i. Appointment of Directors
Independent Directors
The Board of Directors at their meetings held on 25th July 2023, 26th October 2023, and 28th March 2024, based on the recommendations of the Nomination and Remuneration Committee, inter alia, approved the following appointments, respectively, to the Board of Directors of the Company, subject to the approval of the shareholders of the Company:
a. Appointment of Mrs. Ireena Vittal (DIN: 05195656) as an Additional and Independent Director of the Company for a period of five years with effect
from 25th July 2023 to 24th July 2028.
b. Appointment of Mr. Soumitra Bhattacharya (DIN: 02783243) as an Additional and Independent Director of the Company for a period of five years with effect from
26th October 2023 to 25th October 2028.
c. Appointment of Dr. Copichand Katragadda (DIN: 02475721) as an Additional and Independent Director of the Company for a period of five years with effect from 1st April 2024 to 315t March 2029.
In the opinion of the Board, Mrs. Ireena Vittal,
Mr. Soumitra Bhattacharya, and Dr. Copichand Katragadda bring on board the required experience, integrity, expertise, and relevant proficiency which will add tremendous value to the Board in exercising their role effectively.
The requisite declarations and eligibility confirmations under the provisions of the Act and SEBI Regulations were received from Mrs. Ireena Vittal, Mr. Soumitra Bhattacharya, and Dr. Copichand Katragadda for considering their appointment as Independent Directors.
The brief profiles of Mrs. Ireena Vittal, Mr. Soumitra Bhattacharya, and Dr. Copichand Katragadda are given in the Governance section forming part of this Integrated Annual Report and is also available on the Company's website at https://www.asianpaints.com/ GovernanceStructure.html.
The appointment of Mrs. Ireena Vittal, Mr. Soumitra Bhattacharya, and Dr. Gopichand Katragadda as the Independent Directors of the Company for the term as mentioned above was subsequently approved by the shareholders of the Company through special resolutions passed with the requisite majority by way of postal ballot via remote e-voting on 15th September 2023, 22nd December 2023, and 8th May 2024, respectively. Details of the same are provided in the Report of Corporate Governance, forming part of this Integrated Annual Report.
Non-Executive Director
The Board of Directors at their meeting held on 9th May 2024, based on the recommendation of the Nomination and Remuneration Committee, inter alia, approved the appointment of Ms. Nehal Vakil (DIN: 00165627) as a Non-Executive Director of the Company with effect from the date of the ensuing ACM of the Company, subject to approval of the shareholders, in terms of Sections 152 and 161 of the Act, liable to retire by rotation.
Ms. Nehal Vakil was appointed as a Non-Executive Director by the Board of Directors of the Company at their meeting held on 1st March 2022 with effect from the said date, based on the recommendation of the Nomination and Remuneration Committee, to fill the casual vacancy created on the Board on account of the sad demise of Mr. Abhay Vakil, erstwhile Non-Executive Director. The shareholders thereafter approved the said appointment of Ms. Nehal Vakil to hold office up to the date that late Mr. Abhay Vakil would have held office i.e. up to the date of the ensuing ACM, through ordinary resolution passed with the requisite majority by way of postal ballot via remote e-voting on 20th April 2022.
The brief profile of Ms. Nehal Vakil is given in the Governance section forming part of this Integrated Annual Report and is also available on the Company's website at https://www.asianpaints.com/ GovernanceStructure.html.
The appropriate resolution for the appointment of Ms. Nehal Vakil as a Non-Executive Director is being placed for the approval of the shareholders of the Company at the ensuing ACM. Details with respect to her experience, attributes, skills, disclosure of relationship between directors inter-se, directorships held in other companies and committee memberships, etc., as stipulated under Regulation 36 of the Listing Regulations and Secretarial Standard on General Meetings issued by the Institute of Company Secretaries of India ("ICSI"), have been disclosed in the Annexure to the Notice of the ACM.
ii. Retirement of Independent Directors
In terms of Section 149(11) of the Act, the following Independent Directors have retired during the year:
a. Mr. Deepak Satwalekar (DIN: 00009627) retired with effect from the dose of business hours on 30th September 2023, upon completion of his second term of appointment as an Independent Director. He joined the Board in the year 2000.
He was the Chairman of the Board & the Company and a Member of the Corporate Social Responsibility Committee & Investment Committee.
b. Mrs. Vibha Paul Rishi (DIN: 05180796) retired with effect from the dose of business hours on 31st March 2024, upon completion of her second term. She joined the Board in the year 2014. She was the Chairperson of the Risk Management Committee & Stakeholders Relationship Committee and a Member of the Audit Committee & Corporate Social Responsibility Committee.
c. Mr. Suresh Narayanan (DIN: 07246738) retired with effect from the dose of business hours on 31st March 2024, upon completion of his first term of five years. He joined the Board in the year 2019. He was the Chairman of the Nomination and Remuneration Committee and a Member of the Investment Committee.
d. Mrs. Pallavi Shroff (DIN: 00013580) retired with effect from the dose of business hours on
31st March 2024, upon completion of her first term of five years. She joined the Board in the year 2019. She was a Member of the Audit Committee and Risk Management Committee.
