assets of the Company and for
preventing and detecting fraud and other irregularities; and
d) they have prepared the annual accounts on a going concern basis.
Cautionary statement
Some of the statements in this report, describing your Company''s
objectives and expectations expressed in good faith, may constitute
''forward looking statements'' within the meaning of applicable laws
and regulations. Actual results might differ materially from those, in
the event of changes in the assumptions/market conditions.
Acknowledgment
The Directors wish to convey their gratitude and appreciation to all
the employees of your Company for their valuable contribution during
the year. They also wish to place on record their appreciation of our
Company''s customers, shareholders, investors, bankers, agents,
suppliers, distributors and other business associates for their
cooperation and support.
On behalf of the Board
Gurgaon N Kaviratne CBE
20 May 2013 Chairman
Mar 31, 2012
The Directors have pleasure in presenting their report for the year
ended 31 March 2012.
Business environment
GDP growth in fiscal year 2011-12 is estimated at below 7% (previous
year 8.4%). Signs of slowdown are visible in the economy as reflected
in the low growth of just around 3% in Index of Industrial Production
(IIP) for the year 2011-12 (previous year 8%). Coatings market growth
in 2012-13 is expected to slow down, with several challenges posed by
factors like increase in rates of Excise and Service Tax and hardening
of US dollar, putting pressure on costs and business profitability.
Finance and accounts
Total revenue for the year at Rs 21,001 million crossed the
psychologically significant level of Rs 20 billion for the first time
in the Company's history, thanks to the robust growth achieved by the
Decorative Paints business and the amalgamation of three AkzoNobel
group companies with our Company. Profit before tax for the year at Rs
2,464 million is higher than previous year by 12%, though it is not
comparable due to the amalgamation referred to above and changes in
exceptional/non-recurring items. Keeping in view the current year's
performance and other relevant factors, the Board has recommended a
dividend of Rs 20.00 per share for the year 2011-12 (Rs 18.00 for the
previous year), which will be paid after the approval of the members at
the forthcoming Annual General Meeting.
The highlights of performance for the year are:
(Rs million)
2011-12 2010-11
Total income 21,001 11,955
Operating profit 2,737 2,065
Depreciation (366) (217)
Interest income (net) 93 238
Profit before tax from operations 2,464 2,086
Exceptional items - 113
Profit before tax 2,464 2,199
Tax (446) (433)
Profit after tax 2,018 1,766
The appropriations from the profit are as follows:
Balance in Profit & Loss Account b/d
- from previous year 6,276
- by amalgamating companies 2,075
Profit after tax for the year 2,018
Total available for appropriation 10,369
Appropriations
Transfer to general reserve (1,040)
Proposed dividend (959)
Tax on dividend (156)
Balance carried to Balance Sheet 8,214
Interest income of the Company came down significantly during the year
mainly due to reduction in the interest on Income Tax refunds received
during the year to Rs 89 million against Rs 222 million in the previous
year.
No public deposits were accepted by our Company during the year.
Unclaimed dividends amounting to Rs 4 million were remitted into the
Investor Education and Protection Fund of the Central Government as
required under section 205C of the Companies Act, 1956.
Significant developments
Amalgamation
The amalgamation of M/s Akzo Nobel Car Refinishes India (Private)
Limited, Akzo Nobel Chemicals (India) Limited and Akzo Nobel Coatings
India (Private) Limited after all necessary approvals and sanction by
the jurisdictional High Courts was completed on 18 May 2012. As per the
scheme of amalgamation, the Accounts covered in this report include the
results of the amalgamating companies with effect from 1 April 2011
being the 'Appointed Date' for the amalgamation.
