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Asian Paints (India) Ltd.
6 A Shanti Nagar,
Santacruz (E),
Mumbai 400 055

Asian Paint Ar 2k4-5 Cover1-4 With Spine.P65 1 5/26/05, 5:28 PM


Asian Paint Ar 2k4-5 Cover1-4 With Spine.P65 2 5/26/05, 5:28 PM
contents
Board of Directors 02

Chairman’s Letter 04

Highlights 06

Directors’ Report 18

Management Discussion and Analysis 22

Five Year Review 33

Corporate Governance 37

Shareholder Information 44

Auditors’ Report 48

Balance Sheet 52

Profit and Loss Account 53

Cash Flow Statement 54

Schedules 55

Auditors’ Report on Consolidated


Financial Statements 82

Consolidated Balance Sheet 84

Consolidated Profit and Loss Account 85

Consolidated Cash Flow Statement 86

Schedules for Consolidated Accounts 87

Asian Paints (India) Ltd.


annual report 2004-2005
board of directors

in remembrance
Ashwin C Choksi
Chairman

Ashwin S Dani Abhay A Vakil


Vice Chairman & Managing Director
Managing Director

Shri K. Rajagopalachari
(10.1.1935 - 14.3.2005)
Leader, Philosopher and Mentor

Company Secretary
Jayesh Merchant

Auditors
Shah & Co.
Chartered Accountants
03

Mahendra Choksi Amar A Vakil Hasit Dani

Ms. Tarjani Vakil Dipankar Basu Deepak M Satwalekar

R A Shah Dr. S Sivaram Mahendra M Shah

Asian Paints (India) Ltd.


annual report 2004-2005
chairman’s letter

Dear Shareholders,

In the last year’s annual report, I had spoken of


our focus to become more proactive and aggressive
in our efforts to gain market share, while steadily
improving profits. The success of our efforts is
reflected in the results for the year. While sales for
the group grew by 15.4 per cent to Rs. 25,605
million, profit after tax and extraordinary item grew
by 20.2 per cent to Rs. 1,741 million.

All the business units have performed well. The


decorative business in India, which is the largest
contributor to the group’s revenue, has
accomplished significant growth in the topline over
the satisfactory performance seen in the previous
year. The emphasis in the decorative business has
been on sales growth and market share. Changing
market dynamics and a keener competitive
environment is fostering a transformation of the
price-value equation across industries. Consumers
benefit from such a shift; the reward for suppliers
who move in step with this trend is access to a bigger
market. Our strategy of striking a better alignment
with the market on pricing and of coming out with
new offerings in the economy segment is clearly
paying off. Sale of distemper has moved up smartly
after a long time, even as the performance of interior
and exterior emulsions has remained strong.

Rising input costs, uncertainties in the


implementation of the Value Added Tax system and
ambiguities in the interpretation of rules and
procedures associated with it have, to an extent
impacted our performance. I see this as a passing
phase. The introduction of VAT which was long
overdue, is a step in the right direction and the
economy will see its benefits as we move ahead. I
hardly need to emphasise the advantages of such
a unified system of taxation for a company like Asian
Paints with a manufacturing and customer network
spread across different states.
05

Every adversity brings with it an opportunity. To the top three players in each market that it is present
off-set the impact of rising costs, economies were in, by harnessing the combined strengths of the
brought about in overhead expenses. The steps group. The units in Malta and Mauritius which did
taken have helped reduce the pressure on margins not fit in our strategy matrix were divested during
and drive volume growth in the decorative business; the year. We will continue to review our investments
they have also rendered us stronger and more in other countries on an ongoing basis.
competitive for the future.
Though input costs remain a cause for concern in
A measure of our confidence in the emerging future the near term, I am optimistic on the outlook for
is the investment that we are committing to new the current year. As always, our effort will be to
green field sites. For many years now, our philosophy realize the potential that our people and the
has been to get more out of investments already resources at our command represent and stay
made in our existing facilities in the country before focused on growing shareholder value.
looking at fresh expansion at new locations. The
I conclude by thanking my colleagues on the Board
time is now ripe to make such investments that will,
for their guidance, the employees for their dedication
over time, alter our manufacturing footprint and
and other stakeholders for their continued support.
enhance our capability in many ways.
I would also like to make a special mention of
Industrial coatings continue to be our fastest Mr. K. Rajagopalachari, whose demise in March
growing business: last year has seen yet another this year ended a forty-six year long association with
big stride with the business expanding by more than the Company. Well read in history and law,
a third in size. Accelerating pace of industrialisation Mr. Rajagopalachari brought to bear his immense
and rising investments in infrastructural projects will knowledge of both to shape strategy. His sense of
only increase the demand for quality industrial professionalism, fair play, equity and personal values
coatings. Dovetailing our organisational capability inspired colleagues and associates. Asian Paints will
to mesh in with this emerging future is a strategic miss him.
imperative that your Company is focused on. The
With regards,
Directors’ Report speaks of the steps initiated in this
direction. Yours sincerely,
The process of integration of our international
acquisitions continues and we are beginning to feel
the beneficial impact arising out of it. Sales of the Ashwin C. Choksi
international business crossed the 100 million US
Dollar mark during the year. The task ahead is to
improve profitability. International units will now be
managed on a regional basis, with focus on
building scale in the Middle East and South East
Asia. The objective is to place Asian Paints amongst

Asian Paints (India) Ltd.


annual report 2004-2005
highlights

Ø Net Sales and Operating Income of Asian Paints (India)


Ltd. grew by 14.4% from Rs. 16,966 million (US $ 388
million*) in 2003-04 to Rs. 19,415 million (US $ 444
million) in 2004-05.

Ø Net Profit increased by 17.4% from Rs. 1,478 million


(US $ 34 million) in 2003-04 to Rs. 1,735 million
(US $ 40 million) in 2004-05.

Ø The Board of Directors have recommended dividend of


95% for the year 2004-05 with a payout ratio of 60%.

Ø Return on Average Net Worth has increased from 29.3%


in 2003-04 to 31.4 % in 2004-05.

Ø State of the art emulsion paint manufacturing facility


commissioned at Sriperumbudur near Chennai.

Group :

Ø Net Sales and Operating Income for the group grew by


15.4% from Rs. 22,179 million (US $ 507 million) in
2003-04 to Rs. 25,605 million (US $ 585 million) in
2004-05.

Ø Net Profit to shareholders after minority share grew by


20.2% from Rs. 1,449 million (US $ 33 million) in
2003-04 to Rs. 1,741 million (US $ 40 million) in
2004-05.

Ø The revenue of Berger International Limited has increased


by 10.9%. SCIB Chemical, Egypt has reported a profit for
the first time after its acquisition in 2002.

Ø International business sales crossed US $ 100 million.

*1US $ = Rs. 43.75 as on March 31, 2005


07

PROFIT BEFORE TAX & NET WORTH &


GROSS SALES & NET SALES PROFIT AFTER TAX SHARE CAPITAL

RETURN ON CAPITAL EMPLOYED & REVENUE TO


RETURN ON NET WORTH EXCHEQUER

DISTRIBUTION OF INCOME

MATERIAL COST

EMPLOYEE REMUNERATION

OTHER EXPENSES

INTEREST

DEPRECIATION

EXTRAORDINARY ITEM

CORP. TAX & DEF. TAX

DIVIDEND & DIV. TAX

RETAINED EARNINGS

Asian Paints (India) Ltd.


annual report 2004-2005
new capacity

Asian Paints’ new paint plant at Sriperumbudur, near


Chennai in the State of Tamil Nadu commenced production
on January 20, 2005. It is located at SIPCOT (State Industrial
Promotion Corporation of Tamil Nadu) Industrial Park,
Sriperumbudur. This state-of-the-art plant, erected in record
time, has been established to manufacture emulsion paints
alone with an initial capacity of 30,000 KL per annum. This
is Asian Paints’ fifth paint plant in India.

The capacity will be raised to 1,00,000 KL per annum


making it a world scale facility. A rapid ramp-up of
production is planned to keep up with the increased demand
for emulsion paints.
09

The plant is presently equipped with:·

Modern material handling facilities including


storage of raw material in silos.

Capability to handle batch sizes upto 20 KL;


High speed packing lines.

The latest automated process control system.

Pollution abatement, waste usage in a closed loop


manufacturing system and advanced pollution treatment
facilities.

These facilities will enable the Company to implement ‘Right


First Time’ and ‘Zero Defect’ concepts. The plant is a Zero
Discharge plant and has Environment, Health and Safety
(EHS) features of the highest standard.

The Company is also investing in greenfield manufacturing


facilities in the areas of industrial coatings and powder
coatings (through its subsidiary) to cater to the good growth
expected in these segments. These are being set up at Taloja,
Maharashtra (for industrial coatings) and at Baddi, Himachal
Pradesh (for powder coatings) with final capacities of 30,000
KL and 6,500 KL per annum, respectively.

Asian Paints (India) Ltd.


annual report 2004-2005
new strides

In an attempt to provide a major thrust to the global vision of


“Think Global, Synergize Regional and Act Local”, Asian
Paints has embarked on one of its biggest international
initiatives - the launch of ‘e-Strides’- an Enterprise
Resource Planning (ERP) initiative which would involve all
its overseas operations.

‘e-Strides’ will reassess the significance of the current


business processes and will improve them in the context of
the changing business scenarios. This will involve
benchmarking processes with industry best practices,
standardising them to leverage global knowledge and
providing adequate controls. Individuals drawn from various
functions and working full-time with consultants have created
a global template that has already been implemented at
some of the units and implementation at the remaining
units would be completed by the end of 2005.
11

A view of Berger Paints (Ningbo) Co. Ltd.’s plant in China

A view of registered office of Berger International Ltd., Singapore

A view of Berger Paints Jamaica Ltd.’s plant.

Asian Paints (India) Ltd.


annual report 2004-2005
product portfolio

Interior Wall
Finish Matt

Tractor Emulsion
Smooth Wall Finish

Premium Emulsion

Elastomeric Hi-Performance
Exterior Paint

Royale Luxury
Emulsion

Apcolite Premium
Gloss Enamel

PU Wood Finish
Exterior
13

Interior Wall Paints

Interior Wall
Finish Lustre Tractor Acrylic
Distemper Washable

Tractor Synthetic
Distemper Washable
Exterior Wall Paints

Utsav Distemper

Elastomeric Hi-Performance
Exterior Paint Elastomeric Hi-Performance
Exterior Paint
Apex textured Exterior
Emulsion

Utsav Acrylic
Distemper

Wood and Metal Paints

Utsav Enamel

Apcolite Premium Satin


Gattu Synthetic Enamel
Enamel

Wood Finishes

Touch Wood

PU Wood Finish Melamyne


Asian Paints (India) Ltd.
Interior
annual report 2004-2005
opportunities

Asian PPG Industries Limited, a joint venture between Asian


Paints (India) Limited and PPG Industries Inc., USA, has
continuously outpaced industry growth for the last two years.
In just eight years since inception, the Company has
emerged as the second largest automotive coatings
supplier in the country.

Coatings for the automotive industry fall under two segments


viz., the OE (original equipment) and the refinish segment.
For the OE segment, the Company supplies coatings
directly to automobile, two wheeler and tractor manufacturers
at their manufacturing facilities.

The refinish segment is distribution led and in many


respects similar to the Asian Paints Decorative
coatings business. Aspa and Apca – the alkyd
resin and nitrocellulose based refinish paints service the
conventional end of this market. At the high end is the
polyurethane range, which presently has two PPG
brands, D e l t r o n a n d B i l u x . While Deltron is the
premium brand, Bilux is the economy brand of the Company.
Asian PPG Industries Limited also has the ‘Harlequin’
range from PPG, which gives eight different tones when
viewed from different angles.

The joint venture leverages strengths of both PPG Industries


and Asian Paints and it is for this reason that in such a
short time it has evolved into a leading automotive coating
supplier in the country.
15

The non-auto industrial coatings segment consists of the Protective coatings


following:
Ø Protective coatings
Ø Road marking coatings
Ø Floor coatings
Ø General industrial coatings
Ø Powder coatings
To Asian Paints, these provide yet another opportunity to
demonstrate its growing reputation as a pioneer of
Floor coatings
innovative products in a high growth market. Asian Paints
Industrial Coatings Limited (APICL), a wholly owned
subsidiary of Asian Paints (India) Limited (APIL) services
the requirements of the powder coatings segment and
the rest of the segments are serviced by APIL.

APICL has entered into a technology agreement in March,


2004 with Canada based Protech Chemicals, one of the
top ten powder coating companies in the world. APICL
services the powder coatings business through its products Road marking coatings

under the two brands Apcoshield and Hawcoplast.

Other industrial product offerings include the Metacare


range of industrial coatings servicing a range of industrial
applications, Apcoflor range of floor coatings and hot melt
thermoplastic road marking coatings.

Asian Paints (India) Ltd.


annual report 2004-2005
global presence

JAMAICA
BARBADOS
TRINIDAD & TOBAGO

CARIBBEAN
17

EGYPT
BAHRAIN
UAE NEPAL
CHINA
MIDDLE EAST OMAN BANGLADESH

INDIA MYANMAR
THAILAND SOUTH EAST ASIA
SRI
LANKA MALAYSIA

SINGAPORE

SOLOMON ISLANDS

SAMOA

VANUATU FIJI
TONGA
AUSTRALIA

SOUTH PACIFIC

Regions Countries Operating Company


South Pacific Australia, Fiji, Solomon Islands, Samoa, Asian Paints and its subsidiaries
Tonga, Vanuatu
South East Asia China, Malaysia, Myanmar, Singapore, Berger International and its
Thailand subsidiaries
South Asia India, Bangladesh, Nepal, Sri Lanka Asian Paints and its subsidiaries
MIddle East Bahrain, UAE Berger International and its
subsidiaries
Oman Asian Paints and its subsidiaries
Egypt SCIB Chemical
Caribbean Barbados, Jamaica, Trinidad & Berger International and its
Tobago subsidiaries
Berger International Ltd. has no operations in India

Asian Paints (India) Ltd.


annual report 2004-2005
directors’ report

Dear Members,
Your Directors have pleasure in presenting the 59th Annual
Report of the Company and the audited accounts for the
financial year ended 31st March, 2005.

COMPANY PERFORMANCE
FINANCIAL HIGHLIGHTS
(Rs. in Millions)
APIL AP Group Consolidated
2004-2005 2003-2004 2004-2005 2003-2004
GROSS SALES 23,388 20,260 29,853 25,729
Operating Profit 3,254 2,912 3,675 3,235
Less : Interest 28 53 108 152
Less : Depreciation/Amortisation/Impairment 476 480 614 628
Add : Profit/(Loss) from associate — — 2 39
Profit Before EOI, Goodwill Amortisation and Tax 2,750 2,379 2,955 2,494
Less : Extraordinary item (EOI) 42 68 — —
Less : Goodwill Amortisation — — 77 78
Profit Before Tax 2,708 2,311 2,878 2,416
Less : Provision for Current and Deferred tax 970 836 1,061 941
Profit After Tax 1,738 1,476 1,818 1,475
Add/(Less): Prior period items (3) 2 (5) 2
Net Profit after prior period items 1,735 1,478 1,813 1,477
Less : Minority Interest — — 72 28
Attributable to shareholders of the Company 1,735 1,478 1,741 1,449
Add : Balance brought forward from the previous year 820 720 820 646
Add : Balance brought forward of Pentasia Investments Ltd.,
on merger — 8 — —
DISPOSABLE PROFIT 2,555 2,206 2,561 2,095
That the Directors recommend for appropriation as under:        
Dividend - Interim 384 336 384 336
- Final 528 480 528 480
Tax on dividend 125 104 130 104
Transfer to General Reserve 518 466 520 355
Balance carried to Balance Sheet 1,000 820 1,000 820
19

The detailed analysis on the performance of the Company is ASIAN PAINTS INDUSTRIAL COATINGS LIMITED
discussed in Management Discussion and Analysis.
Asian Paints Industrial Coatings Limited (APICL), a wholly
Pursuant to Accounting Standard (AS 28) – Impairment of Assets owned subsidiary of the Company, reported Profit Before Tax
issued by the Institute of Chartered Accountants of India, your of Rs. 9.97 million in 2004-2005 as compared to Rs. 4.46
Company made an assessment for any indication of impairment million in 2003-2004.
loss on fixed assets as at 1st April, 2004. The Company has During the year, APICL acquired land in Baddi near
adjusted an amount of Rs. 291.42 million (Gross – Rs. 454.45 Chandigarh, at an outgo of Rs. 0.90 million by acquiring
million less Deferred Tax Credit – Rs. 163.03 million) against the 100% equity of Surya Gel Caps Ltd., for adding to its capacity
opening balance of revenue reserves, being the impairment loss in powder coatings to cater to an increase in demand. The
pertaining to prior periods. The Company has also increased the name of the Company was subsequently changed to Surya
rate of depreciation of certain classes of fixed assets and the Powder Coating Ltd.
above has been dealt with in accordance with Accounting
Standard (AS 6) - Depreciation Accounting based on Management Discussion and Analysis annexed to this Report
management’s assesment of the useful lives of such assets. Details deals with APICL under the heading – Industrial Paints.
of the provision for impairment loss on fixed assets and increase TECHNICAL INSTRUMENTS MANUFACTURERS
in rate of depreciation are stated in Note 19 of Schedule `M’-B, (INDIA) LIMITED
being Notes on Balance Sheet and Profit and Loss Account.
Your Company holds 100 per cent of the equity interest in
CONSOLIDATED ACCOUNTS Technical Instruments Manufacturers (India) Limited (TIM).
In respect of subsidiaries in India and abroad, both direct TIM owns the building which houses your Company’s
and indirect, your Company has applied for approval from corporate office. It has no other income except the rent it
the Department of Company Affairs, Ministry of Law, Justice receives from your Company.
& Company Affairs, Govt. of India, exempting compliance JOINT VENTURE WITH PPG INDUSTRIES, INC. –
with the provisions of Section 212(8) of the Companies Act, ASIAN PPG INDUSTRIES LIMITED
1956. Subsequent to the date of this report, the Company
Asian PPG Industries Limited, a 50:50 joint venture between
has received approval from the government.
Asian Paints (India) Limited and PPG Industries, USA saw yet
In terms of approval granted by the Central Government under another year of good performance. Both sales and profits
Section 212(8) of the Companies Act, 1956, copies of the have seen good growth in the current year. The Joint Venture
Balance Sheet, Profit & Loss Account, Report of the Board of Company has paid an interim dividend of 10 % for the
Directors and Report of the Auditors of Subsidiary Companies financial year 2004-05 in March 2005. In May 2004, it also
have not been attached to the Balance Sheet of the Company. paid a dividend of 10% for the financial year 2003-04.
The Company will make available these documents/details INTERNATIONAL OPERATIONS
upon request by any member of the Company interested in
obtaining the same. Pursuant to the approval, a statement of During the year 2004, sales of international operations grew
the summarised financials of all the subsidiaries is attached by 16.7% to touch Rs. 4956 million and crossed US $100
along with the consolidated financial statements. Pursuant to million.
Accounting Standard (AS 21) issued by the Institute of Berger International Limited (BIL) a subsidiary of your
Chartered Accountants of India, Consolidated Financial Company and listed on the Singapore Stock Exchange
Statements presented by the Company include the financial performed satisfactorily during the year. Revenues of BIL grew
information of all its subsidiaries. by 10.9% to Singapore $ 122.33 million (equivalent to
DIVIDEND Rs. 3244 million). BIL reported a profit of S $ 2.2 million
(equivalent to Rs. 58 million) in 2004 as against a profit of
The Company declared an interim dividend of Rs. 4.00 per S $ 2.95 million (equivalent to Rs. 78 million) in 2003.
equity share in October, 2004. Your Directors recommend Lower profits are mainly due to additional provisions for
the payment of a final dividend of Rs. 5.50 per equity share. inventories and receivables made during the year in order
The total dividend recommended for the year under review to align with the group accounting policies.
comes to Rs. 9.50 per equity share as against Rs. 8.50 per
equity share declared for the previous year. The final dividend Another subsidiary of your Company, SCIB Chemical S.A.E.,
Egypt, reported a profit for the first time after its acquisition
on equity shares, if approved, would amount to Rs. 601.55
in 2002.
million (including corporate dividend tax of Rs. 73.99 million)
and will be paid to those members whose names appear on Your Company divested its total investment of 89.6% equity
the Register of Members on 27 June, 2005. in the Mauritian subsidiary to two existing shareholders
Asian Paints (India) Ltd.
annual report 2004-2005
of the subsidiary at a total consideration of Mauritius during the year and with this, the total amount of deferment
Rs. 5,00,000/- (equivalent to Rs. 0.76 million ). The availed up to 31 March, 2005 is Rs. 363.60 million.
balance investment of Rs. 43 million (after adjusting a sum
The Company also continues to avail of sales tax deferment
of Rs. 68 million provided last year for permanent
benefit for the expanded capacity at Kasna for which eligibility
diminution) net of sale consideration of Rs. 0.76 million is
certificate for Rs. 254.30 million has been received. A sum
booked to the Profit and Loss Account of your Company.
of Rs. 53.31 million has been availed during the year and
BIL has provided for a permanent diminution in the value of with this, the total amount of deferment availed up to
its investments in Malaysia and Myanmar due to accumulated 31 March, 2005 is Rs. 106.71 million.
losses.
FIXED DEPOSITS
Asian Paints (International) Ltd., a 100% subsidiary of your
Fixed deposits from public and shareholders stood at
Company has provided for a permanent diminution in the
Rs. 3.22 million at the end of the year. A sum of
value of its investment in Sri Lanka due to erosion of net
worth. Rs. 0.78 million from 55 depositors pertains to deposits that
have not been claimed or for which disposal instructions
The Management Discussion and Analysis has dealt with have not been received by the Company. Since close of the
the International Business in detail. year, no deposits have been repaid.
PAINT PLANT INSURANCE
In the last annual report, it was mentioned that your Company All the insurable interests of the Company including
is setting up a paint plant with an ultimate capacity of 100,000 inventories, buildings, plant and machinery and liabilities
KL per annum in phases at Sriperumbudur near Chennai with under legislative enactments are adequately insured. Loss of
an initial capacity of 30,000 KL per annum. Your Directors profit risk for financial year 2004-2005 was self insured.
are happy to inform you that the plant commenced production
on 20th January, 2005 well in time and within the budgeted CONSERVATION OF ENERGY AND TECHNOLOGY
cost. ABSORPTION

