AN ORGANISATION STUDY

AT

Kansai Nerolac Paints Ltd

Chennai

A PROJECT REPORT SUBMITTED BY

Alex Asirvatham R
(Reg. No 2887024)

IN PARTIAL FULFILLMENT OF THE REQUIREMENTS FOR THE AWARD OF THE DEGREE OF

MASTER OF BUSINESS ADMINISTRATION

OF MANONMANIAM SUNDARANAR UNIVERSITY, TIRUNELVELI

DEPARTMENT OF MANAGEMENT STUDIES

NESAMONY MEMORIAL CHRISTIAN COLLEGE, MARTHANDAM, KANYAKUMARI DISTRICT
2008-2010

CERTIFICATE

This is to certify that the project study entitled AN ORGANISATIONAL STUDY AT KANSAI NEROLAC PAINTS LTD, CHENNAI is a bonafide work done by ALEX ASIRVATHAM R, Reg. No.2887024 and submitted in partial fulfillment of the award of degree in Master of business Administration, before Manonmaniam Sundaranar University, Tirunelveli.

Faculty Guide

Head of the Department

External Guide 1. 2.

DECLARATION

I Alex Asirvatham R hereby declare that the project Organizational Study at Kansai Nerolac Paints Ltd, Chennai submitted in partial fulfillment of the award of the Master of Business Administration Degree of the Manonmaniam Sundaranar University, Tirunelveli, has been carried out by me under the guidance and supervision of Prof. Shini MBA., faculty of MBA Department, Nesamony Memorial Christian College, Marthandam.

It has also not being submitted by me or anybody for the award of any other degree or diploma of this or any other institution earlier.

Marthandam Date: ALEX ASIRVATHAM R

ACKNOWLEDGEMENT

First of all, I thank Lord Almighty for his abundant blessings bestowed upon me for the successful completion of my organization study. I am extremely grateful to my beloved parents for their excellent encouragement and support without which I would be what I am today. I extend my heartfelt thanks to Prof C.T.SAM LUTHER, Head of the Department, for encouraging me to go for this organization study. I would like to extend my heartfelt gratitude to Mr. Rajasekaran HR Manager, Mr. Anandh Babu HR, and Mr. Sugumar HR, for guiding me throughout the study and sharing his valuable time for providing information and guidance for my endeavor. I would like to thank all the department heads and management staff who helped me directly or indirectly for getting information about each department. I express my thanks to my friends for encouraging and supporting in every part of my career.

ALEX ASIRVATHAM R

CONTENT
S.No. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 Topic Introduction Objectives of the study Methodology Scope of the study Industry Profile Company Profile Organization Structure Material Control Sales & Distribution Control Review of Annual Accounts SWOT Analysis Corporate Social Responsibility Future Plans Conclusion Page No.

INTRODUCTION

Colour has fascinated culture throughout history, every age and every region has produced dyes and pigment depending on the available resources. Colour has been with us for more than 20,000 years. Evidence survives in early cave paintings and the ancient Chinese are considered to have brought its manufacture and use to a state of perfection tens of thousands of years ago.

OBJECTIVES OF THE STUDY

The objectives of the study are:

 To familiarize with business organization. Getting practical experience regarding the organizational function. To learn about the policies and functions of the organization. To understand the culture in the organization and its effect on employees. To get industrial exposure and experience. To understand the production and marketing methods.

METHODOLOGY

This study was undertaken by visiting the Plant location of Kansai Nerolac Paints Limited, Perungudi, Chennai and spanned over a period of one

month. The information was collected by interacting and interviewing with the concerned personnel of various functional departments.

The methodology used for the study is through the collection of Primary data is collected through direct observation and live discussion with the managers and the staff. Secondary data is collected annual reports, business journals, existing records and also from the website of the company.

SCOPE OF THE STUDY

The study is mainly based on the details collected from each department. It provides a better understanding at functional level of each department i.e. Purchase, materials, production, marketing, finance and human resource management. Each and every activities of the company is studied very carefully with the data available.

INDUSTRIAL PROFILE The Indian paint industry is an Rs 49 billion sector. The demand for paints is relatively price-elastic but is linked to the industrial and economical growth. The per capita consumption of paints in India is very low at 0.5 kg per

annum if compared with 4 kgs in the South East Asian nations and 22 kgs in developed countries. The global average per capita consumption is 15 kg. In India the organised sector controls 70 percent of the total market with the remaining 30 percent being in the hands of nearly 2000 small-scale units. In India the industrial paint segment accounts for 30 percent of the paint market while the decorative paint segment accounts for 70 per cent of paints sold in India. In most developed countries, the ratio of decorative paints vis- -vis industrial paints is around 50:50. All the industry majors have a vast dealership network and are required to maintain high inventory levels. Most of the paint leaders have technical tie-ups with global paint leaders.