In terms of the scheme of amalgamation, equity shares of the Company to
be issued to the shareholders of the amalgamating companies will rank
pari passu with the existing shares of the Company including for the
purpose of determining entitlement to the Dividend for the year
2011-12. Post this issue, promoter holding in the Company will go up to
68.9%. As a result of the amalgamation and share issue as aforesaid,
the capital structure of the Company has changed/will change as
follows:
Pre-amalgamation Post-amalgamation
Rs million Rs million
Authorised capital 416.9 1,266.9
Paid-up capital 368.4 479.6
The Board is delighted to welcome the new shareholders to the Akzo
Nobel India fold and look forward to their support to the Company in
its endeavours to enhance shareholder value.
Arising from the amalgamation, the Company will be reporting its
financials under two business segments, viz. Coatings and Others
(mainly Chemicals).
Share buyback
A share buyback programme through Tender Offer process was initiated by
the Board on 21 May 2012, subject to necessary regulatory and other
approvals. Under this programme, a maximum of 1.3 million shares will
be bought back by the Company at a price of Rs 920 per share from the
non promoter shareholders. The total cost of this buyback assuming full
acceptance will be Rs 1,196 million plus incidental costs. The buyback
is expected to be completed by end July 2012.
Responsible care
Our Company continued to drive its Health, Safety, Environment &
Security objectives by taking on challenging targets for reduction in
energy and water consumption, waste and VOC. Our Company continued to
drive its safety initiatives like behaviour based safety and driving
safety. Commissioning of the expansion of Hyderabad factory has helped
in reducing primary freight CO2 emissions through reduction of the
transportation distance to service the south India market.
In line with global norms and regulatory requirements, the Company
continues to upgrade its standards of compliance of all applicable
('HSE&S') norms while maintaining operational integrity.
Conservation of energy, research, development and innovation
Our Company continues to use its research and development base to bring
consumers new products with improved performance features and products
for special applications. Particulars in respect of conservation of
energy, technology absorption and foreign exchange earnings and outgo,
pursuant to Section 217(1)(e) of the Companies Act, 1956, are given in
Annexure I to this report.
Corporate Social Responsibility
During the year, the Company encouraged several CSR initiatives
directly and in partnership with NGOs with main focus on health,
hygiene & education for underprivileged segments and creating
livelihood opportunities for below poverty line (BPL) category and has
been able to bring about a positive change in many challenging
situations. An Aaghanwadi project was taken up with the objective to
provide help and work with BPL farmers to develop their land to ensure
steady and sustainable income. By implementing "Model Farm", which
consisted of an inter- crop of fruit-bearing trees and vegetables which
will provide immediate returns as well as long-term benefits, combined
with water harvesting tank, their efforts resulted in conversion of
arid lands to lush farms. This project won 1st prize in Akzo Nobel
Global Community Program Best Practices competition - 2011. A team
consisting of employee volunteers worked extensively in raising
contributions to construct a new building for a rural school - Mahatma
Gandhi Vidyalaya, in Navi Mumbai.
Information technology
Our Company maintains global IT and communication networks and
applications to support its business activities. IT security processes
protecting these systems are in place and subject to assessment as part
of the review of internal control over financial reporting.
Video conferencing facilities have been installed at all factories and
regional sales offices, thereby creating a video network across all
major sites and HO. Decorative Paints business has also started a
project to leverage the existing SAP platform to provide real time
business analytics in a visual form for regular review and monitoring.
Human resources
Our Company ensured cordial relations with employees across all
locations during the year.
In appreciation of its efforts in developing and managing talent, Akzo
Nobel India has been awarded the 'Best Talent Management Organisation
of the Year' at the World HRD Congress 2012, held in Mumbai. The total
number of employees on the rolls of the Company including the
amalgamating companies, as at 31 March 2012 was 1,716.
Information as per Section 217 (2A) of the Companies Act, 1956, read
with the Companies (Particulars of Employees) Rules, 1975, as amended
from time to time, forms part of this report. However, as per the
provisions of Section 219(1)(b)(iv) of the Act, the report and accounts
are being sent to the members excluding the aforesaid information. Any
member interested in obtaining such particulars may inspect the same at
the Registered Office of the Company or write to the Company Secretary
for a copy.
