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Company Information

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ASIAN PAINTS LTD.

22 April 2024 | 12:34

Industry >> Paints/Varnishes

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ISIN No INE021A01026 BSE Code / NSE Code 500820 / ASIANPAINT Book Value (Rs.) 166.73 Face Value 1.00
Bookclosure 03/11/2023 52Week High 3568 EPS 42.81 P/E 66.31
Market Cap. 272316.25 Cr. 52Week Low 2766 P/BV / Div Yield (%) 17.03 / 0.90 Market Lot 1.00
Security Type Other

NOTES TO ACCOUNTS

You can view the entire text of Notes to accounts of the company for the latest year
Year End :2023-03 

Description of nature and purpose of each reserve :

Capital Reserve -

a. Capital reserve of ' 5000/- was created on merger of ' Pentasia Chemicals Ltd ' with the Company, pursuant to scheme of Rehabilitation-cum-Merger sanctioned by Board of Industrial and Financial Reconstruction in the financial year 1995-96.

b. Capital Reserve of ' 44.38 crores was created on merger of Asian Paints (International) Limited, Mauritius, wholly owned subsidiary of the Company, with the Company as per the order passed by the National Company Law Tribunal.

Capital Redemption Reserve - This reserve was created for redemption of preference shares in the financial year 1989-90. The preference shares were redeemed in the financial year 1990-91.

General Reserve - General reserve is created from time to time by way of transfer of profits from retained earnings for appropriation purposes. General reserve is created by a transfer from one component of equity to another and is not an item of other comprehensive income.

Remeasurement of defined benefit plans -This represents the cumulative gains and losses arising on the remeasurement of defined benefit plans in accordance with Ind AS 19 that have been recognised in other comprehensive income.

Share based payment reserve - This represents the fair value of the stock options granted by the Company under the 2021 Plan accumulated over the vesting period. The reserve will be utilised on exercise of the options.

Treasury shares - This represents cost incurred by the Company to purchase its own equity shares from secondary market through the Company's ESOP trust for issuing the shares to the eligible employees on exercise of stock options granted under the 2021 Plan.

Trust Reserve - This represents net income of the ESOP trust.

Debt instruments through OCI - This represents the cumulative gains and losses arising on the revaluation of debt instruments measured at FVTOCI that have been recognised in other comprehensive income, net of amounts reclassified to profit or loss when such assets are disposed off and impairment losses on such instruments.

Equity instruments through OCI - This represents the cumulative gains and losses arising on the revaluation of equity instruments measured at FVTOCI, under an irrevocable option, net of amounts reclassified to retained earnings when such assets are disposed off.

The amounts receivable from customers become due after expiry of credit period which on an average ranges around from 30 to 45 days. There is no significant financing component in any transaction with the customers.

The Company provides agreed upon performance warranty for selected range of products and services. The amount of liability towards such warranty is immaterial.

The Company does not have any remaining performance obligation as contracts entered for sale of goods are for a shorter duration and sale of service contracts are measured as per output method.

The Company has recognised revenue of ' 45.00 crores (31st March, 2022 : ' 14.61 crores) from the amounts included under advance received from customers at the beginning of the year.

(ii) Financial Instrument measured at Amortised Cost

The carrying amount of Financial assets and financial liabilities measured at amortised cost in the Standalone Financial Statements are a reasonable approximation of their fair values since the Company does not anticipate that the carrying amounts would be significantly different from the values that would eventually be received or settled.

(iii) Invesments in debentures or bonds measured at FVTOCI

The debentures or bonds are fair valued using various market observable inputs.

(iv) Gross obligation towards Earnout

The gross obligation is valued using agreed financial milestones of Obgenix Software Private Limited for the financial year 2022-23 as per the share purchase agreement. The value is not exposed to any variability.

1) Market Risk (Contd.) a) Interest Rate Risk

Interest rate risk is the risk that the Fair value or Future cash flows of a Financial instrument will Fluctuate because of changes in market interest rates. Since the Company has insignificant interest bearing borrowings, the exposure to risk of changes in market interest rates is minimal. The Company has not used any interest rate derivatives.

b) Foreign Currency Risk

Foreign currency risk is the risk that the fair value or future cash flows of an exposure will fluctuate due to changes in foreign exchange rates. The Company enters into forward exchange contracts with an average maturity of less than one month to hedge against its foreign currency exposures relating to the recognised underlying liabilities and firm commitments. The Company's policy is to hedge its exposures above predefined thresholds from recognised liabilities and firm commitments that fall due in 20-30 days. The Company does not enter into any derivative instruments for trading or speculative purposes.