The Board places on record sincere appreciation for their outstanding contribution towards the success of the Company, during their tenure as Independent Directors on the Board of the Company.
iii. 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. Jigish Choksi (DIN: 08093304), Non-Executive Director of the Company, is liable to retire by rotation at the ensuing ACM and being eligible has offered himself for re-appointment.
Based on performance evaluation and recommendation of the Nomination and Remuneration Committee, the Board of Directors recommends his re-appointment as a Non-Executive Director of the Company, liable to retire by rotation.
The brief profile of Mr. Jigish Choksi is given in the Governance section forming part of this Integrated Annual Report and is also available on the Company's website at https://www.asianDaints.com/ Governances tructure.html
The appropriate resolution for the re-appointment of Mr. Jigish Choksi is being placed for the approval of the shareholders of the Company at the ensuing ACM. Details with respect to his experience, attributes, skills, disclosure of relationship between directors inter-se, directorships held in other companies and committee memberships, etc., as stipulated under Regulation 36 of the Listing Regulations and Secretarial Standard on General Meetings issued by ICSI, have been disclosed in the Annexure to the Notice of the ACM.
The Managing Director & CEO and Independent Directors of the Company are not liable to retire by rotation.
During the year under review, no Director of the Company has resigned. Further, none of the Director of the Company is a director on the Board of the subsidiaries as of 315t March 2024.
Key Managerial Personnel
Mr. Amit Syngle, Managing Director & CEO, and Mr. R J Jeyamurugan, CFO & Company Secretary, are the Key Managerial Personnel ("KMP") of the Company in accordance with the provision of Sections 2(51) and 203 of the Act read with the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014.
During the year under review, there were no changes to the KMP of the Company.
DIRECTORS' RESPONSIBILITY STATEMENT
Pursuant to Section 134 of the Act (including any statutory modification(s) and/or re-enactment(s) thereof for the time being in force), the Directors of the Company state that:
a. in the preparation of the annual accounts for the financial year ended 315t March 2024, the applicable 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 315t March 2024 and of the profits of the Company for the financial year ended 315t March 2024;
c. proper and sufficient care has been taken for the maintenance of adeguate 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 are followed by the Company and that such internal financial controls are adeguate 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 adeguate and operating effectively.
The aforesaid statement has also been reviewed and confirmed by the Audit Committee of the Board of Directors of the Company.
Declaration from Directors
The Company has, inter alia, received the following declarations from all the Independent Directors confirming that:
a. they meet the criteria of independence as prescribed under the provisions of the Act, read with Schedule IV 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;
b. they have complied with the Code for Independent Directors prescribed under Schedule IV to the Act; and
c. they have registered themselves with the Independent Director's Database maintained by the Indian Institute of Corporate Affairs and have qualified the online proficiency self-assessment test or are exempted from passing the test as reguired in terms of
Section 150 of the Act read with Rule 6 of the Companies (Appointment and Qualifications of Directors) Rules, 2014.
The Board of Directors of the Company has taken on record the declaration and confirmation submitted by the Independent Directors after undertaking due assessment of the veracity of the same.
None of the Director of the Company are disqualified from being appointed as Directors as specified under Section 164(1) and 164(2) of the Act read with Rule 14(1) of the Companies (Appointment and Qualifications of Directors) Rules, 2014 (including any statutory modification(s) and/or re-enactment(s) thereof for the time being in force) or are debarred or disqualified by the Securities and Exchange Board of India ("SEBI"), Ministry of Corporate Affairs ("MCA") or any other such statutory authority.
All members of the Board and Senior Management have affirmed compliance with the Code of Conduct for Board and Senior Management for the financial year 2023-24.
The Company had sought the following certificates from independent and reputed Practising Company Secretaries confirming that:
a. none of the Director on the Board of the Company has been debarred or disqualified from being appointed and/or continuing as Directors by the SEBI/MCA or any other such statutory authority.
b. independence of the Directors of the Company in terms of the provisions of the Act, read with Schedule IV and Rules issued thereunder and the Listing Regulations.
NUMBER OF MEETINGS OF THE BOARD
During the year under review, 8 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 2023-24 are given in the Report of Corporate Governance forming part of this Integrated Annual Report.
The maximum interval between any two meetings did not exceed 120 days, as prescribed by the Act and the Listing Regulations.
FAMILIARISATION PROGRAMME FOR INDEPENDENT DIRECTORS
All Independent Directors are familiarised with the operations and functioning of the Company at the time of their appointment and on an ongoing basis.
The details of the training and familiarisation programme are given in the Report of Corporate Governance forming part of this Integrated Annual Report and are also available on the Company's website at https://www.asianpaints. com/FamiliarisationProaramme.html.
COMMITTEES
As of 315t March 2024, the Board has 6 Committees:
Audit Committee, Nomination and Remuneration Committee, Corporate Social Responsibility Committee, Risk Management Committee, Stakeholders Relationship Committee, and Investment Committee.