Internal control systems
Our Company has an effective risk management framework, which helps the
Board to monitor the exposure and state of preparedness in key business
processes. Our Company has well-established procedures for internal
controls commensurate with its size and operations. The organisation is
appropriately staffed with qualified and experienced personnel for
implementing and monitoring the internal control environment. The
internal audit function is adequately resourced and reports to the
Audit Committee.
Corporate governance
Annexure II to this report summarises the details of compliance with
the corporate governance norms outlined in Clause 49 of the Listing
Agreements with Bombay Stock Exchange and National Stock Exchange.
Directors
Mr R Gopalakrishnan and Dr S Misra, Directors, will be retiring by
rotation at the forthcoming Annual General Meeting and are eligible for
re-appointment.
Auditors
M/s B S R & Associates retire as the Auditors of the Company at the
conclusion of the forthcoming Annual General Meeting and being eligible
have offered themselves for reappointment.
Cost Auditors
As required under the Companies Act, the Company has appointed M/s
Chandra Wadhwa & Associates as the Cost Auditors for its Coatings
(Paints & Varnishes) and Chemicals segments for the year 2011-12.
Directors' responsibility statement
The Directors confirm that:
a) in the preparation of the annual accounts, the applicable accounting
standards have been followed;
b) they 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 as on 31 March 2012; and
- the profit for the year ended on that date;
c) they have taken proper and sufficient care for the maintenance of
adequate accounting records in accordance with the provisions of the
Companies Act, 1956, for safeguarding the assets of the Company and for
preventing and detecting fraud and other irregularities; and
d) they have prepared the annual accounts on a going concern basis.
Cautionary statement
Some of the statements in this report, describing our Company's
objectives and expectations expressed in good faith, may constitute
'forward looking statements' within the meaning of applicable laws
and regulations. Actual results might differ materially from those, in
the event of changes in the assumptions/market conditions.
Acknowledgment
The Directors wish to convey their gratitude and appreciation to all
the employees of our Company for their valuable contribution during the
year. They also wish to place on record their appreciation of our
Company's customers, shareholders, investors, bankers, agents,
suppliers, distributors and other business associates for their
cooperation and support.
On behalf of the Board
Gurgaon
21 May 2012 N Kaviratne CBE
Chairman
Mar 31, 2011
The Directors present with pleasure their report for the year ended 31
March 2011.
BUSINESS ENVIRONMENT
Year on year, Indias GDP growth remained strong, spreading positive
energy across the business environment. Estimates for the ?fiscal year
2010-11 suggest a GDP growth of about 8.5% (previous year 8%). There is
every reason to believe that the growth in FY 2011-12 will be sustained
at around 8%, assuming a normal monsoon and effective control on
inflation. The credit policy announcements by the RBI indicate that
inflation continues to be a cause of worry.
Inclusive growth and infrastructure development were clearly the
priorities of the Union Budget for 2011-12, with significant increase
in allocation and a string of incentives for fresh investment in these
sectors. On the taxation front, your Company stands to gain from the
drop in corporate surcharge. Operating costs could, however, increase
with the new levies in indirect taxes, restrictions on availing CENVAT
set off and other similar measures.
The new IFRS converged accounting standards have been notified by the
Government. While your Company is gearing itself to adopt these
standards, more details about the timetable for their adoption are
awaited.
FINANCE AND ACCOUNTS
Total income for the year at Rs 11,955 m grew 15% while profit before
tax at Rs 2,199 m, grew by 10% over the previous year. Profit for the
year is not comparable with the previous year because of exceptional
item in the current year. Keeping in view your Companys performance
and other relevant factors, the Board has recommended a dividend of Rs
18.00 per share for the year 2010-11 (previous year Rs 16.00), which
will be paid after the approval of the members at the forthcoming
Annual General Meeting.
