Equity Analysis

To

The Members

Your Directors take pleasure in presenting the Fifty Fifth Annual Report together with Audited Financial Statements for the year ended 31^st March, 2024.

* Pertaining to dividend for FY 2022-23 # Pertaining to dividend for FY 2021-22

The dividend payout is in accordance with the Dividend Distribution Policy, which is available on the website of the Company https://www.pidilite.com/investor-relations/corporate-governance

The Company does not propose to transfer amounts to the general reserve.

The Company has no outstanding term loans (previous year NIL).

The total capital expenditure during the year was Rs 499.21 crores (previous year Rs 456.94 crores) primarily spent on fixed assets for various manufacturing units, offices, laboratories, warehouses and on information technology.

The Company has not accepted any deposits covered under Chapter V of the Companies Act, 2013 during the financial year 2023-24 (previous year NIL).

During the year, total investment of Rs 177.35 crores (previous year Rs 78.59 crores) was made in subsidiaries. Of this, Rs 170.14 crores was invested in domestic subsidiaries and Rs 7.21 crores in overseas subsidiaries. The investments in domestic subsidiaries were in M/s. Nina Percept Pvt. Ltd. amounting to Rs 107.67 crores, Pidilite Ventures Pvt. Ltd. Rs 50.02 crores and Pidilite Grupo Puma Manufacturing Ltd. Rs 12.45 crores. The investments in overseas subsidiaries were in Pidilite Middle East Ltd Rs 6.80 crores and Pidilite Industries Egypt SAE Rs 0.41 Crores.

During the year a. The Company acquired the balance 25.42% stake in its subsidiary namely Nina Percept Pvt. Ltd. (NPPL), by purchasing 3,00,000 equity shares from an existing shareholder of NPPL, for a cash consideration of Rs 37.75 crores (including certain contingent payment). Effective 29^th June, 2023, consequent to this, NPPL became a wholly owned subsidiary of the Company. b. M/s. Pidilite Middle East Ltd. (PMEL), a wholly owned subsidiary of the Company, increased its holding in its step-down subsidiary M/s. Pidilite MEA Chemicals LLC (PIL MEA LLC) from 49% to 100%, on purchase of balance 51% stake from an existing shareholder of PIL MEA LLC, consequent to this, PIL MEA LLC became a wholly owned subsidiary of PMEL effective 19^th June, 2023. c. M/s. Pidilite MEA Chemicals LLC, a wholly owned subsidiary of the Company and M/s. Corporacion Empresarial Grupo Puma SL, Spain incorporated a joint venture Company in UAE in the name of "PidilitePuma MEA Chemicals LLC" on 2^nd October, 2023 to carry on the business of manufacture of construction chemicals. d. The Company on 8^th November, 2023 has, approved subject to RBI and regulatory approvals, acquisition of M/s. Pargro Investments Pvt. Ltd., an existing NBFC company belonging to Company?s Promoter Group through M/s. Bhimad Commercial Company Pvt. Ltd., a wholly owned subsidiary of the Company for a cash consideration not exceeding Rs 10 crores. The new business shall provide credit to its domain ecosystem to support their business growth. e. M/s. Pidilite USA Inc, a wholly owned subsidiary of the Company, has done a buyback of 1,20,00,000 shares of the Company amounting to Rs 79.75 crores. f. The Company has transferred its 100% Equity shares in M/s. Pulvitec do Brasil Industria e Commercio de Colas e Adesivos Limitada, Brazil, a wholly owned subsidiary of the Company to M/s. Soprema Ltda., Brazil, a part of Soprema Group, France for a consideration of approximately

Rs 47 crores post adjustment of net debt and hold back, on 28^th March, 2024. Pulvitec has ceased to be a wholly owned subsidiary of the Company. g. The Company through its subsidiary M/s. Pidilite Ventures Pvt. Ltd. made certain investments in early-stage companies. h. M/s. Constrobots Robotics Pvt. Ltd. has become an Associate company w.e.f. 27^th May, 2023.

(Rs in crores)

Consumer & Bazaar 472.11 391.11 20.70% 64.69 62.22 4.00% Business to Business 346.57 315.87 9.70% 25.93 6.25 314.70%

Domestic subsidiaries figures includes companies which were non-operating in previous year.

Domestic subsidiaries (Consumer & Bazaar) reported industry leading growth with healthy EBITDA Margins. The subsidiaries in Business to Business segment achieved double digit sales growth with improvement in EBITDA Margins.

(Rs in crores)

Overseas subsidiaries figures are at constant currency.

