Director’s Report: Dear Members, Your Directors are delighted to present the 66th Annual Report of your Company and the Audited Accounts for the financial year ended 31st March, 2012. STANDALONE FINANCIALS The Ministry of Corporate Affairs (MCA) vide notification no. S.O. 447(E) dated 28th February, 2011 amended the existing Schedule VI to the Companies Act, 1956. The Revised Schedule VI is applicable from financial year commencing from 1st April, 2011. The financial statements of your Company for the year ended 31st March, 2012 have been prepared in accordance with the Revised Schedule VI and accordingly, the previous year's figures have been reclassified/ regrouped to conform to this year's classification. Net Revenue from Operations for the standalone entity increased to Rs. 7964.16 crores from Rs. 6336.08 crores in the previous year - a growth of 25.7%. The operating profit (EBITDA) increased by 21.2%, from Rs. 1,232.16 crores to Rs. 1493.24 crores. The profit after tax for the current year is Rs. 958.39 crores as against Rs. 775.15 crores in the previous year - a growth of 23.6%. CONSOLIDATED FINANCIALS The Consolidated Net Revenue from Operations increased to Rs. 9,632.24 crores from Rs. 7722.30 crores - growth of 24.7 %. Net profit after minority interest for the group for the current year is Rs. 988.73 as against Rs. 843.24 crores in the previous year - a growth of 17.3% CONSOLIDATED ACCOUNTS The Ministry of Corporate Affairs (MCA) by General Circular No. 2/2011 dated 8th February, 2011, had granted an exemption to companies from complying with Section 212 of the Companies Act, 1956, provided such companies fulfill conditions mentioned in the said circular. Accordingly, the Board of Directors of your Company at its meeting held on 8th May, 2012, approved the Audited Consolidated Financial Statements for the financial year 2011-12 in accordance with the Accounting Standard (AS-21) and other Accounting Standards issued by the Institute of Chartered Accountants of India as well as Clause 32 of the Listing Agreement, which include financial information of all its subsidiaries, and forms part of this report. The Consolidated Financial Statements of your Company for the financial year 2011-12, have been prepared in compliance with applicable Accounting Standards and where applicable Listing Agreement as prescribed by the Securities and Exchange Board of India. The annual accounts and financial statements of the subsidiary companies of your Company and related detailed information shall be made available to members on request and are open for inspection at the Registered Office of your Company. Your Company has complied with all the conditions as stated in the circular and accordingly has not attached the financial statements of its subsidiary Companies for the financial year 2011-12. A statement of summarized financials of all subsidiaries of your Company including capital, reserves, total assets, total liabilities, details of investment, turnover, etc., pursuant to the General Circular issued by the Ministry of Corporate Affairs, forms part of this report. DIVIDEND During the financial year 2011-12, your Company declared an interim dividend of Rs. 9.50 (Rupees Nine and Paise Fifty only) per equity share in the month of October, 2011 and paid it in the month of November, 2011. In addition, your Directors recommend payment of Rs. 30.50 (Rupees Thirty and Paise Fifty only) per equity share as the final dividend for the financial year ended 31st March, 2012. If approved, the total dividend (interim and final dividend) for the financial year 2011-12 will be Rs. 40 (Rupees Forty only) per equity share; Rs. 32 (Rupees Thirty Two only) per equity share was paid as dividend for the previous year. TRANSFER TO RESERVES Your Company proposes to transfer Rs. 412.46 crores to the general reserve. An amount of Rs. 700.00 crores is proposed to be retained in the statement of profit and loss. MANAGEMENT DISCUSSION AND ANALYSIS A detailed review of operations, performance and future outlook of your Company and its businesses is given in the Management Discussion and Analysis, which forms part of this Report. CORPORATE GOVERNANCE Your Company is compliant with the requirements of Clause 49 of the Listing Agreement. Necessary disclosures have been made in this regard in the Corporate Governance Report. A certificate from the Joint Statutory Auditors of your Company regarding compliance with the requirements of Corporate Governance as stipulated under Clause 49 of the Listing Agreement is attached to this report. The report on Corporate Governance is included and forms part of this report. SECRETARIAL AUDIT Dr. K. R. Chandratre, Practicing Company Secretary conducted Secretarial Audit pursuant to provisions of Section 383A of the Companies Act, 1956, for the financial year 2011-12. Dr. K. R. Chandratre has submitted the Report confirming compliance with the applicable provisions of Companies Act, 1956 and other rules and regulations issued by SEBI/other regulatory authorities for Corporate law. EXPANSION OF THE JOINT VENTURE WITH PPG INDUSTRIES INC., USA. During the FY 2011-12, your Company has filed a Composite Scheme of restructuring under Section 391394 of the Companies Act, 1956 and other applicable provisions with the Hon'ble High Court of Judicature of Bombay. The Scheme envisages merger of AP Coatings Ltd (100% subsidiary of your Company) and a wholly owned Indian subsidiary of PPG Industries Securities Inc., USA (PPG) i.e PPG Coatings