INDUSTRIAL COATINGS PLANT Particulars in respect of conservation of energy and


technology absorption by the Company as per Section 217(1)
Given the sharp growth in sales over the past few years and (e) of the Companies Act, 1956, are given as Annexure to
the forecast for the future, your Company has decided to set this report in Form A and B respectively.
up a greenfield and dedicated industrial coatings
manufacturing facility at Taloja, Maharashtra. The Plant which SAFETY AND ENVIRONMENT
will be set up in two phases, will have an initial capacity to Your Company started implementing the British Safety Council
produce 14,000 KL per annum of industrial paints. This Standards at all its paint manufacturing locations about three
facility will help in meeting the specific requirements of years ago. The Company’s good performance in the area
industrial customers and further enhance servicing capability of safety has continued this year as well. Kasna plant which
of your Company. had received Five-Star rating by the British Safety Council
CORPORATE GOVERNANCE last year was also awarded the “Sword of Honor” in 2004.
All four paint plants of the Company have now been awarded
The Company continues to comply with the requirements of
the “Sword of Honor” in their first attempt.
the Listing Agreement with the Stock Exchanges where the
Company’s shares are listed. The Management Discussion The Company’s new paint plant at Sriperumbudur is equipped
and Analysis and the report on Corporate Governance are with state of the art safety and environmental infrastructure.
included as a part of the Directors’ Report.
Your Company, as an organisation has always been making
A certificate from the Auditors of the Company regarding a proactive effort on environmental management and views
compliance with the conditions of Corporate Governance conservation of resources as a driver of efficiency and
as stipulated under Clause 49 of the Listing Agreement is productivity. The Company’s four paint plants and the two
attached to this report. chemical plants have the ISO 14001 certification for environment
SALES TAX DEFERMENT BENEFIT management standards.

The Company continues to avail of sales tax benefit at FOREIGN EXCHANGE EARNINGS & OUTGO
Patancheru plant for the expanded capacity under Target 2000 Details of expenditure and earnings in foreign currencies
scheme, for which eligibility certificate has been granted for are given in Notes B -12 and B -13 respectively of Schedule
Rs. 407 million. A sum of Rs. 81.55 million has been availed ‘M’ to the financial statements.
21

PERSONNEL Shri Manubhai G. Patel resigned from the Directorship with


Industrial relations during the period were cordial and effect from 25 March, 2005 due to personal reasons and
peaceful. Negotiations for the three year settlement with the the Board accepted his resignation with regret.
union at Mumbai Plant are in progress. The Board places on record its appreciation of the invaluable
Information as per Section 217 (2A) of the Companies Act, services rendered by late Shri K. Rajagopalachari and
1956 read with the Companies (Particulars of Employees) Shri Manubhai G. Patel.
Rules, 1975, forms part of this report. Ms. Tarjani Vakil, Shri Dipankar Basu, and Shri Deepak
CHANGE OF NAME Satwalekar retire by rotation at the conclusion of this Annual
General Meeting and being eligible, offer themselves for
The overseas acquisitions have put the Company on the reappointment. Appropriate resolutions for their appointment
global map. The Company, through its subsidiaries, is are being placed before you for your approval at the
competing in highly competitive markets dominated by well forthcoming Annual General Meeting.
known international brands. The Company’s strength in
logistics and distribution networking is ably supported by The Board of Directors at its meeting held on 11th May, 2005
right technology and prudent financial management have revised the commission payable to Shri Ashwin Choksi,
practices. The Company’s growth is not confined solely to Chairman, Shri Ashwin Dani, Vice Chairman and Managing
the boundaries of Indian markets. The Company has drawn Director and Shri Abhay Vakil, Managing Director with effect
up ambitious plans for attaining and sustaining leadership from 1st April, 2005. The necessary resolutions for the revision
status in international markets in which it operates and in in commission are being placed before you for your approval
the light of this, it is appropriate to change the name of the at the forthcoming Annual General Meeting.
Company to ‘Asian Paints Limited’.
COMMITTEES OF THE BOARD
The process of passing a Special Resolution under Section
21 of the Companies Act, 1956 by way of postal ballot under The Audit Committee, the Remuneration Committee, the Investor
Section 192A of the Companies Act, 1956, seeking Grievance Committee and the Share Transfer Committee have
shareholders’ consent for change of name of the Company been reconstituted during the year. The Corporate Governance
has been initiated. Section appended to this report contains the necessary details
of the aforementioned committees.
DIRECTORS’ RESPONSIBILITY STATEMENT
AUDITORS
Pursuant to Section 217(2AA) of the Companies Act, 1956 The Company’s Auditors, M/s. Shah & Co., Chartered
the Directors confirm that : Accountants, retire and are eligible for reappointment. Your
• In the preparation of the annual accounts, applicable Directors commend their appointment for the ensuing year.
accounting standards have been followed along with COST AUDITOR
proper explanations relating to material departures.
The Company has received the approval of the Central
• The accounting policies have been selected and applied
consistently and the judgements and estimates made, Government for appointment of Shri Damji Keshavji Visariya as
are reasonable and prudent, so as to give a true and Cost Auditor to conduct the audit for the financial year
fair view of the state of affairs of the Company at the 2004-2005.
end of the financial year and of the profit or loss of the APPRECIATION
Company for that period.
Your Directors wish to place on record their appreciation of
• Proper and sufficient care has been taken for the the employees at all levels for their dedicated service and
maintenance of adequate accounting records in contribution to the growth and prosperity of the Company.
accordance with the provisions of the Companies Act,
1956, for safeguarding the assets of the Company and Your Directors also wish to place on record their appreciation
for preventing and detecting fraud and other irregularities. of banks and other financial institutions, shareholders, dealers
and consumers for their wholehearted support.
• The annual accounts have been prepared on a going
concern basis. FOR AND ON BEHALF OF THE BOARD
DIRECTORS
Your Directors report with deep regret the sad demise of
Shri K. Rajagopalachari, Director of the Company on ASHWIN C.CHOKSI
14 March, 2005. He will be remembered for his rich CHAIRMAN
contribution to the Company. Mumbai: 11 May 2005.

Asian Paints (India) Ltd.


annual report 2004-2005
management
discussion & analysis
From all indications, the Indian Economy did fairly well during ASIAN PAINTS (INDIA) LIMITED GROUP : CONSOLIDATED
2004-05. While agriculture declined marginally by 2%, industry (AP GROUP)
and services grew at an estimated 7.1% and 8.9% respectively. • Net Sales and Operating Income for the group has increased
Accordingly, India is expected to have had a 6.9 % real GDP growth by 15.4% from Rs. 22,179 million in 2003-04 to Rs. 25,605
in 2004-05. This is well below the 8.0% recorded in the previous million in 2004-05.
year, largely due to the poor performance of the agricultural sector.
• Profit Before Tax and amortization of goodwill for the group
Even so, India was among the fastest growing large economies in
has increased by 18.5% from Rs. 2,494 million in 2003-04 to
the world. Impressive as the growth may be, in comparison to many
Rs. 2,955 million in 2004-05.
other countries, the economy continues to perform below its
potential due to the halting pace of reforms and slow progress on • Profit attributable to shareholders (after tax and minority interest)
infrastructure development. A good example is the introduction of has increased by 20.2% from Rs. 1,449 million in 2003-04 to
Value Added Tax (VAT); talked about for many years, it was finally Rs. 1,741 million in 2004-05.
introduced in only some states and that too, with inadequate • Return on Capital Employed was 31.4% in 2003-04 and has
preparation. However, even if the economy performs below increased to 34.6% in 2004-05.
potential, sustained growth will lead to greater business confidence. • Return on Net Worth was 28.8% in 2003-04 and has increased
2004-05 was different from the recent past, in that inflation and to 31.7% in 2004-05.
shortage of materials were significant. Crude oil was the main • Basic and diluted Earnings Per Share (EPS) have increased from
cause. Prices of crude oil were extremely volatile during the year. Rs. 15.11 in 2003-04 to Rs. 18.15 in 2004-05.
Fuelled by the price of crude and its derivatives, prices of many raw
materials and packing materials used by your Company witnessed
Chart A : Share of Group Sales
an unanticipated and large surge. Given these circumstances, Asian
Paints had a fairly good year. Net sales and operating income of the
Company have grown satisfactorily. We were able to maintain
excellent control on costs and have succeeded in growing post-tax
profit of the standalone entity by 17.4%.
We give below a snapshot of the salient features of the Company’s
performance during 2004-05 as a stand alone entity as well as the
consolidated group.
ASIAN PAINTS (INDIA) LIMITED: STAND ALONE
• Net Sales and Operating Income have increased by 14.4%
from Rs. 16,966 million in 2003-04 to Rs. 19,415 million in
2004-05.
• Revenue (net of discounts and excise) from the paint segment
has grown by 14.2% from Rs. 16,435 million in 2003-04 to
PAINTS
Rs. 18,765 million in 2004-05.
• Profit Before Tax and Extraordinary item has increased by The Company’s paints business in India consists of Decorative and
15.6% from Rs. 2,379 million in 2003-04 to Rs. 2,750 million Industrial Coatings. In 2004-05, these accounted for 78% of the
in 2004-05.
group sales. We estimate that the local market for all paints including
• Profit After Tax (PAT) has increased by 17.4% from Rs. 1,478
million in 2003-04 to Rs. 1,735 million in 2004-05. cement paints and other powder products manufactured by all

• Return on Capital Employed was 37.7% in 2003-04 and has companies big and small would have been around Rs. 82 billion in
increased to 41.5% in 2004-05. 2004-05. Chart B shows APIL paint sales over the last five years.
• Return on Net Worth was 29.3% in 2003-04 and has Growth of the decorative paints segment has been lower than the
increased to 31.4% in 2004-05.
growth of the Industrial segment. The growth in Industrial products is
• Basic and diluted Earnings Per Share (EPS) have increased
led by the growth in the Automotive Original Equipment sector and
from Rs. 16.12 in 2003-04 to Rs. 18.53 in 2004-05.
in powder coatings.
23

Chart B : APIL Paint Sales (Gross) After a sluggish start to the year, we had an excellent season period
from August to November. This also coincided with the period of
shortages which was exacerbated by the transporters’ strike at the
end of August. Your Company was able to cope with the situation,
thanks to its very capable and flexible Supply Chain. As stated in the
Annual Report for 2003-04, we had resolved to be aggressive so as
not to concede space to competition and to ensure that we got good
growth in the large and important segments of Distemper and
Enamels. Thus, the price increases that became necessary due to
inflation were postponed to post Diwali and effected from the 1st of
December, 2004. Due to these factors, growth during 2004-05 was
volatile quarter on quarter.

Your Company is the leader in Interior wall finishes and has an entire
range of products for this segment. During 2004-05, we extended
Utsav Acrylic Distemper throughout the country as the economy
DECORATIVE PAINTS
Distemper, aggressively pushed Tractor Emulsion to upgrade the market,
Decorative paints accounts for over 75% of the overall paint market introduced extremely attractive dark shades in the high priced emulsion
in India. In this segment, your Company has been a leader for almost product range and stepped up marketing activities. As a result, we had
four decades. Decorative paints include Interior and Exterior Wall a robust growth in the Distemper segment after a gap of some years
finishes, Enamels, Wood Finishes and ancillary products such as and excellent growth in the emulsion category as a whole.
Primers, Putty etc. Decorative paint sale in India accounts for about
While we will continue to face competition from lower priced products
70% of the entire group’s sales in 2004-05. Early estimates place
from large companies and from a large number of regional players
the overall Decorative paints market growth including the small and
in the Distemper category which we dominate, we believe that the
medium scale segment in India at about 11-12% in volume and
strategy shift undertaken is in the right direction.
marginally higher in value. Market conditions were, on the whole,
The fastest growing segment in Decorative products is undoubtedly
good. There was robust demand in most parts of the country, especially
Exterior Wall Finishes. Your Company has been the principal driver
during the season period around the festival ‘Diwali’. The off-take
of the growth in this segment ever since it launched its two winning
during the fourth quarter was affected due to the announcement of
products, Apex and Ace. Apart from products of very good quality,
the introduction of VAT from 1st April, 2005. As the rules were
aggressive marketing activity to improve consumer awareness for
unclear regarding credit for tax on goods purchased prior to
usage of quality emulsion paints on the exterior surfaces has yielded
1st April and there was to be a drop in effective tax in many parts of
excellent results. Your Company has continued to expand its portfolio
the country, dealers reduced their off-take resulting in higher inventory
of Exterior products. Apex Ultima, a premium product was launched
as on 31st March, 2005. The reduction in tax rate was as high as
with a novel warranty scheme in Kerala. This product along with
5.9 % in Karnataka, 4.75% in Kerala and 3.3% in Maharashtra. The
warranty is being extended to the rest of the country. Ace Supreme, a
slowdown in the last quarter would have impacted all trade oriented
high-end version of Ace, has been introduced very recently in select
sellers. However, the introduction of VAT is expected to be beneficial
markets. Exterior Wall finishes performed exceedingly well during
in the long run for the economy and your Company expects that
the year. With a full range of these products, we were able to improve
once all states implement the new system, which is clear and uniform
upon our already strong position in the market.
and the trade gets used to VAT, the benefits will flow in.

Asian Paints (India) Ltd.


annual report 2004-2005
The enamel segment is by far the largest segment, which has been SUPPLY CHAIN
growing slower than Decorative paints as a whole for some years Your Company has been justifiably proud of its supply chain which
now. This is because it is being replaced by other materials on uses contemporary technologies to integrate its plants, contract
hoardings, signboards and the like. Aggressive marketing and pricing manufacturers, regional distribution centres and branches. This supply
policies coupled with extension of Utsav Enamel, an economy product, chain was severely tested during the year that went by when there
enabled us to grow well in the category. was a transport strike and shortage of materials just as the season
Your Company’s Colour World initiative has enabled us to bring to was getting underway. The integrated supply chain responded
the consumer a very large range of shades in several products. effectively and with supply chain management tools providing the
Penetration has increased significantly with the addition of 1200 ability to make rapid changes, service levels could be maintained.

Colour Worlds during 2004-05. We today have close to 5500 As reported last year, your Company undertook setting up of a new
Colour Worlds across the country and Colour World dealers account plant at Sriperumbudur, near Chennai. Construction began in March
for over two-thirds of the Company’s total Decorative sales. The 2004 and was completed in record time with production commencing
company has successfully secured economies of scale not only in the in January 2005. This first phase has a capacity of 30,000 KL per
cost of equipment but also in maintenance charges so that dealers annum. This will be expanded in phases to 100,000 KL per annum.
find it more and more attractive to install Colour World in their The facilities at the Sriperumbudur Plant are contemporary by world
shops. The availability of a range of products from distempers to high standards and will enable extremely rapid ramp up of capacity. The
price emulsions in a very large number of shades, including new “right first time” capability that was aimed for in the plant has been
uniquely formulated dark shades, at 5500 installations across the fully secured. This plant will manufacture only emulsion paints and is
country has given us great strength. expected to help us continue to grow rapidly in this segment.

Asian Paints Home Solutions is a unique and complete paint solution Our supply chain has focused on several areas. By sweating
for customers. It has been extended to Ahmedabad and Pune during the existing assets, we have succeeded in postponing capital
course of 2004-05. The effort here is to provide service to individual expenditure for several years. During the year, we have received
household consumers and the company takes particular care to provide permission to raise production at Kasna to 80,000 KL per annum.
high quality of service. Service is measured objectively by a professional Thus, with only modest capital expenditure we now have inhouse
agency and we track customer satisfaction every month. We believe production capacity of 270,000 KL per annum plus the new capacity
that this service adds to the strength of the Asian Paints brand. at Sriperumbudur.

Due to the sharp rise in the price of crude and its derivatives, prices of INDUSTRIAL COATINGS
many raw materials and packing materials witnessed an upward swing. Industrial Coatings are classified into automotive and non-automotive
Apart from petroleum derivatives, the prices of titanium dioxide also industrial paints. This market is catered to by three entities: the parent
went up due to the gap between the supply and demand widening due Company Asian Paints (India) Limited (APIL), its subsidiary company
to robust growth in many world markets. Inflation was accompanied Asian Paints Industrial Coatings Limited (APICL) and the joint venture
by shortages in several materials. This was particularly acute during Asian PPG Industries Ltd. Together, these contribute to around 8% of
the September – November period, which also impacted service levels the group’s sales in 2004-05. While Asian PPG Industries Ltd., caters
to a small extent. to the automotive coating segments, the wholly owned subsidiary
The Company’s management believes that robust growth is of prime APICL services the powder coatings segment. APIL services the
importance and while we possess strength in most segments of the remaining non-auto industrial coating segments viz., protective
market, our strategies need to be continuously fine-tuned so that we coatings, road markings, floor coatings and general industrial liquid
remain agile and focused. paints.
25

Given the extremely good sales growth witnessed by the Company in


the last few years and continued buoyancy expected in the industrial
Chart C :Total Sales of Industrial Paints*
coatings segment, your Company has decided to invest in a greenfield
manufacturing facility at Taloja, Maharashtra dedicated exclusively
for Industrial Coatings. The plant will be set up in two phases to have
a final capacity of 30,000 KL per annum.

ASIAN PAINTS INDUSTRIAL COATINGS LIMITED (APICL)

APICL, the Company’s wholly owned subsidiary which services the


requirements of powder coating customers in the country registered
an impressive net sales growth of 23%.

