Dear Shareholders,

Incredible is a word that I seldom use, but it best describes

the transformation story that is presently unfolding in our
economy. The consistently high GDP growth seen in recent
years is only one aspect of this transformation. What is truly
amazing is the surge of confidence and optimism enveloping
large sections of our society. Suddenly, wealth and the ways
to spend it are simultaneously expanding. We are beginning
to harvest the gains of policies that set free the productive
abilities of our collective populace.

These are fascinating times. In the history of an organization

such a phase in the environment comes but once in a while.
Good companies anticipate these big changes and prepare Chairman’s Letter
themselves to catch the tide as it comes. This trait, deeply
ingrained in the way we work is what has helped Asian
Paints stay ahead over the years. The results for the current
year, growth in group sales of 21.5% and in net profit of
32.5% testify to the continued success of our strategy.

In Decoratives, our growth has been excellent across all
segments and geographies. Arming ourselves with adequate
productive capacity in advance, securing ties with the trade
through consistent and transparent policies, responding
to the changing buying habits of consumers and building
on our insights into large users have helped us better the
industry growth. As the market expands, we will see the full
benefits of our organization building efforts.
Our industrial business too saw a growth of over 20%. I have
in the past referred to the large spending on infrastructure
and industrial activity in the country and the resultant
growth in the need for quality industrial coatings. We stay
focused on capturing this opportunity.
Our international units have, on the whole, shown improved
results with good growth in the topline. The performance has
been particularly good in the Middle East region. The group’s
stakes in the subsidiary in Myanmar and in the associate
company in the Philippines were divested during the year
as part of the ongoing efforts to prune underperforming
investments.
A large economic transformation of the kind that we are
seeing today is not one smooth and continuous surge forward.
Bottle-necks, imbalances and hiccups will inevitably dot the
journey. Resources needed to fuel growth often have long
gestation periods and availability does not keep pace with
demand. The war for talent that we are witnessing today is
a case in point. Many of the ills that have long afflicted our
education system have resulted in a dearth of employable
talent amidst a sea of unemployment. The shortage of
critical talent will get worse before the balance is restored.
Asian Paints has traditionally been fortunate in this area.
The company’s culture fosters dignity and respect for people
while recognizing individual differences in performance and
contribution at work. Our attention is currently focused on
strategies that would help retain talent in an era of high
attrition.
I conclude by thanking my colleagues on the board for their
support and guidance. I thank you for your continued
support.

To capitalize on the opportunities that are opening up in With regards,

the domestic market, we are investing in new marketing Yours sincerely,
initiatives, building fresh capacities, adding to our IT
capability and expanding Research and Development. A
new R & D centre is being built at Turbhe in Navi Mumbai
to accelerate development of products and technologies that
our customers will need tomorrow. Ashwin Choksi
 Asian Paints Limited Annual Report 2006-2007

DIRECTORS’ REPORT AND MANAGEMENT DISCUSSION & ANALYSIS

Dear Members,
Your Directors have the pleasure in presenting the 61st Annual Report of your Company and the Audited Accounts
for the financial year ended 31st March, 2007.
FINANCIAL RESULTS
(Rs. in Millions)
APL AP Group Consolidated
2006-07 2005-06 Growth 2006-07 2005-06 Growth
% %
GROSS SALES 33,607 27,774 21.0 42,599 35,100 21.4
Operating Profit 4,622 3,878 19.2 5,153 4,237 21.6
Less: Interest 69 38 189 114
Less: Depreciation/Amortisation/Impairment 454 455 611 606
Add: Profit/(Loss) from Associate Company – – (4) (9)
Profit before EOI, Goodwill Amortisation
and Tax 4,099 3,385 21.1 4,349 3,507 24.0
Less: Extraordinary item (EOI) – 336 78 –
Less: Goodwill impairment – – – 76
Profit Before Tax 4,099 3,049 34.5 4,271 3,431 24.5
Less: Provision for Current, fringe benefit
and deferred Tax 1,400 1,171 1,467 1,323
Profit After Tax 2,699 1,878 43.7 2,804 2,109 33.0
Add/(Less): Prior period items 21 (10) 26 (10)
Net profit after prior period items 2,720 1,868 45.7 2,831 2,098 34.9
Less: Minority Interest – – 21 (23)
Net Profit attributable to shareholders
of the Company 2,720 1,868 45.7 2,810 2,121 32.5
Add: Balance brought forward from the
previous year 1,100 1,000 1,100 1,000

DISPOSABLE PROFIT 3,820 2,868 3,910 3,121

That the Directors recommend for

appropriation as under:
Dividend – 1st Interim 528 432 528 432

– 2nd Interim 623 – 623 –

– Final 96 528 96 528
– One time special – 240 – 240
Tax on Dividend 178 168 181 171
Transfer to General Reserve 896 401 983 651

Balance carried forward to Balance Sheet 1,500 1,100 1,500 1,100

5
 RESULTS OF OPERATIONS
Total revenue for the standalone entity increased to
Rs. 28,213 million from Rs. 23,192 million in the previous
year – a growth of 21.7%. The operating profit increased
by 19.2%, from Rs. 3,878 million to Rs. 4,622 million.
The profit after tax and extraordinary item increased to
Rs. 2,720 million from Rs. 1,868 million, representing a
growth of 45.7%.
The consolidated sales and operating income increased
to Rs. 36,700 million from Rs. 30,210 million – a
growth of 21.5%. Net profit after minority interest
for the group increased to Rs. 2,810 million from
Rs. 2,121 million, representing a growth of 32.5%.
The analysis on the performance of your Company is
discussed in the section on Management Discussion and
Analysis.

CONSOLIDATED ACCOUNTS
Under Section 212(8) of the Companies Act, 1956,
the Ministry of Company Affairs (MCA) has vide an
approval letter dated 31st January, 2007, granted
exemption from attaching the financial statements
of the subsidiary companies of your Company, in
India and abroad, both direct and indirect, to the
Balance Sheet of your Company for the financial year
2006-2007. A statement of summarised financials of all
subsidiaries of your Company, pursuant to the approval
granted by MCA forms part of this report. Any further
information in respect of the Annual Report and the
financial statements of the subsidiary companies of
your Company will be made available to the members
on request. In accordance with the Accounting Standard
(AS 21) issued by the Institute of Chartered Accountants
of India, Consolidated Financial Statements presented
by your Company include the financial information of
all its subsidiaries.

DIVIDEND
During the financial year 2006-2007, your Company
declared and paid interim dividend of Rs. 5.50 per
equity share (55%) in the month of November, 2006
and second interim dividend of Rs. 6.50 per equity
share (65%) in the month of March, 2007. In addition,
your Directors also recommend payment of Re. 1/- per
equity share (10%) as the final dividend for the financial
year ended 31st March, 2007. The total dividend
(including the first interim dividend, the second interim
dividend and the final dividend) for the financial year
2006-2007 comes to Rs. 13/- per equity share (130%) as
against Rs. 12.50 (125%) per equity share paid for the
previous year, which included a dividend of 25% as a
one-time special dividend on the occasion of the 60th
year since the incorporation of your Company.

6
 Asian Paints Limited Annual Report 2006-2007

TRANSFER TO RESERVES
Your Company proposes to transfer Rs. 895.79 million
to the general reserve. An amount of Rs. 1,500 million is
proposed to be retained in the profit and loss account.

MANAGEMENT DISCUSSIONS AND ANALYSIS

The Indian economy continued to grow strongly in
the year 2006-2007, driven by booming investment and
consumption. Over the past four years, the economy
has clocked up an average annual growth of more than
8%, compared to around 6% in the 1980s and 1990s
and 3.5% during the three decades before 1980. The
government’s advance GDP estimates for 2006-07 pegs
growth at 9.2% driven by a 11.2% growth in services,
10% in industries and 2.7% in agriculture.

While there are concerns with regard to overheating of

the economy, infrastructural bottlenecks, wage inflation
and political scenario, your Company believes that
the growth rates would continue to be buoyant in the
medium term.

Given the circumstances, your Company has done well

to capitalise on the buoyant economic growth in the
country and this is reflected in the financials during the
year under review.

I. PRODUCTS AND MARKET

Paints
Your Company’s paints business in India consists of
Decoratives and Industrial Coatings. Sales of Decorative
paints constituted 80% of group sales. It is estimated
that the market for all paints produced by all companies
big and small would have been between Rs. 112 and 115
billion in 2006-2007. This would be a growth of about
18% over the previous year. The industry is estimated
to have grown by about 16% in volume terms in
2006-2007.

Decorative Paints
Your Company has been the leader in the Decorative
Paints segment for about four decades now. Decorative
paints account for over 75% of the overall paint market
in India. This segment includes wall finishes for interior
and exterior use, enamels, wood finishes and ancillary
products such as primers, putties etc. The Decorative
paints market as a whole is estimated to have grown
by about 16% in volume terms equivalent to about 19%
in turnover. Turnover increase outpaced volume growth
due to price increases.

Prices of raw materials increased sharply in the second

and third quarter of 2006-2007. The major increases
were in Xylene, Phthalic Anhydride, Acrylates and

7
other petroleum based products and vegetable oils.
Accordingly, your Company had to raise prices four
times during the year. This raised the average selling
prices by about 4.25%. Availability of materials was, on
the whole, good throughout the year.
Market conditions were good in most parts of the
country. Trade was impacted in Delhi due to the
uncertainty prevailing on account of the Delhi Master
Plan and the sealing drive. It was also impacted in parts of
North Eastern India on account of disturbed conditions.
Trade inventories in the Delhi area were at very low
levels. The Diwali season was slightly disappointing in
parts of Northern and Western India. However, robust
growth after the Diwali season has provided buoyant
conditions on the whole. VAT has been introduced in
Tamil Nadu from January 1, 2007 and the amendment
in Kerala ensures that a uniform VAT rate now prevails
over the entire country except in U.P. where VAT is yet
to be implemented.
Your Company has been strongly committed to
growth and accordingly, continued its policy of
moving purposefully on several fronts. Pricing was
kept competitive. The sharp increase in material
cost forced us to raise prices, as described earlier,
in mid-June, on 1st September, on 1st October
and in mid-January. The Company’s strong product
range was further augmented by the addition of
Royale Play Metallics and Stucco, Luxury Ultra
Gloss Enamel and other products. Your Company
will continue to provide consumers with excellent
8
choice at every price point. The exterior range of
products continues to grow strongly.
Your Company will continue to face competition
from lower priced products from large companies
and from a large number of regional players.
However, considering the brand equity your
Company enjoys, its dominant market share
and the range of products that it can offer, your
Company is confident of meeting these challenges
effectively.
Your Company continues to aggressively increase
ColourWorld installation, which would be about 8500
across the country. As reported last year, many of
these are now being installed in small towns, enabling
consumers there to have a choice of large range of
shades in a wide product range.
Asian Paints Home Solutions (APHS) was extended to
Jaipur and Vadodara taking the total number of centers
where this service is offered to twelve. APHS adds
to the strength of Asian Paints brand significantly by
offering novelty finishes.
Manufacturing capacity
As reported last year, the capacity of the Sriperumbudur
plant was raised to 50,000 KL per annum early in
2006-2007. This capacity came in handy as emulsion
paints’ sales grew well. Your Company is adding a
polymer plant at Sriperumbudur which is expected to
be commissioned in the first quarter of 2007-2008.
The plant at Ankleshwar has received environmental
and other clearances to produce up to 1,00,000 KL per
annum. Some additional facilities, especially for storage
and handling, need to be installed at Ankleshwar as well
as Patancheru and Kasna plant so as to produce at the
rated capacity on consistent basis.
Industrial Coatings
Automotive Coatings:
Asian PPG Industries Limited
Asian PPG Industries Limited (APPG), a 50:50 joint
venture between your Company and PPG Industries
Securities Inc., formed in 1997, services the Automotive
OEM, Refinish and certain industrial coatings market in
India. APPG is a supplier to almost every two wheeler
maker in India and has a significant position in this
market.
APPG has benefited from the buoyant economic
growth in the country and the consequent robust
performance of the automotive industry during the

year. With a sizeable and growing working class that
is seeing rapid increases in disposable income, the
country’s automobile industry is on a high growth
trajectory. Additionally, auto components manufactures,
besides benefiting from this growth, are exporting to
global automobile majors.
As per the estimates, the cumulative growth of the
passenger vehicles segment during April-March 2007 was
20.70%. Passenger cars grew by 22.01%, utility vehicles
by 13.21% and multi-purpose vehicles by 25.20% in F.Y.
2006-2007. The two wheeler market grew by 11.42%
during the same period.
These developments have resulted in improved top line
performance during the year under review. Total sales
increased to Rs. 3,405 million from Rs. 2,798 million
in the previous year – a growth of 21.7% while the
consolidated sales were Rs. 3,447 million. The joint
venture Company also declared interim dividend of
Rs. 1.40 (14%) per equity share on 26th March, 2007.
During the financial year 2006-2007, APPG has invested
in 100% equity of Faaber Paints Private Limited (Faaber)
for a consideration of Rs. 40 million. Faaber was a toll
processor of APPG located near Chennai. Faaber has
been associated with APPG since the year 2001, when
it started toll processing thinners for APPG. Faaber’s
production contributes to about 25% of APPG OEM
production volume. The said acquisition has led
to strengthening of APPG’s supply link servicing to
Hyundai and other automotive customers and resulting
in additional industrial business.
Also, during the financial year 2006-2007, PPG
Industries Securities Inc., USA signed a definitive
agreement with ICI (India) Ltd. as a result of which
a portion of ICI India’s auto refinish business
comprising of its advanced refinish range (2K) was
acquired by APPG for a consideration of approximately
Rs. 520 million, subject to certain agreed
adjustments. It had registered sales revenue of
around Rs. 500 million for the financial year ended
31st March, 2006. The said acquisition would enable
Asian Paints Limited Annual Report 2006-2007
APPG in garnering a leadership position within the
premium refinish segment.
During the year, APPG acquired a plot of land admeasuring
10.43 acres on lease from the State Industries Promotion
Corporation of Tamil Nadu (SIPCOT) to establish a paint
plant in phases at Sriperumbudur, near Chennai. After
obtaining requisite consents, construction work on the
plot has commenced. It is expected that the facility
would be commissioned in the course of the current
year and enhance the joint venture’s supply capability
to automotive OE customers.
This year, the Indian automobile market will see at
least 30 new launches, spanning from the affordable
hatchbacks to the mid-size models to the super luxury
high-end cars and SUVs.
Growth prospects for the automobile industry in the
current year is expected to be similar to that witnessed
last year. APPG is in a position to continue to take
advantage of the growth in the market and is optimistic
about the longer term prospects for the Company.
Non-Auto Industrial Coatings
The non-auto industrial coatings market, catered by
your Company through its Strategic Business Unit and a
wholly owned subsidiary, Asian Paints Industrial Coatings
Limited (APICL), is estimated to have grown by 16%
in value during the year 2006-2007. Your Company is
present in most of the major product segments of this
market, thereby ensuring that growth opportunities are
addressed adequately.
Your Company continues to maintain its position as
the second largest player in the protective coating
segment and has made strides in the medium to high
end product category. Your Company has made rapid
gains in the general industrial liquid paints segment
and is expected to emerge as a dominant player in
times to come. In floor coatings, a selective approach
was adopted in an effort to reorient the business. In
road marking segment, your Company has emerged as
a leader and would expect to maintain this position in
the years to come.
The market of non-auto industrial coatings is expected
to maintain its growth momentum. Sustained and
significant investment by the public and private
sector enterprises towards capacity creation and plant
up-gradation would ensure strong growth of the
protective coating segment. Government spending
on infrastructure would also spur the market. Major
investments are underway in road infrastructure which
has a direct bearing on the road marking segment.
Derived demand, both consumer and industrial, would
9
continue to spur the growth of powder coating and
general industrial liquid paints in the years to come.
Your Company would continue its strong focus in
this segment and target emerging opportunities by
way of a structured business development process.
Product development would be directed towards
emerging categories and meeting the value aspiration
of the consumer.
Manufacturing Capacity
Industrial Liquid Paints Plant at Taloja
First phase of the greenfield industrial liquid
paints facility at Taloja, Maharashtra was
commissioned during the last quarter of the financial
year 2006-2007. Production is being ramped up at
the facility and it is expected to reach the installed
capacity of 14,000 KL by the month of September,
2007. This facility will help your Company improve its
service levels to industrial customers and also bring
about cost efficiencies associated with manufacturing
the bulk of industrial products at a single location.
Asian Paints Industrial Coatings Limited
APICL reported Profit Before Tax of Rs. 9.85 million
for the financial year ended 31st March, 2007 as
compared to Rs. 5.71 million for the financial year
ended 31st March, 2006.
During the financial year 2006-2007, your Company
has further invested Rs. 1,00,00,000/- (Rupees
One Crore only) in the share capital of APICL by
subscribing to 10,00,000 Equity Shares of Rs. 10/-
each, in order to facilitate completion of the civil
construction work and to enhance the capacity of its
plant at Baddi, Himachal Pradesh.
The powder coating business, catered through
APICL, continues to grow above the market rate. It
will continue to persist with its efforts to upgrade the
market through the technology of its collaborator,
Protech Chemicals Limited.
Plants for Powder Coatings at Baddi and Sarigam
The powder coatings facility at Baddi, Himachal
Pradesh which has an installed capacity of 1,200
MTs, was commissioned in April, 2006 and during
the last quarter of the financial year 2006-2007 the
plant produced to its installed capacity. The civil
construction in the first phase has been designed to
enable addition of further lines to take the capacity
to 3,000 MTs per annum.
To meet market requirements, it is also planned to
enhance the capacity of the plant at Sarigam. Plans
10
are being drawn up and work on the civil structure is
expected to commence from October, 2007. The enhanced
capacity will be available during the second quarter of the
financial year 2008-2009. With these capacities at Baddi and
Sarigam, APICL will be well placed to service the powder
coating requirements.
Chemicals
The Chemicals business of your Company comprises
of Phthalic Anhydride and Pentaerythritol with plants at
Ankleshwar, Gujarat and Cuddalore, Tamil Nadu, respectively.
These units were set up as backward integration initiatives
in the late eighties. They lack scale and hence, are not
seen as growth drivers for the Company. These facilities
continue to be managed for value.
During the year 2006-2007, the percentage of Company’s
production of Phthalic Anhydride and Pentaerythritol
consumed in-house was 48% and 53%, respectively.
Profitability of both businesses has improved significantly
over the previous years. Penta plant could significantly
increase the exports to meet the demand in the
international market resulting in higher profits. With the
change in catalyst in April 2006, the Phthalic Plant had a
first full year of operations with the new catalyst, resulting
in higher yields and operating efficiencies.
Due to rising oil prices, margins in the Phthalic business
improved significantly resulting in higher profits inspite of
reduction in the import duty on Phthalic Anhydride from
15% to 12.5% in the Union Budget 2006-07.
Import duty on Phthalic Anhydride has been further
reduced from 12.5% to 7.5% in the Union Budget
2007-2008, without any change in duty on raw material
which will put some pressure on margins going forward.
However, overall both the chemical businesses are
expected to perform well in 2007-2008, backed by
planned operation at higher production levels and further
improved operating efficiencies.
Technical Instruments Manufacturers (India) Limited
Technical Instruments Manufacturers (India) Limited
(TIM), is a 100% subsidiary of your Company. It owns the
building which houses your Company’s Corporate Office.
It also owns the land which was acquired in the financial
year 2005-2006 for carrying on research and development
activities for your Company. It has no income except the
rent it receives from your Company.
International Business Units
The focus during the year under review continued to
be on increasing sales and gaining market share in all
overseas markets by increasing the number of dealer
tinting systems, expanding the dealer network, introducing
new products, improving service levels, increasing exports

and minimizing price increases. New product sales
constituted approximately 14% of overseas sales and
over 600 dealer tinting systems have been installed so
far by various subsidiaries.
Material prices were buoyant and prices of inputs went
up significantly. However, by leveraging economies
of scale and the group’s global sourcing capabilities,
significant economies have been realized and these
have helped to reduce the impact of material cost
escalation. The impact of input cost increases has also
been limited by formulation engineering as well as
reduction in material losses in manufacturing.
The group has always attached a high degree of
importance to safety, health and environment standards.
A program has been implemented in all the units to
raise these further.
Microsoft Navision, an ERP software is running
successfully at most of the subsidiaries. Steps have
been taken to enhance the usage of this software as a
decision support system.
The group considers its employees to be a key
resource and ensuring that employees are committed
and engaged in their roles and drive innovation and
change, is essential for achieving sustainable growth
and profitability. Initiatives such as an improved
performance focused management system and a
sales force effectiveness training program to be rolled
out across subsidiaries in the next few months are
expected to improve the quality of human capital and
performance.
Technology is another critical input essential to provide
customers with products that satisfy their needs at
competitive prices. The group continues to invest in
upgrading its technological capability in Decorative as
well as protective and industrial coatings.
Financial Performance – International Business
During the year under review, the volume of paint sold
by the business unit increased by 22% to 94.18 million
litres and revenue from paint sales increased by 21% to
Rs. 6,240 million.
Material cost of paint sold as a percentage to revenue
from paint sales has remained almost flat during
the year despite a sharp increase in material prices.
Improved efficiency in sourcing, R&D efforts to
optimize formulations and manufacturing initiatives
to reduce material wastage have helped mitigate the
impact of higher input costs. Strict control has also
been exercised on working capital as well capital and
overhead expenditure.
Asian Paints Limited Annual Report 2006-2007
For the year under review, the revenue from paint sales
of Berger International Limited (BIL), a subsidiary of
your Company listed on the Singapore Stock Exchange,
increased by 8.1% to S$ 127.71 million (equivalent to
Rs. 3,644 million). BIL has made an operating profit
of S$ 0.31 million (equivalent to Rs. 8.85 million) in
the year 2006 as compared to loss of S$ 0.26 million
(equivalent to Rs. 7.42 million).
Another subsidiary of your Company, SCIB Chemical,
S.A.E., Egypt has done well and has reported a profit
of US $ 3.65 million (equivalent to Rs. 165.39 million)
against a profit of US $ 1 million (equivalent to
Rs. 44.19 million) of last year.
During the year 2006-2007, your Company invested
Rs. 111.06 million in the equity capital of its wholly owned
subsidiary Asian Paints (International) Limited for onward
investment in Asian Paints (Bangladesh) Limited.
The group’s stake in the subsidiary in Myanmar as well
its associate company in Philippines was divested during
the year. These two companies were making losses
and the decision to divest was taken after a careful
assessment of the prospects of these companies.
Earnings Before Interest and Tax (EBIT) for the overseas
operations of the group during the year has increased
by 457% to Rs. 192 million. It may be noted that during
the second half of the year, the EBIT increased by 566%
to Rs. 168 million.
The profitability of the overseas operations of the group
was impacted by the following items:
(i) Loss of Rs. 71 million arising from the disposal
of the group’s stake in its Associate Company in
Philippines;
(ii) Loss of Rs. 7 million arising from the disposal of the
group’s stake in its subsidiary in Myanmar; and
(iii) Tax expense was lower by Rs. 75 million mainly due
to write-back of Rs. 30 million in respect of prior
year taxes as compared to a provision of prior year
taxes of Rs. 45 million made in 2005.
The group operates in five regions across the world i.e.
Caribbean, Middle East, South Asia, South East Asia and
South Pacific as follows:
Operating regions and countries in each region:
Regions Countries
Caribbean Barbados, Jamaica, Trinidad & Tobago
Middle East Egypt, Oman, Bahrain & UAE
South Asia Bangladesh, Nepal & Sri Lanka
South East China, Malaysia, Singapore, Thailand &
Asia Hongkong
South Pacific Australia, Fiji, Solomon Islands, Samoa, Tonga
& Vanuatu
11
Percentage sales contribution of each region to overall
international operations for 2005-06 and 2006-07:
Caribbean Region
During the year under review, the volume of paint
sold in the region increased by 3.4% to 8.8 million
litres. The revenue from paint sales has increased by
12.0% to Rs. 1,523 million and EBIT has decreased by
58.9% to Rs. 28 million.
All the subsidiaries in the region registered sales
growth with the highest growth achieved by the
Barbados subsidiary. The revenue from paint sales
in Jamaica, the largest subsidiary in the region,
increased by 8.5% to Rs. 893 million. However, a
slowdown in the construction sector due to acute
cement shortage has resulted in lower sales growth
and has impacted the profitability of the unit. The
Jamaican unit became the first paint company in
that country to receive the ISO 14001 certification.
The unit in Barbados has done well and the revenue
from paint sales has increased by 14.9% and the
profitability has also improved. The revenue from
paint sales of the unit in Trinidad has increased
by 20%. It has however incurred a loss and steps
have been taken to improve the performance of
the unit.
Middle East Region
During the year under review, the volume of paint
sold in the region has increased by 31.2% to 62.6
million liters and the revenue from paint sales has
increased by 31.5% to Rs. 2,606 million. EBIT has
increased by 171.2% to Rs. 253 million.
The Middle East region is the largest operating region
for the group outside India and the performance of
the region is noteworthy. The region now contributes
42% of the sales from international operations.
The subsidiaries in the region have performed
well. Sales of the Egyptian, Bahrain, UAE and
Oman subsidiaries grew by 46%, 13%, 35% and 1%
respectively. The Egyptian subsidiary is now the
12
largest unit in the group. The Bahrain subsidiary has made
significant inroads in the institutional business segment
and has established a strong presence in this fast growing
segment. The UAE subsidiary has turned around during
the year and has reported a net profit. It has improved
its market share, made significant inroads in the retail
segment and has established itself in the export market
of Qatar. The sales of the Oman subsidiary have grown
marginally but profitability has improved.
South Asia Region
During the year under review, the volume of paint sold
in the region increased by 40% to 9.6 million liters and
revenue from paint sales has increased by 31.9% to Rs. 621
million. The EBIT for the region has increased to Rs. 10
million from a loss of Rs. 19 million.
All the subsidiaries in the region have performed well. The
Sri Lanka, Bangladesh and Nepal subsidiaries have registered
sales growths of 28%, 62.1% and 12.6% respectively. The
Bangladesh and the Sri Lankan subsidiaries have recorded
improvement in market shares while the performance of
the Nepal subsidiary has been impacted by the adverse
political situation prevailing in that country.
South East Asia Region
During the year under review, the volume of paint sold
in the region decreased by 12.9% to 9.2 million litres.
However, the revenue from paint sales has increased by
10.0% to Rs. 843 million. Loss before interest and tax has
reduced by 17% to Rs. 128 million.
The performance of the Singapore subsidiary has been
good and the Malaysian subsidiary has managed to reduce
losses substantially. However, the subsidiaries in Thailand
and China have underperformed and incurred losses.
Steps have been taken in Thailand and China to increase
sales and reduce losses.
South Pacific Region
During the year under review, the volume of paint sold
in the region increased by 8.8% to 4.6 million liters and
the revenue from paint sales increased by 9.9% to Rs. 725
million. EBIT for the region has decreased by 27.8% to
Rs. 23 million.
Fiji, the largest unit in the region performed well and
the revenue from paint sales increased by 9.3%. All the
other units in the region have also performed satisfactorily
during the year. The political situation in Fiji and increases
in input costs have impacted profitability of the region.
In the year ahead, the group will continue to take all
feasible steps, as may be necessary, to increase sales and
gain market share in its international operations.

II. SAFETY, HEALTH AND ENVIRONMENT
Your Company is committed to providing a safe
environment for all its employees. The efforts of
the Company are now focused on improving risk
assessment capability in the plants. Our systems are
being benchmarked to the best in the field and steps
taken accordingly on continual basis.
The Kasna Plant was awarded the Gold Award in the
Chemical Sector for the year 2006 amongst more than
100 organizations during the Annual Safety Award
program organized by the Greentech Foundation in
association with the National Safety Council, USA,
National Institute of Occupational Safety and Health,
Malaysia and the Institution of Fire Engineers, India.
Underlining your Company’s commitment to safety, the
Sriperumbudur plant of your Company was awarded the
honorable Safety Appreciation Award 2005-2006 from
the Nation Safety Council. Also, your Company was
rated ‘The Best’ among the 200 Companies shortlisted
for the prestigious award.
Environmental Initiatives
The specific generation of industrial effluents was
further reduced during 2006-07 as also specific
generation of total effluents. Rainwater harvesting
schemes continue to be in operation in all plants.
Water harvested is about 9% of total water consumed.
Ground water recharge scheme that were implemented
in previous year continue to be comprehensively used
and monitored. During the year, your Company’s
plant at Kasna was awarded the first prize in Paints
and Allied Products category for achieving total energy
saving. Your Company believes that such steps need to
be continuously taken to reduce further waste in the
plants; such steps are both environment friendly and
make good economic sense.
III. HUMAN RESOURCES
Talent management has been the focus of your Company
during the financial year 2006-2007. Your Company is
known for the investment it makes in the development
of its employees and for its work culture. In order to
buttress it, an initiative was launched for reaching out
to employees, building stronger bonds and ensuring
better communication. Work group level activities were
promoted based on an employee engagement survey.
Simultaneously the development plan for employees
to assume higher responsibilities was substantially
redesigned and implemented. Coaching was offered to
managerial cadre employees which has proved to be a
successful initiative.
Asian Paints Limited Annual Report 2006-2007
Compensation was substantially revised during the year
to keep in step with the market trends. The variable
component of compensation was increased to reward
performance handsomely. Performance Management
System has been upgraded by your Company.
Following the development of a Technology agenda, the
Technology function was restructured. Technology is
now a central function, organized to meet the challenges
of the future, promote development of expertise and
ensure speed of delivery. In order to define and develop
the desired work culture, several workshops were
held and this initiative will be continued during the
coming year.
In keeping with our recently announced initiative
of preferentially engaging the local managers in
international operations, your Company has recruited
management graduates from University of South
Pacific, Fiji, who will be trained to assume managerial
positions.
A three year wage settlement was negotiated and
implemented at the Company‘s Plant at Bhandup,
Mumbai, during the year 2006-2007. Also, during the
year, a productivity linked wage settlement for the next
three years was signed between the management and the
employee union of the Phthalic Plant at Ankleshwar.
IV. CORPORATE SOCIAL RESPONSIBILITY
Today, Corporate Social Responsibility has gained
substantial importance in India. Your Company believes
that truly sustainable initiatives in the area of Corporate
Social Responsibility are those which have a positive and
tangible benefit on the health of the society. In the area
of health care, the Company organized an ‘eye camp’ at
Katpor Village near Ankleshwar Plant in association with
‘Sewa Rural’ a renowned institution in eye treatment.
During this camp, 416 patients were examined, out
of which 72 patients were treated for cataract surgery
and 13 patients for other eye ailments, while over 250
spectacles were distributed to needy elderly citizens.
A similar camp was organized at the Patencharu Plant
with the help of Helpage India. Your Company plans to
organize many more such camps in an effort to make a
difference to the society at large.
In the Mumbai Plant, the Company has installed a
Total Water Management centre to educate interested
citizens on concepts of water management. It explains
modalities of implementing various water conservation
projects for all types of building structures. It also
displays working models on Rain Water Harvesting and
provides expertise at no cost.
13
V. INFORMATION TECHNOLOGY VII. FINANCIALS
As intimated in last year’s report, your Company has Net Sales and operating income of the standalone entity
revamped the Customer Relationship Management increased by 21.7% to Rs. 28,213 million. This is driven
system to support the fast growing foray into services mainly on account of good paint volume sales growth of
business. In addition, an application to track and 17.8% and price revisions effected during the year. For the
control the delivery of Home Solutions service to group, net sales and operating income has increased by
the customer has been implemented. Leveraging on 21.5% to Rs. 36,700 million.
this platform, in the coming year, your Company will
Raw material prices continued to exhibit an upward
be implementing customer complaint applications
trend resulting in pressures on the gross margin. Material
for services and products to further improve the
consumption as a percentage to sales for the standalone
customer satisfaction.
entity increased to 58.9% against 58.3% in the previous
In the last year your Company has also implemented year. Profit Before Tax and extraordinary item as a
a state-of-art Product Life Cycle Management system percentage to sales has dropped marginally to 14.5% from
which will help shorten the product development 14.6% in 2005-2006. Profit Before Tax and extraordinary
process by increasing the speed of information flow item stands at Rs. 4,099 million as against Rs. 3,385
across all people involved in the development process. million in the previous year, showing an increase of
This will also give your Company the capability to create 21.1%. For the group, Profit Before Tax and extraordinary
a knowledge base around product development which item has increased by 24% to Rs. 4,349 million.
can be leveraged to support innovation.
The extraordinary item in the previous year’s
With increasing complexity of information standalone accounts relates to provision for diminution
technology applications and also the pace of new in the value of long term investment in Asian Paints
product/customer introductions, it is imperative to (International) Limited, your Company’s wholly owned
manage the process of creating and updating master subsidiary, based on the management’s assessment
data efficiently and accurately. Your Company has of the fair value of the investment to the extent of
in the last year invested in the latest Master Data Rs. 336 million.
Management platform which will support this fast
pace of growth and leverage investments in other IT As a result, net profit for the standalone entity shows an
applications by ensuring consistency of master data increase of 45.7% to Rs. 2,720 million as against Rs. 1868
across systems. million in the previous year. Net profit after minority
interest for the group stands at Rs. 2,810 million, an
To IT enable rapidly changing business processes, increase of 32.5% over the corresponding figure of
your Company is adopting tools and technology that Rs. 2,121 million in the previous year.
support the Enterprise Services Oriented Architecture
paradigm. In the last year, your Company has acquired As always, the Company continues to exhibit tight control
skills on a leading platform in this technology area on its working capital employment. The net core working
by developing and implementing applications using capital turnover for the year has improved to 12 times
this approach. Your Company will continue to adopt from 10 times in the previous year.
such innovative information technology solutions to
APL AP Group
aid business growth. Standalone (Consolidated)
2006-07 2005-06 2006-07 2005-06
VI. RESEARCH & DEVELOPMENT
PBDIT/SALES 16.4% 16.7% 14.0% 14.0%
Technological innovation has been a hallmark of
PBT before EOI/Sales 14.5% 14.6% 11.8% 11.6%
your company’s success throughout its history.
Your Company’s focus in 2006-2007 has been on PAT/SALES 9.6% 8.1% 7.7% 7.0%
upgrading the portfolio of products, opening up Net Sales/Total assets 3.2% 3.1% 3.1% 3.0%
new categories in both the decorative and industrial Return on average capital
markets. Your Company has reassessed its technical employed 51.0% 47.8% 41.8% 38.0%
and cultural capabilities and has determined a more Return on average net
integrated strategy for technology development worth 39.8% 31.3% 39.5% 35.0%
and deployment. It has mapped out a road map for EPS (after EOI) (Rs.) 28.36 19.47 29.30 22.12
technology development and the right organization
Debt:Equity 0.17 0.15 0.37 0.37
and infrastructure to help meet the challenges of a
PBIT/Interest 61 89 24 32
changing market place.

