Akzo Nobel India Ltd Management Discussions

Industry structure and developments

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 Rs.1 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 sectors 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.

As part of the digitalization and automation focus, a robotic palletizer was inaugurated at our Thane decorative paints site by our global CEO during his India visit. This robotic arm merges two major filling lines which delivers 80% of the volume to the plant, while catering to multiple SKUs running parallel on both filling lines without any part changeover. Not only has this state of the art technology helped improve productivity but also helped eliminate ergonomic risk caused due to manual handling/palletizing of filled pails and also limited the man-stacker interaction on the filling floor.

Business Performance

Decorative Paints

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. Indias diverse cultural heritage and preference for vibrant colors have further fuelled the demand for decorative paints in the country. The governments emphasis on infrastructure development and the growing real estate sector are also driving the demand for decorative paints.

Your Companys 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.

Digital delight

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.

Success stories

Renovation of Weathershield Power_exx

The new Weathershield Powerflexx now comes with the Triple Defence Technology backed by Advanced PU modified acrylic, to provide an improved brand promise of 12-years protection against all-weather conditions. The Triple Defence Technology provides superior crack bridging, weather resistance and water resistance properties to home exteriors.

The launch was supported with the new campaign ‘Ghar Ka Champion. The TVC featuring Ashutosh Rana and Ishaan Khattar stood out with an emotional graph of a father-son saga, weaving the product story to the journey of a champion.

"JOY is DIY" Digital campaign and E-commerce foray

Your Company launched the ‘Joy is DIY digital campaign for Dulux Simply Refresh, a range of DIY paint and home repair solutions for various surfaces. The campaign resonated with DIY enthusiasts seeking hassle-free home makeover experiences. This range is also available on Amazon market place.

Portfolio expansion:

Waterproofing Range- Dulux Aquatech

Dulux Aquatech, with its best-in-class range of premium waterproofing solutions, continued to grow faster than the industry. Dulux Aquatech PU Coat was launched with a superior 15-year performance waterproofing.

Promise Sheen Interior now in "Metallic Finish"

This product provides an aspirational finish at an affordable price, while also providing anti-bacterial properties.

SmartChoice Primers

In line with our vision of expanding the distribution footprint in tier III & IV towns, we strengthened our mass market portfolio with the launch of entry-level mass market primers under the SmartChoice brand. The launch is well received by all stakeholders.

Industry-first PU proposition in Satin Range

The upgraded offering of Satin with PU Reinforced Dura Tough Technology provides toughness and durability to the paint film and long-lasting sheen. This also offers first-ever certified antibacterial and anti-fungal claim which resists fungal attack keeping the paint film looking new for a long time.

Automotive & Specialty Coatings

2022-23 summary

Delivering cutting-edge coating solutions to a variety of industries, our Automotive and Specialty Coatings (‘ASC) in India comprises of Automotive OEM Coatings, Consumer Electronics Coatings, Vehicle Refinishes and Specialty Coatings.

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.

More sustainable basecoat gaining traction

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.

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.

Gaining foothold in mid-market

Wanda, our reliable international brand is addressing the retail demand in Indias 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.

Re-energized distribution

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.

Powder Coatings

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.

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.

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).

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.

Low E update

Updated our Interpon Low E product range, for sustainably minded businesses seeking greater energy efficiencies.

A sparkling performance: guaranteed

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.

Industrial Coatings

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 (‘ACP) and Domestic Appliance (‘DA) 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.

Customer-centricity at our core

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, "AkzoNobel 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."

Marine & Protective Coatings

2022-23 summary

This business is about protecting and beautifying assets, both in and out of water. Through our flagship ‘International 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.

Preserving our history

Our premium solvent based Interchar range of fire-proofing products are now protecting the under-construction Ambalas landmark Shaheedi Smarak – the largest such covered structure in the country dedicated to the heroes of the first war of independence in 1857. The steel structures are also protected with our durable range of high-solids anti-corrosive primer and polyurethane top-coat finish.