During the year under review, the Board of Directors of the Company have delegated the authority to approve the transmission, dematerialisation of shares, etc. to a Managing Committee comprising the Managing Director & CEO and CFO & Company Secretary of the Company. A summary of approved transmissions, dematerialisation of shares, etc. is placed before the Board of Directors from time to time as per the Listing Regulations.
During the year, all recommendations of the Committees of the Board which were mandatorily required have been accepted by the Board.
A detailed note on the composition of the Board and its Committees, governance of committees including its terms of reference, number of committee meetings held during the financial year 2023-24, and attendance of the members, is provided in the Report of Corporate Governance forming part of this Integrated Annual Report. The composition and terms of reference of all the Committees of the Board of Directors of the Company are in line with the provisions of the Act and the Listing Regulations.
AUDITORS AND AUDITOR'S REPORT Statutory Auditors
Deloitte Haskins &. Sells LLP ("DHS"), Chartered Accountants (Firm's Registration No. 1 17366W/W-100018), were re-appointed as the Statutory Auditors of the Company at the 75th ACM held on 29th June 2021, to hold office till the conclusion of the 80th ACM for the financial year 2025-26.
DHS has confirmed that they are not disqualified from continuing as Statutory Auditors of the Company and satisfy the independence criteria. The profile of the Statutory Auditors is available on the Company's website at https://www. asianDaints.com/Auditors.html.
The Company's Policy on engagement of Statutory Auditors of the Company is available on the Company's website at https://www.asianpaints.com/ AuditorsEnQaaementPolicv.html.
The Statutory Auditors have issued an unmodified opinion on the financial statements for the financial year 2023-24 and the Statutory Auditor's Report forms part of this Integrated Annual Report.
Secretarial Auditors
The Board of Directors of the Company, on the recommendation made by the Audit Committee, has re-appointed Dr. K. R. Chandratre, Practising Company Secretary (Certificate of Practice No. 5144), as the Secretarial Auditors to conduct an audit of the secretarial records for the financial year 2024-25, based on the confirmation of the eligibility and consent received from Dr. K. R. Chandratre. The Secretarial Auditor has confirmed that he is not disqualified to be appointed as such.
The profile of the Secretarial Auditors is available on the Company's website at https://www.asianDaints.com/ Auditors.html.
The Secretarial Audit Report received from Dr. K. R. Chandratre, for the financial year 2023-24 under Section 204 of the Act read with Rules made thereunder and Regulation 24A of the Listing Regulations, is set out in Annexure (A-1) to this Report.
The Secretarial Compliance Report received from Dr. K. R. Chandratre, for the financial year 2023-24, in relation to compliance with all applicable SEBI Regulations/ Circulars/Cuidelines issued thereunder, Secretarial Standards issued by ICSI, pursuant to requirement of Regulation 24A of the Listing Regulations, is set out in Annexure (A-2) to this Report. The Secretarial Compliance Report has been voluntarily enclosed as good disclosure practice.
As required by Schedule V of the Listing Regulations, the Auditor's Certificate on Corporate Governance received from Dr. K. R. Chandratre is annexed to the Report on Corporate Governance forming part of this Integrated Annual Report.
The Secretarial Audit Report and Secretarial Compliance Report for the financial year 2023-24, does not contain any qualification, reservation, or adverse remark.
Cost Auditors
The Board of Directors of the Company, on the recommendation made by the Audit Committee, appointed Joshi Apte & Associates, Cost Accountants (Firm Registration No. 000240), as the Cost Auditors of the Company for the financial year 2023-24 at a remuneration ofRs 9,00,000 plus applicable taxes and reimbursement of out-of-pocket expenses at actuals. Joshi Apte & Associates, being eligible, consented to act as the Cost Auditors of the Company for the financial year 2023-24. Joshi Apte & Associates were appointed in place of RA & Co.,
Cost Accountants (Firm Registration No. 000242), who had incurred a disqualification to continue as the Cost Auditors of the Company under Section 141(3) read with Section 148 of the Act and consequently vacated their office as the Cost Auditors of the Company with effect from 19th March 2024.
The shareholders of the Company ratified the proposed remuneration payable to Joshi Apte &
Associates to audit the cost records of the Company for the financial year ending 315t March 2024, byway of an ordinary resolution passed with the requisite majority byway of postal ballot via remote e-voting on 8th May 2024, details of which are given in the Report of Corporate Governance forming part of this Integrated Annual Report.
The profile of the Cost Auditors is available on the Company's website at https://www.asianDaints.com/ Auditors.html.
The Company has maintained cost records for certain products as specified by the Central Government under Section 148(1) of the Act. Joshi Apte & Associates, the Cost Auditors, are in the process of carrying out the cost audit for applicable products during the financial year 2023-24.
Further, the Board of Directors of the Company, on the recommendation made by the Audit Committee, re-appointed Joshi Apte & Associates, as the Cost Auditors of the Company to conduct the audit of cost records of applicable products for the financial year 2024-25 at a remuneration of Rs 9,00,000 plus applicable taxes and reimbursement of out-of-pocket expenses at actuals.
Joshi Apte & Associates, being eligible, have consented to act as the Cost Auditors of the Company for the financial year 2024-25 and have confirmed that they are not disqualified to be appointed as such.