Performance highlights (Rs million)
2010-11 2009-10
Total Income 11,955 10,433
Operating Profit 2,077 2,198
Depreciation (217) (212)
Interest income (net) 226 14
Profit before tax from operations 2,086 2,000
Exceptional item 113 -
Profit before tax 2,199 2,000
Tax (433) (407)
Profit after tax for the year 1,766 1,593
Balance in Profit & Loss Account
brought forward from previous year 6,071 5,924
Total available for appropriation 7,837 7,517
Appropriations
Transfer to General Reserve (790) (760)
Proposed Dividend (net) (663) (588)
Tax on Dividend (108) (98)
Balance carried to Balance Sheet 6,276 6,071
No public deposits were accepted by your Company during the year.
Unclaimed dividends amounting to Rs 4 m pertaining to financial year
2002-03 were remitted into the Investor Education and Protection Fund
of the Central Government as required under section 205C of the
Companies Act, 1956.
MANAGEMENT DISCUSSION & ANAlYSIS
Paints
Your Companys Paints segment consists of the Decorative and Automotive
businesses. Continued innovations in product development and strong
marketing efforts contributed to a revenue growth of 16%. Segment
profit for the year grew by 1.3%, as your Company invested in building
and strengthening the brand as well as in enhancing the capability of
human resources, after absorbing input cost inflation.
Dulux Promise, a new product for the Exterior mid-tier category, was
launched in December 2010. With its Colour Guard technology, the
product offers a wide range of colours and longevity. The business also
re-launched two of its products during the year after renovating them
for quality and ease of application. In addition, an international
product Dulux All was also introduced to the Indian market.
Colour Solution machines continue to play a vital role in driving
revenue growth. To ensure high utilisation of these machines, your
Company has pledged to improve service levels and deliver quicker
complaint resolution in the market place.
In order to stay close to the customer and enhance service levels,
judicious investments in strengthening warehousing facilities and
adding new depots have been implemented. Special care is being taken to
transport the Companys products in a safe and cost-efficient manner.
Further, your Company has invested in enhancing its production capacity
at the Hyderabad Plant for waterborne paints. The Tinter manufacturing
facilities have been debottlenecked at the Mohali and Thane Plants.
The Automotive business introduced an international brand Dynacoat
from the AkzoNobel stable in the Indian market during the year. This
launch showcases the technical expertise and international lineage of
AkzoNobel, even as it demonstrates your Companys commitment to
quality.
Taken together, all the above developments reinforced the image of your
Company as the leaders in innovation.
The growth momentum of industrial activity is likely to continue in FY
2011-12 supported by the increased thrust of the Government on
infrastructure. Rising input prices, however, continue to raise
concerns on profitability. Your Company has been monitoring the global
trends in the availability and price movements of all key inputs and
has been striving to safeguard its supply lines for critical materials
at the lowest possible cost. Cost reduction and value enhancement
projects were also pursued to counter inflation/supply security.
Notwithstanding the constraints, your Company stays focused on growing
ahead of the market, with particular emphasis on surprising and
delighting its consumers and empowering its people.
Others
National Starch (Specialty Starches) business was divested during the
year; the profit from this divestment has been reported as an
exceptional item in the Accounts for the year 2010-11.
Surface Chemistry business registered a marginal drop in sales over the
previous year mainly due to intense competition.
SUSTAINABIlITY/ RESPONSIBLE CARE
Health, Safety, Environment & Security
Your Company continued to drive its sustainability objectives by taking
on challenging targets for managing energy, water and waste. The
Hyderabad and Thane facilities reduced their energy consumption per ton
of paint produced by 5%. Water consumption in the plants has also
decreased by 15% from 2010 levels. A task force has been set up to find
ways and means of containing SLOB generation and ensure their
appropriate disposal at depots. Together, the factories registered 18%
reduction in waste generation.