Despite the global economic uncertainty, inflation and political instability in some countries, International subsidiaries (excluding Pidilite USA and Pulvitec Brazil) revenues for the year grew by 7.8% over FY 2023 with EBITDA Margins improving from 10.8% to 14.8%. In March 2024, the Company divested its business in Brazil and with this, now the company has fully exited the businesses in Americas.

In accordance with the provisions of Companies Act, 2013 (hereinafter referred to as ‘the Act?), Regulation 33 of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 (hereinafter referred to as ‘Listing Regulations?) and applicable Accounting Standards, the Audited Consolidated Financial Statements of the Company for the financial year 2023-24, together with the Auditor?s Report, form part of this Annual Report. A statement containing the salient features of the Company?s subsidiaries and associate companies in the prescribed Form AOC- 1, are set out after Note No. 61 to the Consolidated Financial Statements.

The Consolidated Financial Statements have been prepared on the basis of audited financial statements of the Company, its subsidiaries, associate companies and joint venture, as approved by their respective Board of Directors except M/s. Pulvitec Do Brazil Industria e Comercio de Colas e Adesivos Ltda (upto 28^th March, 2024) which has been approved by the local administrator. The accounts of the subsidiaries are also uploaded on the website of the Company, https://www.pidilite.com/ investor-relations/financials.

Shri N. K. Parekh, a promoter Director, has stepped down as the Non-Executive Director of the Company from the close of business hours of 31^st March, 2024. Shri N. K. Parekh has been an outstanding leader associated with the Company for over 55 years and has contributed immensely to the growth of the Company. The Board places on record the deep appreciation and gratitude for the valuable contributions made by Shri N. K. Parekh.

Shri B S Mehta and Shri Uday Khanna, Independent Directors have retired from the Company on 31^st March, 2024 and 2^nd April, 2024 respectively, on completion of their second term on the Board of the Company. The Board places on record the deep appreciation and gratitude for the valuable contributions made by Shri B S Mehta and Shri Uday Khanna during their tenure on the Board.

Shri A. B. Parekh, Executive Vice Chairman has stepped down as the Whole-time Director of the Company effective from 1^st April, 2024 but continues as a Director on the Board of the Company designated as Non-Executive Vice Chairman. Shri Sudhanshu Vats, Deputy Managing Director has been designated as the Managing Director Designate with effect from 1^st April, 2024. Members approval is sought at the ensuing Annual General Meeting for revision in his remuneration.

Shri Kavinder Singh has been appointed as a Joint Managing Director Designate of the Company by the Board on the recommendation of Nomination and Remuneration Committee for a period of 5 years with effect from 20^th May, 2024, subject to the approval of the Members at the ensuing Annual General Meeting. Shri Murali Sivaraman has been appointed as an Independent Director for a period of 5 years, by the Board on the recommendation of Nomination and Remuneration Committee, with effect from 23^rd January, 2024 and Member?s approved his appointment by passing special resolution through Postal Ballot process on 13^th March, 2024. Shri Rajeev Gupta has been appointed as an Additional Director (Independent) of the Company, by the Board on the recommendation of Nomination and Remuneration Committee for a period of five years with effect from 7^th May, 2024, subject to the approval of the Members at the ensuing Annual General Meeting. Shri J. S. Deepak has been appointed as an Additional Director (Independent) of the Company, by the Board on the recommendation of Nomination and Remuneration Committee for a period of five years with effect from 1^st July, 2024, subject to the approval of the Members at the ensuing Annual General Meeting.

In the opinion of the Board, Shri Murali Sivaraman, Shri Rajeev Gupta and Shri J. S. Deepak possess requisite expertise, experience and integrity including proficiency.

In accordance with the Act and the Articles of Association of the Company, Shri A. B. Parekh and Shri Joseph Varghese, Directors of the Company, retire by rotation and being eligible, offer themselves for re-appointment.

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

The policy on Directors? remuneration is available on the website of the Company, https://www.pidilite. com/investor-relations/corporate-governance. The remuneration paid to the Directors is as per the terms laid out in the said policy.

Your Directors confirm that:

• in the preparation of the annual accounts, the applicable accounting standards have been followed along with proper explanation relating to material departures; • they have selected such accounting policies and applied them consistently and made judgments 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 ended 31^st March, 2024 and of the profit of the Company for that period;

• they 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; • they have prepared the annual accounts on a going concern basis; • they have laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and are operating effectively; and • they have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems are adequate and operating effectively.

The Board has put in place a mechanism for evaluation of its own performance and performance of its Committees and individual Directors. The evaluation of the Board, Committees, Directors and Chairman of the Board was conducted based on the evaluation parameters, such as Board composition and structure, effectiveness of the Board, participation at meetings, domain knowledge, awareness and observance of governance, etc. For further details, please refer to the Report on Corporate Governance, which forms a part of this Annual Report.