Appropriate resolution for ratification of the proposed remuneration payable to Joshi Apte & Associates to audit the cost records of the Company for the financial year ending 315t March 2025, is being placed for the approval of the shareholders of the Company at the ensuing ACM.
The Cost Audit Report for the financial year 2022-23 does not contain any qualification, reservation, or adverse remark. The Cost Audit Report for the financial year 2023-24 will be submitted within the prescribed timelines.
Internal Auditors
The Company has in place a robust Internal Audit function, which is led by Mr. Alok Agrawal, Chief Internal Auditor, and ably supported by a team of chartered accountants, certified internal auditors, ISO-certified audit professionals, and an electrical engineer. The Internal Audit function also partners with professional firms in the area of fraud investigation, market intelligence, IT audits, and with other firms having expertise in certain specific areas. The audit conducted by the Internal Audit team is based on an internal audit plan, which is reviewed each year by the Audit Committee. These audits are based on risk and control-based methodology and, inter alia, involve the review of internal controls and governance processes, adherence to management policies, and review of statutory compliances.
The Chief Internal Auditor reports functionally to the Audit Committee and administratively to the Managing Director & CEO of the Company. He participates in the meetings of the Audit Committee and Risk Management Committee. The Audit Committee met the Internal Auditor without the presence of the other members of the management during the year under review.
The Internal Audit team use cutting edge technology to conduct audits, data analysis, fraud focused analysis, managing audits, etc. The Chief Internal Auditor shares his findings on financial, safety, information security, compliance, reporting risks and other critical risks on a periodic basis with the Audit Committee along with the corrective and preventive action plan.
The Company has well established Internal Audit Charter, inter alia, to further enhance the governance mechanism, elaborate the scope of work of the internal audit function, specify the reporting structure of the Chief Internal Auditor, elaborate the authority and responsibilities of the Chief Internal Auditor. The abridged version of the Internal Audit Charter is available on the Company's website at https://www. asianDaints.com/AbridaedlACharter.html.
Report from an independent firm
During the year under review, the Company engaged a firm of accountants to conduct guality assurance review and maturity assessment for Internal Audit function. It was affirmed that the current state of the Internal Audit function is in conformance with the approved Internal Audit framework and current industry practices as per the internal audit standards issued by the Institute of Internal Auditors ("IIA").
Reporting of Frauds by Auditors
None of the Auditors of the Company has identified and reported any fraud as specified under the second proviso of Section 143(12) of the Act.
RELATED PARTY TRANSACTIONS
Related party transactions at Asian Paints
The Company has been entering into transactions with related parties, including entities directly and/or indirectly controlled by members of the Promoter(s) & Promoter(s) Croup, for its business purposes for more than three decades. These transactions primarily include transactions relating to the purchase of raw materials, packing materials, intermediaries, and such other transactions permissible and provided for under the provisions of the Act, the Listing Regulations, and the Income-Tax laws.
The related parties with which the Company contracts:
a. primarily supply their products to the Company;
b. bring in advanced and innovative technology for the benefit of the Company;
c. customise their products to suit the Company's specific reguirements;
d. help in enhancing the Company's purchase cycles and assure just in time supply with resultant benefits - notably on working capital.
All of the aforementioned benefits provide the Company a competitive and cost advantage in the market, without compromising on the quality/service levels and based on sound commercialjudgement.
The Company follows robust internal processes before entering into transactions with related parties and the considerations which govern the transactions with related parties are the same as those applicable for other vendors of the Company. All the transactions are undertaken for the benefit of the Company and in compliance with the applicable laws.
In order to ensure transparency and arm's length pricing for such supplies by related parties, the Company seeks multiple quotes from related parties and unrelated parties of equal standing and appoints a related party only if such party offers competitive terms, including pricing, as compared to unrelated parties. Along with pricing, manufacturing capabilities to effectively serve the Company's requirements and quality parameters are primary factors taken into consideration.
As a part of the Company's annual planning process, before the beginning of a financial year, details of all the transactions proposed to be executed with related parties, including the estimated amount of transactions to be executed, manner of determination of pricing and commercial terms, etc. are presented to the Audit Committee for its consideration and approval. The details of said transactions are also placed before the Board of Directors for their information. The Director, if interested in a transaction, does not participate in the discussion of the item relating to that transaction.
Further approval is sought during the year for any new transaction/modification to the previously approved limits/ terms of contracts with the related parties. This is followed by a guarterly review of the related party transactions by the Audit Committee.
Policy
The Company's Policy on dealing with and materiality of related party transactions is available on its website at https://www.asianDaints.conn/RPTPolicv.htnnl.
During the year under review, the Audit Committee approved revisions to the Framework for transactions with related parties of the Company, to further enhance the governance mechanism.
Review
All transactions with related parties were reviewed and approved by the Audit Committee and were in accordance with the Policy on dealing with and materiality of related party transactions.
There are no materially significant related party transactions that may have potential conflict with the interest of the Company at large.
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 arm's length basis in terms of the provisions of the Act. Further, there are no contracts or arrangements entered into under Section 188(1) of the Act, hence no justification has been separately provided in that regard.