Corporate Social Responsibility (CSR)
Leaving a positive impact on the neighbouring communities is high on
the priorities of your Company. During the year under review, your
Company encouraged a number of CSR initiatives in such communities in
partnership with NGOs for improving awareness levels among children
towards health, safety and environment. Continuing its drive to add
colour to peoples lives, your Company implemented a hygiene
improvement programme for a local school of under-privileged children
in Navi Mumbai and created colourful environment in their classrooms.
Your Company also worked with an NGO, that focuses on people below
poverty line, to set up rain-water harvesting facilities and colourful
community centres in villages.
Visits were taken up to critical vendors to support them with suitable
inputs on safety and sustainability.
CONSERVATION OF ENERGY, RESEARCH, DEVELOPMENT & INNOVATION
Your Company continues to use its research and development base to
bring new products with improved performance features to the consumers
and products for special applications. Particulars in respect of
Conservation of Energy, Technology Absorption and Foreign Exchange
Earnings and Outgo, pursuant to Section 217(1)(e)of the Companies Act,
1956, are given in Annexure I to this report.
INFORMATION TECHNOlOGY
SAP has stabilised at all sites. Implementation of the advanced modules
of SAP, e.g. the Advanced Planning Optimisation for demand and
distribution planning, Project Systems to manage projects end-to-end
and the automation of Accounts Payable are in progress.
A robust Distributor Automation System that manages the transfer and
supply of all items in the distribution chain from the manufacturer to
the retailer, is being rolled out to Re-distribution Stockists. This
application, once fully rolled out, will be interfaced with back-end
SAP for automatic replenishment of stocks to Distributors and will
provide data to track and monitor secondary sales.
HUMAN RESOURCES
Your Company ensured cordial relations with employees across all
locations during the year. The total number of employees on the rolls
of the Company as at 31 March 2011 was 1027.
Information as per Section 217(2A) of the Companies Act, 1956, to be
read with the Companies (Particulars of Employees) Rules 1975, forms
part of this report. However, as per the provisions of Section
219(1)(b)(iv) of the Act, the Report and Accounts are being sent to the
members excluding the aforesaid information. Any member interested in
obtaining such particulars may write to the Company Secretary.
INTERNAL CONTROL SYSTEMS
Your Company has an effective Risk Management framework, which helps
the Board to monitor the exposure and state of preparedness in key
business processes. Your Company has well-established procedures for
internal controls commensurate with its size and operations. The
organization is appropriately staffed with qualified and experienced
personnel for implementing and monitoring the internal control
environment. The Internal Audit function is adequately resourced and
reports to the Audit Committee.
CORPORATE GOVERNANCE
Annexure II to this report summarizes the details of compliance with
the Corporate Governance norms outlined in clause 49 of the Listing
Agreements with the National Stock Exchange and Bombay Stock Exchange.
DIRECTORS
Mr N Kaviratne CBE took over as Chairman of the Company with effect
from 1 October 2010, on the retirement of Mr Aditya Narayan from the
Board.
Mr N Kaviratne CBE and Ms R S Karnad, Directors, will be retiring by
rotation at the forthcoming Annual General Meeting and are eligible for
re-appointment.
Mr P S Basu joined the Board as a Wholetime Director and CFO with
effect from 1 November 2010. His appointment and remuneration are
subject to approval by the members at the forthcoming Annual General
Meeting.
Mr G Armstrong and Mr A Uppal were appointed as Additional Directors
with effect from 1 April 2011 and will hold office up to the date of
the forthcoming Annual General Meeting. Their continued appointment to
the Board is being placed for your approval. Your Board has also
appointed Ms Sucheta Govil as the Alternate Director to Mr G Armstrong.
The Board wishes to place on record its deep appreciation of the
contribution of Mr. Aditya Narayan during his tenure as Chairman of the
Board.
AUDITORS
M/s B S R & Associates retire as the Auditors of the Company at the
conclusion of the forthcoming Annual General Meeting and, being
eligible, have offered themselves for reappointment.