A sustainable push to cargo movement

When it comes to protecting mobility in water and the marine environment, our sustainable anti-fouling range of offerings such as Interswift and Intersleek are now coating some of the biggest cargo vessels in and outside India. In 2022-23, we coated more than 25 vessels with key customers in India, Bangladesh and Sri Lanka.

Green future

Were powering the green future of energy with our continued partnership with Siemens Gamesa Renewable Energy. A recent project involved supplying our high-performance protective coatings such as Intergard, Interseal and Interthane to over 250 windmills across the country. Our Relest range of products also protect the windmill blades.

Promoting health

Intergard - our low VOC epoxy primer, Interchar – our water-based fire intumescent and Interthane 990 UHS – our low VOC PU paints are now protecting five COVID-19 hospitals in Delhi. Stepping up to support the urgency of the project, our team worked relentlessly to supply the solutions in record time.

Sustainable solutions

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 (‘SPPA) framework, which we have developed in collaboration with other chemical companies and the World Business Council for Sustainable Development (‘WBCSD). 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.

Sustainable solutions - Products that provide sustainaibility advantages to our customers

Perfomers - Products that have no immediate negative or positive sustainability impact

Transitioners - Products that have known sustainability risks

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

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.

Internal Control Systems

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 Companys internal control environment and monitors the implementation of audit recommendations, including those related to strengthening the Companys 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.

Risks and Opportunities

(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.

Companys 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.

Risk description and mitigation
Risk	Risk Description The risk of significant business	Mitigation • Continuous reinforcement of cybersecurity culture by intense training and awareness
Cyber	disruption and/or inadequate recovery	creation.
security	following a cybersecurity attack, leading to potential loss of sensitive	• Continuous security assessments and
External;	information, intellectual property,	monitoring of infrastructure capacity to prevent
Operational	financial or reputational damage. The local regulatory environment is evolving, and we have witnessed	cyber risks. • Introduction of updated Information and Cybersecurity Policies framework. • The Company has zero tolerance policy against non-compliance.
Statutory	considerable increase in regulatory	• Review of all applicable compliances
Compliances	scrutiny as well as stakeholder expectations vis a vis Compliances.	through a third party compliance tool. • Quarterly compliance status reported
External;	We recognize that non-compliance with	to the Board of Directors.
Compliance	applicable laws and regulations poses
		• Independent assessments are also
	a threat to our financial and reputational
		undertaken to gain assurance.
	standing.
	The risk that we are unable to attract,	• Focus on building employer brand; talent
Attract and	retain or develop talent in a dynamic	acquisition, talent development, talent
retain Talent	talent market to ensure a fit for future	retention and succession planning;
	workforce with the right capabilities.	• Continuing our employee well-being
Internal;
		programs; and Embedding the Talent
Operational		Management Framework to drive talent and
		leadership development.

(b) Opportunities and Threats

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 and actions
Opportunity	Opportunity Description With the 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. Growth and market penetration by gaining share and expanding into adjacent segments.	Actions
		Several new initiatives have been launched
		which include:
Growing in Channels for the future		• Digitalisation through e-commerce initiatives;
		• Focus on geographic expansion via Hub &
		Spoke model.
		Expansion of geographic presence
		• Launches/re-launches of products and
		continued investment in innovation.
		Media Campaigns
Increasing market reach		• First ever digital advertising consumer
		campaign - Parul and Painter- A Love Story.
		• Relaunch of Weathershield PowerFlexx with
		Triple Defence Technology.
		Dulux Assurance 2.0
		Expansion of Waterproofing range.
	Opportunities arising from rapidly emerging digital technologies present a chance to make meaningful interventions and develop capabilities	Investing time and resources to develop compelling
		content and presence across various social media
		platforms for the consumers.
Digital Transformation
		Continued automation in Painter & Dealer Initiatives.
	across the value chain redefining the way we do business with a focus on customer experience to build long term relationships.
		For further details, please refer to the section on
		‘Information Technology /Digitalisation.