Sector comments Paint is a mixture of four elements - solvents, binders, pigments and additives. Solvents give the paint a liquid flow while the binder binds it to the

surface. Pigments impart colour and opacity to the paint and the additives give it special resistance properties. Sector trends The recession in the construction and automobile sector had thrown in shades of grey across the Industry spectrum, but the revival in these sectors is cause for cheer for the paint industry as well. The balance sheets of the industry majors are now painted with bright colours. Sector specifics On product lines, paints can be differentiated into decorative or architectural paints and industrial paints. While the former caters to the housing sector, the automotive segment is a major consumer of the latter. Decorative paints can further be classified into premium, medium and distemper segments. Premium decorative paints are acrylic emulsions used mostly in the metros. The medium range consists of enamels, popular in smaller cities and towns. Distempers are economy products demanded in the suburban and rural markets. Nearly 20 per cent of all decorative paints sold in India are distempers and it is here that the unorganised sector has dominance. Industrial paints include powder coatings, high performance coating and automotive and marine paints. But two-thirds of the industrial paints produced in the country are automotive paints.

COMPANY PROFILE Kansai Nerolac Paints Limited embarked their journey in 1920 as Gahagan Paints and Varnish Co. Ltd. at Lower Parel in Bombay. In 1930, three British companies merged to formulate Lead Industries Group Ltd. In 1933, Lead Industries Group Ltd. acquired entire share capital of Gahagan Paints in

1933 and thus, Goodlass Wall (India) Ltd. was born.

Subsequently, by 1946, Goodlass Wall (India) Ltd. was known as Goodlass Wall Pvt. Ltd. In 1957, Goodlass Wall Pvt. Ltd. grew popular as Goodlass Nerolac Paints (Pvt.) Ltd. Also, it went public in the same year and established itself as Goodlass Nerolac Paints Ltd. In 1976, Goodlass Nerolac Paints Ltd. became a part of the Tata Forbes Group on acquisition of a part of the foreign shareholdings by Forbes Gokak.

In 1983, Goodlass Nerolac Paints Ltd. strengthened itself by entering in technical collaboration agreements with Kansai Paint Co. Ltd., Japan and Nihon Tokushu Toryo Co. Ltd., Japan.

In 1986, Goodlass Nerolac Paints Ltd. turned into a joint venture of the Tata Forbes and the Kansai Paint Co. Ltd., with the latter acquiring 36% of its share capital.

In 1999, Kansai Paint Company Ltd., Japan took over the entire stake of Tata Forbes group and thus GNP became a wholly owned subsidiary of Kansai Paint Company Ltd.

In 2006, on the 11th of July, Goodlass Nerolac Paints Ltd. name has been changed to Kansai Nerolac Paints Ltd. During the journey of continuous performance excellence, we have entered in to many technical collaborations with other industry leaders such as E.I. Du-Pont de Nemours & Company Inc., USA and Oshima Kogya Company Ltd., Japan for our different products. Our incessant journey of successes will go on backed by our present human asset of over 2000 professionals and a sales turnover of Rs. 1484 crores KNPL are the second largest coating company in India with a market share of over 20%. We are the market leader in industrial / automotive segment supplying over 90% of the OEM requirements. We are the leader in powder coatings.

NATURE OF PRODUCTS

Vision

KNP is gaining from the positive changes triggered by the fast growing economy in India. The India shining story is likely to continue in the years to

come. Conscious of our responsibility towards the society, we stand committed to invest in neighborhood communities, more and more and improve the quality of life and inculcate a sense of well-being amongst the people, settled around. The Corporate Vision of CSR goes like this, To behave fairly & responsibly contributing to sustainable economic development and improving the quality of life in the neighborhood, in the process maximizing stakeholders value.

Accountable for impact on stakeholders work force, their family, the local community and society at large Improving the quality of life of the neighborhood in ways good for development.

Mission

To contribute positively to the development of the society, by acting as a good neighbor, considerate of others, playing the role of a good corporate citizen with passion and compassion.

Milestones

During FY 2008, KNPL group has sustained Zero lost time injury. ISO 14001, OHSAS 18001 re-certification

ORGANIZATIOAL STRUCTURE

HR MANAGER

HR DEPARTMENT
HR OFFICERS T&D OFFICER

OFFICE ASSISTANT

FUNCTION OF HR DEPARTMENT

To maintain good relationship with the employees. To look into the welfare of the employees. To maintain leave register. Attendance making. Overtime confirmation. Recruiting new staff. Giving training PURCHASE DEPARTMENT

COMMERCIAL MANAGER

MANAGER PURCHASE JUNIOR MANAGER PURCHASE JUNIOR EXECUTIVE OFFICER

OFFICE ASSISTANTS

OFFICE ASSISTANTS

FUNCTION OF PURCHASE DEPARTMENT Placing order Inviting quotation Correspondents

FINANCE DEPARTMENT

UNIT HEAD

FINANANCE MANAGER

ACCOUNTANT

ASSISTANT SUPERINDENTEN T

OFFICE ASSISTANT

FUNCTIONS OF FINANCE DEPARTMENT

Financial forecasting and planning.

 Acquisitions of funds. Investment of funds. Maintaining proper liquidity. Assigning the chief accounts officer and others. Accounting of all annual accounts and other periodical report and statement. Checking of wages and salaries. Regular payment of stationary dues like provident fund, sales tax etc. Furnishing necessary records relating to finance cash to managing director or chief accountant officer.