DIRECTORS RESPONSIBILITY STATEMENT
Your Directors confirm that:
a) in the preparation of the Annual Accounts, the applicable accounting
standards have been followed;
b) they 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
à the state of affairs of the Company as on 31 March 2011; and
à the profit for the year ended on that date;
c) they have taken proper and sufficient care for the maintenance of
adequate accounting records in accordance with the provisions of the
Companies Act, 1956, for safeguarding the assets of the Company and for
preventing and detecting fraud and other irregularities; and
d) they have prepared the annual accounts on a going concern basis.
CAUTIONARY STATEMENT
Some of the statements in this report, describing your Companys
objectives and expectations expressed in good faith, may constitute
forward looking statements within the meaning of applicable laws and
regulations. Actual results might differ materially from those, in the
event of changes in the assumptions/market conditions.
ACKNOWLEDGEMENT
Your Directors wish to convey their gratitude and appreciation to all
the employees of your Company for their valuable contribution during
the year. They also wish to place on record their appreciation of your
Companys customers, shareholders, investors, bankers, agents,
suppliers, distributors and other business associates for their
co-operation and support.
On behalf of the Board
N Kaviratne CBE
Chairman
Gurgaon
11 May 2011
Mar 31, 2010
The Directors have pleasure in presenting their report for the year
ended 31 March 2010.
BUSINESS ENVIRONMENT
After a sluggish start, the Indian economy picked up momentum in the
second half of the year under review. The estimated GDP growth in
2009-10 was over 7% (previous year 6.7%); the Index of Industrial
Production also indicates a growth of around 10% in 2009-10, against
previous years 2.8%. The Union Budget for 2010-11 has, as widely
anticipated, partially withdrawn some of the stimulus measures
introduced in 2008-09 in the wake of improvement in economic
environment, besides re-adjusting corporate tax rates. A road map for
implementing the new Direct Taxes Code and the Goods and Services Tax
with effect from 1 April 2011 has also been laid out. RBIs macro
economic forecast for the fiscal year 2010-11 is a GDP growth at 8%
with an upward bias, assuming normal monsoon and moderate inflation.
The credit policy announced by the RBI in April 2010 factors in the
above outlook and has initiated measures to adjust interest rates to
contain inflationary pressures.
FINANCE AND ACCOUNTS
Total income for the year at Rs 10,433m was up by 5% while the PBT at
Rs 2,000m grew by 12% over the previous year. PAT for the year at Rs
1,593m is however not comparable with the previous years Rs 2,946m
because of exceptional items. Keeping in view the current years
performance and other relevant factors, the Board has recommended a
dividend of Rs 16.00 per share for the year 2009-10 (same as in the
previous year) which will be paid after the approval of the members at
the forthcoming Annual General Meeting.
The performance highlights for the year are (Rs million)
2009-10 2008-09
Total Income 10,433 9,963
Operating Profit (PBDIT) 2,198 1,967
Depreciation (212) (213)
Interest income (net) 14 38
Profit before tax from operations 2,000 1,792
Exceptional items - 1,995
Profit before tax 2,000 3,787
Tax (407) (841)
Profit after tax 1,593 2,946
The appropriations from the profit are as follows:
Balance in Profit & Loss Account
brought forward from previous year 5,924
Profit after tax for the year 1,593
Total available for appropriation 7,517
Appropriations
Transfer to General Reserve (760)
Proposed Dividend (net) (588)
Tax on Dividend (98)
Balance carried to Balance Sheet 6,071
No public deposits were accepted by the Company during the year.
Unclaimed dividends amounting to Rs 3m were remitted into the Investor
Education and Protection Fund of the Central Government as required
under section 205C of the Companies Act, 1956.
SIGNIFICANT DEVELOPMENTS
After obtaining all necessary approvals, the name of the Company has
been changed to Akzo Nobel India Limited. This change reflects the
alignment of your Company with the AkzoNobel Group which had acquired
Imperial Chemical Industries PLC (ICI) worldwide.