Statutory Disclosures
The details of the related party transactions as per Ind AS-24 on Related Party Disclosures are set out in Note no. 37 to the standalone financial statements of the Company.
The Company in terms of Regulation 23 of the Listing Regulations submits on the date of publication of its standalone and consolidated financial results for the half year, disclosures of related party transactions, in the format specified by the SEBI. The said disclosures are available on the Company's website at https://www.asianDaints.conn/StatutorvFilincis.htnnL
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 Annexure (B) to this Report.
INTERNAL CONTROLS
The Company has in place well-established and robust internal control systems which are commensurate with the nature of its business, size & scale and complexity of its operations and are implemented across all processes, units and functions. Internal control systems comprising of policies and procedures are designed to ensure sound management of the Company's operations, safekeeping of its assets, optimal utilisation of resources, reliability of its financial information and compliance. Systems and procedures are periodically reviewed to keep pace with the growing size and complexity of the Company's operations. The Audit Committee also periodically reviews the adeguacy and effectiveness of internal control systems and provides guidance for further strengthening them.
During the year under review, no material observation has been made by the Internal Auditor or Statutory Auditors of the Company in relation to the efficiency and effectiveness of such controls.
INTERNAL FINANCIAL CONTROLS RELATED TO FINANCIAL STATEMENTS
The Company has designed and implemented a comprehensive Internal Financial Controls System over financial reporting to ensure that all transactions are authorised, recorded and reported correctly in a timely manner. The Company's Internal Financial Controls over financial reporting provide reasonable assurance over the integrity and reliability of the financial statements of the Company.
The Company has detailed work instructions, Standard Operating Procedures, policies, processes and manuals that lays down roles, responsibilities, and actions reguired. Functional heads are responsible for ensuring compliance with all laws and regulations and also with the policies and procedures laid down by the management.
The Company's Enterprise Resource Planning ("ERP") system of SAP S/4 HANA is well leveraged and implemented towards day-to-day transaction accounting and financial reporting. The Company's ERP along with allied information technology solutions provides a strong technology architecture for financial reporting controls.
The Company's investment in an advanced automation system to enable automated accounting and financial closing procedures in various areas has resulted in better accuracy and faster financial reporting with fewer manual interventions. The financial statement preparation has been automated to ensure end-to-end system-driven reporting across the Croup reducing the scope of manual errors.
The Company's Shared Services Center has taken ahead the digitalisation journey and delivered aggressive targets for on-time payment processing with near zero errors. The efforts towards digital processing, touchless processing, use of a virtual assistant, on-the-fly intelligence tools, use of optical character reader technology, mobile apps for employee reimbursements, car hire, hotel and travel booking, have created strong delight to stakeholders with related efficiencies in the process. The Company is continuously investing in new technology to enable smoother and error-proof processes.
The Company actively tracks all changes in Accounting Standards, the Act, and other applicable regulations and makes changes to the underlying systems, processes, and financial controls to ensure adherence to the same. With increased business complexities, detailed accounting and financial treatment are decided for dealing with newer products, services, assets, commitments, contracts, and arrangements. All resultant changes to the policy and impact on financials are disclosed after due validation with the Statutory Auditors, to the Audit Committee.
The Company has refreshed the Risk Assessment and Control Matrix for all processes involved in financial reporting and periodically tested them for design and operating effectiveness. The results of these tests are reported to the Audit Committee.
The Company gets its standalone financial results audited every quarter by its Statutory Auditors.
The policies ensuring uniform accounting treatment are followed by the subsidiary companies as well. International subsidiaries provide the information required for the 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. The Company has implemented audit trail on the books of accounts.
190 Asian Paints I imiterl
VIGIL MECHANISM
The Company promotes ethical behaviour in all its business activities and is in line with the best governance practices. The Company has a robust vigil mechanism through its Whistle Blower Policy approved and adopted by the 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 to manage the "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 all its stakeholders who report unethical practices and irregularities.
Any incidents that are reported are investigated and suitable action is taken in line with the Company's Whistle Blower Policy. No person is denied access to the Audit Committee.
The Whistle Blower Policy aims to:
a. allow and encourage stakeholders to bring to the management's notice concerns about unethical behaviour;
b. provide protection against victimisation;
c. ensure timely and consistent organisational response; and
d. build and strengthen a culture of transparency and trust.
The Whistle Blower Policy has been appropriately communicated within the Company and its Croup and is also available on the Company's website at https://www.asianDaints.conn/WBPolicv.htnnl.
COMPLIANCE MANAGEMENT
The Company has in place a comprehensive and robust legal compliance management digital tool, which is devised to ensure compliance with all applicable laws which impact the Company's business. Automated alerts are sent to compliance owners to ensure compliance within stipulated timelines. The portal has a dedicated license module wherein all the licenses applicable to various locations of the Company are updated and tracked for renewal. Alerts for renewal of licenses is sent at the frequency set in the portal based on regulatory requirements.
