Indigo Paints Ltd Management Discussions

Indian Economy2

Amid a turbulent world economic landscape, the economy of India demonstrated its strength, growing at 6.5% in FY 2024-25. Backed by sustained rural demand, favourable monsoon and declining inflation, the economy remained one of the fastest growing large economies in the world.

Although rural demand remained robust, urban consumption moderated during the year. The headline CPI inflation averaged 4.6%, remaining within the RBIs target range and enabling a follow-up 100 basis-point reduction in the repo rate till June 2025, to 5.5%. The RBIs policy pivot to an accommodative stance was crucial in maintaining growth momentum. However, in light of the prevailing geopolitical turbulences, the central bank has now switched to a neutral stance to assess the impact of inflation.

Investment activity picked up in strongly during FY 2024-25, led by a resurgence in manufacturing and export orders in the third quarter, following a weak second quarter. Infrastructure development continued to be a top priority of the government, with the continuation of support for schemes such as the Production Linked Investment (PLI) 2.0 to augment indigenous manufacturing.

Outlook

Moving forward, Indias economic outlook appears positive, with the country surpassing Japan to become the fourth largest economy in the world. The nation is projected to sustain the growth momentum at 6.5% for FY 2025-26. This growth momentum is expected to be fuelled by growing foreign investment, consistent decline in inflation, enhanced industrial performance and revival of consumer spending. Policies by the government aimed at encouraging Foreign Direct Investment (FDI) and enhanced public capital expenditure are expected to further fuel indigenous industries.

With easing inflationary pressures, consumption is envisioned to showcase a stronger rebound. The monetary policies of the RBI, coupled with income tax relief for salaried employees, will further heighten spending. Measures for addressing food price shocks as well as driving economic activity in smaller cities are expected to translate into higher domestic demand, bolstered by better consumer and business sentiment.

However, global economic headwinds, erratic trade policies and sustained supply chain disruptions may compress manufacturers margins. A weakening of the global economy may also impact investor confidence in the short-term. Amid this economic environment, Indias relative macroeconomic stability makes it a preferred destination for foreign institutional investors looking for alternatives to the US market. The growth in Indias manufacturing infrastructure positions it as a global manufacturing hub, sustaining demand for warehouses and bring multinational companies to set up manufacturing bases. Ongoing structural reforms and favourable policy environment is expected to support the nations vision for becoming a developed nation by 2047.

Indias real GDP growth

Industry Overview

Indian Paint and Coatings Industry 3 4

The paint industry navigated several challenges in FY 2024-25 amid broader consumer demand sluggishness in India. The market was valued at $ 13.91 billion in 2024. In the years ahead, the market is envisioned to expand at an estimated CAGR of 8.81%, reaching $ 27.33 billion by FY2033. This surge is expected to be fuelled by the expanding automotive industry, expedited urbanisation and supportive government policies driving infrastructure development. Further, environmental awareness is promoting the adoption of eco-friendly paints with lower Volatile Organic Compounds (VOC) emissions.

The organised paints industry of India is forecasted to exhibit robust growth.

The industry showcased modest revenue as manufacturers passed on the benefits from softer prices for crude-linked inputs, amidst heightened competition. The costs of most raw materials, particularly crude-based derivatives like binders and solvents, along with titanium dioxide, have stabilised.

Automotive Sector Growth

Indias commanding position as one of the largest automotive markets globally has created substantial demand for automotive paints, used for exterior finishes and protective coatings. The rise in vehicle customisation has further heightened the demand for premium automotive paints offering enhanced durability, aesthetic appeal and environmental resistance.

Construction Boom

The upswing in the construction activity, notably in residential and commercial complexes, has considerably augmented the demand for decorative paints. Government schemes, such as the Smart Cities Mission and Housing for All have further accelerated this upward trajectory.

Rising Per Capita Consumption

At 3.5 kgs, Indias per capita paint consumption is much lower compared to developed nations. This points to a vast untaped potential. The gap offers great opportunities for the paint industry players to grow their market and develop products that suit the taste of Indian consumers Indian.5

Capacity Expansion

Indian paint manufacturers are expected to undertake notable capital investment programmes. The current capacity of major players is envisioned to witness notable augmentation, with a 70% expansion scheduled in the next three to four years.6

Indian Construction Chemicals Industry7

Propelled by accelerated infrastructure projects and greater adoption of modern building technologies, Indias construction chemicals industry witnessed notable growth in 2024. The market was valued at $ 3.76 billion in 2024 and is projected to exhibit a CAGR of 5.64% during the forecast period to reach $ 5.17 billion by 2030. This growth is primarily attributed to the expanding infrastructure developments and heightening demand for sustainable construction practices and eco-friendly materials.