STORES DEPARTMENT

DEPARTMENT MANAGER

STORE SUPERINDENTENT

STORE KEEPER

ASSISTANT STORE KEEPER

HELPERS

ATTENDERS

FUNCTIONS OF STORES DEPARTMENT

 To store the raw materials for the different departments. To prepare the purchase order. To prepare the stores records as Bin card and Karade X card. General store is the department for storing the raw materials. The materials are collected as per the order made by the department, which is known as the purchase order.

QUALITY CONTROL DEPARTMENT

MANAGER

CHEMIST

TESTER

SAMPLE BOYS

HELPERS

FUNCTIONS OF QUALITY CONTROL DEPARTMENT To test the quality of raw materials To check whether the product involves the right proportion of raw materials. To maintain the quality of the products.

WELFARE FACILITIES PROVIDED BY THE COMPANY

There were several welfare measures provided by the company. They were provided with the following benefits: Uniform Footwear allowances Washing soap & toilet soap Turkey towel Medical reimbursement Company scholarship Tour programs Factory day complement Special advances

MATERIAL CONTROL

Material control is done by a proper planning. Kansai Nerolac depends mainly on the planning of the material planning. Another important aspect is that the centralized purchase of the materials. Rather than buying the materials for different sources, it is better to purchase from a single vendor, and it is profitable. The packaging is done locally i.e. in the plant itself so as to reduce the moving cost and less time. Another aspect of the material control is done accurately by SAP. The whole organization is familiar SAP and it accelerates the performance of the whole unit. A report prepared by SAP is ZMSR report in which the current stock, last month produced, moving average reports are produced. It helps in foreseeing the planning and also useful to review the performance of the month.

Purchase policy

The materials to be purchased have to get the approval of the Research & Development inorder to make a purchase order. And then the materials are purchased. In case of scarcity of raw materials substitute materials are also used to make production. The substitute raw materials have two grades. The 1st material and the 2nd material. The first material is considered as the low grade (2702) and the second material is to be the high grade (2356).

Types of purchase

The purchase of raw materials is done only with the well reputed organization. Everything which is purchased is made by only bulk ordering. The important material to be purchased for Kansai Nerolac is the Mineral Turbine oil. It is purchased bulk from BPL (Bharat Petroleum Corporation). In case a purchase is done outside it should not exceed the period of time. And if it exceeds the time limit the penalty certificate is issued. Nerolac has a strict policy on these areas.

Credit Policy

Kansai Nerolacs credit policy is based on its vendors. Materials are purchased from different vendors. Normally Nerolac gives credit for the local vendors for a period of 30days. And this policy differs to the outside vendors. The main vendor for Nerolac is BPC. And the company has an agreement with BPC i.e. if the purchase is done between 1-15 days the payment date is 20 and if the purchase if done between 15-30 days the payment date is 3. Some other payments for credit for the new vendors are done by negotiations.

Inventory Control

The inventory of Kansai Nerolac is playing an important role in the organization. The inventory control is mainly based on the requirements of materials. As it is mentioned above there are two premier products i.e. the Industrial paints and the Decorative paints. These two raw materials has to be controlled separately. Industrial paints are kept separately and the decorative paints to be kept separately. The materials of decorative product can be used in industrial products in case of scarcity and changes made accordingly. But the materials of industrial cannot be used in decorative section.

Stores

Kansai Nerolac has 63 depots all over India and 9 factories. The sales from the stores department are done by certain procedures. Sales request is given to the stores and also the requirement is to be specified. Then the request is consolidated by the Head Office. The order, request and consolidated is updated in the systems and it acts according to the directions given by the Head Office. Purchase department asks the stores department about the moving items and the non moving items in order to make the purchase order for the moving item. The moving batch is the successful one in the market and the non moving items are failure batch in the market. According to the information of the moving and non moving items the purchase order is made for the material. So there is a link between the purchase department and the stores department. By having a link with such department the planning, production department focuses on the business effectively. While making the purchase order the receipts are maintained. The receipts consist of serial no, date, v.no, time in and time out.

While the materials are to be unloaded into the company, the materials have to get the QC test certificate. If the QC test certificate is positive the materials are accepted and it is unloaded from the trucks. And then the store department gives the out pass receipt with reference to the entry pass.

If the QC test certificate is negative the materials are not accepted and it is returned back in the initial stage itself. The entry pass and the out pass are maintained clearly when a vehicle is in and out of the plant. Each vendors material has its unique code number. And each order has different code numbers. The orders are purchase order [4100], STO (Stock Transfer Order) [700] and local purchase [460].

SALES AND DISTRIBUTION CONTROL

Kansai Nerolac has a unique indigenous export and sales. The sale is mainly to the Industrial coatings i.e. the automobiles industry and some other industry. The sales and the distribution controls are as follows.