SHARE BUYBACK
The share buyback through market operations, approved by the members on
19 December 2008 was closed on 18 December 2009, after buying back a
total of 1.38m shares, constituting 3.6% of the pre-buyback paid up
capital of the Company, spread over two financial years 2008-09 and
2009-10. The premium paid over the face value of the shares bought back
during the year and other costs of the buyback amounting to Rs 684m
have been adjusted against General Reserve. In addition, as required
under the Companies Act 1956, a Capital Redemption Reserve of Rs 12m
has been created by adjustment to the General Reserve.
MANAGEMENT DISCUSSION & ANALYSIS
Paints
Your Companys Paints business segment consists of Decorative and
Refinish businesses. In the early part of the financial year, the
business took a cautious approach to protect its profitability. Segment
sales for the year grew 4% while segment profit grew by 26%, on the
back of savings in raw materials costs, improved mix and innovation.
In Decorative Paints business, your Company continued to invest in
Retail Modernization which was started last year under the brand Dulux
Decorator Centre. A new initiative for improving your Companys
visibility in the retail segment called Visual Merchandising was
launched during the year, providing world class visibility elements to
its dealers to differentiate their outlets.
In Refinish Paints business, your Company initiated focus on new
emerging segment Mid Tier PU and revamped the Brand Strategy for
Eterna with clear market segmentation. The business continued its
focus on demand generation through programmes like The Great Finishers
Club1, colour workshops and training in colour matching skills for
painters.
Having created a strong growth platform in the previous year, the
outlook for the business segment in the new financial year is positive
in the backdrop of revived economic conditions. The governments thrust
on infrastructure development and the extension of the interest subsidy
scheme on small individual housing loans is likely to improve the
sentiments in the real estate sector, which in turn could help the
paints industry.
The business segment has positioned itself to target growth ahead of
market in the next few years and has been building capbility for taking
advantage of new opportunites. The key aspects of the growth strategy
are to place customers interests first and empower its people, besides
operating in a sustainable manner. However, volatility in crude oil
prices and exchange fluctuations may adversely impact input costs,
which will be addressed through innovation and value creation plans.
Others
This segment consisting of the trading operations in Surface Chemistry
and National Starch products registered a sales growth of 6% and profit
growth of 18% over the previous year.
RESPONSIBLE CARE - HEALTH, SAFETY, ENVIRONMENT & SECURITY (HSE&S) AND
CORPORATE SOCIAL RESPONSIBILITY (CSR)
HSE&S
Your Company continued to sustain its high standards of HSE&S
performance, returning yet another year with no major injury or
incidents. The integrated HSE&S system has stabilized and is being used
uniformly across the organization. Your Company continued to drive its
sustainability objectives by taking up challenging targets for energy,
water and waste reduction in all its plants. Your Company has also
become a member of the TERI- BCSD (Business Council for Sustainable
Development) to participate in issues related to sustainable
development and to promote leadership in environmental management and
social responsibility. No occupational illness was reported during the
year.
CSR
During the year under review, your Company encouraged a number of CSR
initiatives in the neighbouring communities in partnership with NGOs
for improving childrens awareness on health, safety and environment.
Your Companys efforts won recognition from AkzoNobel Group with a
second prize in the Global Community Programs 2009 Best Practices
Competition for the project A self-sustaining home for street
children.
CONSERVATION OF ENERGY, RESEARCH, DEVELOPMENT & INNOVATION
Your Companys performance on energy and waste reduction continued to
improve ahead of targets. Your Company continues to use its research
and development base to bring to the consumers new products with
improved performance features and products for special applications.
Particulars in respect of Conservation of Energy, Technology Absorption
and Foreign Exchange Earnings and Outgo, pursuant to section 217( 1
)(e) of the Companies Act, 1956, are given in Annexure I to this
report.
INFORMATION TECHNOLOGY
Your Company continued to invest in upgrading its Information
Technology systems to enhance competitive advantage.