Indian Waterproofing Chemicals Market8

In FY 2025, Indias waterproofing chemicals market demonstrated robust growth. This growth can be attributed to the expanding construction and infrastructure development sectors. The market is projected to grow at a CAGR of 7.67% during the forecast period FY 2025-32, reaching $ 2.26 billion by FY 2032.

The industry continues to flourish on the back of growing construction and infrastructure development. Waterproofing chemicals have become critical components in safeguarding buildings and structures against water damage. The growing emphasis on durability and moisture-resistance is further fuelling market demand.

Demand Drivers

Increasing Residential Construction

The demand for Indias waterproofing market is rising in tandem with development of the residential real estate sector. 40% of the nations population will reside in urban areas by 2036, up from 31% in 2011.9 Demand for housing is expected to remain strong over the next two years, while launches surge and sales growth is expected to be 10%-15% as Indias construction market becomes the third largest in the world by 2025.10 This presents a significant opportunity to the manufacturers and suppliers of innovative and sustainable waterproofing solutions. Additionally, Indias climate of intense monsoon rains is expected to further exacerbate the demand of advanced waterproofing products.

Climate Concerns

Climate change is resulting in heavier and more erratic rainfall. This threatens the structure of buildings through weakness and moisture. Good waterproofing systems play an instrumental role in stopping moisture issues, such as mold and damage to the foundation, thereby heightening the demand for waterproofing materials. Builders, developers and homeowners are increasingly transitioning towards superior waterproofing technologies to minimise the damage caused by climate change on their constructions.

Indian Decorative Coating Market11

The Indian decorative coatings market has witnessed steady expansion in recent years driven by fast-paced urbanisation, rising disposable incomes and a growing inclination towards home enhancements. The market generated a revenue of $ 7,307.1 million in 2024 and is expected to reach $ 10,464.0 million by 2030, with a CAGR of 6.2% from 2025 to 2030.

Among product categories, emulsion paints were the largest revenue-generating product in 2024, accounting for an estimated 44.1% of the market share. This segments dominance stems from the increasing preference of water-based paints due to their washability, durability and aesthetic appeal. Demand for decorative paints is largely driven by repainting cycle which constitutes an estimated 80% of the market, while new construction projects make up the remaining 20%.12

Customisation

A growing demand personalised interiors is shaping the decorative paint customisation movement in India. This shift towards customisation has become the central driver of the market share of decorative paints in India. Additionally, innovation in digital colour matching and colour selection is further enhancing customer experience, enabling them to obtain desired shade and finish in a seamless manner.

Enhanced Discretionary Spending

Over the last decade, the income levels of urban and semi-urban residents in India have witnessed a steady rise. Rising disposable income is fuelling greater expenditure on home improvement and renovation to elevate the aesthetic appeal and value of homes. The expanding middle class is increasingly inclining to spend money on premium paint products for interior and exterior uses.

Technological Advancements

Technological progress continues to propel the decorative paints market with innovation focused on durability, finish and environmental compatibility. The trend of developing new paint solutions encompassing weather-proof paints, anti-fungal paints and UV-resistant coatings is being shaped by evolving of consumer preferences for high-performance and low-maintenance products. Over the past few years, the market has experienced an increased demand for eco-friendly paints with low volatile organic compounds (VOCs). The rise of e-commerce and improved distribution infrastructure have heightened the ease of purchase for customers, driving higher market penetration.

Mega-trends

Shift towards Organised Players

The share of organised players in the domestic paint sector has risen to an estimated 75%. With existing and new players planning augmented capex, the share of organised players is projected to go up to ~80% in the medium term.13

Digitisation

Indian chemical industries are witnessing a rapid integration of Industry 4.0 technologies, with AI and IoT as the drivers of this change. Manufacturing firms are adopting AI for predictive maintenance, process optimisation, quality assurance and supply chain optimisation.

Premiumisation

One of the key trends in this category is the increasing need for luxury and premium paints. Customers are gradually moving away from conventional economy-grade products to premium offerings, which provide advanced functionalities, such as increased durability, enhanced coverage and a broader colour palette. Further, augmentation in the demand of value-added paint with added offerings, such as anti-bacterial, weather resistance and low-maintenance is also propelling the decorative paint industry growth.

