Asian Paints Ltd
Directors Reports
Dear Members,
The Board of Directors are pleased to present the Seventy-Fourth Annual Report of Asian
Paints Limited along with the audited financial statements (standalone and consolidated)
for the financial year ended 31st March, 2020.
FINANCIAL RESULTS
The Company's financial performance for the year ended 31st March, 2020 is
summarized below:
|
|
Rs. crores |
|
Standalone |
Consolidated |
|
Year ended 31.03.2020 |
Year ended 31.03.2019* |
Growth (%) |
Year ended 31.03.2020 |
Year ended 31.03.2019* |
Growth (%) |
Revenue from Operations* |
17,194.09 |
16,391.78 |
4.9% |
20,211.25 |
19,248.45 |
5.0% |
Earning Before Interest, Taxes, Depreciation and Amortisation |
4,214.58 |
3,789.62 |
11.2% |
4,466.08 |
3,998.58 |
11.7% |
Less : Finance Cost |
78.38 |
78.60 |
|
102.33 |
105.27 |
|
Less : Depreciation and Amortisation Expense |
689.97 |
540.77 |
|
780.50 |
622.14 |
|
Profit For the period before share of profit in associate |
3,446.23 |
3,170.25 |
8.7% |
3,583.25 |
3,271.17 |
9.5% |
Share of profit of Associate |
- |
- |
|
50.74 |
40.73 |
|
Profit before exceptional items & tax |
3,446.23 |
3,170.25 |
8.7% |
3,633.99 |
3,311.90 |
|
Exceptional Items** |
33.20 |
- |
|
- |
- |
|
Profit Before Tax |
3,413.03 |
3,170.25 |
7.7% |
3,633.99 |
3,311.90 |
9.7% |
Less : Tax Expense |
759.08 |
1,038.08 |
|
854.85 |
1,098.06 |
|
Profit for the period from continuing operations |
2,653.95 |
2,132.17 |
24.5% |
2,779.14 |
2,213.84 |
25.5% |
Profit before tax from discontinued operations |
- |
- |
|
(5.73) |
(7.28) |
|
Tax expense of discontinued operations |
- |
- |
|
(0.78) |
(1.48) |
|
Profit for the period from discontinued operations |
- |
- |
|
(4.95) |
(5.80) |
|
Profit for the period |
2,653.95 |
2,132.17 |
24.5% |
2,774.19 |
2,208.04 |
25.6% |
Attributable to: |
|
|
|
|
|
|
Shareholders of the Company |
2,653.95 |
2,132.17 |
24.5% |
2,705.17 |
2,155.92 |
25.5% |
Non Controlling Interest |
- |
- |
|
69.02 |
52.12 |
|
Other Comprehensive Income (net of tax) |
50.40 |
(18.18) |
|
58.31 |
(13.76) |
|
Total Comprehensive Income |
2,704.35 |
2,113.99 |
27.9% |
2,832.50 |
2,194.28 |
29.1% |
Attributable to: |
|
|
|
|
|
|
Shareholders of the company |
2,704.35 |
2,113.99 |
27.9% |
2,755.61 |
2,132.97 |
29.2% |
Non-Controlling Interest |
- |
- |
|
76.89 |
61.31 |
|
Opening balance in Retained Earnings |
4,424.53 |
3,345.90 |
|
4,604.60 |
3,502.31 |
|
Amount available for Appropriation |
7,068.66 |
5,451.71 |
|
7,299.35 |
5,632.52 |
|
Dividend - Interim - FY 2019-20 |
1,007.16 |
- |
|
1,007.16 |
- |
|
Interim - FY 2018-19 |
- |
273.37 |
|
- |
273.37 |
|
Final- FY 2018-19 |
733.79 |
- |
|
733.79 |
- |
|
Final- FY 2017-18 |
- |
580.31 |
|
- |
580.31 |
|
Tax on Dividend |
353.07 |
173.50 |
|
353.07 |
173.50 |
|
Transfer to General Reserve |
- |
- |
|
- |
- |
|
Transfer to Other Reserve |
- |
- |
|
0.69 |
0.74 |
|
Closing balance in Retained Earnings |
4,974.64 |
4,424.53 |
|
5,204.64 |
4,604.60 |
|
* Restated figures after adjusting for retrospective application of Ind AS 116 -
Leases.
**Comprise of impairment provision towards investment made in Sleek International
Private Limited & Maxbhumi Developers Limited of ' 29.7 crores and ' 3.5 crores
respectively.
COMPANY PERFORMANCE OVERVIEW During the financial year 2019-20:
During the financial year 2019-20, revenue from operations on standalone basis
increased to Rs. 17,194.09 crores as against Rs. 16,391.78 crores in the previous year - a
growth of 4.9%.
Even with the loss of sales in the last fortnight of March, 2020, the Company
managed to end the year with a double digit volume growth of 11.2% for domestic decorative
business. Against this double digit volume growth for the year, the value growth was in
single digit as we continue to focus on growing the bottom of the pyramid with
concentrated push on the upgradation of emulsions as well as large undercoats market.