NOTE 29(C) : FINANCIAL RISK MANAGEMENT - OBJECTIVES AND POLICIES

The Company's Financial assets comprise mainly of investments, cash and cash equivalents, other balances with banks, trade receivables and other receivables and financial liabilities comprise mainly of borrowings, trade payables and other payables.

The Company is exposed to Market risk, Credit risk and Liquidity risk. The Board of Directors ('Board') oversees the management of these financial risks through its Risk Management Committee. The Risk Management Policy of the Company formulated by the Risk Management Committee and approved by the Board, states the Company's approach to address uncertainties in its endeavour to achieve its stated and implicit objectives. It prescribes the roles and responsibilities of the Company's management, the structure for managing risks and the framework for risk management. The framework seeks to identify, assess and mitigate financial risks in order to minimize potential adverse effects on the Company's financial performance. The Board has taken all necessary actions to mitigate the risks identified basis the information and situation present.

The following disclosures summarize the Company's exposure to financial risks and information regarding use of derivatives employed to manage exposures to such risks. Quantitative sensitivity analyses have been provided to reflect the impact of reasonably possible changes in market rates on the financial results, cash flows and financial position of the Company.

1) Market Risk

Market risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market prices. Market risk comprises three types of risks : interest rate risk, currency risk and other price risk. Financial instruments affected by market risk include borrowings, investments, trade payables, trade receivables and derivative financial instruments.

c) Other Price Risk

Other price risk is the risk that the fair value of a financial instrument will fluctuate due to changes in market traded price. Other price risk arises from financial assets such as investments in equity instruments and bonds. The Company is exposed to price risk arising mainly from investments in equity instruments recognised at FVTOCI. As at 31st March, 2023, the carrying value of such equity instruments recognised at FVTOCI amounts to ' 586.31 crores (Previous year - ' 496.13 crores). The details of such investments in equity instruments are given in Note 5(A)(b).

The Company is also exposed to price risk arising from investments in bonds and debentures recognised at FVTOCI. As at 31st March, 2023, the carrying value of such instruments recognised at FVTOCI amounts to ' 243.23 crores (Previous year - ' 78.80 crores). These being debt instruments, the exposure to risk of changes in market rates is minimal. The details of such investments in bonds and debentures are given in Note 5C.

The Company is mainly exposed to change in market rates of its investments in equity investments recognised at FVTOCI. A sensitivity analysis demonstrating the impact of change in market prices of these instruments from the prices existing as at the reporting date is given below :

If the equity prices had been higher/lower by 10% from the market prices existing as at 31st March, 2023, Other Comprehensive Income for the year ended 31st March, 2023 would increase by ' 51.80 crores (Previous year - ' 43.85 crores) and decrease by ' 51.80 crores (Previous year - ' 46.74 crores) respectively with a corresponding increase/decrease in Total Equity of the Company as at 31st March, 2023. 10% represents management's assessment of reasonably possible change in equity prices.

d) Commodity Rate Risk

Material cost is the largest cost component for the Company, thus exposing it to the risk of price fluctuations based on the supply and demand conditions of those materials. Commodity price risk exposure is evaluated and managed through operating procedures and sourcing policies. The Company has put in place a mix of long-term and short-term mitigation plans. The long-term price view consisted of identifying single vendor dependency and finding alternate materials or vendors for the same. The Company also has a robust process of estimating the prices at a quarterly frequency, analysing deviations, if any, and taking short-term corrective measures in addition to altering the outlook for the long-term, if required. The Company also leverages its financial resources to modify the inventory levels as required keeping in mind the price outlook in the near term. Similarly, the Company modifies the contract period in negotiations with the vendors to either lock in prices or to keep them open based on the expected price movements. During the year ended 31st March, 2023 and 31st March, 2022, the Company had not entered into any derivative contracts to hedge exposure to fluctuations in commodity prices.

2) Credit Risk

Credit risk refers to risk that a counterparty will default on its contractual obligations resulting in financial loss to the Company. Credit risk arises primarily from financial assets such as trade receivables, investment in mutual funds, derivative financial instruments, other balances with banks and other receivables. The Company's exposure to credit risk is disclosed in note 5 (except equity shares, bonds and debentures) 6, 10 ,11A and 11B.