Smart Materials and Next-Generation Formulations

Manufacturers are creating sophisticated formulations with antibacterial functionality, weatherability and self-healing properties. Liquid-applied membrane technology in waterproofing is gaining traction in the building industry. Building chemicals are shifting towards high-performance products with increased durability and niche uses. The industry is witnessing innovation in temperature-resistant paints and water-repellent adhesives for precise construction needs. Further, the use of eco-friendly paints, including water-based and low-VOC paints is on the rise.

Opportunities and Challenges

		Opportunities
Government Giant Headroom	Initiatives for Growth	Initiatives such as the National Building Code (NBC) and Smart Cities Mission implemented by the Indian government is bolstering the construction chemicals industry. The NBC standardises sustainable materials, which will elevate the application of sophisticated chemicals. Demand is also promoted by PMAY and PM Gati Shakti through funding for housing and infrastructure projects with additional capital outlay on. Further, the India Chem initiative in 2024 promoted local manufacturing and reduced reliance on imports. Such policies create an environment conducive to market development, sustainability and quality improvements. Further, the ‘Make in India project promotes domestic production and consumption of construction chemicals. Projects supporting green building norms, such as LEED certification, have contributed to the rising demand for these paints in buildings. Indias low per capita paint consumption of 3.5 kilograms, reflects huge growth opportunity.14 Manufacturers can adapt their strategies to proliferate into untapped markets to maintain growth momentum. The strong performance of rural demand and improving standards of living indicate positive prospects for expansion. Technologies such as smart coatings are setting new benchmarks by providing superior performance attributes, such as greater durability, weather resistance and aesthetic appeal. Advancements in application techniques, such as spray painting, powder coating and electrostatic coating, have enabled faster, more uniform and efficient coverage.
Technological Urbanisation	Innovation	These modern technologies have considerably elevated the overall customer experience. The creation of sophisticated anti-corrosion coatings has been vital for industries, such as automotive, marine and infrastructure, where resistance to corrosion is an imperative. The building industry of India continues to accelerate, propelled by a growing middle class and proactive government initiatives. The southern region of the country has emerged as a major centre for demand of paints and coatings industry. The urban hubs of Bengaluru, Chennai and Hyderabad are witnessing a surge in residential, commercial and institutional development, requiring high-performance coatings that provide durability, aesthetics and protection against the elements. Urbanisation, population expansion and infrastructure development programmes are collectively driving sustained demand for decorative paints, protective coatings and special finishes.

 

	Challenges
Raw Material	Volatility and Supply Chain Disruptions	The volatility of raw material prices weigh heavily on the paints and coatings industry. Raw materials such as petrochemicals and titanium dioxide represent a substantial share of the cost of production, with fluctuating crude oil prices exerting pressure on profit margins. Geopolitical incidents and natural catastrophes complicate supply chain vulnerabilities, adding a layer of uncertainty in output and exportability.
Evolving	Environmental Standards	Stringent environmental regulations present complexities for manufacturers, particularly in relation to volatile organic compounds (VOCs) and other toxic emissions. Manufacturers are required to spend on sustainable practices and formulas to adapt with shifting regulatory demands. The prolonged and complicated procedures for applying quality control orders present operational challenges to manufacturers and importers.
Quality	Concerns	The presence of low-quality, unbranded alternatives in the market pose challenges to existing players. Many construction companies and contractors are still utilising traditional building techniques and materials that fail to provide modern performance and sustainability. The unorganised segment still provides low-quality products at reduced costs, which yield higher dealer margins when compared to organised players.

Company Overview

Indigo Paints Limited was founded in 2000 and is a rapidly growing paint manufacturer in India. Based in Pune, the firm has made notable progress in decorative paints with a broad-spectrum portfolio encompassing emulsions, enamels, putties, primers and distempers.

Indigo Paints has a reputation for innovative products and a widespread distribution chain in India that enabled it to gain a considerable market share in the highly competitive Indian paint market. Having three strategically positioned plants located at Jodhpur (Rajasthan), Kochi (Kerala) and Pudukkottai (Tamil Nadu). Indigo Paints innovative strategy and strategic marketing efforts have consolidated its market position as a strong player in the paint, coatings and construction chemicals market. Its growth strategy includes development of its manufacturing capacities and product portfolios to meet growing demand.