This proactive measure heips keep everyone on track and avoid any penaities or other iegai issues that couid arise From non-compliance. The compliance owners certify the compliance status which is reviewed by compliance approvers and a consolidated dashboard is presented to the respective Functional heads and Compliance OFFicer.
A certiFicate oF compliance with ail applicable laws and regulations along with the corrective and preventive action, iF any, is placed beFore the Audit Committee and Board oF Directors on a quarterly basis.
Additionally, the Company has also implemented a centralised automated tool designed to streamline the monitoring and management oF show cause notices/ inspection reports/visit reports/other communication ("notices") received from the statutory authorities. It automatically sends alerts to Central Functions and Business Heads when a notice is uploaded and allows them to suggest modiFications to responses to the notices prepared by the team. This tool enables the Company to eFFiciently track the status oF notices received across all locations and link related notices From the same authority. It also supports the generation oF customised reports and dashboards, providing a clear view oF the notices received and their status, thereby Facilitating a seamless review process.
NOMINATION AND REMUNERATION POLICY
The Nomination and Remuneration Policy oF the Company, inter alia, provides that the Nomination and Remuneration Committee shall: (i) formulate the criteria For Board membership, including the appropriate mix oF Executive & Non-Executive Directors; (ii) lay down the criteria For appointment in Senior Management positions; (iii) approve and recommend compensation packages and policies For Directors and Senior Management; (iv) lay down the process for the effective manner of performance evaluation of the Board, its Committees and the Directors; and (v) play the role of Compensation Committee in accordance with the SEBI (Share Based Employee Benefits and Sweat Equity) Regulations, 2021 and administer the Asian Paints Employee Stock Option Plan 2021.
During the year under review, the Nomination and Remuneration Policy was amended to, inter alia, include the revised definition of senior management to reflect the intent of the law in letter and spirit.
The salient Features of the Nomination and Remuneration Policy of the Company are outlined in the Report of Corporate Governance Forming part of this Integrated Annual Report. The Policy is also available on the Company's website at https://www.asianpaints.com/NRCPolicv.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 Report of Corporate Governance Forming part of this Integrated Annual Report.
Mr. Amit Syngle, Managing Director & CEO of the Company, has not received any remuneration or commission From any of the subsidiary companies. Further, the Company does not have any holding company, hence, a circumstance of any remuneration or commission From a holding company does not arise.
The information required under Section 197 of the Act read with the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 in respect of Directors and employees of the Company is set out in Annexure (C) to this Report.
BOARD EVALUATION
The Nomination and Remuneration Policy of the Company empowers the Nomination and Remuneration Committee to Formulate a process For effective evaluation of the performance of the Directors, Committees of the Board, and the Board as a whole. During the year under review, the Nomination and Remuneration Committee engaged Egon Zehnder, external consultant, to conduct the evaluation of the Board, Committees thereof, and the Directors.
The criteria For the evaluation and the outcomes thereto are set out in the Report of Corporate Governance Forming part of this Integrated Annual Report.
ASIAN PAINTS EMPLOYEE STOCK OPTION PLAN 2021 ("2021 PLAN")
The shareholders of the Company at their 75th ACM held on 29th June 2021, have authorised the Board to offer, issue, and provide stock options to the eligible employees of the Company and its subsidiaries under the 2021 Plan.
The 2021 Plan was introduced to incentivise, retain, and attract key talent through a performance-based stock option grant program and consequently enhance shareholder value.
The 2021 Plan aims to create a sense of ownership among the eligible employees and to align their medium and long- term compensation with the Company's performance.
The vesting criteria are primarily based on the achievement of annual performance parameters by the eligible employees, number of years of service, and such other criteria as may be prescribed by the Nomination and Remuneration Committee i.e., the Administrator, from time to time. The exercise price for stock options granted to eligible employees is at 50% of the "Reference Share Price" of the Company (as defined under the 2021 Plan).
The equity shares transferred under the 2021 Plan pursuant to exercise ranks pari-passuwith the existing equity shares of the Company.
The details of the stock options granted under the 2021 Plan and the disclosures in compliance with the SEBI (Share Based Employee Benefits and Sweat Equity) Regulations, 2021 ("SEBI SBEB Regulations") are set out in Annexure (D) and are available on the Company's website at https://www.asianpaints.com/AnnualReports.html.
The 2021 Plan is being implemented in accordance with the provisions of the Act and the SEBI SBEB Regulations.
The certificate from the Secretarial Auditor on the implementation of the 2021 Plan in accordance with Regulation 13 of the SEBI SBEB Regulations, has been uploaded on the Company's website at https://www.asianDaints.conn/AnnualReDorts.htnnl. The certificate will also be available for electronic inspection by the members during the ACM of the Company.
CORPORATE SOCIAL RESPONSIBILITY ("CSR")
During the financial year 2023-24, the Company has spent Rs 91.26 crores towards CSR expenditure, including set-off of excess CSR spends of Rs 0.22 crore made by the Company in the previous financial years, in terms of the CSR annual action plan approved by the CSR Committee and the Board of Directors, from time to time. The CSR initiatives of the Company were under the thrust area of health & hygiene, enhancing vocational skills, water stewardship, and disaster management.