APICL has a technology collaboration with Canada based Protech


Chemicals Ltd., one of the top ten powder coating companies in the
world. The process of technology absorption is well underway and
several products based on Protech technology have been developed
at APICL. Trials for commercialisation of these products have

*includes 100% sales of Asian PPG Industries Ltd.


commenced. Simultaneously, in-house R&D efforts at APICL have
continued and efforts to enter into specific large OE accounts have
borne fruit. The combination of inputs from Protech and in-house
With the automobile industry continuing on its growth trajectory, white
R&D efforts will enable APICL to provide customers with state of the
good manufacturers registering good growth and the focus on enhancing
art technology products for existing and new applications.
the road network in the country, the Company’s overall performance in
industrial coatings has been commendable. The group’s total sales of With the demand for Powder Coatings expected to grow at a healthy

industrial coatings in India grew by 35%. Given below is the detailed pace, the Company has decided to build a second manufacturing

performance of industrial coatings for 2004-05. facility for Powder Coatings at Baddi in Himachal Pradesh. The new
facility will have a capacity of 6500 MT and will be set up in two
INDUSTRIAL COATINGS – APIL
phases. The first phase is expected to be commissioned in the last
The industrial coatings market where APIL operates is estimated to
quarter of financial year 2005-06.
have grown by around 15% during the year. APIL industrial coatings
ASIAN PPG INDUSTRIES LIMITED
has registered a value growth of 48%, due to strong growth in the
protective coatings and road marking segments, which have grown Asian PPG Industries Limited, the 50:50 joint venture between Asian

by 50% and 60%, respectively. While we are the second largest Paints and PPG Industries, saw yet another year of vigorous growth.

player in protective coatings in the country, we have also emerged as The venture benefitted from the excellent performance of the

the second largest player in road marking paint in just a few years of automobile industry during the year. Besides the impact of increased

entering this segment. volumes resulting from the growth of the automobile industry, Asian
PPG Industries Ltd., was also able to increase its share of the market
Another segment in which we plan to grow aggressively during the
by offering new and improved products and by providing enhanced
next year is the floor coatings segment. We have, during the year,
value to its customers. Net sales of Asian PPG Industries Ltd.,
through in-house R&D, been successful in commercialising a number
increased by 30% from Rs. 1,570 million in 2003-04 to
of products which constitute the bulk of the range presently in use for
Rs. 2,038 million in 2004-05.
the Indian floor coating market.

Asian Paints (India) Ltd.


annual report 2004-2005
A part of the increase in turnover has come from the improved An initiative to implement Microsoft Navision, an Enterprise Resource
performance of Asian PPG’s refinish business. Aspa, the alkyd refinish Planning (ERP) software has been undertaken across all its overseas
product and Bilux, its second tier PU refinish system have performed subsidiaries. In November 2004, the software was implemented at
very well. The Company was able to improve market share in both the subsidiary in Bahrain and subsequently in four other subsidiaries.
the auto OE and the auto refinish segments. The solution is expected to provide consistent, timely and accurate

The year saw a sharp rise in prices of raw materials resulting from the information that would facilitate better and faster decision making as

twin impact of rising crude prices and increase in world-wide demand. well as improve controls. The implementation of the software at the

Simultaneously, continuing efforts by customers to cut costs limited other overseas subsidiaries will be completed in the next financial

the scope for improved price realisation. This posed a serious year.

challenge to the ability of coating suppliers to sustain margins and During the year, the company divested its 84.2% stake in its subsidiary,
manage earnings growth. Asian PPG has performed creditably in this Berger Paints (Malta) Limited. The Company decided to exit operations
area through aggressive cost management, introducing technically from the country as there was no strategic fit. Subsequent to this
advanced products and by improving the product mix. divestment, a licensing arrangement has been entered into with the

OTHERS Company. Berger International Limited, in which your company has a


controlling stake, has entered into technical support arrangements
APIL also has chemicals businesses consisting of phthalic anhydride
with Dutch Boy Philippines Inc, an associate company and Berger
and pentaerythritol. These two chemicals manufactured at Ankleshwar
Paints (Pakistan) Limited. The latter is not a subsidiary. These agreements
in Gujarat and Cuddalore in Tamil Nadu respectively were set up as
are fee based. Your Company has also divested its 89.6% stake in its
backward integration initiatives in the 90s and are not seen as growth
Mauritius based subsidiary, Asian Paints (Mauritius) Limited to local
drivers for the Company. Today, approximately half of APIL’s chemical
shareholders. The company decided to exit Mauritius as the paint
production is consumed in-house while the remaining is sold in the
market has not been growing for the past few years and the subsidiary
open market.
has been making losses for several years.
The chemicals business fared well during the year registering growth
FINANCIAL PERFORMANCE - INTERNATIONAL BUSINESS
of 18% in external sales from Rs. 637 million in 2003-04 to Rs. 753
During the year under review, the volume of paint sold has increased by
million in 2004-05. The profitability of the chemicals business also
16.5% to 65.3 million liters and the revenue from paint sales has
improved significantly by 145%, mainly driven by higher price
increased by 12.3% to Rs. 4,648 million. Adjusted for the exchange rate
realisation in the phthalic anhydride business.
impact, the value growth would have been 15.6%. The revenue of Berger
The entire chemical business is not seen as core to the company’s
International Limited has increased by 10.9% from
growth and it’s percentage contribution to the overall sales of the
Rs. 2,926 million in 2003-04 to Rs. 3,244 million in 2004-05. SCIB
group is on the decline. We will continue to manage this business for
Chemical S.A.E., Egypt has reported a profit for the first time after its
value.
acquisition in 2002. SCIB Chemical’s revenue has grown by 51% percent
INTERNATIONAL BUSINESS UNIT
from Rs. 320 million in 2003-04 to Rs. 484 million in 2004-05.
During the year under review, the focus of the International Business
Material prices have risen sharply but the impact of higher material
Unit has been on increasing the top line and strengthening its presence
prices has been partly neutralised by improved efficiencies in both
in various markets through initiatives such as installation of dealer
product mix and control of overheads. The strategy has been to gain
tinting systems, launch of new products, market research to enable
market share and minimise upward revision in selling prices. Group
fine tuning of marketing strategies, advertising and promotional
policies in respect of general provisioning for stock and debtors have
activities and improved service levels.
been implemented in stages over the last two financial years. Interest
27

cost is lower due to a combination of finer rates and swapping of high perform well. The subsidiary in Egypt has improved its presence in the
cost borrowings with cheaper alternatives. retail segment by launching new products and has made profits for

With the exit of operations in Mauritius and Malta, the group now the first time since it was taken over in 2002. The subsidiary in Bahrain

operates in five regions across the world i.e., South Pacific, South has taken steps to increase its presence in the Saudi Arabian market

East Asia, South Asia, Middle East and the Caribbean. and augment its manufacturing capacity to meet increasing demand.
The subsidiary in Oman has reported profits for the first time since its
Chart D shows the percentage sales contribution of each region to
inception. The subsidiary in UAE has recorded good revenue growth
overall international operations for 2004-05.
due to increased sales to the domestic decorative projects segment
and exports to the Commonwealth of Independent States (CIS)
Chart D: Regionwise share of International Business sales markets.

SOUTH ASIA REGION

The business unit, after the disposal of the subsidiary in Mauritius in


March 2005, has operations in Nepal, Bangladesh and Sri Lanka.
The volume of paint sold in the region (excluding India) increased
by 24.8% to 5.7 million liters. The revenue from paint sales has
increased by 24.8% to Rs. 400 million. The subsidiary in Nepal
performed well registering impressive sales growth but profits were
lower due to provisioning for stock and debtors. Losses for the year
were lower in both Sri Lanka and Bangladesh. The subsidiary in
Sri Lanka reported a loss due to higher interest cost and provisioning
for doubtful debts.

SOUTH EAST ASIA REGION


CARIBBEAN REGION
The business unit operates in China, Malaysia, Myanmar, Singapore and
The business unit has operations in Jamaica, Trinidad & Tobago and
Thailand. The business unit also has a sales office in Hong Kong. The
Barbados. During the year, the volume of paint sold in the region has
volume of paint sold in the region increased by 10.9 % to 10.8 million
increased by 5.7% to 8.5 million liters. The revenue from paint sales
liters. The revenue from paint sales has increased by 8.6% to Rs. 699
has increased by 1.3% to Rs. 1,342 million. The highlight of the year
million. The subsidiaries in Thailand and Singapore recorded satisfactory
was the improved sales performance by Barbados and Trinidad &
profit performance. The unit in Thailand recorded excellent sales growth.
Tobago. Higher material cost and additional provisioning made by the
Malaysia and Myanmar units are a cause for concern.
subsidiary in Jamaica towards stock obsolescence has impacted profits
SOUTH PACIFIC REGION
of the region. During the year, dealer tinting systems were launched in
all the three subsidiaries. The business unit operates in Fiji, Tonga, Solomon Island, Vanuatu,
Samoa and Australia. The volume of paint sold in the region decreased
MIDDLE EAST REGION
by 3.9% to 4.4 million liters. The revenue from paint sales has
The business unit has operations in Egypt, Bahrain, United Arab Emirates
increased by 6.8% to Rs. 618 million. Barring Australia, all the
(UAE) and Oman. The volume of paint sold in the region has increased
subsidiaries in the region recorded improved sales and profit
by 22.9% to 35.5 million liters. The revenue has increased by 24.9% to
performance. Taubmans Paints (Fiji) Limited and Samoa Paints Limited,
Rs. 1565 million. The subsidiaries in Egypt, Bahrain and Oman have
in their first full year of performance post acquisition by Asian Paints
recorded impressive revenue and profit growth which helped the region
(India) Ltd., recorded improved performance.

Asian Paints (India) Ltd.


annual report 2004-2005
OUTLOOK FOR INTERNATIONAL BUSINESS B. ENVIRONMENT INITIATIVES

While the business unit has performed well in terms of revenue growth, Asian Paints has always taken a proactive stance on
the sharp increase in raw material prices has impacted margins and environmental management and the Company views
profitability in the current year. Raw material prices are expected to be conservation of resources as a driver of efficiency and
buoyant in the next year and efforts will continue to reduce the impact productivity. The Company’s four paint plants and the two
of increasing raw material prices through cost optimisation in all chemical plants have the ISO 14001 certification for
areas. The outlook for international operations for the next financial environment management standards. The Company follows a

year, barring unforeseen developments, is positive. two-pronged approach:

SAFETY, HEALTH AND ENVIRONMENT • ”Waste Minimisation” through waste reduction at source
and recycle of waste.
A. SAFETY AT APIL PAINT PLANTS
• Resource Conservation.
Your Company continues to invest in the area of safety. Due to
this continued focus, Kasna plant which received the Five-Star The organization has been able to reduce waste generation by

rating by the British Safety Council last year was also awarded implementing pneumatic conveying systems for powder raw materials,

the “Sword of Honor” in this year. All the four paint plants in employing superior cleaning systems and carrying out mass balance

India have now been awarded with the “Sword of Honor” in audits for waste minimization. With the help of rain water harvesting
schemes implemented across all the plants and their colonies and
their first attempt. The reduction in the time wasted due to
the implementation of drip irrigation systems and ground water
accidents is given in the tables here in below :
recharging schemes, the company has been able to reduce water
Frequency Rate Severity Rate consumption significantly. Energy audits have been done at all the

Number of reportable lost time injury Man-days lost due to reportable lost
plants to save energy. Implementation of waste recycle schemes have
per million man-hours worked time injury per million man-hours worked enabled all paint plants achieve ‘zero industrial discharge’ capability.
All manufacturing streams now have closed loop recycle schemes in
Ye a r Co. level Ye a r Co. level
place to minimize waste generation.
2000 3.1 2000 93.6
HUMAN RESOURCES
2001 4.4 2001 91.6
To meet the challenges of a constantly evolving environment, we
2002 1.8 2002 57.0 have restructured our training programmes.

2003 1.4 2003 45.4 Training activity is divided in three areas : the ones that support the

2004 1.5 2004 46.7 initiatives of the business units, those that help develop leaders from
within and others that help employees upgrade their skills or acquire
The new paint plant at Sriperumbudur is equipped with state of new skills. Training man-days have increased to over five per executive.
the art safety and environment infrastructure. The plant is A large part of the training is aligned to support initiatives of the
designed for ‘zero-discharge’ of industrial effluent. The plant business units.

has a state of the art effluent treatment system, a reverse osmosis The International Business Unit [IBU] represents a group of individual
plant and a multiple effect evaporator that allows the plant to units, some of which were set up as greenfield units by Asian Paints
recycle more than 99% of the effluent back into the process. while some others were recently added through the acquisition process.
Based on the British Safety Council guidelines, several safety The success of the group, where each unit has its own operating
features have been incorporated in the design of the plant. systems, processes and cultural identity, depends on introduction of
29

common systems, particularly the Performance Management system Community initiatives have also been undertaken in different countries
and a common value system. The Performance Management system by the company’s overseas subsidiaries. Contributions have been made
was upgraded during the year and a variable pay plan introduced to by the group to the International Red Cross to help victims affected by
bring in greater performance orientation. Defining organisational values the Tsunami tragedy. The subsidiaries in the Caribbean, especially

[‘Guiding Principles’] and reaching out to all key managers through Jamaica have supported various educational, cultural and sports

several value workshops has been completed during the year which activities for the development of youth. One major initiative run in

will strengthen the integration process. Jamaica is the adoption of the Rivertown Meadows Early Childhood
Education Centre which has around 120 students aged 3-6 years.
CORPORATE SOCIAL RESPONSIBILITY

Asian Paints approaches Corporate Social Responsibility (CSR) from INFORMATION TECHNOLOGY

the perspective of being a responsible corporate citizen. There has In the last few years, your Company has derived immense benefit
been a continued effort to take up initiatives in various quarters and from reduced working capital, increased transparency in transaction
ensure sufficient resources for the sustenance and continuity of the reporting and greater speed and efficiency in decision making from
same. The Company has identified projects across all its manufacturing the revamp of the Information Technology solutions. The year under

locations in the country primarily in the areas of education, health review has been a year of consolidation as also expanding the scope

care, and rain water harvesting. to better serve the needs of our growing international business. Focus
has been on improving robustness and utilization whilst maximizing
In the area of education, the Company has been involved in supporting
the benefit from information technology solutions.
various schools around its plants including the setting up of the ‘Gattu’
school at Ankleshwar which provides education to around 2,500 In order to reflect the increase in our international presence as well as to
students from various strata of society. In the area of health care, the provide an integrated view from the outside to the Asian Paints group, it
Company continued operating mobile medicare units (MMU) around was felt necessary to have a modern and contemporary web presence
Patancheru (Andhra Pradesh) and Kasna (UP) plants collaborating for corporate and customer information and transactions. A few months
with HelpAge India, an NGO. The Company also took the initiative back, we unveiled the new web presence. In months to come, we will be

of treating people with cataract and successfully got around 460 rolling out new additions, such as a painting tool, web store and decor

patients operated at recognised eye-hospitals. related information. As mentioned elsewhere in this report, a common
ERP solution is being implemented at all our overseas units. This is being
Another part of the company’s CSR initiative is the harvesting of rain
done so that our overseas units have the ability to speedily adapt to
water. In Mumbai, which faces a severe water shortage problem, our
changes in the environment and deliver value to our customers.
Bhandup plant pursued the objective of increasing awareness about
rain water harvesting. Before taking the concept to the masses, we Several improvements have been made in our backend infrastructure

first implemented the rain water harvesting scheme in all our plants to improve our support for new applications and take advantage of

and their residential colonies. The Company organised seminars the improved communication and telecom infrastructure to leverage
information technology.
free of cost to bring about awareness and influence other organisations
to adopt this concept. The Company has designed a rain water RESEARCH & DEVELOPMENT
harvesting scheme for its corporate office in Mumbai, which will be a Research and Development (R&D) plays an important role in
unique example of a commercial building implementing such a project. developing new products and reducing cost by re-engineering
During the year, your Company contributed Rs. 3.5 million to the formulations. R&D operates in tandem with the Company’s long
Prime Minister’s and Chief Minister’s Relief Fund to aid the victims of term strategy and demands of the market place. In the last few years,
the Tsunami tragedy. Employees of the Company also contributed our R&D efforts have been focused on developing new exterior
Rs. 1.2 million out of their salary towards this purpose. finishes, economy emulsions, distempers and wood finishes.

Asian Paints (India) Ltd.


annual report 2004-2005
FINANCIALS

ABRIDGED PROFIT AND LOSS STATEMENT Rs. in Millions

APIL AP Group (Consolidated)

2004-05 2003-04 Growth 2004-05 2003-04 Growth

Net sales and operating income 19,415 16,966 14.4% 25,605 22,179 15.4%

Other income 316 217 324 264

Total Income 19,731 17,183 14.8% 25,929 22,443 15.5%

Total Expenditure 16,477 14,271 15.5% 22,254 19,208 15.9%

Operating profit 3,254 2,912 11.7% 3,675 3,235 13.6%

Less : Interest 28 53 -47.7% 108 152 -28.9%

Less : Depreciation/Amortization/

Impairment 476 480 614 628

Add : Profit/(Loss) from associate - - - 2 39

Profit before EOI, Goodwill Amortization

and Tax 2,750 2,379 15.6% 2,955 2,494 18.5%

Less : Extraordinary Item 42 68 - - - -

Less : Goodwill Amortization - - - 77 78 -

Profit Before Tax 2,708 2,311 17.2% 2,878 2,416 19.2%

Less : Provision for Current & Deferred tax 970 836 - 1,061 941 -

Profit After Tax 1,738 1,476 17.8% 1,818 1,475 23.2%

Add/(Less) : Prior period items (3) 2 - (5) 2 -

Net Profit after prior period items 1,735 1,478 17.4% 1,813 1,477 22.7%

Less : Minority interest - - - 72 28 -

Available to shareholders 1,735 1,478 17.4% 1,741 1,449 20.2%

Net Sales and Operating Income for APIL standalone has increased percentage to sales (standalone accounts) increased to 57.5% in
by 14.4% whereas that of the group has increased by 15.4%. The 2004-05 against 55.6% in the previous year. However, the Company
higher growth for the group reflects the good growth in industrial and has minimized the impact of the same through prudent overheads
international revenues. Profit after tax (PAT) has increased by 17.4% management. As a result, Profit Before Tax and Extraordinary item as
and 20.2% for the standalone entity and group respectively. a percentage to sales is marginally higher at 14.2% in 2004-05 as
Raw material prices continued their upward trend in 2004-05, against 14% in 2003-04.
resulting in pressure on gross margins. Material consumption as a
31

Other income in the standalone accounts for year 2004-05 is higher The year-end net working capital trend (measured as “Sales/Net
than the previous year by Rs. 99 million mainly due to dividend received Current Assets”) is as under :
on trade investments and profit on disposal of certain vacant property. Sales/Net Current Assets

The extraordinary item in the standalone accounts of 2004-05 is on


account of the balance loss of Rs. 42 million recognized by the parent
company arising on the sale of investments in its subsidiary – Asian
Paints (Mauritius) Ltd. Out of the total loss of Rs.110 million arising
on sale, an amount of Rs. 68 million had already been recognized in
2003-04 as a provision for diminution in the value of investment.

Efficient working capital management has been a strength of the


Company over the years. However, there has been an increase in
levels of finished good and raw material inventory towards the year-
end in 2004-05 due to VAT related uncertainties and also in
anticipation of higher material prices.