Cost of goods sold as a percentage to revenue from operations decreased to 55.3
% as against 57.4% in the previous year.
Employee cost as a percentage to revenue from operations increased to 5.7%
(Rs.5.43 crores) against 5.5% (Rs.900.14 crores) in the previous year.
Other expense as a percentage to revenue from operations increased to 16.6%
(Rs.2,845.44 crores) as against 15.7% (Rs.2,576.21 crores) in the previous year.
The Company has contributed Rs. 25 Crores towards COVID-19 pandemic related
relief activities.
The Profit After Tax for the current year is Rs. 2,653.95 crores against Rs.
2,132.17 crores in the previous year - a growth of 24.5%. Higher growth was due to
reduction in tax rate during the year.
On a consolidated basis, the group achieved revenue of Rs.,211.25 crores as
against Rs. 19,248.45 crores - a growth of 5.0%. Net profit after non-controlling interest
for the group for the current year is Rs. 2,705.17 crores as against Rs. 2,155.92 crores
in the previous year - a growth of 25.5%.
IMPACT OF COVID-19
The country witnessed lockdown being implemented in India in the second fortnight of
March 2020. There were also restrictions of varying extent across larger part of the
world, due to the COVID-19 pandemic. This impacted the business operations of the Company
significantly. Since May 2020, the Company started resuming operations in its
manufacturing plants and warehouses after taking requisite permissions from Government
authorities.
By staying true to its purpose and its values, the top-most priority for the Company
was to ensure the safety of its employees. The Company has taken several measures to
ensure their well-being including leveraging the power of technology to enable them to
work from home. For those employees who are working in sales offices and manufacturing
locations, their safety is being ensured by stringent use of protective gear, abiding by
social distancing norms and taking all safety precautions.
Standing by its core commitment, the Company is navigating through these unprecedented
times by building stronger and deeper relationships with consumers and its partners. The
Company is supporting various Government Initiatives and helping communities around to
fight the pandemic.
Detailed information on the same has been included under the Management Discussion
& Analysis report forming part of this Annual Report.
TRANSFER TO RESERVES
The Company has not transferred any amount to the Reserves for the year ended 31st
March, 2020.
DIVIDEND
During the year under review, the Company paid to its shareholders:
First interim dividend of Rs. 3.35 (Rupees three and paise thirty-five only)
(335%) per equity share of the face value of Rs. 1 (Rupee one only) each in the month of
November, 2019; and
Second interim dividend of Rs. 7.15 (Rupee seven and paise fifteen only) (715%)
per equity share of the face value of Rs. 1 (Rupee one only) each in the month of March,
2020.
The Board of Directors at their meeting held on 23rd June, 2020 has
recommended payment of Rs. 1.50 (Rupees one & paise fifty only) per equity share of
the face value of Rs. 1 (Rupee one only) each as final dividend for the financial year
ended 31st March, 2020. The payout is expected to be Rs. 143.88 crores (Rupees
one hundred fourty three crores and eighty eight lakhs). The payment of final dividend is
subject to the approval of the shareholders of the Company at the ensuing Annual General
Meeting (AGM).
If approved, the total dividend (interim and final dividend) for the financial year
2019 - 20 will be Rs. 12 (Rupees Twelve only) per equity share of the face value of Rs. 1
each (Rupee one only) [Dividend payout for the FY 2019-20 totals to Rs. 1,151.04 crores
(Rupees one thousand one hundred fifty one crores and four lakhs)] as against the total
dividend of Rs. 10.50 (Rupees ten and paise fifty only) per equity share of the face value
of Rs. 1 each (Rupee one only) paid for the previous financial year 2018-19 [Dividend
payout for the FY 2018-19 totals to Rs. 1007.16 crores (Rupees One Thousand and Seven
Crores and Sixteen Lakhs)].
In view of the changes made under the Income-tax Act, 1961, by the Finance Act, 2020,
dividends paid or distributed by the Company shall be taxable in the hands of the
Shareholders. The Company shall, accordingly, make the payment of the final dividend after
deduction of tax at source.
The dividend recommended is in accordance with the Dividend Distribution Policy of the
Company. The Dividend Distribution Policy of the Company is set out as Annexure [A] and is
also uploaded on the Company's website:
https://www.asianpaints.com/more/investors/policies- programs.html.
INVESTOR EDUCATION AND PROTECTION FUND (IEPF)
In accordance with the applicable provisions of Companies Act, 2013 (hereinafter
referred to as "the Act") read with Investor Education and Protection Fund
(Accounting, Audit, Transfer and Refund) Rules, 2016 (hereinafter referred to as the
"IEPF Rules"), all unclaimed dividends are required to be transferred by the
Company to the IEPF, after completion of seven (7) years. Further, according to IEPF
Rules, the shares on which dividend has not been claimed by the shareholders for seven (7)
consecutive years or more shall be transferred to the demat account of the IEPF Authority.