Credit Policy

Kansai Nerolacs credit policy is based on its vendors. Materials are purchased from different vendors. Normally Nerolac gives credit for the local vendors for a period of 30days. And this policy differs to the outside vendors. The main vendor for Nerolac is BPC. And the company has an agreement with BPC i.e. if the purchase is done between 1-15 days the payment date is 20 and if the purchase if done between 15-30 days the payment date is 3. Some other payments for credit for the new vendors are done by negotiations.

Distribution control

The distribution of Kansai Nerolac is playing an important role in the organization. The distribution control is mainly based on the requirements of products. As it is mentioned above there are two premier products i.e. the Industrial paints and the Decorative paints. These two products have to be controlled separately. Industrial paints are kept separately and the decorative paints to be kept separately. The product of decorative product can be used in industrial products in case of scarcity and changes made accordingly. But the products of industrial cannot be used in decorative section.

Kansai Nerolac has 63 depots all over India and 9 factories. The sales from the stores department are done by certain procedures. Sales request is given to the stores and also the requirement is to be specified. Then the request is consolidated by the Head Office. The order, request and consolidated is updated in the systems and it acts according to the directions given by the Head Office. The sales target for the month period is allotted by the Head Office for every month. And the marketing executives act accordingly.

POLLUTION CONTROL

Whether you're painting, plating, performing mechanical finishing operations or doing something else, pollution control equipment is a necessary part of most every metal finishing operation. Suppliers of pollution control equipment are constantly working to upgrade the performance of their systems in terms of both environmental control and energy efficiency. For wastewater disposal, evaporators and similar types of equipment are common. With natural gas costs high and showing no signs of a let-up, suppliers of evaporator systems have focused their efforts on enabling their equipment to provide the needed evaporation while using less energy. Preventing air pollution and improving worker safety in some operations such as hex chrome plating may require use of a ventilation system. Suppliers of this type of equipment work to improve the extraction capability of the equipment while minimizing maintenance. This means increasing use of corrosion-resistant materials of construction ranging from stainless steel and superalloys to a variety of polymer materials. In many paint shops, thermal oxidizers are common to prevent volatile organic compounds (VOCs) and other hazardous air pollutants (HAPs) from reaching the atmosphere outside the plant. These systems operate at such high temperatures that they can be one of the big consumers of natural gas in the plant.

Some suppliers are reducing energy consumption by employing regenerative thermal oxidizers that recover the vast majority of heat that would normally exhaust out the stack to the atmosphere. The recovered heated air can be used for warehouse or building comfort heating and process make-up air. Energy consumption is not such a big issue with filter systems, but system maintenance is. Back-flushing systems and other concepts that reduce maintenance and extend media life are coming more common in filtration applications.

REVIEW OF ANNUAL ACCOUNTS

Annual Accounts

Mar ' 09 Mar ' 08 Mar ' 07 Sources of funds Owner's fund Equity share capital Share application money Preference share capital Reserves & surplus Loan funds Secured loans Unsecured loans Total Uses of funds Fixed assets Gross block Less : revaluation reserve Less : accumulated depreciation Net block Capital work-in-progress Investments Net current assets Current assets, loans & advances Less : current liabilities & provisions Total net current assets Miscellaneous expenses not written Total Notes: Book value of unquoted investments Market value of quoted investments

Mar ' 06

Mar ' 05

26.95 627.50 16.08 77.54 748.07 541.98 304.55 237.44 35.62 294.43 508.67 328.08 180.59 748.07 273.70 21.25

26.95 566.74 19.18 78.77 691.64 480.15 272.94 207.20 26.64 232.14 478.84 253.18 225.66 691.64 224.78 7.89

25.51 1.44 484.78 30.02 79.98 621.73 424.41 234.59 189.82 17.63 154.82 460.91 201.46 259.45 621.73 147.46 7.53

25.51 380.55 38.56 71.22 515.83 354.62 194.73 159.89 17.96 163.93 407.20 233.16 174.04 515.83 157.92 6.37

25.51 297.89 32.59 54.55 410.54 294.34 162.71 131.63 29.26 179.12 293.95 223.43 70.53 410.54 173.11 6.33

Contingent liabilities Number of equity sharesoutstanding (Lacs)

2.85 269.46

5.91 269.46

2.88 255.08

6.90 255.08

14.36 255.08

Ratio Analysis

Mar '05 Investment Valuation Ratios Face Value 10.00 Dividend Per Share 11.50 Operating Profit Per 51.65 Share (Rs) Net Operating Profit Per Share (Rs) Free Reserves Per Share (Rs) Bonus in Equity Capital Profitability Ratios Operating Profit Margin(%) Profit Before Interest And Tax Margin(%) Gross Profit Margin(%) Cash Profit Margin(%) Adjusted Cash Margin(%) Net Profit Margin(%) Adjusted Net Profit Margin(%) Return On Capital Employed(%) Return On Net Worth(%) Adjusted Return on Net Worth(%) Return on Assets Excluding Revaluations Return on Assets Including Revaluations Return on Long Term 363.01 116.78 61.23 14.22 11.80 15.50 11.97 10.66 9.77 8.46 30.66 28.44 24.61 126.78 126.78 30.93