Overall, the Company has improved its financial performance despite margin pressures and year-end VAT uncertainties. The ratios below
summarize the financial performance for the year :

Key Financial Ratios

APIL AP Group
(Consolidated)

2004-05 2003-04 2004-05 2003-04

PBDIT/Sales 16.8% 17.2% 14.4% 14.8%


PBT before EOI/Sales 14.2% 14.0% 11.2% 10.9%
PAT/Sales 8.9% 8.7% 6.8% 6.5%
Return on Average Capital Employed1 41.5% 37.7% 34.6% 31.4%
Return on Average Net Worth1 31.4% 29.3% 31.7% 28.8%
EPS (Rs.) 18.53 16.12 18.15 15.11
Debt : Equity 0.15:1 0.13:1 0.38:1 0.28:1
Interest Cover
(PBIT/Interest) 101 46 28 17

1
Capital Employed and Networth as at 31.03.2005 are after providing for impairment loss.

Asian Paints (India) Ltd.


annual report 2004-2005
RISKS AND OUTLOOK

The overall outlook for 2005-06 is positive. The government’s control across its operations to ensure that all assets are safeguarded
renewed thrust on infrastructure and the continuation of tax incentives and protected against loss from unauthorised use or disposition.
on housing loans will continue to help the paint industry. If the Your Company has well defined independent procedures to execute
monsoons are normal, we expect the rural economy to perform well. financial transactions. Your Company’s internal audit department
For the industrial coatings segment, increasing investments in the continuously monitors the adequacy of internal control processes
development of core infrastructure, increasing industrialization, and across the business units and ensures compliance with regulatory
growing needs for consumer durables and automobiles augur well requirements as well as internal policies. The internal audit also
for the continued growth of this segment. However, the Company is ensures that internal controls and checks and balances in the system
confident that it will grow above industry average due to its forays in are adequate and up-to-date. Internal audits are undertaken on a
fast growing areas like powder coatings and road markings. continuous basis covering both domestic and international operations

APIL continues to see three risks that can affect its performance. with specific focus on processes, risks and statutory compliances. A

Firstly, if input costs continue to rise, pressure on operating margins summary of audit observations and the ‘action taken reports’ are

will continue. Secondly, if India’s GDP growth rate significantly slows regularly placed before the Audit Committee.

down, the industry may not see adequate demand for coatings. Thirdly, CAUTIONARY STATEMENT
if overseas economies in which we have a large presence do not
Statements in this Management Discussion and Analysis describing
perform well, the performance of the international business can be
the Company’s objectives, projections, estimates and expectation
affected.
may be “forward looking statements” within the meaning of applicable
INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY laws and regulations. Actual results might differ materially from those

Your Company is committed to ensuring comprehensive internal either expressed or implied.


Five year review
(Rs. in millions except for per share data, number of employees and ratios)

Results for the Accounting Year 2004-2005 2003-2004 2002-2003 2001-2002 2000-2001

REVENUE ACCOUNT
Gross Sales 23,388.4 20,259.5 18,066.6 15,984.5 14,695.1
Net Sales and Operating Income 19,415.1 16,966.5 15,302.5 13,613.5 12,333.5
Growth Rates (%) 14.43 10.87 12.41 10.38 13.18
Materials Consumed 11,154.0 9,441.5 8,023.5 7,173.6 6,611.6
% to Net Sales 57.45 55.65 52.43 52.70 53.61
Overheads 5,323.3 4,829.6 4,587.7 4,176.8 3,699.4
% to Net sales 27.42 28.47 29.98 30.68 29.99
Operating Profit 3,253.9 2,912.2 2,817.2 2,407.8 2,115.0
Interest Charges 27.5 52.7 83.5 145.8 221.2
Depreciation 476.1 480.1 485.2 447.9 334.9
Profit Before Tax and Extraordinary item 2,750.3 2,379.4 2,248.5 1,814.1 1,558.9
% to Net Sales 14.17 14.02 14.69 13.33 12.64
Extraordinary item 42.3 68.1 --- --- ---
Profit Before Tax and after Extraordinary item 2,708.0 2,311.3 2,248.50 1,814.10 1,558.90
% to Net Sales 13.95 13.62 14.69 13.33 12.64
Profit After Tax 1,738.2 1,475.8 1,433.7 1,153.3 1,063.9
Prior period items (3.3) 2.1 (13.6) (10.2) (8.1)
Profit After Tax and prior period items 1,734.8 1,477.9 1,420.1 1,143.1 1,055.8
Return on average net worth (RONW) (%) * 31.43 29.32 32.01 27.82 27.47
CAPITAL ACCOUNT
Share Capital 959.2 959.2 641.9 641.9 641.9
Reserves and Surplus 4,763.0 4,356.2 4,124.3 3,463.7 3,470.1
Deferred Tax Liability (Net) 305.4 486.6 581.6 611.8 ---
Loan Funds 838.8 704.7 1,036.2 1,107.7 2,268.2
Fixed Assets 3,195.1 3,444.3 3,662.4 3,895.0 3,804.6
Investments 2,584.3 2,424.9 1,476.9 633.4 440.7
Net Current Assets 1,087.0 637.5 1,244.58 1,296.7 2,134.9
Debt-Equity Ratio 0.15: 1 0.13: 1 0.22:1 0.27:1 0.55:1
Market Capitalisation 37,514.2 29,135.6 21,187.8 21,056.2 15,802.6
PER SHARE DATA
Earnings Per Share (Rs.) 18.5 # 16.1 # 14.8 17.8 16.5
Dividend (%) 95.0 $ 85.0 110.0 90.0 70.0
Book Value (Rs.) 59.7 $ 55.4 74.3 64.0 64.1
OTHER INFORMATION
Number of Employees 3,627 3,430 3,400 3,258 3,197

* RONW is calculated after provision for impairment on fixed assets in 2004-2005


# EPS is calculated after adjusting for Bonus issue and the reduction of capital on account of merger of Pentasia Investments Ltd. in accordance with Accounting
Standard (AS 20) - Earnings per share
$ On increased capital

Asian Paints (India) Ltd.


annual report 2004-2005 33
Annexure to Directors’ Report
FORM A FORM B
Disclosure of particulars with respect to Conservation of Energy : Disclosure of Particulars with Respect to Technology Absorption :
Research and Development (R&D)
2004-05 2003-04
A. Power and fuel consumption : 1. Specific area in which R&D is carried out by the Company:
1. Electricity : i) Development of new products and processes related
a) Purchased : to surface coatings and intermediates.
Units (‘000 KWH) 22,836 23,600
ii) Continuous improvement in quality and cost of existing
Total Amount (Rs. in million) 101 105
Rate/Unit (Rs.) 4.42 4.45 products.
b) Own Generation : iii) Upgradation of products and processes to improve
Through Diesel Generator - environmental and safety concerns.
Units (‘000 KWH) 1,929 2,148
Units per ltr. of diesel oil 2.90 3.26 iv) Identification of alternate raw materials and vendors
Cost/unit (Rs.) 8.17 6.57 enabling quality improvement, cost benefits, supply
Natural Gas ---- chain flexibility and crisis management.
Units (‘000 KWH) 7,040 5,556
Units per cubic nm. 3.25 3.35 v) Development of analytical test methods,
Cost/Unit (Rs.) 3.12 2.65 characterisation techniques and application essential
2. Coal : for product development, benchmarking, process
(Steam coal used in control and customer services.
Boiler to generate steam
for the process)* 2. Benefits derived as a result of the above R&D:
Quantity (in MTs) 15,210 16,252
Total cost (Rs. in million) 40 31 i) Development of new products such as special effect
Average Rate/MT (Rs.) 2,648 1,886 finish - Royale play, Utsav range of stainers for water
* includes Leco/Raw Lignite based paints and polyester wood finishes.
expressed in equivalent
tons of coal ii) Professional acrylic distemper designed for specific
3. Furnace Oil : customer segment.
Quantity (in MTs) 1,720 1,688 iii) A premium product, AP melamyne gold clear in the
Total Amount (Rs. in million) 38 31 category of acid cure system developed and launched
Average Rate/Kg. (Rs.) 21.87 18.45
in Mumbai market. Similarly a fast drying PU coating
4. Natural Gas :
developed and launched in selected markets.
Quantity (in cubic nm.) 3,045 3,005
Total Amount (Rs. in million) 28 28 iv) Exterior paint with superior features and high
Average Rate/cubic nm. (Rs.) 9.13 9.25 durability under the name Apex Ultima developed and
launched.
B. Consumption per unit of production :
v) Water borne retro-reflective road marking paint
Electricity Furnace Oil Natural Gas Coal commercialised under the brand ‘Apcotrak WBR’.
(KWH/Ton/KL) (Ton/KL) (Ton/KL) (Ton) vi) Epoxy tank lining suitable for usage in contact with
04-05 03-04 04-05 03-04 04-05 03-04 04-05 03-04 potable water and for wet heat resistance up to 150
degree celsius developed for refineries.
Paints,
Enamels vii) Self leveling epoxy floor coating for automotive and
and chemical industries commercialized.
Varnishes
(including viii) Development of products like metallic and pearlescent
Synthetic finish in latex glaze, economy emulsion paint and wall
Resins for putty for overseas subsidiaries. Thermal insulating
captive use) 89 100 41 43 36 40 ---- ---- coating, vintage exterior finish and self leveling epoxy
Phthalic floor coating have been launched in few countries.
Anhydride 36 40 ---- ---- 68 71 ---- ---- ix) Technological assistance provided to Licencees.
Pentae-
rythritol 916 997 1.16 0.02 ---- ---- 3 4

34
Annexure to Directors’ Report
3. Future plan of action: 4. Expenditure on R & D during the year is as follows:
Company will continue efforts towards development of new (Rs. in Millions)
products/product systems for domestic and international
markets meeting the requirements of customer needs, society, 2004-05 2003-04
and continuously improve quality, cost, availability and a) Capital 17.33 3.56
environment. b) Recurring 96.36 75.89
113.69 79.45
Total R & D expenditure as a
percentage of turnover 0.59% 0.47%

Technology absorption, adaptation and innovation:


All developments were done indigenously.
Foreign exchange earnings and outgo:

With the entry and direct presence in several international There is no plan to supply material in the near future to any new
markets the major focus in exports currently is to service the export markets from India. All the new markets would be serviced
needs of the subsidiaries. Hence the exports are primarily to the from the overseas subsidiary closest to the market.
overseas subsidiaries and not to distributors and customers. The
Details of expenditure in foreign currency have been given
main exported materials are raw materials, resins and tinting
separately under Note B-12 in Schedule ‘M’ - Notes to accounts.
colorants. About 20% of exports also include engineering supplies
and marketing material. Going forward, the export growths will
be primarily driven by tinting colorants, where with the focus on
improving the retail presence through introduction of retail tinting
systems, demand for tinting colorants will grow.

For and on behalf of the Board

Mumbai Ashwin C. Choksi


11th May, 2005 Chairman

Asian Paints (India) Ltd.


annual report 2004-2005 35
Annexure to Directors’ Report
Information as per Section 217(2A) read with the Companies (Particulars of Employees) Rules, 1975 and forming part of the
Directors’ Report dated 11th May, 2005 for the year ended 31st March, 2005.
Name Age Designation/ Remuneration Qualifications Date of Expe- Last Employment Held
Nature of Duties Rs. commencement of rience Name of the Company, Designation
employment No. of
years

(a) Particulars of employees employed throughout the financial year and who are in receipt of remuneration of not less than Rs. 2,400,000/- in terms of Section 217(2A)(i):
Shri K. B. S. Anand 49 Vice President - Sales & Marketing 4,994,195 B.Tech., P.G.D.M. 01.06.1979 25 ----
Shri Ashwin C. Choksi 63 Chairman 9,857,179 M.Com. 01.01.1965 40 ----
Shri Manish M. Choksi 38 Vice President - Strategic Planning & IT 2,921,363 B.Chem, Engg., MBA 17.09.1992 14 E.I.Du.Pont De Nemours, Summer Intern
Shri Ashwin S. Dani 63 Vice Chairman & Managing Director 10,045,335 B.Sc.(Hons.), B.Sc.(Tech.),M.S. 01.10.1968 37 Interchemical Corpn., Development Chemist
Shri Jalaj Dani 35 Vice President - International 2,939,943 B.S., S.M. 18.01.1999 12 Gujarat Organics Ltd., Managing Director
Shri Vikram Jaisinghani 42 GM - Manufacturing 2,844,821 B.E., M.F.M. 01.09.1999 19 GE Lighting Ltd., General Manager -
Materials & Sourcing
Shri I. K. Jaiswal 46 Regional Vice President 3,870,261 B.Tech., P.G.D.M. 03.05.1982 23 ----
Shri S. S. Kini 50 Vice President - Supply Chain 5,348,164 B.Tech., P.G.D.M. 01.06.1979 25 ----
Shri Gokul Manjeshwar 50 Financial Controller 3,318,253 M.Com., M.M.S. 15.01.1985 26 Price Waterhouse & Co., Assistant Manager
Shri Jayesh Merchant 47 Vice President - Corporate Finance & 3,827,137 B.Com., A.C.A, A.C.S., L.L.B. 01.11.2002 21 UTV Software Communications,
Company Secretary Director - Finance
Shri P. M. Murty 54 President - Decoratives (India) 6,430,205 B.Sc.(Hons.), P.G.D.M. 03.05.1971 33 ----
Shri Vivek Patwardhan 53 Vice President - Human Resources 3,247,393 B.Sc. (Hons.), M.L.W. 01.03.1984 31 Herbertson Ltd., Personnel Manager
Shri V. S. Ram @ 54 Chief Executive - Asian PPG Industries Ltd. 6,424,446 B.Tech., P.G.D.M. 20.05.1974 30 ----
Shri J. N. Shahani 58 Vice President - Industrial, Penta & Phthalic 5,376,501 B.Chem., Engg. 01.02.1974 34 Resins & Plastics Pvt. Ltd., Plant Supervisor
Shri Vivek Subramanian 41 General Manager - Retail Sales 2,623,799 B.Tech.(Mech.),P.G.D.M. 11.05.1987 18 ----
Shri Amit Syngle 38 General Manager - Marketing 2,583,061 B.E., M.B.A. 01.06.1990 15 Sea Services, Marketing Incharge
Shri Abhay A. Vakil 54 Managing Director 9,935,262 B.Sc.,B.S. 05.08.1974 30 ----

(b) Particulars of employees employed for the part of the year who were in receipt of remuneration at the rate of not less than Rs. 200,000/- p.m. in terms of Section 217(2A)(ii):
Shri Rajiv Kumar Garodia 31 Marketing Manager 318,272 B.E., P.G.D.M. 06.06.1996 7 ----
Shri Nikhil Mathur 37 Finance & Strategic Planning Manager 218,658 B.Com., CA, P.G.D.B.M. 02.06.1993 11 M/s. Ray & Ray, Chartered Accountants
Shri A. V. S. Murthy 67 Vice President - Accounts & Taxation 2,520,283 B.Com.(Hons.), A.I.C.W.A. 15.04.2002 46 Apar Pvt Ltd., Cost & Budget Manager
Shri Girish Pradhan 39 Materials Executive 216,827 B.Com., P.G.D.M 03.03.1987 17 ----
Shri P. Rambabu 37 General Manager - Systems 200,168 B.E., P.G.D.M. 01.06.1990 14 ----
Shri Mahendra Rawat 45 Manager - Product Development 237,436 M.Sc. 20.07.1996 17 Devidayal (Sales) Pvt.Ltd.- Research Chemist
Shri Mayur Toshniwal 36 Purchase Manager 205,744 B.Tech.(Mech.),P.G.D.M. 04.06.1992 11 ----

@ Employee seconded to joint venture company Asian PPG Industries Ltd.

Notes:
1. Nature of employment whether contractual or otherwise:
a. The employment of Shri Ashwin C. Choksi, Shri Ashwin S. Dani and Shri Abhay A. Vakil is contractual for five years and terminable by six months notice on either side.
b. The employment of the remaining persons is contractual and the terms and conditions are subject to the rules and regulations of the Company as in force from time to time.
2. Relatives of Directors.
a. Names of Directors:
Shri Ashwin C. Choksi, Chairman is related to Shri Mahendra C. Choksi, Director of the Company.
Shri Ashwin S. Dani,Vice- Chairman & Managing Director is related to Shri Hasit A. Dani, Director of the Company.
Shri Abhay A. Vakil, Managing Director is related to Shri Amar A. Vakil, Director of the Company.
b. Names of employees:
Shri Jalaj A. Dani is related to Shri Ashwin S. Dani, Vice- Chairman & Managing Director and Shri Hasit A. Dani, Director
Shri Malav Dani is related to Shri Ashwin S. Dani, Vice- Chairman & Managing Director and Shri Hasit A. Dani, Director
Shri Manish M. Choksi is related to Shri Mahendra C. Choksi, Director
Ms. Nehal A. Vakil is related to Shri Abhay A. Vakil, Managing Director
Ms. Amrita A. Vakil is related to Shri Amar A. Vakil, Director
Shri Rupen Choksi is related to Shri Ashwin C. Choksi, Chairman.
The remuneration of Ms. Nehal A. Vakil, Ms. Amrita A. Vakil and Shri Rupen Choksi was less than the limit prescribed in terms of Section 217(2A) for the year. No remuneration has been
paid to Shri Malav Dani, pending statutory approvals.
3. Remuneration includes, salary, dearness allowance, performance incentive, arrears paid, commission, house rent allowance, leave encashment, conveyance allowance, Company’s contribu-
tion to provident fund and superannuation fund, medical and leave travel allowance etc., as well as monetary value of perquisites as per Income Tax Rules. It excludes provision for accrued
leave salary and the Company’s contribution to Gratuity Fund as the same is a lumpsum amount based on actuarial valuation.

For and on behalf of the Board

Mumbai Ashwin C. Choksi


11th May, 2005 Chairman

36
Corporate Governance
Asian Paints’ philosophy has always been to practice the best BOARD OF DIRECTORS
standards of Corporate Governance for the welfare of Composition of Board
stakeholders. The Company lays significant emphasis on the
As on 31 March 2005, the Board comprised of twelve Directors,
principles of accountability, integrity and transparency.
out of whom, six are promoter-Directors. Three of the six
The Securities and Exchange Board of India (SEBI) has prescribed promoter-Directors, including the executive Chairman, are
mandatory standards of corporate governance for all companies whole-time executive Directors, while the other three are
listed on Indian stock exchanges and notified them under Clause non-executive. The remaining six Directors are non-executive
49 of the listing agreement. This chapter, along with chapters and independent.
on Management Discussion and Analysis and Additional
Number of Board meetings
Shareholders Information, constitutes Asian Paints’ compliance
with Clause 49 of the listing agreement. The Asian Paints Board met six times during the year. The Board
meetings took place on 11 May 2004, 28 July 2004,
Asian Paints has already adopted a Code of Conduct which
27 October 2004, 3 December 2004, 19 January 2005 and
lays down the standards of values, ethics and business principles
25 March 2005.
of the Management. Our business strategy and day to day affairs
of the Company are conducted with highest level of compliances,
sincerity and consistency.

Table 1: Details about Asian Paints’ Board of Directors


Name of Director Position Board meetings Board Whether Directorships Memberships
held during the meetings attended in other in board
year attended last AGM companies committees of
incorporated other
in India companies*

Ashwin C. Choksi Executive Chairman/ 6 6 Yes 2 2(1)


Promoter
Ashwin S. Dani Executive Vice-Chairman/ 6 6 Yes 6 4(2)
Managing Director/
Promoter
Abhay A. Vakil Managing Director/ 6 6 Yes 3 3(-)
Promoter
K. Rajagopalachari @ Non-executive 6 4 Yes --- ---
Mahendra C. Choksi Non-executive/Promoter 6 6 Yes 3 1(-)
Amar A. Vakil Non-executive/Promoter 6 5 No 3 ---
Hasit A. Dani Non-executive/Promoter 6 6 Yes 3 ---
Manubhai G. Patel # Non-executive/ 6 5 Yes 2 4(3)
Independent
Tarjani Vakil Non-executive/ 6 6 Yes 4 4(3)
Independent
Dipankar Basu Non-executive/ 6 6 Yes 7 7(4)
Independent
Deepak M. Non-executive/ 6 5 Yes 7 5(2)
Satwalekar Independent
Rajendra A. Shah Non-executive/ 6 5 Yes 15 10(4)
Independent
Swaminathan Non-executive/ 6 3 Yes 3 1(-)
Sivaram Independent
Mahendra M. Shah Non-executive/ 6 6 Yes 4 2(-)
Independent

Notes:
* The figures in parenthesis denote the number of chairmanship(s) of board committees in other companies.
@ Mr. K. Rajagopalachari expired on 14 March 2005.
# Mr. Manubhai G. Patel resigned from the board effective 25 March 2005.