The CSR annual action plan of the Company for the financial years 2023-24 and 2024-25 is available on the Company's website at https://www.asianpaints.com/about-us.html.
The CSR Committee confirms that the implementation and monitoring of the CSR Policy was done in compliance with the CSR objectives and policy of the Company.
The Company's CSR Policy statement and annual report on the CSR activities undertaken during the financial year ended 315t March 2024, in accordance with Section 135 of the Act and the Companies (Corporate Social Responsibility Policy) Rules, 2014 ("CSR Rules") is set out in Annexure (E) to this Report. During the year, no revision was made to the CSR Policy of the Company.
A synopsis of the report of the independent agency for the CSR projects, to which impact assessment is applicable in terms of the provisions of Section 135 of the Act read with the CSR Rules, has been provided as part of the said annual report on CSR. The detailed report is available on the Company's website at https://www.asianpaints.com/about-us.html.
RISK MANAGEMENT
The Company recognises that risk is an integral and inevitable part of business and it is fully committed to managing the risks proactively and efficiently. Our success as an organisation depends on our ability to identify and leverage the opportunities while managing the risks. The Company has a disciplined process for continuously assessing risks, in the internal and external environment along with minimising the impact of risks. The Company incorporates the risk mitigation steps in its strategy and operating plans.
The objective of the Risk Management process in the Company is to enable value creation in an uncertain environment, promote good governance, address stakeholder expectations proactively, and improve organisational resilience and sustainable growth.
The Company has in place a Risk Management Policy which articulates the approach to address the uncertainties in its endeavour to achieve its stated and implicit objectives. 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 to ensure that all short-term and long-term implications of key strategic and business risks are identified and addressed by the management. The Audit Committee takes the mantle of reviewing the risk management systems of the Company.
During the year, the Company has also reviewed its Risk Management Policy and no revision was made in the said Policy. The Company regularly identifies uncertainties and after assessing them, devises short- term and long-term actions to mitigate any risk which could materially impact the Company's long-term plans. Mitigation plans for significant risks are well integrated with business plans and are reviewed on a regular basis by the senior leadership.
The Company periodically reviews and improves the adequacy and effectiveness of its risk management systems considering the rapidly changing business environment and evolving complexities. The Company, through the risk management process, aims to contain the risk within the risk appetite.
There are no risks which in the opinion of the Board threaten the existence of the Company. Further, some of the risks that may pose challenges are set out in the Governance section forming part of this Integrated Annual Report.
The Risk Management Policy of the Company is available on the Company's website at https://www.asianDaints.conn/RMPolicv.htnnl.
INTEGRATED ANNUAL REPORT
The Company continues with its integrated reporting journey in the current financial year, aligning with its purpose of bringing joy to people's lives. This is the fourth year of publication of the Integrated Annual Report of the Company in line with the <IR> framework published by the International Financial Reporting Standards Foundation (IFRS).
The Global Reporting Initiative reported in this Integrated Annual Report have been subject to Reasonable/
Limited Assurance. The Assurance Report issued by Price Waterhouse Chartered Accountants LLP has been annexed to this Integrated Annual Report.
The Integrated Annual Report comprises both financial and non-financial information to illustrate how different 'capitals' are deployed to enable the creation of value, thereby enabling the members to make well-informed decisions and have a better understanding of the Company's long-term perspective and value creation for all the stakeholders.
The Integrated Annual Report, this year, is structured around Environmental, Social and Governance ("ESG") commitments and how they are integrated into the Company's business strategy. The Company's focus on creating sustainable operations, supported by empowered people and world-class governance, helps to build and grow the Company's business seamlessly.
The key initiatives taken by the Company, inter alia, with respect to the stakeholder engagement, ESG, Health & Safety of employees/workers, and progress against ESG commitments have been provided separately under various sections of this Integrated Annual Report.
The Board acknowledges its responsibility for the integrity of the report and the information contained therein.
Corporate Governance Report
In compliance with Regulation 34(3) of the Listing Regulations, a separate report on the Corporate Governance, as stipulated under the Listing Regulations is presented in a separate section forming part of this Integrated Annual Report.
Business Responsibility and Sustainability Report
In compliance with Regulation 34(2)(f) of the Listing Regulations, the Business Responsibility and Sustainability Report ("BRSR") on the environmental, social, and governance disclosures, including BRSR Core consisting of Key Performance Indicators as stipulated under the Listing Regulations is presented in a separate section forming part of this Integrated Annual Report.
ANNUAL RETURN
In accordance with Section 92(3) read with Section 134(3)(a) of the Act and the Companies (Management and Administration) Rules, 2014, the Annual Return of the Company as of 315t March 2024 in Form MGT-7, is available on the Company's website at https://www.asianDaints.conn/AnnualReDorts.htnnl.
The Annual Return will be submitted to the Registrar of Companies within the timelines prescribed under the Act.
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 ("the 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 Committee 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. Further, the Policy also gives shelter to contract workers, probationers, temporary employees, trainees, apprentices of the Company and any person visiting the Company at its office.
