Asian Paints Ltd Directors Report.

Dear Members,

The Board of Directors are pleased to present the 75 th Integrated Annual Report of the Company along with the audited financial statements (standalone and consolidated) for the financial year 2020-21.

FINANCIAL RESULTS

RESULTS FOR THE FINANCIAL YEAR

Standalone

Consolidated

2020-21 2019-20 Growth (%) 2020-21 2019-20 Growth (%)
Revenue from Operations 18,516.86 17,194.09 7.7% 21,712.79 20,211.25 7.4%
Earning Before Interest, Taxes, Depreciation and Amortisation 4,859.51 4,214.58 15.3% 5,158.65 4,466.08 15.5%
Less : Finance Costs 71.66 78.38 91.63 102.33
Less : Depreciation and Amortisation Expense 697.47 689.97 791.27 780.50
Profit For the period before share of profit in associate 4,090.38 3,446.23 18.7% 4,275.75 3,583.25 19.3%
Share of profit of Associate - - 28.60 50.74
Profit before exceptional items & tax 4,090.38 3,446.23 4,304.35 3,633.99
Exceptional Items** - 33.20 - -
Profit before Tax 4,090.38 3,413.03 19.8% 4,304.35 3,633.99 18.4%
Less : Tax Expense 1,037.87 759.08 1,097.60 854.85
Profit for the period from continuing operations 3,052.51 2,653.95 15.0% 3,206.75 2,779.14 15.4%
Profit before tax from discontinued operations - - - (5.73)
Tax expense of discontinued operations - - - (0.78)
Profit for the period from discontinued operations - - - (4.95)
Profit for the period 3,052.51 2,653.95 15.0% 3,206.75 2,774.19 15.6%
Attributable to:
Shareholders of the company 3,052.51 2,653.95 15.0% 3,139.29 2,705.17 16.0%
Non-Controlling Interest - - 67.46 69.02
Other Comprehensive Income (net of tax) 50.53 50.40 (5.68) 58.31
Total Comprehensive Income 3,103.04 2,704.35 14.7% 3,201.07 2,832.50 13.0%
Attributable to:
Shareholders of the company 3,103.04 2,704.35 14.7% 3,143.42 2,755.61 14.1%
Non-Controlling Interest - - 57.65 76.89
Opening balance in Retained Earnings 4,974.64 4,424.53 5,204.64 4,604.60
Amount available for Appropriation 8,023.17 7,068.66 8,339.68 7,299.35
Dividend
Interim - FY 2020-21 321.35 - 321.35 -
Interim - FY 2019-20 - 1,007.16 - 1,007.16
Final - FY 2019-20 143.88 - 143.88 -
Final - FY 2018-19 - 733.79 - 733.79
Tax on Dividend - 353.07 - 353.07
Transfer to General Reserve - - - -
Transfer to other Reserve - - 0.43 0.69
Closing balance in Retained Earnings 7,557.94 4,974.64 7,874.02 5,204.64

"Comprise of impairment provision towards investment made in Sleek International Private Limited & Maxbhumi Developers Limited, wholly owned subsidiary companies of the Company of Rs. 29.7 crores and Rs. 3.5 crores respectively.

COMPANY PERFORMANCE OVERVIEW

During the financial year 2020-21:

• During the financial year 2020-21, revenue from operations on standalone basis increased to Rs. 18,516.86 crores as against Rs. 17,194.09 crores in the previous year - a growth of 7.7%.

• Cost of goods sold as a percentage to revenue from operations decreased to 54.5% as against 55.3% in the previous year.

• Employee cost as a percentage to revenue from operations increased to 6.1% ( Rs. 1,128.66 crores) as against 5.7% (? 985.43 crores) in the previous year.

• Other expense as a percentage to revenue from operations decreased to 15.2% ( Rs. 2,812.48 crores) as against 16.5 % ( Rs. 2,845.44 crores) in the previous year.

• The Company has contributed approximately a sum of Rs. 10 crores towards COVID-19 pandemic related relief activities.

• The Profit after Tax for the current year is Rs. 3,052.51 crores as against Rs. 2,653.95 crores in the previous year - a growth of 15.0%.

• On a consolidated basis, the group achieved revenue of Rs. 21,712.29 crores as against Rs. 20,21 1.25 crores - a growth of 7.4%. Net profit after non-controlling interest for the group for the current year is Rs. 3,139.29 crores as against Rs. 2,705.17 crores in the previous year - a growth of 16.0%.