Growth Strategies and Outlook

Demand Recovery Pattern

The paint industry is currently experiencing a gradual resurgence in demand. This was highlighted by fourth quarter of fiscal year 2025. This upward momentum has continued into the first quarter of fiscal year 2026. This is being propelled by improved consumer buying behaviour. The industry experts expect the demand to return on its historical growth trajectory by the second quarter of fiscal year 2026, when the paint industry is expected to grow at around 7-8%.

Raw Material Cost Dynamics

The cost of raw materials continues to sustain its downward trend, having eased steadily over the last five to six months. This favourable cost landscape is anticipated to sustain, meaningfully contributing to margin augmentation across product lines. The stabilising of crude-linked derivatives such as binders, solvents, additives and titanium dioxide has contributed to a more stable cost structure for manufacturers. However, lingering macroeconomic uncertainties and supply chain disruptions still pose risks to price stability.

Product Mix and Profitability

The expedited growth in premium emulsions and the waterproofing segment presents a positive outlook for overall profitability. Further, the waterproofing market is projected to grow at a CAGR of 7-8% through 2033. This segments expansion, coupled with the Companys strategic focus on premium products, is envisioned to augment the gross margin profile and support sustained improvements in profits.

Advertising and Promotion Strategy

Despite growing investment in online advertising media, the Advertising and Promotion (A&P) expenditure for the fiscal witnessed a slight decline is declined as a percentage of revenue.

The Company is recalibrating its marketing approach with an increased focus on digital outreach, targeting both end consumers and influencers. In addition, the Company is intensifying its Below The Line (BTL) marketing activities to better track and promote secondary sales from the dealer counters. Notably, the Company allocates 6.4% of its top line towards A&P activities to drive expansion, which is considerably higher than the industry standards.

EBITDA Margin Outlook

EBITDA margins in fiscal year 2026 are envisioned to be better. This is expected to be supported by several positive drivers. The expected recovery in demand, sustained raw material price softening and the improved product mix with elevated focus on premium products are expected to contribute to strengthened profitability ratios.

Apple Chemie Performance

The Apple Chemie subsidiary, which was acquired with a 51% holding to venture into the construction chemicals and waterproofing products business, is expected to experience margin augmentation . This is set to be directed by a changing product mix that tilts towards higher-margin products and strategic concentration in some geographic markets. The subsidiary, which achieved robust revenue growth to H63.7 crore in FY 2024-25, is well-positioned to contribute more significantly to consolidated profitability as its product offerings and market concentration are optimised.

Operational Overview

Sales and Product Mix

Premiumisation is fuelling value growth in emulsions despite flat volumes. The differentiated portfolio remains a significant revenue driver. The putty segment continues to underperform due to low margins and price competition. Waterproofing and construction chemicals are emerging as a strong growth area, contributing a mid-single digit percentage to total revenues.

Value Growth

Product Category	FY 2022-23	FY 2023-24	FY 2024-25
Cement paints + putty	33.19	35.87	-1.27
Emulsions	18.20	15.01	1.88
Enamels + wood coatings	30.30	13.63	0.49
Primers + distempers + others	18.93	32.16	11.06

Volume Growth

Product Category</td>	FY 2022-23	FY 2023-24	FY 2024-25
Cement paints + putty	25.52	35.50	-2.47
Emulsions	5.88	15.36	1.16
Enamels + wood coatings	18.52	15.79	0.91
Primers + distempers + others	13.82	33.01	6.04

Distribution Network

During the year under review, the Company broadened its active dealer base, reaching a total of 18,371 dealers. Further, the Company augmented its tinting machines to 11,000 + in FY25. The Company continues to expand its footprint, aligning with the long-term business strategy.