With a view to improve operational effectiveness and efficiency,
AkzoNobels proven global SAP solution called SATURN has been
implemented at all sites across Paints business. The new system
provides a single end-to-end platform to facilitate management decision
making and enable deployment of advanced integrated functionalities in
future.
The data network has been completely revamped and upgraded to provide
high-speed links at all sites to ensure the connectivity and quality of
service required to run all the relevant applications.
HUMAN RESOURCES
Cordial relations with employees prevailed at all the Company locations
during the year. The total number of employees on the rolls of the
Company as at 31 March 2010 was 873.
Information as per Section 217 (2A) of the Companies Act, 1956, read
with the Companies (Particulars of Employees) Rules, 1975, forms part
of this report. However, as per the provisions of Section 219(l)(b)(iv)
of the Act, the report and Accounts are being sent to the members
excluding the aforesaid information. Any member interested in obtaining
such particulars may write to the Company Secretary.
INTERNAL CONTROL SYSTEMS
The Company has an effective Risk Management framework, which helps the
Board to monitor the exposure and state of controls in the key business
processes. Your Company has well-established procedures for internal
control commensurate with its size and operations. The organization is
appropriately staffed with qualified and experienced personnel for
implementing and monitoring the internal control environment. The
internal audit function is adequately resourced and reports to the
Audit Committee.
CORPORATE GOVERNANCE
Annexure II to this report summarizes the details of compliance with
the Corporate Governance norms outlined in clause 49 of the Listing
Agreements with National Stock Exchange and Bombay Stock Exchange.
DIRECTORS
Mr M V Subbiah resigned from the Board with effect from 20 June 2009.
Mr. A J Britt resigned from the Board with effect from 1 July 2009. In
the casual vacancy caused by Mr. Britts resignation, Ms Kerris Bright
was appointed as a Director with effect from 1 July 2009; she has since
resigned from the Board with effect from 30 April 2010. Dr Sanjiv
Misra joined the Board with effect from 14 May 2010 in the casual
vacancy caused by the resignation of Ms Kerris Bright. Mr M R Rajaram
stepped down from the Board with effect from 1 November 2009.
Mr R Gopalakrishnan and Dr Sanjiv Misra, Directors, will be retiring by
rotation at the forthcoming Annual General Meeting and are eligible for
re-appointment.
The Board wishes to place on record its deep appreciation of the
contribution of Mr. M V Subbiah, Mr A J Britt, Mr M R Rajaram and Ms
Kerris Bright during their respective tenures as members of the Board.
AUDITORS
M/s B S R & Associates retire as the Auditors of the Company at the
conclusion of the forthcoming Annual General Meeting and being eligible
have offered themselves for reappointment.
DIRECTORS* RESPONSIBILITY STATEMENT
Your Directors confirm that:
a) in the preparation of the Annual Accounts, the applicable accounting
standards have been followed;
b) they have selected such accounting policies and applied them
consistently and made judgements and estimates that are reasonable and
prudent so as to give a true and fair view of
- the state of affairs of the Company as on 31 March 2010;and
- the profit for the year ended on that date;
c) they have taken proper and sufficient care for the maintenance of
adequate accounting records in accordance with the provisions of the
Companies Act, 1956, for safeguarding the assets of the Company and for
preventing and detecting fraud and other irregularities; and
d) they have prepared the annual accounts on a going concern basis.
Cautionary Statement
Some of the statements in this report, describing the Companys
objectives and expectations expressed in good faith, may constitute
forward looking statements within the meaning of applicable laws and
regulations. Actual results might differ materially from those, in the
event of changes in the assumptions/market conditions.
ACKNOWLEDGMENT
The Directors wish to convey their gratitude and appreciation to all
the employees of the Company for their valuable contribution during the
year. They also wish to place on record their appreciation to the
Companys customers, shareholders, investors, bankers, agents,
suppliers, distributors and other business associates for their
cooperation and support.
On behalf of the Board
Gurgaon A NARAYAN
14 May 2010 Chairman
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