14

VIII. RISK AND OUTLOOK
Your Company expects the overall outlook for 2007-
2008 to be positive. The Government’s continued
thrust on infrastructure and the continuation of tax
incentives on housing loans will continue to help the
economy in general and the paint industry in particular.
Also, with early prediction of normal monsoon in
2007-2008, your Company expects the rural economy
to perform well and support paint demand in the rural
areas. The market for industrial coatings is expected
to maintain its growth momentum with sustained
and significant investments by the public and private
sector enterprises towards capacity creation and plant
up-gradations. Your Company continues to see the
following risks that can affect its performance. If input
costs continue to rise, pressure on operating margins
will continue. The near term growth outlook is a bit
clouded taking into consideration the Reserve Bank of
India’s tightening measures to dampen the inflation. If
interest rates in the Indian economy continue to move
on the upward trajectory, demand might be adversely
affected, particularly in interest rate sensitive sectors
like automobiles and housing. if, as a result of adverse
political, economic or natural conditions, the economies
of the countries where your Company has a significant
presence do not perform well, the performance of the
business can be affected.
IX. INTERNAL CONTROL SYSTEMS AND THEIR
ADEQUACY
Your Company has implemented comprehensive
internal control structures and well defined procedures
to execute financial transactions and ensure that all
assets are safeguarded and protected against loss from
unauthorized use or disposition.
Main features of the internal control systems are:
(i) A well defined organization structure with state
of the art software to connect different business
locations, dealers and vendors for real time
information exchange;
(ii) Formal procedures for sanction, authorization and
implementation of capital expenditure proposals
and operating budgets across the Company;
(iii) An independent Corporate Audit Function to
validate the adequacy of the internal controls from
an operating, financial and statutory compliance
point of view;
(iv) A blend of process audits at Company level and
transaction audits at unit/department level to ensure
adequacy and efficiency of the audit procedures
carried out for domestic and international
operations; and
(v) A summary of audit observations and action taken
reports are placed before the Audit Committee on
a periodical basis.
X. CAUTIONARY STATEMENT
Statements in this Management Discussion and Analysis
describing the Company’s objectives, projections,
Asian Paints Limited Annual Report 2006-2007
estimates and expectation may be “forward looking
statements” within the meaning of applicable laws and
regulations. Actual results might differ materially from
those either expressed or implied.
CORPORATE GOVERNANCE
Pursuant to Clause 49 (VII) of the Listing Agreement,
a separate report on Corporate Governance forms
part of the Directors’ Report in the Annual Report.
Your Company is compliant with the requirements of
the Listing Agreement and necessary disclosures have
been made in this regard in the Corporate Governance
Report.
A certificate from the Auditors of the Company
regarding compliance with the conditions of Corporate
Governance as stipulated under Clause 49 of the Listing
Agreement is attached to this report.
DELISTING
Pursuant to the approval of the shareholders at the
Annual General Meeting held on 26th July, 2002, your
Company had applied for delisting the equity shares of
the Company from certain Regional Stock Exchanges,
in accordance with the Securities Exchange Board of
India (Delisting of Securities) Regulations, 2003. The
Company has received confirmation as to the delisting
of its securities from The Ludhiana Stock Exchange
Association Limited, Vadodara Stock Exchange Limited,
The Stock Exchange, Ahmedabad, The Hyderabad
Stock Exchange Limited, The Calcutta Stock Exchange
Association Limited and Madras Stock Exchange Limited.
Delisting confirmation is awaited from The Delhi Stock
Exchange Association Limited.
FIXED DEPOSITS
Your Company has not accepted any fixed deposits
during the year 2006-2007 and there are no outstanding
fixed deposits from the public as on 31st March, 2007.
SALES TAX DEFERMENT BENEFIT
Your Company continues to avail sales tax deferment
benefit for the expanded capacity at Kasna plant for
which eligibility certificate for Rs. 381.58 million has
been received. A sum of Rs. 46.36 million has been
availed during the year 2006-2007 and with this, the
total amount of deferment availed upto 31st March,
2007 is Rs. 182.32 million.
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
Particulars in respect of conservation of energy and
technology absorption by the Company as per Section
217(1) (e) of the Companies Act, 1956, are given as
Annexure to this report in Form ‘A’ and ‘B’, respectively.
15
FOREIGN EXCHANGE EARNINGS AND OUTGO
Details of expenditure and earnings in foreign
currencies are given in Notes B-14 and B-13,
respectively of Schedule ‘M’ to the financial statements.
PERSONNEL
In terms of the provisions of Section 217(2A)
of the Companies Act, 1956 and the Companies
(Particulars of Employees) Rules, 1975, names and
other particulars of the employees are required to
be set out in the annexure 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 the Company sent to the shareholders
do not contain the said annexure. Any shareholders
desirous of obtaining a copy of the said annexure
may write to the Chief Financial Officer & 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 at the end of the financial
year 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
As per Article 131 read with Article 133 of the Articles
of Association of the Company, Mr. Mahendra
Shah, Mr. Hasit Dani and Mr. Mahendra Choksi
are due to retire by rotation at the conclusion
of the forthcoming Annual General Meeting and
being eligible, offer themselves for reappointment.
Appropriate resolutions for their re-appointment
are being placed before the shareholders for the
approval at the ensuing Annual General Meeting. The
brief resume of the aforesaid Directors and other
information have been detailed in the Corporate
Governance section of this report. Your Directors
recommend their reappointment as Directors of
your Company.
SHARE TRANSFER COMMITTEE
The Share Transfer Committee of the Company
has been reconstituted by the Board of
16
Directors of the Company at its meeting held on
29th January, 2007. The authority to approve transfers,
transmissions, deletions, etc., has been delegated by the
Board of Directors of your Company to the Executive
Directors and the Chief Financial Officer & Company
Secretary. The Corporate Governance section of this report
contains the details in this regard.
COST AUDITOR
The Company has received the approval of the Central
Government for appointment of Mr. Damji Visariya as Cost
Auditor to conduct the audit of the cost records of your
Company for the financial year 2006-2007.
APPRECIATION
Your Directors wish to place on record their appreciation
of the contribution made by employees at all levels to the
continued growth and prosperity of your Company. Your
Directors also wish to place on record their appreciation
of banks and other financial institutions, shareholders,
dealers and consumers for their continued support.
For and on behalf of the Board
Ashwin Choksi
Mumbai, Chairman
10th May, 2007
The Board of Directors of your Company, at their meeting
held on 26th May, 2007, considered and approved, subject
to the approval of the shareholders at the ensuing
Annual General Meeting, the appointment of M/s. BSR &
Associates, Chartered Accountants, as the Joint Auditors
of your Company alongwith the existing Auditors, M/s.
Shah & Co. Accordingly, the following shall form part of
the Directors’ Report:
AUDITORS
M/s. Shah & Co., Chartered Accountants, the existing
Statutory Auditors, have been associated with your
Company since a long time. They will retire at the
conclusion of the ensuing Annual General Meeting
and are eligible for re-appointment. Keeping in
view the growth of your Company, its international
operations and in order to follow the best practices
prevalent internationally, it is proposed to appoint
M/s. BSR & Associates, Chartered Accountants, as Joint
Auditors of your Company, subject to the approval of the
shareholders at the ensuing Annual General Meeting.
Your Directors recommend the re-appointment/
appointment of M/s. Shah & Co., Chartered Accountants
and M/s. BSR & Associates, Chartered Accountants, as
Joint Auditors of your Company.
For and on behalf of the Board
Ashwin Choksi
Mumbai, Chairman
26th May, 2007
 Asian Paints Limited Annual Report 2006-2007

FIVE YEAR REVIEW

(Rs. in Millions except for per share data, number of employees and ratios)
RESULTS FOR THE FINANCIAL YEAR 2006-2007 2005-2006 2004-2005 2003-2004 2002-2003
REVENUE ACCOUNT
Gross Sales 33,606.9 27,774.2 23,388.4 20,259.5 18,066.6
Net Sales and Operating Income 28,212.9 23,191.6 19,545.6 16,960.9 15,350.1
Growth Rates (%) 21.65 18.65 15.24 10.49 11.93
Materials Consumed 16,607.1 13,517.4 11,284.4 9,436.0 8,071.2
% to Net Sales 58.86 58.29 57.73 55.63 52.58
Overheads 7,388.2 6,155.0 5,323.3 4,829.6 4,587.7
% to Net sales 26.19 26.54 27.24 28.47 29.89
Operating Profit 4,622.1 3,878.5 3,253.9 2,912.2 2,817.2
Interest Charges 68.7 38.3 27.5 52.7 83.5
Depreciation 454.2 455.3 476.1 480.1 485.2
Profit Before Tax and Extraordinary item 4,099.2 3,384.9 2,750.3 2,379.4 2,248.5
% to Net Sales 14.53 14.60 14.07 14.02 14.65
Extraordinary item – (336.0) (42.3) (68.1) –
Profit Before Tax and after Extraordinary item 4099.2 3048.9 2708.0 2311.3 2248.5
% to Net Sales 14.53 13.15 13.85 13.62 14.65
Profit After Tax 2,699.3 1,878.0 1,738.2 1,475.8 1,433.7
Prior period items 21.2 (10.2) (3.3) 2.1 (13.6)
Profit After Tax and prior period items 2,720.5 1,867.8 1,734.8 1,477.9 1,420.1
Return on average net worth (RONW) (%) * 39.82 31.27 31.43 29.32 32.01
CAPITAL ACCOUNT
Share Capital 959.2 959.2 959.2 959.2 641.9
Reserves and Surplus 6,481.6 5,263.6 4,763.0 4,356.2 4,124.3
Deferred Tax Liability (Net) 221.5 284.7 305.4 486.6 581.6
Loan Funds 1,256.7 910.8 882.4 704.7 1,036.2
Fixed Assets 3,465.3 3,246.9 3,195.1 3,444.3 3,662.4
Investments 3,343.9 2,745.5 2,584.3 2,424.9 1,476.9
Net Current Assets 2,109.7 1,426.0 1,130.6 637.5 1,244.58
Debt-Equity Ratio 0.17:1 0.15:1 0.15:1 0.13:1 0.22:1
Market Capitalisation 73,359.4 61,777.1 37,514.2 29,135.6 21,187.8
PER SHARE DATA
Earnings Per Share (Rs.) 28.4 ** 19.5 ** 18.1 ** #15.4 #14.8
Proposed Dividend (%) 130.0 @ 125.0 95.0 $ 85.0 110.0
Book Value (Rs.) 77.6 64.9 59.7 $ 55.4 74.3
OTHER INFORMATION
Number of Employees 3,868 3,681 3,550 3,356 3,327

* RONW is calculated after provision for impairment on fixed assets from 2004-2005 onwards.
** EPS calculated on Net Profit after extraordinary item (Refer Note B – 27 in Schedule ‘M’)
# EPS is calculated after adjusting for Bonus issue and the reduction of capital on account of merger of Pentasia Investments
Limited in accordance with Accounting Standard (AS 20) - Earnings per share
@ Includes one-time special dividend of 25%
$ On increased capital

17
 ANNEXURE TO DIRECTORS’ REPORT
FORM A FORM B
Disclosure of particulars with respect to Conservation of Disclosure of particulars with respect to Technology
Energy : Absorption :
2006-07 2005-06 Research and Development (R&D)
1. Specific area in which R&D is carried out by the
A. Power and fuel consumption :
Company.
1. Electricity : The R&D Function of your Company is carrying out
(a) Purchased – the following activities to support the business goals of
Units (‘000 KWH) 26,732 23,841 your Company:
Total amount (Rs. in million) 117 103 (i) Development of new products and processes
related to surface coatings and intermediates.
Rate/unit (Rs.) 4.37 4.30
(ii) Value Engineering and improving formulation
efficiency of existing products.
(b)Own Generation :
(iii) Technology supports to all overseas units in 22
Through diesel generator – countries.
Units (‘000 KWH) 3,987.37 2,676.33
(iv) Upgradation of products and processes to
Units per ltr. of diesel oil 3.36 3.55 reduce environmental and safety concerns.
Cost/unit(Rs.) 9.13 8.38 (v) Identification of alternate and new raw materials
and vendors enabling product development,
Natural gas – quality improvement, cost benefits, supply chain
Units (‘000 KWH) 7,595 7,077 flexibility and crisis management.
Units per nm3 3.36 3.34 (vi) Development of analytical test methods,
Cost/unit (Rs.) 3.27 3.14 characterization techniques and application
techniques essential for product development,
bench marking, process control and customer
2. Coal : services.
Quantity (in MTs) 16,259.21 16,863.70
Total amount (Rs. in million) 43.78 43.73 2. Benefits derived as a result of above R&D:
Average rate/MT (Rs.) 2692 2593 (i) Continuous upgrades of high end products.
(ii) Luxury ultra gloss enamel launched.
3. Diesel : (iii) Development of special textured exterior paint.
Quantity (in KL) 982.55 850.63 (iv) Metallic shades for premier interior products.
Total amount (Rs. in million) 30.18 26.50 (v) Improved tracking of projects, workflows and
efficiencies due to implementation of new R&D
Average rate/KL (Rs.) 30.71 31.16 software for product life cycle management
implemented.
4. Furnace oil : (vi) Range of colours offered in wood finishes,
Quantity (in MTs) 1,019.92 904.32 melamyne and PU, under the brand name AP
PU Palatte/AP Melamine Palatte through tinting
Total amount (Rs. in million) 17.36 15.79
system.
Average rate/kg. (Rs.) 17.02 17.46 (vii) Deep shades offered in tinting system introduced
in tractor emulsion and luster.
5. Natural gas : (viii) Process modification done in manufacturing
Quantity (in ‘000 cubic m.) 3,973.10 2,762.47 colorants, emulsion and primer which helped to
improve process cycle time and productivity.
Total amount (Rs. in million) 37.71 24.92
(ix) Development of polysulphide sealant for road
Average rate/cubic nm. (Rs.) 9.49 9.02 segment.
(x) Development of oil sealing primer for flooring
B. Consumption per unit of production segment.
Electricity Furnace Oil Natural Gas Coal Diesel (xi) Development of moisture insensitive primer for
(KWH/Ton/KL) (Ton/KL) (Ton/KL) (Ton) (Ton/KL)
green concrete.
06-07 05-06 06-07 05-06 06-07 05-06 06-07 05-06 06-07 05-06
(xii) Development of high strength self levelling
Paints 95 97 72 68 55 50 – – 62 60
screed for flooring industries.
Phthalic 44 3* – – 107 58 – – –
(xiii) Capability development for corrosion monitoring
Penta 959 940 3 7 – – 3 3 – – and simulation using electro-chemical impedance
* During the year, Phthalic plant was operational throughout and hence, the power spectroscopy.
consumption for startup was Nil.
(xiv) Development of rapid cure PU system for general
industrial liquid paint segment.

18
 Asian Paints Limited Annual Report 2006-2007

(xv) Development of two component PU system for 4. Expenditure on R & D during the year is as follows:
plastic industries. (Rs. in Millions)
(xvi) Application of new instrumental methods for
2006-07 2005-06
characterisation of polymers and coatings.
(a) Capital 12.54 31.99
(xvii) Development of water borne retro-reflective
(b) Recurring 128.95 108.55
road marking paint.
Total 141.49 140.54
(xviii) One coat emulsion paint equivalent to Dulux Total R & D as a percentage of
Pentalite launched in Sri Lanka. turnover 0.49% 0.60%
(xix) Weatherflex 500 - Elastomeric wall coating with
PSB certification, Berger Paints Singapore Pte. Technology absorption, adaptation and innovation :
Limited. All developments were done indigenously.
(xx) Pipeline coating conforming to AWWA Foreign exchange earnings and outgo :
specification certified by PSB Singapore.
Your Company’s exports are primarily to its overseas
(xxi) Underwater Epoxy putty – Berger Paints subsidiaries. The main exported materials are raw materials,
Singapore Pte. Limited for Marine Segment. resins and tinting colorants. Going forward, the exports will
(xxii) Scaffolding Paint – Asian Paints (Middle East) primarily be tinting colorants as the overseas subsidiaries
LLC. are focusing their activities towards increasing the number
(xxiii) 1320 Shade gap completion in three products in of tinting machines. The exports of other raw materials
Sri Lanka and four products in Nepal. to subsidiaries are unlikely to increase in future as the
raw material purchases are being directed through group
(xxiv) Completeness of AMC (filling color gamut gap level tie up with suppliers and strategic sourcing by the
in redder yellow region of AMC’s) offered in two units purchases for both of which are directly done by
products in South Asia region. the units from the suppliers. During 2006-2007, an export
(xxv) Industrial tinting system based on in house BU of finished goods to a third party in Africa was done for
Tinters implemented in Berger Paints Emirates Rs. 3.6 million.
Limited.
Details of earnings and expenditure in foreign currency have
been given separately under Notes B – 14 and B – 13 in
3. Further plan of action: Schedule ‘M’ Notes to Accounts.
Your Company considers the development of technical
capabilities to sustain its competitive position in the For and on behalf of the Board
market place to be of primary importance. In order
to better service the customers, the Company will be
strengthening its technical capabilities, redeploying its
technical resources to rapidly emerging opportunities
around the world and leverage its collective capabilities.
Its technical capabilities will be seen as an instrument Ashwin Choksi
for growth. It will further enhance the voice of Chairman
customers and will proactively seek new and innovative Mumbai
opportunities. 10th May, 2007

19
REPORT ON CORPORATE GOVERNANCE
COMPANY’S PHILOSOPHY ON CORPORATE GOVERNANCE:
Corporate Governance today has emerged as an integral
element in the business environment. It is not only a pre-
requisite for attaining sustainable growth in emerging
global market scenario but it is also an embodiment of
the parameters of fairness, accountability, disclosures and
transparency to maximise value for the stakeholders of a
Company.
The governance practices followed by your Company have
played an instrumental role in its pathway to success. All the
procedures, policies and practices followed by the Company
emulate sound governance principles. Comprehensive
disclosures, structured accountability in exercise of powers,
attuning to international standards and commitment in
compliance with regulations and statutes in letter as well
as in spirit have enabled your Company to enhance the
shareholder value.
Your Company believes that e-governance is another milestone
to good governance. Your Company has taken proactive
action to follow the e-governance initiative launched by
Ministry of Company Affairs (MCA) with an objective to
provide prompt and efficient services to stakeholders
by MCA, thereby eliminating the physical interface of
the Company and the shareholders with the Registrar of
Companies (ROC).
Your Company has complied with all the regulations
stipulated by Securities Exchange Board of India (SEBI) in
the Listing Agreement. This chapter, along with chapters
on Management Discussion and Analysis and Additional
Shareholders’ Information, constitutes Asian Paints’
compliance with Clause 49 of the Listing Agreement.
BOARD OF DIRECTORS:
Composition:
The Board of Directors of your Company comprise of an
optimal proportion of Executive and Non-Executive Directors.
The directorate of your Company consists of 3 (three)
Executive Directors and 9 (nine) Non- Executive Directors,
out of which 6 (six) are Independent Directors. All the
Directors, except the Executive Directors, are liable to retire
by rotation and one third of the Directors who are liable to
retire by rotation, are eligible for re-election.
Number of Board Meetings:
Your Company’s Board of Directors met 8 times during the
financial year ended 31st March, 2007 on the following days:
Date(s) on which the meeting(s) were held:
29th April, 2006 29th January, 2007
10th May, 2006 8th February, 2007
28th July, 2006 13th March, 2007
30th October, 2006 29th March, 2007
The time gap between any two Board Meetings does not exceed
four months in accordance with the Clause 49 of the Listing
Agreement. The calendar of Board Meetings to be held in the
succeeding year is determined in advance to review and declare
the quarterly and the annual results of the Company. However,
additional meetings are held as and when necessitated.

Composition, nature of Directorship, the number of meetings attended and the Directorships in other companies of the Board of Directors as on 31st March, 2007:
Name of the Director Nature of Directorship Date of Attendance Directorship Membership and
joining in other Chairmanship of the
the Board Companies (*) Committees of the Board
of other Companies (**)
At the At the Committee Committee
Board last AGM Member Chairman
Meetings
Ashwin Choksi Executive 18.12.2003 (***) 8 Yes 2 2 1
DIN 00009095 Chairman/Promoter
Ashwin Dani Executive Vice-Chairman & 18.12.2003 (***) 8 Yes 6 5 2
DIN 00009126 Managing Director/Promoter
Abhay Vakil Managing Director/Promoter 18.12.2003 (***) 6 Yes 3 2 –
DIN 00009151
Mahendra Choksi Non-executive/Promoter 27.11.1992 8 Yes 4 2 –
DIN 00009367
Amar Vakil Non-executive/Promoter 01.10.1995 4 No 3 – –
DIN 00009252
Hasit Dani Non-executive/Promoter 23.07.2001 8 Yes 4 – –
DIN 00009577
Tarjani Vakil Non-executive/Independent 01.12.1998 7 Yes 6 5 3
DIN 00009603
Dipankar Basu Non-executive/Independent 15.04.2000 8 Yes 9 5 2
DIN 00009653
Deepak Satwalekar Non-executive/Independent 30.05.2000 8 No 6 3 2
DIN 00009627
R.A. Shah Non-executive/Independent 07.04.2001 7 Yes 13 8 5
DIN 00009851
S. Sivaram Non-executive/Independent 07.04.2001 3 No 3 1 –
DIN 00009900
Mahendra Shah Non-executive/Independent 06.06.2001 7 Yes 4 – –
DIN 00009786
Notes:
* Excludes directorship in Asian Paints Limited. Also excludes directorship in Indian Private Limited Companies, Foreign Companies and Alternate Directorships. As per the disclosure(s)
received from the Directors, the Directors do not hold directorship in more than 15 Companies.
** For the purpose of considering the limit of the Committee Memberships and chairmanships of a Director, the Audit Committee and the Shareholders’ Grievance Committee of public
listed committees alone has been considered. As per disclosure(s) received from the Directors, the Directors do not hold Memberships in more than 10 Committees and Chairmanships
in more than 5 Committees.
*** The Executive Directors are appointed under a service contract which is renewable after five years of appointment, as governed by the agreement(s) entered into with Company.

20

Board Procedures:
The effectiveness of the decision-making of the Board is
buttressed by its structure and procedures. The Board of your
Company meets at regular intervals, with sufficient notice of
the issues and the Agenda to be discussed and backed by
necessary information and material to enable to the Directors
to discharge their fiduciary responsibilities in an efficient
manner. All the deliberations and the decisions occurring at
every meeting of the Board of Directors are appropriately
recorded and minuted. The draft minutes of each meeting
is circulated to the members of the Board for their approval
and then finalised.
The Board has complete and unrestricted access to any
information required by them to transact business and
take decisions. Also, as a good governance practice, all the
information and data, relevant for the Board to understand
the business of the Company in general as well as the agenda
items circulated to the Board, are comprehensive in nature.
Following information inter-alia is supplied to the Board on
a periodical basis:
• Annual budgets, operating plans and budgets, capital
budgets,
• Quarterly, half yearly and annual results of the Company
and its operating divisions or business segments along
with the consolidated results of the group,
• Minutes of meetings of the audit committee and other
committee(s) of the Board,
• Information on recruitment and remuneration of senior
officers just below the Board level,
• Materially important show cause, demand, prosecution
and penalty notices,
• Fatal or serious accidents or dangerous occurrences,
• Any materially significant effluent or pollution problems,
• Any materially relevant defaults in financial obligations to
and by the Company or substantial non-payment for goods
sold by the Company,
• Any issue which involves possible public or product liability
claims of a substantial nature,
• Details of any joint venture or collaboration agreement,
• Transactions that involve substantial payment towards
goodwill, brand equity or intellectual property,
• Significant labour problems and their proposed solutions,
• Significant initiatives and developments on the human
resource and industrial relations fronts,
• Sale of a material nature of investments, subsidiaries and
assets, which are not in the normal course of business,
• Investment of funds of the Company,
• Quarterly details of foreign exchange exposure and the
steps taken by management to limit the risks of adverse
exchange rate movement,
• Status on legal cases,
• Non compliance of any statutory nature of listing
requirements,
• Proposals for investments, divestments, loans, guarantees,
mergers and acquisitions,
Asian Paints Limited Annual Report 2006-2007
• Approval of related party transactions,
• General notices of interest of Directors,
• Review of compliance reports of all laws applicable to the
Company,
• Review of the minutes of the meetings of the Board of
Directors of unlisted subsidiary companies.
• Review of the disclosures made by the senior management
personnel as to all material financial and commercial
transactions, where they have personal interest; and
• All other information which is relevant for decision
making by the Board and all other statutory information
which is required by Clause 49 of the Listing Agreement.
COMMITTEES OF THE BOARD:
The Board of Directors of your Company has constituted four
committees: Audit Committee, Remuneration Committee,
Shareholders/Investors Grievance Committee and Share
Transfer Committee. The roles and responsibilities assigned to
these Committees are covered under the terms of reference
approved by the Board and are subject to review by the Board
from time to time. The minutes of the meetings of Audit
Committee, Remuneration Committee and Shareholders/
Investors Grievance Committee are placed before the
Board for their discussions and noting. The details as to the
composition, terms of reference, number of meetings and
related attendance, etc of these Committees are provided
below:
AUDIT COMMITTEE:
Audit Committees have become a mechanism for providing
an independent overview of the Company’s strategy, financial
reporting, risk areas and control systems. Audit Committees
are a part of the process that enhances the financial reputation
of a company.
The Board of your Company has constituted a very qualified and
independent Audit Committee which promotes relationship of
accountability between the Board, Management and Statutory
Auditors. The prime objective of the Audit Committee inter-
alia is to liaise with the management; internal and statutory
auditors, reviewing the adequacy of internal controls and
compliance with significant policies and procedures and
reporting key issues to the Board.
The Audit Committee of your Company comprises of 3
(Three) Independent Directors. The members of the Audit
Committee as on 31st March, 2007 are Ms. Tarjani Vakil
(Chairperson), Mr. Dipankar Basu and Mr. Mahendra Shah, all
of whom are financially literate in terms of Clause 49 of the
Listing Agreement.
Date(s) on which the meetings were held and the attendance
details of the members of the Committee during the financial
year ended 31st March, 2007:
Date(s) on which the meeting(s) were held during the financial year
2006-2007
29th April, 2006 27th October, 2006
9th May, 2006 16th December, 2006
27th July, 2006 25th January, 2007
26th September, 2006
21
Attendance details of the members during the financial year 2006-2007: • Reviewing the appointment and terms of remuneration of
the Chief Internal Auditor of the Company
Name Meeting details Whether
attended last The Audit Committee also reviews the Management
Held during Attended % AGM
the year of total (Y/N) Discussion and Analysis of the financial condition and
results of operations, statements of significant related party
Tarjani Vakil 7 6 85.7% Y transactions, the financial statements and investments made
(Chairperson) by the unlisted subsidiary companies and any other matter
Mahendra Shah 7 7 100% Y which may be a part of its terms of reference or referred by
the Board of Directors. The Audit Committee advises and also
Dipankar Basu 7 6 85.7% Y recommends to the management the pivotal and new areas
which require greater amount of diligence by the Internal
The role of the Audit Committee inter-alia includes the Audit Department of your Company.
following:
The Committee invites the Executive Chairman of your
• Overseeing the Company’s financial reporting process and Company, Chief Financial Officer & Company Secretary,
the disclosure of its financial information to ensure that the Financial Controller, Chief Manager – Corporate Accounts,
financial statements are correct, sufficient and credible. Statutory Auditor(s) and Chief Internal Auditor to attend
• Recommending to the Board, the appointment, re- Audit Committee Meeting(s). The Chief Financial Officer &
appointment and, if required, the replacement or removal Company Secretary acts as Secretary to the Committee.
of the statutory auditor, fixing of audit fees and approving The composition, procedures, role, powers and the terms of
payments for any other service. reference of the Audit Committee are as stipulated in Section
• Reviewing, with the management, the annual financial 292A of the Companies Act, 1956 and the Clause 49 of the
statements before submission to the Board for approval, Listing Agreement.
with particular reference to:
• Matters required to be included in the Directors’ REMUNERATION COMMITTEE
Responsibility Statement to be included in the Board’s Composition and terms of reference:
report as per Section 217(2AA) of the Companies Act,
1956; The Board has constituted a Remuneration Committee which
determines and recommends to the Board, the remuneration
• Changes in the Accounting policies and practices and
payable to the Executive Directors of the Company.
the reasons for the same, major accounting entries and
significant adjustments made in the financial statements Details as to the composition of the Remuneration Committee,
arising out of audit findings; date(s) on which the meetings were held and the attendance
• Compliance with listing and other legal requirements details of the members of the Committee during the financial
relating to financial statements; year ended 31st March, 2007:
• Disclosure of any related party transactions; and Date(s) on which the meeting(s) were held during the financial year 2006-2007:

• Qualifications in the draft audit report, if any. 29th April, 2006

• Reviewing with management quarterly and half-yearly 27th July, 2006

financial statements before submission to the Board for
approval. Attendance details of the members during the financial year 2006-2007:

• Reviewing with the management performance of statutory Composition of Meeting details Whether
and internal auditors. the Remuneration attended last AGM
Committee Held during Attended % (Y/N)
• Reviewing adequacy of internal audit systems and the the year of total
internal audit department including the structure, staffing, Dipankar Basu 2 2 100% Y
reporting structure and frequency of internal audit. (Chairman)
• Discussion with the internal auditors on any significant Tarjani Vakil 2 2 100% Y
findings and follow up thereon.
• Reviewing the Company’s financial and risk management Deepak Satwalekar 2 2 100% N
policies.
• Reviewing the internal investigations by the internal The terms of reference of the Remuneration Committee are
auditors into matters where there is a suspected fraud as follows:
or irregularity or failure of internal control systems of a
material nature and reporting the matter to the Board. • To review and recommend to the Board, the salaries,
commission, other benefits, service agreements and
• Discussion with the statutory auditors before the audit employment conditions of Executive Directors.
commences, about the nature and scope of audit as well
as post-audit discussion to ascertain any area of concern. • To approve the selection, appointment and remuneration
• Reviewing reports furnished by the internal auditors of relatives of Directors for holding an office of profit
and statutory auditors and ensuring suitable follow up pursuant to Section 314 of the Companies Act, 1956.
thereon.
Remuneration Policy:
• Looking into reasons for substantial defaults in payment The remuneration policy of the Company is purely
to the depositors, debenture holders, shareholders and performance driven which is assessed on a periodical basis
creditors, if any. as against the benchmarked achievements. The Company
• Reviewing of the Cost Accounting records of the Company’s endeavors to attract, retain, develop and motivate a high
products. performance workforce.

22
 Asian Paints Limited Annual Report 2006-2007

Directors with materially significant, pecuniary or
business relationship with the Company:
The transactions with related parties are furnished under
Schedule ‘M’ of the Notes to the Accounts as stipulated under
Accounting Standard 18 (AS-18). There are no transactions of
material nature with the Promoter Directors or their relatives
etc., which may have a potential conflict with the interest of
the Company. Disclosures have also been received during the
year from the Directors and the Senior Managerial Personnel
relating to the financial transactions in which they or their
relatives may have a personal interest. However, none of these
transactions have a potential conflict with the interest of the
Company. The Register of Contracts required to be maintained
under Section 301 of the Companies Act, 1956, containing the
contracts in which the Directors are concerned and interested
is placed at the meeting of Board of Directors of the Company
for their approval and noting, on a periodical basis.
No pecuniary or business relationship exists between the
Non-Executive Directors and the Company, except for
the commission payable to them annually. Mr. R. A. Shah,
Independent Director of the Company, is a senior partner
of M/s. Crawford Bayley & Co., Solicitors & Advocates, of
the Company, which renders professional services to the
Company. The quantum of fees paid to M/s. Crawford Bayley
& Co, is an insignificant portion of their total revenue, thus,
M/s. Crawford Bayley & Co., are not construed to have any
material association with the Company.
Details of the remuneration paid to the Directors of
the Company are as follows:
Executive Directors:
The remuneration payable to the three Executive Directors
of the Company is recommended by the Remuneration
Committee to the Board. The criteria adopted by the
Committee to determine the remuneration of the Executive
Directors is the performance of the Company and the industry
benchmarks. The Company has entered into agreements with
the Executive Directors of the Company, which are approved
by the Board of Directors as well as the shareholders of
the Company, detailing the terms of their employment and
their remuneration. These agreements with the Executive
Directors are for a period of five years and renewed
thereafter, on mutually accepted terms and conditions. The
Executive Directors were re-appointed on 18th December,
2003, and in accordance with the terms of their agreements,
their appointments can be terminated by giving six months
notice in writing. Their remuneration structure comprises of
salary, house rent allowance, commission, perquisites, etc.
No severance is payable to the Directors on termination of
employment.
Non-Executive Directors:
The contribution of the Non-Executive/Independent
Directors of the Company is critical for ensuring appropriate
directions with regard to leadership, vision, strategy, policies,
monitoring, supervision, accountability to shareholders
and other stakeholders, and to achieving greater levels of
performance on a sustained basis as well as adherence to
the best practices of corporate governance. The criterion for
determining the commission payable to the Non-Executive
Directors includes evaluating their performance in terms of
the contribution made by them in leading the Company to
achieve its objectives as well as their commitment towards
attending the meetings and thereby enhancing the decision-
making process of the Board. The commission paid to the
Non-Executive Directors of the Company is within the limits
set under Section 309 of the Companies Act, 1956 and the
limits approved by the shareholders at their meeting held
on 28th June, 2004. The commission payable is determined
as a percentage to the profits (as determined under Section
349 and 350 of the Companies Act, 1956) of the Company.
Apart, from commission the Non-Executive Directors are
also paid sitting fees of Rs. 10,000/- (Rupees Ten Thousand
only) per meeting, for attending the meeting(s) of the
Board of Directors and Committees thereof, except for
attending the meeting(s) of the Share Transfer Committee.
The Company has not granted any Stock Options to any of
its Directors.

Remuneration paid to the Directors and their relationship with each other: (Figures in Rs.)

Name of the Director Relationship Salary HRA Perquisites* Sitting Commission Total
with each other Fees

Ashwin Choksi Brother of Mahendra Choksi 26,10,000 10,44,000 37,19,028 – 85,00,000 1,58,73,028

Ashwin Dani Father of Hasit Dani 26,10,000 10,44,000 37,82,700 – 85,00,000 1,59,36,700

Abhay Vakil Brother of Amar Vakil 26,10,000 10,44,000 37,82,700 – 85,00,000 1,59,36,700

Mahendra Choksi Brother of Ashwin Choksi – – – 1,00,000 7,00,000 8,00,000

Amar Vakil Brother of Abhay Vakil – – – 40,000 7,00,000 7,40,000

Hasit Dani Son of Ashwin Dani – – – 90,000 7,00,000 7,90,000

Tarjani Vakil ** – – – 1,50,000 9,00,000 10,50,000

Dipankar Basu ** – – – 1,60,000 9,00,000 10,60,000

Deepak Satwalekar ** – – – 1,00,000 7,00,000 8,00,000

R.A. Shah ** – – – 70,000 7,00,000 7,70,000

S. Sivaram ** – – – 30,000 2,65,000 2,95,000

Mahendra Shah ** – – – 1,60,000 9,00,000 10,60,000

Note:

* Perquisites include Company’s contribution to provident and superannuation fund, medical and leave travel allowance etc., as well as monetary value of perquisites
as per Income Tax rules.

** There is no relationship between any of the Independent Directors

23
Employees holding an office or place of profit in the SHAREHOLDERS/INVESTORS GRIEVANCE
Company pursuant to Section 314 of the Companies COMMITTEE:
Act, 1956, who are relatives of the Directors:
In terms of Clause 49 of the Listing Agreement, the Board has
Mr. Jalaj Dani, son of Mr. Ashwin Dani, Vice Chairman & Managing constituted the Shareholders/Investors Grievance Committee,
Director, holds the position of President – International under the chairmanship of a Non-Executive Director/
Business Unit and had drawn a gross remuneration of Rs. Independent Director to specifically look into the redressal
66,77,784/- (Rupees Sixtysix Lakhs Seventyseven Thousand of shareholders’ complaints.
Seven Hundred Eightfour only) during the financial year 2006-
2007. Mr. Manish Choksi, son of Mr. Mahendra Choksi, Non- Details as to the composition of the Committee, date(s) on
Executive Director, holds the position of Chief – Corporate which the meetings were held and the attendance details
Strategy & CIO and had drawn a gross remuneration of Rs. of the members of the Committee during the financial year
66,82,827/- (Rupees Sixtysix Lakhs Eightytwo Thousand Eight ended 31st March, 2007:
Hundred Twentyseven only) during the financial year 2006- Date(s) on which the meeting(s) were held during the financial year 2006-2007:
2007. Ms. Nehal Vakil, daughter of Mr. Abhay Vakil, Managing
Director, holds the position of a Manager – Finance and had 27th October, 2006
drawn a gross remuneration of Rs. 11,31,403/- (Rupees Eleven 29th March, 2006
Lakhs Thirtyone Thousand Four Hundred Three only) during
the financial year 2006-2007.
Attendance details of the members during the financial year 2006-2007:
Mr. Malav Dani, son of Mr. Ashwin Dani, Vice Chairman Composition of Meeting details Whether
& Managing Director, held the position of the Manager the Shareholders/ Held Attended % attended
– Quality Support and separated from the Company on Investors Grievance during the of total last AGM
Committee (Y/N)
5th December, 2006. During the financial year, for the tenure of
period upto which he was employed, he was paid a Director
gross remuneration of Rs. 8,34,370/- (Rupees Eight Lakhs Mahendra Shah 2 2 100% Y
(Chairman)
Thirtyfour Thousand Three Hundred Seventy only). During
the financial year ended 31st March, 2007, the Remuneration Abhay Vakil 2 2 100% Y
Committee recommended to the Board the appointment Mahendra Choksi 2 2 100% Y
of Mr. Vishal Choksi, son of Mr. Shailesh Choksi (a Hasit Dani 2 1 50% Y
relative of Company’s Directors Mr. Ashwin Choksi and
Mr. Mahendra Choksi) as a Management Trainee for a The terms of reference of the Committee include the
remuneration less than Rs. 6,00,000/- (Rupees Six Lakhs only) following:
p.a., including all allowances. The Board at its meeting held • To specifically look into complaints received from the
on 28th July, 2006, subject to the approval of the shareholders shareholders of the Company.
at their ensuing Annual General Meeting, approved the • To oversee the performance of the Registrar and Transfer
appointment of Mr. Vishal Choksi in terms of Section Agent of the Company.
314(1)(b) of the Companies Act, 1956. The appointment
of Mr. Malav Dani and revision in remuneration of Mr. Jalaj • To recommend measures for all overall improvement in
Dani, Mr. Manish Choksi and Ms. Nehal Vakil was approved the quality of services to the investors.
by the shareholders at the Annual General Meeting held on Mr. Jayesh Merchant, Chief Financial Officer & Company
27th June, 2005 as well as the Central Government. Secretary is the Compliance Officer of the Company as per
Shareholding of the Non-executive/Independent Directors of the the Listing Agreement.
Company as on 31st March, 2007:
Details pertaining to the number of complaints received
Name of the Nature of No. of Percentage to and resolved and the status thereof during the financial year
Director Directorship Shares held the paid up
capital*
ended 31st March, 2007:
Mahendra Choksi Non-executive/ 1,65,638 0.173 Nature of complaints Received Replied
Promoter
Non receipt of Share Certificates lodged for transfer 1 1
Amar Vakil Non-executive/ 10,64,021 1.109
Promoter Non receipt of Dividend warrants 5 5

Hasit Dani Non-executive/ 5,15,560 0.537 Non receipt Share Certificate lodged for split/ 3 3
Promoter Bonus shares
Tarjani Vakil Non-executive/ Nil Nil Letters from SEBI/Stock Exchanges 10 10
Independent
Others/miscellaneous 11 11
Dipankar Basu Non-executive/ Nil Nil
Independent Total 30 30
Deepak Satwalekar Non-executive/ Nil Nil
Independent All the complaints as at the end of financial year 31st March,
2007, stand resolved and no complaints are pending for
R. A. Shah Non-executive/ 1,809 0.001
Independent
redressal except where they are constrained by dispute or
legal impediments or due to incomplete or non submission
S. Sivaram Non-executive/ Nil Nil of documents by the shareholders. Certain Court cases are
Independent
pending in the Courts/Consumer Forums, relating to disputes
Mahendra Shah Non-executive/ Nil Nil over the titles to the shares of the Company in which either
Independent the Company has been made a party or necessary intimation
Total 17,47,028 1.820 thereof has been received by the Company. The Company
* As per the declarations made to the Company by the Directors as to the shares shall comply with the decrees or orders of the Hon’ble Courts
held in their own name. as and when the same are received by the Company.