TRANSFER TO RESERVES

During the year under review, there was no amount transferred to any of the reserves by the Company.

DIVIDEND

The Board of Directors at their meeting held on 12th May, 2021, has recommended payment of Rs. 14.50 (Rupees fourteen and paise fifty only) (1450%) per equity share of the face value of Rs. 1 (Rupee one only) each as final dividend for the financial year ended 31st March, 2021. The payment of final dividend is subject to the approval of the shareholders at the ensuing Annual General Meeting (AGM) of the Company.

During the year under review, the Board of Directors of the Company at their meeting held on 22nd October, 2020, declared an 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. The interim dividend was paid to the shareholders on 12th November, 2020.

The total dividend amount for the financial year 2020-21, including the proposed final dividend, amounts to Rs. 17.85 (Rupees seventeen and paise eighty five only) per equity share of the face value of Rs. 1 (Rupee one only) each

[total dividend payout for the FY 2020-21 amounting to Rs. 1,712.17 crores (Rupees one thousand seven hundred twelve crores and seventeen lakhs only)] as against the total dividend of Rs. 12 (Rupees twelve only) per equity share of the face value of Rs. 1 (Rupee one only) each paid for the previous financial year 2019-20 [total dividend payout for the FY 2019-20 amounting to Rs. 1,151.04 crores (Rupees one thousand one hundred fifty one crores and four lakhs only)].

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, in terms of Regulation 43A of the Securities and

Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 ("Listing Regulations") is available on the Companys website: https://www. asianDaints.com/more/investors/Dolicies-Droarams.html.

The dividend payout ratio of the Company since last three financial years is more than 50%.

UNCLAIMED DIVIDEND

Pursuant to the applicable provisions of the Companies Act, 2013 ("the Act") read with the Investor Education and Protection Fund Authority (Accounting, Audit, Transfer and Refund) Rules, 2016 ("the IEPF Rules"), during the year, unpaid or unclaimed dividend amounting to Rs. 1.34 crores was transferred by the Company to the Investor Education and Protection Fund ("IEPF"), established by the Government of India.

Further, 1,43,738 shares were transferred to the demat account of the IEPF Authority during the year, in accordance with IEPF Rules, as the dividend has not been paid or claimed by the shareholders for 7 (seven) consecutive years or more.

SUBSIDIARIES & ASSOCIATE COMPANIES

The Company has 23 subsidiaries and 2 joint-venture companies as on 31st March, 2021.

Financial Performance

A list of bodies corporates which are subsidiaries/associates/ joint ventures of the Company is provided as part of the notes to Consolidated Financial Statements.

A separate statement containing the salient features of financial statements of subsidiaries, associates, joint venture companies of the Company in the prescribed Form AOC-1 forms a part of Consolidated Financial Statements ("CFS") in compliance with Section 129(3) and other applicable provisions, if any, of the Act read with Rules.

The Company does not have any material subsidiary.

Consolidated Financial Statements

In accordance with the provisions of the Act, Regulation 33 of the Listing Regulations and applicable Accounting Standards, the Audited Consolidated Financial Statements of the Company for the financial year 2020-21, together with the Auditors Report form part of this Annual Report.

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 companies, are available on our website, www.asianpaints.com. Any Member desirous of making inspection or obtaining copies of the said financial statements may write to the Company Secretary at investor.relations@asianpaints.com.

The Companys Policy for determining material subsidiaries may be accessed on the website of the Company at https://www. asianpaints.com/more/investors/policies-programs.html.

Amalgamation of Reno Chemicals Pharmaceuticals & Cosmetics Private Limited with the Company

The Company Petition filed for amalgamation of Reno Chemicals Pharmaceuticals & Cosmetics Private Limited, Companys wholly owned subsidiary with the Company was admitted on 26th April, 2021 by Honble National Company Law Tribunal, Mumbai (NCLT).

The said Petition is listed for final hearing before the Honble NCLT.

Merger of Asian Paints (Lanka) Limited with Causeway Paints Lanka (Private) Limited

With effect from 1st April, 2021, indirect subsidiary of the Company, Asian Paints (Lanka) Limited amalgamated with Causeway Paints Lanka (Private) Limited.

Winding-up of Asian Paints (Tonga) Limited

Asian Paints (Tonga) Limited has ceased its business operations w.e.f. 10th December, 2020 and liquidated all its assets & liabilities. The name of the Company was struck off from the Business Registries Office, Kingdom of Tonga on 29th January, 2021.