Asian Paints (India) Ltd.


annual report 2004-2005 37
Corporate Governance
Information supplied to the Board Directors with materially significant related party transactions,
pecuniary or business relationship with the Company
The following, inter-alia, is provided to the board as a part of
the agenda papers well in advance of the board meetings or is None of the non-executive Directors of Asian Paints have any
tabled in the course of the Board meetings: pecuniary relationships with the Company except late
 annual budgets, operating plans and budgets, capital budgets, Mr. K. Rajagopalachari who had been appointed as an advisor
for a period of five years with effect from 1 June 2000 and
 quarterly, half yearly and annual results of the Company received a retainer fee of Rs.1,00,000 per month, a Company
and its operating divisions or business segments, car and driver, telephone facilities at home and office, and
 minutes of meetings of the audit committee and other board provision of medical facilities as applicable to executives of the
committees, Company.
 information on recruitment and remuneration of senior He also drew a monthly pension of Rs.50,737.50 as per
officers just below the Board level, Company rules. The appointment of late Mr. K. Rajagopalachari
 materially important show cause, demand, prosecution and had received the approval of the Department of Company Affairs,
penalty notices, Ministry of Law, Justice and Company Affairs, Government of
India, under Section 309 (1)of the Companies Act,1956 (vide
 fatal or serious accidents or dangerous occurrences, 6/33/2000-CLVII of 1.11.2000).
 any materially significant effluent or pollution problems, As required under Accounting Standard 18 (AS-18) transactions
 any materially relevant defaults in financial obligations to with related parties are furnished under Schedule M of the Notes
and by the Company or substantial non-payment for goods to the Accounts. There are no transactions of material nature
sold by the Company, with the promoter Directors or their relatives etc., that may have
a potential conflict with the interest of the Company.
 any issue which involves possible public or product liability
claims of a substantial nature, Disclosures have also been received from the Senior Managerial
 details of any joint venture or collaboration agreement, Personnel relating to the financial transactions in which they or
their relatives may have a personal interest. However, none of
 transactions that involve substantial payment towards these transactions have a potential conflict with the interest of
goodwill, brand equity or intellectual property, the Company at large.
 significant labour problems and their proposed solutions, Remuneration of Directors
 significant initiatives and developments on the human
The executive Chairman and other executive Directors are paid
resource and industrial relations fronts,
remuneration as per their agreements with the Company. These
 sale of a material nature of investments, subsidiaries and agreements are approved by the Board, shareholders and such
assets, which are not in the normal course of business, other authorities as may be necessary. The remuneration structure
 investment of funds of the Company, of the executive Chairman and other executive Directors comprises
salary, house rent allowance, commission, perquisites, contribution
 quarterly details of foreign exchange exposure and the steps to provident/superannuation fund, gratuity and leave travel
taken by management to limit the risks of adverse exchange allowance and these are reviewed by the Remuneration Committee
rate movement, of the Board before being approved. The non-executive Directors
 status on legal cases, receive commission and sitting fees, except for
Mr. K. Rajagopalachari, who in addition, drew remuneration as
 non compliance of any statutory nature of listing requirement; and
stated above. Table 2 gives the details of the remuneration package
 proposals for investment, mergers and acquisitions. of Directors and their relationship with each other.

38
Corporate Governance
Table 2: Details of the remuneration paid to Directors and their relationships with each other are as follows (in Rs.)
Name of Director Relationship Salary HRA Perquisites* Sitting Commission Total
with each other fees
Ashwin C.Choksi Brother of Mahendra C.Choksi 18,75,000 7,50,000 26,32,179 --- 46,00,000 98,57,179
Ashwin S.Dani Father of Hasit A.Dani 18,75,000 7,50,000 28,20,335 --- 46,00,000 1,00,45,335
Abhay A.Vakil Brother of Amar A.Vakil 18,75,000 7,50,000 27,10,262 --- 46,00,000 99,35,262
K.Rajagopalachari @ --- --- --- 15,000 60,000 4,00,000 **4,75,000
Mahendra C.Choksi Brother of Ashwin C.Choksi --- --- --- 1,40,000 4,00,000 5,40,000
Amar A.Vakil Brother of Abhay A. Vakil --- --- --- 60,000 4,00,000 4,60,000
Hasit Dani Son of Ashwin S. Dani --- --- --- 1,30,000 4,00,000 5,30,000
Manubhai G.Patel # --- --- --- --- 1,10,000 4,40,000 5,50,000
Tarjani Vakil --- --- --- --- 1,60,000 4,00,000 5,60,000
Dipankar Basu --- --- --- --- 1,00,000 4,00,000 5,00,000
Deepak M. Satwalekar --- --- --- --- 90,000 4,00,000 4,90,000
Rajendra A.Shah --- --- --- --- 50,000 4,00,000 4,50,000
Swaminathan Sivaram --- --- --- --- 30,000 2,00,000 2,30,000
Mahendra M.Shah --- --- --- --- 1,40,000 4,00,000 5,40,000

Notes :
* 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. Pension and leave encashment, as applicable have been included.
** Includes retainership of Rs.1.25 million and pension of Rs. 0.58 million paid during the year.
@ Mr. K. Rajagopalachari expired on 14 March 2005.
# Mr. Manubhai G. Patel resigned from the board effective 25 March 2005.

The employment of Mr. Ashwin C. Choksi, Mr. Ashwin S. Dani of India. Ms. Nehal A. Vakil, daughter of Mr. Abhay A. Vakil, is
and Mr. Abhay A. Vakil as executive Directors is contractual a Finance Executive and joined the Company on 18 January
for five years and can be terminated by six months notice on 1999.The gross remuneration paid to her for 2004-05 is
either side. During 2003-04, the Company renewed the contract Rs. 739,266/- as per the approval of the members of the Company
with them for a period of five years. and the Government of India.
Six employees are relatives of Directors of Asian Paints. Mr. Jalaj The Board of Directors at its meeting held on 11th May, 2005,
A. Dani, son of Mr. Ashwin S. Dani, is Vice-President-International based on the recommendation of the Remuneration Committee,
and joined the Company on 18 January 1999. The gross revised the service conditions of Mr. Jalaj Dani, Mr. Manish
remuneration paid to him for 2004-05 is Rs.2,939,943/- as per Choksi and Ms. Nehal Vakil, subject to the approval of the
the approval of the members of the Company and the Government shareholders at the general meeting and the Central Govt.
of India. Mr. Manish M. Choksi, son of Mr. Mahendra C. Choksi, thereafter. Necessary resolutions for the revision of service
is Vice-President - Strategic Planning and Information Technology conditions, including remuneration of the above three Executives
and joined the Company on 17 September 1992.The gross as well as the Explanatory Statement u/s. 173(2) of the
remuneration paid to him for 2004-05 is Rs. 2,921,363/- as per Companies Act, 1956 are part of the Notice convening the
the approval of the members of the Company and the Government Annual General Meeting of the shareholders.

Asian Paints (India) Ltd.


annual report 2004-2005 39
Corporate Governance
Ms. Amrita A. Vakil, daughter of Mr. Amar A. Vakil, HR  Reviewing the internal investigations by the internal auditors
Executive, joined the Company on 6 January 2003 and left the into matters where there is suspected fraud or irregularity
Company on 31 March 2005.The gross remuneration paid to or failure of internal control systems of a material nature
her for 2004-05 was Rs. 354,161/- as per the approval of the and reporting the matter to the Board.
members of the Company. Mr. Rupen Choksi, son of Mr. Ashwin  Reviewing reports furnished by the internal auditors and statutory
Choksi, joined the Company on 8 September 2003 and left the auditors and ensuring suitable follow up thereon.
Company on 3 November 2004 as an Executive Trainee. The  Reviewing the related party transactions.
gross remuneration paid to him for 2004-05 was Rs. 331,752/-
The audit committee met six times during the year on 10 May
as per the approval of the members of the Company.
2004, 27 July 2004, 13 September 2004, 12 October 2004,
Mr. Malav Dani, son of Mr. Ashwin S. Dani, is Manager - Quality 26 October 2004, and 18 January 2005. The details of number
Support in the Corporate Centre of the Company and joined the of meetings held and attendance record of members are given
Company on 21 February 2005. His appointment and in table 3. The Executive Chairman of the Company, Vice
remuneration is subject to approval by the shareholders in the President - Corporate Finance & Company Secretary, Financial
forthcoming annual general meeting and the Central Government. Controller, Accounts Manager and Corporate Audit Manager
Committees of the Board also attend audit committee meetings.
Audit Committee Table 3: Details about audit committee meetings
The Audit Committee comprised of Mr. Manubhai G. Patel Name of Director No. of No. of
(Chairman and independent Director), Mr. Mahendra C. Choksi committee committee
(Non executive Director), Ms. Tarjani Vakil (independent meetings held meetings
attended
Director), Mr. Mahendra M. Shah (independent Director) and
Mr. Hasit Dani (Non executive Director). The audit committee Manubhai G. Patel # 6 6
was reconstituted on 25 March 2005 and comprises of three Mahendra C. Choksi 6 6
non-executive independent Directors. The members of the Tarjani Vakil 6 6
Committee are Ms. Tarjani Vakil (Chairperson and independent Mahendra M. Shah 6 6
Director), Mr. Mahendra M. Shah (independent Director), Hasit Dani 6 6
Dipankar Basu (independent Director). All the members of the
# Mr. Manubhai G. Patel resigned from the board, effective 25 March 2005.
committee possess financial and accounting knowledge.
The composition, procedures, powers, role and functions of
The terms of reference of the Audit Committee include the
the audit committee constituted by the Company comply with
following:
requirements of the Companies Act, 1956 as well as those of
 Overseeing the Company’s financial reporting process and clause 49 of the listing agreement.
the disclosure of its financial information.
Remuneration Committee
 Recommending appointment and removal of the statutory
Due to the sad demise of Mr. K. Rajagopalchari, Director of
auditor, fixing of audit fees and approving payments for
the Company, the Remuneration Committee of Directors has
any other service.
been reconstituted by the Board of Directors at its meeting held
 Reviewing with management quarterly, half-yearly and
on 25 March 2005. The remuneration committee comprises of
annual financial statements with primary focus on
three non-executive independent Directors. The members of the
accounting policies and practices, compliance with
Committee are Mr. Dipankar Basu (Chairman and independent
accounting standards and stock exchange and legal
Director), Ms. Tarjani Vakil (independent Director) and
requirements concerning financial statements.
Mr. Deepak Satwalekar (independent Director). The details of
 Reviewing adequacy of internal control systems and the number of meetings held and attendance record of members
internal audit function. are given in table 4.
 Reviewing the Company’s financial and risk management
policies.

40
Corporate Governance
Table 4: Details about remuneration committee meetings of the number of meetings held and the attendance record of
the members are given in table 5 and 6.
Name of Director No.of No.of
Committee committee Table 5: Details about shareholder/investor grievance
meetings held meetings committee meeting before reconstitution
attended
Name of Director No. of No. of
Dipankar Basu 4 4 committee committee
Ms.Tarjani Vakil 4 4 meetings held meetings
Deepak Satwalekar 4 4 attended
K. Rajagopalchari @ 4 1 K. Rajagopalachari @ 1 1
@ Mr. K. Rajagopalachari expired on 14 March 2005. Abhay A. Vakil 1 1
The scope of the Remuneration Committee is as follows: Mahendra C. Choksi 1 1

 To review and recommend to the Board, the salaries, Mahendra M. Shah 1 1


commission, other benefits, service agreements and @ Mr. K. Rajagopalachari expired on 14 March 2005.

employment conditions of Executive Directors. The Committee Table 6: Details about shareholder/investor grievance
considers these based on Company performance as well as committee meeting after its reconstitution on 25 March 2005
individual performance vis-a-vis agreed goals, taking into
Name of Director No. of No. of
account prevailing practices in the corporate world. committee committee
 To review the remuneration policies and practices relating meetings held meetings
attended
to senior management of the Company.
 To approve the selection and appointment of relatives of Mahendra M. Shah 1 1
Directors as required by section 314 of the Companies Act, Abhay A. Vakil 1 1
1956. Mahendra C. Choksi 1 1
Hasit Dani 1 1
Shareholder/Investor Grievance Committee
The Company has constituted a Shareholder/Investor Grievance MANAGEMENT
Committee of the Board of Directors to specifically look into Management Discussion and Analysis
complaints received from the shareholders of the Company. This annual report has a detailed section on Management
The Committee also oversees the performance of the Registrar Discussion and Analysis.
and Transfer Agent of the Company and recommends measures
Disclosures by management
for overall improvement in the quality of services to the investors.
The Board of Directors on 25 March 2005 reconstituted the  The Company has complied with all requirements of the
Shareholders/ Investor Grievance Committee due to the sad Listing Agreement entered into with The Stock Exchange,
demise of Mr. K. Rajagopalchari, Director of the Company. Mumbai and The National Stock Exchange of India Ltd. as
The members of the Company’s newly constituted Shareholders/ well as SEBI regulations and guidelines. No penalties were
Investor Grievance Committee are Mr. Mahendra M. Shah imposed or strictures were passed against the Company
(Chairman and non-executive independent Director), Mr. Abhay with regard to the capital market in the last three years.
A. Vakil (Managing Director), Mr. Mahendra C. Choksi (non-  As required by SEBI (Prohibition of Insider Trading)
executive Director) and Mr. Hasit Dani (non- executive Director). Regulations, 1992, the Company has adopted a policy
Mr. Jayesh Merchant, Vice President - Corporate Finance & for Corporate Disclosure Practices for prevention of insider
Company Secretary, is the compliance officer. trading with effect from June 2002. Mr. Jayesh Merchant,
The committee met twice during the year on 27 July 2004 and Vice President - Corporate Finance & Company Secretary
30 March 2005 to review investor grievances and the details has been appointed as the Compliance Officer.

Asian Paints (India) Ltd.


annual report 2004-2005 41
Corporate Governance
SHAREHOLDERS Presently he is the Managing Director of HDFC Standard Life
Disclosures regarding re-appointment of Directors Insurance Company. He has been a consultant to the World
Bank, the Asian Development Bank, United States Agency for
As per the Companies Act, 1956, at least two-thirds of the
International Development (USAID) and the United Nations
Board should consist of retiring directors. Of these, one-third
Centre for Human Settlement (HABITAT). He is on the Board of
are required to retire every year. Nine out of the twelve directors
Directors of several companies. He was involved in policy work
of the Company are retiring directors.
as a member of the Steering Committee on Urban Infrastructure
Ms. Tarjani Vakil (68) completed her post-graduation from and Housing for the Ninth Five Year Plan of the Govt. of India
Mumbai University. She has extensive experience in and is actively involved in CII. He has been a Director in the
international trade finance and export marketing strategy. She Company since 30 May 2000.
held the position of Chairperson of the Export-Import Bank of
Information required under Clause 49 VI A of the listing
India. She has been on the Board of Directors of IDBI, ECGC,
agreement with The Stock Exchange, Mumbai (relating to
STCI, BHEL, LIC and GIC. She is also on the local advisory
Corporate Governance) with respect to the Directors retiring
Board of ABN-Amro Bank. She has been a consultant to
by rotation and being eligible and seeking re-appointment is
developing countries for setting up export credit agencies. She
given in notes to the notice convening the meeting.
is a Managing Committee Member in Indian Merchant
Chamber. She is a Trustee in General Electoral Trust and Means of communication
Qimpro Fundation. She is on the Board of Directors of Indian The financial results of the Company are published in widely
Rayon & Industries Ltd., Mahindra Intertrade Ltd., DSP Merrill circulated newspapers such as the Business Standard and
Lynch Trustee Company Pvt. Ltd., i-flex Solutions Ltd., Alkyl Loksatta. The results are also displayed on the Company’s
Amines Chemicals Ltd. She has been a Director in the Company website www.asianpaints.com. The Company’s official news
since 1 December 1998. releases and presentations made to institutional investors and
Shri Dipankar Basu (69) holds a Masters degree in Economics analysts are available on the Company’s website. Pursuant to
from the Delhi University. He is a former Chairman of State Bank clause 51 of the listing agreement, financial information such
of India. He is on the Boards of various Companies. He has spent as the annual and quarterly financial statements, shareholding
his entire professional career with State Bank of India. He pattern and segment-wise results are also available on the SEBI
spearheaded its foray into investment banking and was responsible web-site www.sebiedifar.nic.in.
for setting up SBI Capital Markets and SBI Mutual Fund. Investor grievances
He is a Director on the Boards of Securities Trading Corporation As mentioned earlier, the Company has constituted a
of India Ltd., Rain Calcining Ltd., Chambal Fertilizers and Shareholder/Investor Grievance Committee for redressing
Chemicals Ltd., Peerless General Finance and Investment Co. shareholder and investor complaints. The status on complaints
Ltd., iGate Global Solutions Ltd., Deepak Fertilizers and is reported to the Board of Directors as an agenda item.
Petrochemicals Corporation Ltd., Sun F&C Asset Management
Share transfer
(India) Pvt. Ltd., SBI Cards & Payment Services Pvt. Ltd., and
Saregama India Ltd. He has been a Director in the Company The Board of Directors has delegated the power to attend to
since 15 April 2000. share transfer approvals to a share transfer committee. During
the year the Share Transfer Committee was reconstituted. As
Deepak Satwalekar (56) is a B.Tech from the Indian Institute
on 31 March 2005, the committee comprised Mr. Abhay A.
of Technology (IIT), Mumbai and completed his post graduation
Vakil (Managing Director of Asian Paints), Mr. Ashwin S. Dani
in business administration from the American University,
(executive Vice-Chairman and Managing Director of Asian
Washington DC. He was appointed Deputy Managing Director
Paints) and Mr. Mahendra C. Choksi (non-executive Director).
of HDFC in 1990 and became Managing Director in 1993.
The committee ordinarily meets once every fortnight.

42
Corporate Governance
General body meetings Details regarding postal ballot to be passed for change of name
Location and time of the AGMs and EGMs held in the last three years from Asian Paints (India) Limited to Asian Paints Limited during
the financial year 2005-06
Year Location Meetings Date Time
Notice under Section 192A of the Companies Act, 1956 along
2003-2004 Yashwantrao Chavan AGM 28 June 3:00 p.m.
with postal ballot form in relation to a Special Resolution under
Pratisthan Auditorium, 2004
Y. B. Chavan Centre,
Section 21 of the Companies Act, 1956 seeking shareholders’
General Jagannath Bhosle consent for change of name of the Company from Asian Paints
Marg, Next to Sachivalaya (India) Limited to Asian Paints Limited was posted on
Gymkhana, 11 April 2005. The Board in its meeting dated 25 March 2005,
Mumbai - 400 021. has appointed Shri H.N. Shah, Chartered Accountant as
2002-2003 Patkar Hall, AGM 18 July 10:30 a.m. Scrutinizer for conducting the postal ballot. The Company has
Nathibai Thackersey Road, 2003
fixed 14 May 2005 as the last date by which the postal ballot
New Marine Lines,
Mumbai 400 020.
form duly completed and signed should reach the Scrutinizer.
The declaration of result of postal ballot is scheduled on
2002-2003 Patkar Hall, EGM 18 July 1:00 p.m.
Nathibai Thackersey Road, 2003 30 May 2005.
New Marine Lines,
Mumbai 400 020.
2001-2002 Patkar Hall, AGM 26 July 3:00 p.m.
Nathibai Thackersey Road, 2002
New Marine Lines,
Mumbai 400 020.
No special resolutions were put through postal ballot in 2004-05.