The details relating to amount of dividend transferred to the IEPF during the FY 2019-20
and corresponding shares on which dividends were unclaimed for seven (7) consecutive
years, are provided in the General Shareholders Information section of Corporate
Governance report forming part of this Annual Report.
CONSOLIDATED FINANCIAL STATEMENTS
In accordance with the provisions of the Act, Regulation 33 of the Securities and
Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations,
2015 (hereinafter referred to as "Listing Regulations") and applicable
Accounting Standards, the Audited Consolidated Financial Statements of the Company for the
financial year 2019-20, together with the Auditors' Report form part of this Annual
Report.
SUBSIDIARIES & ASSOCIATE COMPANIES
Financial Performance
The Management Discussion and Analysis report forming part of the Annual Report
provides a detail overview of the operations of the subsidiaries of the Company.
A statement containing the salient features of financial statements of
subsidiaries/joint venture companies of the Company in the prescribed Form AOC - 1 forms a
part of Consolidated Financial Statements (hereinafter referred to as "CFS") in
compliance with Section 129 (3) and other applicable provisions, if any, of the Act read
with Rules.
In accordance with Section 136 of the Act, the audited financial statements, including
the CFS and related information of the Company and the financial statements of each of the
subsidiary and associate companies, are available on our website, www.asianpaints.com
The Company's Policy for determining material subsidiaries may be accessed on the
website of the Company at https://www.asianDaints.com/more/
investors/Dolicies-Droarams.html .
The Company does not have a material subsidiary.
During the year under review:
a. The Board of Directors of the Company at their meeing held on 22nd
January, 2020, approved the Scheme of Amalgamation of Reno Chemicals Pharmaceuticals &
Cosmetics Private Limited (Reno), wholly owned subsidiary of the Company with the Company,
subject to necessary statutory and regulatory approvals, including approval of the
National Company Law Tribunal, Mumbai.
The proposed Amalgamation is, inter alia, to maintain a simple corporate
structure, eliminate duplicate corporate procedures and reduce multiplicity of legal and
regulatory compliances between both the companies.
There is no consideration involved as the entire share capital of Reno is held by the
Company along with its nominees. The appointed date for the Scheme of Amalgamation is 1st
April, 2019 or such other date as may be approved by the National Company Law Tribunal
(NCLT) and the Scheme shall be effective from the last date of receipt of all approvals,
permissions as may be required or filing of necessary certified copies of Orders under the
applicable section(s) of the Act with the Registrar of Companies, Maharashtra at Mumbai.
The NCLT vide its Orders dated 22nd April, 2020 and 27th April,
2020, inter alia admitted the Scheme of Amalgamation.
b. Asian Paints International Private Limited, Singapore (APIPL), wholly owned
subsidiary of the Company divested its entire stake in Berger Paints Singapore Pte
Limited, Singapore (BPS), wholly owned subsidiary of APIPL to Omega Property Investments
Pty Ltd, Australia, for a consideration of approx Rs. 20.81 crores (Rupees twenty crores
and eighty one lakhs) on 17th September, 2019. BPS had a limited presence in
the Singapore coatings market and was not material in overall Company's international
operations.
c. The Company has made an assessment of the recoverable value of investment in its
subsidiaries taking into account the past business performance, prevailing business
conditions and revised expectations of the future performance. Accordingly, an impairment
loss of approximately Rs. 29.70 crores (Rupees twenty nine crores and seventy lakhs) and
Rs. 3.50 crores (Rupees three crores and fifty lakhs) have been recognised towards
investment in Sleek International Private Limited and Maxbhumi Developers Limited (an
asset holding Company having land held for sale), respectively.
DIRECTORS AND KEY MANAGERIAL PERSONNEL
Board of Directors
Retirement of Mr. KBS Anand as the Managing Director & CEO of the Company
The term of Mr. KBS Anand as the Managing Director and CEO came to an end on 31st
March, 2020 and consequently he ceased to be a Director of the Company.
Mr. KBS Anand had joined the Company in the year 1979 and has held various positions in
Decorative, Industrial and Chemical business functions of the Company. He was appointed as
the Managing Director & CEO of the Company, w.e.f. 1st April, 2012. During
his tenure as the Managing Director & CEO, he has transformed the Company from being a
Paints' major towards a complete decor solutions provider to help customers create their
dream homes.
The Board of Directors place on record their deep sense of gratitude and appreciation
for the invaluable contribution rendered by Mr. KBS Anand during his four decades long
illustrious career with the Company in many roles and recently as the Managing Director
& CEO of the Company for the past eight years.