The Company has adopted a policy of only dealing with counterparties that have sufficiently high credit rating. The Company's exposure and credit ratings of its counterparties are continuously monitored and the aggregate value of transactions is reasonably spread amongst the counterparties.

Credit risk arising from investment in mutual funds, derivative financial instruments, term deposits and other balances with banks is limited and there is no collateral held against these because the counterparties are banks and recognised financial institutions with high credit ratings assigned by the international credit rating agencies.

The average credit period ranges from 30 to 45 days on sales of products. Credit risk arising from trade receivables is managed in accordance with the Company's established policy, procedures and control relating to customer credit risk management. Credit quality of a customer is assessed based on a detailed study of creditworthiness and accordingly individual credit limits are defined/modified. The concentration of credit risk is limited due to the fact that the customer base is large. There is no customer representing more than 5% of the total balance of trade receivables.

3) Liquidity Risk

Liquidity risk is the risk that the Company will encounter difficulty in raising funds to meet commitments associated with financial instruments that are settled by delivering cash or another financial asset. Liquidity risk may result from an inability to sell a financial asset quickly at close to its fair value.

The Company has an established liquidity risk management framework for managing its short term, medium term and long term funding and liquidity management requirements. The Company's exposure to liquidity risk arises primarily from mismatches of the maturities of financial assets and liabilities. The Company manages the liquidity risk by maintaining adequate funds in cash and cash equivalents. The Company also has adequate credit facilities agreed with banks to ensure that there is sufficient cash to meet all its normal operating commitments in a timely and cost-effective manner.

The Company believes that its liquidity position (' 4,269.98 crores as at 31st March 2023 (Previous Year -' 3,574.94 crores)), anticipated future internally generated funds from operations, and its fully available revolving undrawn credit facility will enable it to meet its future known obligations in the ordinary course of business. However, if liquidity needs were to arise, the Company believes it has access to financing arrangements, value of unencumbered assets, which should enable it to meet its ongoing capital, operating, and other liquidity requirements.

The liquidity position of the Company mentioned above, includes :

i) Cash and cash equivalents as disclosed in the Cash Flow Statement

ii) Current/ Non-Current term deposits as disclosed in Other Financial Assets and Other Balances with Banks

iii) Investments in debentures or bonds (including interest accrued on the same)

The Company's liquidity management process as monitored by management, includes- Day to day funding, managed by monitoring future cash flows to ensure that requirements can be met;

- Maintaining rolling forecasts of the Company's liquidity position on the basis of expected cash flows;

- Maintaining diversified credit lines.

For the purpose of the Company's capital management, capital includes issued capital and all other equity reserves attributable to the equity shareholders of the Company. The primary objective of the Company when managing capital is to safeguard its ability to continue as a going concern and to maintain an optimal capital structure so as to maximise shareholder value.

As at 31st March, 2023 and 31st March, 2022, the Company has only one class of equity shares and has low debt. Consequent to such capital structure, there are no externally imposed capital requirements. In order to maintain or achieve an optimal capital structure, the Company allocates its capital for distribution as dividend or re-investment into business based on its long term financial plans.

a. Contingent Liabilities

(' in Crores)

As at 31.03.2023

As at 31.03.2022

Claims against the Company not acknowledged as debts

i. Tax matters in dispute under appeal

Income Tax

247.17

242.62

Value Added Tax, Goods & Service Tax, Sales Tax, Entry Tax, Octroi & Trade Tax

154.15

159.20

Excise, Service Tax & Customs

15.17

14.86

ii. Labour related disputes

31.53

21.58

iii. Disputes relating to property matters

25.07

22.52

iv. Others (includes disputes on matters pertaining to rent deposits, electricity, consumer cases, etc)

17.93

18.42

Total

491.02

479.20

The above claims are pending before various Appellate Authorities. The management including its advisors expect that its position will likely be upheld on ultimate resolution and will not have a material adverse effect on the Company's financial statement.

b. Commitments

(' in Crores)

As at 31.03.2023

As at 31.03.2022

1. Estimated amount of contracts remaining to be executed on capital account and not provided for

i. Towards Property, Plant and Equipment

1,644.83

626.12

ii. Towards Intangible Assets

28.59

15.27

2. Letters of Credit and Bank guarantees issued by bankers towards procurement of goods and services and outstanding as at year end

80.07

104.84

NOTE 35 : EMPLOYEE BENEFITS

(1) Post-employment benefits* :

(a) Defined benefit gratuity plan (Funded)

The Company has defined benefit gratuity plan for its employees, which requires contribution to be made to a separately administered fund. It is governed by the Payment of Gratuity Act, 1972. Under the Act, all employees who have completed five years of service are entitled to specific benefit. The level of benefits provided depends on the member's length of service and salary at retirement age. There is no separate contribution by the employee in the fund. The fund has the form of a trust and it is governed by the Board of Trustees. The Board of Trustees is responsible for the administration of the plan assets including investment of the funds in accordance with the norms prescribed by the Government of India.