Product Category	FY2021-22	FY2022-23	FY2023-24	FY2024-25
No. of depots	47	47	53	54
Active dealers	15,787	16,496	18,105	18,371
Tinting machines	7,101	8,273	9,842	11,000+

Financial Overview

The Company concluded the year with a net revenue from operations of H 1,340.7 Crores on a consolidated basis. Despite muted demand scenario and a de-growth in industry, Indigo Paints has closed the year with a growth of 2.65%. The Company has registered a gross margin of 46.02% and has continued to maintain pole position with regards to gross margins. This accomplishment can be attributed to the basket of differentiated products and a prudent material purchase policy. The EBITDA margin has decreased to 17.42% from 18.23% in FY24, while the PAT margin has decreased to 10.46% from 11.27% in FY24. In accordance with the SEBI (Listing Obligations and Disclosure Requirements) (Amendment) Regulations 2018, the Company is required to provide details of significant changes (i.e., change of 25% or more as compared to the immediately previous financial year) in key financial ratios, along with detailed explanations thereof. The key financial ratios are given below:

On Standalone Basis

Particulars	FY2021-22	FY2022-23	FY2023-24	FY2024-25
Revenue from operations (H Lakhs)	90,597.48	1,07,333.43	1,25,486.11	1,27,719.20
Gross margin (%)	43.32	44.54	47.90	46.52
EBITDA (H Lakhs)	13,598.37	18,153.24	23,269.79	23,157.16
EBITDA margin (%)	15.01	16.91	18.54	18.13
Profit for the year (H Lakhs)	8,404.80	13,193.94	14,865.26	14,394.24
PAT margin (%)	9.17	12.18	11.72	11.12
Capital employed (H Lakhs)	62,777.76	75,251.10	89,854.25	103,588.31
ROCE (%)	18.42	20.90	22.25	18.86
RoNW	12.93	17.00	16.24	13.73
Debt-equity ratio (times)	0	0	0	0
Debtors turnover ratio	6.16	5.75	6.21	6.02
Inventory turnover	4.84	5.06	4.61	4.33
Interest coverage ratio	86.91	114.29	125.70	65.95
Current ratio	2.34	1.96	2.16	2.40

1. Capital employed = Tangible net worth (i.e., paid up capital + reserves – goodwill) + total debt + deferred tax liability

2. Return on capital employed (ROCE) = Earnings before interest and taxes (i.e., profit before tax + finance cost) ? capital employed 3. Debtors turnover ratio = Net credit sales (gross credit sales – sales return) ? average trade receivable 4. Inventory turnover ratio = Cost of goods sold ? average inventory 5. Return on net worth (RONW) = Profit after tax ? shareholders equity (i.e. equity share capital + reserves)

Particulars	FY2021-22	FY2022-23	FY2023-24	FY2024-25
Discount as % of revenue from operations	14.22	17.39	21.78	24.26
Employee costs as % of net revenue	6.22	6.81	7.36	8.16
Advertising & sales promotion as % of revenue from ops	9.72	7.70	7.36	6.42
Material costs as % of revenue from operations	56.68	55.46	52.10	53.48
Freight & handling as % of revenue from operations	8.89	8.97	9.62	8.74
Overhead costs - other expenses (% of revenue from ops)	3.48	4.15	5.02	5.07

On a consolidated basis

Particulars	FY2021-22	FY2022-23	FY2023-24	FY2024-25
Revenue from operations (H Lakhs)	90,597.48	1,07,333.43	1,30,608.58	1,34,067.29
Gross margin (%)	43.32	44.54	47.63	46.02
EBITDA (H Lakhs)	13,598.37	18,153.24	23,806.86	23,348.49
EBITDA margin (%)	15.01	16.91	18.23	17.42
Profit for the year (H Lakhs)	8,404.80	13,193.94	14,882.83	14216.47
PAT margin (%)	9.17	12.18	11.27	10.46
Capital employed (H Lakhs)	62,777.76	75,251.10	88,539.03	102079.83
ROCE (%)	18.42	20.90	22.67	18.95
RoNW	12.93	17.00	16.50	13.79
Debt-equity ratio (times)	0	0	0	0
Debtors turnover ratio	6.16	5.75	6.17	5.74
Inventory turnover	4.84	5.06	4.75	4.46
Interest coverage ratio	86.91	114.29	94.63	55.26
Current ratio	2.34	1.96	2.18	2.37

Revenue

For FY25, on a consolidated basis Indigo Paints has achieved a revenue of H 1,34,067.29 Lakhs, a 2.65% growth despite a muted demand scenario. On a standalone basis Indigo Paints has clocked a revenue of H 1,27,719.20 Lakhs, registering a growth of 1.78%.