The Company periodically conducts sessions for employees across the organisation to build awareness about the Policy and the provisions of the Prevention of Sexual Harassment Act.
Complaints of sexual harassment received during the financial year 2023-24 by the Company were investigated in accordance with the procedures prescribed and adequate steps were taken to resolve them. Further details with respect to the complaints of sexual harassment are provided in the Report on Corporate Governance forming part of this Integrated Annual Report.
The Company's Policy for prevention of sexual harassment is available on the Company's website at https://www.asianDaints.conn/POSHPolicv.htnnl.
REGISTRAR AND SHARE TRANSFER AGENT
Pursuant to an Order dated 18th December 2023 passed by the Mumbai Bench of the National Company Law Tribunal, TSR Consultants Private Limited, Registrar and Share Transfer Agent of the Company has been amalgamated with Link Intime India Private Limited ("LIIPL") with effect from 22nd December 2023.
LIIPL is the Registrar and Share Transfer Agent of the Company.
SHARE CAPITAL
During the financial year 2023-24, there was no change in the authorised, issued, subscribed, and paid-up share capital of the Company.
Confirmations:
a. During the year under review, the Company has not:
i) issued any shares, warrants, debentures, bonds, or any other convertible or non-convertible securities.
ii) issued equity shares with differential rights as to dividend, voting or otherwise.
iii) issued any sweat equity shares to its Directors or employees.
iv) made any change in voting rights.
v) reduced its share capital or bought back shares.
vi) changed the capital structure resulting from restructuring.
vii) failed to implement any corporate action.
b. The Company's securities were not suspended for trading during the year.
c. The disclosure pertaining to the explanation for any deviation or variation in connection with certain terms of a public issue, rights issue, preferential issue, etc., is not applicable to the Company.
UNCLAIMED DIVIDEND
I n terms of applicable provisions of the Act read with the Investor Education and Protection Fund Authority (Accounting, Audit, Transfer and Refund) Rules, 2016 ("IEPF Rules"), unclaimed dividend amounting to Rs 2.51 crores was transferred by the Company to the Investor Education and Protection Fund ("IEPF"), established by the Government of India, during the year under review.
Further, 8,32,780 shares were transferred to the demat account of the IEPF Authority during the year under review, in accordance with the IEPF Rules, as the dividend(s) has not been claimed by the shareholders for 7 consecutive years or more.
The details of unclaimed dividend lying in the unclaimed dividend accounts of the Company and details of resultant benefits arising out of shares already transferred to IEPF as on 315t March 2024 is provided in the General Shareholder Information section forming part of this Integrated Annual Report.
SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS
There are no significant and material orders passed by the Regulators or Courts or Tribunals impacting the going concern status of the Company and its operations in the future.
The Competition Commission of India ("Commission") had passed a prima facie Order dated 14th January 2020 directing the Director General ("DC") to conduct an investigation against the Company, under the provisions of Section 26(1) of the Competition Act, 2002 ("the Competition Act"). Based on this Order, the DC initiated the investigation against the Company and on 17th December 2021 submitted its consolidated Investigation Report to the Commission.
The Hon'ble Commission vide its Order dated 8th September 2022 had noted that the Company has not contravened any charging sections i.e., Sections 3(4) and 4 read with Section 3(1) of the Competition Act. The said Order of the Hon'ble Commission has been appealed in the National Company Law Appellate Tribunal by the complainants.
LOANS AND INVESTMENTS
Details of loans, guarantees and investments covered under the provisions of Section 186 of the Act read with the Companies (Meetings of Board and its Powers) Rules, 2014, as on 315t March 2024, are set out in Note no. 35(B) to the standalone financial statements of the Company.
DEPOSITS
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.
COMPLIANCE WITH SECRETARIAL STANDARDS
The Company has complied with Secretarial Standards issued by ICSI on Meetings of the Board of Directors, General Meetings, and voluntarily the Secretarial Standards on Dividend and Report of the Board of Directors.
CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUTGO
The information on the conservation of energy, technology absorption and foreign exchange earnings and outgo as stipulated under Section 134(3)(m) of the Act read with Rule 8 of the Companies (Accounts) Rules, 2014, is set out in the Annexure (F) to this Report.
AWARDS AND ACCOLADES
The details of some of the significant accolades earned by the Company during the financial year 2023-24 have been provided as part of this Integrated Annual Report.
OTHER DISCLOSURES
During the year under review:
a. No credit rating has been obtained by the Company with respect to its securities. Further, the details of the credit rating obtained by the Company with respect to its long-term and short-term borrowings have been provided separately in the General Shareholder Information section of this Integrated Annual Report.
b. No application has been made under the Insolvency and Bankruptcy Code, 2016. Hence, the requirement to disclose the details of the application made or any proceeding pending under the said Code during the year along with their status as at the end of the financial year is not applicable.
c. The requirement to disclose the details of the difference between the amount of the valuation done at the time of one-time settlement and the valuation done while taking a loan from the Banks or Financial Institutions along with the reasons thereof, is not applicable.
APPRECIATION
The Board of Directors places on record sincere gratitude and appreciation for all the employees of the Company. Our consistent growth has been possible through 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.