Each year, the Board of Trustees and the Company review the level of funding in the Trust. Such a review includes the asset-liability matching strategy and assessment of the investment risk. The Company (employer) contributes to the fund based on the results of this annual review and ensures that the trust is adequately funded. Generally, it aims to have a portfolio mix of sovereign debt instruments, debt instruments of Corporates and equity instruments. The Company aims to keep annual contributions relatively stable at a level such that no significant plan deficits (based on valuation performed) will arise.

Every two years an Asset-Liability-Matching study is performed in which the consequences of the investments are analysed in terms of risk and return profiles. The Board of Trustees, based on the study, take appropriate decisions on the duration of instruments in which investments are done. As per the latest study, there is no Asset-Liability-Mismatch. There has been no change in the process used by the Company to manage its risks from prior periods.

As the plan assets include significant investments in quoted debt and equity instruments, the Company is exposed to the risk of impacts arising from fluctuation in interest rates and risks associated with equity market.

Fair value of the Company's own transferable financial instruments held as plan assets : NIL

(b) Defined benefit pension plan (Unfunded)

The Company operates a defined benefit pension plan for certain specified employees and is payable upon the employee satisfying certain conditions, as approved by the board of directors.

(c) Defined benefit post-retirement medical benefit plan (Unfunded)

The Company operates a defined post-retirement medical benefit plan for certain specified employees and payable upon the employee satisfying certain conditions.

Aforesaid post-employment benefit plans typically expose the Company to actuarial risks such as : investment risk, interest rate risk, longevity risk and salary risk.

The sensitivity analyses presented above may not be representative of the actual change in the defined benefit obligation as it is unlikely that the change in assumptions would occur in isolation of one another as some of the assumptions may be correlated. Furthermore, in presenting the above sensitivity analysis, the present value of the defined benefit obligation has been calculated using the projected unit credit method at the end of the reporting period, which is the same as that applied in calculating the defined benefit obligation liability recognised in the Balance Sheet.

The average duration of the defined benefit plan obligation at the end of the reporting period is 10.49 years (Previous year -10.46 years).

The Company expects to make a contribution of ' 26.77 crores (Previous year - ' 19.66 crores) to the defined benefit plans during the next financial year.

(d) Provident Fund

The Provident Fund assets and liabilities are managed by 'Asian Paints Office Provident Fund' and 'Asian Paints Factory Employees Provident Fund' in line with The Employees' Provident Fund and Miscellaneous Provisions Act, 1952.

The plan guarantees minimum interest at the rate notified by the Provident Fund Authorities. The contribution by the employer and employee together with the interest accumulated thereon are payable to employees at the time of separation from the Company or retirement, whichever is earlier. The benefit vests immediately on rendering of the services by the employee. In terms of the guidance note issued by the Institute of Actuaries of India for measurement of provident fund liabilities, the actuary has provided a valuation of provident fund liability and based on the assumptions provided below, there is no shortfall as at 31st March, 2023.

Participation by all employees in provident funds plans is mandatory. Contribution to Provident Fund is made @ 12% of salary (computed in accordance with the prevalent regulations) by the employee. Similarly, the Company also contributes to the Provident Fund specified percentage of salary as per the prevalent regulations. Employees have the option to voluntarily contribute a higher amount.

The Company contributed ' 21.26 crores (Previous year - ' 19.41 crores) towards Asian Paints Office Provident Fund during the year ended 31st March, 2023. The Company contributed ? 13.44 crores (Previous year - ' 11.56 crores) towards Asian Paints Factory Employees Provident Fund during the year ended 31st March, 2023.

(2) Other Long term employee benefits :

Annual Leave and Sick Leave assumptions

The liability towards compensated absences (annual leave and sick leave) for the year ended 31st March, 2023 based on actuarial valuation carried out by using Projected Accrued Benefit Method resulted in increase in liability by ' 9.80 crores (Previous year - increased by ' 12.42 crores).