24
 Asian Paints Limited Annual Report 2006-2007

SHARE TRANSFER COMMITTEE: GENERAL BODY MEETINGS:

The Share Transfer Committee was reconstituted by the Board Venue and the time of the last three Annual General Meetings of the
Company:
at their meeting held on 29th January, 2007 consequent to
the reduction in the number of share transfer requests and to Year Location Meeting Time No. of
facilitate processing of transfers, transmissions, deletion, etc, Date Special
Resolutions
more expeditiously by the Company in co-ordination with
set out at
Sharepro Services (India) Private Limited, the Company’s the AGMs
Registrar and Transfer Agent.
2005-06 Patkar Hall, 26th 3.00 p.m Nil
Constitution of the Share Transfer Committee before and after its Nathibai Thackersey Road, June,
reconstitution: New Marine Lines, 2006
Mumbai 400 020.
Members of the Committee Members of the Committee after
before reconstitution reconstitution 2004-05 Patkar Hall, 27th 3.00 p.m 7
Nathibai Thackersey Road, June,
Abhay Vakil (Chairman) Abhay Vakil (Chairman) New Marine Lines, 2005
Ashwin Dani Ashwin Dani Mumbai 400 020.
2003-04 Yashwantrao Chavan, 28th 3.00 p.m 2
Mahendra Choksi Ashwin Choksi
Pratisthan Auditorium, June,
Hasit Dani Jayesh Merchant, Chief Financial Y. B. Chavan Centre, 2004
Officer & Company Secretary General Jagannath Bhosle Marg,
Next to Sachivalaya Gymkhana,
The Share Transfer Committee, constituted by the Board has Mumbai 400 021.
been delegated powers to administer the following:
No special resolutions were passed at the last AGM by the
• To effect transfer of shares; shareholders. All special resolutions set out in the notices
• To effect transmission or deletion of shares; for the year 2003-2004 and 2004-2005 were passed by the
shareholders at the respective meetings with requisite
• To issue duplicate share certificates as and when required; majority. There were no resolutions passed through postal
ballot during the financial year ended 31st March, 2007.
• To approve the register of members as on the record
date(s) and/or book closure dates for receiving dividends DISCLOSURES:
and other corporate benefits; and • Disclosures on materially significant related party
• To review correspondence with the shareholders transactions:
vis-à-vis legal cases and take appropriate decisions in that The Company has not entered into any other transaction
regard. of a material nature with the Promoters, Directors or the
Management, their subsidiaries or relatives etc. that may
The Committee, in accordance with Clause 49 (IV) (G) of the have potential conflict with the interest of the Company
Listing Agreement, attends to the share transfer and other at large. All transactions were carried out on an arms
formalities once in a fortnight and has met 25 times during length basis and were not prejudicial to the interest of the
the financial year 2006-2007. Company.
• Details of non-compliance(s) by the Company:
SUBSIDIRAY COMPANIES: The Company has complied with all the requirements of
In terms of Clause 49 (III) of the Listing Agreement, your the Stock Exchange(s) or Securities Exchange Board of
Company does not have a material non-listed Indian subsidiary India on matters related to Capital Markets, as applicable
company, whose turnover or net worth exceeds 20% of from time to time. There were no penalties imposed or
the consolidated turnover or networth respectively, of the strictures passed against the Company by the statutory
Company and its subsidiaries in the immediately preceding authorities in this regard.
accounting year.
• Disclosure of Accounting Treatment:
The Audit Committee reviews the financial statements The Company follows Accounting Standards issued by
including investments by the unlisted subsidiary Companies of the Institute of Chartered Accountants of India and in
the Company from time to time. Also, copies of the minutes of preparation of financial statements, the Company has not
the unlisted subsidiary Companies of the Company are placed adopted a treatment different from that prescribed in the
before the Board of the Company on a periodical basis. any Accounting Standard.
CEO/CFO CERTIFICATION: • Details of compliance with mandatory and non-mandatory
As required by Clause 49(V) of the Listing Agreement, the requirements of Clause 49 of the Listing Agreement:
CEO/CFO Certificate signed by Mr. Ashwin Choksi, Chairman Your Company has complied with all the mandatory
and Mr. Jayesh Merchant, Chief Financial Officer & Company requirements of the revised Clause 49 of the Listing
Secretary was placed before the Board of Directors at their Agreement. Following is the status of the compliance with
meeting held on 10th May, 2007. the Non-Mandatory requirements of the Clause 49 of the
Listing Agreement:
• The Company has constituted a Remuneration
Committee. The Remuneration Committee determines
the remuneration payable to the Executive Directors
of the Company. The Chairman of the Committee was
present at the Annual General Meeting of the Company
held on 26th June, 2006.
• Half-yearly results of the Company are sent to all
shareholders.

25
 • During the year under review, there was no audit Following are the details of the Directors retiring by rotation
qualification in the Company’s financial statements. The at the ensuing Annual General Meeting, as required pursuant
Company continues to adopt best practices to ensure a to Clause 49(IV) of the Listing Agreement:
regime of unqualified financial statements.
Mr. Mahendra Shah
• Code of Conduct for the Board of Directors and senior
management personnel:
Date of birth 19th April, 1940
The Board of Directors at their meeting held on 25th
March, 2005, had adopted a Code of Conduct for all the Qualification B.E. (Electrical), M.E. (Industrial Engineering)
Board Members and senior management personnel of the
Company in consonance with the requirement under Clause Date of joining the Board 6th June, 2001
49(I)(D) of the Listing Agreement. The code of conduct has
been posted on the website of the Company. All the Board Mahendra Shah is a B.E. (Electrical Engineering) from Mumbai
members and the senior management personnel have University and has completed M.E. (Industrial Engineering)
affirmed their compliance with the said code of conduct for from New York University, U.S.A. He was the Managing
the financial year ended 31st March, 2007. The declaration Director of The Indian Card Clothing Company Limited (an
to this effect signed by Mr. Ashwin Choksi, Chairman of the Indo-English joint-venture) for over 15 years and has had
Company forms part of the report. successful associations with companies such as Suessan Asia
• Code of Conduct for Prevention of Insider Trading: Limited (Managing Director) and Texmatic India Limited
(Director). Mr. Mahendra Shah has proven entrepreneur skills
Your Company has adopted a Code of Conduct for and business expertise.
Prevention of Insider Trading, in accordance with the
Securities and Exchange Board of India (Prohibition of Mr. Mahendra Shah does not own any shares of the Company
Insider Trading) Regulations, 1992. Mr. Jayesh Merchant, in his own name or in the name of others and having beneficial
Chief Financial Officer & Company Secretary is the interest.
Compliance Officer. All the Directors, senior management
personnel and such other designated employees of the Mr. Hasit Dani
Company who are expected to have access to unpublished
price sensitive information relating to the Company are Date of birth 14th June, 1972
covered under the said code. The Directors, their relatives,
senior management personnel, designated employees etc. Qualification Master in Business Administration
are restricted in purchasing, selling and dealing in the
Date of joining the Board 23rd July, 2001
shares while possession of unpublished price sensitive
information about the Company as well as during certain
periods known as ‘Quiet Period. Mr. Hasit Dani holds a master degree in Business Administration
from University of Pittsburgh, U.S.A and Bachelors Degree
• Management Discussion and Analysis: in Business Administration from University of Massachussetts.
This annual report has a detailed section on Management He has experience in General Administration. Presently
Discussion and Analysis forming part of the Directors’ he is working as Managing Director of Gujarat Organics
Report. Limited.
MEANS OF COMMUNICATION: Details as to his shareholding in the Company either in his
The quarterly results of Company are published in all India own name or in the name of others and having beneficial
editions of Business Standard and Mumbai editions of Free Press interest in the shares held by others, as on 31st March, 2007,
Journal and Navshakti. The results of the Company are also are as follows:
put up on the Company’s corporate website: www.asianpaints.
Category Number of Percentage to
com. Also, the Annual General Meeting(s) conducted by the Shares paid-up capital
Company enable face to face communication by the Board
of Directors with the shareholders of the Company. The Own name 5,15,560 0.537
Company’s official news releases and presentations made to
the institutional investors and analysts are also available on Held in the name of other persons/ Nil Nil
the Company’s website. All important information pertaining companies and having beneficial
interest in such shares
to the Company is also mentioned in the Annual Report
of the Company containing inter-alia Audited Accounts, Total 5,15,560 0.537
Consolidated Financial Statements, Directors’ Report,
Auditors’ Report and the Corporate Governance Section
which is circulated to the members and others entitled Mr. Mahendra Choksi
thereto for each financial year. The Annual Report, quarterly
results, shareholding pattern etc. are posted on the website: Date of birth 19th April, 1941
www.sebiedifar.nic.in, pursuant to Clause 51 of the Listing
Qualification B.E. (Chem), M.Sc. (Tech.), PPV
Agreement and are also intimated to Stock Exchange(s) which
in turn display the same on their website. Date of joining the Board 27th November, 1992

DISCLOSURES REGARDING RE-APPOINTMENT OF
DIRECTORS:
As per the Companies Act, 1956, at least two-thirds of the
Board should consist of retiring Directors. Of these, one-third
of the retiring Directors are required to retire every year. All
the Directors, excepting the three Executive Directors are
liable to retire by rotation.
Mr. Mahendra Choksi has considerable knowledge and
experience in the Chemical industry, particularly in ‘Synthetic
Resins’. Mr. Mahendra Choksi was Director-Production &
Process Engineering till 1st March, 1973 in Asian Paints Limited.
Prior to becoming a Director on the Board of Asian Paints
Limited, he was holding the position of Managing Director in
Resins and Plastics Limited till 31st August, 2002.

26
 Asian Paints Limited Annual Report 2006-2007

Details as to his shareholding in the Company either in his Dividend:

own name or in the name of others and having beneficial An interim dividend of Rs. 5.50 per share (55 per cent)
interest in the shares held by others, as on 31st March, 2007 was declared on 30th October, 2006 and paid on 9th
are as follows: November, 2006 and a 2nd interim dividend of Rs. 6.50
per share (65 per cent) per share has been declared on
Category Number of Percentage to 13th March, 2007 and paid on 26th March, 2007. A final
Shares paid-up capital dividend of Re 1/- (10 per cent) per share has been
recommended on 10th May, 2007 and subject to the
Own name 1,65,638 0.173
approval from the shareholders at the AGM, will be paid
Held in the name of other persons/ 25,44,671 2.653 on and from 27th June, 2007 as follows:
companies and having beneficial
interest in such shares • to those members whose names appear on the Company’s
Register of Members, after giving effect to all valid share
Total 27,10,309 2.826 transfers in physical form lodged on or before 15th June,
2007.

• in respect of shares held in electronic form, to those

members whose names appear in the statement of
CERTIFICATE BY THE STATUTORY AUDITORS AS TO beneficial ownership furnished by NSDL and CDSL as at
COMPLIANCE OF THE CONDITIONS OF CORPORATE the closing hours of 15th June, 2007.
GOVERNANCE:
The certificate given by the Statutory Auditors of the
Dividend declared and paid by the Company:
Company as to the compliance of the condition of Corporate
Governance pursuant to Clause 49(VII)(1) of the Listing Dividend during the last five years:
Agreement is annexed to the Corporate Governance report
and forms part of the report. 2001-2002 90 578

2002-2003 110 706

2003-2004 85* 815

GENERAL SHAREHOLDER INFORMATION 2004-2005 95* 911

Annual General Meeting:
2005-2006 125* 1199
Date Tuesday, 26 June, 2007.
2006-2007 (1st interim) 55* 528
Venue Yashwantrao Chavan Pratishthan Auditorium,
Y. B. Chavan Centre, General Jagannath Bhosle Marg, 2006-2007 (2nd interim) 65* 623
Next to Sachivalaya Gymkhana, Mumbai 400 021
* On increased capital
Time 3.00 p.m.

Listing:
Financial calendar: The Company’s shares are listed on:
Financial year: 1st April to 31st March. • Bombay Stock Exchange Limited (BSE)
For the year ended 31st March, 2007 results were announced Phiroze Jeejeebhoy Towers, 25th Floor, Dalal Street,
on: Mumbai 400 023.

29th July, 2006 First quarter • National Stock Exchange of India Limited (NSE)
Exchange Plaza, 5th Floor, Plot No. C/1 “G” Block,
30th October, 2006 Half yearly Bandra Kurla Complex, Bandra (East), Mumbai 400 051.
29th January, 2007 Third quarter
The Company has paid the listing fees for the financial year
11th May, 2007 Fourth quarter and annual
2006-2007 to the Stock Exchange(s) on which Company’s
shares are listed. The Company has also paid custodial fees
for the year 2006-2007 to National Securities Depository
For the financial year ending on 31st March, 2008 results will Limited (NSDL) and Central Depository Services (India)
be announced tentatively: Limited (CDSL). The International Security Identification
Number (ISIN) allocated to the Company by NSDL and CDSL
On or around 30th July, 2007 First quarter is INE021A01018.

On or around 25th October, 2007 Half yearly Stock exchange codes assigned to your Company’s shares
are as follows:
On or around 22th January, 2008 Third quarter
Stock exchange codes:
On or around 10th May, 2008 Fourth quarter and annual
Name of the Stock Exchange Code
Book Closure: BSE 500820
The dates of book closure are from 15th June, 2007 to 26th
NSE ASIANPAINT
June, 2007 inclusive of both days.

27
Stock Price Data Performance of the Company’s share price as at the
The monthly high and low prices and volumes of your beginning and end of the financial year 2006-2007:
Company’s shares at Bombay Stock Exchange Limited (BSE) Performance of the Company’s share price on BSE and NSE (In Rs.)
for the year ended 31st March, 2007 are as follows:
BSE NSE
High, low and volumes of Asian Paints’ shares for 2006-2007
Price as on 3rd April, 2006 646.65 644.60
Month High Low Volume Date on Date on
Price as on 30th March, 2007 764.80 762.60
(Rupees) (Rupees) (No. of which it which it
shares) touched touched
Change in value + 118.15 + 118.00
the high the low
% Change + 18.27% + 18.30%
April, 2006 662.00 590.00 5,42,884 07.04.2006 28.04.2006

May 707.00 525.00 8,21,965 10.05.2006 23.05.2006 Share transfer system:

June 605.00 501.10 7,96,798 02.06.2006 02.06.2006
The share transfer requests for shares held in physical form
received by the Company are processed and the share
July 610.00 551.00 2,74,176 31.07.2006 24.07.2006 certificates are returned within the stipulated period under
the Companies Act, 1956 and the Listing Agreement, provided
August 655.00 599.50 3,20,538 11.08.2006 01.08.2006 that the documents received are in order and complete in
all respects. A summary of all the transfers, transmissions,
September 685.00 629.50 2,95,453 29.09.2006 01.09.2006
deletion requests etc., approved by the Share Transfer
October 712.00 530.00 7,21,902 05.10.2006 19.10.2006 Committee are placed before the Board of Directors. The
Committee ordinarily meets once every fortnight.
November 725.00 668.15 3,02,582 08.11.2006 01.11.2006
Distribution of Shareholder holdings:
December 742.00 692.10 12,39,617 06.12.2006 07.12.2006 The distribution pattern of shareholding of your Company as
January, 2007 835.00 684.95 5,77,634 15.01.2007 12.01.2007
on 31st March, 2007 by ownership and size class, respectively,
is as follows:
February 810.15 708.30 11,31,655 08.02.2007 28.02.2007
Distribution of shareholding by ownership:
March 777.90 642.00 4,25,449 30.03.2007 05.03.2007 Category of shareholder Total No. of Percentage
shares of total no.
Note: High and low are in rupees per traded share. Volume is the total monthly of shares
volume of trade in Asian Paints shares on BSE.
(A) Shareholding of Promoter and
Promoter Group

1) Indian
Shareholders’ Satisfaction Survey
(a) Individuals/Hindu Undivided Family 94,83,999 9.887
The Company had carried out a shareholders’ satisfaction
survey by sending out a questionnaire to all the shareholders (b) Bodies Corporate 3,51,44,583 36.640
of the Company in June, 2006. Feedback from shareholders (c) Trust 12,41,806 1.295
was requested on various aspects of services rendered to by
the Company and Registrar & Transfer Agent of the Company, Total Shareholding of Promoter and 4,58,70,388 47.822
Promoter Group
Sharepro Services (India) Pvt. Ltd. Shareholders expressed
their satisfaction as to the services rendered to them by the (B) Public shareholding
Company and its R&T agent.
1) Institutions
Chart A shows the comparison of your Company’s share price
(a) Mutual Funds/UTI 14,35,711 1.497
movement on NSE vis-à-vis the movement of the CNX Nifty
Junior for the year 2006-2007: (b) Financial Institutions/Banks 14,287 0.015

Chart A (c) Insurance Companies 92,15,875 9.608

(d) Foreign Institutional Investors 1,94,62,971 20.291

Sub-Total(B) (1) 3,01,28,844 31.410

2) Non-institutions

(a) Bodies Corporate 27,67,374 2.885

(b) Individuals

(i) Individual shareholers holding nominal 1,39,67,749 14.562

share Capital up to Rs. 1 lakh
(ii) Individual shareholders holding nominal 11,88,925 1.239
share capital in excess of Rs.1lakh

(c) Individual (Non-Resident individuals) 19,96,499 2.081

Sub-Total(B) (2) 1,99,20,547 20.768

Note: Total Public Shareholding (B)=(B)(1)+(B)(2) 5,00,49,391 52.178
Both Asian Paints share prices and the CNX Nifty Junior have been indexed to
Total (A)+(B) 9,59,19,779 100.000
100 as on 1st April, 2006.

28
 Asian Paints Limited Annual Report 2006-2007

Distribution of shareholding of the Company by number of shares Distribution pattern of Shareholdeholdings as on

held as on 31st March, 2007: 31st March, 2007:
Shareholders Amount % to Total
(Rs.)
Number % to Total

Upto 500 40,395 82.385 5,06,91,970 5.285

501 – 1000 5,511 11.240 4,38,82,310 4.575

1001 – 2000 1,638 3.341 2,40,47,400 2.507

2001 – 3000 485 0.989 1,21,41,670 1.266

3001 – 4000 233 0.475 82,16,030 0.857

4001 – 5000 185 0.377 84,50,990 0.881

History of IPO/Bonus Issue/Allotment of shares of the
5001 – 10000 224 0.457 1,63,11,950 1.701
Company:
10001 and above 361 0.736 79,54,55,470 82.929
Build up of the Company’s share capital:
Total 49,032 100.000 95,91,97,790 100.000
Type of issue Year of Ratio No. of Total
issue shares cumulative
shares (No.)
Details about Company’s dematerialised shares:
Paid up Capital (Pre-IPO) 1982 – – 35,00,000
Number of % of total Number of % of total
shares shares shareholders shareholders
IPO 1982 – 16,85,185 51,85,185
68316615 71.22% 33211 67.73%
Bonus issue 1985 3:5 31,11,111 82,96,296

Shareholders, who still continue to hold shares in physical Bonus issue 1987 1:2 41,48,148 1,24,44,444
form, are requested to dematerialise their shares at the
earliest and avail of the various benefits of dealing in securities Bonus issue 1992 3:5 74,66,666 1,99,11,110
in electronic/dematerialised form. For any clarification,
Bonus issue 1996 1:1 1,99,11,110 3,98,22,220
assistance or information, please contact Sharepro Services
(India) Private Limited, the Registrar and Transfer Agent of Issue of shares pursuant 1996 1:25 2,94,000 4,01,16,220
the Company. The shareholders have the option to hold to merger with Pentasia
Company’s shares in demat form through the National Chemicals Limited
Securities Depository Limited (NSDL) or Central Depository
Bonus issue 2000 3:5 2,40,69,732 6,41,85,952
Securities Limited (CDSL).
Bonus issue 2003 1:2 3,20,92,976 9,62,78,928
Break up of shares in physical and demat form as on 31st March,
2007:
Cancellation of shares 2003 – 3,59,149 9,59,19,779
No. of Shares Percentage pursuant to merger of Pentasia
of shares Investments Limited with the
Company
Physical Segment 2,76,03,164 28.78
Total paid up capital as on 31st March, 2007 9,59,19,779
Demat Segment:
Top ten shareholders of the Company in the
NSDL 6,69,12,489 69.76 non-promoter category as on 31st March, 2007:
CDSL 14,04,126 1.46 Top ten shareholders:
Name of the shareholder No. of Percentage
Total 9,59,19,779 100.00 Shares
held
Outstanding GDRs/ADRs/Warrants/Convertible Life Insurance Corporation of India 79,43,167 8.281
Instruments and their impact on equity:
Genesis Indian Investment Company Limited 55,66,283 5.803
The Company does not have any outstanding GDRs/ADRs/
Aberdeen Asset Managers Limited 26,89,659 2.804
Warrants/Convertible Instruments as on 31st March, 2007.
Universities Superannuation Scheme Limited 19,08,200 1.989
Details of public funding obtained in the last three
Smallcap World Fund Inc. 13,12,500 1.368
years:
FID Funds (Mauritius) Limited 12,54,368 1.308
Your Company has not obtained any public funding in the last
three years. The Master Trust Bank of Japan Ltd. A/c. 8,28,090 0.863

Columbia Acorn Trust A/c. Columbia Acorn 7,00,000 0.730

Other Information:
Acacia Partners, Lp. 6,99,904 0.730
Corporate Identification Number (CIN No.):
General Insurance Corporation of India 5,88,530 0.614
L24220MH1945PLC004598

29
Secretarial Audit Report: Consolidation of Folios:
As stipulated by the Securities and Exchange Board of India, Members holding shares of the Company in physical form
a qualified Practicing Company Secretary carries out the through multiple folios are requested to consolidate their
Secretarial Audit to reconcile the total admitted capital with shareholding into single folio, by sending their original share
National Securities Depository Limited (NSDL) and Central certificates along with a request letter to consolidate their
Depository Services (India) Limited (CDSL) and the total shareholding into a single folio, to the Registrar & Transfer
issued and listed capital. This audit is carried out every Agent of the Company.
quarter and the report thereon is submitted to the Stock
Exchanges and is also placed before the Board of Directors. Unpaid/Unclaimed dividend:
The audit, interalia, confirms that the total listed and paid up In terms of Sections 205A and 205C of the Companies Act,
capital of the Company is in agreement with the aggregate 1956, the Company is required to transfer the amount of
of the total number of shares in dematerialised form (held dividend remaining unclaimed for a period of seven years from
with NSDL and CDSL) and total number of shares in physical the date of transfer to the unpaid dividend account to the
form. Investor Education and Protection Fund (IEPF). Shareholders
are requested to ensure that they claim the dividend(s) from
Electronic Clearing Scheme (ECS) for dividend: the Company before transfer to the IEPF.
The Reserve Bank of India (RBI) has provided an Electronic Due dates for transfer of dividend unclaimed to IEPF:
Clearing Scheme (ECS) to the investors as an option to
Financial Year Unclaimed Due date
receive dividend directly through their bank accounts rather dividend for transfer
than receiving the same in the form of Dividend Warrants. amount as on to IEPF
Under this option, an investor’s bank account is directly 31st March,
credited and intimation thereof is sent by the Company to 2007
(Rs.)
the shareholder.
1999-2000 2nd Interim 6,27,042.00 29.04.2007
This service not only protects a shareholder against fraudulent
interception and encashment of dividend warrants but also 2000-2001 Interim 5,62,098.37 22.11.2007
eliminates dependence on the postal system, loss/damage of
dividend warrants in transit and correspondence relating to 2000-2001 Final 14,39,533.00 27.09.2008
revalidation/issue of duplicate warrants.
2001-2002 Interim 13,30,475.00 29.11.2008
Shareholders holding shares in physical form:
2001-2002 Final 17,52,713.00 25.08.2009
Investors who would like to avail this facility and are
holding shares in physical form may send in their ECS 2002-2003 Interim 14,63,650.00 22.11.2009
Mandate Form, duly filled in to the Company’s Registrar and
Transfer Agent, Sharepro Services (India) Private Limited, 2002-2003 Final 23,94,445.00 17.08.2010
Satam Estate, Cardinal Gracious Road, Chakala, Andheri
2003-2004 Interim 16,07,482.00 29.11.2010
(East), Mumbai 400 099 or Sharepro Services (India) Private
Limited, 912, Raheja Centre, Free Press Journal Road, Nariman 2003-2004 Final 20,21,124.80 27.07.2011
Point, Mumbai 400 021. The ECS mandate form is given at
the end of the annual report. The ECS Mandate instruction 2004-2005 Interim 21,73,360.00 26.11.2011
should be under the signature of the shareholder(s) as per
the specimen signature records lodged with the Company. 2004-2005 Final 25,23,202.00 26.07.2012

Shareholders holding shares in electronic/demat form: 2005-2006 Interim 23,15,687.00 25.11.2012

Investors holding shares in demat or electronic form may 2005-2006 Final 36,90,639.00 25.07.2013
send in their ECS mandate to the concerned Depository
Participant (DP) directly, in the format prescribed by the 2006-2007 1st interim 28,82,792.26 29.11.2013
DP. Pursuant to the Depository Regulations, the Company
is obliged to pay dividend on dematerialised shares as per 2006-2007 2nd interim 3,52,60,449.50 12.04.2014
the details furnished by the concerned DP. The Company or
the Registrar and Transfer Agent cannot make any change Registrar & Transfer Agent:
in such records received from the Depository. Additional Sharepro Services (India) Pvt. Ltd. is the Registrar & Transfer
details pertaining to the Electronic Clearing System (ECS) are Agent of the Company.
mentioned elsewhere in the Annual Report.
Shareholders, beneficial owners and depository participants
Nomination facility: (DPs) are requested to send/deliver the documents/
Pursuant to the provision of Section 109A of the Companies correspondence relating to the Company’s share transfer
Act, 1956, members are entitled to make a nomination in activity etc. to Sharepro Services (India) Pvt. Ltd., Registrar and
respect of the shares held by them. Members holding shares Transfer Agent of the Company at the following addresses:
in physical form and desirous of making a nomination are
Sharepro Services (India) Pvt. Ltd.
requested to send their requests in Form 2B (A format is given
at the end of the annual report), to the Company’s Registrar Unit: Asian Paints Limited
and Transfer Agent, Sharepro Services (India) Private Limited, Satam Estate, 3rd Floor, Above Bank of Baroda,
Satam Estate, Cardinal Gracious Road, Chakala, Andheri Cardinal Gracious Road, Chakala,
(East), Mumbai 400 099 or Sharepro Services (India) Private Andheri (E), Mumbai 400 099.
Limited, 912, Raheja Centre, Free Press Journal Road, Nariman Tel. No. 2821 5168, 2832 9828,
Point, Mumbai 400 021. Members holding shares in electronic 2821 5991, 2834 7719, 2834 8218
form are requested to give the nomination request to their Fax No. 2837 5646
respective Depository Participants directly. Email: sharepro@vsnl.com

30
 Asian Paints Limited Annual Report 2006-2007

Sharepro Services (India) Pvt. Ltd. Plant locations:

Unit: Asian Paints Limited Paint Plants:
912, Raheja Centre, Free Press Journal Road,
Nariman Point, Mumbai 400 021. • Lal Bahadur Shastri Marg,
Tel. No: 2288 1568, 2288 1569, Bhandup, Mumbai 400 078, Maharashtra.
2282 5163, 2288 4527
Fax No. 2282 5484 • Plot No. 2602, GIDC Industrial Area,
Email: sharepro_services@roltanet.com Ankleshwar 393 002, Gujarat.

For the benefit of shareholders, documents will also continue • Plot Nos. 50-55, Industrial Development Area,
to be accepted at the following office of the Company: Phase II, Patancheru 502 309
Dist. Medak, Andhra Pradesh.
Asian Paints Limited
6A Shantinagar, Santacruz (East), • A-1, UPSIDC Industrial Area, Kasna - II,
Mumbai - 400 055. Kasna Village, Tehsil Sikandarabad,
Email: investor.relations@asianpaints.com Dist. Bulandshahr 203 207, Uttar Pradesh.
Members are requested to quote their e-mail address, • SIPCOT Industrial Park,
telephone number and full address for prompt reply to their Plot No. E6-F13,
communication. Sriperumbudur 602 105,
Website: www.asianpaints.com Kancheepuram District, Tamil Nadu.
The Company’s website provides for the benefit of
shareholders, information on topics such as transfer and Phthalic Plant:
transmission of shares, equity history, dematerialisation, • Plot No.2702, GIDC Industrial Area,
nomination, change of address, loss of share certificates and Ankleshwar 393 002, Gujarat.
the Company’s performance and dividend policy.
E-mail Id for Investor’s Grievances: Penta Plant:
Securities Exchange Board of India (SEBI) has recently • B5-B10, Sipcot Industrial Complex,
amended the Listing Agreement by adding a new sub-clause Cuddalore 607 005, Tamil Nadu.
(f) to the Clause 47 of the Listing Agreement, which mandates
all listed companies to designate an e-mail address of the
grievance redressal division/compliance officer exclusively Industrial Paints Plant:
for the purpose of registering complaints by investors. Your • Plot no.3/2, MIDC, Taloja,
company even before the aforesaid was mandated by SEBI, Raigad 410208, Maharashtra.
had an exclusive e-mail id for registering complaints by the
shareholders and quick redressal thereof. Address for Correspondence:
The e-mail address for investor grievance is Registered Office:
investor.relations@asianpaints.com
Asian Paints Limited
The above e-mail id is disclosed by the Company on its websites 6A, Shantinagar, Santacruz (East),
and all the various materials, correspondence, publications Mumbai 400 055.
and communication to the shareholders at large. Tel: +91-(0)22-3981 8000

31
DECLARATION OF COMPLIANCE WITH THE CODE OF AUDITORS’ REPORT ON CORPORATE GOVERNANCE
CONDUCT
TO THE MEMBERS OF ASIAN PAINTS LIMITED
I hereby confirm that:
We have examined the compliance of conditions of Corporate
The Company has obtained from all the members of the Governance by Asian Paints Limited for the year ended
Board and Senior Management Personnel, affirmation(s) that 31st March, 2007 as stipulated in Clause 49 of the Listing
they have complied with the Code of Conduct for Board Agreement entered into with the stock exchanges.
Members and Senior Management Personnel for the financial
year ended 31st March, 2007. The compliance of conditions of Corporate Governance
is the responsibility of the management. Our examination
Ashwin Choksi was limited to procedures and implementation thereof,
Chairman adopted by the Company for ensuring the compliance of the
Mumbai conditions of Corporate Governance. It is neither an audit nor
an expression of opinion on the financial statements of the
10th May, 2007 Company.
In our opinion and to the best of our information and according
to the explanations given to us and the representations made
by the Directors and the Management, we certify that the
Company has complied with the conditions of Corporate
Governance as stipulated in the above mentioned Listing
Agreement.
We state that no investor grievances are pending for a period
exceeding one month against the Company as per the
records maintained by the Shareholders/Investors Grievance
Committee.
We further state that such compliance is neither an assurance
as to the future viability of the Company nor the efficiency or
effectiveness with which the management has conducted the
affairs of the Company.

For Shah & Co.,

Chartered Accountants

H. N. Shah
Partner
M. No. 8152
Mumbai
10th May, 2007

32

AUDITORS’ REPORT TO THE MEMBERS OF ASIAN PAINTS LIMITED
We have audited the attached Balance Sheet of ASIAN PAINTS
LIMITED as at 31st March, 2007 and also the Profit and Loss
Account and the Cash Flow Statement of the Company
for the year ended on that date, annexed thereto. These
financial statements are the responsibility of the Company’s
management. Our responsibility is to express an opinion on
these financial statements based on our audit.
We conducted our audit in accordance with auditing standards
generally accepted in India. Those Standards require that we
plan and perform the audit to obtain reasonable assurance
about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the
financial statements. An audit also includes assessing the
accounting principles used and significant estimates made
by management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a
reasonable basis of our opinion.
As required by the Companies (Auditor’s Report) Order,
2003, issued by the Central Government of India in terms
of sub-section (4A) of Section 227 of the Companies Act,
1956, we enclose in the Annexure a statement on the matters
specified in paragraph 4 and 5 of the said order to the extent
applicable.
Further to our comments in the Annexure referred to in
paragraph 3 above, we state that:
(a) We have obtained all the information and explanations,
which to the best of our knowledge and belief were
necessary for the purpose of our audit.
(b) In our opinion, proper books of account as required by
law have been kept by the Company so far as appears
from our examination of those books.
(c) The Balance Sheet, the Profit and Loss Account and the
Cash Flow Statement referred to in this report are in
agreement with the books of account.
(d) In our opinion, the Balance Sheet, the Profit and Loss
Account and the Cash Flow Statement dealt with by this
report comply with the Accounting Standards referred to
in Section 211(3C) of the Companies Act, 1956.
(e) On the basis of the written representations received
from the Directors, and taken on record by the Board
of Directors, we report that none of the Directors is
disqualified as on 31st March, 2007 from being appointed
as a Director in terms of clause (g) of sub-section (1) of
section 274 of the Companies Act, 1956.
(f) In our opinion and as per the information and according
to the explanations given to us, the said Balance Sheet,
Profit and Loss Account and the Cash Flow Statement read
together with the notes thereon, give the information
required by the Companies Act, 1956, in the manner so
required and give a true and fair view in conformity with
the accounting principles generally accepted in India:
(i) in the case of the Balance Sheet, of the state of
affairs of the Company as on 31st March, 2007;
Asian Paints Limited Annual Report 2006-2007
(ii) in the case of the Profit and Loss Account, of the
profit of the Company for the year ended on that
date;
and
(iii) in the case of the Cash Flow Statement, of the cash
flows for the year ended on that date.
For Shah & Co.
Chartered Accountants
H. N. Shah
Partner
M. No. 8152
Mumbai
10th May, 2007
ANNEXURE REFERRED TO IN PARAGRAPH 3 OF THE
AUDITORS’ REPORT TO THE MEMBERS OF ASIAN PAINTS
LIMITED FOR THE YEAR ENDED 31ST MARCH, 2007:
1. (a) The Company has maintained proper records
showing full particulars including quantitative details
and location of the Fixed Assets.
(b) There is a regular program of physical verification,
which in our opinion is reasonable, having regard
to the size of the Company and the nature of fixed
assets. No material discrepancies have been noticed
in respect of the assets physically verified during the
year.
(c) The Company has not disposed of substantial part of
fixed assets during the year.
2. (a) Inventories have been physically verified during
the year by the management. In our opinion, the
frequency of verification is reasonable.
(b) The procedures of physical verification of stocks
followed by the management are adequate in
relation to the size of the Company and the nature
of its business.
(c) The Company is maintaining proper records of
inventory. The discrepancies noticed on verification
between the physical stocks and book records were
not material and have been properly dealt with in
the books of account.
3. (a) The Company has not accepted any loans during
the year from the parties covered in the register
maintained under Section 301 of the Companies
Act, 1956.
In view of Clause 4 (iii)(a) of the Companies
(Auditor’s Report) Order, 2003, Clause 4 (iii)(b, c &
d) are not applicable to the Company.
(b) The Company has not granted any loans during
the year to the parties covered in the register
maintained under Section 301 of the Companies
Act, 1956.
33
 In view of Clause 4 (iii)(e) of the Companies
(Auditor’s Report) Order, 2003, clause 4 (iii)(f & g)
are not applicable to the Company.
4 In our opinion, and according to the information and
explanations given to us, there are adequate internal
control systems commensurate with the size of the
Company and the nature of its business with regard to
purchase of stores, raw materials including components,
packing materials, plant and machinery, equipment
and other assets and with regard to sale of goods and
services. There is no major weakness in the internal
control procedures.
5. (a) The particulars of all contracts and arrangements
referred to in Section 301 of the Companies Act,
1956 have been properly entered in the register
maintained under Section 301 of the Act.
(b) In our opinion, and according to the information
and explanations given to us, the contracts and
arrangements entered in the register maintained
under Section 301 of the Companies Act, 1956 have
been made at prices which are reasonable having
regard to the prevailing market price.
with the directives issued by the Reserve Bank of India
and the provisions of Section 58A and 58AA or any other
relevant provisions of the Companies Act, 1956 and the
rules framed there under.
7. In our opinion, the Company has an internal audit system
commensurate with the size and nature of its business.
8 We have broadly reviewed the books of accounts and
other records maintained by the Company in respect of
paints, resins and pentaerythritol where pursuant to the
Rules made by the Central Government, the maintenance
of Cost Records have been prescribed under Section
209(1)(d) of the Companies Act, 1956. We are of the
opinion that prima facie the prescribed accounts and
records have been maintained.
9. (a) The Company is regular in depositing undisputed
statutory dues including Provident Fund, Investor
Education and Protection Fund, Employees’ State
Insurance, Income Tax, Sales Tax, Wealth Tax, Service
Tax, Custom Duty, Excise Duty, Cess and other
statutory dues with the appropriate authorities.