ASIAN PAINTS EMPLOYEES STOCK OPTION PLAN

The Board of Directors of the Company at their meetings held on 30th March, 2021 and 12th May, 2021, based on the recommendations of the Nomination and Remuneration Committee, approved formulation of Asian Paints Employees Stock Option Plan 2021 ("2021 Plan"), for grant of stock options to Eligible Employees of the Company and its subsidiary companies. This 2021 Plan will be effective from the financial year 2020-21 onwards and is subject to approval of the shareholders at the ensuing AGM of the Company. The 2021 Plan has been introduced for eligible employees of the Company and/or its subsidiary companies with an objective to motivate and retain professionals by rewarding performance, and in order to further increase shareholder value.

The 2021 Plan is intended to cover Eligible Employees of the Company and its subsidiary companies, including the Managing Director & CEO of the Company. As such, Mr. Amit Syngle, Managing Director & CEO, shall also be eligible to participate in the 2021 Plan.

The appointment and remuneration of Mr. Amit Syngle as the Managing Director & CEO, was approved by the shareholders of the Company in the 74th AGM of the Company held on 5th August, 2020 ("Original Resolution").

It is proposed to amend the Original Resolution to include appropriate clauses enabling the grant of stock options to Mr. Amit Syngle, pursuant to the 2021 Plan.

The brief details of the 2021 Plan and other relevant details have been provided in explanatory statement annexed to the Notice of the ensuing 75th AGM of the Company.

DIRECTORS AND KEY MANAGERIAL PERSONNEL

Board of Directors

Re-appointment and continuation of Mr. R. Seshasayee as an Independent Director of the Company, not liable to retire by rotation.

At the 71st AGM of the Company held on 27th June, 2017, the shareholders had approved the appointment of Mr. R Seshasayee (DIN: 00047985) as an Independent Director to hold office for a period of 5 (five) consecutive years up to 22nd January, 2022.

Based on the outcome of performance evaluation and recommendations of the Nomination and Remuneration Committee, the Board of Directors of the Company, at their meeting held on 12th May, 2021 have recommended the reappointment of Mr. R Seshasayee as an Independent Director for second term of 5 (five) consecutive years upto 22nd January, 2027 (not liable to retire by rotation), in accordance with Section 149, 152, Schedule IV and other applicable provisions, if any, of the Act and the Listing Regulations.

In terms of the provisions of the Regulation 17(1A) of the

Listing Regulations, consent of the Shareholders by way of Special Resolution shall be required for continuation of directorship of Mr. R. Seshasayee, Independent Director of the Company, who would attain the prescribed age limit of 75 years during the period of the proposed second term.

In the opinion of the Nomination & Remuneration Committee and Board of Directors of the Company, considering the wealth of experience and expertise of Mr. R Seshasayee and the immense value he brings to the Board and the Company, the re-appointment of Mr. R Seshasayee for a second term of 5 (five) consecutive years from 23rd January, 2022 to 22nd January, 2027 (not liable to retire by rotation) and continuation of his directorship beyond 75 (seventy-five) years of age would be in the interest of the Company and its shareholders. Mr. R. Seshasayee is exempt from the requirement to undertake online proficiency self-assessment test conducted by Indian Institute of Corporate Affairs (IICA), Manesar.

Retirement by rotation and subsequent re-appointment

In accordance with the provisions of Section 152 and other applicable provisions, if any, of the Act and the Articles of Association of the Company, Mr. Abhay Vakil and Mr. Jigish Choksi, Non-Executive Directors of the Company, 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.

Declaration from Directors

The Company has received the following declarations from all the Independent Directors confirming that:

1. They meet the criteria of independence as prescribed under the provisions of the Act, read with the Schedule and Rules issued thereunder, and the

Listing Regulations. There has been no change in the circumstances affecting their status as Independent Directors of the Company; and

2. They have registered themselves with the Independent

Directors Database maintained by the IICA.

None of the Directors of the Company are disqualified for being appointed as Directors as specified in Section 164(2) of the Act and Rule 14(1) of the Companies (Appointment and Qualification of Directors) Rules, 2014.

Key Managerial Personnel

Mr. Amit Syngle, Managing Director & CEO and Mr. R. J. Jeyamurugan, CFO & Company Secretary, are the Key Managerial Personnel of the Company.

Mr. Amit Syngle was appointed as the Managing Director & CEO of the Company with effect from 1st April, 2020. During the year under review, there were no other changes to the Key Managerial Personnel of the Company.