Asian Paints (India) Ltd.


annual report 2004-2005 43
Additional Shareholders’ Information
ANNUAL GENERAL MEETING Table 2: High, low and volumes of Asian Paints’ shares for
Date: Monday, 27 June, 2005. 2004-05
Venue: Patkar Hall, Nathibai Thackersey Road, New Marine High Low Volume
Lines, Mumbai 400 020. (Rupees) (Rupees) (No.of shares)
Time: 15:00 hours April 04 323.75 299.00 1698638
Financial calendar May 04 315.95 245.00 715429
Financial year : 1 April to 31 March June 04 317.50 282.25 282876
For the year ended 31 March 2005, results were announced July 04 323.75 295.10 132987
on: August 04 326.60 307.55 160987
 28 July 2004 : First quarter September 04 338.00 304.00 132973
 27 October 2004 : Half yearly October 04 325.00 293.00 370521
 19 January 2005 : Third quarter November 04 306.00 289.00 718266
 11 May 2005 : Fourth quarter and annual. December 04 330.00 295.60 1546289
For the year ending 31 March 2006, results will be announced: January 05 360.00 302.60 492757
 on or around 27 July 2005: First quarter February 05 363.00 341.30 370701
 on or around 26 October 2005: Half yearly March 05 395.00 350.05 926187
 on or around 31 January 2006: Third quarter Note: High and low are in rupees per traded share. Volume
is the total monthly volume of trade in Asian Paints
 on or around 11 May 2006: Fourth quarter and annual. shares on BSE.
Book Closure Chart A shows the comparison of your Company's share price
The dates of book closure are from 24 June 2005 to movement vis-à-vis the movement of the BSE Sensex:
27 June 2005, inclusive of both days. Chart A: Asian Paints’ share performance versus the sensex
Dividend Date for 2004-05
An interim dividend of Rs. 4.00 per share (40 per cent dividend)
was declared on 27 October 2004 and paid on 2 November 250

2004. A final dividend of Rs. 5.50 (55 per cent dividend) per
share has been recommended on 11 May 2005 and, subject 210
to approval from the shareholders at the AGM, will be paid on
or after 27 June 2005.
170
Listing
The Company’s shares are listed on The Stock Exchange,
Mumbai and the National Stock Exchange of India Limited 130
BSE Sensex
(NSE). The stock exchange codes assigned to your Company's
shares at these stock exchanges are given in table 1. 90
Asian Paints
Table 1: Stock exchange codes
Stock exchange Code 50
Oct-04
Sep-04

Dec-04

Mar-05
Jan-05
Nov-04

Feb-05
Jun-04

Jul-04
May-04

Aug-04
Apr-04

BSE 500820
NSE ASIANPAINT Note: Both Asian Paints share prices and the BSE Sensex have been
indexed to 100 as on 1 April 2004.
Stock Data
Table 2 gives the monthly high and low prices and volumes of Distribution of Shareholder holdings
your Company's shares at The Stock Exchange, Mumbai (BSE) Table 3 and 4 give the distribution pattern of shareholding of
for the year ended 31 March 2005. your Company as on 31 March 2005 by ownership and size
class respectively.

44
Additional Shareholders’ Information
Table 3: Distribution of shareholding by ownership Table 5: Number of shares in physical and demat form as on
No. of shares % of Shares 31 March 2005
held held No. of shares Percentage of total
Directors, relatives and shares
associates 41111965 42.86 Physical segment 34962585 36.45
Other Directors and their Demat segment 60957194 63.55
relatives 2923 0.00
Total 95919779 100.00
Individuals 16790464 17.51
Domestic companies 843881 0.88 Outstanding GDRs/ADRs/Warrants/Convertible Instruments
Financial institutions 12451144 12.98 and their impact on equity
Mutual Funds and Banks 2261262 2.36 Not applicable.

FIIs and OCBs 20287955 21.15


Details of public funding obtained in the last three years
Non-Resident Individuals 2170185 2.26
Your Company has not obtained any public funding in the last
Total 95919779 100.00 three years.

Registrar & Transfer Agent


Table 4: Distribution of shareholding by number of shares held
Sharepro Services (India) Pvt. Ltd. is the Registrar & Transfer
No. of equity No. of % of No. of % of share
Agent of the Company.
shares held shareholders shareholders shares holding
Shareholders, beneficial owners and depository participants
1-100 23480 47.21 721950 0.75 (DPs) are requested to send/deliver the documents/
101-200 6017 12.10 892034 0.93 correspondence relating to the Company's share transfer activity
etc. to Sharepro Services (India) Pvt. Ltd., Registrar and Share
201-500 10783 21.68 3844814 4.01
Transfer Agent of the Company at the following addresses:
501-2000 7939 15.96 7506986 7.83
2001-5000 927 1.86 2949074 3.08 SHAREPRO SERVICES (INDIA) PVT. LTD.
5001-10000 235 0.47 1710082 1.78 Unit: Asian Paints (India) Ltd.
10001 and Satam Estate, 3rd Floor, Above Bank of Baroda,
Cardinal Gracious Road, Chakala,
above 358 0.72 78294839 81.62 Andheri (E), Mumbai 400 099.
Total 49739 100.00 95919779 100.00 Tel.No. 2821 5168, 2832 9828,
2821 5991,2834 7719, 2834 8218
De-materialisation of shares Fax No. 2837 5646
The shareholders have the option to hold Asian Paints’ shares Email: sharepro@vsnl.com
in demat form through the National Securities Depository Limited
(NSDL) or Central Depository Securities Limited (CDSL). The
SHAREPRO SERVICES (INDIA) PVT. LTD.
ISIN number allocated to Asian Paints by NSDL and CDSL is
INE021A01018. Unit: Asian Paints (India) Ltd.
912, Raheja Centre, Free Press Journal Road,
At present, 63.55 per cent of the Company’s shares are held Nariman Point, Mumbai 400 021.
in electronic form. Table 5 gives the break up of shares in Tel.No.: 2288 1568, 2288 1569,
physical and demat form: 2282 5163, 2288 4527,
Fax No. 2282 5484
Email: sharepro_services@roltanet.com

Asian Paints (India) Ltd.


annual report 2004-2005 45
Additional Shareholders’ Information
For the benefit of shareholders, documents will also continue Table 6: Dates of unclaimed dividend to be transferred to
to be accepted at the following office of the Company: Investor Education & Protection Fund (IEPF) u/s 205C.*

ASIAN PAINTS (INDIA) LTD. Year of Dividend Date of Declaration Date of Transfer
to IEPF
Asian Paints House
6A Shantinagar, Santacruz (E) 1997-98 (Final) 6 Aug 1998 5 Sept 2005
Mumbai - 400 055 1998-99 (Interim) 28 Oct 1998 27 Nov 2005
Email: investor.relations@asianpaints.com 1998-99 (Final) 15 Jul 1999 14 Aug 2006
Members are requested to quote their e-mail address, telephone 1999-2000 (1st Interim) 29 Oct 1999 28 Nov 2006
number and full address for prompt reply to their 1999-2000 30 Mar 2000 29 Apr 2007
communication. (2nd Interim/Final)
Website (www.asianpaints.com) 2000-2001 (Interim) 23 Oct 2000 22 Nov 2007
The Company’s website provides for the benefit of shareholders, 2000-2001 (Final) 28 Aug 2001 27 Sep 2008
information on topics such as transfer and transmission of
2001-2002 (Interim) 30 Oct 2001 29 Nov 2008
shares, equity history, dematerialisation, nomination, change
of address, loss of share certificates and the Company’s 2001-2002 (Final) 26 Jul 2002 25 Aug 2009
performance and dividend policy. 2002-2003 (Interim) 23 Oct 2002 22 Nov 2009
Electronic Clearance Scheme (ECS) for Dividend 2002-2003 (Final) 18 Jul 2003 17 Aug 2010
Your Company provides shareholders an option to receive 2003-2004 (Interim) 30 Oct 2003 29 Nov 2010
dividends through the ECS facility. To avoid risk of loss/
2003-2004 (Final) 28 Jun 2004 27 July 2011
interception of dividend warrants in postal transit and/or
fraudulent encashment, shareholders are requested to avail the 2004-2005 (Interim) 27 Oct 2004 26 Nov 2011
ECS facility — where dividends are directly credited in electronic *within 30 days the dividend account to be transferred to
form to their respective bank accounts. This also ensures faster unclaimed dividend account and thereafter, from that date it
credit of dividend. Shareholders who desire receipt of their should be transferred after seven years to IEPF.
dividend through ECS can obtain the application form from Number and nature of complaints
the office of the Registrar and Transfer agent.
Your Company received 62 complaints from its shareholders
Shareholders are requested to update their bank account details during 2004-05. Details are given in table 7.
with their respective DPs. This would enable the Company to
Table 7: Details of complaints received
service its investors better.
Shareholders located in places where ECS facility is not A. Type of complaints
available may submit their bank details. This will enable the Non receipt of shares 20
Company to incorporate this information on dividend warrants Non receipt of dividend warrant 34
to minimise the risk of fraudulent encashment.
Others 8
In terms of Sections 205A and 205C of the Companies Act,
Total A 62
1956, the Company is required to transfer the amount of
dividend remaining unclaimed for a period of seven years from B. Complaints received through
the date of transfer, to the unpaid dividend account with the SEBI 9
Investor Education and Protection Fund. Accordingly, in the Stock Exchanges 1
year 2005 the Company would be transferring the final
Department of Company Affairs ---
dividend for the year 1997-1998 and the Interim Dividend for
the year 1998-1999 to the Investor Education and Protection Directly from shareholders 52
Fund on 5 September 2005 and 27 November 2005 Total B 62
respectively. Shareholders are requested to ensure that they
claim the dividend(s) from the Company before transfer to the
Investor Education and Protection Fund.

46
All the above complaints were attended to immediately. Your
Company endeavours to reply to all complaints received from
its shareholders within a period of two days. As on date, only
those cases, which are constrained by dispute or legal
proceedings or court orders, are pending.

Plant locations
Paint Plants:
Lal Bahadur Shastri Marg,
Bhandup, Mumbai 400 078, Maharashtra.

Plot No. 2602, GIDC Industrial Area,


Ankleshwar 393 002, Gujarat.

Plot Nos. 50-55, Industrial Development Area,


Phase II, Patancheru 502 309
Dist. Medak, Andhra Pradesh.

A-1, UPSIDC Industrial Area, Kasna - II,


Kasna Village, Tehsil Sikandarabad,
Dist. Bulandshahr 203 207, Uttar Pradesh.

SIPCOT Industrial Park,


Plot No. E6- F13,
Sriperumbudur 602 105,
Kancheepuram District, TamilNadu.

Phthalic Plant:
Plot No.2702, GIDC Industrial Area,
Ankleshwar 393 002, Gujarat.

Penta Plant:
B5-B10, Sipcot Industrial Complex,
Cuddalore 607 005, Tamil Nadu.

Registered Office:
Asian Paints (India) Ltd.,
6A, Shantinagar, Santacruz (East),
Mumbai 400 055.
Tel: +91-(0)22-5695 8000
Fax: +91-(0)22-5695 8888

Asian Paints (India) Ltd.


annual report 2004-2005 47
Auditors’ Report on Corporate Governance to the members of Asian Paints (India) Limited
We have examined the compliance of conditions of Corporate We state that no investor grievances are pending for a period
Governance by Asian Paints (India) Limited for the year ended exceeding one month against the Company as per the records
31 March, 2005 as stipulated in clause 49 of the Listing maintained by the Shareholders/Investors Grievance Committee.
Agreement entered into with the stock exchanges.
We further state that such compliance is neither an assurance
The compliance of conditions of Corporate Governance is the as to the future viability of the Company nor the efficiency or
responsibility of the management. Our examination was limited effectiveness with which the management has conducted the
to procedures and implementation thereof, adopted by the affairs of the Company.
Company for ensuring the compliance of the conditions of
Corporate Governance. It is neither an audit nor an expression
For Shah & Co.
of opinion on the financial statements of the Company.
Chartered Accountants
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 Mumbai H. N. Shah
Company has complied with the conditions of Corporate 11th May, 2005 Partner
Governance as stipulated in the above mentioned Listing Membership No. 8152
Agreement.

48
Auditors’ Report To the members of Asian Paints (India) Limited

We have audited the attached Balance Sheet of ASIAN PAINTS (c) The Balance Sheet, the Profit and Loss Account and the
(INDIA) LIMITED as at 31st March 2005, and also the Profit and Cash Flow Statement referred to in this report are in
Loss Account and the cash flow statement of the Company for agreement with the books of account and with the audited
the year ended on that date, annexed thereto, incorporating accounts of Penta Division.
therein accounts of Penta Division audited by Branch Auditors. (d) In our opinion, the Balance Sheet, the Profit and Loss
These financial statements are the responsibility of the Company’s Account and the Cash Flow Statement dealt with by this
management. Our responsibility is to express an opinion on report comply with the Accounting Standards referred to
these financial statements based on our audit. in Section 211(3C) of Companies Act, 1956.
We conducted our audit in accordance with auditing standards (e) On the basis of the written representations received from
generally accepted in India. Those Standards require that we the directors, and taken on record by the Board of Directors,
plan and perform the audit to obtain reasonable assurance about we report that none of the directors is disqualified as on
whether the financial statements are free of material misstatement. 31st March 2005 from being appointed as a director in
An audit includes examining, on a test basis, evidence supporting terms of clause (g) of sub-section (1) of section 274 of the
the amounts and disclosures in the financial statements. An audit Companies Act, 1956.
also includes assessing the accounting principles used and
(f) In our opinion and as per the information and according
significant estimates made by management, as well as evaluating
to the explanations given to us, the said Balance Sheet,
the overall financial statement presentation. We believe that our
Profit and Loss Account and the Cash Flow Statement read
audit provides a reasonable basis of our opinion.
together with the notes thereon, give the information
As required by the Companies (Auditor’s Report) Order, 2003, required by the Companies Act, 1956, in the manner so
issued by the Central Government of India in terms of sub-section required and give a true and fair view in conformity with
(4A) of Section 227 of the Companies Act, 1956, we enclose in the accounting principles generally accepted in India:
the Annexure a statement on the matters specified in paragraph
(i) in the case of the Balance Sheet, of the state of affairs
4 and 5 of the said order to the extent applicable.
of the Company as on 31st March 2005;
Further to our comments in the Annexure referred to in paragraph
(ii) in the case of the Profit and Loss Account, of the profit
3 above, we state that:
of the Company for the year ended on that date; and
(a) We have obtained all the information and explanations,
(iii) in the case of the Cash Flow Statement, of the cash
which to the best of our knowledge and belief were
flows for the year ended on that date.
necessary for the purpose of our audit.
For Shah & Co.
(b) In our opinion proper books of account as required by law
Chartered Accountants
have been kept by the Company so far as appears from
our examination of those books. The Branch Auditor’s
H. N. Shah
Report of Penta Division has been forwarded to us and has
Mumbai Partner
been appropriately dealt with.
11th May, 2005 Membership No. 8152

Asian Paints (India) Ltd.


annual report 2004-2005 49
Annexure Referred to in paragraph 3 of the Auditors’ Report to the members of Asian Paints (India)
Limited for the year ended 31st March 2005

1. (a) The Company has maintained proper records showing under Section 301 of the Companies Act, 1956 have
full particulars including quantitative details and been made at prices which are reasonable having
location of the Fixed Assets. regard to the prevailing market prices.
(b) There is a regular program of physical verification, 6. In our opinion and according to the information and
which in our opinion is reasonable, having regard explanations given to us, the Company has complied
to the size of the Company and the nature of fixed with the directives issued by the Reserve Bank of India
assets. No material discrepancies have been noticed and the provisions of Section 58A and 58AA or any
in respect of the assets physically verified during other relevant provisions of the Companies Act, 1956
the year. and the rules framed there under.
(c) The Company has not disposed off substantial part of 7. In our opinion, the Company has an internal audit system
fixed assets during the year. commensurate with the size and nature of its business.
2. (a) Inventories have been physically verified during the 8. We have broadly reviewed the books of accounts and
year by the management. In our opinion, the other records maintained by the Company in respect of
frequency of verification is reasonable. resins where pursuant to the rules made by the Central
(b) The procedures of physical verification of stocks Government, the maintenance of cost records have been
followed by the management are adequate in prescribed under Section 209(1)(d) of the Companies
relation to the size of the Company and the nature Act, 1956. We are of the opinion that prima facie the
of its business. prescribed accounts and records have been maintained.
(c) The Company is maintaining proper records of 9. (a) The Company is regular in depositing undisputed
inventory. The discrepancies noticed on verification statutory dues including Provident Fund, Investor
between the physical stocks and book records were Education and Protection Fund, Employees’ State
not material and have been properly dealt with in Insurance, Income Tax, Sales Tax, Wealth Tax,
the books of account. Service Tax, Custom Duty, Excise Duty, cess and
other statutory dues with the appropriate authorities.
3. (a) The Company has not accepted any loans during
the year from the parties covered in the register (b) Following dues are not deposited on account of
maintained under section 301 of the Companies disputes pending at various forums.
Act, 1956. Name of Nature Financial Amount Forum where
of the of dues Year (Rs. in dispute is
In view of clause 4 (iii)(a) of the Companies Statute Millions) pending
(Auditor’s Report) Order, 2003, clause 4 (iii)(b, c & Sales Tax Assessment F.Y.1993-94 to 47.08 First Appellate level
d) are not applicable to the Company. Dues F.Y.1995-96 and
F.Y.1997-98 to
(b) The Company has not granted any loans during the
F.Y. 2002-03
year to the parties covered in the register maintained F.Y. 1995-96 and 7.82 Second Appellate
under section 301 of the Companies Act, 1956. F.Y. 1998-99 to level
F.Y. 2001-02
In view of clause 4 (iii)(e) of the Companies
F.Y. 1991-92, 17.19 Tribunal
(Auditor’s Report) Order, 2003, clause 4 (iii)(f & g) F.Y.1993-94 to
are not applicable to the Company. F.Y.1996-97 and
F.Y. 2000-01 to
4. In our opinion, and according to the information and
2004-05
explanations given to us, there are adequate internal Total (A) 72.09
control system commensurate with the size of the Company Excise
and the nature of its business with regard to purchase of Central Excise Dispute F.Y. 2004-05 0.21 Adjudication level
stores, raw materials including components, packing Act 1944 relating to
materials, plant and machinery, equipment and other assets Cenvat
Credit
and with regard to sale of goods and services. There is no
F.Y.1986-87 to 8.48 First Appellate
major weakness in the internal control procedures. F.Y.1990-91,
5. (a) The particulars of all contracts and arrangements F.Y.1992-93 to
F.Y.1995-96 and
referred to in section 301 of the Companies Act,
F.Y.1997-98 to
1956 have been properly entered in the register 1999-2000
maintained under section 301 of the Act. F.Y.1993-94, 4.02 Second Appellate
F.Y.1996-97 to
(b) In our opinion, and according to the information
F.Y.1997-98 and
and explanations given to us, the contracts and F.Y.1999-2000
arrangements entered in the register maintained F.Y. 1987-88 0.55 High Court
F.Y. 2004-05 0.56 Tribunal

50
Annexure Referred to in paragraph 3 of the Auditors’ Report to the members of Asian Paints (India)
Limited for the year ended 31st March 2005

Name of Nature Financial Amount Forum where 14. As the Company is not dealing or trading in shares,
of the of dues Year (Rs. in dispute is
Statute Millions) pending
securities, debentures and other investments, the provision
of clause 4(xiv) of the Companies (Auditor’s Report)
Dispute F.Y. 2003-04 and 6.79 Adjudication level
Order, 2003 is not applicable to the Company.
relating to F.Y. 2004-05
valuation 15. The Company has given certain guarantees on behalf of
F.Y.1986-87 to 47.35 First Appellate its dealers and subsidiaries as mentioned in Note B - 3(a)
F.Y.1988-89,
F.Y.1992-93 to
& (b) of Schedule M to the financial statements. In our
F.Y.1993-94, opinion based on the information and explanations
F.Y.1995-96, received, the terms and conditions of these guarantees are
F.Y.1996-97 to
not prejudicial to the interest of the company.
F.Y.1997-98 and
F.Y.1999-2000 16. The Company has not taken any term loans during the
F.Y.2000-01 and 2.32 Second Appellate year.
F.Y.2002-03
F.Y.1986-87 and 0.71 Tribunal 17. According to the information and explanations received
F.Y.03-04 the Company has not applied short term borrowings for
Dispute F.Y. 2003-04 and 5.94 Adjudication level
long term use.
relating to F.Y. 2004-05
Service Tax 18. The Company has not made any preferential allotment
Total (B) 76.93
of shares during the year.
Income Tax A.Y. 2000-01 and 68.56 First Appellate
19. The Company has not issued any debentures during the
A.Y. 2002-03 year.
Total (C) 68.56 20. The Company has not raised any money by way of public
Grand issue during the year.
To t a l 217.58
21. As per the information and explanation given to us, no
material fraud on or by the Company has been noticed
10. The Company has not incurred cash loss in the current
during the year.
year and in the immediately preceding financial year
and there are no accumulated losses in the balance sheet
as on 31st March, 2005.
11. The Company has not defaulted during the year in
repayment of dues to any financial institutions, banks or
debenture holders.
For Shah & Co.
12. The Company has not granted any loans and advances Chartered Accountants
on the basis of security by way of pledge of shares,
debentures and other securities.
13. As the Company is not a chit fund, nidhi, mutual benefit
fund or society the provisions of clause 4(xiii) of the Mumbai H. N. Shah
Companies (Auditor’s Report) Order, 2003 is not 11th May, 2005 Partner
applicable to the Company. Membership No. 8152