6. In our opinion and according to the information and (b) Following dues are not deposited on account of
explanations given to us, the Company has complied disputes pending at various forums:

Name of the Nature of dues Financial Year Amount Forum where

Statute (Rs. in Millions) dispute is pending
Sales Tax Assessment Dues F.Y. 1994-95 to 1995-96, F.Y. 1997-98 to 1999-2000, F.Y. 2001-02 to 2002-03 64.69 First Appellate level
F.Y. 1999-2000 to 2001-02 & F.Y. 2003-04 5.02 Second Appellate level
F.Y. 1993-94 0.67 High Court
F.Y. 1991-92, F.Y. 1993-94, F.Y. 1995-96 to 1996-97, F.Y. 1998-99 & F.Y. 2001-02 17.23 Tribunal
Total (A) 87.61
Excise
Central Excise Act, Dispute relating F.Y. 1999-2000, F.Y. 2002-03 & F.Y. 2006-07 0.32 Adjudication level
1944 to Cenvat Credit
F.Y. 1980-81 to 1990-91, F.Y. 1992-93 t0 1999-2000, F.Y. 2002-03 & 2004-05 11.23 First Appellate

F.Y. 1985-86 & F.Y. 1994-95 to 1996-97 2.99 Second Appellate

F.Y. 1969-70 to 1972-73 & F.Y. 2000-01 to 2001-02 1.78 High Court

Dispute relating F.Y. 1978-78 to 1997-98, F.Y. 2003-04 to 2004-05 & F.Y. 2006-07 47.99 Adjudication level
to Excise Duty
F.Y. 1984-85 to 1988-89, F.Y. 1993-94 to 1999-2000 & F.Y. 2003-04 to 2005-06 6.70 First Appellate

F.Y. 1994-95, F.Y. 2000-01 & F.Y. 2005-06 to 2006-07 3.85 Second Appellate

F.Y. 1986-87 to 1999-2000 1.59 Tribunal

Dispute relating F.Y. 1998-99 to 2003-04 & F.Y. 2005-06 to 2006-07 90.21 Adjudication level
to Service Tax

Total (B) 166.66

Income Tax A.Y. 2004-05 87.01 First Appellate

Total (C) 87.01

Grand Total 341.28

34
 Asian Paints Limited Annual Report 2006-2007

10. The Company has not incurred cash loss in the current
year and in the immediately preceding financial year and
there are no accumulated losses in the Balance Sheet as
on 31st March, 2007.
11. The Company has not defaulted during the year in
repayment of dues to any financial institutions, banks or
debenture holders.
12. The Company has not granted any loans and advances
on the basis of security by way of pledge of shares,
debentures and other securities.
16. The Company has not taken any term loans during the
year.
17. According to the information and explanations received
the Company has not applied short term borrowings for
long term use.
18. The Company has not made any preferential allotment of
shares during the year.
19. The Company has not issued any debentures during the
year.

13. As the Company is not a chit fund, nidhi, mutual benefit 20 The Company has not raised any money by way of public
fund or society the provisions of Clause 4(xiii) of the issue during the year.
Companies (Auditor’s Report) Order, 2003 are not
applicable to the Company. 21. As per the information and explanation given to us, no
material fraud on or by the Company has been noticed
14. As the Company is not dealing or trading in shares, during the year.
securities, debentures and other investments, the
provision of Clause 4(xiv) of the Companies (Auditor’s
Report) Order, 2003 is not applicable to the Company. For Shah & Co.
Chartered Accountants
15. The Company has given certain guarantees on behalf of
its dealers and subsidiaries as mentioned in Note B - 3 H. N. Shah
of Schedule M of the accounts. In our opinion, based on Partner
the information and explanations received, the terms and M. No. 8152
conditions of these guarantees are not prejudicial to the Mumbai
interest of the Company. 10th May, 2007

35
BALANCE SHEET AS AT 31ST MARCH, 2007
(Rs. in Millions)
Schedules As at As at
31.03.2007 31.03.2006
FUNDS EMPLOYED
Shareholders’ Funds
Share Capital A 959.20 959.20
Reserves and Surplus B 6,481.58 5,263.64
7,440.78 6,222.84
Loan Funds C
Secured Loans 668.98 318.79
Unsecured Loans 587.68 592.05
1,256.66 910.84
Deferred Tax Liability (Net) 221.46 284.68
(Refer Note B - 23 in Schedule ‘M’)
Total 8,918.90 7,418.36

APPLICATION OF FUNDS
Fixed Assets D
Gross Block 8,062.03 7,361.39
Less: Depreciation/Amortisation/Impairment 4,712.89 4,357.09
Net Block 3,349.14 3,004.30
Add: Capital Work in Progress 116.15 233.36
3,465.29 3,237.66
Investments E 3,343.88 2,745.51
Current Assets, Loans And Advances F
Interest accrued on investments 0.26 –
Inventories 4,340.70 3,497.09
Sundry debtors 2,359.58 1,851.09
Cash and Bank Balances 424.92 283.87
Retirement Benefit Asset (Refer Note B - 26 in Schedule ‘M’) 54.90 –
Other receivables 257.37 214.24
Loans and Advances 1,075.52 980.68
Advance payment of Taxes (Net of provision for tax) 78.80 16.58
8,592.05 6,843.55
Less: Current Liabilities and Provisions G
Current Liabilities 5,940.83 4,335.49
Provisions 541.49 1,072.87
6,482.32 5,408.36
Net Current Assets 2,109.73 1,435.19
Total 8,918.90 7,418.36
Notes M

As per our report of even date For and on behalf of the Board
For Shah & Co. Ashwin Choksi Ashwin Dani Abhay Vakil
Chartered Accountants Chairman Vice Chairman & Managing Director
Managing Director

H. N. Shah Tarjani Vakil Mahendra Shah Jayesh Merchant

Partner Chairperson of Director Chief Financial Officer &
Membership No. 8152 Audit Committee Company Secretary

Mumbai Mumbai
10th May, 2007 10th May, 2007

36
 Asian Paints Limited Annual Report 2006-2007

PROFIT & LOSS ACCOUNT FOR THE YEAR ENDED 31ST MARCH, 2007
(Rs. in Millions)
Schedules Year Year
2006-2007 2005-2006
INCOME
Sales and operating income (Net of discounts) H 32,445.66 26,785.46
Less: Excise 4,232.73 3,593.91
Sales and operating income (Net of discounts and excise) 28,212.93 23,191.55
Other income I 404.51 359.26
28,617.44 23,550.81

EXPENDITURE
Materials Consumed J 16,607.14 13,517.35
Employees’ remuneration and benefits K 1,549.57 1,289.76
Manufacturing, administrative, selling and distribution expenses L 5,838.66 4,865.24
23,995.37 19,672.35
PROFIT BEFORE INTEREST, DEPRECIATION,
EXTRAORDINARY ITEM AND TAX 4,622.07 3,878.46
Less: Interest (Refer Note B - 17 in Schedule ‘M’) 68.73 38.31
Less: Depreciation/Amortisation/Impairment D 454.15 455.28
PROFIT BEFORE TAX AND EXTRAORDINARY ITEM 4,099.19 3,384.87
Less: Extraordinary item (Refer Note B - 21 in Schedule ‘M’) – 336.00
PROFIT BEFORE TAX 4,099.19 3,048.87
Less: Provision for Taxation
Current Tax 1,379.00 1,141.00
Deferred Tax (Refer Note B - 23 in Schedule ‘M’) (23.72) (20.70)
Fringe Benefit Tax 44.66 50.52
PROFIT AFTER TAX AND BEFORE PRIOR PERIOD ITEMS 2,699.25 1,878.05
Add/(Less): Prior period items (net) 21.23 (10.25)
PROFIT AFTER TAX 2,720.48 1,867.80
Add: Balance brought forward from previous year 1,100.00 1,000.00
DISPOSABLE PROFIT 3,820.48 2,867.80
DISPOSAL OF ABOVE PROFIT
Dividend on Equity shares:
– Interim dividend I 527.56 431.64
– Interim dividend II 623.48 –
– Final dividend 95.92 527.56
– One-time special dividend – 239.80
Tax on Dividend 177.73 168.16
Transfer to General Reserve 895.79 400.64
Balance carried to Balance Sheet 1,500.00 1,100.00
3,820.48 2,867.80
Earnings per share (Rs.) Basic and Diluted – before Extraordinary item 28.36 22.98
Earnings per share (Rs.) Basic and Diluted – after Extraordinary item 28.36 19.47
(Face value of Rs. 10 each)
(Refer Note B - 27 in Schedule ‘M’)
Notes M

As per our report of even date For and on behalf of the Board
For Shah & Co. Ashwin Choksi Ashwin Dani Abhay Vakil
Chartered Accountants Chairman Vice Chairman & Managing Director
Managing Director

H. N. Shah Tarjani Vakil Mahendra Shah Jayesh Merchant

Partner Chairperson of Director Chief Financial Officer &
Membership No. 8152 Audit Committee Company Secretary

Mumbai Mumbai
10th May, 2007 10th May, 2007

37
CASH FLOW STATEMENT FOR THE YEAR ENDED 31ST MARCH, 2007

(Rs. in Millions)
2006-2007 2005-2006
(A) Cash flow from operating activities
Profit before prior period item, tax and after
extraordinary item 4,099.19 3,048.87
Adjustments for:
Depreciation/impairment 454.15 455.28
Interest income (14.41) (14.33)
Dividend income (131.70) (75.90)
Interest expense 68.73 38.31
Prior period items (net) 21.23 (10.25)
Extraordinary item – 336.00
Loss/(Profit) on sale of long term investments (3.11) 0.00
Loss/(Profit) on sale of short term investments (0.58) (3.48)
Loss/(Profit) on sale of assets (13.62) 0.94
Operating Profit before working capital changes 4,479.88 3,775.44
Adjustments for:
Trade receivables (508.49) (361.46)
Other receivables (141.66) (129.43)
Inventories (843.61) (179.98)
Trade and other payables 1,622.28 427.13
Cash generated from operations 4,608.40 3,531.71
Income Tax paid net of refund (1,485.88) (1,344.85)
Net cash generated from operating activities 3,122.52 2,186.86
(B) Cash flow from investing activities
Purchase of fixed assets (677.33) (542.58)
Sale of fixed assets 20.92 18.32
Loans to subsidiaries (Net of repayments) (3.95) (133.69)
Purchase of investments (1,163.31) (493.99)
Sale of investments 568.62 28.63
Interest received 14.15 8.24
Dividend received 131.70 55.42
Net cash used in investing activities (1,109.20) (1,059.66)
(C) Cash flow from financing activities
Proceeds from long term borrowings 46.36 72.66
Proceeds from short term borrowings 303.83 –
Repayment of long term borrowings (4.55) (3.45)
Repayment of short term borrowings – (40.97)
Interest paid (69.12) (38.59)
Dividend and Dividend tax paid (2,148.79) (1,090.26)
Net Cash used in financing activities (1,872.27) (1,100.61)
(D) Net Increase/(Decrease) in cash 141.05 26.59
Cash and cash equivalent as on 01.04.2006 283.87 257.28
Cash and cash equivalent as on 31.03.2007 424.92 283.87

As per our report of even date For and on behalf of the Board
For Shah & Co. Ashwin Choksi Ashwin Dani Abhay Vakil
Chartered Accountants Chairman Vice Chairman & Managing Director
Managing Director

H. N. Shah Tarjani Vakil Mahendra Shah Jayesh Merchant

Partner Chairperson of Director Chief Financial Officer &
Membership No. 8152 Audit Committee Company Secretary

Mumbai Mumbai
10th May, 2007 10th May, 2007

38
 Asian Paints Limited Annual Report 2006-2007

SCHEDULES FORMING PART OF THE ACCOUNTS

(Rs. in Millions)
As at As at
31.03.2007 31.03.2006
SCHEDULE A : SHARE CAPITAL
Authorised

99,500,000 Equity Shares of Rs. 10/- each 995.00 995.00

50,000 11% Redeemable Cumulative 5.00 5.00

Preference shares of Rs. 100/- each

1,000.00 1,000.00

Issued and Subscribed

95,919,779 Equity Shares of Rs. 10/- each fully paid:

(a) 93,989,940 Bonus Shares of Rs. 10/- each fully paid up issued on
capitalisation of Share premium account (Rs. 21.91 million) and
General Reserves (Rs. 917.98 million)
(b) 294,000 shares of Rs. 10/- each issued as fully paid up pursuant
to the Scheme of Rehabilitation/Amalgamation of Pentasia
Chemicals Ltd., without payment received in cash.

959.20 959.20

959.20 959.20

SCHEDULE B : RESERVES AND SURPLUS

Capital Reserve 0.01 0.01

Capital Redemption Reserve 5.00 5.00

General Reserve

As per last Balance Sheet 4,158.63 3,757.99

Add: Transfer from Profit and Loss Account 895.79 400.64

Less: Adjustment on account of adoption of AS 15 (Revised)

(Refer Note B - 26 in Schedule ‘M’) (77.85) –

4,976.57 4,158.63

Profit and Loss Account 1,500.00 1,100.00

6,481.58 5,263.64

39
SCHEDULES FORMING PART OF THE ACCOUNTS

(Rs. in Millions)
As at As at
31.03.2007 31.03.2006
SCHEDULE C : SECURED AND UNSECURED LOANS
Secured Loans
Long Term:
Loans and advances

Financial Institution (Sales tax deferment scheme – State of Uttar Pradesh)

(Note No. 1) 182.32 135.96

Short Term:
Loans and advances from banks
Cash Credit Accounts (Note No. 2) 486.66 182.83
668.98 318.79
Unsecured Loans
Long Term:
Trade deposits – interest free 180.67 185.04
Sales tax deferment – State of Andhra Pradesh (Note No. 3) 407.01 407.01
587.68 592.05
Notes:
(1) Interest free term loan from the Pradeshiya Industrial Corporation of U.P.
Limited (PICUP) under Sales Tax Deferment Scheme of Government of U.P. is
secured by a first charge on the Company’s immovable properties pertaining
to the paint plant at Kasna and by way of hypothecation of all movable
properties at the above location. 182.32 135.96
Amount repayable within one year. 1.72 –
(2) Secured by hypothecation of inventories, book debts and other
current assets. 486.66 182.83
(3) Sales tax deferment – State of Andhra Pradesh represents interest free
loan availed under the Sales Tax deferment Scheme of the Government of
Andhra Pradesh 407.01 407.01
Amount repayable within one year. – –

40
 SCHEDULE D : FIXED ASSETS
(Rs. in Millions)
Gross Block Depreciation/Amortisation Impairment Net Block
As at Additions Deductions As at As at During Deductions As at As at Additions Deductions As at As at As at
1.4.2006 during and/or 31.3.2007 31.3.2006 the year and/or 31.3.2007 1.4.2006 and/or 31.3.2007 31.3.2007 31.3.2006
the year transfers transfers transfers

Tangible Assets:
Freehold Land 59.95 0.87 59.08 – – – – – – – – 59.08 59.95

Leasehold Land 81.19 52.34 – 133.53 7.09 1.12 – 8.21 – – – – 125.32 74.10

Buildings 1,336.60 187.95 2.34 1,522.21 321.47 39.89 0.64 360.72 – – – – 1,161.49 1,015.13

Plant and Machinery 4,246.52 493.12 69.43 4,670.21 2,565.11 294.70 48.79 2,811.02 148.82 3.44 15.00 137.26 1,721.93 1,532.59

Scientific Research:

Equipment 104.38 12.54 1.77 115.15 68.15 7.88 1.77 74.26 4.99 – – 4.99 35.90 31.24

Buildings 31.10 – 31.10 5.65 1.03 – 6.68 – – – – 24.42 25.45

Furnitures and Office Equipment 204.74 20.49 7.81 217.42 143.60 17.41 7.53 153.48 18.63 0.15 0.44 18.34 45.60 42.51

Vehicles 31.99 13.82 12.34 33.47 26.47 3.01 11.86 17.62 – – – – 15.85 5.52

Assets given on Operating Lease:

Tinting systems 981.15 3.06 11.11 973.10 552.19 57.30 9.70 599.79 245.72 – 2.61 243.11 130.20 183.24

Intangible Assets:
SCHEDULES FORMING PART OF THE ACCOUNTS

Trademark 119.24 – – 119.24 105.26 13.98 – 119.24 – – – – – 13.98

Software – License Fees 164.53 22.99 – 187.52 143.94 14.23 – 158.17 – – – – 29.35 20.59

Total 7,361.39 806.31 105.67 8,062.03 3,938.93 450.55 80.29 4,309.19 418.16 3.59 18.05 403.70 3,349.14 3,004.30
Asian Paints Limited

Previous year 7,127.04 366.51 132.16 7,361.39 3,560.28 454.14 75.49 3,938.93 454.45 1.14 37.43 418.16 3,004.30 3,112.31

41
Annual Report 2006-2007
SCHEDULES FORMING PART OF THE ACCOUNTS
(Rs. in Millions)
Nos. Face As at As at
Value 31.03.2007 31.03.2006
(Rs.)
SCHEDULE E : INVESTMENTS
Long Term Investments
Unquoted
(i) In Government Securities
National Savings Certificates, Indira Vikas Patra and
Defence Certificates deposited with Government
authorities 0.03 0.04
(National Saving Certificate sold during the year Rs. 5000/-)
(ii) Trade Investments (Preference Shares)
(a) 5.75% Preference Shares of Clear Plastics Ltd. – 10/- – 50.00
(5,000,000 Preference shares sold during the year) (5,000,000)
(iii) Trade Investments (Fully paid Equity shares)
(a) Asian PPG Industries Ltd. 14,625,000 10/- 146.25 146.25
(b) Patancheru Enviro-tech Ltd. 12,900 10/- 0.13 0.13
(c) SIPCOT Common Utilities Ltd. 2,830 100/- 0.28 0.28
(d) Bharuch Eco-Acqua Infrastructure Ltd. 478,270 10/- 4.78 4.78
151.44 151.44
(iv) Other investments
(a) Contribution to Gujarat Venture Capital Fund – 1990
(10% amounting to Rs. 50,000/- redeemed during
the year) – 0.05
(b) Equity shares of SKH Metals Ltd. (formerly Mark Auto
Industries Ltd.) 62,500 10/- 5.00 5.00
5.00 5.05
(v) Subsidiary Companies
(a) Equity shares of Technical Instruments Manufacturers
(India) Ltd. 5,000 100/- 181.85 181.85
(b) Equity shares of Asian Paints Industrial Coatings Ltd. 10,000,000 10/- 100.00 90.00
(1,000,000 shares allotted during the year) (9,000,000)
(c) Ordinary Shares of Asian Paints (International) Ltd.,
Mauritius 28,045,444 US $ 1 1,324.27 1,213.21
(2,450,000 shares allotted during the year) (25,595,444)
Less: Provision for diminution (336.00) (336.00)
988.27 877.21
(d) Equity Shares of Asian Paints (Nepal) Pvt. Ltd., Nepal 1,084,770 NRs 10/- 1.24 1.24
1,271.36 1,150.30
Total Long Term Unquoted Investments 1,427.83 1,356.83
Quoted (Fully Paid Equity Shares)
(i) Trade Investments
ICI (India) Ltd. 3,760,783 10/- 772.46 772.46
(ii) Other Investments
Housing Development Finance Corporation Ltd. 93,000 10/- 1.24 1.24
Apcotex Industries Ltd. 3,418 10/- 0.11 0.11
Total Long Term Quoted Investments 773.81 773.81
Total Long Term Investments 2,201.64 2,130.64

42
 Asian Paints Limited Annual Report 2006-2007

SCHEDULES FORMING PART OF THE ACCOUNTS

(Rs. in Millions)
Nos. Face As at As at
Value 31.03.2007 31.03.2006
(Rs.)
Short Term Investments (Unquoted)
DSP Merill Lynch Liquidity Fund – Daily Dividend – 10/- – 112.72
(11,261,190.024 units sold during the year) (11,261,190.024)
Kotak FMP Series XVI Dividend – 10/- – 100.93
(10,092,581.483 units sold during the year) (10,092,581.483)
Reliance Fixed Maturity Quarterly Plan III Series II Div. – 10/- – 100.00
(10,000,000 units sold during the year) (10,000,000.000)
UTI Fixed Maturity Plan (Q FMP 0106) – 10/- – 100.73
(10,073,039.377 sold during the year) (10,073,039.377)
ABN Amro Fixed Term Plan Series 2 Regular Dividend – 10/- – 100.49
(10,049,387.653 sold during the year) (10,049,387.653)
Birla Fixed Term Plan – Series H – Growth 10,000,000.000 10/- 100.00 100.00
ABN Amro Fixed Term Plan Series 4 Quarterly Plan D – Div. 10,081,340.789 10/- 100.82
Kotak Fixed Maturity Plan 3M Series 11 – Div. 4,024,225.464 10/- 40.24
Kotak Fixed Maturity Plan 3M Series 8 – Div. 10,137,731.134 10/- 101.38
Kotak Fixed Maturity Plan 6 Months Series 2 – Div. 10,249,192.847 10/- 102.49
Prudential ICICI Fixed Maturity Plan Series 35 – 3 Months Plan B Div. 10,098,497.045 10/- 100.99
Prudential ICICI Fixed Maturity Plan Series 35 – 3 Months Plan A Div. 10,136,000.000 10/- 101.36
Prudential ICICI Fixed Maturity Plan Series 35 – 3 Months Plan C Div. 4,000,000.000 10/- 40.00
Reliance Fixed Horizon Fund II Quarterly Plan Series II Inst. Div. 5,000,000.000 10/- 50.00
SBI Debt Fund Series 90 Days II (Dec. 06) 5,071,565.342 10/- 50.72
SBI Debt Fund Series 180 Days (Nov. 06) Div. 5,109,500.259 10/- 51.10
Standard Chartered Fixed Maturity Plan Quarterly Series 3 10,147,600.000 10/- 101.48
TATA Fixed horizon fund series 9 – Scheme D Div. Inst. Plan 10,064,461.323 10/- 100.65
UTI Fixed Maturity Plan Quarterly Series QFMP/0207/I Div. 10,100,702.400 10/- 101.01
Total Short Term Investments 1,142.24 614.87
Total Investments 3,343.88 2,745.51
Aggregate market value of Long term Quoted Investments: 1,830.23 1,582.48
Notes :
1. Figures in brackets indicate that of previous year.
2. The following investments were purchased and sold during the year.

Nos. Face Value Purchase Cost

(Rs.) (Rs. in millions)
Units in Mutual Funds
(1) ABN AMRO Fixed Term Plan Series 2 Quarterly Plan A Dividend 108,715.281 10.00 1.09
(2) ABN AMRO Fixed Term Plan Series 3 Quarterly Plan C Dividend 5,073,635.770 10.00 50.74
(3) ABN AMRO Fixed Term Plan Series 3 Quarterly Plan F Dividend 10,156,219.750 10.00 101.56
(4) ABN AMRO Fixed Term Plan Series 4 Quarterly Plan A Dividend 5,079,433.770 10.00 50.79
(5) Birla Cash Plus-Institutional Premium Plan Dividend 53,192,919.622 10.00 532.97
(6) Birla Fixed Maturity Plan – Series 2 – Quarterly – Div. 10,155,633.328 10.00 101.85

43
SCHEDULES FORMING PART OF THE ACCOUNTS

Nos. Face Value Purchase Cost

(Rs.) (Rs. in millions)
(7) DSP Merrill Lynch Liquidity fund – Daily Div. 7,049.741 10.00 0.07
(8) DSP Merrill Lynch Liquidity fund INST – Daily Div. 343,232.593 10.00 343.30
(9) DWS Insta Cash Fund – Institutional Plan – Daily Div. 58,949,506.482 10.00 590.64
(10) DWS Money Plus Fund – Institutional Plan – Daily Div. 34,130,095.406 10.00 341.58
(11) HDFC Cash MGT Fund-Savings Plan – Daily Div. Reinvestment 72,775,872.624 10.00 774.07
(12) HDFC Fixed Maturity Plan 6 Month June 2006 I - Inst. Div. 5,136,853.907 10.00 51.42
(13) HSBC Cash Fund – Institutional Plus – Dividend 84,350,120.127 10.00 843.97
(14) HSBC Liquid Plus – Institutional Plus – Daily Div. 17,126,688.553 10.00 171.32
(15) J M Fixed Maturity Fund – Series III Monthly Plan FMF Div. 5,026,625.285 10.00 50.27
(16) Kotak Fixed maturity plan Series 24 – Dividend 10,133,857.166 10.00 101.34
(17) Kotak Fixed maturity plan XVI – Dividend 45,714.823 10.00 0.46
(18) LIC MF Fixed Maturity Plan Series 10-3 Months Dividend Plan 5,077,466.515 10.00 50.77
(19) LIC MF Liquid Fund – Dividend 66,908,236.594 10.00 734.55
(20) Principal Cash Management Fund Liquid option – INST 57,027,013.091 10.00 570.31
(21) Prudential ICICI FMP Series 32 three months Plan D – Div. 10,161,400.000 1,000.00 101.61
(22) Prudential ICICI Liquid Plan Institutional Plus – Dividend 3,376,111.970 1,000.00 40.01
(23) Prudential ICICI Inst. Liquid – Super IP Plus – Dividend 80,434,981.151 1,000.00 804.35
(24) Reliance Fixed Horizon Fund – Plan B Series II – Dividend 20,311,499.500 10.00 203.11
(25) Reliance Fixed Horizon Fund I Qrtly. Plan Series II Div. 5,077,915.715 10.00 50.78
(26) Reliance Fixed Horizon Fund Monthly Plan A Series II 5,022,337.470 10.00 50.22
(27) Reliance Fixed Horizon Fund Monthly Plan A Series VI 19,094,658.608 10.00 190.95
(28) Reliance Fixed Horizon Fund – I – Monthly Plan Series III Div. 10,051,372.100 10.00 100.51
(29) Reliance Fixed Horizon Fund – Mthly. Plan A – Series V Div. 15,070,320.150 10.00 150.70
(30) Reliance Fixed Horizon Fund – Qtrly. Plan B – Series V – Div. 5,077,874.875 10.00 50.78
(31) Reliance Fixed Horizon Fund Monthly Plan A Series III – Div. 5,022,174.125 10.00 50.22
(32) Reliance Fixed Horizon Fund Monthly Plan A Series IV – Div. 5,023,072.525 10.00 50.23
(33) Reliance Fixed Maturity Qtr. Plan III – Series II Dividend 47,533.490 10.00 0.48
(34) SBI Debt Fund Series – 180 Days (Aug. 06) Div. 10,288,572.423 10.00 102.89
(35) SBI Debt Fund Series – 60 Days (June 06) Div. 5,044,600.000 10.00 50.45
(36) SBI Premier Liquid Fund – Inst. Daily Div. 149,566,946.556 10.00 1,500.53
(37) Standard Chartered Liquidity Manager Plus Fund Dividend 2,004,679.934 10.00 2,004.88
(38) Tata Fixed Horizon Fund Series 5 – Scheme E – Div. 5,022,545.716 10.00 50.23
(39) Tata Liquid Super High Investment Fund – Daily Div. 784,751.199 10.00 874.62
(40) Templeton India TMA Super Institutional Plan – Div. 902,517.629 10.00 902.74
(41) UTI Fixed Maturity Plan Qrtly. Series QFMP/08/06II Div. 10,145,949.000 10.00 101.46
(42) UTI Liquid Cash Plan Institutional – Daily Income Option 779,323.655 10.00 794.48
(43) UTI Money market fund – Daily Dividend Option 18,514,855.999 10.00 322.71
(44) UTI Fixed Maturity Plan – (Q F M P/0106/II) Dividend Plan 59,936.595 10.00 0.60
(45) Prudential ICICI Fixed Maturity Plan Series 35 – 3 Months Plan C Div. 28,509.120 10.00 0.29
(46) Reliance Fixed Horizon Fund II Quarterly Plan Series II Inst. Div. 54,843.190 10.00 0.55

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SCHEDULES FORMING PART OF THE ACCOUNTS

(Rs. in Millions)
As at As at
31.03.2007 31.03.2006
SCHEDULE F : CURRENT ASSETS, LOANS AND ADVANCES
CURRENT ASSETS
(i) Interest accrued on investments 0.26 –
(ii) Inventories – valued and certified by the Management
(a) Raw materials 1,249.66 1,079.68
(b) Packing materials 129.96 213.56
(c) Finished goods 2,563.52 1,911.89
(d) Work-in-process 257.34 193.98
(e) Stores, spares and fuel 111.45 83.22
(f) Other traded items 28.77 14.76
4,340.70 3,497.09
(iii) Sundry debtors (Unsecured)
(a) Outstanding for more than six months
Considered good 43.34 34.89
Considered doubtful 45.45 35.17
88.79 70.06
Less: Provision for doubtful debts 45.45 35.17
43.34 34.89
(b) Other debts (considered good) 2,316.24 1,816.20
2,359.58 1,851.09
(iv) Cash and Bank Balances
(a) Cash on hand 1.44 1.87
(b) Balances with Scheduled Banks:
(i) Current Accounts 423.28 281.80
(ii) Term Deposits 0.20 0.21
424.92 283.87
(v) Retirement Benefit Asset 54.90 –
(Refer Note B - 26 in Schedule ‘M’)
(vi) Other Receivables 257.37 214.24
LOANS AND ADVANCES
(i) Wholly owned subsidiaries
(a) Interest bearing loan unsecured and considered good
Asian Paints Industrial Coatings Ltd. 127.50 127.50
(Maximum outstanding during the year Rs. 127.50 million
Previous year Rs. 127.50 million)
(b) Interest free loan – unsecured and considered good
Technical Instruments Manufacturers (India) Ltd. 147.16 143.21
(Maximum outstanding during the year Rs. 155.21 million
Previous year Rs. 143.21 million)
274.66 270.71
(ii) Other Loans and Advances:
Unsecured and considered good
(a) Balances with Customs, Central Excise etc. 144.31 170.61
(b) Sundry deposits 137.25 108.71
(c) Advances/claims recoverable in cash or in kind 438.17 282.80
(d) Advances to employees 7.27 7.65
(e) Advances against capital expenditure 46.98 58.74
(f) Amount due from subsidiaries 26.88 81.46
800.86 709.97
1,075.52 980.68
(iii) Advance payment of taxes (Net of provision for tax) 78.80 16.58
8,592.05 6,843.55

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SCHEDULES FORMING PART OF THE ACCOUNTS

(Rs. in Millions)
As at As at
31.03.2007 31.03.2006
SCHEDULE G : CURRENT LIABILITIES AND PROVISIONS
Current Liabilities
(i) Acceptances 1,650.88 1,180.12
(ii) Sundry creditors
– Trade 2,214.21 1,356.29
– Others 459.27 480.58
(Out of the above, the total outstanding dues to small scale industrial
undertakings are Rs. 89.58 million — Previous year Rs. 127.89 million)
(Refer Note B - 20 in Schedule ‘M’) 2,673.48 1,836.87
4,324.36 3,016.99
(iii) Investor Education and Protection Fund *
(a) Unpaid/Unclaimed dividend 62.05 23.39
(b) Unpaid/Unclaimed matured deposits 0.40 0.58
(c) Unclaimed interest 0.05 0.18
(d) Unclaimed amount of sale proceeds of fractional coupons of
bonus shares 0.39 0.40
62.89 24.55
(iv) Other liabilities (including Rs. 32.4 million due to Directors – Previous
year Rs. 26.67 million) 1,553.58 1,293.95
5,940.83 4,335.49
* There is no amount due and outstanding to be paid to the Investor
Education and Protection Fund as on 31st March, 2007. These amounts
shall be paid to the fund as and when they become due.
Provisions
(i) Proposed Dividend 95.92 767.36
(ii) Provision for tax on Proposed Dividend 16.30 107.62
(iii) Provision for accrued leave (Refer Note B - 22 and 26 in Schedule ‘M’) 359.28 156.40
(iv) Defined benefit obligations (Refer Note B - 26 in Schedule ‘M’) 27.36 –
(v) Other provisions (Refer Note B - 22 in Schedule ‘M’) 42.63 41.49
541.49 1,072.87
6,482.32 5,408.36

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SCHEDULES FORMING PART OF THE ACCOUNTS

(Rs. in Millions)
Year Year
2006-2007 2005-2006
SCHEDULE H : SALES & OPERATING INCOME
Sales:
Home Market 33,821.54 27,981.40
Exports 172.71 133.81
33,994.25 28,115.21
Less: Goods returned 387.33 341.00
Turnover (Refer Note B - 8 of Schedule ‘M’) 33,606.92 27,774.21
Less: Discounts 1,364.24 1,222.02
Sales (Net of discounts) 32,242.68 26,552.19
Processing charges 115.20 102.42
Lease Rent 17.27 79.31
Revenue from Home Solutions operations 70.51 51.54
32,445.66 26,785.46

SCHEDULE I : OTHER INCOME

Interest 14.41 14.33
(TDS Rs. 2.65 million – Previous year Rs. 1.02 million)
Claims received 0.71 8.40
Dividends from subsidiary companies 5.08 3.05
(TDS Rs. 0.25 million – Previous year Rs. 0.15 million)
Dividend from long term investments
– Trade 45.02 43.42
– Others 1.87 1.66
Dividend from short term investments 79.73 27.77
Royalty 88.02 63.09
(TDS Rs. 11.86 million – Previous year Rs. 6.89 million)
Sundry balances written back (Net) (Refer Note B - 18 in Schedule ‘M’) 6.76 22.18
Profit on sale of long term investments (Net) 3.11 –
Profit on sale of short term investments (Net) 0.58 3.48
Profit on sale of assets (Net) 13.62 –
Exchange difference (Net) 3.32 –
Miscellaneous income (Refer Note B - 19 in Schedule ‘M’) 142.28 171.88
404.51 359.26