NUMBER OF MEETINGS OF THE BOARD

During the year under review, 7 (seven) meetings of the Board of Directors were held. The details of the meetings of

the Board of Directors of the Company held and attended by the Directors during the financial year 2020-21 are given in the Corporate Governance Report which forms part of this Annual Report.

The maximum interval between any two meetings did not exceed 120 days, as prescribed by the Act.

NOMINATION AND REMUNERATION POLICY The Nomination and Remuneration Policy of the Company, inter alia, provides that the Nomination and Remuneration Committee shall, formulate the criteria for Board membership, including the appropriate mix of Executive & Non-Executive Directors, Board Diversity and approve and recommend compensation packages and policies for Directors and Senior Management and lay down the effective manner of performance evaluation of the Board, its Committees and the Directors and such other matters as provided under Section 178 of the Act and Listing Regulations.

The salient features of the Nomination and Remuneration Policy of the Company are outlined in the Corporate Governance Report which forms part of this Annual

Report. The Policy is also available on the website of the Company httDs://www.asianDaints.com/more/investors/ Dolicies-Droarams.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 read with Schedule II of the Listing Regulations. Further details on the same are given in the Corporate Governance Report which forms part of this Annual Report.

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 [A] to this report and is also available on the website of the Company at www.asianpaints.com.

BOARD EVALUATION

During the year under review, the Nomination and Remuneration Committee engaged M/s. Egon Zehnder, external consultants, to conduct evaluation of the Board, Committees of the Board and Directors. The evaluation was conducted based on the criteria and framework adopted by the Board. The evaluation parameters and the process have been explained in the Corporate Governance Report.

FAMILIARIZATION PROGRAM FOR INDEPENDENT DIRECTORS

All I ndependent Directors 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, the Directors of the Company state that:

a. in the preparation of the annual accounts for the financial year ended 31st March, 2021, the applicable

Asian Paints Limited

Boards Report (Contd.)

Accounting Standards 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, 2021 and of the profits of the Company for the financial year ended 31st March, 2021;

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 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.

REGISTRAR AND TRANSFER AGENT

M/s. TSR Darashaw Consultants Private Limited (TSR) is the Registrar and Transfer Agent of the Company.

During the year under review, the registered office and place of operation of TSR has been shifted to Vikhroli, Mumbai.

Accordingly, the Company is required to seek shareholders approval under Section 94 and other applicable provisions of the Act read with the Companies (Management and Administration) Rules, 2014, for maintenance of the Registers and Indexes of Members of the Company under Section 150 of the Companies Act, 1956 or Section 88 of the Act, as applicable and copies of the returns prepared under Section 159 of the Companies Act, 1956 or Section 92 of the Act, as applicable, read with the Companies (Management and Administration) Rules, 2014 and in accordance with Article 144 of the Articles of Association of the Company, for the period(s) on or after 1st April, 2003, at TSRs office located in Vikhroli, Mumbai.

Appropriate resolution seeking approval of the shareholders has been placed at the ensuing AGM of the Company.

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. 1 17366W/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 ensuing 75th AGM.

M/s. Deloitte Haskins & Sells LLP, Chartered Accountants are eligible to be re-appointed for a further term of 5 (five) years, in terms of provisions of Sections 139 and 141 of the Act.

Accordingly, the Board of Directors of the Company at their meeting held on 12th May, 2021 on the recommendation of the Audit Committee and subject to the approval of the shareholders of the Company at the ensuing AGM, have approved the re-appointment of M/s. Deloitte Haskins & Sells LLP, Chartered Accountants (Firm Registration No. 117366W/ W-100018), as the Statutory Auditors, for a further period of 5 (five) years i.e. from the conclusion of the 75th AGM till the conclusion of 80th AGM of the Company.

The Company has received written consent and certificate of eligibility in accordance with Sections 139, 141 and other applicable provisions of the Act and Rules issued thereunder, from M/s. Deloitte Haskins & Sells LLP. They have confirmed to hold a valid certificate issued by the Peer Review Board of the Institute of Chartered Accountants of India (ICAI) as required under the Listing Regulations.

The Auditors have issued an unmodified opinion on the Financial Statements, both standalone and consolidated for the financial year ended 31st March, 2021. The said Auditors Report(s) for the financial year ended 31st March, 2021 on the financial statements of the Company forms 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. RA & Co.,

Cost Accountants, (Firm Registration No. 000242) have carried out the cost audit for applicable products during the financial year 2020-21.