Your company is working with a greater focus on differentiated and wholesome solutions to mitigate the threat due to shifting consumer preferences and changes in competitive landscape over the last few years.

Human Resources

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 (‘D&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 others 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.

D&I case studies

In conversation with Ms. Gurpreet Kaur

"Success is a decision and not a result" is the belief of Ms. Gurpreet Kaur (Left in photo) when it comes to lead in both personal and professional life. Experienced in manufacturing and sales, Gurpreet landed in sales after completing her MBA in International Business. With her dedication, will, right guidance and the right opportunities, she is set to achieve big in a field dominated by her male counterparts.

What has followed has been nothing short of amazing in terms of personal and career growth, evolving as the best version of herself and being fierce, fearless and flawed!

In conversation with Ms. Meenakshi AP

"Catch the trade winds on your sail. Explore. Dream. Discover" as Mark Twain rightly quotes is the motto on which Ms Meenakshi leads her everyday life! Fresh out of College with a degree in Mechanical Engineering she joined Akzonobel as a Graduate Engineer Trainee and is currently the Assistant Manager for Production at Thane Site.

With a strong team for support & guidance and a dynamic work environment her journey so far has been nothing but exciting, challenging yet filled with amazing opportunities for growth in both personal and professional life!

Employee Engagement

Your Company fosters a culture that maximizes human potential through a leadership focus on employee development and well-being. 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 companys 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 (‘KMP) has been formulated by the Nomination and Remuneration Committee (‘NRC) 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. india@akzonobel.com. The disclosures below are made in terms of Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 as amended:

Name	Status	(i) Ratio of the remuneration of each Director to the median remuneration of the employees of the Company for the financial year 2022-23	(ii) Percentage increase in remuneration during 2022-23 over 2021-22
Oscar Wezenbeek	Non Executive	NA	No remuneration was paid to him
	Director and Chairman		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	15.40	9% increase in base salary based
	and CFO		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 7.73% financial year 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 Average increase in base salary of non-managerial other than the managerial personnel in the last financial year and its personnel was 7.73% which is considered in line comparison with the percentile increase in the managerial remuneration and with the prevailing market conditions and other justification thereof and point out if there are any exceptional circumstances relevant factors. 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 paid for the financial year 2022-23.

2. Median remuneration in the Company (Base Salary) for all its employees was H 0.92 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.

Corporate Governance

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.

Board Evaluation

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.

Vigil Mechanism - Whistle Blower Policy

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 Companys 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 companys website www.akzonobel.co.in and can be accessed from https:// akzonobel.co.in/pdf/policy/Whistle_Blower_Policy_Jan2.pdf.

Sustainability

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.

Our focus is on providing pioneering paints and coatings that not only protect the world today but also safeguard it for generations to come. Furthermore, our sustainable business approach aligns with the global agenda outlined in the United Nations Sustainable Development Goals (SDGs).

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 companys purpose, brands, core principles, and employee value proposition. It serves as a catalyst for growth, innovation, and productivity.

Companys 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 (‘Listing Regulations) read with relevant SEBI Circulars, new reporting requirements on ESG parameters were prescribed under Business Responsibility and Sustainability Report (‘BRSR).

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

Corporate Social Responsibility

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.

The CSR agenda focuses on three key areas of:

Economic development through Skill building

Education

Community healthcare

The CSR agenda is governed by approved policies from relevant stakeholders, CSR Committee and the Board.

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.

FY 2022-23 Highlights:

3700+ youth and painters trained and upskilled

~39% of students are females and D&I candidates 15 students from LGBTQ+ community Expanded business for ~100 women microentrepreneurs across Assam, Tamil Nadu and West Bengal

Presence in two aspirational districts of Darrang (Assam); East Singhbum (Jharkhand)

Diversity & Inclusion Focus

Trained approximately 400 women in Decorative Paints and facilitated their employment as painters, breaking gender barriers.