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SCHEDULES FORMING PART OF THE ACCOUNTS

(Rs. in Millions)
Year Year
2006-2007 2005-2006
SCHEDULE J : MATERIALS CONSUMED
Raw Materials Consumed
Opening Stock 1,079.68 832.66
Add: Purchases and expenses 13,919.38 10,898.15
14,999.06 11,730.81
Less: Closing Stock 1,249.66 1,079.68
13,749.40 10,651.13
Packing Materials Consumed
Opening Stock 213.56 283.76
Add: Purchases and expenses 2,813.36 2,259.88
3,026.92 2,543.64
Less: Closing Stock 129.96 213.56
2,896.96 2,330.08
Purchase of Paints for resale 264.28 239.85
(Quantity MT – 14,511 Previous year 12,770 MT)
Cost of other goods sold 280.06 282.72
17,190.70 13,503.78
Add/(Less):
Decrease/(Increase) in finished and semi-finished stocks
Opening Stock 2,105.86 2,120.54
Closing Stock 2,820.86 2,105.86
(715.00) 14.68
Increase/(Decrease) in Excise duty on finished goods 131.44 (1.11)
16,607.14 13,517.35

SCHEDULE K : EMPLOYEES’ REMUNERATION AND BENEFITS

Salaries, wages, allowances, commission and provisions for
bonus and accrued leave salary 1,323.42 1,101.93
Staff welfare expenses 77.36 75.29
Contribution to Defined contribution plans:
Provident and Superannuation Funds 100.40 78.61
Defined Benefit Plans (Gratuity and Pension Plans) – expense 48.39 33.93
(Refer Note B - 26 in Schedule ‘M’)
1,549.57 1,289.76

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 Asian Paints Limited Annual Report 2006-2007

SCHEDULES FORMING PART OF THE ACCOUNTS

(Rs. in Millions)
Year Year
2006-2007 2005-2006

SCHEDULE L : MANUFACTURING, ADMINISTRATIVE,

SELLING AND DISTRIBUTION EXPENSES
Stores and spares 142.12 134.56
Power and fuel 332.95 273.00
Processing charges 193.92 144.83
Freight and handling charges 1,283.91 1,001.74
Repairs and Maintenance:
Buildings 31.80 19.88
Machinery 49.98 50.23
Other assets 115.12 99.31
196.90 169.42
Rent 233.95 183.89
Rates and taxes 135.21 143.97
Insurance 35.79 31.14
Advertisement and sales promotional expenses 1,109.81 909.73
Cash and payment performance discount 1,325.90 1,089.91
Printing, stationery and communication expenses 141.00 133.76
Travelling expenses 220.20 171.61
Commission on sales 4.93 14.21
Donations 15.77 9.82
Loss on sale of assets (Net) – 0.94
Miscellaneous expenses 232.15 218.65
Commission to Non-Executive Directors 6.47 4.50
Directors’ sitting fees 0.90 0.81
Bad and doubtful debts 18.74 12.01
Auditors’ remuneration 5.16 4.17
Bank charges 50.54 43.31
Exchange difference (Net) – 11.69
Information Technology expenses 71.35 62.40
Legal and professional expenses 43.96 53.62
Training and recruitment expenses 37.03 41.55
5,838.66 4,865.24

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SCHEDULES FORMING PART OF THE ACCOUNTS
SCHEDULE M: NOTES ON BALANCE SHEET AND PROFIT AND LOSS ACCOUNT
A. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES FOLLOWED IN THE COMPILATION OF ACCOUNTS
1. Basis for preparation of financial statements
The financial statements are prepared in accordance with the accounting principles generally accepted (‘GAAP’) in
India under the historical cost convention on accrual basis.
GAAP comprises mandatory accounting standards issued by the Institute of Chartered Accountants of India (‘ICAI’)
and the provisions of the Companies Act, 1956. Accounting policies have been consistently applied except where
a newly issued accounting standard is initially adopted or a revision to an existing accounting standard requires a
change in the accounting policy hitherto in use.
The preparation of the financial statements in conformity with GAAP requires Management to make estimates and
assumptions that affect the reported balances of assets and liabilities and disclosures relating to contingent assets
and liabilities as at the date of the financial statements and reported amounts of income and expenses during
the period. Examples of such estimates include provisions for doubtful debts, future obligations under employee
retirement benefit plans, income taxes and the useful lives of fixed assets and intangible assets.
2. Fixed Assets
(a) The ‘Gross Block’ of fixed assets is shown at the cost of acquisition, which includes taxes, duties (net of tax
credits as applicable) and other identifiable direct expenses. Interest on borrowed funds attributable to the
qualifying assets up to the period such assets are put to use, is included in the cost.
(b) Know-how related to plans, designs and drawings of buildings or plant and machinery is capitalised under
relevant asset heads.
(c) Depreciation on tinting systems except computers leased to dealers is provided under Straight Line Method
over the estimated useful life of nine years as per technical evaluation. Depreciation on computers given on
lease is provided under Straight Line Method and at rates specified under Schedule XIV to the Companies Act,
1956.
(d) Leasehold land is amortised over the period of lease.
(e) Depreciation on all other fixed assets is provided under Straight Line Method and at rates specified under
Schedule XIV to the Companies Act, 1956 except for the following classes of fixed assets, where the depreciation
is provided under Straight Line Method based on estimated useful life of the assets as under: -
Information Technology Assets : 4 years
Scientific Research Equipment : 8 years
Furniture and Fixtures : 8 years
Office Equipment and Vehicles : 5 years
(f) Intangible Assets
i. User licence fees for major software are amortised over a period of four years.
ii. Trade Mark is amortised over a period of five years.

(g) At balance sheet date, an assessment is done to determine whether there is any indication of impairment in the
carrying amount of the Company’s fixed assets. If any such indication exists, the asset’s recoverable amount is
estimated. An impairment loss is recognised whenever the carrying amount of an asset exceeds its recoverable
amount.
An assessment is also done at each balance sheet date whether there is any indication that an impairment loss
recognised for an asset in prior accounting periods may no longer exist or may have decreased. If any such
indication exists the asset’s recoverable amount is estimated. The carrying amount of the fixed asset is increased
to the revised estimate of its recoverable amount but so that the increased carrying amount does not exceed
the carrying amount that would have been determined had no impairment loss been recognised for the asset
in prior years. A reversal of impairment loss is recognised in the profit and loss statement.
After recognition of impairment loss or reversal of impairment loss as applicable, the depreciation charge for
the asset is adjusted in future periods to allocate the asset’s revised carrying amount, less its residual value (if
any), on straight line basis over its remaining useful life.
3. Revenue Recognition
Sale of products is recognised when the risks and rewards of ownership are passed on to the customers, which is on
despatch of goods. Sales are stated gross of excise duty as well as net of excise duty; excise duty being the amount
included in the amount of gross turnover. The excise duty related to the difference between the closing stock and
opening stock is recognised separately as part of ‘Materials Consumed’. Sales are stated exclusive of VAT / sales
tax.

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SCHEDULES FORMING PART OF THE ACCOUNTS

Processing income is recognised upon rendition of the services.
Dividend income is recognised when the right to receive the dividend is unconditional at the balance sheet date.
4. Lease Accounting
The Company has provided tinting systems to dealers on an operating lease basis. The company has also taken some
assets such as cars, computers and systems hardware on an operating lease basis. Lease rentals are accounted on
accrual basis in accordance with the respective lease agreements and any variation thereof.
5. Inventory
(a) Inventories are valued at the lower of cost and net realisable value. Damaged, unserviceable and inert stocks
are suitably depreciated.
(b) In case of raw materials, packing materials, stores, spares and consumables, the cost includes duties and taxes
(net of CENVAT, wherever applicable) and is arrived at on weighted average cost basis.
(c) Cost of finished goods and work-in-process includes the cost of raw materials, packing materials, an appropriate
share of fixed and variable production overheads, excise duty as applicable and other costs incurred in bringing
the inventories to their present location and condition.
(d) The cost of traded goods is arrived at on a weighted average basis.
6. Investments
Short term investments are carried at the lower of cost and fair value computed category wise. Long term investments
are carried at cost. Provision for diminution in the value of long term investments is made only if such a decline is
not temporary in the opinion of the management.
7. Transactions in Foreign Exchange
Transactions in foreign currencies are recorded at the exchange rates prevailing on the date of the transactions.
In respect of transactions covered by forward exchange contracts, the difference between the forward rate and
the exchange rate on the date of the transaction is recognised as income or expense over the life of the contract.
Transactions outstanding at year end are translated at exchange rates prevailing at the year end and the profit/loss
so determined is recognised in the Profit and Loss Account.
8. Sundry Debtors
Sundry debtors are stated after writing off debts considered as bad. Adequate provision is made for debts considered
doubtful. Discounts due, yet to be quantified at the customer level are included under the head ‘Current Liabilities
and Provisions’.
9. Employee Benefits
The Company has adopted Accounting Standard (AS) 15 (Revised) Employee Benefits with effect from 1st April
2006. Pursuant to the same, the Company has adjusted the additional liability arising on adoption of AS 15 (Revised)
against the opening balance of General Reserves, net of deferred tax.
(i) Short Term Employee Benefits:
The Company recognises the undiscounted amount of short term employee benefits expected to be paid in
exchange for services rendered as a liability (accrued expense) after deducting any amount already paid.
(ii) Post-employment benefits:
(a) Defined contribution plans
Defined contribution plans are post-employment benefit plans under which the Company pays fixed
contributions into separate entities (funds). The Company’s contribution to defined contribution plans are
recognised in the profit and loss statement in the financial year to which they relate.
The Company operates defined contribution plans pertaining to Provident Fund schemes for all employees
and a Superannuation scheme for eligible employees. The Company also contributes to a Government
administered pension fund on behalf of its employees.
(b) Defined benefit plans
(i) Defined benefit gratuity plan
The Company operates a defined benefit gratuity plan for employees. The Company contributes to a
separate entity (a fund), towards meeting the Gratuity obligation.
(ii) Defined benefit pension plan
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.
The cost of providing defined benefits is determined using the Projected Unit Credit Method with actuarial
valuations being carried out at each balance sheet date. Past service cost is recognised immediately to the
extent that the benefits are already vested, else is amortised on a straight-line basis over the average period
until the amended benefits become vested.
The defined benefit obligations recognised in the balance sheet represents the present value of the defined
benefit obligation as adjusted for unrecognised actuarial gains and losses and unrecognised past service

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SCHEDULES FORMING PART OF THE ACCOUNTS
costs, and as reduced by the fair value of plan assets, if applicable. Any defined benefit asset (negative
defined benefit obligations resulting from this calculation) is recognised representing the unrecognised
past service cost plus the present value of available refunds and reductions in future contributions to the
plan.
(iii) Other long term employee benefits
Entitlements to annual leave and sick leave are recognised when they accrue to employees. Sick leave can
only be availed while annual leave can either be availed or encashed subject to a restriction on the maximum
number of accumulation of leaves. The Company determines the liability for such accumulated leaves using the
Projected Accrued Benefit Method with actuarial valuations being carried out at each Balance Sheet date.
10. Research and Development
(a) Capital expenditure is shown separately under respective heads of fixed assets.
(b) Revenue expenses including depreciation are included under the respective heads of expenses.
11. Provision for Taxation
Provision for current tax is computed as per ‘Total Income’ returnable under the Income Tax Act, 1961 taking
into account available deductions and exemptions. Deferred tax is recognised for all timing differences being the
differences between taxable income and accounting income that originate in one period and are capable of reversal
in one or more subsequent periods. Deferred tax assets are not recognised unless there is a virtual certainty that
sufficient future taxable income will be available against which such deferred tax assets can be realised.
Provision for Fringe Benefit Tax (FBT) is computed as per provisions of the Income Tax Act, 1961.
12. Proposed Dividend
Dividend recommended by the Board of Directors is provided for in the accounts, pending approval at the Annual
General Meeting.

(Rs. in Millions)
2006-2007 2005-2006
B. NOTES :
1. Estimated amount of contracts remaining to be executed on capital account
and not provided for 190.69 317.72
2. Letters of Credit and Bank guarantees issued by bankers and outstanding as on
31st March, 2007. 279.57 210.07
3. Contingent Liabilities:
(a) Guarantee given on behalf of Company’s dealers in respect of loans
granted to them by a bank for acquiring dealer tinting systems 348.25 309.62
(b) Corporate guarantees issued by the Company to certain banks on behalf of 773.19 864.52
some of its subsidiaries.
(c) Claims against the Company not acknowledged as debts
i. Tax matters in dispute under appeal 460.90 369.22
ii. Others. 29.18 11.49
4. The Company has issued letters of comfort/support to banks on behalf of some
of its subsidiaries from time to time and also a letter of financial support to the
board of a subsidiary. The financial support/comfort based on such letters is
limited to Rs. 1,263.29 million as on 31st March, 2007 (Rs.1,219.66 million as on
31st March, 2006).
5. Auditors’ remuneration
Statutory audit fee 2.35 2.15
Tax audit fees 0.45 0.45
Certification fees 1.12 1.15
Other services 0.50 –
Out of pocket expenses 0.44 0.25
Cost audit fees 0.15 0.15
In addition, an associate firm of the statutory auditor’s firm has been paid Rs. 0.15
million for taxation services during the year (Previous year Rs. 0.19 million).

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(Rs. in Millions)
2006-2007 2005-2006
6. (a) Computation of Profit for the year ended 31st March, 2007 under section
349 of the Companies Act, 1956.
Net Profit as per Profit and Loss Account 2,720.48 1,867.80
Add: Provision for current and fringe benefit tax 1,423.66 1,191.52
Provision for deferred tax (23.72) (20.70)
Loss on sale of assets (Net) – 0.94
Extra Ordinary Item (Refer Note No. 21) – 336.00
Less: Surplus on sale of long term
Investments (Net) 3.11 –
Profit on sale of assets (Net) 13.62 –
Profit under Section 349 of the Companies Act, 1956 4,103.69 3,375.56
Add: Managerial remuneration 55.11 44.33
Profit under Section 198 of the Companies Act, 1956 4,158.80 3,419.89
Commission to Non-Executive Directors -
Subject to a ceiling of 1% of profit as computed above 41.59 34.20
Commission actually paid 6.47 4.50
Remuneration to Whole-time Directors -
Subject to a ceiling of 10% of profit as computed above 415.88 341.99
Total remuneration actually paid 47.75 39.02
(b) Details of managerial remuneration under Section 198 of the Companies
Act, 1956:
Salaries and allowances 10.96 9.29
Commission to Executive Directors (Maximum permissible limit is 2%
of the Profit as computed under section 349 of the Companies Act,
1956 in aggregate to all three Executive Directors as approved by the
shareholders). 25.50 21.00
Contribution to Provident and Superannuation funds 9.00 6.83
Perquisites 2.29 1.90
Sub total 47.75 39.02
Sitting fees to Non-Executive Directors 0.90 0.81
Commission to Non-Executive Directors 6.47 4.50
Sub total 7.37 5.31
Grand total 55.12 44.33
The above remuneration does not include Defined Benefit Plan expenses and provision for
Compensated Leave as these are lump sum amounts based on actuarial valuation.
The Company depreciates certain fixed assets at higher rates of depreciation based on estimated
useful lives which are lower or equal to the implicit estimated useful lives prescribed by Schedule
XIV of the Companies Act, 1956. The above higher value of depreciation has been considered as
deduction for the computation of managerial remuneration in (a) above.

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SCHEDULES FORMING PART OF THE ACCOUNTS
7. Production:
Unit Location Installed Capacity(1) Production
As at As at
31st March, 31st March, 2006-2007 2005-2006
2007 2006
(a) Paints, enamels, varnishes MT/KL In-house(2) 354,150 300,150 282,602(3) 241,903(3)
and blacks
Contract
Manufacture/
Purchase – – 102,960 77,564
(b) Synthetic Resins
(Mainly for captive consumption) MT In-house(2) 99,880 77,880 59,671(4) 55,460(4)
(8) (5)
(c) Phthalic Anhydride MT Ankleshwar 25,200 24,000 21,864 23,041(5)
(d) Pentaerythritol MT Cuddalore 3,000 3,000 5,216(6) 4,860(6)
(e) Sodium Formate MT Cuddalore 1,800 1,800 3,034 2,742
(7)
(f) Formaldehyde (50%) MT Cuddalore 13,500 13,500 11,549 11,690

(1)
Installed capacities are as certified by the management
(2)
Manufacturing plants at Mumbai, Ankleshwar, Patancheru, Kasna, Sriperumbudur and Taloja.
(3)
Includes 7730 MT (Previous year 7617 MT) of products processed for third party.
(4)
Includes 3116 MT (Previous year 2590 MT) of resins processed for third party.
(5)
Includes 10587 MT (Previous year 9087 MT) Phthalic Anhydride transferred to paint plants for captive
consumption.
(6)
Includes 2751 MT (Previous year 2840 MT) Pentaerythritol transferred to paint plants for captive consumption.
(7)
Mainly for internal consumption in the manufacture of Pentaerythritol.
(8)
Based on rated capacity per month.

8. Stocks and Turnover

Unit Opening Stock Closing Stock Turnover *
Qty. Value Qty. Value Qty. Value
(Rs. in millions) (Rs. in millions) (Rs. in millions)

(a) Paints, enamels, varnishes MT/KL 29,312 1,834.80 37,810 2,503.52 368,920 32,184.51
and blacks (31,004) (1,858.02) (29,312) (1,834.80) (313,213) (26,470.20)
(b) Phthalic Anhydride MT 655 35.46 347 21.63 11,575 787.20
(411) (20.23) (655) (35.46) (13,711) (743.63)
(c) Pentaerythritol MT 472 34.59 358 32.56 2579 237.29
(421) (35.93) (472) (34.59) (1968) (164.52)
(d) Sodium Formate MT 278 4.38 252 4.85 3,054 54.81
(220) (3.54) (278) (4.38) (2,684) (42.01)
(e) Formaldehyde MT 387 2.66 105 0.96 385 6.55
(51) (0.40) (387) (2.66) (235) (2.77)
(f) Others 336.56
(Refer Note (ii) below) (351.08)
TOTAL 1,911.89 2,563.52 33,606.92
(1,918.12) (1,911.89) (27,774.21)

* Includes sale of materials processed outside, resale of finished paints and dealer tinting systems purchased.
i. Figures in brackets are for the previous year.
ii. This comprises of resins, machinery spares, stationery items, plant and machinery, dealer tinting systems and
other miscellaneous items.

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 Asian Paints Limited Annual Report 2006-2007

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9. Raw materials consumed:
2006-2007 2005-2006
Unit Qty. Value Qty. Value
(Rs. in millions) (Rs. in millions)
(a) Pigments, Extenders, Minerals etc. MT 177,228 4443.93 144,122 3,398.72
(b) Additives MT 21,032 1,808.16 16,720 1,458.62
(c) Solvents MT 6,961 5,301
KL } 61,141 } 2,289.20
54,685 } 1,708.85

(d) Resins MT 23,193 1,277.89 13,508 773.38

(e) Oils MT 26,912 1,160.26 23,399 929.23
(f) Ortho Xylene MT 23,821 1,136.19 25,604 958.01
(g) Methanol MT 6,900 145.88 7,038 109.40
(h) Acetaldehyde MT 1,984 73.17 1,888 71.71
(i) Monomers MT 9,566 758.63 9,272 773.19
(j) Others MT 16,919 656.09 14,313 470.02
TOTAL 13,749.40 10,651.13

10. CIF value of direct imports:

2006-2007 2005-2006
(Rs. in millions) (Rs. in millions)
(a) Raw materials 2,224.18 1,960.85
(b) Packing materials – 19.32
(c) Stores and Spares 30.04 30.58
(d) Capital goods 14.73 31.38

11. Value of imported and indigenous raw materials and spares consumed and percentage of each to total
consumption:
2006-2007 2005-2006
(Rs. in millions) % to Total (Rs. in millions) % to Total
(a) Raw materials:
Direct imports 2,470.27 17.97 2,165.18 20.33
Others (including value of consumption of
imported raw materials purchased through
indigenous sources) 11,279.13 82.03 8,485.95 79.67
13,749.40 100.00 10,651.13 100.00
(b) Stores and spares:
Direct imports 14.14 9.95 21.36 15.87
Others 127.97 90.05 113.20 84.13
142.11 100.00 134.56 100.00

12. Net dividend remitted in foreign currency:

2006-2007 2005-2006
Number of Number of Dividend Number of Number of Dividend
Non-resident Equity Shares remitted Non-resident Equity Shares remitted
Shareholders held (Rs. in millions) Shareholders held (Rs. in millions)

Final Dividend 2004-2005 – – – 18 35431 0.19

Interim Dividend 2005-2006 – – – 18 35431 0.16
Final Dividend 2005-2006 * 17 33,589 0.27 – – –
Interim Dividend I 2006-2007 17 33,589 0.18 – – –
Interim Dividend II 2006-2007 18 33,598 0.22 – – –
* includes one time special dividend of 25%

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SCHEDULES FORMING PART OF THE ACCOUNTS
13. Expenditure in foreign currency:
(Rs. in Millions)
2006-2007 2005-2006
(a) Annual maintenance for software 9.01 13.85
(b) Procurement of software – 6.43
(c) Professional fees 12.57 12.27
(d) Shade cards and other sales promotional Items 16.77 21.63
(e) Travelling and Training Expenses 12.15 9.06
(f) Others 5.64 6.30
Total 56.14 69.54

14. Earnings in foreign currency:

(Rs. in Millions)
2006-2007 2005-2006
(a) Export of own products at FOB value 139.69 125.06
(b) Export of traded goods at FOB value 26.30 2.31
(c) Royalty 60.87 41.46
(d) Other receipts including recoveries from subsidiaries 13.87 35.07
Total 240.73 200.90

15. Sundry debtors include Rs. 16.70 million (Previous year Rs. 11.65 million) due from subsidiary companies.
16. Revenue expenses amounting to Rs. 128.95 million on Research and Development have been included under the
respective heads of expenses (Previous year Rs. 108.55 million).

17. Interest expense includes:

(Rs. in Millions)
2006-2007 2005-2006
On Bank borrowings 1.80 0.10
On Bill discounting 59.52 29.42
Other Interest (Net)* 7.41 8.79
Total 68.73 38.31

* Includes interest payment of Rs. 40.6 million (Previous year Rs. 7.52 million) to Income Tax authorities and
interest receipt of Rs. 34.08 million (Previous year Rs. Nil) from Income Tax authorities on account of completion/
disposal of various tax assessments/appeals.
18. Sundry balances written back (net) includes write back of provisions made in the earlier years towards statutory and
other liabilities which have been determined to be no longer required in the current financial year.
19. Miscellaneous income includes refund of taxes paid in earlier years under sales tax laws amounting to Rs. NIL (Previous
year Rs. 19.30 million) on completion of assessments.
20. The amount due to Small Scale Industrial undertakings (SSIs) is furnished under the relevant head, on the basis of
information available with the Company regarding small scale industry status of the suppliers. There are no amounts
outstanding to such suppliers which are due for more than 30 days beyond the agreed credit period.
The Company has not received any intimation from suppliers regarding their status under the Micro, Small and
Medium Enterprises Development Act, 2006 and hence disclosures, if any, relating to amounts unpaid as at the year
end together with interest paid/payable as required under the said Act have not been given.
21. The extraordinary item for the previous year comprises of a provision for diminution in the value of long term
investment in the Company’s wholly owned subsidiary Asian Paints (International) Ltd., Mauritius.

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SCHEDULES FORMING PART OF THE ACCOUNTS

22. Pursuant to the Accounting Standard (AS 29) – Provisions, Contingent Liabilities and Contingent Assets, the disclosure
relating to provisions made in the accounts for the year ended 31st March, 2007 is as follows:
*Provision for Provision for leave Provision for Bad Provision for
Excise (1) entitlements / and Doubtful Diminution in the
encashment (2) debts (3) Value of
Investment (4)
2006-07 2005-06 2006-07 2005-06 2006-07 2005-06 2006-07 2005-06
Opening Balance 41.49 51.99 156.40 126.42 35.17 32.89 336.00 –
Additional obligation
arising on adoption of
Accounting Standard
(AS 15) (Revised),
adjusted against general
reserve and deferred tax – 162.70 – – – –
Additions 2.72 – 40.18 29.98 19.06 12.52 – 336
Utilisations – – – – 5.11 5.99 – –
Reversals 1.59 10.5 – – 3.67 4.25 – –
Closing Balance 42.63 41.49 359.28 156.40 45.45 35.17 336.00 336

* Provision for Excise has been grouped under the head ‘other provisions’ of Schedule G.
(1) Excise provision is made towards matters disputed at various appellate levels.
(2) Provision is made based on actuarial valuation in accordance with AS 15 (Revised) Employee Benefits and includes
all leave entitlements/compensatory absences.
(3) Provision is made for the debts that are outstanding for more than 1 year.
(4) Provision for diminution in the value of investment is based on management’s assessment of the fair value of long
term investment.
23. The Company has recognised deferred tax arising on account of timing differences, being the difference between
the taxable income and accounting income, that originates in one period and is capable of reversal in one or more
subsequent period(s) in compliance with Accounting Standard (AS 22) - Accounting for Taxes on Income issued by
Institute of Chartered Accountants of India.
The major components of deferred tax assets/(liabilities) arising on account of timing differences as at 31st March,
2007 are as follows:
(Rs. in Millions)
As at As at
31st March, 31st March,
2007 2006
Deferred tax assets/(liabilities)
Difference between the Written Down Value of assets as per books of accounts
and Income Tax Act, 1961. (368.47) (370.56)
Expenses allowed for tax purpose on payment basis 104.53 53.92
Provision for doubtful debts 15.45 11.84
Voluntary Retirement Scheme (VRS) expenditure debited to Profit and Loss
Account but allowed in Income tax over five years 10.11 3.38
Capital Losses carried forward under the Income Tax Act, 1961. 16.92 16.75
Net deferred tax asset/(liability) (221.46) (284.68)
Deferred tax asset on employee benefit obligations, pursuant to adoption of
AS 15 (Revised), adjusted against General Reserve 39.50
Deferred tax benefit/(expense) for the year 23.72 20.7

24. I. Pursuant to Accounting Standard (AS-19) – Leases issued by the Institute of Chartered Accountants of India, the
following information is given:
(a) The Company has provided tinting systems to its dealers on an operating lease basis. The lease period varies
between six and ten years. Lease rentals are payable monthly by the dealers. A refundable security deposit
is collected at the time of signing the agreement. The equipment shall be used only to tint products of the
lessor.

57
SCHEDULES FORMING PART OF THE ACCOUNTS
(b) Future minimum lease rentals receivable as at 31st March, 2007 as per the lease agreements:
(Rs. in Millions)
2006-2007 2005-2006
i) Not later than one year 6.06 18.11
ii) Later than one year and not later than five years 10.24 16.31
iii) Later than five years 0.10 0.17
Total 16.40 34.59
The information pertaining to future minimum lease rentals receivable is based on the lease agreements
entered into between the Company and the dealers and variation made thereto. Lease rentals are reviewed
periodically taking into account prevailing market conditions.
(c) Total amount of contingent rents recognised as income - NIL.
(d) The initial direct cost relating to acquisition of tinting system is capitalised.
(e) The information on gross amount of leased assets, depreciation and impairment is given in Schedule ‘D’ to
the Balance Sheet.
II. (a) The Company has taken certain assets such as cars, computers and Systems hardware on an operating lease
basis for a period of 48 (forty eight) months. The lease rentals are payable by the company on a monthly
and quarterly basis, respectively.
(b) Future minimum lease rentals payable as at 31st March, 2007 as per the lease agreements:
(Rs. in Millions)
2006-2007 2005-2006
(i) Not later than one year 30.47 29.00
(ii) Later than one year and not later than five years 51.46 23.74
(iii) Later than five years –
Total 81.93 52.74
(c) Lease payments recognised in the profit and loss account for the period are Rs. 33.28 millions (Previous year
Rs.34.52 millions).
25. Pursuant to Accounting Standard (AS 27) - Financial Reporting of Interests in Joint Venture, the disclosures relating
to the Joint Venture viz., Asian PPG Industries Limited (hereinafter referred to as JV) are as follows:
(a) The proportion of interest of the Company in the JV is by way of equal equity participation with PPG Industries
Securities Inc., U.S.A.
(b) The aggregate amount of assets, liabilities, income and expenses related to the Company’s interests in the JV as
at 31st March, 2007 is as follows:
(Rs. in Millions)
2006-2007 2005-2006
i) Assets 1035.96 681.45
ii) Liabilities 519.60 234.62
iii) Income 1498.47 1203.31
iv) Expenses 1403.75 1099.59

(c) The Company’s share of capital commitments of the JV as at 31st March, 2007 is Rs. 47.19 million (Previous year
Rs. 0.37 million).
(d) The Company’s share of contingent liabilities of the JV as at 31st March, 2007 is Rs. 24.15 million (Previous year
Rs. 21.17 million).
(e) No contingent liabilities and capital commitments have been incurred as at 31st March, 2007 in relation to the
Company’s interests in the JV along with the other venturer (Previous year Rs. Nil).
26. Employee Benefits :
The Company has adopted Accounting Standard (AS 15) (Revised) Employee Benefits with effect from 1st April, 2006.
Pursuant to the same, the Company has adjusted the opening balance of employee benefit obligations, net of related
deferred tax assets arising out of such adoption as on 1st April, 2006 against the General Reserves as explained below:
(1) Long term employee benefits: The Company has recognised the expected liability arising out of compensated
absences (annual leave and sick leave) as at 1st April, 2006 based on actuarial valuation carried out using the
Projected Accrued Benefit Method. Consequent to the above, the additional opening liability towards compensated
leaves as at 1st April, 2006 amounting to Rs. 162.70 million has been recognised in the financial statements by
adjusting against the General Reserves (net of deferred tax asset of Rs. 54.76 million).
The liability towards leave entitlements for the year ended 31st March, 2007 has been recognised in the Profit &
Loss statement and the same has been disclosed in Note B - 22 above.
(2) Short term employee benefits: The Company has recognised certain short term employee benefit obligations
as at 1st April, 2006 amounting to Rs. 13.41 million in the financial statements by adjusting the same against the
General Reserves (Net of deferred tax asset of Rs. 4.52 million).

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SCHEDULES FORMING PART OF THE ACCOUNTS

The liability towards all short term benefits including the above for the year ended 31st March, 2007 has been
recognised in the Profit & Loss statement.
(3) The net defined benefit asset of the gratuity plan as at 1st April, 2006 of Rs 23.20 million plus the provision of
Gratuity liability made as per the pre-revised Accounting Standard (AS 15) determined as at 31st March, 2006 of
Rs 35.56 million based on actuarial valuation, net of deferred tax liability of Rs 19.78 million, has been adjusted
against the General Reserves.
Thus, the net adjustment of Rs 77.85 million (aggregate of the above) to General Reserves as on 1st April, 2006
consist of employee benefit obligations of Rs 117.35 million and deferred tax asset thereon of Rs 39.50 million.
Until 31st March, 2006, the liability towards pension to certain specified employees under the Company’s
pension scheme was charged to Profit & Loss Statement as and when the liability was discharged. On adoption
of Accounting Standard (AS 15) (Revised), the Company has charged Rs 27.36 million to Profit & Loss Statement
towards accrued liability based on actuarial valuation carried out as at Balance Sheet date.

The following disclosures are made in accordance with Accounting Standard (AS 15) (Revised) pertaining to Defined Benefit Plans:

(Rs. in Millions)
Gratuity Pension
(Funded Plan) (Unfunded Plan)
2006-2007 2006-2007
Amount recognised in Balance Sheet
Present value of funded obligations 442.07 –
Fair value of plan assets (499.88) –
Present value of unfunded obligations – 27.36
Unrecognized past service cost – –
Amount not recognised as an asset, because of the limit 2.91
in Para 59(b) of AS 15
Net liability/(asset) (54.90) 27.36
Amounts in Balance Sheet
Liability – 27.36
Assets 54.90 –
Net liability/(asset) (54.90) 27.36
Expense recognised in the statement of Profit & Loss
Opening defined benefit obligation less benefits paid – 28.45
Current service cost 29.55 0.23
Interest on defined benefit obligation 33.05 2.18
Expected return on plan assets (31.94) –
Net actuarial losses/(gains) recognized in year (12.54) (3.50)
Past service cost – –
Effect of the limit in Para 59(b) of AS 15 (Revised) 2.91 –
Losses/(gains) on ‘Curtailments and Settlements’ – –

Total, included in ‘Employee Benefit Expense’ 21.03 27.36

Actual return on plan assets 25.19 –
Reconciliation of benefit obligations and plan assets for the
period
Change in defined benefit obligation
Opening defined benefit obligation as at 1st April, 2006 457.14 29.74
Current service cost 29.55 0.23
Interest cost 33.05 2.18
Actuarial losses/(gain) (19.28) (3.51)
Liabilities extinguished on curtailment – –
Liabilities extinguished on settlements – –
Liabilities assumed on acquisition – –
Exchange difference on foreign plans – –

59
SCHEDULES FORMING PART OF THE ACCOUNTS
(Rs. in Millions)
Gratuity Pension
(Funded Plan) (Unfunded Plan)
2006-2007 2006-2007
Benefits paid (58.39) (1.29)
Closing defined benefit obligation as at 31st March, 2007 442.06 27.36
Change in fair value of assets
Opening fair value of plan assets as at 1st April, 2006 480.34 –
Expected return on plan assets 31.94 –
Actuarial gain/(losses) (6.74) –
Assets distributed on settlements – –
Contributions by employer* 52.73 1.29
Assets acquired due to acquisition – –
Exchange difference on foreign plans – –
Benefits paid (58.39) (1.29)
Closing fair value of plan assets as at 31st March, 2007 499.88 –
* including Rs. 35.56 million towards contributions for the provision made as at 31st March, 2006.
Assets information

Category of assets 31st March, 2007 31st March, 2007

Government of India Securities 52% –
Corporate Bonds 26% –
Special Deposit Scheme 14% –
Equity Shares of Listed Companies – –
Property – –
Insurer Managed Funds – –
Others 8% –
Grand Total 100% –

Summary of the actuarial assumptions

Discount rate 8.25% 8.25%
Expected rate of return on assets 7.50% –

Note:–
(1) The estimates of future salary increases, considered in actuarial valuation, takes into account the inflation,
seniority, promotion and other relevant factors.
(2) The Company estimates that the amount to be contributed to the Gratuity Fund for the financial year
2007-2008 will be Rs. NIL.
(3) Comparative values of defined benefit plans for the past four financial years, as required by Accounting
Standard (AS 15) (Revised) are not provided, this being the first year of adoption of the standard.
27. Earnings per share:

2006-2007 2005-2006
(a) Basic and diluted earnings per share before extra ordinary item in rupees 28.36 22.98
(face value – Rs. 10/- per share)
(b) Basic and diluted earnings per share after extra ordinary item in rupees 28.36 19.47
(face value – Rs. 10/- per share)
(c) Profit after tax and prior period items but before extra ordinary item as 2,720.48 2,203.80
per Profit & Loss account (Rs. in million)
(d) Profit after tax, prior period items and extra ordinary item as per Profit & 2,720.48 1,867.80
Loss account (Rs. in million)
(e) Weighted average number of equity shares outstanding 95,919,779 95,919,779

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28. Information on related party transactions as required by Accounting Standard – 18 for the year ended 31st March,
2007.
(Rs. in Millions)
Particulars Joint Venture Subsidiaries Key Management Relatives of Key Companies Employee benefit Others
Personnel (1) Management Controlled by plans where
Personnel (2) Directors/Relatives control exists

2006-07 2005-06 2006-07 2005-06 2006-07 2005-06 2006-07 2005-06 2006-07 2005-06 2006-07 2005-06 2006-07 2005-06

Processing of goods (Income) 112.47 96.38 3.13 6.04

Sale of goods 169.65 115.56 53.49 71.65 43.67 22.20

Purchase of goods 9.97 11.72 829.37 354.85

Purchase of goods (Expense) 19.27 108.22

Consignment sales – 0.02

Royalty received 17.12 13.33 75.73 51.36

Consultancy expenses – 0.39

Other recoveries 64.15 57.63 9.89 25.18 0.16 0.14

Interest received on loan given 8.92 3.90

Purchase of investments – 50.00

Sale of investments 53.09 25.10

Equity contribution 121.06 28.43

Loan given 19.08 145.00

Repayment of loan given 15.12 11.32

Rent paid 19.50 19.50

Remuneration 47.75 39.02 15.65 11.79

Commission to Non–Executive Directors 2.10 1.50

Sitting fees paid to Non–Executive Directors 0.23 0.21

Sitting fees received 1.85 1.59

(from subsidiaries for Nominee Directors)

Other services – receipts 7.10 5.49

Donation 6.50 4.50

Sale of assets 4.36 – 0.03

Dividend received 20.48 20.48 5.08 3.05 1.96

Contributions during the year 197.62 175.00

Provision for doubtful debts (0.05) 0.32

Outstanding as on 31st March

Loans: – – 274.66 270.71 – – – – – – – – – –

Deposits accepted 0.65 0.65 – – – – – – 0.10 0.10 – – – –

Net receivables/(payables) 52.43 42.95 43.46 92.79 (32.40) (26.67) (2.10) (1.50) (22.50) (17.83) (6.59) (46.13) – –

Corporate guarantee issued by the Company on behalf of its subsidiaries amounting to Rs. 773.19 millions as at 31st March,
2007 (Previous year Rs. 864.52 million).
The Company has issued letters of comfort/support to banks on behalf of some of its subsidiaries from time to time and also
a letter of financial support to the board of a subsidiary. The financial support/comfort based on such letters is limited to
Rs. 1,263.29 million as on 31st March, 2007 (Rs. 1,219.66 million as on 31st March, 2006).
(1) Key management personnel and relatives of key management personnel are entitled for post employment benefits and
other long term employee benefits recognised as per Accounting Standard (AS 15) (Revised) Employee Benefits in the
financial statements. As the same is based on actuarial valuations not identifiable at an individual employee level, the
same is not included above.
(2) Under the employment of the Company, pursuant to the necessary approvals from the shareholders and the Central
Govt. under section 314 of the Companies Act, 1956.