The Board of Directors of the Company, on the recommendations made by the Audit Committee, have appointed M/s. RA & Co., as the Cost Auditors of the Company to conduct the audit of cost records of certain products for the financial year 2021-22. M/s. RA & Co., being eligible, have consented to act as the Cost Auditors of the Company for the financial year 2021-22.

The remuneration proposed to be paid to the Cost Auditor, subject to ratification by the members of the Company at the ensuing 75th 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 have 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 2021-22. The Company has received consent from Dr. K.

124 Annual Report 2020-21

R. Chandratre to act as the auditor for conducting audit of the secretarial records for the financial year ending 31st March, 2022.

The Secretarial Audit Report for the financial year ended 31st March, 2021 under the Act, read with Rules made thereunder and Regulation 24A of the Listing Regulations, is set out in the Annexure [B-1] to this report.

The Secretarial Compliance Report for the financial year ended 31st March, 2021, in relation to compliance of all applicable SEBI Regulations/circulars/guidelines issued thereunder, pursuant to requirement of Regulation 24A of the Listing Regulations, is set out in Annexure [B-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 OF THE BOARD

As on 31st March, 2021, the Board has 7 (seven) committees: Audit Committee, Nomination and Remuneration Committee,

Corporate Social Responsibility Committee, Risk Management Committee, Stakeholders Relationship Committee, Investment Committee and Shareholders Committee.

During the year under review, the Board of Directors constituted a committee called the Investment Committee, inter alia, to consider, evaluate and recommend to the Board viable investment proposals which are in the interest of furthering the strategic goals of the Company.

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, including its terms of reference is provided in the Corporate Governance Report. The composition and terms of reference of all the Committee(s) of the Board of Directors of the Company is in line with the provisions of the Act and Listing Regulations.

CORPORATE SOCIAL RESPONSIBILITY (CSR)

During the financial year ended 31st March, 2021, the Company incurred CSR Expenditure of Rs. 62.98 crores (Rupees sixty two crores and ninety eight 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 httDs://www.asianDaints.com/about-us.html.

Ministry of Corporate Affairs vide its Notification(s) dated

22nd January, 2021, notified the Companies (Corporate Social Responsibility Policy) Amendment Rules, 2021, which, inter alia, provides for the revised format of annual report for publishing the CSR activities undertaken during the financial year ended 31st March, 2021. The other changes pursuant to said Notification(s) under the CSR provisions, have been briefly highlighted in the annual report of the Companys CSR activities for the financial year ended 31st March, 2021.

The Companys CSR Policy statement and annual report on the CSR activities undertaken during the financial year ended 31st March, 2021, in accordance with Section 135 of the Act and Companies (Corporate Social Responsibility Policy) Rules, 2014 is set out in Annexure [C] to this report.

CORPORATE GOVERNANCE REPORT AND 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.

ANNUAL RETURN

The Annual Return of the Company as on 31st March, 2021 in Form MGT - 7 in accordance with Section 92(3) of the Act read with the Companies (Management and Administration) Rules, 2014, is available on the website of the Company at httDs://www.asianDaints.com/more/investors/ AnnualReportFY2021.html.

RELATED PARTY TRANSACTIONS

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. An omnibus approval from the Audit Committee is obtained for the related party transactions which are unforeseen in nature. During the year under review, the Related Policy Framework was suitably amended to include the revised pricing structure and certain new transactions which were not anticipated earlier.

All contracts/arrangements/transactions entered into by the Company during the year under review with Related Parties were in the ordinary course of business and on arms length basis in terms of provisions of the Act.

The Companys Policy on dealing with and Materiality of Related Party Transactions is available on the website of the Company at httDs://www.asianDaints.com/more/investors/ Dolicies-Droarams.html.

There are no materially significant related party transactions that may have potential conflict with interest of the Company at large. There were no transactions of the Company with any person or entity belonging to the Promoter(s)/Promoter(s) Group which individually holds 10% 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 to the stock exchanges. The said disclosures can be accessed on the website of the Company at https://www. asianpaints.com/more/investors/announcements.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 [D] 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, 2021, are set out in Note 36(B) to the Standalone Financial Statements of the Company.

RISK MANAGEMENT

Risk management is integral to your Companys strategy and for the achievement of our long-term goals. Our success as an organization depends on our ability to identify and leverage the opportunities while managing the risks.