Mar '06 10.00 20.00 61.72 416.0 8 149.1 9 61.23 14.83 11.67 15.97 15.83 10.30 12.88 7.35 27.33 34.17 19.49 159.1 9 159.1 9 27.87

Mar '07

Mar '08

Mar '09

10.00 11.50 67.36 504.74 189.94 61.23 13.34 10.62 14.17 10.85 10.04 8.27 7.46 24.41 21.04 19.03 200.05 200.05 24.74

10.00 12.00 69.73 489.68 210.21 57.96 14.24 11.15 11.23 10.95 10.95 9.00 9.00 22.90 20.17 17.85 220.33 220.33 22.94

10.00 12.00 58.76 513.14 232.76 57.96 11.45 8.62 8.73 9.43 9.43 7.04 7.04 18.49 15.06 14.43 242.87 242.87 18.53

Funds(%) Liquidity And Solvency Ratios

SWOT ANALYSIS

Strengths

Asias no.1 in Industrial coatings.

80% share holder in Industrial coatings.

Supplying industrial coatings for major reputed companies.

Weakness

Lowest share market in Decorative Coatings.

Not using CNC machines.

Bad marketing techniques.

Opportunities

 South Indian market shows opportunity.

Decorative segment can considered as an opportunity.

Threats

Growing competitors like Berger, Asian paints in Industrial coatings.

Rising crude oil prices and resultant change in derivatives prices is a big concern.

CORPORATE SOCIAL RESPONSIBILITY AND REPORTING

CSR Policy

Kansai Nerolac Paints will make a positive contribution to society by targeting social and cultural issues, maintaining a humanitarian approach, focus on areas in and around our factories and areas of operations.

KNP, is a socially responsible organization, while transacting business, will adopt fair and just means, that meet the norms of Corporate Governance. KNP will make a positive contribution to society by targeting social and cultural issues, maintaining a humanitarian approach, focus on areas in and around our factories and areas of operations. KNP will lend a helping hand to the society in which it operates, covering areas of health, education, preservation of environment and community development.

KNP believes that good neighbors are considerate of each other, are inter-dependent and believe in partnering at times in times of trouble. As far as possible, KNP will encourage its employees to render support in the areas of social activities, make them participate in the CSR initiatives at the Company level and recognize their work and contribution to the society. Most of the activities will be carried out through the GNP Charitable Trust. KNP will

contribute 0.4 - 0.5% of its net profit annually, to the corpus of the Trust, in order to carry out its activities from the interest earned of the accumulated fund.

Triple Bottom Line

CSR covers four core areas like social responsibility, business responsibility, environmental responsibility & stakeholder involvement.

The concept of Triple Bottom line (TBL) is catching up fast in the corporate sector, which measures overall performance of the company based on its combined contribution to economic prosperity, environmental quality and social capital. TBL focuses, not just on the economic value added, but also on the environmental and social value impacted-positively or negatively. Such reporting for the corporate will increasingly become essential in coming times. At Kansai Nerolac, our effort to publish Annual reports on CSR & Environment (ER) is a positive step taken in this direction. The CSR covers four core areas like social responsibility, business responsibility, environmental responsibility & stakeholder

involvement.

Social responsibility We respect human rights, work on employee welfare, protect consumers interest, and make community & socially responsible investments, keeping the socioeconomic development in mind.

Business responsibility We meet statutory & legal compliances, are conscious of corporate governance obligations and invest in R&D, to offer best of the products to our customers.

Environmental Responsibility We believe in environmental friendly technology and practice the same. All our automotive coatings meant for painting of passenger cars and decorative product formulations are free of lead. All our factory locations work for safe disposal of hazardous solid waste & reduce the same every year. Measures for preventive & precautionary control of environment pollution are taken to minimize the pollution load. Waste reduction is strictly followed & demonstrated. We voluntarily publish Environment Report (ER), annually a practice followed for the last six years.

Stakeholder Involvement We propagate principles and ethical values enshrined in the organization to the stakeholders. Wherever possible, we do encourage employees to volunteer for carrying out social responsibility activities. Ours therefore is an enlightened company which has chartered the journey of CSR in order to broaden the traditional corporate goals of profitability by adopting social trusteeship as a desirable objective. Set of policies, vision, mission is integrated in business operations & decision making processes to achieve this objective. The CSR report presented here covers Community & Socially Responsibility activities & investments.

Karmayog Ratings

This year the rating for KNPL has improved and we have been rated 4/5. There are only 10 companies in this bracket, out of 1000 assessed, and we share this space with some top-notch companies.

www.karmayog.org is a unique free platform for concerned citizens for social and civic issues since June 2004.It provides a networking platform for ordinary citizens and NGOs to engage with each other and with government ,media, corporates, institutions, etc. They had undertaken a study and rating of the 1000 largest Indian companies in 2008. This is the second CSR study and rating by them, the first one being done in 2007 for the largest 500 companies in India.