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SCHEDULES FORMING PART OF THE ACCOUNTS
(a) Joint Venture: Asian PPG Industries Limited
Subsidiary: Faaber Paints Pvt. Limited

(b) Subsidiaries:
Direct Subsidiaries:
Asian Paints (Nepal) Pvt. Limited Asian Paints (International) Limited, Mauritius
Asian Paints Industrial Coatings Limited Technical Instruments Manufacturers (India) Limited

Subsidiaries of the wholly owned subsidiary, Asian Paints (International) Limited, Mauritius.
Asian Paints (South Pacific) Holdings Limited Asian Paints (South Pacific) Limited
Asian Paints (Tonga) Limited Asian Paints (S.I.) Limited
Asian Paints (Vanuatu) Limited Asian Paints (Queensland) Limited
Asian Paints (Lanka) Limited Asian Paints (Bangladesh) Limited
Asian Paints (Middle East) LLC SCIB Chemical, S.A.E., Egypt.
Berger International Limited, Singapore

Subsidiary of Asian Paints (South Pacific) Limited: Taubmans Paints (Fiji) Limited

Subsidiary of Taubmans Paint (Fiji) Limited: Samoa Paints Limited

Subsidiary of Asian Paints (Lanka) Limited: Asian Paints Distributors (Pvt.) Limited (Under
voluntary liquidation)

Subsidiaries of Berger International Limited, Singapore

Berger Paints Singapore Pte. Limited
Berger International Sdn Bhd,. Malaysia
Berger Paints Manufacturing Limited, Myanmar *
Berger Paints (Hong Kong) Limited
Universal Paints Limited, U.K.
* Sold during the year
Berger Building Services (Singapore) Pte. Limited
Berger Paints (Thailand) Limited
Berger Paints (China) Co. Limited (formerly known
as Berger Paints (Ningbo) Co. Limited)
Enterprise Paints Limited, U.K.
Lewis Berger (Overseas Holdings) Limited, U.K.

Subsidiary of Berger Building Services (Singapore) Pte. Limited Berger Contractor (Singapore) Pte. Limited

Subsidiary of Enterprise Paints Limited: Nirvana Investments Limited, U.K.

Subsidiary of Nirvana Investments Limited Berger Paints Emirates Limited

Subsidiaries of Lewis Berger (Overseas Holdings) Limited:

Berger Paints Jamaica Limited Berger Paints Trinidad Limited
Berger Paints Barbados Limited

Subsidiary of Universal Paints Limited: Berger Paints Bahrain W.L.L.

Associate Company: Dutch Boy Philippines Inc. *
* Sold during the year

(c) Key management personnel:

Name of the Director Designation
Ashwin Choksi Chairman
Ashwin Dani Vice Chairman & Managing Director
Abhay Vakil Managing Director

(d) Relatives of key management personnel:

Directors:
Mahendra Choksi Non–Executive Director
Amar Vakil Non–Executive Director
Hasit Dani Non–Executive Director

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 Asian Paints Limited Annual Report 2006-2007

SCHEDULES FORMING PART OF THE ACCOUNTS

Employees:
Jalaj Dani Malav Dani *
Manish Choksi Nehal Vakil
Vishal Choksi *
* Employed for part of the year.

(e) Companies controlled by Directors/Relatives :

AR Intertect Design Pvt. Ltd.
Ashwin Holdings Pvt. Ltd.
Asteroids Trading and Investments Pvt. Ltd.
Castle Investments and Industries Pvt. Ltd.
Centaurus Trading and Investments Pvt. Ltd.
Clear Plastics Limited
Coating Specialties (India) Ltd.
Dakshina Properties Pvt. Ltd.
Dani Capital and Investments Pvt. Ltd.
Dani Enterprises Pvt. Ltd.
Dani Finance and Investments Co. Pvt. Ltd.
Dani Finlease Ltd.
Dani Holdings & Trading Co. Pvt. Ltd.
Dani Securities Ltd.
Dani Trading and Investments Ltd.
Doli Trading and Investments Pvt. Ltd.
Elcid Investments Ltd.
ELF Trading and Chemical Mfg. Co. Ltd.
Geetanjali Trading & Investments Ltd.
Gujarat Organics Ltd.
Himanshu Holdings Pvt. Ltd.
Hitech Plast Ltd.
Hiren Holdings Pvt. Ltd.
Jalaj Trading and Investments Pvt.Ltd.
Jaldhar Investments and Trading Co. Pvt. Ltd.
Jatayu Investments Ltd.
Kalica Paper Industries Pvt. Ltd.
Lambodar Investments & Trading Co. Ltd.
Lyon Investments and Industries Pvt. Ltd.
Mipak Polymers Ltd.
Murahar Investments and Trading Co. Ltd.
Navbharat Packaging Industries Ltd.
Nehal Trading and Investments Pvt. Ltd.
Omega Properties Pvt. Ltd.
Pragati Chemicals Ltd.
Pragati Marketing Pvt. Ltd.
Rangmeet Investments Ltd.
Resins and Plastics Ltd.
Ricinash Oil Mill Ltd.
Rita Choksi Holdings Pvt. Ltd.
Rupen Investments and Industries Pvt. Ltd.
S.C. Dani Research Foundation Ltd.
Sadavani Investments and Trading Co. Pvt. Ltd.
Sapan Investments Pvt. Ltd.
Satyadharma Investments & Trading Co. Pvt. Ltd.
Sudhanva Investments and Trading Co. Pvt. Ltd.
Suprasad Investments & Trading Co. Ltd.
Suptaswar Investments and Trading Co. Ltd.
Tru Trading and Investments Pvt. Ltd.
Unnati Trading and Investments Pvt. Ltd.
Urvashi Holding Pvt. Ltd.
Ultramarine & Pigments Ltd.
Vikatmev Containers Ltd.

(f) Employee benefit funds where control exists:

Asian Paints Office Provident Fund Asian Paints Factory Employees’ Provident Fund
Asian Paints Management Cadres’ Superannuation Scheme Asian Paints (India) Limited Employees’ Gratuity Fund

(g) Other entities over which there is a significant control: Asian Paints Charitable Trust

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SCHEDULES FORMING PART OF THE ACCOUNTS
29. Segment Information for the year ended 31st March, 2007:
(Rs in Millions)
2006-2007 2005-2006
Paints Others* Total Paints Others* Total
Revenue
Net Sales
External 27,285.94 926.99 28,212.93 22,378.89 812.66 23,191.55
Inter-Segment – 821.23 821.23 – 604.42 604.42
Other income 165.64 34.56 200.20 169.42 39.03 208.45
Total Revenue 27,451.58 1,782.78 29,234.36 22,548.31 1,456.11 24,004.42
Result
Segment result 4,226.41 246.28 4,472.69 3,560.26 119.62 3,679.88
Unallocated expenses (509.08) (407.51)
Operating Profit 3,963.61 3,272.37
Interest expenses (68.73) (38.31)
Interest income 9.28 4.70
Dividends 126.62 72.83
Exchange difference 3.32 –
Profit/(Loss) on sale of short term investments 0.58 –
Profit/(Loss) on sale of long term investments 3.11 3.48
Profit on sale of assets 8.54 –
Miscellaneous income 47.60 56.97
Sundry balance written back 5.26 12.83
Extraordinary item – (336.00)
Income taxes (1,399.94) (1,170.82)
Net Profit 2,699.25 1,878.05
Other information
Segment assets 10,633.00 780.03 11,413.03 8,918.41 645.18 9,563.59
Unallocated assets 4,175.23 3,576.08
Total assets 15,588.26 13,139.67
Segment liabilities 5,989.55 228.01 6,217.56 4,552.51 145.41 4,697.92
Unallocated liabilities 1,929.92 2,218.91
Total liabilities 8,147.48 6,916.83
Capital expenditure 748.85 3.84 752.69 308.11 13.96 322.07
Unallocated capital expenditure 53.62 44.44
Total 806.31 366.51
Depreciation/impairment 401.10 34.45 435.55 399.22 34.38 433.60
Unallocated depreciation/impairment 18.60 21.68
Total 454.15 455.28

* Others include Company’s business units manufacturing Phthalic Anhydride and Pentaerythritol.

30. Previous year’s figures have been regrouped, wherever necessary.

64
 Asian Paints Limited Annual Report 2006-2007

STATEMENT
PURSUANT TO PART IV OF SCHEDULE VI TO THE COMPANIES ACT, 1956 BALANCE SHEET ABSTRACT AND COMPANY’S
GENERAL BUSINESS PROFILE
I. Registration Details
Registration No. 0 4 5 9 8 State Code 1 1

Balance Sheet Date 3 1 0 3 2 0 0 7

Date Month Year

II. Capital Raised During the Year (Amount – Rs. in Thousands)

Public Issue Cancellation of Shares Rights Issue
N I L N I L N I L
Bonus Issue Private Placement
N I L N I L

III. Position of Mobilisation and Deployment of Funds

(Amount – Rs. in Thousands)
Total Liabilities Total Assets
8 9 1 8 8 9 5 8 9 1 8 8 9 5

Sources of Funds
Paid-up Capital Reserves and Surplus
9 5 9 1 9 8 6 4 8 1 5 7 5

Secured Loans Unsecured Loans

6 6 8 9 8 0 5 8 7 6 8 1

Deferred Tax Liability

2 2 1 4 6 1

Application of Funds
Net Fixed Assets Investments
3 4 6 5 2 9 1 3 3 4 3 8 7 7

Net Current Assets Deferred Revenue Expenditure

2 1 0 9 7 2 7 N I L

Accumulated Losses
N I L

IV. Performance of Company (Amount – Rs. in Thousands)

Turnover Total Expenditure
3 3 6 0 6 9 1 9 2 9 5 0 7 7 2 8

+ – Profit/(Loss) Before Tax + – Profit/(Loss) After Tax

9 4 0 9 9 1 9 1 9 2 7 2 0 4 8 4
(Please tick appropriate box + for profit, – for loss)

Earnings Per Share (Rs.) Dividend Rate %

2 8 . 3 6 1 3 0

V. Generic Names of three Principal Products/Services of the Company

(As per Monetary Terms)
Item Code No. (ITC Code) Product Description
3 2 0 8 9 0 0 3 S Y N T H E T I C E N A M E L ,
O T H E R C O L O U R S
Item Code No. (ITC Code) Product Description
2 9 1 7 3 5 0 0 P H T H A L I C A N H Y D R I D E
Item Code No. (ITC Code) Product Description
2 9 0 5 4 2 0 0 P E N T A E R Y T H R I T O L

65
 Signatures to Schedules A to M

As per our report of even date For and on behalf of the Board
For Shah & Co. Ashwin Choksi Ashwin Dani Abhay Vakil
Chartered Accountants Chairman Vice Chairman & Managing Director
Managing Director

H. N. Shah Tarjani Vakil Mahendra Shah Jayesh Merchant

Partner Chairperson of Director Chief Financial Officer &
Membership No. 8152 Audit Committee Company Secretary

Mumbai Mumbai
10th May, 2007 10th May, 2007

66
• Consolidated Financial Statements • Asian Paints Limited Annual Report 2006-2007

CONSOLIDATED
FINANCIAL STATEMENTS

67
AUDITORS’ REPORT TO THE BOARD OF DIRECTORS OF ASIAN PAINTS LIMITED
GROUP ON THE CONSOLIDATED FINANCIAL STATEMENTS OF ASIAN PAINTS LIMITED
AND ITS SUBSIDIARIES

We have audited the attached consolidated Balance Sheet of in the case of the consolidated Cash Flow Statement, of the
Asian Paints Limited group as at 31st March, 2007 and also the cash flows for the year ended on that date.
consolidated Profit and Loss Account and the consolidated
For Shah & Co.
Cash Flow Statement for the year ended on that date annexed
Chartered Accountants
thereto. These financial statements are the responsibility
of the Asian Paints Limited’s management and have been
prepared by the management on the basis of the separate H. N. Shah
financial statements and other financial information regarding Partner
its subsidiaries. Our responsibility is to express an opinion on M. No. 8152
these financial statements based on our audit. Mumbai
10th May, 2007
We conducted our audit in accordance with generally accepted
auditing standards in India. These standards require that we
plan and perform the audit to obtain reasonable assurance
whether the financial statements are prepared, in all material Annexure
respects, in accordance with and identified financial reporting The subsidiary companies considered in the consolidated
framework and are free of material misstatements. An audit financial statements are:
includes examining on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An Direct Subsidiaries:
audit also includes assessing the accounting principles used (Rs. in Millions)
and significant estimates made by management, as well as Name of the Company Financial Total Assets Total
evaluating the overall financial statements. We believe that Year Revenues
our audit provides a reasonable basis for our opinion. Asian Paints (Nepal) Pvt. Limited 14th January– 138.67 188.54
13th January
We did not audit the financial statements of subsidiaries Asian Paints (International) January– 4,808.80 6,459.75
mentioned in Annexure to this report whose total assets and Limited December
total revenues are mentioned in the annexure to this report Asian Paints Industrial Coatings April–March
except Asian Paints Industrial Coatings Limited and Technical Limited
Instruments Manufacturers (India) Limited whose accounts are Technical Instruments April–March
Manufacturers (India) Limited
audited by us. The financial statements of other subsidiaries
other than those mentioned above have been audited by Indirect Subsidiaries:
other auditors whose reports have been furnished to us and (i) Subsidiaries of the wholly owned subsidiary, Asian Paints
our opinion, in so far as it relates to the amounts included in (International) Limited, Mauritius.
respect of subsidiaries, is based solely on the reports of the
other auditors. Accounting period
Asian Paints (South Pacific) Holdings Limited January–December
We report that the consolidated financial statements have
been prepared by the Company in accordance with the Asian Paints (South Pacific) Limited January–December
requirements of Accounting Standard (AS 21) – Consolidated Asian Paints (Tonga) Limited January–December
Financial Statements, (AS 23) Accounting for Investments in Asian Paints (S.I.) Limited January–December
Associates in Consolidated Financial Statements and (AS 27) Asian Paints (Vanuatu) Limited January–December
Financial reporting of interests in Joint Ventures issued by the
Asian Paints (Queensland) Limited January–December
Institute of Chartered Accountants of India.
Asian Paints (Lanka) Limited January–December
Based on our audit of financial statements of Asian Paints
Asian Paints (Bangladesh) Limited January–December
Limited and on consideration of reports of other auditors of
subsidiaries included in the consolidated financial statements Asian Paints (Middle East) LLC. January–December

read with Notes 4 and 5 of Schedule ‘M’ Part ‘B’, and to the SCIB Chemical, S.A.E., Egypt January–December
best of our information and according to explanations given Berger International Limited, Singapore January–December
to us, we are of the opinion that the attached consolidated
(ii) Subsidiary of Asian Paints (South Pacific) Limited:
financial statements give a true and fair view in conformity
with the accounting principles generally accepted in India: Taubmans Paints (Fiji) Limited January–December

In the case of consolidated Balance Sheet, of the state of (iii) Subsidiary of Taubmans Paint (Fiji) Limited:
affairs of Asian Paints Limited group as at 31st March, 2007; Samoa Paints Limited January–December

In the case of consolidated Profit and Loss Account, of the

(iv) Subsidiary of Asian Paints Lanka Limited:
profit for the year ended on that date;
Asian Paints Distributors (Pvt.) Limited January–December
and (Under voluntary liquidation)

68
• Consolidated Financial Statements • Asian Paints Limited Annual Report 2006-2007

(v) Subsidiaries of Berger International Limited, Singapore: Joint Venture:

Accounting The Joint Venture unit considered in the consolidated financial
period statements is Asian PPG Industries Limited, a joint venture
Berger Paints Singapore Pte. Limited January–December between the parent company and PPG Industries Securities
Berger Building Services (Singapore) Pte. Limited January–December Inc., U.S.A. wherein the parent company has equal equity
Berger International Sdn. Bhd. January–December
participation.
Berger Paints (Thailand) Limited January–December
Subsidiary of Joint Venture:
Berger Paints (China) Limited January–December
Asian PPG Industries Limited acquired a 100% stake in Faaber
Berger Paints (Hong Kong) Limited January–December
Paints Pvt. Limited on 30th August, 2006. The accounts of the
Enterprise Paints Limited January–December said company are incorporated with that of the Joint Venture
Universal Paints Limited January–December for the purpose of consolidation.
Lewis Berger (Overseas Holdings) Limited January–December
Associate Company:
Berger Paints Manufacturing Limited* January–December
Dutch Boy Philippines Inc., wherein one of the indirect
* divested during the year
subsidiary i.e. Berger International Limited is holding 30%
(vi) Subsidiary of Berger Building Services (Singapore) Pte. equity interest. The stake in this associate company was
Limited: disposed off during the year.
Berger Contractor (Singapore) Pte. Limited January–December

(vii) Subsidiary of Enterprise Paints Limited:

Nirvana Investments Limited January–December

(viii) Subsidiary of Nirvana Investments Limited:

Berger Paints Emirates Limited January–December

(ix) Subsidiaries of Lewis Berger (Overseas Holdings) Limited:

For Shah & Co.
Berger Paints Jamaica Limited January–December
Chartered Accountants
Berger Paints Trinidad Limited January–December
Berger Paints Barbados Limited January–December H. N. Shah
Partner
(x) Subsidiary of Universal Paints Limited: M. No. 8152
Berger Paints Bahrain W.L.L. January–December Mumbai
10th May, 2007

69
CONSOLIDATED BALANCE SHEET AS AT 31ST MARCH, 2007
(Rs in Millions)
Schedules As at As at
31.03.2007 31.03.2006
FUNDS EMPLOYED
Shareholders’ Funds
Share Capital A 959.20 959.20
Reserves and Surplus B 6,796.30 5,480.89
Capital Reserve on consolidation 22.42 22.42
7,777.92 6,462.51
Loan Funds C
Secured Loans 1,201.05 1,127.06
Unsecured Loans 1,860.71 1,485.72
3,061.76 2,612.78
Deferred Tax Liability (Net) 267.86 340.71
(Refer Note B-11 in Schedule ‘M’)
Minority Interest 600.75 600.30
Total 11,708.29 10,016.30

APPLICATION OF FUNDS
Fixed Assets D
Gross Block 10,831.48 9,765.59
Less : Depreciation/Amortisation/Impairment 6,037.67 5,584.44
Net Block 4,793.81 4,181.15
Add: Capital Work in Progress 137.84 337.40
4,931.65 4,518.55
Investments E 1,927.17 1,640.58
Current Assets, Loans And Advances F
Interest accrued on investments 0.26 –
Inventories 5,980.06 4,888.66
Sundry debtors 4,206.12 3,475.22
Cash and Bank Balances 1,053.93 734.08
Retirement Benefit Asset (Refer Note B-12 in Schedule ‘M’) 252.52 178.85
Other receivables 441.07 432.38
Loans and Advances 979.34 745.18
12,913.30 10,454.37
Less: Current Liabilities and Provisions G
Current Liabilities 7,870.38 5,787.37
Provisions 662.07 1,258.51
8,532.45 7,045.88
Net Current Assets 4,380.85 3,408.49
Goodwill on consolidation 468.62 448.68
Total 11,708.29 10,016.30
Notes M

As per our report of even date For and on behalf of the Board
For Shah & Co. Ashwin Choksi Ashwin Dani Abhay Vakil
Chartered Accountants Chairman Vice Chairman & Managing Director
Managing Director

H. N. Shah Tarjani Vakil Mahendra Shah Jayesh Merchant

Partner Chairperson of Director Chief Financial Officer &
Membership No. 8152 Audit Committee Company Secretary

Mumbai Mumbai
10th May, 2007 10th May, 2007

70
• Consolidated Financial Statements • Asian Paints Limited Annual Report 2006-2007

CONSOLIDATED PROFIT & LOSS ACCOUNT FOR THE YEAR ENDED 31ST MARCH, 2007
(Rs. in Millions)
Schedules Year Year
2006-2007 2005-2006
INCOME
Sales and operating income (Net of discounts) H 41,335.27 34,135.84
Less: Excise 4,635.54 3,925.49
Sales and operating income (Net of discounts and excise) 36,699.73 30,210.35
Other income I 372.51 320.25
37,072.24 30,530.60
EXPENDITURE
Materials Consumed J 21,993.95 17,921.01
Employees’ remuneration and benefits K 2,620.84 2,233.25
Manufacturing, administrative, selling and distribution expenses L 7,304.15 6,139.21
31,918.94 26,293.47
PROFIT BEFORE INTEREST, DEPRECIATION AND TAX 5,153.30 4,237.13
Less: Interest 189.11 114.28
Less: Depreciation/Amortisation/ Impairment D 611.41 606.16
Add: Profit/(Loss) from Associate Company (4.02) (9.31)
PROFIT BEFORE TAX, IMPAIRMENT OF GOODWILL AND
EXTRAORDINARY ITEMS 4,348.76 3,507.38
Less: Impairment of Goodwill – 76.00
Less: Extraordinary items (Refer Note B - 6 and Note B - 8 in Schedule ‘M’) 77.56 –
PROFIT BEFORE TAX AND PRIOR PERIOD ITEMS 4,271.20 3,431.38
Less: Provision for Taxation
Current Tax 1,483.23 1,242.50
Deferred Tax (Refer Note B - 11 in Schedule ‘M’) (28.83) (17.75)
Tax of associate company – (4.20)
Fringe Benefit Tax 48.14 54.39
Tax Provision for earlier years (Refer Note B - 15 in Schedule ‘M’) (35.76) 47.92
PROFIT AFTER TAX BEFORE PRIOR PERIOD ITEMS 2,804.42 2,108.52
Add/(Less): Prior period items (Net) 26.48 (10.29)
PROFIT AFTER TAX AND PRIOR PERIOD ITEMS 2,830.90 2,098.23
Less: Minority Interest
ATTRIBUTABLE TO SHAREHOLDERS 20.60 (23.25)
Add : Balance brought forward from previous year 2,810.30 2,121.48
DISPOSABLE PROFIT 1,100.00 1,000.00
DISPOSAL OF ABOVE PROFIT 3,910.30 3,121.48
Dividend to shareholders of parent company
Equity Shares – Interim 1,151.04 431.64
– Final 95.92 527.56
– One-time special dividend – 239.80
Tax on Dividend 180.60 171.03
Transfer to General Reserve 982.74 651.45
Balance carried to Balance Sheet 1,500.00 1,100.00
3,910.30 3,121.48
Earnings per share (Rs.) Basic and diluted – (Face value of Rs. 10 each) 29.30 22.12
(Refer Note B - 13 in Schedule ‘M’)
Notes M

As per our report of even date For and on behalf of the Board
For Shah & Co. Ashwin Choksi Ashwin Dani Abhay Vakil
Chartered Accountants Chairman Vice Chairman & Managing Director
Managing Director

H. N. Shah Tarjani Vakil Mahendra Shah Jayesh Merchant

Partner Chairperson of Director Chief Financial Officer &
Membership No. 8152 Audit Committee Company Secretary

Mumbai Mumbai
10th May, 2007 10th May, 2007

71
CASH FLOW STATEMENT FOR THE PERIOD ENDED 31ST MARCH, 2007
(Rs in Millions)
2006-2007 2005-2006

A. Cash Flow from operating activities:

Net Profit before taxation and prior period items: 4,271.20 3,431.38
Adjustment for:
Impairment of goodwill – 76.00
Depreciation/amortisation/impairment 611.41 606.16
Other Assets written off – 0.79
Prior period adjustment 26.48 (10.29)
Profit on sale of investments (3.90) (3.58)
(Profit)/Loss on disposal of subsidiaries 6.85 –
Share of (profit)/loss of associate 4.02 9.31
(Gain)/loss on disposal of assets (14.67) (2.17)
Loss on disposal of Associate Company 70.71 –
Fair value adjustment on receivable from disposal of subsidiary 2.75 –
Interest expense 189.11 114.29
Interest income (14.31) (17.54)
Dividend income (115.28) (58.10)
Operating Profit before working capital 5,034.37 4,146.25
(Increase)/Decrease in stocks (1,044.76) (343.22)
(Increase)/Decrease in trade and other receivables (994.49) (636.71)
(Decrease)/Increase in payables and accruals 1,286.58 93.57
Cash generated from operations 4,281.70 3,259.89
Income tax paid (Net of refund) (1,585.00) (1473.12)
Net cash generated from operating activities 2,696.70 1,786.77
B. Cash flow from investing activities:
Purchase of fixed assets (937.07) (867.18)
Proceeds from sale of fixed assets 133.68 39.93
Purchase of investment (395.58) (797.16)
Sale of investment 53.99 298.48
Interest received 14.05 17.57
Dividend received 115.28 58.10
Cash inflow/(outflow) on disposal of subsidiaries 5.51 –
Cash inflow/(outflow) on disposal of associate company 67.32 –
Cash outflow on acquisitions made by joint venture. (269.38) –
Net cash used in investing activities (1,212.20) (1,250.26)
C. Cash flow from financing activities
Repayment of long term loans (280.53) (333.70)
Short term loans availed 736.84 56.73
Long term loans availed – 494.70
Interest paid (189.11) (114.29)
Dividend paid (including dividend paid to minority) (1,374.85) (519.16)
Net cash used in financing activities (1,107.65) (415.72)
Net effect of exchange rates (57.00) 5.10
D. Net Increase/(Decrease) in cash and cash equivalents 319.85 125.89
Cash and cash equivalents as at 01.04.2006 734.08 608.19
Cash and cash equivalents as at 31.03.2007 1,053.93 734.08

As per our report of even date For and on behalf of the Board
For Shah & Co. Ashwin Choksi Ashwin Dani Abhay Vakil
Chartered Accountants Chairman Vice Chairman & Managing Director
Managing Director

H. N. Shah Tarjani Vakil Mahendra Shah Jayesh Merchant

Partner Chairperson of Director Chief Financial Officer &
Membership No. 8152 Audit Committee Company Secretary

Mumbai Mumbai
10th May, 2007 10th May, 2007

72
• Consolidated Financial Statements • Asian Paints Limited Annual Report 2006-2007

SCHEDULES FORMING PART OF THE ACCOUNTS

(Rs in Millions)
As at As at
31.03.2007 31.03.2006
SCHEDULE A : SHARE CAPITAL
Authorised
99,500,000 Equity Shares of Rs. 10/- each 995.00 995.00
50,000 11% Redeemable Cumulative Preference shares of Rs. 100/- each 5.00 5.00
1,000.00 1,000.00
Issued and Subscribed
95,919,779 Equity Shares of Rs. 10/- each fully paid up :
(a) 93,989,940 Bonus Shares of Rs. 10/- each fully paid issued
on capitalisation of Share premium account (Rs. 21.91 million)
and General Reserves (Rs. 917.98 million).
(b) 294,000 shares of Rs. 10/- each issued as fully paid up pursuant
to the Scheme of Rehabilitation/Amalgamation of Pentasia
Chemicals Limited without payments received in cash. 959.20 959.20
959.20 959.20

SCHEDULE B : RESERVES AND SURPLUS

Capital Reserve 0.01 0.01
Capital Redemption Reserve 53.74 53.74
General Reserve
As per last Balance Sheet 4,390.72 3,725.17
Add: Transfer from Profit and Loss Account 982.74 651.45
Add: Reclassification on capital reserve on acquisition. – 19.84
Less: Transitional provision on implementation of International Financial (6.90) (5.74)
Reporting Standards by certain subsidiaries
Less: Adjustment on account of adoption of Accounting Standard (AS 15) (Revised) (80.56) –
(Refer Note B - 12 in Schedule ‘M’)
5,286.00 4,390.72
Foreign Currency Translation Reserve
As per last Balance Sheet (63.58) (88.79)
Add: Currency translation during the year (38.51) 25.21
Less: Realised on disposal of Subsidiary Company 17.29 –
Less: Realised on disposal of Associate Company 41.35 –
(43.45) (63.58)
Profit and Loss Account 1,500.00 1,100.00
6,796.30 5,480.89

73
SCHEDULES FORMING PART OF THE ACCOUNTS
(Rs in Millions)
As at As at
31.03.2007 31.03.2006
SCHEDULE C : SECURED AND UNSECURED LOANS
Secured Loans
Long Term :
Loans and advances from others
From Banks and Financial Institutions (Note No. 1) 185.64 461.82
Short Term :
Loans and advances from banks
Cash Credit Accounts (Note No. 2) 1,015.41 665.24
1,201.05 1,127.06
Unsecured Loans
Long Term :
Trade Deposits - Interest free 181.56 185.91
Short Term :
Loans and advances from banks :
Other Loans (Note No. 3) 1,679.15 1,299.81
1,860.71 1,485.72
Notes:
(1) (a) Interest free term loan from the Pradeshiya Industrial Corporation of U.P. Limited
(PICUP) under Sales Tax Deferment Scheme of Government of U.P. is secured
by a first charge of the Company’s immovable properties pertaining to the paint
plant at Kasna and by way of hypothecation of all movable properties at the
above location. 182.32 135.96
(b) Secured either by fixed/floating charge on the assets of various subsidiaries. 3.32 325.86
185.64 461.82
(2) Secured by hypothecation of inventories, book debts and other current assets 1,015.41 665.24
(3) Other loans represent:
(a) Interest free loan availed under the sales tax deferment Scheme of the
Government of Andhra Pradesh by parent company. 407.01 407.01
(b) Loans availed by various subsidiaries based on Guarantees/Letter of comfort
from the parent company. 1,262.11 880.60
(b) Finance Leases of subsidiaries. 10.03 12.20
(Refer Note B - 14 (III) (b) of Schedule ‘M’)
1,679.15 1,299.81

74
 • Consolidated

SCHEDULE D : FIXED ASSETS (Rs. in Millions)

Gross Block Depreciation/Amortisation Impairment Net Block
Particulars As at Adjust- Trans- Add- Additions Deduc- Disposals As at Upto Adjust- Trans- Additions During Deduc- Disposals As at As at Trans- During Deduc- As at As at As at
Financial Statements •

01.04.2006 ment lation itions on con- tion of Sub- 31.03.2007 31.03.2006 ment lation on Con- the tions of Sub- 31.03.2007 01.04.2006 lation the tion/ 31.03.2007 31.03.2007 31.03.2006
as per Diff- during solidation during sidiaries as per Diff- solidation year sidiaries Diff- year Adjust-
IFRS erence the year the year IFRS erence erence ment

Tangible Assets :

Land – Owned 149.90 – (2.27) – 0.18 2.83 – 144.99 – – – – – – – – – – – – – 144-99 159.08

Land – Lease hold 236.60 – 1.75 61.47 – 100.08 8.84 190.91 110.67 – 3.75 – 2.51 101.12 2.11 13.70 – – – – – 177.21 138.63

Buildings – Owned 1,771.24 (5.76) (4.13) 228.81 4.03 1.53 10.75 1,981.90 401.19 0.31 (0.79) 1.30 49.74 2.91 – 448.84 – – – – – 1,533.07 1,360.85

Leasehold Buildings 393.41 (19.61) 1.87 103.54 – 1.12 – 478.10 149.68 (14.71) (2.61) – 15.01 (102.52) 5.13 244.76 20.67 1.08 16.20 – 37.95 195.39 210.34

Plant and Machinery 5,235.03 3.08 642.30 9.38 88.32 12.47 5,683.18 3,194.56 (86.14) 2.88 2.41 362.72 63.17 10.50 3,402.75 148.82 – 3.70 15.00 137.52 2,142.91 1,893.86
(105.81)

Scientific Research :

Equipment 107.09 – 0.15 12.76 – 1.79 – 118.21 69.21 – 0.06 – 8.10 1.77 – 75.59 4.99 – – – 4.99 37.62 31.24

Buildings 31.10 – – – – – – 31.10 5.65 – – – 1.03 – – 6.68 – – – – 24.42 25.45

Furnitures and Fixtures 238.48 127.78 1.98 32.53 0.31 16.52 0.68 383.88 180.67 84.66 1.93 0.14 28.49 15.32 0.23 280.34 18.63 – 0.15 0.44 18.34 85.19 89.41

Office Equipment 152.49 – 2.71 19.06 0.46 5.37 – 169.35 100.59 – 2.18 0.33 14.34 3.53 – 113.91 – – – – – 55.45 1.23

Vehicles 120.40 (2.80) 0.92 23.46 1.23 23.12 0.23 119.86 92.48 (0.93) 0.37 0.41 14.14 20.98 0.60 84.87 – – – – – 34.98 30.41

Assets acquired on financial lease

– Plant & Machinery 4.56 – (0.32) – – – – 4.24 1.43 – (0.12) – 0.31 – – 1.62 – – – – – 2.62 3.74

– Vehicles 17.20 – 0.59 3.63 – 2.39 – 19.02 8.04 – 0.31 – 1.35 1.92 – 7.78 – 11.24 6.67
SCHEDULES FORMING PART OF THE ACCOUNTS

Assets given under operating lease 988.82 – 0.90 4.74 – 12.72 – 981.73 555.72 – 0.42 – 58.98 10.53 – 604.58 245.72 – – 2.62 243.10 134.05 187.60

Intangible Assets 319.26 – (0.04) 205.79 – – – 525.01 275.71 – (0.05) – 34.67 – – 310.34 – – – – – 214.67 42.63

Total 9,765.59 (6.20) 7.20 1,338.09 15.59 255.80 32.98 10,831.48 5,145.61 (16.81) 8.32 4.58 591.36 118.73 18.57 5,595.77 438.83 1.08 20.05 18.06 441.90 4,793.81 4,181.15

Previous Year 9,354.94 1.41 46.72 541.82 – 176.49 – 9,765.59 4,636.52 0.96 26.98 – 584.35 101.28 – 5,145.61 454.45 – 21.81 37.43 438.83 4,181.15 4,263.97
Asian Paints Limited

75
Annual Report 2006-2007
SCHEDULES FORMING PART OF THE ACCOUNTS
(Rs in Millions)
Nos. Face Value (Rs.) As at As at
31.03.2007 31.03.2006

SCHEDULE E : INVESTMENTS
Long Term Investments

Unquoted

(i) In Government Securities

National Savings Certificates, Indira Vikas Patra and

Defence Certificates deposited with Government
authorities 0.03 0.04
(National Savings Certificates sold during the year
Rs. 10,000/-)

(ii) Trade Investments (Preference Shares)

5.75% Preference Shares of Clear Plastics Limited

(5,000,000 Preference shares sold during the
year) (5,000,000) 10/- – 50.00

(iii) Trade Investments (Fully paid Equity shares)