Asian Paints (India) Ltd.


annual report 2004-2005 51
Balance Sheet as at 31st March, 2005
(Rs. in Millions)
As at As at
Schedules 31.03.2005 31.03.2004

FUNDS EMPLOYED
Shareholders’ Funds
Share Capital A 959.20 959.20
Reserves and Surplus B 4,763.00 4,356.21
5,722.20 5,315.41
Loan Funds C
Secured Loans 283.65 229.23
Unsecured Loans 555.12 475.50
838.77 704.73
Deferred Tax Liability (Net) 305.38 486.56
(Refer Note B - 27 in Schedule ‘M’)
Total 6,866.35 6,506.70
APPLICATION OF FUNDS
Fixed Assets D
Gross Block 7,127.04 6,511.93
Less : Depreciation/Amortisation/Impairment 4,014.73 3,106.49
Net Block 3,112.31 3,405.44
Add : Capital Work in Progress 82.78 38.89
3,195.09 3,444.33
Investments E 2,584.27 2,424.84
Current Assets, Loans
and Advances F
Interest accrued on investments 0.03 0.83
Inventories 3,307.89 2,114.90
Sundry debtors 1,489.63 1,379.20
Cash and Bank Balances 210.42 245.53
Other receivables 190.12 81.45
Loans and Advances 727.25 787.88
5,925.34 4,609.79
Less : Current Liabilities and Provisions G
Current Liabilities 3,721.32 3,087.23
Provisions 1,117.03 885.03
4,838.35 3,972.26
Net Current Assets 1,086.99 637.53
Total 6,866.35 6,506.70
Notes M

As per our report of even date For and on behalf of the Board
For Shah & Co. Ashwin C. Choksi Ashwin S. Dani Abhay A. Vakil Tarjani Vakil
Chartered Accountants Chairman Vice Chairman & Managing Director Director
Managing Director
H. N. Shah
Partner Jayesh Merchant
Membership No. 8152 Vice President -
Corporate Finance &
Company Secretary
Mumbai Mumbai
11th May, 2005 11th May, 2005

52
Profit & Loss Account for the year ended 31st March, 2005
(Rs. in Millions)
Year Year
Schedules 2004-2005 2003-2004

INCOME
Sales and operating income (Net of discounts) H 22,553.86 19,531.92
Less: Excise 3,138.71 2,565.46
Sales and operating income (Net of discounts and excise) 19,415.15 16,966.46
Other income I 316.14 216.77
19,731.29 17,183.23
EXPENDITURE
Materials Consumed J 11,154.04 9,441.50
Employees’ remuneration and benefits K 1,179.30 1,015.56
Manufacturing, administrative, selling and distribution expenses L 4,144.05 3,814.02
16,477.39 14,271.08
PROFIT BEFORE INTEREST, DEPRECIATION, EXTRAORDINARY ITEM AND TAX 3,253.90 2,912.15
Less : Interest (Refer Note B - 17 in Schedule ‘M’) 27.54 52.65
Less : Depreciation/Amortisation (Refer Note B - 19 in Schedule ‘M’) D 476.05 480.10
PROFIT BEFORE TAX AND EXTRAORDINARY ITEM 2,750.31 2,379.40
Less : Extraordinary item (Refer Note B - 23 in Schedule ‘M’) 42.31 68.06
PROFIT BEFORE TAX 2,708.00 2,311.34
Less : Provision For Current Tax 988.00 880.00
Less : Provision For Deferred Tax Liability/(Asset) (Refer Note B - 27 in Schedule ‘M’) (18.16) (44.46)
PROFIT AFTER TAX AND BEFORE PRIOR PERIOD ITEMS 1,738.16 1,475.80
Add/(Less) : Prior period items (3.34) 2.07
PROFIT AFTER TAX 1,734.82 1,477.87
Add : Balance of Profit & Loss Account brought forward of
Pentasia Investments Ltd. on merger --- 8.40
Add : Balance brought forward from previous year 820.00 720.00
DISPOSABLE PROFIT 2,554.82 2,206.27
DISPOSAL OF ABOVE PROFIT
Dividend:
Equity Shares - Interim 383.69 335.73
- Final 527.56 479.60
Tax on Dividend 125.36 104.47
Transfer to General Reserve 518.21 466.47
Balance carried to Balance Sheet 1,000.00 820.00
2,554.82 2,206.27
Earnings per share (Rs.) Basic and diluted (Face value of Rs.10 each) 18.53 16.12
(Refer Note B - 30 in Schedule ‘M’)
Notes M

As per our report of even date For and on behalf of the Board
For Shah & Co. Ashwin C. Choksi Ashwin S. Dani Abhay A. Vakil Tarjani Vakil
Chartered Accountants Chairman Vice Chairman & Managing Director Director
Managing Director
H. N. Shah
Partner Jayesh Merchant
Membership No. 8152 Vice President -
Corporate Finance &
Company Secretary
Mumbai Mumbai
11th May, 2005 11th May, 2005

Asian Paints (India) Ltd.


annual report 2004-2005 53
Cash Flow Statement for the year ended 31st March, 2005
(Rs. in Millions)

2004-2005 2003-2004
A. Cash Flow from Operating Activities
Profit before prior period item, tax and after
extraordinary item 2,708.00 2,311.34
Adjustments for :
Depreciation 476.05 480.10
Interest income (7.68) (37.06)
Dividend income (93.78) (15.54)
Interest expense 27.54 52.65
Prior Period items (3.34) 2.07
Extraordinary item 42.31 68.06
Loss/(Profit) on Sale of Long Term Investments (0.50) (0.01)
Loss/(Profit) on Sale of Short Term Investments (23.90) (1.65)
Loss/(Profit) on Sale of Assets (27.44) 3.52
Operating Profit before working capital changes 3,097.26 2,863.48
Adjustments for :
Trade Receivables (110.43) (204.59)
Other Receivables (37.39) (215.06)
Inventories (1,192.99) (45.94)
Trade and Other Payables 670.25 818.63
Cash generated from Operations 2,426.70 3,216.52
Income Tax paid net of refund (853.56) (782.19)
Net Cash generated from Operating Activities 1,573.14 2,434.33
B. Cash Flow from Investing Activities
Purchase of Fixed Assets (774.52) (322.31)
Sale of Fixed Assets 138.47 17.60
Purchase of Investments (299.62) (988.95)
Sale of Investments 93.88 11.14
Interest received 8.54 37.16
Dividend received 93.78 15.54
Net Cash used In Investing Activities (739.47) (1,229.82)
C. Cash Flow from Financing Activities
Proceeds from long term borrowings 134.86 112.04
Proceeds from short term borrowings 176.94 90.83
Repayment of long term borrowings (90.16) (288.38)
Repayment of short term borrowings (86.92) (246.43)
Interest paid (29.29) (52.94)
Dividend and Dividend tax paid (974.21) (846.03)
Net Cash used in Financing Activities (868.78) (1,230.91)
D. Net (Decrease) / Increase in Cash (35.11) (26.40)
Cash and cash equivalents as at 01.04.2004 245.53 271.93
Cash and cash equivalents as at 31.03.2005 210.42 245.53

As per our report of even date For and on behalf of the Board

For Shah & Co. Ashwin C. Choksi Ashwin S. Dani Abhay A. Vakil Tarjani Vakil
Chartered Accountants Chairman Vice Chairman & Managing Director Director
Managing Director
H. N. Shah
Partner Jayesh Merchant
Membership No. 8152 Vice President -
Corporate Finance &
Company Secretary

Mumbai Mumbai
11th May, 2005 11th May, 2005

54
Schedules forming part of the accounts
(Rs. in Millions)

As at As at
31.03.2005 31.03.2004

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 :
a) 93,989,940 Bonus Shares of Rs. 10/- each fully paid up issued
on capitalisation of Share premium (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 3,488.70 3,215.56
Add : Transfer from Profit and Loss Account 518.21 466.47
Add : Transfer from Debenture Redemption Reserve 42.50 141.25
Add : Excess deferred tax liability created in 2001-2002
transferred back --- 50.56
Less : Capitalised for issue of Bonus shares --- (320.93)
Less : Net reduction on account of merger of
Pentasia Investments Ltd. --- (64.21)
Less : Provision for impairment of fixed assets as on
1st April, 2004 (Refer Note B - 19 in Schedule ‘M’) (454.45) ---
Add : Reduction in deferred tax liability on impairment
of assets (Refer Note B - 19 in Schedule ‘M’) 163.03 ---
3,757.99 3,488.70
Debenture Redemption Reserve
As per last Balance Sheet 42.50 183.75
Less : Transfer to General Reserve (42.50) (141.25)
--- 42.50
Profit and Loss Account 1,000.00 820.00
4,763.00 4,356.21

Asian Paints (India) Ltd.


annual report 2004-2005 55
Schedules forming part of the accounts
(Rs. in Millions)

As at As at
31.03.2005 31.03.2004

SCHEDULE C : SECURED AND UNSECURED LOANS


Secured Loans
Long Term :
Debentures
13.75% Non-Convertible Debentures (Note No. 1) --- 85.00
Loans and advances
Financial Institution (Sales tax deferment scheme - State of Uttar Pradesh)
(Note No. 2) 106.71 53.40
106.71 138.40
Short Term :
Loans and advances from banks
Cash Credit Accounts (Note No. 3) 176.94 ---
Foreign Currency Loan (Note No. 3) --- 90.83
283.65 229.23
Unsecured Loans
Long Term :
Fixed Deposits 3.22 3.32
(Repayable within one year Nil - Previous year Rs. 0.17 million)
Interest accrued and due --- 0.01
Trade deposits - Interest free 188.30 190.12
Sales tax deferment - State of Andhra Pradesh (Note No. 4) 363.60 282.05

555.12 475.50

Notes:
(1) Nil, (Previous year - 850) 13.75 % Secured Redeemable Non-Convertible Debentures
of Rs. 100,000/- each privately placed redeemable at par. 850 debentures were
redeemed during the year (Previous year - 825). --- 85.00
Amount repayable within one year. --- 85.00
Debentures were secured by pari passu charge on the Company’s movable and
immovable properties pertaining to the paint plants situated at Bhandup, Ankleshwar
and Patancheru, excluding inventories at the above locations.
(2) Interest free term loan from the Pradeshiya Industrial Corporation of U.P. Ltd., (PICUP)
under Sales Tax deferment scheme 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, subject to prior charge in favour of the
Company’s bankers. 106.71 53.40
Amount repayable within one year. 11.18 ---
(3) Secured by hypothecation of inventories, book debts and other current assets. 176.94 90.83
(4) Sales tax deferment - State of Andhra Pradesh represents interest free loan availed
under the Sales Tax deferment scheme of the Government of Andhra Pradesh. 363.60 282.05
Amount repayable within one year. --- ---

56
SCHEDULE D : FIXED ASSETS (Rs. in Millions)
Gross Block Depreciation/Amortisation Impairment Net Block
As at Additions Deductions As at Upto During Deductions As at As at As at As at As at
01.04.2004 during and/or 31.03.2005 31.03.2004 the year and/or 31.03.2005 01.04.2004 31.03.2005 31.03.2005 31.03.2004
the year transfers transfers (Refer Note
B - 19
Schedule ‘M’)

Tangible Assets :
Freehold Land 40.42 --- 0.08 40.34 ---- ---- --- --- --- --- 40.34 40.42
Leasehold Land 162.01 10.00 90.82 81.19 5.39 0.85 --- 6.24 --- --- 74.95 156.62
Schedules forming part of the accounts

Buildings 1,081.04 236.58 8.29 1,309.33 253.98 32.48 1.41 285.05 --- --- 1,024.28 827.06
Plant and Machinery 3,655.14 459.10 15.71 4,098.53 2,080.84 267.68 12.25 2,336.27 178.65 178.65 1,583.61 1,574.30
Scientific Research :
Equipment 90.19 9.78 9.29 90.68 45.20 18.97 2.57 61.60 5.96 5.96 23.12 44.99
Buildings 7.33 7.55 --- 14.88 4.54 0.25 --- 4.80 ---- --- 10.08 2.79
Furniture and
Office Equipment 192.82 16.17 2.07 206.92 91.85 39.61 1.09 130.37 21.63 21.63 54.92 100.97
Vehicles 36.19 2.43 3.50 35.12 15.67 12.85 2.19 26.33 --- --- 8.79 20.52
Leased Assets : Equipment 990.05 0.89 3.53 987.41 434.95 63,29 2.76 495.48 248.21 248.21 243.72 555.10
Intangible Assets :
Trademark 119.24 --- --- 119.24 57.56 23.85 --- 81.41 --- --- 37.83 61.68
Software - License fees 137.50 5.90 --- 143.40 116.51 16.22 --- 132.73 --- --- 10.67 20.99

Total 6,511.93 748.40 133.29 7,127.04 3,106.49 476.05 22.27 3,560.28 454.45 454.45 3,112.31 3,405.44
Previous year 6,305.55 262.89 56.51 6,511.93 2,661.76 480.10 35.37 3,106.49 --- --- 3,405.44

annual report 2004-2005


Asian Paints (India) Ltd.
57
Schedules forming part of the accounts
(Rs. in Millions)
Nos. Face value As at As at
(Rs.) 31.03.2005 31.03.2004

SCHEDULE E : INVESTMENTS
Long Term Investments
Unquoted
(i) In Government Securities
National Savings Certificates, Indira Vikas Patra and
Defence Certificates deposited with Government
authorities. 0.05 0.07
(National Savings Certificate sold during the year Rs. 20,000)
(ii) Trade Investments (Preference shares)
9% Preference shares of
Multitech Plast Containers Ltd. 2,510,000 10/- 25.10 25.10
(iii) Trade Investments (Fully paid Equity shares)
(a) Multitech Plast Containers Ltd. --- 10/- --- 1.90
(190,000 Shares sold during the year) (190,000)
(b) Ricinash Oil Mill Ltd. --- 10/- --- 1.10
(110,000 shares sold during the year) (110,000)
(c) Asian PPG Industries Ltd. 14,625,000 10/- 146.25 146.25
(d) Patancheru Enviro-tech Ltd. 12,900 10/- 0.13 0.13
(e) SIPCOT Common Utilities Ltd. 2,830 100/- 0.28 0.28
(f) Bharuch Eco-Acqua Infrastructure Ltd. 434,790 10/- 4.35 4.35
151.01 154.01

(iv) Other Investments


(a) Units of Unit Trust of India under
Venture Capital Unit Scheme - 1990 --- 100/- --- 0.04
(370 units redeemed during the year) (370)
(b) Contribution to Gujarat Venture Capital Fund -
1990 (5% amounting to Rs. 25,000 0.09 0.11
redeemed during the year)
(c) 10.5% tax free Bonds of
Konkan Railway Corporation Ltd. --- 1,000/- --- 25.64
(25,000 bonds redeemed during the year) (25,000)
(d) Equity shares of Mark Auto Industries Ltd. 62,500 10/- 5.00 5.00
5.09 30.79
(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. 9,000,000 10/- 90.00 80.00
(1,000,000 shares allotted during the year) (8,000,000)
(c) Ordinary shares of Asian Paints (International) Ltd.,
Mauritius 24,945,444 US $ 1/- 1,184.79 1,094.91
(2,010,000 shares allotted during the year) (22,935,444)

58
Schedules forming part of the accounts
(Rs. in Millions)

Nos. Face value As at As at


(Rs.) 31.03.2005 31.03.2004

(d) Equity shares of Asian Paints 1,084,770 NRs 10/- 1.24 1.24
(Nepal) Pvt. Ltd., Nepal
(e) Ordinary shares of Asian Paints --- MRs 10/- --- 111.12
(Mauritius) Ltd., Mauritius. (6,670,755)
(6,670,755 shares sold
during the year)
Less: Provision for diminution
(Refer Note B - 23 in Schedule ‘M’) --- (68.06)
--- 43.06
1,457.88 1,401.06
Total long term unquoted investments 1,639.13 1,611.03
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 Lattices Ltd. 3,418 10/- 0.11 0.11
Total long term quoted investments 773.81 773.81
Total long term investments 2,412,94 2,384.84
Short Term Investments (Unquoted)
DSP Merrill Lynch Liquidity Fund -
Growth Plan --- 10/- --- 20.00
(13,09,036.220 units sold during the year) (13,09,036.220)
Birla Cash Plus Institutional Plan -
Growth --- 10/- --- 20.00
(11,76,829.370 units sold during the year) (11,76,829.370)
Birla Cash Plus Institutional Premium Plan -
Dividend - acquired during the year 1,996,477.315 10/- 20.01 ---
JM Fixed Maturity Plan - Dividend Option
acquired during the year 15,131,481.727 10/- 151.32 ---
Total Short Term Investments 171.33 40.00
Total Investments 2,584.27 2,424.84
Aggregate market value of Long term Quoted Investments : 924.99 748.05

Notes :
1. Figures in brackets indicate that of previous year.