This was the first-of-its-kind rating in India and the world. In their first year study for the year FY2007- 2008 KNP had been rated at 3, on a scale of 1 to 5. There were only 40 Companies forming this elite class (roughly 8%).This year the rating for KNP has improved & we have been rated 4/5.There are only 10 companies in this bracket, out of 1000 assessed & we share this space with some top notch companies like Infosys Technologies, TCS, TATA Steel, ACC to name a few. The Karmayog CSR Ratings are based on various

parameters and are from Level 0 to Level 5 with level 0 being the lowest on CSR.

For 2008-2009

Karmayog CSR Rating No. of Companies Percentage (%)

(Highest) 5/5 0

4/5

3/5

2/5

1/5

0/5

TOTAL

10

45

221

231

493

1000

22

23

49

100

KNPLs FY09 rating

For 2007-2008

Karmayog CSR Rating No. of Companies Percentage (%)

(Highest) 5/5 0

4/5

3/5

2/5

1/5

0/5

TOTAL

40

138

89

229

500

27

18

46

100

KNPLs FY08 rating

Areas of Focus

From the time we started out on the CSR journey, the focus has been on core work areas of Health, Education, Community Development & Environment Preservation. In the current financial year, most of the activities pursued have centered around these areas with a prime focus on Health and Community Development.

Areas of Focus

Activities 2008-09

The CSR issues adopted for support by the company are relevant & contemporary and well supported by staff volunteers, wherever feasible. Staff volunteering is a good practice as it builds up a positive image encouraging social involvement of employees, which in turn develops a sense of loyaltytowards the organization, helping and creating a dedicated work force proud of its company. The management acts as a facilitator in promoting the activities. We have tried to cover variety of activities in the area chosen. The distribution of expense in areas of focus is given below in the pie chart.

% OF EXPENSE HEAD WISE (2008-09)

How we operate

For every unit of ours we prepare a detailed Annual plan of the CSR activities to be carried out in respective areas. The activities are evaluated for its relevance and a budget/ schedule is assigned. The plant in the scheduled month rolls out the activity by involving an agency or plans to execute on its own. Wherever required, volunteers are deployed for carrying out the activity. The activity once completed is documented and reviewed on a quarterly basis. CC & CSR team in HR also gets proposals or identifies activities at local level and on merit decides to participate, once approved by the Trustees.

Health

Program Vision

The objective is to support various activities towards improving and generating awareness about general health & primary health care to the general masses, and the people residing with the vicinity of our plants. Activities It is a challenge to create general awareness about health issues & improving public health especially in the rural regions. It is our constant endeavor to address to the various health issues faced by the people in areas where our manufacturing units are located. Various activities are carried out to address the health related issues faced by men, women, children, senior citizens and so on. This is carried out with the help of supportive team of doctors/ NGOs within the vicinity of our plants and coordinated by our employees. Through the various activities we aspire to educate & bring about health awareness amongst local community which will address their ignorance towards general health care.

Activity Health Camps

Numbers 18

No. of persons Covered 1865

Through the various activities, we aspire to educate and bring about health awareness amongst the local community and address their ignorance about general health care.

Key Activities

Health Check-up camp in Haryana Two health camps were organized for the villagers in Rewari district, where 495 patients were covered. The tests conducted at the health camp were ECG, diabetes, general health check up & opthal. The camp was organized with a team of 4 external doctors and our employees. Awareness about the camp was created amongst the villagers through articles published in the local news papers, distributing leaflets and announcements made on public address systems

Free Medical Check Up Camp in Uttar Pradesh Free medical check up camp was organized on 12 th Dec 2008, at the nearby Primary School at Nabipur, Kanpur Dehat. Local Villagers as well as school children were covered for the programme. They were checked for Blood Sugar, BP, Eyes, Teeth and general check up. The team of doctors comprised of four specialist doctors from Ganga Ram Hospital, Kanpur. The programme was inaugurated by the principal of the Primary School. She appreciated the efforts taken by Nerolac in helping out the needy and in her address asked nearby industries to follow the same so that overall development of the area can take place at a faster pace.120 villagers benefited from the camp.

Medical Camp

Kansai Nerolac Paints conducted Free Health Checkup Camps in the month of August08 in 15 towns of India. The duration of each camp was 2 days per town. A total of 1250 people participated in this camp. The facilities provided were general check up of blood pressure, pulse rate, sugar and skin related diseases. Eye & blood sugar test were also performed. All the Participants were given personal Health Check-up cards and informed about dos and donts to keep fit. The check-ups were conducted by certified MBBS Doctors and Eye Specialist.

Indian Medical Association (IMA) Chiplun, Maharashtra IMA is a well known association of Medical Practitioners which undertakes various health activities in the form of medical check up camps, health education campaigns and health education series to focus on health of tribal women and children who are deprived of basic health facilities. The association had planned to conduct at least two health camps for tribal community in the remote areas of Khed and Chiplun taluka. Kansai Nerolac participated in this endeavor of IMA by providing financial assistance towards this activity, and also distributed Health Education Materials to the schools in the villages around Khed & Chiplun.

Sri Shanmukhananda Fine Arts & Sangeetha Sabha, requested for financial assistance to provide proper medical treatment to the poor & needy patients who were visiting the Nerolac Eye Care Centre and the same was met. The free/subsidized medical activities, both diagnostic and operative, are targeted at the poor and low income groups.