Raw materials & gross margins

While the net revenue from operations increased by 2.65% on a consolidated basis, the cost of raw materials and components consumed increased by 5.81% from H 68,393.51 Lakhs in FY2023-24 to H 72,366. 73 Lakhs in FY 2024-25. On a standalone basis, the cost of raw materials and components consumed increased by 4.48% while the revenue from operations increased by 1.78%. A muted demand environment also warranted relatively higher discounts in the trade channel to spur demand which affected the gross margins marginally. On a standalone basis, the gross margins reduced from 47.90% in FY 2023-24 to 46.52% in FY 2024-25. However, Indigo Paints with the robust portfolio of differentiated products, continue to maintain the pole position in the industry with regards to the gross margin.

EBITDA & PAT margins

On a consolidated basis, the EBITDA has reduced by 1.93% from H 23806.86 Lakhs in FY24 to H 23,348.49 Lakhs in FY25. The EBITDA margin contracted to 17.42% in FY 25 from 18.23% in FY24. The PAT reduced by 4.48% in FY25 to H 14216.47 Lakhs.

On a standalone basis, the EBITDA reduced to H 23,157.16 Lakhs from H 23,269.79 Lakhs registering a slight reduction of 0.48%. The reduction was primarily due to the low growth in sales and slightly elevated employee cost. The PAT for the year reduced by 3.17% to H 14394.24 Lakhs. PAT was also affected by higher depreciation incurred due to the commissioning of water based plant at Pudukkottai, Tamil Nadu. Though the plant was commissioned in Sep 2023, the full effect of depreciation was factored in FY 2024-25.

Other income, cash and investments

The other income increased substantially from H 1421.64 Lakhs in FY 2023-24 to H 1849.58 Lakhs in FY 2024-25 primarily due to the increase in the treasury income. During As on March 31, 2025, on a consolidated basis, the Company had H 26,322.25 Lakhs and on standalone basis had H 25,312.02 Lakhs in terms of cash and cash equivalents, Bank balances, short-term and long-term investment instruments.

D&A, property plant and equipment

On a standalone basis, the D&A expense increased from H 4,617.76 Lakhs in FY 2023-24 to H 5,383.93 Lakhs in FY 2024-25 primarily due to higher depreciation incurred following the addition in plant and machinery worth H 1,879.56 Lakhs as well as due to the depreciation charge for the full year for the new plant at Pudukkottai, Tamil Nadu which was commissioned in Sep23. The Capital Work in Progress (CWIP) had also increased significantly from H 1,512.11 Lakhs in FY 2023-24 to H 13,485.30 Lakhs in FY 2024-25. This CWIP pertains to the new manufacturing facilities being set up in Jodhpur, Rajasthan for the new water based and solvent based paint products. These facilities are expected to be commissioned in FY 2025-26.

Interest coverage ratio and finance costs

Indigo Paints on a standalone basis is a zero-debt company and the major portion of the finance cost of H 295.98 Lakhs pertains to the lease liabilities. On a consolidated basis, there was a debt of H 640.67 Lakhs pertaining to Apple Chemie India Ltd, a majority of which is for setting up an additional manufacturing facility at Nagpur and working capital requirements. The new plant at Nagpur is expected to be commissioned by September 2026.

Human Resource

Indigo Paints appreciates its employees and attributes this effective workforce with continually delivering targets, attaining new milestones and maintaining competitive advantage.

Employees benefit from competitive compensation and a comprehensive suit of benefits alongside opportunities of career and personal development. Through ongoing skill-building and structured training programmes, the Company equips its workforce with tools necessary to excel. The Company aims to have a strong leadership-succession strategy while nurturing a diverse and inclusive work environment.

The Company ensures that all business practices adhere strictly to legal and ethical requirements, thereby guaranteeing integrity and honest reporting. To reinforce this commitment, the Company has formulated a Whistle Blower Policy. This policy allows employees to confidentially report possible violations without fear of retaliation. The policy acts as an essential mechanism for raising, investigating and addressing issues, thereby strengthening corporate governance and cementing the reputation of the Company. This policy complies with the provisions of the Companies Act and SEBI Listing Regulations.

The Company places great emphasis on representative Board composition in terms of executive, non-executive and independent directors in accordance with regulatory requirements. The Company believes that diversity in perspective, viewpoint, knowledge and experience enhance competitive edge, supports sound corporate governance, improves decision-making and contributes to long-term growth. Further, a policy is in place for regular evaluation of individual directors regarding the periodic assessment of the performance of individual directors, the Board as a whole and its various committees to ensure effective governance, functioning and compliance with mandated responsibilities.