Appointment of Mr. Amit Syngle as an Additional Director/Managing Director & CEO of
the Company
The Board of Directors of the Company at their Meeting held on 28th March,
2020, based on the recommendations of the Nomination and Remuneration Committee of the
Board of Directors of the Company, approved the appointment and remuneration of Mr. Amit
Syngle as an Additional Director/Managing Director & CEO (Key Managerial Person) of
the Company for a period of three years effective from 1st April, 2020 up to 31st
March, 2023, subject to the approval of the shareholders at ensuing AGM of the Company.
The Board of Directors recommend the appointment of Mr. Amit Syngle as the Managing
Dirctor and CEO of the Company. Mr. Amit Syngle has spent 30 years with the Company and
has headed Supply Chain, Sales & Marketing and Research & Technology funtions. In
addition, he also spearheaded the newly acquired businesses of the Kitchens and Bath
spaces in the Home Improvement venture of the Company.
Before being appointed as an Additional Director/ Managing Director & CEO, Mr. Amit
Syngle held the position of Chief Operating Officer of the Company.
He has been appointed as the Key Managerial Personnel of the Company in accordance with
Section 203 of the Act, w.e.f. 1st April, 2020.
Appointment of Mr. Manish Choksi as NonExecutive Director of the Company
The Board of Directors of the Company at their meeting held on 22nd October,
2018, based on the recommendations of the Nomination & Remuneration Committee approved
the appointment of Mr. Manish Choksi as a Non - Executive Promoter Director, to fill the
casual vacancy created on the Board on account of the sad demise of Mr. Ashwin Choksi,
erstwhile Chairman. The shareholders had thereafter approved the same.
In terms of sub-section (4) of Section 161 of the Act, Mr. Manish Choksi holds office
upto to the date of this AGM.
The Board of Directors of the Company, based on the recommendation of Nomination and
Remuneration Committee, have recommended the appointment of Mr. Manish Choksi as a Non -
Executive Director of the Company from the date of ensuing AGM, subject to approval of the
shareholders, in terms of Section 152 read with Section 160 of the Act, liable to retire
by rotation.
Retirement by rotation and subsequent reappointment
In accordance with the provisions of Section 152 and other applicable provisions, if
any, of the Act (including any statutory modification(s) or re-enactment(s) thereof for
the time being in force) and the Articles of Association of the Company, Mr. Ashwin Dani
and Ms. Amrita Vakil, Non-Executive Directors, are liable to retire by rotation at the
ensuing AGM and being eligible have offered themselves for re-appointment.
The Managing Director & CEO and Independent Directors of the Company are not liable
to retire by rotation.
Mr. Ashwin Dani, Chairman and Non - Executive Director of the Company, having attained
the prescribed age limit of 75 years, Special Resolution is proposed in accordance with
Regulation 17(1A) of Listing Regulations for approval by the Shareholders of the Company.
The Shareholders had earlier approved the continuation of directorship of Mr. Ashwin
Dani beyond 75 years of age by passing a Special Resolution.
In the opinion of the Nomination & Remuneration Committee and Board of Directors of
the Company, considering his seniority, role played by Mr. Ashwin Dani towards the growth
of this Company and to reap the benefits of his rich and varied experience, approval of
shareholders is sought for continuation of Mr. Ashwin Dani as a Non-Executive Director,
liable to retire by rotation.
Declaration of independence from Independent Directors
The Company has received the following declarations from all the Independent Directors
confirming that:
They meet the criteria of independence as prescribed under the provisions of the
Act, read with the Schedules and Rules issued thereunder, as well as of Regulation 16 of
the Listing Regulations.
In terms of Rule 6(3) of the Companies (Appointment and Qualification of
Directors) Rules, 2014, they have registered themselves with the Independent Director's
database maintained by the Indian Institute of Corporate Affairs, Manesar.
In terms of Regulation 25(8) of the Listing Regulations, they are not aware of
any circumstance or situation, which exist or may be reasonably anticipated, that could
impair or impact their ability to discharge their duties.
In terms of Regulation 25(9) of the Listing Regulations, the Board of Directors has
ensured the veracity of the disclosures made under Regulation 25(8) of the Listing
Regulations by the Independent Directors of the Company.
CHANGE IN KEY MANAGERIAL PERSON Retirement of Mr. Jayesh Merchant as CFO & Company
Secretary, President - Industrial JVs from the Company
Mr. Jayesh Merchant retired from the services of the Company, w.e.f. 26th
November, 2019.
Mr. Jayesh Merchant had joined the Company in the year 2002 as Vice President- Finance
& Company Secretary. The Board of Directors designated him as the Chief Financial
Officer of the Company in 2006. Since, November, 2012, he also headed the Industrial
businesses of the Company operated in India, through two joint ventures companies with PPG
Inc., USA.
The Board places on record its appreciation of the contribution of Mr. Jayesh Merchant
during his association with the Company.
Appointment of Mr. R J Jeyamurugan as the CFO
6 Company Secretary of the Company
Mr. R J Jeyamurugan was appointed as the CFO & Company Secretary of the Company,
w.e.f. 27th November, 2019.