The Company has put in place an induction and familiarisation programme for all its Directors including the Independent Directors.

The familiarisation programme for Independent Directors in terms of provisions of Regulation 46(2)(i) of the Listing Regulations is uploaded on the website of the Company.

Eight meetings of the Board of Directors of the Company were held during the financial year 2023-24. For further details, please refer to the Report on Corporate Governance, which forms a part of this Annual Report.

All the Independent Directors of the Company have given declarations that: a. they meet the criteria of independence as laid down under the Act and the Listing Regulations; b. they have complied with the Code of Independent Directors prescribed under Schedule IV of the Act; and c. they have registered themselves with the Independent Directors? Database maintained by the Indian Institute of Corporate Affairs.

The Company is committed to good corporate governance practices. The Report on Corporate Governance, as stipulated under Listing Regulations, forms an integral part of this Annual Report. The requisite certificate from M/s. Parikh & Associates, Practising Company Secretaries, is attached to the Report on Corporate Governance.

The Management Discussion and Analysis Report for the year under review, as stipulated under the Listing Regulations, is presented in a section forming part of this Annual Report. For the sake of brevity the items covered in this Report are not repeated in the Management Discussion and Analysis Report.

The following are the statutory Committees constituted by the Board and they function according to their respective roles and defined scope:

• Audit Committee

• Nomination and Remuneration Committee

• Corporate Social Responsibility Committee

• Stakeholders Relationship Committee

• Risk Management Committee

Details of composition, terms of reference and number of meetings held for respective Committees are given in the Report on Corporate Governance, which forms a part of this Annual Report. Further, during the year under review, all recommendations made by the Audit Committee have been accepted by the Board.

The CSR Report as per Section 135 of the Act read with Companies (Corporate Social Responsibility Policy) Rules, 2014 and amendments thereto, is attached as Annexure 1 to this Report. The details of CSR Initiatives forms part of Social & Community Service Initiatives section of this Annual Report. CSR Policy can be accessed on website of the Company https://www.pidilite.com/investor-relations/corporate-governance.

The Company has established a Vigil Mechanism and Whistle Blower Policy for its Directors and employees. The said policy has been communicated to the Directors and employees of the Company and is also posted on the website of the Company https://www.pidilite.com/investor-relations/corporate-governance. For further details, please refer to the Report on Corporate Governance, which forms a part of this Annual Report.

In accordance with the requirements of the Sexual Harassment of Women at Workplace (Prevention, Prohibition & Redressal) Act, 2013 ("POSH Act") and Rules made thereunder, the Company has formulated a Prevention of Sexual Harassment Policy, which mandates no tolerance against any conduct amounting to sexual harassment of women at workplace. The Company has formed Internal Complaints Committee to redress and resolve any complaints arising under the POSH Act. To build awareness in this area, Company has been conducting induction/training programmes in the organisation on a periodical basis. For further details, please refer to the Report on Corporate Governance, which forms a part of this Annual Report.

In accordance with the provisions of the Act, M/s. B S R & Co. LLP, Chartered Accountants

(Firm Registration No 101248W/W-100022) have been appointed as the Statutory Auditors of the Company, for a period of five years i.e. upto the conclusion of 59^th AGM to be held for the adoption of accounts for the financial year ending 31^st March, 2028. Auditors have confirmed that they are not disqualified from continuing as Auditors of the Company. There is no qualification or adverse remark in Auditors? Report. There is no incident of fraud requiring reporting by the Auditors under Section 143(12) of the Act.

The Company has maintained cost records as specified by Central Government u/s 148(1) of the Act. M/s. V J Talati & Co., Cost Accountants, were appointed as the Cost Auditor for the financial year 2023-24 to conduct the audit of the cost records of the Company and they have been reappointed as the Cost Auditor for the financial year 2024-25. In terms of the provisions of Section 148(3) of the Act, read with the Companies (Audit and Auditors) Rules, 2014, as amended, the remuneration payable to the Cost Auditor has to be ratified by the Members of the Company. Accordingly, at the ensuing AGM, the Board seeks ratification of the remuneration payable to the Cost Auditor for the financial year 2024-25.

Pursuant to the provisions of Section 204 of the Act and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Company has appointed M/s. Parikh & Associates, Practising Company Secretaries to undertake the Secretarial Audit of the Company for the financial year 2023-24. The Secretarial Audit Report for the financial year 2023-24 under the Companies Act, 2013 read with Rules made thereunder and Regulation 24A of the Listing Regulations, is set out in Annexure 2 to this report. There is no qualification or adverse remark in their Report.