To address grievances related to sexual harassment, an Internal Complaints Committee has been established. Victims may submit written complaints to a member of the committee or the Company Secretary within three months from the date, with extensions possible in exceptional cases. Assistance is provided in drafting written complaints and strict confidentiality is maintained in the form of a register. Arrangements are made for sensitive depositions and a formal enquiry into the case.

Health and safety are equally prioritised by the Company. A comprehensive health-and-safety scheme, encompassing regular training, sophisticated equipment and rigorous protocols is in place to guarantee a safe working environment.

Information Technology

Technology plays an instrumental role in the Companys daily business operations. Indigo Paints has made substantial investments to modernise its technology infrastructure, aiming to improve the monitoring of operations and ultimately augment shareholder value. These investments encompass the implementation of technology-driven tools such as the ITSAP system, which streamlines raw material procurement, finished goods management, vendor and supplier payments and effective receivables management. In addition, the Company has developed a strong data analytics and reporting system to support its operations.

Risk Mitigation

Indigo Paints Limited has instituted a robust risk management system based on four fundamental pillars – Risk Identification, Risk Assessment, Risk Mitigation and Monitoring and Reporting. This methodical and proactive approach enables the Company to anticipate and manage potential threats to its business objectives.

The process of risk identification is aimed at identifying events that could adversely impact the Companys goals. All identified risks are consolidated in a Risk Register that captures detailed information encompassing risk description, category, classification, mitigation plan and responsible function or department. The organisation classifies risks broadly as External and Strategic, Manufacturing and Operational, Financial, Sales, Internal, Sustainability and ESG-related and Cyber Security and Backup risks. Every risk is also classified by severity as low, medium or high.

For effective risk management, the Committee has identified certain individuals as process owners for various risk areas. The risk assessment process entails the quantification of each risk based on two important factors- the probable impact of the event in case of occurrence and the chance of occurrence. This is done to ascertain the total risk exposure and prioritise the effort towards mitigation.

For mitigation of risk, Indigo Paints utilises a four-pronged framework with four strategic responses. Risk avoidance requires eliminating activities that hold risk, even at the cost of potential opportunities. Risk transfer relocates the risk to a third party via contracts, hedging or insurance. Risk reduction uses processes to lower the degree of possible losses. Risk retention entails accepting certain low-level risks where mitigation costs exceed potential losses.

The monitoring and review process needs assigned process owners to scrutinise the Risk Register and report all new material risks to the Committeebi-annually.TheCommitteemonitorspolicyimplementation, develops mitigation plans, evaluates risk seriousness, sets mitigation timescales and reviews the sufficiency of risk management systems. The Risk Register is kept by the Committee Secretary.

To keep the policy updated, the Committee re-evaluates it at least once every two years, ensuring alignment with shifting industry dynamics and emerging complexities. The Risk Management Committee also presents to the Board of Directors an annual review of the risk assessment process and plans of mitigation to ensure high corporate-level oversight.

Internal Control Systems

The Company has put in place internal control systems suitable for the nature, scale and complexity of its operations. These systems consist of clear policies and procedures aimed at ensuring operational effectiveness and efficiency, reliable financial reporting, compliance with relevant laws and regulations, prevention and detection of fraud and errors and the safeguarding of assets. Internal auditors regularly examine these controls using a risk-based audit approach to assess their adequacy and effectiveness. The internal audit plan is reviewed and approved by the Audit Committee, which also monitors the implementation of audit recommendations and evaluates the sufficiency of the Companys internal financial controls. Significant audit findings and activities are reported to the Audit Committee and appropriate corrective actions are taken as needed.

Cautionary Statement

Certain statements in the MDA section concerning future prospects may be forward-looking statements which involve a number of underlying identified/ non-identified risks and uncertainties that could cause actual results to differ materially. In addition to the foregoing changes in the macro-environment, a global pandemic like Covid-19 may pose an unforeseen, unprecedented, indeterminable and constantly evolving risk(s), inter-alia, to the Company and the environment in which it operates. The results of these assumptions made, relying on available internal and external information, are the basis for determining certain facts and figures stated in the report. Since the factors underlying these assumptions are subject to change over time, the estimates on which they are based are also subject to change accordingly. These forward-looking statements represent only the Companys current intentions, beliefs or expectations and any forward-looking statement speaks only as of the date on which it was made. The Company assumes no obligation to revise or update any forward-looking statements, whether as a result of new information, future events, or otherwise.