Akzo Nobel Director Discussions


Dear Members,

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.

Financial Statements

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

 

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
Debt/ Equity 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.

Dividend

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 Companys 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.

Transfer to Reserves

During the financial year, there was no amount transferred to the Reserves.

Business Environment & Outlook

The Paints & Coatings industrys prospects are intricately connected to the overall growth of the countrys 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 Indias projected medium-term growth rate of 6-7%, which sets a favorable backdrop for the industrys 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.

Subsidiary

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 (‘the 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 (‘AGM). 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.

Share Capital

The paid-up share capital of the Company as on 31 March 2023 was Rs.455.40 million comprising 45.54 million equity shares of Rs.10 each (Previous year Rs.455.40 million comprising

45.54 million equity shares of Rs.10 each).