Further, the 2021 Plan replaced the existing Deferred Incentive Scheme (which provided for deferred cash payouts based on performance of the employees and satisfaction of vesting conditions). Pursuant to launch of 2021 Plan, the eligible employees were given option to convert existing deferred incentive benefit for FY 2020-21 into ESOPs. Accordingly, stock options were granted to those employees opting for ESOPs.

The Administrator approved secondary purchase of shares equivalent to the options granted in August 2021 through Asian Paints Employees Stock Ownership Trust ("ESOP Trust" or "Trust") which is shown as treasury shares in the Statement of Changes in Equity.

(3) Employee share based payment plans

During the year ended 31st March, 2022, the Company implemented Asian Paints Employee Stock Option Plan 2021 ("2021 Plan"). The plan was approved by the shareholders in the Company's 75th AGM held on 29th June, 2021. The 2021 Plan enables grant of stock options to the eligible employees of the Company and its subsidiaries not exceeding 25,00,000 Shares, which is 0.26 % of the paid up equity share capital of the Company as on 12th May, 2021. Further, the stock options to any single employee under the Plan shall not exceed 5,00,000 Shares of the Company during the tenure of the Plan, subject to compliance with Applicable Law.

The options granted under 2021 Plan have a maximum vesting period of 4 years. The options granted are based on the performance of the employees during the year of the grant and their continuing to remain in service over the next 3 years. The process for determining the eligibility of employees for the grant of stock options under the 2021 Plan shall be determined by the Nomination and Remuneration Committee (Administrator of the 2021 Plan) in consultation with Managing Director & CEO and based on employee's grade, performance rating and such other criteria as may be considered appropriate. The employees shall be entitled to receive one equity share of the Company on exercise of each stock option, subject to performance of the employees and continuation of employment over the vesting period. The exercise price for stock options granted are at a discount of 50% to the Reference Share Price (the average of the daily high and low of the volume weighted average prices of the Shares quoted on a recognised stock exchange during the 22 trading days preceding the day on which the grant is made) of the shares of the Company as defined under 2021 Plan.

There are no loans and advances in the nature of loans given to subsidiaries, associates and others and investment in shares of the Company by such parties as at 31st March, 2023 and 31st March, 2022.

NOTE 36(B) : DISCLOSURE AS PER SECTION 186 OF THE COMPANIES ACT, 2013

The details of loans, guarantees and investments under Section 186 of the Companies Act, 2013 read with the Companies (Meetings of Board and its Powers) Rules, 2014 are as follows :

(i) Details of Investments made are given in Note 5(A)(a)(i) and 5(A)(a)(ii).

(ii) There are no guarantees issued or loans given by the Company as at 31st March, 2023 and 31st March, 2022.

NOTE 37 : ACQUISITIONS AND INCORPORATIONS(a) Equity infusion in Weatherseal Fenestration Private Limited :

The Company entered into Shareholders Agreement and Share Subscription Agreement entered with the promoters of Weatherseal Fenestration Private Limited ("Weatherseal") on 1st April, 2022. Weatherseal is engaged in the business of interior decoration/furnishing, including manufacturing uPVC windows and door systems.

The Company subscribed to 51% of the equity share capital of Weatherseal for a cash consideration of ' 18.8 crores on 14th June, 2022. Accordingly, Weatherseal became a subsidiary of the Company. Further, in accordance with the Shareholders Agreement and the Share Subscription Agreement, the Company has agreed to acquire further stake of 23.9% in Weatherseal Fenestration from its promoter shareholders, in a staggered manner, over the next 3 years period. The Company has also entered into a put contract for acquisition of 25.1% stake in Weatherseal.

On the day of acquisition, the Company recognised derivative asset / liability (net) for the same, initially measured at fair value and correspondingly adjusted in the cost of investment amounting to ' 1.86 crores. On 31st March, 2023, fair value of the derivative asset / liability (net) is ' 2.25 crores. Fair valuation impact of ' 0.39 crores is recognised in the Statement of Profit & Loss for the year ended 31st March, 2023 towards derivative contracts.

(b) Investment in Obgenix Software Private Limited :

The Company entered into Share Purchase Agreement and other definitive documents with the shareholders of Obgenix Software Private Limited (popularly known by the brand name of 'White Teak') on 1st April, 2022. White Teak is engaged in designing, trading or otherwise dealing in all types and description of decorative lighting products and fans, etc. In accordance with the agreement, the remaining 51% of the equity share capital would be acquired in a staggered manner.