(a) Patancheru Enviro-tech Limited 12,900 10/- 0.13 0.13

(b) SIPCOT Common Utilities Limited 2,830 100/- 0.28 0.28

(c) Bharuch Eco-Acqua Infrastructure Limited 478,270 10/- 4.78 4.78

(d) Apco Coatings (NZ) Limited 23,500 1 NZ 0.74 0.72

(e) Danish for Wood 2500 10LE 0.19

Less: Provision for diminution in the value of

investments 0.19 – –

(f) Master Builders Technologies, Egypt 500 10LE 0.04

Less: Provision for diminution in the value of

investments 0.04 – –

(g) Master Builders Technologies, Egypt 125 10LE 0.04 0.01

(h) Misr Quena 1,000 10LE 0.08 0.07

(i) Den Braven 500 10LE 0.04 0.04

6.09 56.03

(iv) Other investments

(a) Contribution to Gujarat Venture Capital

Fund - 1990 (10% amounting to Rs. 50,000/-
redeemed during the year) – 0.05

(b) Equity shares of SKH Metals Limited (formerly

Mark Auto Industries Limited) 62,500 10/- 5.00 5.00

(v) Dutch Boy Philippines, Inc. (Including share of 100/-

profit) 427,500 (in Peso) – 58.93
(Refer Note B - 6 in Schedule ‘M’)

5.00 63.98

Total long term unquoted investments 11.12 120.05

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SCHEDULES FORMING PART OF THE ACCOUNTS

(Rs in Millions)
Nos. Face Value As at As at
(Rs.) 31.03.2007 31.03.2006

Quoted (Fully Paid Equity Shares)

(i) Trade Investments
ICI (India) Limited 3,760,783 10/- 772.46 772.46
(ii) Other Investments
Housing Development Finance Corporation Limited 93,000 10/- 1.24 1.24
Apcotex Industries Limited 3,418 10/- 0.11 0.11
Total Long Term Quoted Investments 773.81 773.81
Total Long Term Investments 784.93 893.86
Short Term Investments (Unquoted)
DSP Merill Lynch Liquidity Fund - Daily Dividend
(11,261,190.024 units sold during the year) (11,261,190.024) 10/- – 112.72
Kotak FMP Series XVI Dividend (10,092,581.483 units
sold during the year) (10,092,581.483) 10/- 100.93
Reliance Fixed Maturity Qtr Plan III Series II Div
(10,000,000 units sold during the year) (10,000,000.000) 10/- – 100.00
UTI Fixed Maturity Plan (Q FMP 0106) 10,073,039.377
sold during the year) (10,073,039.377) 10/- – 100.73
ABN Amro Fixed Term Plan Series 2 Regular Dividend
(10,049,387.653 sold during the year) (10,049,387.653) 10/- – 100.49
UTI Fixed Maturity Plan - QFMP (02/6) Dividend
Reinvestment (5500000.00 units sold during the year) (5,500,000.000) 10/- – 56.42
LIC MF FMP Series 1-6 Months Growth Plan
(5500000.00 units sold during the year) (5,500,000.000) 10/- – 55.41
UTI MF Quarterly FMP Dividend Plan (2,002, 100.00
units sold during the year) (2,002,100.000) 10/- – 20.02
Birla Fixed Term Plan - Series H - Growth 10,000,000.000 100.00 100.00
ABN Amro Fixed Term Plan Series 4 Quarterly Plan
D - DIV 10,081,340.789 10/- 100.82 –
Kotak Fixed Maturity Plan 3M Series 11 - DIV 4,024,225.464 40.24 –
Kotak Fixed Maturity Plan 3M Series 8 - DIV 10,137,731.134 101.38 –
Kotak Fixed Maturity Plan 6 Months Series 2 - DIV 10,249,192.847 102.49 –
Prudential ICICI Fixed Maturity Plan Series 35 - 3
Months Plan B DIV 10,098,497.045 100.99 –
Prudential ICICI Fixed Maturity Plan Series 35 - 3
Months Plan A DIV 10,136,000.000 101.36 –
Prudential ICICI Fixed Maturity Plan Series 35 - 3
Months Plan C DIV 4,000,000.000 40.00 –
Reliance Fixed Horizon Fund II Qtrly Plan Series II
Inst Div 5,000,000.000 50.00 –
SBI Debt Fund Series 90 Days II (Dec 06) 5,071,565.342 50.72 –
SBI Debt Fund Series 180 Days II (Nov 06) Div 5,109,500.259 51.10 –
Standard Chartered Fixed Maturity Plan Qrtly Series 3 10,147,600.000 101.48 –
TATA Fixed horizon fund series 9-Scheme D Div Inst Plan 10,064,461 100.65 –
UTI Fixed Maturity Plan Quarterly Series QFMP/0207/I DIV 10,100,702 101.01 –
Total Short Term Investments 1,142.24 746.72
Total Investments 1,927.17 1,640.58
Aggregate market value of Long Term Quoted
Investments: 1,830.23 1,582.48

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SCHEDULES FORMING PART OF THE ACCOUNTS
(Rs in Millions)
As at As at
31.03.2007 31.03.2006
SCHEDULE F : CURRENT ASSETS, LOANS AND ADVANCES
Current Assets
(i) Interest accrued on investments 0.26 –
(ii) Inventories - valued and certified by the Management
(a) Raw and packing materials 2,263.87 2,071.65
(b) Finished goods 3,263.39 2,496.83
(c) Work-in-process 304.85 229.21
(d) Stores, spares, fuel and other traded goods 147.95 90.97
5,980.06 4,888.66
(iii) Sundry debtors (Unsecured)
(a) Outstanding for more than six months
Considered good 173.18 174.07
Considered doubtful 461.49 487.71
634.67 661.78
Less: Provision for doubtful debts 461.49 487.71
173.18 174.07
(b) Other debts (considered good) 4,032.94 3,301.15
4,206.12 3,475.22
(iv) Cash and Bank Balances
(a) Cash on hand 1.71 9.85
(b) Balances with Banks:
(i) Current Accounts 1,032.39 567.20
(ii) Term Deposits 19.83 157.03
1,053.93 734.08
(v) Retirement Benefit Asset 252.52 178.85
(Refer note B - 12 in Schedule ‘M’)
(vi) Other Receivables 441.07 432.38
Loans and Advances
(i) Loans and Advances :
Unsecured and considered good
(a) Balances with Customs, Central Excise etc. 152.17 175.75
(b) Sundry deposits 141.05 112.05
(c) Advances/claims recoverable in cash or in kind 473.07 308.97
(d) Advances to employees 8.30 8.39
(e) Advances against capital expenditure 138.84 136.29
(f) Others 29.37 2.89
(g) Advance payment of tax (Net) 35.34 –
(h) Prepaid expenses 1.20 0.85
979.34 745.18
12,913.30 10,454.37

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SCHEDULES FORMING PART OF THE ACCOUNTS

(Rs in Millions)
As at As at
31.03.2007 31.03.2006
SCHEDULE G: CURRENT LIABILITIES AND PROVISIONS
Current Liabilities
(i) Acceptances 1,729.27 1,227.48
(ii) Sundry creditors
– Trade 3,692.78 2,266.92
– Others 792.57 1,029.38
4,485.35 3,296.30
6,214.62 4,523.78
(iii) (a) Unpaid/Unclaimed dividend 62.05 23.39
(b) Unpaid/Unclaimed matured deposits 0.40 0.58
(c) Unclaimed interest 0.05 0.18
(d) Unclaimed amount of sale proceeds of fractional coupons 0.39 –
62.89 24.15
(iv) Other liabilities 1,592.87 1,239.44
7,870.38 5,787.37
Provisions
(i) Proposed Dividend 95.92 767.36
(ii) Provision for tax on Dividend 16.30 107.62
(iii) Provision for taxation (Net of advance taxes paid) – 52.22
(iv) Defined benefit obligations (Refer Note B - 12 in Schedule ‘M’) 93.48 62.35
(iv) Provision for accrued Leave 392.91 179.25
(Refer Note B - 12 & B - 16 in Schedule ‘M’)
(v) Other provisions 63.46 89.71
662.07 1,258.51
8,532.45 7,045.88

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SCHEDULES FORMING PART OF THE ACCOUNTS
(Rs in Millions)
Year Year
2006-2007 2005-2006
SCHEDULE H : SALES AND OPERATING INCOME
Sales:
Revenue from sales 43,156.49 35,571.34
Less: Goods returned 557.90 471.69
Turnover 42,598.59 35,099.65
Less: Discounts 1,801.67 1,463.61
Sales (Net of discounts) 40,796.92 33,636.04
Processing charges 112.06 96.38
Lease Rent 17.27 79.98
Revenue from Home Solutions operations 70.51 51.54
Revenue from painting and other services 338.51 271.90
41,335.27 34,135.84

SCHEDULE I : OTHER INCOME

Interest received 14.31 17.54
Claims received 4.13 8.64
Dividends 115.28 58.10
Royalty 28.48 22.44
Sundry balances written back (Net) 8.39 25.01
Profit on sale of investments 3.90 3.58
Profit on sale of assets (Net) 14.67 2.17
Exchange difference (Net) 11.49 –
Miscellaneous income 171.86 182.77
372.51 320.25

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(Rs in Millions)
Year Year
2006-2007 2005-2006
SCHEDULE J : MATERIALS CONSUMED
Raw and Packing Materials consumed:
Opening Stock 2,071.65 1,849.21
Add: Purchases and expenses 21,961.89 17,511.22
24,033.54 19,360.43
Less: Closing Stock 2,263.87 2,071.65
21,769.67 17,288.78
Purchase of paints for resale 644.42 453.81
Cost of other goods sold 280.06 282.72
22,694.15 18,025.31
Decrease/(Increase) in finished and
semi-finished stock
Opening stock 2,726.04 2,616.80
Closing stock 3,568.24 2,726.04
(842.20) (109.24)
Increase/(Decrease) in Excise duty on
stock of finished goods 142.00 4.94
21,993.95 17,921.01

SCHEDULE K : EMPLOYEES’ REMUNERATION AND BENEFITS

Salaries, wages, allowances, commission and provisions for
bonus and accrued leave salary 2,346.19 1,945.44
Staff welfare expenses 107.72 146.57
Contribution to Defined contribution plans 125.27 113.90
Defined Benefit Plans – Expense
(Refer Note B - 12 in Schedule ‘M’) 41.66 27.34
2,620.84 2,233.25

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SCHEDULES FORMING PART OF THE ACCOUNTS
(Rs in Millions)
Year Year
2006-2007 2005-2006
SCHEDULE L : MANUFACTURING, ADMINISTRATIVE, SELLING
AND DISTRIBUTION EXPENSES
Stores and spares 244.40 211.86
Power and fuel 391.83 314.59
Processing charges 215.86 202.52
Freight and handling charges 1,456.71 1,149.25
Repairs and Maintenance:
Buildings 39.99 28.99
Machinery 77.64 69.79
Other assets 152.31 130.32
269.94 229.10
Rent 275.90 221.99
Rates and taxes 183.60 172.64
Insurance 64.83 59.23
Advertisement and sales promotional expenses 1,299.56 1,180.23
Cash and payment performance discount 1,346.90 1,095.55
Printing, stationery and communication expenses 200.89 195.40
Travelling expenses 322.36 275.34
Commission on sales 9.33 26.60
Donations 17.72 11.17
Miscellaneous expenses 896.19 689.69
Commission to Non-Executive Directors 7.79 5.24
Directors’ fees 0.90 0.81
Bad and doubtful debts 75.49 63.85
Auditors’ remuneration 23.95 19.42
Exchange difference (Net) – 14.73
7,304.15 6,139.21

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SCHEDULE M: NOTES ON CONSOLIDATED FINANCIAL STATEMENTS
A. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES FOLLOWED IN THE COMPILATION OF ACCOUNTS
1. Basis for preparation of consolidated financial statements
The consolidated financial statements have been prepared in accordance with generally accepted accounting
principles and comply with the Accounting Standard (AS 21) - Consolidated Financial Statements, Accounting
Standard (AS 23) - Accounting for Investments in Associates in Consolidated Financial Statements and Accounting
Standard (AS 27) - Financial Reporting of Interests in Joint Venture issued by the Institute of Chartered Accountants
of India.

2. Method of Accounting
The financial statements have been prepared on accrual basis.

3. Fixed Assets
The ‘Gross Block’ of fixed assets is shown at the cost of acquisition, which includes taxes, duties (net of tax credits,
as applicable) and other identifiable direct expenses. Interest on borrowed funds attributable to the qualifying
assets upto the period such assets are put to use is included in the cost.
Know-how related to plans, designs and drawings of buildings or plant and machinery is capitalised under relevant
asset heads.
The depreciation on fixed assets is provided on Written Down Value/Straight Line methods as the case may be
and at rates permissible under applicable local laws or at such rates so as to write off the value of assets over their
useful life.
Leasehold land is amortised over the period of the lease.
Intangible assets are capitalised and amortised on straight line basis over their estimated useful life.
At Balance Sheet date, an assessment is done to determine whether there is any indication of impairment of
the carrying amount of the Group’s fixed assets. If any such indication exists, an asset’s recoverable amount
is estimated. An impairment loss is recognised whenever the carrying amount of asset exceeds its recoverable
amount.
An assessment is also done at each Balance Sheet date whether there is any indication that an impairment loss
recognised for an asset in prior accounting periods may no longer exist or may have decreased. If any such
indication exists the asset’s recoverable amount is estimated. The carrying amount of the fixed asset is increased
to the revised estimate of its recoverable amount but so that the increased carrying amount does not exceed the
carrying amount that would have been determined had no impairment loss been recognised for the asset in prior
years. A reversal of impairment loss is recognised in the profit and loss statement.
After recognition of an impairment loss or reversal of an impairment loss as applicable, the depreciation charge for
the asset is adjusted in future periods to allocate the asset’s carrying amount, less its residual value (if any), over
its remaining useful life.

4. Goodwill
Goodwill arising on the acquisition of a subsidiary represents the excess of the cost of acquisition over the Group’s
interest in the net fair value of the identifiable assets, liabilities and contingent liabilities of the subsidiary recognised
at the date of acquisition. Goodwill is initially recognised as an asset at cost and is subsequently measured at cost
less any accumulated impairment losses.
For the purpose of impairment testing, goodwill is allocated to each of the Group’s cash-generating units expected
to benefit from the synergies of the combination. Cash-generating units to which goodwill has been allocated are
tested for impairment annually or more frequently when there is an indication that the unit may be impaired. If the
recoverable amount of the cash-generating unit is less than the carrying amount of the unit, the impairment loss
is allocated first to reduce the carrying amount of any goodwill allocated to the unit and then to the other assets
of the unit pro-rata on the basis of the carrying amount of each asset in the unit. An impairment loss recognised
for goodwill is not reversed in a subsequent period.

5. Revenue Recognition
Sale of products is recognised when the risks and rewards of ownership are passed on to the customers, which
is on despatch of goods. Sales are stated gross of excise duty as well as net of excise duty; excise duty being the
amount included in the amount of gross turnover. The excise duty related to the difference between the closing
stock and opening stock is recognised separately as part of ‘Materials Consumed’. Sales are stated exclusive of sales
tax/VAT.

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SCHEDULES FORMING PART OF THE ACCOUNTS
Revenue from rendering of services is recognised by reference to the stage of completion of the transaction at the
Balance Sheet date determined by services performed to date as a percentage of total services.
Processing income is recognised upon rendition of the services.
Dividend income is recognised when the right to receive the dividend is unconditional at the Balance Sheet
date.

6. Lease Accounting
In respect of operating leases, lease rentals are accounted on accrual basis in accordance with the respective lease
agreements.
In respect of assets obtained on finance leases, assets are recognised at their fair value at the date of acquisition
or if lower, at the present value of the minimum lease payments. The corresponding liability to the lessor is
included in the Balance Sheet as a finance lease obligation. The excess of lease payments over the recorded
lease obligations are treated as finance charges which are allocated to each lease term so as to produce a constant
rate of charge on the remaining balance of the obligations. The assets are depreciated as owned depreciable
assets.
In respect of assets provided on finance leases, amounts due from lessees are recorded as receivables at the
amount of the group’s net investment in the leases. Finance lease income is allocated to accounting periods so as
to reflect a constant periodic rate of return on the Group’s net investment outstanding in respect of the leases.

7. Inventory
Inventories are valued at the lower of cost and net realisable value. Damaged, unserviceable and inert stocks are
suitably depreciated.
In case of raw materials, packing materials, stores, spares and consumables, the cost includes duties and taxes (net
of tax credits as applicable) and is arrived at on weighted average cost basis. In respect of the joint venture, stores,
spares and consumables are charged to revenue at the time of procurement.
The finished goods and work-in-process cost includes the cost of raw materials, packing materials (if applicable),
an appropriate share of fixed and variable production overheads, duties (if applicable) and other costs incurred in
bringing the inventories to their present location and condition. Traded goods are valued at the lower of cost and
net realisable value.

8. Investments
Short term investments are carried at the lower of cost and fair value computed category wise. Long term
investments are carried at cost. Cost is arrived at by applying specific identification method. Provision for
diminution in the value of long term investments is made only if such a decline is not temporary in the opinion
of the management.

9. Transactions in Foreign Exchange

Transactions in foreign currency are recorded at the original rates of exchange in force at the time of transaction
date. At the year end, monetary items denominated in foreign currency are reported using the closing rates of
exchange. Exchange differences arising on realisation/payments of foreign exchange are accounted in the year of
actual realisation/ payment. The values of fixed assets acquired through foreign currency loans are adjusted at the
end of each financial year by any change in liability arising out of expressing the outstanding foreign currency loans
at the closing rates of exchange prevailing at the date of Balance Sheet.
In case of forward contracts, the exchange difference between the forward rate and the exchange rate at the date
of transaction is recognised as income or expense over the life of the contract, except in respect of liabilities
incurred for acquiring fixed assets, in which case such differences are adjusted in the carrying amount of the
respective fixed assets.

10. Translation of Foreign Currency Statements

In translating the financial statements of foreign entities for incorporation in the consolidated financial statements,
the assets and liabilities are translated at the exchange rate prevailing at the balance sheet date of respective
subsidiaries and the income and expense items are translated at the average rates of exchange for the year. The
resulting exchange differences are classified as foreign currency translation reserve.

11. Sundry Debtors

Sundry debtors are stated after writing off debts considered as bad. Adequate provision is made for
debts considered doubtful. Bad debts are written off during the period in which they are identified. Discounts
due, yet to be quantified at the customer level are included under the head ‘Current Liabilities and Other
Provisions’.

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12. Employee Benefits
A) The holding company and its Indian subsidiaries/Joint Venture have adopted Accounting Standard (AS 15)
(Revised) Employee Benefits with effect from 1st April, 2006. Pursuant to the same, the said companies have
adjusted the additional liability arising on adoption of Accounting Standard (AS 15) (Revised) against the
opening balance of General Reserves, net of deferred tax.

(i) Short Term Employee Benefits:

The Group recognises the undiscounted amount of short term employee benefits expected to be paid
in exchange for services rendered as a liability (accrued expense) after deducting any amount already
paid.

(ii) Post-employment benefits:

In respect of the holding company and its Indian subsidiaries/Joint Venture (referred to as
‘Companies’) –

(a) Defined contribution plans

Defined contribution plans are post-employment benefit plans under which the Companies pay
fixed contributions into separate entities (funds) or to financial institutions. The Companies’
contribution to defined contribution plans are recognised in the profit and loss statement in
the financial year to which they relate.
The Companies operate defined contribution plans pertaining to Provident Fund schemes
for all employees and the holding company operates a Superannuation scheme for eligible
employees. The Companies also contributes to a Government administered Pension Fund on
behalf of employees.

(b) Defined benefit plans

(i) Defined benefit Gratuity Plan
The Companies operate a defined benefit gratuity plan for employees. The Companies
contribute to a separate entity (a fund) or to a financial institution, towards meeting the
Gratuity obligation.
(ii) Defined benefit Pension Plan
The holding 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.

The cost of providing defined benefits is determined using the Projected Unit Credit Method
with actuarial valuations being carried out at each balance sheet date. Past service cost is
recognised immediately to the extent that the benefits are already vested, else is amortised on
a straight-line basis over the average period until the amended benefits become vested.

The defined benefit obligations recognised in the balance sheet represents the present value
of the defined benefit obligation as adjusted for unrecognised actuarial gains and losses and
unrecognised past service costs and as reduced by the fair value of plan assets, if applicable.
Any defined benefit asset (negative defined benefit obligations resulting from this calculation)
is recognised representing the unrecognised past service cost plus the present value of available
refunds and reductions in future contributions to the plan.

(iii) Other long term employee benefits

Entitlements to annual leave and sick leave are recognised when they accrue to employees. Sick leave
can only be availed while annual leave can either be availed or encashed subject to a restriction on
the maximum number of accumulation of leaves. The Companies determine the liability for such
accumulated leaves using the Projected Accrued Benefit Method with actuarial valuations being
carried out at each balance sheet date.

B) In respect of some of the foreign subsidiaries –

(i) Payments to defined contribution retirement benefit plans are charged as an expense as they fall
due. Payments made to state-managed retirement benefit schemes are dealt with as payments to
defined contribution plans where the company’s obligations under the schemes are equivalent to
those arising in a defined contribution retirement benefit plan.

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SCHEDULES FORMING PART OF THE ACCOUNTS
(ii) For defined retirement benefit plans, the cost of providing benefits is determined using the Projected
Unit Credit Method with actuarial valuations being carried out at each balance sheet date. Actuarial
gains and losses that exceed 10 per cent of the greater of the present value of the company’s defined
benefit obligation and the fair value of plan assets are amortised over the expected average remaining
working lives of the participating employees. Past service cost is recognised immediately to the extent
that the benefits are already vested and otherwise is amortised on a straight-line basis over the average
period until the benefits become vested.

The retirement benefit obligation recognised in the balance sheet represents the present value of
the defined obligation as adjusted for unrecognised actuarial gains and losses and unrecognised past
service cost and as reduced by the fair value of plan assets. Any asset resulting from this calculation
is limited to unrecognised actuarial losses and past service cost, plus the present value of available
refunds and reductions in future contributions to the plan.

13. Research and Development

Capital expenditure is shown separately under respective heads of fixed assets. Revenue expenses including
depreciation are included under the respective heads of expenses.

14. Taxes on Income

Provision for current tax is computed as per ‘Total Income’ returnable under the applicable laws taking into
account available deductions and exemptions.
Deferred tax is recognised for all timing differences being the differences between taxable income and accounting
income that originate in one period and are capable of reversal in one or more subsequent periods. Deferred tax
assets are not recognised unless there is a virtual certainty that sufficient future taxable income will be available
against which such deferred tax assets can be realised.
Provision for Fringe Benefit Tax (FBT) is computed as per the provisions of the Income Tax Act, 1961.

15. Proposed Dividend

Dividend proposed by the Board of Directors is provided for in the accounts, pending approval at the Annual
General Meeting.

B. NOTES:
(Rs in Millions)

2006–2007 2005–2006
1. Estimated amount of contracts remaining to be executed on capital 248.61 318.09
account and not provided for
2. Letters of credit issued by bankers and outstanding as at the Balance 319.57 219.96
Sheet date
3. Contingent Liabilities:
(i) Guarantees given -
a. to a bank on behalf of Company’s dealers in respect of 348.25 309.62
loans granted to them by a bank for acquiring dealer
tinting systems
b. to others 86.99 67.25
(ii) Claims against the Company not acknowledged as debts
a. Tax matters in dispute under appeal 487.58 382.81
b. Others 29.18 11.49
(iii) Berger International Limited and its subsidiary, Berger Paints Trinidad Limited, are engaged in litigation
initiated by its former Regional Managing Director. The company upon discontinuing his services has
paid him compensation as per his contract of employment and the same has been charged to income
statement. This matter is subject to Trinidad and Tobago’s High Court Action No.3085 of 2003.Based on the
information presently available, the likely outcome of this trial cannot be determined with any reasonable
certainty. Therefore, no further provision has been made in these financial statements for this matter.

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SCHEDULES FORMING PART OF THE ACCOUNTS

4. Details of Subsidiaries and Joint Venture:
Subsidiaries:
The subsidiary companies considered in the consolidated financial statements are:
Direct Subsidiaries:
Name of the Company Country of % of voting Financial Year
Incorporation power
Asian Paints (Nepal) Pvt. Limited Nepal 51% 14th Jan-13th Jan
Asian Paints (International) Limited Mauritius 100% January-December
Asian Paints Industrial Coatings Limited. India 100% April-March
Technical Instruments Manufacturers (India) Limited India 100% April-March

Indirect Subsidiaries:
i) Subsidiaries of the wholly owned subsidiary, Asian Paints (International) Limited, Mauritius.

Subsidiaries of Asian Paints (International) Country of % holding Financial Year

Limited, Mauritius. Incorporation
Asian Paints (South Pacific) Holdings Limited Vanuatu 100% January-December
Asian Paints (South Pacific) Limited Fiji Islands 51% January-December
Asian Paints (Tonga) Limited Kingdom of Tonga 51% January-December
Asian Paints (S.I.) Limited Solomon Islands 75% January-December
Asian Paints (Vanuatu) Limited Republic of Vanuatu 60% January-December
Asian Paints (Queensland) Limited Australia 88.57% January-December
Asian Paints (Lanka) Limited Sri Lanka 98.20% January-December
Asian Paints (Bangladesh) Limited Bangladesh 89.78% January-December
Asian Paints (Middle East) LLC. Sultanate of Oman 49% January-December
SCIB Chemical, S.A.E., Egypt Egypt 60% January-December
Berger International Limited Singapore 50.10% January-December

ii) Subsidiary of Asian Paints (South Pacific) Limited:

Taubmans Paints (Fiji) Limited Fiji Island 100% January-December
iii) Subsidiary of Taubmans Paints (Fiji) Limited:
Samoa Paints Limited Samoa 80% January-December
iv) Subsidiary of Asian Paints (Lanka) Limited:
Asian Paints Distributors (Pvt.) Limited Sri Lanka 100% January-December
(Under voluntary liquidation)
v) Subsidiaries of Berger International Limited, Singapore
Berger Paints Singapore Pte. Ltd. Singapore 100% January-December
Berger Building Services (Singapore) Pte. Ltd. Singapore 100% January-December
Berger International Sdn. Bhd. Malaysia 100% January-December
Berger Paints (Thailand) Ltd. Thailand 83.7% January-December
Berger Paints (China) Ltd. People’s Republic of 100% January-December
China
Berger Paints (Hong Kong) Ltd. Hong Kong 100% January-December
Enterprise Paints Limited Isle of Man, U.K. 100% January-December
Universal Paints Limited Isle of Man, U.K. 100% January-December
Lewis Berger (Overseas Holdings) Ltd. U.K. 100% January-December
Berger Paints Manufacturing Ltd.* Myanmar 60% January-December
* divested during the year

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SCHEDULES FORMING PART OF THE ACCOUNTS
Country of % holding Financial Year
Incorporation

vi) Subsidiary of Berger Building Services (Singapore) Pte. Ltd.

Berger Contractor (Singapore) Pte. Ltd Singapore. 100% January-December
vii) Subsidiary of Enterprise Paints Limited:
Nirvana Investments Ltd Isle of Man, U.K. 100% January-December
viii) Subsidiary of Nirvana Investments Ltd.
Berger Paints Emirates Ltd U.A.E. 100% January-December
ix) Subsidiaries of Lewis Berger (Overseas Holdings) Ltd.:
Berger Paints Jamaica Ltd Jamaica. 51% January-December
Berger Paints Trinidad Ltd Trinidad. 70% January-December
Berger Paints Barbados Ltd Barbados. 100% January-December
x) Subsidiary of Universal Paints Limited:
Berger Paints Bahrain W.L.L. Bahrain 100% January-December
Joint Venture:
Asian PPG Industries Limited, a joint venture between the parent company and PPG Industries Securities Inc.,
U.S.A., wherein the parent company has 50% equity participation.
Subsidiary of the Joint Venture: Asian PPG Industries Ltd acquired a 100% stake in Faaber Paints Pvt. Ltd., on
30th August, 2006. The accounts of the said company are incorporated with that of the Joint Venture for the
purpose of consolidation.
Associate Company:
Dutch Boy Philippines, Inc., wherein one of the subsidiaries viz. Berger International Limited was holding 30%
equity interest. The stake in this associate company was disposed off during the year.

5. Principles of consolidation:
i) The consolidated financial statements are based on the audited financial statements of the subsidiaries for
their respective financial years. In respect of indirect subsidiaries of Asian Paints (International) Limited, the
audited consolidated financial statements of Asian Paints (International) Limited have been considered for
the purpose of consolidation.
ii) The financial statements of the parent company and its subsidiaries have been combined to the extent
possible on a line by line basis by adding together like items of assets, liabilities, income and expenses. The
results of subsidiaries acquired or disposed off during the year are included in the consolidated profit and
loss account from the effective date of acquisition or upto the effective date of disposal, as appropriate.
All significant intra group balances and transactions have been eliminated on consolidation. The amounts
shown in respect of reserves comprise the amount of the relevant reserves as per the balance sheet of the
parent company and its share in the post – acquisition increase in the relevant reserves of the subsidiaries.
iii) The consolidated financial statements have been prepared using uniform accounting policies for like
transactions and other events in similar circumstances and are presented to the extent possible, in the same
manner as the parent company’s financial statements.
iv) Minority interest in the net income and net assets of the consolidated financial statements are computed
and shown separately. Losses applicable to minority in excess of the minority’s interest in the subsidiary’s
equity are allocated against the interests of the group.
v) The carrying value of goodwill is tested for impairment as at each balance sheet date.
6. The investment in the associate company, Dutch Boy Philippines Inc., where Berger International Limited,
Singapore held a 30% stake was disposed off on 28th November, 2006. The consideration received on sale was
Rs 67.32 million. The loss on disposal recognised in the Profit & Loss Statement was Rs 70.71 million.
7. As required under Accounting Standard (AS 27) - Financial Reporting of Interests in Joint Venture, the audited
consolidated financial statements of Asian PPG Industries Limited (hereinafter referred to as JV), the Joint Venture
between the parent company and PPG Industries Securities Inc., U.S.A. have been consolidated using proportionate
consolidation method.
• The financial year of the JV is April to March. The parent company’s share of each of the assets, liabilities,
income and expenses of JV have been included in the consolidated financial statements.

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• The parent company’s share of capital commitments in the JV as at 31st March, 2007 is Rs. 47.19 Millions.
(Previous year Rs. 0.37 Million). (Included in Note B - 1 in Schedule ‘M’).
• The parent company’s share of contingent liabilities of the JV as at 31st March, 2007 is Rs. 24.16 Millions
(Previous year Rs. 21.17 millions).
• No contingent liabilities and capital commitments have been incurred as at 31st March, 2007 in relation to
the parent company’s interests in the JV along with the other venturer. (Previous year Rs. Nil).

8. The group disposed its 60% stake in subsidiary, Berger Paints Manufacturing Limited, Myanmar on 31st December,
2006. The net assets of Berger Paints Manufacturing Limited as at the date of disposal were as follows:
(Rs. in Millions)
Cash and cash Equivalents 0.31
Inventories 8.61
Trade Receivables 14.01
Other Receivables and Prepayments 0.80
Fixed Assets 14.41
Trade Payables and accrued liabilities (3.99)
Overdraft (13.46)
Short Term Loan (29.72)
(9.03)
Foreign Exchange Translation Reserve 34.51
Loss on Disposal (6.85)
Total Consideration 18.63

Satisfied by:
Cash Consideration 5.51
Deferred Consideration 13.12
18.63

Net cash inflow on disposal:

Cash Consideration 5.51
Cash overdrawn disposed off 13.15
Net Cash Inflow 18.66

9. On 30th August, 2006, Joint Venture Company, Asian PPG Industries Limited acquired 100% stake in Faaber Paints
Private Limited.
(Rs. in Millions)
Fixed Assets (including Capital Work in Progress) 21.99
Inventories 2.51
Trade Receivables 11.80
Loans and Advances 2.67
Cash and cash Equivalents 0.24
Goodwill on consolidation 28.54
Secured Loans (13.96)
Unsecured Loans (1.80)
Deferred Tax Liability (0.51)
Other Current Liabilities (11.48)
Total Consideration 40.00
Satisfied by:
Cash Consideration 40.00
Net Cash outflow 39.76

The Goodwill arising on acquisition of Faaber Paints Private Limited has been recognised in the consolidated
financial statements using proportionate consolidation method.

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SCHEDULES FORMING PART OF THE ACCOUNTS
10. Effective 16th March, 2007, Joint Venture Company, Asian PPG Industries Limited acquired the ‘2K Business’ from
ICI (India) Limited. This business of purchase and sale of “advanced refinish’ paints was acquired as a going
concern, on a slump sale basis, at an aggregate consideration of Rs. 518.00 million (excluding stamp duty).

(Rs. in Millions)
Net Current Assets 115.90
Fixed Assets 51.90
Intangibles Assets 287.46
Goodwill 31.37
Non Compete Fees 31.37
Total Consideration 518.00

The business purchase agreement provides for the final determination of certain amounts in respect of net current
assets after time lag(s) which will extend into the next accounting year. However, these, if any, are not expected
to be material and/or having any significant effect on the Profit and Loss account.

11. The group recognises deferred tax arising on account of timing differences, being the difference between the
taxable income and accounting income, that originates in one period and is capable of reversal in one or more
subsequent periods in compliance with the applicable accounting standards.
The major components of Deferred tax assets/(liabilities) arising on account of timing differences as at 31st March,
2007 are as follows:

(Rs. in Millions)

As at As at
31st March, 2007 31st March, 2006

Deferred tax Liabilities

Difference between the Written Down Value of assets as per books of (387.78) (379.04)
accounts and Income Tax
Accelerated Capital Allowances and Unremitted income (46.46) (26.88)
Deferred tax liability on account of income on retirement assets (55.18) (49.32)
Preconstruction interest capitalised in accounts, deductions for the (7.00) (7.07)
same claimed in Income Tax over a period of 5 years
Total (496.42) (462.31)
Deferred tax Assets
Expenses allowed for tax purpose on payment basis 107.95 55.46
Provision for doubtful debts 19.08 14.70
Expenditure debited to Profit and Loss Account but allowed in Income 45.38 3.38
tax over a longer period.
Losses carried forward under Income Tax 56.15 48.06
Total 228.56 121.60
Net Deferred Tax Asset/(Liability) (267.86) (340.71)
Deferred Tax asset on employee benefit Obligations, pursuant to 40.88
adoption of AS 15 (Revised), adjusted against General Reserve.
Adjustment on account of adoption of IFRS by certain subsidiaries. 0.30
Foreign Exchange Fluctuation 2.84
Deferred Tax benefit/(expense) for the year 28.83 17.75

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12. Employee Benefits :
The Holding Company and its Indian Subsidiaries/Joint Venture (hereafter referred to as ‘Companies’) have
adopted Accounting Standard (AS) 15 (Revised) Employee Benefits with effect from 1st April, 2006. Pursuant to the
same, the Companies have adjusted the opening balance of employee benefit obligations, net of related deferred
tax assets arising out of such adoption as on 1st April, 2006 against the General Reserves as explained below:
The net adjustment of Rs 80.56 million to General Reserves as on 1st April, 2006 consist of employee benefit
obligations of Rs 121.44 million and deferred tax asset thereon of Rs 40.88 million.
Until 31st March, 2006, the liability towards pension to certain specified employees under the Holding
Company’s pension scheme was charged to Profit & Loss Statement as and when the liability was discharged. On
adoption of AS 15 (Revised), the Group has charged Rs 27.36 million to Profit & Loss Statement towards accrued
liability based on actuarial valuation carried out as at balance sheet date.
The following disclosures are made in accordance with AS 15 (Revised) pertaining to Defined Benefit Plan:
(Rs. in Millions)

Gratuity Pension/Medical
(Funded) Plan (Unfunded)
2006-2007 2006-2007
Amount recognised in Balance Sheet
Present value of funded obligations 891.98
Fair value of plan assets (1,161.23)
Present value of unfunded obligations 100.81
Unrecognized past service cost
Amount not recognised as an asset because of the limitation as per 16.73 (7.34)
AS 15 (Revised) and unrecognised actuarial gains/losses
Net Liability (252.52) 93.48
Amounts in Balance Sheet
Liability 93.48
Assets 252.52 –
Net Liability/(Asset) (252.52) 93.48
Expense recognised in the statement of Profit & Loss
Opening defined benefit obligation less benefits paid 28.45
Current service cost 54.99 5.71
Interest on defined benefit obligation 50.64 6.26
Expected return on plan assets (85.58) –
Net actuarial losses/(gains) recognised in the year (39.86) (3.51)
Past service cost – –
Effect of the limit in Para 59(b) of AS 15 ( revised) 24.55 –
Losses/(Gains) on ‘Curtailments & Settlements’ – –
Total, included in ‘Employee Benefit Expense’ 4.74 36.92
Actual return on plan assets 51.96 –
Reconciliation of benefit obligations and plan assets for the
period
Change in defined benefit obligation
Opening defined benefit obligation as at 1st April, 2006 892.46 91.71
Current service cost 48.08 5.71
Interest cost 72.06 6.26

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SCHEDULES FORMING PART OF THE ACCOUNTS
(Rs. in Millions)

Gratuity Pension/Medical
(Funded) Plan (Unfunded)
2006-2007 2006-2007
Actuarial losses/(gain) (37.85) 4.19
Liabilities extinguished on curtailment – –
Liabilities extinguished on settlements – –
Liabilities assumed on acquisition – –
Exchange difference on foreign plans (2.64) (0.98)
Benefits paid (80.15) (6.08)
Closing defined benefit obligation as at 31st March, 2007 891.98 100.81
Change in fair value of assets
Opening fair value of plan assets as at 1st April, 2006 1,132.09 –
Expected return on plan assets 94.31 –
Actuarial gain/(losses) (39.60) –
Assets distributed on settlements
Contributions by employer* 60.84 –
Assets acquired due to acquisition
Exchange difference on foreign plans (6.26) –
Benefits paid (80.15) –
Closing fair value of plan assets as at 31st March, 2007 1,161.23 –
* including Rs. 35.56 million towards contributions for the provision made as at 31st March, 2006 by the
parent company
Note:–
1) The estimates of future salary increases, considered in actuarial valuation, takes into account the inflation,
seniority, promotion and other relevant factors.
2) Comparative values of defined benefit plans for the past four financial years, as required by Accounting
Standard (AS 15) (Revised) are not provided, this being the first year of adoption of the standard.