Medical Research Foundation, Chennai Sankara Nethralaya, Chennai has been providing eye care surgeries and assistance towards eye care free of cost to the economically backward segment of the population. This year they also inaugurated Sankara Nethralay-Kolkata and kick started the Tele-Opthalmology Project. This project would help dispensing of glasses to the people in rural areas and the first 1000 cataract surgeries free of - cost program was also launched. Kansai Nerolac provided financial assistance to this Foundation.

Shri Jalaram Arogya Seva Trust, Gujarat approached us with a request for financial assistance towards purchase of a Laser Machine for their eye care department. Kansai Nerolac supported this institution towards this activity.

Maharogi Sewa Samiti, Warora is a society working towards the rehabilitation of leprosy patients & coordinated for some of Indias most daring

and prominent ecological and social programs. We provided assistance for painting of the dormitory at Baba Amtes Ashram.

Kewalram Chanrai Hospital, Mumbai Is a private hospital in Ulhasnagar near Mumbai, which caters to the local population under the management of Jaslok Hospital. As a part of the CSR activity Kansai Nerolac got associated with KC hospital to decorate the walls of the children ward and made them more playful with our Disney paint designs.

KNPL conducted Free Health Check-up Camps in the month of August08 in 15 towns of India. The duration of each camp was 2 days per town.

Education

Program Vision

Education plays an important role in the progress and development of an individual as well as of the nation. Our goal is encouraging & supporting institutions imparting education. We also try to focus on educating girl child & children residing in nearby villages in the vicinity of our manufacturing units.

The Right to Education Bill is the legislation to notify the 86th Constitutional amendment, which gives every child between the age of 6 and 14 years the right to free and compulsory education.

We realise that a lot of work needs to be done in this area, especially in rural India. Our objective is to support educational institutions and to impart education to children particularly residing in smaller areas. The goal is to work towards long term economic & social growth of the weaker sections of the society.

Education plays an important role in the progress and development of an individual as well as of the nation. Our goal is encouraging & supporting institutions imparting education.

Key Activities

Shashi Mangalyam, Mumbai (School for children in need of special care) imparts education to special children, mainly belonging to under privileged section of our society and also works in multiple ways to support them. They also provide Medical & Paramedical services, psychological

Testing/Counseling, psychiatric treatment as per need and many other facilities. They were raising funds for extension of their Building to accommodate more children and provide them better facilities. We provided financial support to this institute towards the building extension.

OM Sairam Charitable foundation, Navi Mumbai

Is a foundation, which is tirelessly working towards providing for education & education facilities to the children belonging to the economically weaker strata of the society of the fishermen community. We pledged a donation to support this institution in their cause.

Bharitiya Samaj Sewa Kendra,Chiplun Is a non-political,non-profit making Organisation working in the field of Child & family Welfare. Their scope of work has been tremendously growing and hence to cater to the need for bigger space for their office & for conducting education sponsorship activities they have started construction of a new building at Chiplun. We provided them support to maintain their building.

Canossa special school, Mumbai for special children approached us with a request for providing financial assistance towards the building fund. We provided the same as it would go a long way in providing the much needed accommodation facilities to the under privileged & disabled children.

The Akanksha Foundation, Mumbai is a non-profit organization with the vision to equip all students with the education, skills and character they need to lead empowered lives. Akanksha works primarily in the field of education, addressing non formal education through the Akanksha centre and also formal education through the Akanksha Schools. They approached us with a request for

donation towards maintenance and upkeep of the King George Memorial Centre, at Mahalaxmi Mumbai, which is utilized by 120 kids for learning of subjects. To make their environment conducive for learning, we extended our support. Bunyad School, Haryana is a reputed school in Bawal providing primaryeducation. The institute had approached us with a request for a donation towards purchase of a photocopier machine. They were facing problems in this area since there was no photocopy facility available near the school. With this assistance provided to them we eliminated the problems they faced towards photocopying the exam question papers and various study & educational material

Child development Centre, Haryana The school aims at providing a playful & informal learning environment to children from kindergarten to the 5th grade through early childhood educational activity oriented plays, Audio-Visual Teaching aids, Music & dance. We pledged our support by donating a Water Cooler and 29 Flat screen colour television to this centre.

Primary Schools, Uttar Pradesh We took up the initiative of distributing desks and chairs to various Primary Schools in the areas around Kanpur Dehat. Local Villagers as well as

school children were present during the inaugural ceremony, which was presided over by Village Pradhan, School Principal, Staff members and the Works Manager at Jainpur. The school Principal appreciated the efforts taken up by Nerolac towards providing the basic facilities for the students, which shall go a long way in development of the students.

Deaf & Dumb School Akbarpur (Jainpur) We distributed 7 Lunch Table Sets, 1 Daisy Player and 40 Tracksuits to Deaf and Dumb School at Akbarpur on. Teachers, Staff members and Students were present during the inaugural ceremony, which was presided over by the Principal and our Works Manager, Jainpur .The Principal appreciated the efforts taken up by KNPL in providing the basic amenities for the deaf and dumb children, which motivates the morale of the students, and grooms them to become responsible citizens of the nation.