The Company acquired 49% of the equity share capital of 'White Teak' on 2nd April, 2022 for a cash consideration of ~ ' 180 crores along with an earn out, payable after a year, subject to achievement of mutually agreed financial milestones. Accordingly, White Teak became an associate of the Company.

On the day of acquisition, the Company estimated and recognised gross obligation towards earn out for acquiring 49% stake amounting to ' 37.71 crores and derivative asset / liability (net) for acquiring the remaining 51% stake in White Teak at fair value with a corresponding adjustment in the cost of investment amounting to ' 1.32 crores.

On 31st March, 2023, fair value of earn out is ' 58.97 crores and that of derivative asset / liability (net) is ' 3.85 crores. Fair valuation impact of ' 21.26 crores and ' 5.17 crores is recognised in the Statement of Profit & Loss for the year ended 31st March, 2023 towards earn out and derivative contracts respectively.

(c) Incorporation of Asian Paints (Polymers) Limited :

On 11th January, 2023, the Company incorporated a wholly owned subsidiary named Asian Paints (Polymers) Private Limited ('APPPL') for manufacturing of Vinyl Acetate Monomer and Vinyl Acetate Ethylene Emulsion in India. The Company invested ' 200 crores in equity share capital of Asian Paints (Polymers) Private Limited in the current year, thus subscribing to 20 crores equity shares of APPPL having a face value of ' 10 each.

(d) Agreement for acquisition of stake in Harind Chemicals and Pharmaceuticals Private Limited :

The Company entered into Share Purchase Agreement and other definitive documents with the shareholders of Harind Chemicals and Pharmaceuticals Private Limited ('Harind') on 20th October, 2022 for purchase of majority stake over a period of 5 years, subject to fulfilment of certain conditions precedent in a staggered manner. Harind is a specialty chemicals company engaged in the business of nanotechnology-based research, manufacturing, and sale of a range of additives and specialized coatings.

On fulfilment of pre-condition, the acquisition would happen in the following manner :

(i) First tranche of 51% would be acquired for a consideration of ' 12.75 crores (approx.); and

(ii) Second tranche of 19% and third tranche of 20% would be acquired during the FY 2023-24 and FY 2027-28, respectively, on such consideration as agreed between the Company and the existing shareholders based on achievement of certain financial targets.

(e) Incorporation of Asian White Cement Holding Limited :

The Company has incorporated a subsidiary named Asian White Cement Holding Limited ('AWCHL') along with other partners in Dubai International Financial Centre, UAE on 2nd May, 2023 for the purpose of setting up an operating Company in Fujairah, UAE. The Company is currently in the process of infusing capital in AWCHL and will hold 70% stake.

g) Other entities where significant influence exist :

i) Post employment-benefit plan entity :

Asian Paints (I) Limited Employees' Gratuity Fund

ii) Other :

Asian Paints Office Provident Fund (Employee benefit plan)

Asian Paints Factory Employees' Provident Fund (Employee benefit plan)

Asian Paints Management Cadres' Superannuation Scheme (Employee benefit plan)


Terms and conditions of transactions with related parties :

1. The Company has been entering into transactions with related parties for its business purposes. The process followed for entering into transactions with related party is same as followed for unrelated party. Vendors are selected competitively having regard to strict adherence to quality, timely servicing and cost advantage. Further related party vendors provide additional advantages in terms of :

(a) Supplying products primarily to the Company,

(b) Advanced and innovative technology,

(c) Customization of products to suit the Company's specific requirements, and

(d) Enhancement of the Company's purchase cycle and assurance of just in time supply with resultant benefits-notably on working capital.

2 . The purchases from and sales to related parties are made on terms equivalent to and those applicable to all

unrelated parties on arm's length transactions. Outstanding balances payable and receivable at the year-end are unsecured, interest free and will be settled in cash.

3. During the year ended 31st March, 2023, the Company has recorded an amount of ' 0.22 crores due from its subsidiaries and associates (Previous year - ' 0.21 crores) as provision for doubtful receivables in Statement of Profit and Loss. As at 31st March, 2023, the provision for doubtful receivables from its subsidiaries and associates is ' 7.31 crores (Previous year - ' 7.09 crores).