13. Earnings per share:

2006-2007 2005-2006
a. Basic and diluted earnings per share in rupees (Face value - 29.30 22.12
Rs.10/- per share)
b. Profit after tax as per Profit & Loss Account (Rs. in million) 2,810.30 2,121.48
c. Weighted average number of equity shares outstanding 95,919,779 95,919,779

14. Pursuant to the Accounting Standard (AS 19) – Leases issued by the Institute of Chartered Accountants of India,
the following information is given :
I. a) The parent company has provided tinting systems to its dealers on an operating lease basis. The lease
period varies between six to ten years. The lease rentals are payable by dealers monthly. A refundable
security deposit is collected at the time of signing the agreement. The equipment shall be used only
to tint the products of the lessor. The initial direct cost relating to acquisition of tinting system is
capitalised.
b) In addition, the Joint Venture has given certain ‘mixing racks’ on non-cancellable operating lease to
its dealers. Initial direct costs are recognised as expenses in the Profit and Loss Account.
c) Certain subsidiaries provide tinting systems to their dealers on an operating lease basis. The lease
normally ranges for a 5 year period. A security deposit is collected at the time of signing the
agreement.

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SCHEDULES FORMING PART OF THE ACCOUNTS

d) Future minimum lease rentals receivable as at 31st March, 2007 as per the lease agreements:
(Rs. in Millions)

2006-2007 2005–2006
i) Not later than one year 8.96 18.05
ii) Later than one year and not later than five years 13.33 16.16
iii) Later than five years 0.10 0.17
Total 22.39 34.38

The information pertaining to future minimum lease rentals receivable is based on the lease
agreements entered into between the respective companies and the dealers and variation made
thereto in the current year. The lease rentals are reviewed periodically taking into account prevailing
market conditions.
e) Total amount of contingent rents recognised as income – Rs. NIL.
f) The information on gross amount of leased assets and depreciation is given in Schedule ‘D’ to the
Balance Sheet.

II. a) The parent company has taken Cars, computers and other systems hardware on an operating lease
basis for a period of 48 (forty eight) months. The lease rentals are payable by the Parent company on
a monthly and quarterly basis respectively.
b) In addition, the Joint Venture has entered into an arrangement to obtain computer equipments,
mixing racks etc, on non-cancellable operating lease for thirty six months. As per the lease agreement
the Joint Venture does not have an option to purchase the assets.
c) In addition, certain overseas subsidiaries have also taken certain assets on operating lease.
d) Future minimum lease rentals payable as at 31st March, 2007 as per the lease agreements:

(Rs. in Millions)

2006-2007 2005-2006
i) Not later than one year 79.89 81.37
ii) Later than one year and not later than five years 139.95 49.32
iii) Later than five years 73.74 30.19
Total 293.58 160.88

e) Operating Lease payments recognised in the profit and loss account for the period is Rs. 72.67 millions
(previous year Rs. 74.39 millions).
f) Total amount of contingent rents recognised as expense – Rs. NIL;

III. a) Certain subsidiaries have taken property, plant and equipment on finance lease which effectively
transferred to the respective subsidiaries substantially all of the risks and benefits incidental to the
ownership.
b) Future minimum lease rentals payable as at 31st March, 2007 as per the lease agreements:

(Rs. in Millions)

2006-2007 2005-2006
Minimum Finance charge Present Minimum Finance charge Present
lease allocated to Value lease allocated to Value
payments future periods payments future periods
i) Not later than one 5.11 0.55 4.56 5.48 0.66 4.82
year
ii) Later than one year 6.25 0.78 5.47 8.05 0.83 7.22
and not later than
five years
iii) Later than five years 0.00 0.00 0.00 0.19 0.03 0.16
11.36 1.33 10.03 13.72 1.52 12.20

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SCHEDULES FORMING PART OF THE ACCOUNTS
c) The information on gross amount of leased assets and depreciation is given in Schedule ‘D’ to the
Balance Sheet.

IV. a) Certain subsidiaries have leased certain of its plant and equipment on finance lease which effectively
transferred substantially all of the risks and benefits incidental to the ownership.
b) Future minimum lease rentals receivable as at 31st March, 2007 as per the lease agreements:

(Rs. in Millions)

2006-2007 2005-2006
Minimum Unearned Present Minimum Unearned Present
payments Finance Value lease Finance Value
Income payments Income
i) Not later than one 3.68 1.70 1.99 2.77 0.90 1.87
year
ii) Later than one year 1.99 0.58 1.41 1.82 0.65 1.17
and not later than
five years
iii) Later than five years – – – – – –
5.67 2.28 3.40 4.59 1.55 3.04

15. The provision for taxation includes write back of tax provision of Rs. 30.00 million made in respect of notice for
additional assessment received for the assessment years 2000 to 2004 by the Company’s subsidiary Berger
International Ltd (BIL), Singapore. BIL had made a total tax provision of Rs. 45.20 million in the financial year
ended 31st December, 2005.

16. Pursuant to the Accounting Standard (AS 29) – Provisions, Contingent Liabilities and Contingent Assets, the
disclosure relating to provisions made in the accounts for the year ended 31st March, 2007 is as follows:

(Rs. in Millions)

Provision for leave Provision for bad

*Provision for entitlements/ and doubtful Provision for
Excise(1) encashment(2) debts(3) warranties(4)

2006-07 2005-06 2006-07 2005-06 2006-07 2005-06 2006-07 2005-06

Opening Balance 41.49 51.99 179.25 127.78 487.71 427.34 12.13 12.68

Additional obligation
arising on adoption of
Accounting Standard
(AS 15) (Revised),
adjusted against General
Reserve and deferred tax 163.44 – 2.59 –

Additions 2.72 – 54.67 51.47 77.29 83.73 3.43 1.91

Utilisations – – (4.22) (0.85) (86.07) (31.65) (0.72) (2.89)

Reversals (1.59) (10.50) – – (16.28) (9.53) – –

Currency translation – – (0.23) 0.85 (3.75) 17.82 (0.42) 0.43

Closing Balance 42.62 41.49 392.91 179.25 461.49 487.71 14.42 12.13

* Provision for Excise has been grouped under the head ‘other provisions’ of Schedule ‘G’.
(1) Excise provision is made towards matters disputed at various appellate levels.
(2) Provision is made based on actuarial valuation in accordance with Accounting Standard (AS 15)
(Revised) Employee Benefits and includes all leave entitlements/compensatory absences.
(3) Provision is made for the debts that are outstanding for more than one year.
(4) Provision for warranties represents management’s best estimate of the liability for warranties granted
on paints by some of the subsidiaries based on past experience of claims.

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SCHEDULES FORMING PART OF THE ACCOUNTS

17. Information on related party transactions as required by Accounting Standard (AS 18) for the year ended
31st March, 2007.
(Rs. in Millions)

Particulars Key Management Relatives of Key Companies Employee benefit Others

Personnel Management Controlled by plans where
Personnel(*) Directors/Relatives control exists

2006-07 2005-06 2006-07 2005-06 2006-07 2005-06 2006-07 2005-06 2006-07 2005-06
Processing of goods 19.27 114.73
(Expense)
Sale of goods 43.67 18.17
Purchase of goods 865.80 399.40
Royalty Paid 28.91 26.65
Consultancy Expenses 0.39
Other recoveries 0.16 0.14
Interest on Loan
Interest paid
Sale of Investments 53.09 25.10
Repayment of loan given
Purchase of Investments 50.00
Remuneration 93.06 90.44 15.65 11.79
Commission to Non- 2.10 1.50
executive Directors
Sitting Fees Paid to Non- 0.23 0.21
Executive Directors
Dividend Paid
Other services 3.26 1.80
Retainership fee and
other reimbursements
Fixed Deposits repaid
Other Miscellaneous 5.60
Expenses
Donation 6.50 4.50
Dividend received 22.44
Contributions during 197.62 175.00
the year
Sale of Assets 0.03
Outstanding as on
31st March
Loans:
Deposits accepted 0.10 0.10
Other receivables / (32.40) (26.67) (2.10) (0.15) (22.23) (22.30) (6.59) (46.13)
(payables)

* Under the employment of the Company pursuant to the necessary approvals from the shareholders and the
Central Govt. under section 314 of the Companies Act, 1956.
1. Key Management Personnel :
• Directors of Parent Company: Mr. Ashwin Choksi - Chairman, Mr. Ashwin Dani - Vice Chairman &
Managing Director and Mr. Abhay Vakil - Managing Director.
• Directors/ key management personnel of subsidiaries/joint venture:
Mr. V. S. Ram, Mr. Jagdish Acharya, Mr. J. N. Shahani, Mr. I. K. Jaiswal, Mr. Warren McDonald,
Mr. S. Sundaresan (till 20.09.2006 ) and Mr. Satish Kulkarni (from 23.07.2006).
2. Relatives of Key Management Personnel: Mr. Jalaj Dani*, Mr. Manish Choksi, Ms. Nehal Vakil, Mr. Malav Dani,
Mr. Mahendra Choksi - Non-Executive Director, Mr. Amar Vakil - Non-Executive Director, Mr. Hasit Dani -
Non-Executive Director and Mr. Vishal Choksi.
* Mr Jalaj Dani, a relative of Parent Company’s Vice Chairman & Managing Director is also Chairman of
Berger International Limited and Director on most of the subsidiary companies.

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SCHEDULES FORMING PART OF THE ACCOUNTS
3. a) Companies over which the Directors have significant influence or control :
AR Intertect Design Pvt. Ltd.
Ashwin Holdings Pvt. Ltd.
Asteroids Trading and Investments Pvt. Ltd.
Castle Investments and Industries Pvt. Ltd.
Centaurus Trading and Investments Pvt. Ltd. Hiren Holdings Pvt. Ltd.
Clear Plastics Limited
Coating Specialties (India) Ltd.
Dakshina Properties Pvt. Ltd.
Dani Capital and Investments Pvt. Ltd.
Dani Enterprises Pvt. Ltd.
Dani Finance and Investments Co. Pvt. Ltd.
Dani Finlease Ltd.
Dani Holdings & Trading Co. Pvt. Ltd.
Dani Securities Ltd.
Dani Trading and Investments Ltd.
Doli Trading and Investments Pvt. Ltd.
Elcid Investments Ltd.
ELF Trading and Chemical Mfg. Co. Ltd.
Geetanjali Trading & Investments Ltd.
Gujarat Organics Ltd.
Himanshu Holdings Pvt Ltd
Hitech Plast Ltd.
Jalaj Trading and Investments Pvt. Ltd.
Jaldhar Investments and Trading Co. Pvt. Ltd. Sadavani Investments and Trading Co. Pvt. Ltd.
Jatayu Investments Ltd.
Kalica Paper Industries Pvt. Ltd.
Lambodar Investments & Trading Co. Ltd.
Lyon Investments and Industries Pvt. Ltd.
Mipak Polymers Ltd.
Murahar Investments and Trading Co. Ltd.
Navbharat Packaging Industries Ltd.
Nehal Trading and Investments Pvt. Ltd.
Omega Properties Pvt. Ltd.
Pragati Chemicals Ltd.
Pragati Marketing Pvt. Ltd.
Rangmeet Investments Ltd.
Resins and Plastics Ltd.
Ricinash Oil Mill Ltd.
Rita Choksi Holdings Pvt. Ltd.
Rupen Investments and Industries Pvt. Ltd.
S.C. Dani Research Foundation Ltd.
Sapan Investments Pvt. Ltd.
Satyadharma Investments & Trading Co. Pvt. Ltd.
Sudhanva Investments and Trading Co. Pvt. Ltd.
Suprasad Investments & Trading Co. Ltd.
Suptaswar Investments and Trading Co. Ltd.
Tru Trading and Investments Pvt. Ltd.
Unnati Trading and Investments Pvt. Ltd.
Urvashi Holding Pvt. Ltd.
Ultramarine & Pigments Ltd.
Vikatmev Containers Ltd.

b) Associates, promoters and affiliates of subsidiary companies/joint venture:

LKP Hardware, Solomon Islands Al - Hassan Group, Oman
Sultan Bin Sulayem, UAE Port Vila Hardware
ABM Santo Rene Ah Pow
PPG Industries Securities Inc. Dutch Boy Philippines Inc. (Divested on 28.11.2006)
Ariza Holdings Limited PPG Industries Inc.

4. Employee Benefit Funds where control exists:

Asian Paints Office Provident Fund
Asian Paints Factory Employees’ Provident Fund
Asian Paints Management Cadres’ Superannuation Scheme
Asian Paints (India) Limited Employees’ Gratuity Fund

5. Other entities over which there is a significant control:

Asian Paints Charitable Trust.

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SCHEDULES FORMING PART OF THE ACCOUNTS

18. Segment information for the year end 31st March, 2007
i) Primary segment information:
Business Segment:
(Rs. in Millions)
2006-2007 2005-2006
Paints Others* Total Paints Others* Total
REVENUE
External Sales (Net) 35,772.75 926.98 36,699.73 29,397.69 812.66 30,210.35
Inter-Segment Sales 821.23 821.23 604.42 604.42
Other Income 337.95 34.56 372.51 142.86 39.02 181.88
Total Revenue 36,110.70 1,782.77 37,893.47 29,540.55 1,456.10 30,996.65
RESULT
Segment result 4,700.88 246.28 4,947.16 3,774.78 119.62 3,894.40
Unallocated expenses 605.04 487.09
Operating Profit 4,342.12 3,407.31
Interest Expenses (189.11) (114.29)
Interest Income 14.31 17.54
Dividends 115.28 58.10
Profit/(Loss) on sale of 3.90 3.58
investments
Profit/(Loss) on sale of fixed 14.67 2.17
assets
Profit/(Loss) on sale of (77.56) —
Subsidiaries
Miscellaneous Income 47.59 56.97
Income taxes (1,466.78) (1,322.86)
Net Profit before prior 2,804.42 2,108.52
period items
OTHER INFORMATION
Segment assets 16,419.61 780.04 17,199.65 13,748.48 645.18 14,393.66
Unallocated assets 3,041.09 2,668.53
Total assets 20,240.74 17,062.19
Segment liabilities 6,074.16 228.01 6,302.17 4,852.06 145.40 4,997.46
Unallocated liabilities 6,160.65 5,602.21
Total liabilities 12,462.82 10,599.67
Capital expenditure 1,280.63 3.84 1,284.47 483.42 13.96 497.38
Unallocated capital expenditure 53.62 44.44
Total 1,338.09 541.82
Depreciation/Impairment 556.34 34.46 590.80 548.08 34.38 582.46
Unallocated depreciation/ 20.61 23.70
Impairment
Total 611.41 606.16
Unallocated Non Cash expense — 76.00
other than depreciation
Total — 76.00
* Others include the parent company’s business units manufacturing Phthalic Anhydride and
Pentaerythritol.

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SCHEDULES FORMING PART OF THE ACCOUNTS

ii) Secondary segment information:

Geographical Segment:
(Rs. in Millions)
2006-2007 2005-2006
Domestic International Total Domestic International Total
Operations Operations Operations Operations
Segment revenue 30,423.95 6,648.29 37,072.24 24,982.16 5,548.44 30,530.60
Carrying cost of 15,708.55 4,532.15 20,240.70 12,442.06 4,620.13 17,062.19
segment assets
Additions to fixed and 1,086.76 251.33 1,338.09 362.18 179.64 541.82
intangible assets

19. Previous year’s figures have been regrouped, wherever necessary.

Signatures to Schedules A to M

As per our report of even date For and on behalf of the Board
For Shah & Co. Ashwin Choksi Ashwin Dani Abhay Vakil
Chartered Accountants Chairman Vice Chairman & Managing Director
Managing Director

H. N. Shah Tarjani Vakil Mahendra Shah Jayesh Merchant

Partner Chairperson of Director Chief Financial Officer &
Membership No. 8152 Audit Committee Company Secretary

Mumbai Mumbai
10th May, 2007 10th May, 2007

98
 • Consolidated

SUMMARY OF FINANCIAL STATEMENTS OF SUBSIDIARY COMPANIES PURSUANT TO THE APPROVAL UNDER SECTION 212 (8) OF THE COMPANIES ACT, 1956 All figures in INR Millions

Subsidiary Name Currency Accounting period Capital Reserves Total Liabilities Total Assets Sales Other Income PBT Tax provision PAT Dividend

Current Previous Current Previous Current Previous Current Previous Current Previous Current Previous Current Previous Current Previous Current Previous Current Previous
Period Period Period Period Period Period Period Period Period Period Period Period Period Period Period Period Period Period Period Period

Asian Paints (Bangladesh) Ltd Taka Jan to Dec 260.92 132.83 (170.08) (139.24) 102.87 175.24 193.72 168.83 198.31 130.85 0.44 1.08 (35.77) (51.27) - - (35.77) (51.27) - -
Asian Paints (International) Ltd US $ Jan to Dec 1,237.36 1,156.79 (426.12) (475.30) 85.45 122.52 896.69 804.00 - - 45.13 10.37 39.57 (346.52) (1.24) (0.82) 38.33 (347.34) - -
Asian Paints (Middle East) LLC Oman OR Jan to Dec 71.54 73.16 (33.08) (45.09) 128.74 150.72 167.21 178.79 194.43 200.22 1.76 1.35 11.14 11.17 - - 11.14 11.17 - -
Asian Paints (Nepal) Pvt Ltd Nepal Rs 14th Jan to 13th Jan 14.03 13.85 71.26 61.23 53.90 46.79 139.19 121.86 196.89 181.25 3.52 2.52 21.99 15.02 (6.30) (6.13) 15.69 8.89 10.46 10.43
Asian Paints (Queensland) Pty Ltd Aus $ Jan to Dec 82.88 78.53 (74.10) (60.79) 134.36 113.54 143.14 131.29 154.91 150.19 2.31 0.65 (11.83) (13.26) 2.15 3.31 (9.69) (9.95) - -
Financial Statements •

Asian Paints (S.I.) Ltd SI $ Jan to Dec 3.99 4.14 57.27 58.02 16.75 10.32 78.01 72.48 58.93 48.98 1.04 0.82 8.97 8.45 (0.96) (1.48) 8.01 6.97 6.10 4.93
Asian Paints (South Pacific) Fiji Ltd Fiji $ Jan to Dec 11.41 11.09 229.96 223.01 76.01 76.04 317.38 310.15 320.08 303.30 30.71 9.91 19.36 26.28 (1.84) (5.66) 17.52 20.62 1.90 14.41
Asian Paints (Tonga) Ltd $ Top Jan to Dec 2.59 2.68 42.69 48.15 6.59 2.32 51.88 53.15 28.59 28.55 1.36 0.98 (1.11) 1.38 0.48 0.19 (0.63) 1.57 0.47 -
Asian Paints (Vanuatu) Ltd Vatu Jan to Dec 13.38 12.60 24.27 18.10 9.12 12.07 46.76 42.77 46.96 40.11 0.41 - 4.89 2.60 - - 4.89 2.60 - 0.64
Asian Paints Industrial Coatings Ltd INR Apr to Mar 100.00 90.00 8.10 3.37 295.69 236.19 403.78 329.56 477.25 390.22 3.93 0.44 9.85 5.71 (4.08) (2.69) 5.77 3.02 - -
Asian Paints Lanka Ltd SL Rs Jan to Dec 137.64 148.35 (100.65) (109.51) 164.99 142.13 201.98 180.98 242.58 189.48 5.97 2.15 0.99 (15.33) - - 0.99 (15.33) - -
Asian Paints South Pacific Holdings Ltd US $ Jan to Dec 57.73 57.97 12.68 13.96 1.29 1.87 71.70 73.80 - - 1.46 7.58 0.21 5.74 - - 0.21 5.74 1.17 1.13
Berger Building Services (Singapore) Pte Ltd SG$ Jan to Dec 28.77 27.14 (29.09) (27.50) 0.56 0.59 0.24 0.23 - - 0.06 2.74 0.06 2.67 - - 0.06 2.67 - -
Berger Contractor (Singapore) Pte Ltd SG$ Jan to Dec 129.46 122.12 (130.21) (122.91) 0.76 0.80 0.01 0.02 - - 0.09 1.32 0.08 1.14 - (0.33) 0.08 0.81 - -
Berger International Ltd SG$ Jan to Dec 1,057.26 704.93 (975.96) (677.00) 1,093.75 1,071.41 1,175.05 1,099.34 - - 111.94 117.58 40.77 (436.51) 9.98 (56.25) 50.76 (492.76) - -
Berger International Sdn. Bhd. MYR (Malaysia) Jan to Dec 300.15 286.75 (405.13) (366.27) 253.12 221.77 148.14 142.25 217.78 169.76 - 0.10 (21.26) (60.12) - - (21.26) (60.12) - -
Berger Paints (Hong Kong) Ltd HK $ Jan to Dec 9.64 9.91 (6.49) (2.41) 7.49 5.37 10.64 12.88 41.09 45.38 0.33 0.05 (4.21) (3.17) - - (4.21) (3.17) - -
Berger Paints (Ningbo) Co. Ltd CNY Jan to Dec 331.17 282.13 (330.53) (271.15) 140.98 140.11 141.62 151.09 73.39 56.28 - - (56.40) (68.73) - - (56.40) (68.73) - -
Berger Paints (Thailand) Ltd THB Jan to Dec 71.10 55.19 (166.58) (61.12) 198.02 194.81 102.54 188.88 138.07 214.46 1.67 1.20 (92.73) (54.73) - - (92.73) (54.73) - -
Berger Paints Bahrain W.L.L. BHD Jan to Dec 49.00 50.22 174.50 182.46 53.97 126.54 277.47 359.22 426.31 382.86 2.45 3.77 67.62 59.85 - - 67.62 59.85 71.21 74.98
Berger Paints Barbados Ltd Barbados $ Jan to Dec 42.10 43.46 119.84 124.52 113.12 85.39 275.06 253.37 306.89 266.17 0.58 2.36 7.17 8.14 (2.28) 3.27 4.89 11.41 5.69 -
Berger Paints Emirates Ltd AED Jan to Dec 12.02 12.31 (125.24) (143.80) 655.30 630.84 542.07 499.34 984.80 711.42 4.43 4.54 15.85 (24.04) - - 15.85 (24.04) 0.52 -
Berger Paints Jamaica Ltd Jamaican $ Jan to Dec 98.52 100.15 196.33 202.53 274.64 229.38 569.49 532.05 901.58 835.34 - 0.71 37.18 69.50 (10.22) (22.71) 26.96 46.79 30.03 30.70
Berger Paints Singapore Pte Ltd SG$ Jan to Dec 418.36 394.65 (287.29) (293.78) 161.25 130.81 292.32 231.68 551.90 486.27 0.75 0.19 16.33 3.58 16.07 - 32.40 3.58 8.95 -
Berger Paints Trinidad Ltd Trinidad $ Jan to Dec 42.37 43.04 154.22 173.62 125.92 99.51 322.51 316.17 327.18 277.41 - 1.09 (10.58) 6.69 0.45 2.11 (10.13) 8.81 7.09 6.28
Enterprise Paints Ltd GBP Jan to Dec 12.58 11.32 (10.85) (2.70) 101.60 49.64 103.33 58.25 - - 0.19 1.93 (7.46) 1.93 - - (7.46) 1.93 - -
Lewis Berger (Overseas Holdings) Ltd GBP Jan to Dec 161.62 145.43 209.65 201.74 7.76 59.57 379.02 406.74 - 0.04 71.28 - 27.55 32.16 (4.26) (0.81) 23.29 31.35 7.64 -
Nirvana Investments Ltd GBP Jan to Dec - - (0.94) (1.13) 7.67 6.90 6.73 5.77 - - 0.30 - 0.30 - - - 0.30 - - -
Samoa Paints Ltd WST $ (Samoa) Jan to Dec 1.44 1.52 21.21 22.79 11.42 7.27 34.07 31.58 34.39 34.74 1.09 1.30 9.07 8.06 (2.66) (2.33) 6.41 5.74 7.41 -
SCIB Chemicals S.A.E. Egpt pound Jan to Dec 140.07 238.05 141.64 (49.66) 325.47 273.26 607.18 461.64 1,140.73 816.27 8.98 5.75 165.13 46.36 (2.85) (1.95) 162.28 44.40 64.36 -
Taubman Paints Fiji Ltd Fiji $ Jan to Dec 4.27 4.15 47.80 48.62 25.29 17.35 77.36 70.12 102.02 86.18 10.51 6.08 20.21 12.53 (5.86) (4.08) 14.35 8.44 12.63 5.25
Technical Instruments Manufacturers (India) Ltd. INR Apr to Mar 0.50 0.50 53.75 43.80 154.25 150.32 208.51 194.63 - - 19.50 19.60 13.59 13.76 (3.64) (3.59) 9.95 10.17 - -
Universal Paints Ltd GBP Jan to Dec 37.10 33.38 131.07 48.53 - - 168.17 81.91 - - 76.07 84.59 74.09 84.76 - - 74.09 84.76 0.82 31.89

Notes :
1. Berger International Limited (BIL) disposed off its 60% stake in subsidiary, Berger Paints Manufacturing Limited, Myanmar on 31st December, 2006. BIL also disposed off its 30% stake in its associate company, Dutch Boy Philippines inc., on 28th November, 2006.
2. Capital, Reserves, Total assets and Total liabilities have been translated at the rates prevailing at the end of the respective financial years. Sales, Other income, Profit before tax, Profit after tax and Proposed dividend have been translated at average rates prevailing during the respective financial years.

99
Asian Paints Limited   Annual Report 2006-2007
NOTES
 Asian Paints Limited
Registered Office : 6 A, Shanti Nagar, Santacruz (E), Mumbai - 400 055.
Email: investor.relations@asianpaints.com

PAYMENT OF DIVIDEND THROUGH ELECTRONIC CLEARING SERVICE (ECS)

Securities and Exchange Board of India (SEBI) has made it mandatory for all the companies to use the bank account
details furnished by the investors for distributing dividends through Electronic Clearing Service (ECS) to the investors
wherever ECS and bank details are available. In the absence of ECS facility, the companies are required to print the bank
account details, if available, on the payment instrument, for the distribution of dividends to the investors.

Salient features of the scheme:

• Instant Credit
This facility provides instant credit of dividend amount to your bank account electronically at no cost. ECS also
eliminates the delay in postal transit and fraudulent encashment of warrants.

• Coverage
ECS through RBI clearing is presently available at Mumbai, New Delhi, Kolkata, Chennai, Ahmedabad, Bangalore,
Hyderabad, Kanpur, Nagpur, Jaipur, Chandigarh, Patna, Bhubaneshwar, Guwahati and Thiruvananthapuram.

• Procedure for Credit

Under this facility, the amount of dividend payable to you would be directly credited to your bank account. Your
bank branch will credit your account and indicate the credit entry as ‘ECS transaction’ in your passbook/ statement of
account.
In case ECS facility is not made available to you by the Company/their Bankers at a particular centre the dividend
amount due to you would be remitted by means of a dividend warrant which would be posted to your address with the
particulars of the bank branch and account number furnished by you duly incorporated on it.
If you wish to avail of this facility and hold shares in physical form, kindly fill in the Form printed
overleaf and return the same alongwith a xerox copy a cancelled the cheque pertaining to the Bank
Account where you would like the amount to be credited to the following address:
Sharepro Services (India) Pvt. Ltd.,
Unit: Asian Paints Limited,
Satam Estate, 3rd Floor, Above Bank of Baroda,
Cardinal Gracious Road, Chakala, Andheri (E),
Mumbai 400 099.
Tel. No. 2821 5168,2832 9828
Please send the same to the above mentioned address to enable us to credit the future dividend entitlements to your
account through ECS.
This arrangement is subject to the RBI guidelines issued from time to time.

Bank particulars to be incorporated on warrants

If you do not wish to opt for ECS facility, we request you to provide us your bank details for printing the same on
the dividend warrants which will be mailed to you in future, in the space provided overleaf. In case you have already
furnished these particulars and if there is any change/correction in the same, kindly fill up the required details.
In case you have dematerialised your shares and hold shares in electronic form, kindly convey necessary
bank details to your Depository Participant.

All queries to be addressed to the Company’s Registrar & Transfer Agent:

SHAREPRO SERVICES (INDIA) PVT. LTD. SHAREPRO SERVICES (INDIA) PVT. LTD.
Unit: Asian Paints Limited Unit: Asian Paints Limited
Satam Estate, 3rd Floor, Above Bank of Baroda, 912, Raheja Centre, Free Press Journal Road,
Cardinal Gracious Road, Chakala, Nariman Point, Mumbai 400 021.
Andheri (E), Mumbai 400 099. Tel. No : 2288 1568,2288 1569,
Tel. No. 2821 5168,2832 9828, 2282 5163,22884527
2821 5991,2834 7719,2834 8218 Fax No. 2282 5484
Fax No. 2837 5646 Email : sharepro_services@roltanet.com
Email : sharepro@vsnl.com
 E-mail id

Telephone No.: STD Code Tel. No.

Sharepro Services (India) Pvt. Ltd.,

Unit: Asian Paints Limited,
Satam Estate, 3rd Floor, Above Bank of Baroda,
Cardinal Gracious Road, Chakala, Andheri (E),
Mumbai 400 099.

Dear Sirs,

I request you to register the bank details against my account as given below:

FOLIO NO. :

NAME(S) OF THE HOLDERS :

NAME & ADDRESS OF THE BANK BRANCH :

ACCOUNT TYPE : SAVINGS CURRENT CASH CREDIT

ACCOUNT NO. :

(PLEASE TICK FOR THE FACILITY YOU OPT)

1. Mail the warrant directly to the bank.

2 Mail the warrant at my registered address with the bank particulars incorporated.

3* Directly credit to the account through Electronic Clearing System (ECS).

* If opted for ECS, kindly provide the following information:

9 DIGIT CODE NUMBER OF THE BANK AND BRANCH AS

APPEARING ON THE MICR CHEQUE ISSUED BY THE BANK

LEDGER FOLIO NO. (IF ANY) OF YOUR ACCOUNT

(in case if you have opted for ECS, affix photocopy of your cancelled cheque here)

I hereby declare that the particulars given are correct and complete. If the payment transaction through ECS is delayed
or not effected at all for any reasons, I would not hold the Company or the Registrar & Transfer Agent responsible.

Signature
Date: ________________________
 FORM 2B
[Rule 5 D of Companies (Central Govt’s) Rules & Forms)]

NOMINATION FORM
(To be filled in by individual applying singly or jointly)

I/We, _______________________________________________________________________ the holder(s) of Equity Shares

bearing Folio Number and accruals thereon of Asian Paints Limited wish to make a nominaton and do hereby nominate
the following person in whom all rights of transfer and/or amount payable in respect of shares shall vest in the event of
my/our death.

Name and Address of the nominee

Name : ________________________________________________________________________________________________

Address : _______________________________________________________________________________________________
______________________________________________________________________ Pincode : _____________

Date of Birth* : ____________________

(to be furnished in case Signature of Nominee

the nominee is minor)

*The nominee is a minor whose guardian is –

Name and address of the guardian __________________________________________________________________________

__________________________________________________________________________________________________________

_________________________________________________________________________________________________________

Signature(s) of Holder(s)

Signature : ________________________________________ Signature : ___________________________________

(1st Holder) (1st Joint Holder, if any)

Name : ________________________________________ Name : ___________________________________

Address : ________________________________________ Address : ___________________________________

________________________________________ ___________________________________

Date : ________________________________________ Date : ___________________________________

Signature of two witnesses

Name and Address Signature and date

1.

2.

Instructions :
1. The nomination can be made by individuals only applying/holding shares /on their own behalf singly or jointly upto
two persons. Non-individuals including society, trust, body corporate, partnership firm, Karta of Hindu Undivided
Family, holder of Power of Attorney cannot nominate. If the securities are held jointly, all joint holders will sign the
nomination form.
2. A minor can be nominated by holders of shares/and in that event the name and address of the Guardian shall be
given by the holders.
3. The nominee shall not be a trust, society, body corporate, partnership firm, karta of Hindu Undivided Family or
a power of attorney holder. A non-resident Indian can be a nominee on repatriable basis, provided RBI approval
granted to the nominee is registered with the Company.
4. Nomination shall stand rescinded upon transfer of shares.
5. Transfer of shares/in favour of a nominee and repayment of amount of deposits to nominee shall be valid discharge
by a Company against the legal heir.

FOR OFFICE USE ONLY

Nomination Regn. No. : ____________________________ Checked by : ____________________________

Date of Registration : ____________________________ Signature : ____________________________

 INSTRUCTIONS

1. Nomination per Folio

Nomination for only one folio can be made on this Form. In case you have many folios, then you may take a
photocopy of this Form and nominate separately.

2. Signatures
The sole/joint holders should sign as per the specimen signature recorded with the Company. Otherwise, the Form
is liable to be rejected.

3. Change in Composition of the Account

Nomination stand rescinded upon transfer of shares. Whenever the shares in the given folio are transferred/
transposed /transmitted/dematerialised/amalgamated with some other folio, then this nomination stands void. A
new Nomination Form will have to be filled in by the person(s) in whose name(s) the shares have been transferred/
transposed/ transmitted/amalgamated.

4. Electronic Holding
The nomination given in the Form would be considered for the physical holding only. In case securities are held in
electronic form, then the holder(s) have to approach the Depository Participant for registering their nomination.

5. Accruals and Acquisitions

Once a nomination is registered by a Company for a given folio, the same is valid for all future accruals and acquisitions
made by the holder(s) in that folio unless notified to the contrary by the holder(s).

6. Validity of Nomination
The nomination made through Form 2B will be considered valid and recognised by the Company if the nomination
made by the holder(s) of the shares/is registered with the Company before the death of the holder(s) of the
shares.

7. Entitlement of Nominee
The nominee wil be entitled to all the rights in the shares of the Company only in the event of death of the Sole/all
holders in the account. The nominee will be required to approach the Company for transmitting the securities in
his/ her name and will be required to produce the death certificate of the holder(s), the share certificates and proof
of identity as required by the Company.

8. Date of Execution
Kindly note that nomination being a legal document should be dated by the nominator and the witnesses certifying
that the Form has been signed by the nominator in their presence. Furthermore the date of execution on the
Nomination Form should match with the date of witnesses witnessing the document.

All queries to be addressed to the Company’s Registrar & Transfer Agent:

SHAREPRO SERVICES (INDIA) PVT. LTD. SHAREPRO SERVICES (INDIA) PVT. LTD.
Unit: Asian Paints Limited Unit: Asian Paints Limited
Satam Estate, 3rd Floor, Above Bank of Baroda, 912, Raheja Centre, Free Press Journal Road,
Cardinal Gracious Road, Chakala, Nariman Point, Mumbai 400 021.
Andheri (E), Mumbai 400 099. Tel. No : 2288 1568,2288 1569,
Tel. No. 2821 5168,2832 9828, 2282 5163,22884527
2821 5991,2834 7719,2834 8218 Fax No. 2282 5484
Fax No. 2837 5646 Email : sharepro_services@roltanet.com
Email : sharepro@vsnl.com