Mr. R J Jeyamurugan is an associate member of the Institute of Chartered Accountants of
India (ICAI) and the Institute of Company Secretaries of India (ICSI). He joined the
Company in the year 1991. He has considerable experience in the areas of finance,
accounts, secretarial and taxation matters. He has held important positions in the
organization including Assistant Company Secretary during August, 1997 to May, 1999. He
heads the Finance, Accounts, Shared Service Centre, Tax, Legal, Secretarial & Investor
relations functions of the Company.
Before his appointment as the CFO & Company Secretary, he held the position of Vice
President - Finance of the Company. He has also been the Compliance Officer of the Company
since May, 2018.
NUMBER OF MEETINGS OF THE BOARD
7 (seven) meetings of the Board of Directors were held during the financial year 2019 -
20. The details of the meetings of the Board of Directors of the Company convened and
attended by the Directors during the financial year 2019-20 are given in the Corporate
Governance Report which forms part of this Annual Report.
NOMINATION AND REMUNERATION POLICY
The salient features of the Nomination and Remuneration Policy of the Company are set
out in the Corporate Governance Report which forms part of this Annual Report.
The said Policy of the Company, inter alia, provides that the Nomination and
Remuneration Committee shall formulate the criteria for appointment & re-appointment
of Directors on the Board of the Company and persons holding Senior Management positions
in the Company, including their remuneration and other matters as provided under Section
178 of the Act and Listing Regulations.
The Policy is also available on the website of the Company
https://www.asianpaints.com/more/investors/ policies-programs.html .
REMUNERATION OF DIRECTORS, KEY MANAGERIAL PERSONNEL AND SENIOR MANAGEMENT
The remuneration paid to the Directors, Key Managerial Personnel and Senior Management
is in accordance with the Nomination and Remuneration Policy formulated in accordance with
Section 178 of the Act and Regulation 19 of the Listing Regulations.
The information required under Section 197 of the Act read with Companies (Appointment
and Remuneration of Managerial Personnel) Rules, 2014 in respect of Directors/employees of
the Company is set out in the Annexure [B] to this report and is also available on the
website of the Company (www.asianpaints.com ).
PERFORMANCE EVALUATION
The Nomination and Remuneration Policy of the Company empowers the Nomination and
Remuneration Committee to formulate a process for effective evaluation of the performance
of Individual Directors, Committees of the Board and the Board as a whole.
The Board formally assesses its own performance based on parameters which, inter
alia, include performance of the Board on deciding long term strategy, rating the
composition and mix of Board members, discharging of governance and fiduciary duties,
handling critical and dissenting suggestions, etc.
The parameters for the performance evaluation of the Directors include contribution
made at the Board meeting, attendance, instances of sharing best and next practices,
domain knowledge, vision, strategy, engagement with senior management, etc.
The Chairperson(s) of the respective Committees based on feedback received from the
Committee members on the outcome of performance evaluation exercise of the Committee,
shares a report to the Board.
The Independent Directors at their separate meeting review the performance of:
non-independent directors and the Board as a whole, Chairperson of the Company after
taking into account the views of Executive Director and non-executive directors, the
quality, quantity and timeliness of flow of information between the Company management and
the Board that is necessary for the Board to effectively and reasonably perform their
duties.
Based on the outcome of the performance evaluation exercise, areas have been identified
for the Board to engage itself with and the same would be acted upon.
The details of the evaluation process are set out in the Corporate Governance Report
which forms a part of this Annual Report.
FAMILIARIZATION PROGRAM FOR INDEPENDENT DIRECTORS
All new independent directors inducted into the Board are familiarized with the
operations and functioning of the Company. The details of the training and familiarization
program are provided in the Corporate Governance report.
DIRECTORS' RESPONSIBILITY STATEMENT
Pursuant to Section 134 of the Act (including any statutory modification(s) or
re-enactment(s) thereof for the time being in force), the Directors of the Company state
that:
a. in the preparation of the annual accounts for the financial year ended 31st
March, 2020, the applicable Accounting Standards and Schedule III of the Act, have been
followed and there are no material departures from the same;
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 as at 31st March, 2020 and of
the profits of the Company for the financial year ended 31st March, 2020;
c. proper and sufficient care has been taken for the maintenance of adequate accounting
records in accordance with the provisions of the Act for safeguarding the assets of the
Company and for preventing and detecting fraud and other irregularities;
d. the annual accounts have been prepared on a Rs.going concern' basis;
e. proper internal financial controls laid down by the Directors were followed by the
Company and that such internal financial controls are adequate and operating effectively;
and
f. proper systems to ensure compliance with the provisions of all applicable laws were
in place and that such systems are adequate and operating effectively.
MANAGEMENT DISCUSSION AND ANALYSIS
Management Discussion and Analysis as stipulated under the Listing Regulations is
presented in a separate section forming part of this Annual Report.
AUDITORS AND AUDITORS' REPORT Statutory Auditor
M/s. Deloitte Haskins & Sells LLP, Chartered Accountants (Firm Registration No.