During the year ended 31st March, 2023, the Company has not written off any amount against doubtful receivables (Previous year - NIL).

The assessment of receivables is undertaken in each financial year through examining the financial position of related parties, the market and regulatory environment in which related parties operate and is in accordance with the accounting policy of the Company.

NOTE 39 : SEGMENT REPORTING

The Company has Forayed into new Home Decor products and services propelling its transition From 'share of surface' to 'share of space'. Home Decor has strong synergy with the Company's core business and hence is an essential part of the Company's strategy. Considering the interlinked nature of products and services offered and the type of customers served, the resources are allocated across the Company interchangeably and business performance is reviewed as one segment. Thus, in accordance with Ind AS 108 - Segment Reporting, the Company's business segment comprises of a single reportable operating segment of "Paints and Home Decor". Accordingly, no separate segment information has been provided. The comparative figures are reported in line with the current year.

NOTE 40 :

During year ended 31st March, 2022, the Company had re-assessed the expected timing of receipt of cashflow towards subsidy receivable from the State Governments in accordance with Ind AS 109 - Financial Instruments. Accordingly, an amount of ' 53.73 crores was computed under 'expected credit loss' method and recognised as an exceptional item towards subsidy receivable for earlier years provided for time value of money in the Financial Statements for the year ended 31st March, 2022. The impact of this provision reversal / unwinding on account of passage of time has been recognised as non-operating income in the Financial Statements for the year ended 31st March, 2023.

G. Nature of CSR activities undertaken by the Company

The CSR initiatives of the Company aim towards inclusive development of the communities largely around the vicinity of its plants and registered office and at the same time ensure environmental protection through a range of structured interventions in the areas of :

(i) creating employability & enhancing the dignity of the painter/ carpenter/ plumber community

(ii) focus on water conservation, replenishment and recharge

(iii) enabling access to quality primary health care services

(iv) disaster relief measures

NOTE 43 : ADDITIONAL REGULATORY INFORMATION REQUIRED BY SCHEDULE III TO THE COMPANIES ACT, 2013

(i) The Company does not have any benami property held in its name. No proceedings have been initiated on or are pending against the Company for holding benami property under the Benami Transactions (Prohibition) Act, 1988 (45 of 1988) and Rules made thereunder.

(ii) The Company has not been declared wilful defaulter by any bank or financial institution or other lender or government or any government authority.

(iii) The Company has complied with the requirement with respect to number of layers as prescribed under Section 2(87) of the Companies Act, 2013 read with the Companies (Restriction on number of layers) Rules, 2017.

(iv) Utilisation of borrowed funds and share premium

I The Company has not advanced or loaned or invested funds to any other person(s) or entity(ies), including foreign entities (Intermediaries) with the understanding that the Intermediary shall :

(a) Directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Company (Ultimate Beneficiaries) or

(b) Provide any guarantee, security or the like to or on behalf of the ultimate beneficiaries

II The Company has not received any fund from any person(s) or entity(ies), including foreign entities (Funding Party) with the understanding (whether recorded in writing or otherwise) that the Company shall :

(a) directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Funding Party (Ultimate Beneficiaries) or

(b) provide any guarantee, security or the like on behalf of the ultimate beneficiaries

(v) There is no income surrendered or disclosed as income during the year in tax assessments under the Income Tax Act, 1961 (such as search or survey), that has not been recorded in the books of account.

(vi) The Company has not traded or invested in crypto currency or virtual currency during the year.

(vii) The Company does not have any charges or satisfaction of charges which is yet to be registered with Registrar of Companies beyond the statutory period.

NOTE 44 :

A competitor of the Company had filed a complaint with the Competition Commission of India (CCI) alleging the Company to be hindering its entry in the decorative paints market by virtue of unfair use of the Company's position of dominance in the market. The CCI had passed a prima facie Order dated 14th January, 2020 directing the Director General ("DG") to conduct an investigation against the Company under the provisions of the Competition Act, 2002. The DG submitted a detailed report to the CCI. Based on the findings of the DG's report and after hearing both the parties, the CCI passed a favourable order on 8th September, 2022 dismissing the allegations relating to abuse of dominance and anti-competitive agreements made by the competitor. The competitor has now filed an appeal against CCI's order before the National Company Law Appellate Tribunal. The said appeal is pending for hearing.

NOTE 45 :

The Financial Statements are approved for issue by the Audit Committee and the Board of Directors at their respective meetings conducted on 11th May, 2023.