India Private Limited into Asian PPG Industries Limited (APPG), 50:50 joint venture between your company and PPG and thereafter, certain businesses will demerge into Asian Paints PPG Limited (APPL), new 50:50 joint venture between your Company and PPG. As informed in the last year's Annual Report, the new Joint venture will service the protective, industrial powder coatings, industrial containers and light industrial coatings markets. Your Company will have effective management control in APPL while PPG will take lead in APPG. This would enable utilization of respective strengths in order to capture the growth in infrastructure development and globally driven markets in India. FIXED DEPOSITS Your Company has not accepted any fixed deposits during the year 2011-12 and there are no outstanding fixed deposits from the public as on the Balance Sheet date. INSURANCE All the insurable interests of your Company including inventories, buildings, plant and machinery and liabilities under legislative enactments are adequately insured. CONSERVATION OF ENERGY AND TECHNOLOGY ABSORPTION The information on Conservation of Energy and Technology absorption by your Company as per Section 217(1)(e) of the Companies Act, 1956 read with the Companies (Disclosure of particulars in the report of the Board of Directors) Rules, 1988, are given as Annexure to this report in Form 'A' and 'B', respectively. FOREIGN EXCHANGE EARNINGS AND OUTGO Details of expenditure and earnings in foreign currencies are given under Note 34 and 35 to the financial statements. PERSONNEL In terms of the provisions of Section 217 (2A) of the Companies Act, 1956, read with the Companies (Particulars of Employees) Rules, 1975 as amended, names and other particulars of employees are required to be attached to this report. However, as per the provisions of Section 219(1)(b) (iv) of the Companies Act, 1956, the Report and Annual Accounts of your Company sent to the shareholders do not contain the said annexure. Any member desirous of obtaining a copy of the said annexure may write to your Company Secretary at the Registered Office of the Company. DIRECTORS' RESPONSIBILITY STATEMENT Pursuant to Section 217(2AA) of the Companies Act, 1956, the Directors hereby confirm that: i. In preparation of the annual accounts, the applicable accounting standards have been followed; ii. The accounting policies have been selected and applied consistently and the judgments and estimates made, are reasonable and prudent, so as to give a true and fair view of the state of affairs of the Company as on 31st March, 2012 and of the profit and loss of the Company for that period; iii. Proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956, for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; and iv. The annual accounts have been prepared on a going concern basis. DIRECTORS The term of Mr. P M Murty as Managing Director & CEO came to an end on 31st March, 2012 and consequently he ceased to be a Director on the Board of your Company. The Board has placed on its record a deep sense of appreciation for the valuable contributions rendered by Mr. P M Murty during his tenure of three years. The Board appointed Mr. K B S Anand as an Additional Director in accordance with Section 260 of the Companies Act, 1956 with effect from 1st April, 2012 and as Managing Director & CEO with effect from 1st April, 2012 to 31st March, 2015. In accordance with the provisions of the Companies Act, 1956 and the Articles of Association of the Company, Mr. Ashwin Choksi, Mr. Ashwin Dani, Mr. Abhay Vakil and Dr. S Sivaram retire by rotation at the conclusion of the forthcoming Annual General Meeting and being eligible, offer themselves for re-appointment. Appropriate resolutions for their re-appointment are being placed before you for your approval at the ensuing Annual General Meeting. The brief resume of the aforesaid Directors and other information have been detailed in the Notice. Your Directors recommend their reappointment as Directors of your Company. AUDITORS M/s. Shah & Co., Chartered Accountants and M/s. B S R & Associates, Chartered Accountants, Joint Auditors of your Company are due for retirement at the ensuing Annual General Meeting and are eligible for re-appointment. Your Directors recommend their re-appointment for the ensuing year. The Statutory Auditors of your Company have submitted a certificate to your Company that they have subjected themselves for the peer review process of the Institute of Chartered Accountants of India for the financial year 2011-12. COST AUDITOR Pursuant to the direction from the Ministry of Corporate Affairs for appointment of Cost Auditors, your Board has reappointed Ms. Ketki Visariya, as the Cost Auditor of your Company for the financial year 2011-12 to conduct the audit of the cost records of the Company. The Cost Audit report for the FY 2010-11 due on 27th September, 2011 was filed by the Cost Auditor on 3rd August, 2011. Further, for the FY 2011-12, due date for submission of Cost Audit Report is 27th September, 2012. APPRECIATION Your Directors take this opportunity to thank and place on record their appreciation for all the employees at all levels for their hard work and dedication during the year. Your Directors sincerely convey their appreciation to customers, shareholders, vendors, bankers, business associates, regulatory and government authorities for their consistent support. For and on behalf of the Board Ashwin Choksi Chairman Place: Mumbai Date: 8th May, 2012 |