117366W/W-100018), were appointed as Statutory Auditors of the Company at the 70th
AGM held on 28th June, 2016, to hold office till the conclusion of the 75th
AGM.
M/s. Deloitte Haskins & Sells LLP has confirmed that they are not disqualified from
continuing as Auditors of the Company.
The Auditors have issued an unmodified opinion on the Financial Statements for the
financial year ended 31st March, 2020. The Auditors' Report for the financial
year ended 31st March, 2020 on the financial statements of the Company is a
part of this Annual Report.
Cost Auditor
The Company has maintained cost records for certain products as specified by the
Central Government under sub-section (1) of Section 148 of the Act. M/s. R A & Co.,
Cost Accountants, (Firm Registration No. 000242) carried out the cost audit for applicable
businesses during the financial year 2019 - 20.
The Board of Directors of the Company, on the recommendations made by the Audit
Committee, have appointed M/s. RA & Co., Cost Accountants, (Firm Registration No.
000242) as the Cost Auditor of the Company to conduct the audit of cost records of certain
products for the financial year 2020 - 21. M/s. RA & Co., being eligible, have
consented to act as the Cost Auditors of the Company for the FY 2020 - 21.
The remuneration proposed to be paid to the Cost Auditor, subject to ratification by
the members of the Company at the ensuing 74th AGM, would not exceed Rs. 8
lakhs (Rupees Eight Lakhs only) excluding taxes and out of pocket expenses, if any.
Secretarial Auditor
The Board of Directors of the Company has appointed Dr. K R Chandratre, Practicing
Company Secretary (Certificate of Practice No. 5144), as the Secretarial Auditor to
conduct an audit of the secretarial records for the financial year 2020 - 21. The Company
has received consent from Dr. K. R. Chandratre to act as the auditor for conducting audit
of the secretarial records for the financial year ending 31st March, 2021.
The Secretarial Audit Report for the financial year ended 31st March, 2020
under Act, read with Rules made thereunder and Regulation 24A of the Listing Regulations
(including any statutory modification(s) or re-enactment(s) thereof for the time being in
force) is set out in the Annexure [C-1] to this report.
The Secretarial Compliance Report for the financial year ended 31st March,
2020, in relation to compliance of all applicable SEBI Regulations/circulars/ guidelines
issued thereunder, pursuant to requirement of Regulation 24A of Listing Regulations, is
set out in Annexure [C-2] to this report. The Secretarial Compliance Report has been
voluntarily disclosed as part of Annual Report as good disclosure practice.
The Secretarial Audit Report and/or Secretarial Compliance Report does not contain any
qualification, reservation or adverse remark.
COMMITTEES
As on 31st March, 2020, the Board has six committees: Audit Committee,
Corporate Social Responsibility Committee, Nomination and Remuneration Committee, Risk
Management Committee, Stakeholders Relationship Committee and Shareholders Committee.
During the year, all recommendations made by the committees were approved by the Board.
A detailed note on the composition of the Board and its committees is provided in the
Corporate governance report.
CORPORATE SOCIAL RESPONSIBILITY (CSR)
During the financial year ended 31st March, 2020, the Company incurred CSR
Expenditure of Rs. 74.64 crores (Rupees seventy four crores and sixty four lakhs). The CSR
initiatives of the Company were under the thrust area of health & hygiene, education,
water management and vocational training. The CSR Policy of the Company is available on
the website of the Company at https://www. asianDaints.com/about-us.html .
The Company's CSR Policy statement and annual report on the CSR activities undertaken
during the financial year ended 31st March, 2020, in accordance with Section
135 of the Act and Companies (Corporate Social Responsibility Policy) Rules, 2014
(including any statutory modification(s) or re- enactment(s) thereof for the time being in
force) is set out in Annexure [D] to this report.
The Company has committed Rs. 35 crores towards COVID-19 pandemic related relief
activities, out of which Rs. 15 crores was spent as CSR in the FY 2019-20. The
contribution was made to the Central as well as other Disaster Relief State funds to
combat COVID-19 pandemic.
CORPORATE GOVERNANCE REPORTAND BUSINESS RESPONSIBILITY REPORT
In compliance with Regulation 34 of the Listing Regulations, a separate report on
Corporate Governance along with a certificate from the Auditors on its compliance and a
Business Responsibility Report as per Regulation 34 of the Listing Regulations, detailing
the various initiatives taken by the Company on the environmental, social and governance
front forms part of this Annual Report.
EXTRACT OF ANNUAL RETURN
The extract of the Annual Return of the Company as on 31st March, 2020 in Form MGT - 9
in accordance with Section 92 (3) of the Act read with Companies (Management and
Administration) Rules, 2014, is available on the website of the Company at
https://www.asianpaints.com/more/ investors/financial-results.html and is set out in
Annexure [E] to this Rport.