Provided Decorative Training to around 110 youth rehabilitated from drug addiction in Imphal

Trained approximately 30 tribal youth from Bihar and Jharkhand as professional painters in partnership with the Responsible Mica Initiative.

Partnered with Thane Central Prison to launch a rehabilitation program for approximately 150 prison inmates.

Established two new training centers in Kerala, specifically in Kollam and Tavanur, offering training in Decorative Paints and Vehicle Refinish.

Case studies

Despite parental pressures and getting married at 19, Ajima never abandoned her dream of becoming an entrepreneur. Last September, she seized the opportunity and became the first female-owned Dulux paints dealer in Darrang district, Assam. In a short time, she has achieved remarkable success, selling paints worth H3,00,000 per month. Now, Ajima not only manages her own business but also supports 25 women entrepreneurs who have opened Dulux paint sections in their stores.

Tejashree is not an ordinary girl. She is the first female aeroplane body painter in Air Indias Mumbai engineering team. Her journey began with joining AkzoNobel Paint Academys vehicle repainting course. She is now not only valued as the best painter by her employer but has also played a vital role in achieving 50% female workforce in the bodyshop.

Rakhi and Mousumi, members of the LGBTQ+ community, are now living life on their own terms, thanks to the support of AkzoNobel. They enrolled in vocational skill training in decorative paints at the Kolkata center and secured jobs as professional painters with a leading paint contractor in Bhubaneshwar, earning H12,000 per month. AkzoNobel Paint Academy takes pride in training and empowering numerous members of the LGBTQ+ community, enabling them to earn respect for their work and live authentically.

2) Education

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.

FY 2022-23 Highlights:

6,700+ children benefitted 1,800+ children being provided supplementary education

Appreciation Letter received from education Department and/or Sub Divisional Magistrate of three States

Projects in two aspirational districts of Rajgarh (Madhya Pradesh) and Koraput (Orissa)

"Thanks to the AkzoNobel-run Parivartan project, my childrens future has transformed. From the fear of rag picking, they are now able to recite poems in English. As a father, I couldnt be prouder."

Mr. Vijay

Father of Rajeev, a student of Parivartan centre in Sohna

3) Community healthcare

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 ‘Arogya 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.

FY 2022-23 Highlights:

25,000+tele consultations provided to villagers & painters 46,000+ teleconsultations since 2019 ~64% beneficiaries are women & children Tele medicine access to 1.5m+ painter families Appreciation Letter received from Health Department of Bhind District of Madhya Pradesh

"As painters, we dont have the luxury to spend hours in the hospital to visit a doctor. With AkzoNobels help, we can consult doctors over phone easily for our family without spending even a single rupee"

Mr. Mohammad Javed

Beneficiary of ArogyaSakha project in Madhya Pradesh

Conservation of Energy, Technology Absorption and Forex Earnings and Outgo

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.

Information Technology/Digitalisation

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.

Policy against Sexual Harassment

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 companys 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.

Related Party Transactions (RPTs)

The Companys Policy on Related Party Transactions (RPTs) can be found on the companys 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 arms 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 Arms Length basis. No Material Related Party Transactions, as per the Boards 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 Companys 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 arms length transactions, are disclosed in Form AOC–2, which is included in this report.

Particulars of Loans, Guarantees or 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 Note 5.1 of the financial statements.

Auditors

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.

Cost Records

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.

Annual Return

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.

Directors & Key Management Personnel

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.

Committees of the Board

The terms of reference and composition of all the Committees of the Board has been provided in the Corporate Governance Report.

Board Meetings

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.

Directors Responsibility Statement

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.

Awards

• Most Trusted Brand of India 2023: Two centuries of AkzoNobels 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. Thats why, were 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 & D?cor segment by the International Advertising Association (India Chapter) Award: ‘The two-episode digital campaign ‘Parul 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 & D?cor 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

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 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.

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 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.

Acknowledgements

The Directors express deep appreciation to employees for their hard work and dedication. They also acknowledge the parent companys 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