Environment Preservation

Program Vision

It is our continuous endeavor to support preservation of resources like water & the green cover and provide clean environment.

Key Activities

Tree plantation has been carried out in our plants on World Environment day. We undertook the activity of renovating a park in Bawal.

Lead Free Paints- KNPL has been proactively working on eliminating Lead and Mercury from paint formulations.

All Architectural paints & passengervehicle coatings have been made lead & mercury free.

Community Development

Our goal is to provide basic facilities to the community settled in the vicinity so as to support and improve their basic living and thus fulfill the role of being a good Corporate Citizen.

We believe that supporting activities which focus towards development of the society as a whole is essential towards building a strong & sound community. A vital part of being a good corporate citizen is giving back to the society & communities that we live & work in. Our goal is to provide basic facilities to the community settled in the vicinity so as to support & improve their basic living and thus fulfill the role of being a good Corporate citizen. Our

commitment towards sustainable development of communities reflects through the various activities that we undertake.

Key Activities

Armed Forces Flag Day The Collector of Mumbai has been tirelessly working for the Welfare of the ex servicemen & their families. We have pledged our support towards this noble cause.

Concern India Foundation, Mumbai is a non profit, public charitable trust that supports development-oriented oragnisations working with the most vulnerable people of our society in the areas of education, health, community development and the environment. We pledged a donation to this foundation & this endeavor of ours will go a long way in our achieving their aim of helping the underprivileged help themselves.

Kherwadi Social Welfare Association, Mumbai (KSWA) is a 80-year-old NGO, founded in 1928. KSWA has been providing uninterrupted service to the slum dwellers in the field of Education, Healthcare and Vocational Training. We have provided donation to this foundation to support them in carrying out

the renovation of the Rural development & Vocational Centre situated at Wada Taluka head quarters in Thane District of Maharashtra.

Senior Citizens Settlement Foundation, Mumbai works towards the cause of Elders Home. We supported them in this cause by providing financial assistance and villagers while waiting outside the Railway Station for city buses & local transport.

Akbarpur Police Station, Uttar Pradesh We distributed 4 computers at Akbarpur Police Station. The Local Police Staff were present during the inaugural ceremony, which was presided over by the Circle Officer and our Works Manager. The Circle Officer appreciated the efforts taken up by Nerolac in providing the facilities for the authorities at the police station, which shall help in maintaining database, relevant information that can be accessed readily.

Old age Home, Haryana To provide good quality potable water & good life to the inmates of the old home, we donated a water filter & few chairs.

Pick Up Shed, Chiplun

A Pickup Shed was constructed outside the Chiplun Railway Station, which is used by passengers and villagers while waiting out side the Railway Station for city buses & local transport.

Summary of CSR expense

Health Education

Community Development

Environment Preservation

Total Expense

Share of Expense

21.7

10.55

11.22

1.62

45.3

OUTSTANDING PERFORMANCE, AWARDS

Best Vendor Award from customers like Toyota Kirloskar Motors (TKML) for Cost and from Maruti Udyog Limited (MUL) on overall commendation.

 Awards for marketing initiatives like Cannes 2007 Bronze for press Ad.

Emvies 2007 Gold & Silver for Best Media innovation, Best case study Media innovation (Impression Rang Jama De), Best Integrated Campaign, Best Media strategy & Peoples Choice Award.

Readers Digest Trusted Brands Gold Award for 2008.

Frost & Sullivan Market Leadership Award in Indian Industrial Paints & Coating Market.

Hall of Fame from CTO Forum, PC Quest & Best Implementation-APO in IT.

ICSI National Award for Excellence in Corporate Governance 2007 from the Institute of Company Secretaries of India.

Greentech Environment Excellence Gold and Silver for Bawal and Chennai units.

ABCI Silver for Annual Environment Report.

FUTURE PLANS

Kansai Nerolac plans 45 impression style zones Kansai Nerolac Paints, a leading paint manufacturer, has lined up a total of 45 Impression Style Zones in Chennai, Bangalore and Hyderabad in the

next six months. First of such zones was set up in Chennai recently. We will open 15 such zones in each of these cities in the pilot, catering to the whole population there, Mr C. Venugopal, General Manger (Marketing), told Business Line. After studying the results of the pilot, the company would set up a number of such outlets across major cities. What we offer at these outlets is unique. We help the customers visualise design and conceptualise their homes, he said. The concept showroom is equipped with a workstation where a trained associate, using a specially designed software, would show the customer how things would look like. Upfront, the customers would know what colour would fit into the scheme of things. They can try out other combinations, if they dont like a particular pattern, Mr Venugopal explained. Each outlet would be backed by 20-25 company-approved contractors. They, in turn, would employ Nerolac-certified painters to take up the job.

CONCLUSION

The tremendous growth of automobile industry and construction activities in the country has increased the demand for industrial/decorative materials, especially paints and its allied products. With the implementation of new technology, improving the marketing strategies and solving the existing problems, the company is ensured of bright prospects.