The COVID-19 pandemic this year has posed several unprecedented challenges in the form of uncertain lockdowns, unlock phases, health hazards and supply chain disruptions across the globe. These have added a new dimension to the term VUCA (volatile, uncertain, complex and ambiguous).

These changes and challenges have brought a mix of opportunities and uncertainties impacting the Companys objectives. Risk Management, which aims at managing the impact of these uncertainties, is an integral part of the Companys strategy setting process. The Company regularly identifies uncertainties and after assessing them, devises short-term and long-term actions to mitigate any risk which could materially impact your Companys long-term goals. This process of identifying and assessing the risks is a two-way process. Inputs are taken, both bottom up and top down while finalizing the risk treatment plans.

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.

Our approach to risk management is designed to provide reasonable assurance that our assets are safeguarded, the risks facing the business are being assessed and mitigated and all information that may be required to be disclosed is reported to Companys Senior Management including, where appropriate, the Managing Director & CEO, the Chief Financial Officer, the Audit Committee, the Risk Management Committee and the Board.

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. 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.

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 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, malafide manipulation of Company records, discrimination to the Code of Conduct in an anonymous manner.

The Policy also provides adequate 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 ("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 2020-21 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

The Company has adequate Internal Financial Controls System over financial reporting which ensures that all transactions are authorized, recorded, and reported correctly in a timely manner. The Companys Internal Financial Control over financial reporting is designed to provide reliable financial information and to comply with applicable accounting standards.

The Company has laid down Standard Operating Procedures and policies to guide the operations of the business. Functional heads are responsible to ensure compliance with all laws and regulations and also with the policies and procedures laid down by the Management.

During the year, the Company has updated the delegation of Authority Manual and Commercial Manual to make it in line with the changes in the business environment and underlying systems and processes. The Company has modified the format of the internal certification by functional heads on reporting accuracy (Financial Closure Certificate (FCC)) in line with the changes in accounting and reporting requirements.

The Shared Services Center (SSC) extended the coverage of digital invoice processing for transporters during the year.

This has made the process touchless and seamless. Vendor Invoice Process Automation & Transporter Invoice Process Automation has inbuilt 3-way checks (PO, GR/Service Entry & invoice) in the system leading to accuracy and lower manual errors. To increase the digital footprints with added control, employee reimbursement and digital invoices are processed paperless.

The Company has invested in automation of inventory provisions for damaged, dead, defective, inert stock, etc. leading to robust review and faster closure of financial.

The Company has developed system with built in checks to ensure that GST and tax is collected at source correctly for all applicable transactions ensuring statutory compliance. The Company has also completed development to generate E-invoice through the system as per the government regulations.

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 statutory auditors and 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 accounts.

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. None of the Directors of the Company have resigned during the year under review;

b. There are no material changes and commitments affecting the financial position of the Company which have occurred between the end of the financial year 2020-21 and the date of this report;

c. During the year under review, the Company has launched its Home Decor Range in furniture, furnishings and lighting through Beautiful Homes. This was in line with the Companys vision of providing its customers complete home decor solution. There has been no other change in the nature of business carried out by the Company.

d. 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;

e. 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;

f. 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;

The Competition Commission of India had passed a prima facie Order dated 14th January, 2020, directing the Director General (DG) 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. The investigation is currently ongoing and the Company is fully co-operating and providing necessary information to the authority.

g. The Managing Director & CEO of the Company has not received any remuneration or commission from any of the subsidiary companies. Further the Company doesnt 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 [E] to this report;

j. The Company has formulated Asian Paints Employees Stock Option Plan 2021 (ESOP) for Eligible Director(s) and Employees of the Company and its subsidiaries, which is subject to approval of the shareholders at the ensuing AGM. Hence, the disclosure requirement in relation to ESOP under Rule 12(9) and Rule 16(4) of the Companies (Share Capital and Debentures) Rules, 2014 is not applicable yet;

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;

m. There was no revision of financial statements and Boards Report of the Company during the year under review;

n. No application has been made under the Insolvency and Bankruptcy Code; hence the requirement to disclose the details of application made or any proceeding pending under the Insolvency and Bankruptcy Code, 2016 (31 of 2016) during the year alongwith their status as at the end of the financial year is not applicable; and

o. The requirement to disclose the details of difference between amount of the valuation done at the time of onetime settlement and the valuation done while taking loan from the Banks or Financial Institutions along with the reasons thereof, is not applicable.

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: 12th May, 2021