RELATED PARTY TRANSACTIONS
AH contracts/arrangements/transactions entered into by the Company during the year
under review with Related Parties were in ordinary course of business and on arm's length
basis in terms of provisions of the Act.
The Company's Policy on dealing with and Materiality of Related Party Transactions is
available on the website of the Company at https://www.asianpaints.com/more/
investors/policies-programs.html .
All transactions with related parties were reviewed and approved by the Audit Committee
and are in accordance with the Policy on dealing with and materiality of Related Party
Transactions and the Related Party Framework, formulated and adopted by the Company.
During the year under review, the Related Policy Framework was suitably amended to give
effect to the changes in the relevant provisions of law.
There are no materially significant related party transactions that may have potential
conflict with interest of the Company at large. There are no person(s) or entities forming
part of the Promoter(s)/Promoter(s) Group which individually hold 20% or more shareholding
in the Company.
The details of the related party transactions as per Indian Accounting Standards (IND
AS) - 24 are set out in Note 43 to the Standalone Financial Statements of the Company.
The Company in terms of Regulation 23 of the Listing Regulations submits within 30 days
from the date of publication of its standalone and consolidated financial results for the
half year, disclosures of related party transactions on a consolidated basis, in the
format specified in the relevant accounting standards for annual results to the stock
exchanges. The said disclosures can be accessed on the website of the Company at
https://www.asianpaints.com/more/investors.html .
Form AOC - 2 pursuant to Section 134 (3) (h) of the Act read with Rule 8(2) of the
Companies (Accounts) Rules, 2014 is set out in the Annexure [F] to this report.
LOANS AND INVESTMENTS
Details of loans, guarantees and investments under the provisions of Section 186 of the
Act read with the Companies (Meetings of Board and its Powers) Rules, 2014, as on 31st
March, 2020, are set out in Note 37(B) to the Standalone Financial Statements of the
Company.
RISK MANAGEMENT
The Company operates in a volatile, uncertain, complex and ambiguous (VUCA) world with
rapid changes. These changes bring a mix of opportunities and uncertainties impacting the
Company's objectives. Risk Management, which aims at managing the impact of these
uncertainties, is an integral part of the Company's strategy setting process. The Company
regularly identifies these uncertainties and after assessing them, devises short-term and
long-term actions to mitigate any risk which could materially impact the Company's
long-term goals.
The Risk Management Committee of the Company has been entrusted by the Board with the
responsibility of reviewing the risk management process in the Company and ensuring that
the risks are brought within acceptable limits.
Mitigation plans to significant risks are well integrated with functional and business
plans and are reviewed on a regular basis by the senior leadership.
The Company endeavors to continually sharpen its Risk Management systems and processes
in line with a rapidly changing business environment. The Company, through its risk
management process, aims to contain the risks within its risk appetite. There are no risks
which in the opinion of the Board threaten the existence of the Company. However, some of
the risks which may pose challenges are set out in the Management Discussion and Analysis
which forms part of this Annual Report.
The Board of Directors of the Company on the recommendation of the Risk Management
Committee has developed risk management policy for the Company which articulates the
Company's approach to address the uncertainities in its endeavour to achieve its stated
and implicit objectives.
VIGIL MECHANISM
The Company has a robust vigil mechanism through its Whistle Blower Policy approved and
adopted by Board of Directors of the Company in compliance with the provisions of Section
177 (10) of the Act and Regulation 22 of the Listing Regulations.
The Company has engaged an agency for managing an Rs.Ethics Hotline' which can be used
to, inter alia, report any instances of financial irregularities, breach of code of
conduct, abuse of authority, disclosure of financial/unpublished price sensitive
information other than for legitimate purposes, unethical/unfair actions concerning
Company vendors/suppliers, mala-fide manipulation of Company records, discrimination to
the Code of Conduct in an anonymous manner.
The Policy also provides protection to the directors, employees and business associates
who report unethical practices and irregularities.
Any incidents that are reported are investigated and suitable action is taken in line
with the Whistle Blower Policy.
The Whistle Blower Policy of the Company can be accessed at website of the Company at
https://www.asianpaints. com/more/investors/Dolicies-Droorams.html .
POLICY ON PREVENTION OF SEXUAL HARASSMENT AT WORKPLACE
As per the requirements of the Sexual Harassment of Women at Workplace (Prevention,
Prohibition and Redressal) Act, 2013 (hereinafter referred to as "Prevention of
Sexual Harassment Act"), the Company has formulated a Policy on Prevention of Sexual
Harassment at Workplace for prevention, prohibition and redressal of sexual harassment at
workplace and an Internal Complaints Committees has also been set up to redress any such
complaints received.
The Company is committed to providing a safe and conducive work environment to all of
its employees and associates.
The Company periodically conducts sessions for employees across the organization to
build awareness about the Policy and the provisions of Prevention of Sexual Harassment
Act.
Complaints of sexual harassment received during the financial year 2019-20 by the
Company were investigated in accordance with the procedures prescribed and adequate steps
were taken to resolve them.