The particulars under Section 134 of the Act, read with the Companies (Accounts) Rules, 2014 are attached as Annexure 3 to this Report.

In compliance with Regulation 21 of the Listing Regulations, a Risk Management Committee has been constituted by the Board. The Risk Management Committee, also known as Risk Management Oversight Committee, is entrusted with roles and powers as specified in Part D of Schedule II of Listing Regulations. The Company has laid out a risk management policy for identification and mitigation of risks. The Company has also constituted a Management Risk Committee which is chaired by the Managing Director and has Senior Leadership of the Company as its members. The Management Risk Committee identifies the key risks for the Company, develops and implements the risk mitigation plan, reviews and monitors the risks and corresponding mitigation plans on a regular basis and prioritises the risks, if required, depending upon the effect on the business/reputation.

The other details in this regard are provided in the Report on Corporate Governance, which forms a part of this Annual Report.

All contracts/arrangements/transactions entered into by the Company during the financial year under review with related parties (as defined in the Act and Listing Regulations) were in the ordinary course of business and on an arm?s length basis. During the year, the Company did not enter into any contract/ arrangement/transaction with related parties which could be considered as material in accordance with the Policy of the Company on Materiality of Related Party Transactions (RPT Policy) or which is required to be reported in Form No. AOC-2 in terms of Section 134(3)(h) read with Section 188 of the Act and Rule 8(2) of the Companies (Accounts) Rules, 2014. The RPT Policy, as approved by the Board, is available on the Company?s website: https://www.pidilite.com/investor-relations/corporate-governance.

Disclosure of related party transactions with the promoter(s)/promoter(s) group which individually hold 10% or more shareholding of the Company, as per the Indian Accounting Standards, are set out in Note No 45 of the Standalone Financial Statements of the Company.

Details of loans, guarantees or investments covered under the provisions of Section 186 of the Act are given in the Notes to the Financial Statements.

The Employees Stock Option Scheme (Scheme) is in line with SEBI (Share Based Employee Benefits) Regulations, 2014. The certificate of Secretarial Auditors regarding implementation of the Scheme is available for inspection of Members in electronic mode. The applicable disclosure, as stipulated under Securities and Exchange Board of India (Share Based Employee Benefits and Sweat Equity) Regulations, 2021, as on 31^st March, 2024 with regard to Scheme, is provided in Annexure 4 to this Report.

Annual Return of the Company for FY 2023-24 as on 31^st March, 2024 is available on the website of the

Company viz. https://www.pidilite.com/investor-relations/latest-general-meeting.

A Business Responsibility and Sustainability Report as per Regulation 34 of the Listing Regulations, detailing the various initiatives taken by the Company on the environmental, social and governance front along with Independent Practitioners? Reasonable Assurance Report provided by M/s. B S R & Co. LLP, Statutory Auditors, forms an integral part of this Report.

The Company has adequate internal financial control procedures commensurate with its size and nature of business.

The Company has appointed Internal Auditors who periodically audit the adequacy and effectiveness of the internal controls laid down by the management and suggest improvements.

The Audit Committee of the Board of Directors approves the annual internal audit plan and periodically reviews the progress of audits as per approved audit plans along with critical internal audit findings presented by internal auditors, status of implementation of audit recommendations and adequacy of internal controls.

Pursuant to an Order dated 18^th December, 2023, passed by the Mumbai Bench of the National Company Law Tribunal, M/s. TSR Consultants Pvt. Ltd., Registrar and Share Transfer Agent of the Company has been amalgamated with M/s. Link Intime India Pvt. Ltd. ("LIIPL") with effect from 22^nd December, 2023. LIIPL is the Registrar and Share Transfer Agent of the Company.

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.

Disclosure pertaining to remuneration as per Section 197(12) of the Act, read with Rule 5(1) of the Companies

(Appointment and Remuneration of Managerial Personnel) Rules, 2014 is attached as Annexure 5 to this Report.

Details of employee remuneration as required under provisions of Section 197 of the Act and Rule 5(2) of Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 (including any modifications, thereof) shall be made available to any shareholder, on request.

The Company has neither issued equity shares with differential rights nor any sweat equity shares. There have been no material changes and commitments affecting the financial position of the Company between the end of financial year and the date of this Report. 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.

No proceedings are made or pending under the Insolvency and Bankruptcy Code, 2016 and there is no instance of one-time settlement with any Bank or Financial Institution.

There has been no change in the nature of business of the Company.

Your Directors wish to place on record their appreciation of the contribution made by the employees at all levels to the continued growth and prosperity of your Company. Your Directors also wish to place on record their appreciation to the shareholders, dealers, distributors, consumers, banks and other financial institutions for their continued support.

FOR AND ON BEHALF OF THE BOARD

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