INTERNAL FINANCIAL CONTROLS RELATED TO FINANCIAL STATEMENTS
Internal financial control over financial reporting have been designed to provide
reasonable assurance with regards to recording and providing reliable financial
information and complying with applicable accounting standards. These controls are
reviewed periodically, and the Company continuously tries to automate these controls to
increase its reliability.
The Company uses an established ERP system of SAP S/4 HANA to record day to day
transactions for accounting and financial reporting. The ERP system is configured to
ensure all transactions are integrated seamlessly with the underlying books of account.
During the year, the Company upgraded its core Navision based ERP system to the latest
SAP S/4 HANA version for its International business units except subsidiaries in South
Pacific. All key internal controls over financial reporting were thoroughly tested
along with the core functionalities before migrating to the new system.
The Shared Services Center (SSC) further increased the coverage of digital invoice
processing during the year. This has made the process touchless and seamless. Necessary
validations built in ensures compliance to statutes and internal policies are adhered to.
The Company has invested in an RPA (Robotic Process Automation) to help in doing the
GST reconciliation with the data uploaded by the vendors. This has brought about
significant efficiencies and enabled the Company to follow up with the vendors in a timely
manner so that GST credits taken are not lost.
The Company has a well-defined and documented delegation of authority with specified
limits for approval of expenditure, both capital and revenue. The Company has workflows to
ensure adherence to the delegation of authority.
The Company has a commercial manual which lays down certain principles and procedures
that are to be followed in commercial & purchase contracts transactions across the
Company. The SSC verifies the compliance to commercial manual before clearing the
payments.
The Company periodically tracks all amendments to Accounting Standards and makes
changes to the underlying systems, processes and financial controls to ensure adherence to
the same. All resultant changes to the policy and impact on financials are disclosed after
due validation with the Audit Committee.
Corporate accounts function is actively involved in designing large process changes as
well as validating changes to IT systems that have a bearing on the books of account.
The Company gets its Standalone financial statements audited every quarter by its
Statutory Auditors. The policies to ensure uniform accounting treatment are prescribed to
the subsidiary companies as well. International subsidiaries provide information required
for consolidation of accounts in the format prescribed by the Company. The accounts of the
subsidiary and joint venture companies are audited and certified by their respective
Statutory Auditors for consolidation.
OTHER DISCLOSURES
a. There are no material changes and commitments affecting the financial position of
the Company which have occurred between the end of the financial year 2019-20 and the date
of this report;
b. During the year under the review, there was no change in the nature of business of
the Company.
In the beginning of financial year 2020-21, the Company has expanded its health and
hygiene segment by the launch of Viroprotek range of hand sanitisers and Surface
disinfectants. This was with a view to address the growing requirement of hand and surface
sanitizers for increased protection and assist the Government in fighting against the
COVID-19 pandemic;
c. During the year under review, the Company has not accepted any deposit within the
meaning of Sections 73 and 74 of the Act read with the Companies (Acceptance of Deposits)
Rules, 2014;
d. The Company has complied with Secretarial Standards issued by the Institute of
Company Secretaries of India on Meetings of the Board of Directors and General Meetings;
e. There are no significant material orders passed by the Regulators or Courts or
Tribunals impacting the going concern status of the Company and its operations in future;
f. The Competition Commission of India has passed a prima facie Order dated 14th
January, 2020, directing the Director General to cause an investigation against the
Company, under the provisions of Section 26(1) of the Competition Act, 2002.
This Order is for initiating an investigation against the Company under the relevant
provisions of the Competition Act, but it in no way affects the going concern status of
the Company;
g. The Managing Director & CEO of the Company has not received any remuneration or
commission from any of the subsidiary companies. Further the Company doesn't have any
holding Company;
h. None of the Auditors of the Company have reported any fraud as specified under the
second proviso of Section 143 (12) of the Act;
i. The information on conservation of energy, technology absorption and foreign
exchange earnings and outgo as stipulated under Section 134 of the Act read with the
Companies (Accounts) Rules, 2014, is set out in the Annexure [G] to this report;
j. The Company does not have any scheme or provision of money for the purchase of its
own shares by employees/ Directors or by trustees for the benefit
of employees/ Directors;
k. The Company has not issued equity shares with differential rights as to dividend,
voting or otherwise;
l. The Company has not issued any sweat equity shares to its directors or employees;
and
m. There was no revision of financial statements and Boards report of the Company
during the year under review.
APPRECIATION
The Board of Directors place on record sincere gratitude and appreciation for all the
employees at all levels for their hard work, solidarity, cooperation and dedication during
the year.
The Board conveys its appreciation for its customers, shareholders, suppliers as well
as vendors, bankers, business associates, regulatory and government authorities for their
continued support.
For and on behalf of the Board of Directors |
|
Ashwin Dani |
|
Chairman |
|
(DIN: 00009126) |
Place : Mumbai |
|
Date : 23rd June, 2020 |
|