Asian Paints (India) Ltd.


annual report 2004-2005 59
Schedules forming part of the accounts
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) Birla Cash Plus - Institutional Premium Plan Growth 43,470,784.103 10.00 440.00
(2) Birla Cash Plus - Institutional Plan - Growth 5,244,887.760 10.00 90.00
(3) Birla Cash Plus - Institutional Premium Plan - Dividend 24,304,455.310 10.00 243.52
(4) Deutsche Insta Cash Plus Fund - Growth 10,325,555.492 10.00 110.00
(5) Deutsche Insta Cash Plus Fund-Institutional Plan - Growth 26,521,468.475 10.00 270.00
(6) DSP Merrill Lynch Liquidity Fund - Growth 26,671,610.750 10.00 420.00
(7) Grindlays Cash Fund - Super Inst Plan C - Growth 9,818,456.735 10.00 100.00
(8) HDFC Cash Management Fund - Savings Plan - Growth 31,314,609.391 10.00 420.00
(9) HSBC Cash Fund - Institutional Plus - Dividend 30,184,972.680 10.00 302.02
(10) HSBC Cash Fund - Institutional Plus - Growth 32,501,655.427 10.00 330.00
(11) HSBC Cash Fund Institutional Plan - Growth 21,411,541.039 10.00 230.00
(12) Prudential ICICI Institutional Liquid Plan - Growth 10,831,652.045 10.00 170.00
(13) Prudential ICICI Liquid Plan - Growth 631,915.526 10.00 10.00
(14) Prudential ICICI Liquid Plan Institutional Plus - Dividend 33,084,005.087 10.00 392.10
(15) Prudential ICICI Liquid Plan Institutional Plus - Growth 31,434,353.917 10.00 500.00
(16) Reliance Fixed Term Scheme - Monthly Plan -10 - Growth 6,000,000.000 10.00 60.00
(17) Reliance Fixed Term Scheme - Monthly Plan -7 - Growth 6,000,000.000 10.00 60.00
(18) Reliance Fixed Term Scheme - Monthly Plan -8 - Growth 6,024,720.000 10.00 60.25
(19) Reliance Fixed Term Scheme - Monthly Plan - 9 - Growth 10,000,000.000 10.00 100.00
(20) Reliance Fixed Term Scheme - Monthly Plan - 12 Growth 10,000,000.000 10.00 100.00
(21) Reliance Fixed Term Scheme - Monthly Plan - 13 Growth 15,000,000.000 10.00 150.00
(22) Reliance Fixed Term Scheme - Monthly Plan - 14 Growth 20,000,000.000 10.00 200.00
(23) Reliance Fixed Term Scheme - Monthly Plan - 15 Dividend 25,000,000.000 10.00 250.00
(24) Reliance Fixed Term Scheme - Monthly Plan - 16 Dividend 15,000,000.000 10.00 150.00
(25) Reliance Fixed Term Scheme - Monthly Plan - 17 Dividend 15,000,000.000 10.00 150.00
(26) SBI Magnum Insta Cash Fund - Cash Plan 27,297,209.536 10.00 390.00
(27) SBI Magnum Institutional Income Fund-Savings - Dividend 84,764,289.414 10.00 850.40
(28) SBI Magnum Institutional Income Fund-Savings - Growth 119,206,533.687 10.00 1,240.00
(29) Tata Liquid Super High Investment Fund - Appreciation 48,320,806.227 10.00 570.00
(30) Tata Liquid Super High Investment Fund - Daily Dividend 8,075,410.380 10.00 90.00
(31) Tata Liquid Super High Investment Fund - Daily Dividend 81,043.839 1,000.00 90.32
(32) Templeton India Treasury Mgmt A/c Inst Plan - Growth 158,515.065 1,000.00 160.00

(Rs. in Millions)

As at As at
31.03.2005 31.03.2004

SCHEDULE F : CURRENT ASSETS, LOANS AND ADVANCES


CURRENT ASSETS
(i) Interest accrued on investments 0.03 0.83
(ii) Inventories - valued and certified by the Management
(a) Raw materials 832.66 517.14
(b) Packing materials 283.76 164.24
(c) Finished goods 1,918.12 1,216.11
(d) Work-in-process 202.42 160.82
(e) Stores, spares and fuel 65.30 50.14
(f) Other traded items 5.63 6.45
3,307.89 2,114.90

60
Schedules forming part of the accounts
(Rs. in Millions)

As at As at
31.03.2005 31.03.2004
(iii) Sundry debtors (Unsecured)
(a) Outstanding for more than six months
Considered good 21.45 24.81
Considered doubtful 32.89 38.97
54.34 63.78
Less: Provision for doubtful debts 32.89 38.97
21.45 24.81
(b) Other debts (Considered good) 1,468.18 1,354.39
1,489.63 1,379.20
(iv) Cash and Bank Balances
(a) Cash on hand 1.66 2.32
(b) Balances with Scheduled Banks :
(i) Current Accounts 206.14 200.29
(ii) Term Deposits 2.62 3.29
(iii) Cash Credit Accounts --- 39.63
210.42 245.53
(v) Other receivables 190.12 81.45
LOANS AND ADVANCES
(i) Wholly owned subsidiaries
(a) Interest free loan - Secured and considered good
Asian Paints Industrial Coatings Ltd. 60.00 60.00
(Maximum outstanding during the year Rs. 60.00 million.
Previous year Rs. 60.00 million)
Technical Instruments Manufacturers (India) Ltd. 77.02 85.69
(Maximum outstanding during the year Rs. 85.69 million.
Previous year Rs. 100.02 million). 137.02 145.69

(ii) Company in which directors are interested


Hitech Plast Ltd. - Unsecured and considered good
(Maximum outstanding during the year Rs. 1.30 million.
Previous year Rs. 2.50 million) --- 1.30
(iii) Other Loans and Advances :
Unsecured and considered good
(a) Balances with Customs, Central Excise etc. 141.77 57.32
(b) Income Tax refund receivable --- 187.35
(c) Sundry deposits 105.41 115.67
(d) Advances/claims recoverable in cash or in kind 241.97 199.15
(e) Advances to employees 4.10 7.99
(f) Share application money 28.43 ---
(g) Advances against capital expenditure 42.48 60.26
(h) Other advances to subsidiaries 26.07 13.15
590.23 640.89
727.25 787.88
5,925.34 4,609.79

Asian Paints (India) Ltd.


annual report 2004-2005 61
Schedules forming part of the accounts
(Rs. in Millions)

As at As at
31.03.2005 31.03.2004

SCHEDULE G : CURRENT LIABILITIES AND PROVISIONS


Current Liabilities
(i) Acceptances 1,109.63 796.03
(ii) Sundry creditors
- Trade 1,342.72 1,119.31
- Others 334.75 271.87
(Out of the above, the total outstanding dues to small scale
industrial undertakings are Rs. 48.53 million - Previous year
Rs. 60.01 million). (Refer Note B - 22 in Schedule ‘M’) 1,677.47 1,391.18
2,787.10 2,187.21
(iii) Investor Education and Protection Fund *
(a) Unpaid / Unclaimed dividend 19.92 18.02
(b) Unpaid / Unclaimed matured deposits 0.78 0.52
(c) Unclaimed interest 0.31 0.38
(d) Unclaimed amount of sale proceeds of fractional
coupons of bonus shares 0.41 0.44
21.42 19.36
(iv) Interest accrued but not due 0.15 1.85
(v) Other liabilities (Including Rs. 17.80 million due to Directors -
Previous year Rs. 14.75 million). 912.65 878.81
3,721.32 3,087.23
* There is no amount due and outstanding to be paid to the Investor
Education and Protection Fund as at 31st March, 2005. These
amounts shall be paid to the fund as and when they become due.
Provisions
(i) Proposed Final Dividend 527.56 479.60
(ii) Provision for tax on Proposed Final Dividend 73.99 61.45
(iii) Provision for tax (Net of advance tax) 136.75 2.31
(iv) Provision for Leave encashment (Refer Note B - 26 in Schedule ‘M’) 126.42 123.70
(v) Other provisions (Refer Note B - 26 in Schedule ‘M’) 252.31 217.97
1,117.03 885.03
4,838.35 3,972.26

62
Schedules forming part of the accounts
(Rs. in Millions)

Year Year
2004-2005 2003-2004

SCHEDULE H : SALES & OPERATING INCOME


Sales :
Home Market 23,533.64 20,455.10
Exports 138.52 83.11
23,672.16 20,538.21
Less : Goods returned 283.79 278.72
Turnover (Refer Note B - 7 in Schedule ‘M’) 23,388.37 20,259.49
Less : Discounts 1,073.05 1,013.15
Sales (Net of discounts) 22,315.32 19,246.34
Processing charges 69.80 70.20
Lease Rent 127.89 188.18
Revenue from Home Solutions operations 40.85 27.20
22,553.86 19,531.92

SCHEDULE I : OTHER INCOME


Interest (Refer Note B - 21 in Schedule ‘M’) 7.68 37.06
(TDS Rs. 0.68 million - Previous year Rs. 0.93 million)
Claims received 3.41 0.28
Dividends from subsidiary companies 5.42 8.81
(TDS Rs. 0.27 million - Previous year Rs. 0.61 million)
Dividend from long term investments
- Trade 78.52 0.28
- Others 1.32 1.02
Dividend from short term investments 8.52 5.43
Royalty (TDS Rs. 4.22 million - Previous year Rs. 1.09 million) 34.59 26.70
Sundry balances written back (Net) (Refer Note B - 20 in Schedule ‘M’) 13.84 47.57
Profit on sale of long term investments (net) 0.50 0.01
Profit on sale of short term investments (net) 23.90 1.65
Profit on sale of assets (net) (Refer Note B - 25 in Schedule ‘M’) 27.44 ---
Exchange difference (net) 0.89 9.62
Miscellaneous income 110.11 78.34
316.14 216.77

Asian Paints (India) Ltd.


annual report 2004-2005 63
Schedules forming part of the accounts
(Rs. in Millions)

Year Year
2004-2005 2003-2004

SCHEDULE J : MATERIALS CONSUMED


Raw Materials Consumed
Opening Stock 517.14 568.61
Add : Purchases and expenses 9,752.72 7,463.59
10,269.86 8,032.20
Less: Closing Stock 832.66 517.14
9,437.20 7,515.06
Packing Materials Consumed
Opening Stock 164.24 123.51
Add : Purchases and expenses 2,154.61 1,627.79
2,318.85 1,751.30
Less : Closing Stock 283.76 164.24
2,035.09 1,587.06
Purchase of Paints for resale 182.70 199.51
(Quantity 10,231 MT - Previous year 11,549 MT)
Cost of other goods sold 242.66 198.62
11,897.65 9,500.25
Add / (Less) :
Decrease / (Increase) in finished and semi-finished stocks
Opening Stock 1,376.93 1,318.18
Closing Stock 2,120.54 1,376.93
(743.61) (58.75)
11,154.04 9,441.50

SCHEDULE K : EMPLOYEES’ REMUNERATION AND BENEFITS


Salaries, wages, allowances, commission, provision for
bonus and accrued leave salary 974.54 848.07
Staff welfare expenses 64.40 54.67
Contribution to Provident Fund, Gratuity Fund and Superannuation Fund 140.36 112.82
1,179.30 1,015.56

64
Schedules forming part of the accounts
(Rs. in Millions)

Year Year
2004-2005 2003-2004

SCHEDULE L : MANUFACTURING, ADMINISTRATIVE,


SELLING AND DISTRIBUTION EXPENSES
Stores and spares 100.00 111.89
Power and fuel 254.38 228.30
Processing charges 133.28 107.30
Freight and handling charges 836.88 697.34
Repairs and maintenance:
Buildings 18.26 19.85
Machinery 41.88 47.84
Other assets 99.01 109.49
159.15 177.18
Rent 171.73 158.76
Rates and taxes 147.37 126.06
Insurance 33.41 33.74
Advertisement and sales promotional expenses 699.17 682.42
Cash discount and Payment performance discount 908.88 785.28
Printing, stationery and communication expenses 121.30 129.08
Travelling expenses 133.79 140.34
Commission on sales 10.35 12.05
Donations 9.03 9.90
Loss on sale of assets (net) --- 3.52
Miscellaneous expenses (Refer Note B - 24 in Schedule ‘M’) 279.12 217.54
Commission to Non executive directors 4.24 3.12
Directors’ sitting fees 1.06 ---
Bad and doubtful debts 9.27 28.01
Auditors’ remuneration 4.52 3.76
Financial charges 38.23 34.35
Information technology expenses 63.87 96.12
Legal and professional expenses 25.02 27.96
4,144.05 3,814.02

Asian Paints (India) Ltd.


annual report 2004-2005 65
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 in India and comply
with the Accounting Standards specified by the Institute of Chartered Accountants of India under section 211(3C) of the
Companies Act, 1956.
2. Method of Accounting
The Company is following accrual basis of accounting.
3. 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 the 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 the 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.
After recognition of impairment loss, 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.
4. 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 exclusive of sales tax.
Processing income is recognised upon rendition of the services.
Dividend income is recognised when the right to receive dividend is unconditional at the balance sheet date.
5. Lease Accounting
The Company has provided tinting systems to dealers on an operating lease basis. Lease rentals are accounted on accrual
basis in accordance with the respective lease agreements and any variation thereof.

66
Schedules forming part of the accounts
6. 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 on the basis of standard cost method, excise duty as applicable and other
costs incurred in bringing the inventories to their present location and condition.
d) Traded goods are valued at cost on weighted average basis.
7. 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.
8. 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 not covered by forward
contracts and 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.
9. 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’.
10. Employees’ Retirement Benefits
Company’s contribution to Provident and Superannuation funds and Pension is charged to Profit and Loss Account on accrual
basis. Liability for Gratuity and Leave encashment benefits are charged to Profit and Loss Account on the basis of actuarial
valuation.
11. 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.
12. 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.
13. Proposed Dividend
Dividend proposed by the Board of Directors is provided for in the accounts, pending approval at the Annual General
Meeting.

Asian Paints (India) Ltd.


annual report 2004-2005 67
Schedules forming part of the accounts
(Rs. in Millions)
2004-2005 2003-2004
B. NOTES :
1. Estimated amount of contracts remaining to be executed on capital account
and not provided for 86.94 378.79
2. Letters of credit and bank guarantees issued by bankers and outstanding as on 31.03.05 451.21 509.64
3. Contingent liabilities:
(a) Guarantee given on behalf of Company’s dealers in respect of loans granted
to them by a bank for acquiring tinting systems 279.56 417.77
(b) Corporate guarantee issued by the Company on behalf of its subsidiaries 879.17 769.68
(c) Claims against the Company not acknowledged as debts:
(i) Tax matters in dispute under appeal 231.60 116.03
(ii) Others 11.01 25.29
4. Auditors’ remuneration (including service tax, wherever applicable)
Statutory audit fee 1.85 1.84
Tax audit fees 0.40 0.40
Certification fees 1.60 0.87
Out of pocket expenses 0.38 0.37
Cost audit fees 0.07 0.08
Branch audit fees 0.07 0.05
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. 0.16 million)
5. (a) Computation of Profit for the year ended 31st March, 2005
under section 349 of the Companies Act, 1956.
Net Profit as per Profit and Loss Account 1,738.16 1,475.80
Add : Provision for taxation 988.00 880.00
Provision for deferred tax (18.16) (44.46)
Managerial remuneration 35.72 29.71
Loss on sale of assets (net) --- 3.52
2,743.72 2,344.57
Less : Surplus on sale of long term investments (net) 0.50 0.01
Surplus on sale of short term investments (net) 23.90 1.65
Profit on sale of assets 27.44 ---
Extraordinary item (Refer Note 23) 42.31 68.06
Prior period items (net) (3.34) 2.07
Profit under Section 198 of the Companies Act,1956 2,652.91 2,272.78
Commission to Non-Executive Directors:
Subject to a ceiling of 1% of profit as computed above 26.53 22.73
Commission actually paid 4.24 3.12
Remuneration to Wholetime Directors:
Subject to a ceiling of 10% of profit as computed above 265.29 227.28
Total remuneration actually paid 30.42 26.59
(b) Details of managerial remuneration under Section 198 of the
Companies Act, 1956
Salaries and allowances 7.88 6.30
Commission to Executive Directors (0.17% of Profit before taxes for
each of the Executive Directors) 13.80 11.79
Contribution to Provident and Superannuation funds 5.24 4.52
Perquisites 3.50 3.98
Sitting Fees to Non-Executive Directors 1.06 ---
Commission to Non-Executive Directors 4.24 3.12
The above remuneration does not include contribution to gratuity fund and leave encashment as this contribution is a lump 35.72 29.71
sum amount 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.

68
Schedules forming part of the accounts
6. Production :

Unit Location Installed Capacity Production

As at As at
31st March, 31st March, 2004-2005 2003-2004
2005 2004
(a) Paints, enamels, varnishes MT/KL In-house(1) 300150 240150 220284(2) 187221(2)
and blacks
Contract
Manufacture/
Purchase --- --- 71776 61215
(b) Synthetic Resins (For mainly
captive consumption) MT In-house(1) 77880 70600 84306(3) 74831(3)
(c) Phthalic Anhydride MT Ankleshwar 24000 24000 22183(4) 21592(4)
(d) Pentaerythritol MT Cuddalore 3000 3000 4430(5) 4235(5)
(e) Sodium Formate MT Cuddalore 1800 1800 2505 2230
(f) Formaldehyde (50%)(6) MT Cuddalore 13500 13500 10598 10570
Capacities are expressed in terms of :
(i) Double-shift working for a period of nine months and three shift working for the remaining period of three months in the year for Paints.
(ii) Three shift working for Synthetic Resins, Phthalic Anhydride, Pentaerythritol, Sodium Formate and Formaldehyde, seven days a week,
throughout the year.
(As per certificate given by the Management).
(1)
Manufacturing plants at Mumbai, Ankleshwar, Patancheru, Kasna and Sriperumbudur.
(2)
Includes 6958 MT (Previous year 6275 MT) of products processed for third party.
(3)
Includes 3573 MT (Previous year 3029 MT) of resins processed for third party.
(4)
Includes 9166 MT (Previous Year 7695 MT) Phthalic Anhydride transferred to paint plants for captive consumption.
(5)
Includes 2926 MT (Previous Year 2398 MT) Pentaerythritol transferred to paint plants for captive consumption.
(6)
Mainly for internal consumption in the manufacture of Pentaerythritol.

7. Stocks and Turnover :

Opening Stock Closing Stock Turnover *


Unit Qty. Value Qty. Value Qty. Value
(Rs. in millions) (Rs. in millions) (Rs. in millions)

(a) Paints, enamels, varnishes MT/KL 21353 1148.67 31004 1858.02 275252 22194.59
and blacks (22549) (1151.50) (21353) (1148.67) (243148) (19195.60)
(b) Phthalic Anhydride MT 102 4.14 411 20.23 12709 674.00
(181) (8.36) (102) (4.14) (13975) (602.49)
(c) Pentaerythritol MT 930 61.23 421 35.93 1936 172.68
(214) (17.66) (930) (61.23) (1129) (106.43)
(d) Sodium Formate MT 6 0.09 223 3.54 2088 37.70
(95) (1.48) (6) (0.09) (2319) (36.92)
(e) Formaldehyde (50%) MT 191 1.98 51 0.40 315 3.03
(134) (2.02) (191) (1.98) (672) (10.43)
(f) Others (Refer Note (ii) below) --- --- --- --- --- 306.37
(307.62)
Total 1216.11 1918.12 23388.37
(1181.02) (1216.11) (20259.49)

* 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.

Asian Paints (India) Ltd.


annual report 2004-2005 69
Schedules forming part of the accounts
8. Raw materials consumed :

2004-2005 2003-2004
Unit Qty. Value Qty. Value
(Rs. in millions) (Rs. in millions)
(a) Pigments, Extenders, Minerals etc. MT 130,994 3,089.28 109,282 2,710.79
(b) Additives MT 14,983 1,265.27 11,824 956.74
(c) Solvents MT 5,295 4,314
KL
} 52,902
} 1,383.40 47,692
} 941.74
(d) Resins MT 7,157 450.72 3,933 229.17
(e) Oils MT 22,865 1,038.53 20,206 913.74
(f) Ortho Xylene MT 23,632 887.16 23,514 704.58
(g) Methanol MT 6,659 111.55 6,481 130.24
(h) Acetaldehyde MT 1,741 64.45 1,581 40.40
(i) Monomers MT 9,551 763.42 8,291 542.16
(j) Others MT 13,442 383.42 11,114 345.50
9,437.20 7,515.06
9. CIF value of direct imports :
2004-2005 2003-2004
(Rs. in millions) (Rs. in millions)
(a) Raw materials 1,426.71 1,219.57
(b) Packing materials 29.60 5.62
(c) Stores and spares 34.27 19.36
(d) Capital goods 54.19 21.08

10. Value of imported and indigenous raw materials and spares consumed and percentage of each to total consumption :

2004-2005 2003-2004
(Rs. in millions) % to Total (Rs. in millions) % to Total
(a) Raw materials :
Direct imports 1,737.49 18.41 1,458.07 19.40
Others (Including value of consumption of
imported raw materials purchased through
indigenous sources Rs. 1,175.97 million -
Previous year Rs. 800.59 million) 7,699.71 81.59 6,056.99 80.60
9,437.20 100.00 7,515.06 100.00
(b) Stores and spares :
Direct imports 27.65 27.65 18.91 16.90
Others 72.35 72.35 92.98 83.10
100.00 100.00 111.89 100.00

11. Net dividend remitted in foreign currency :

2004-2005 2003-2004
Number of Non- Number of Dividend Number of Number of Dividend
resident Equity Shares remitted Non-resident Equity Shares remitted
Shareholders held (net of tax) Shareholders held (net of tax)
(Rs. in millions) (Rs. in millions)
Final Dividend 2002-2003 --- --- --- 21 60,492 0.39
Interim Dividend 2003-2004 --- --- --- 21 90,734 0.32
Final Dividend 2003-2004 19 87,031 0.44 --- --- ---
Interim Dividend 2004-2005 18 35,431 0.14 --- --- ---

70
Schedules forming part of the accounts
(Rs. in Millions)
12. Expenditure in foreign currency :
2004-2005 2003-2004
(a) Annual maintenance for software 8.31 7.09
(b) Royalty --- 0.10
(c) Procurement of software --- 5.52
(d) Professional fees 1.47 3.48
(e) Shade cards and other sales promotional items 15.40 ---
(f) Travelling and training expenses 8.86 8.44
(g) Others 4.92 4.01
38.96 28.64

13. Earnings in foreign currency :


2004-2005 2003-2004
(a) Export of own products at FOB value 102.08 52.06
(b) Export of traded goods at FOB value 2.15 20.42
(c) Royalty 18.16 13.93
(d) Dividend 5.42 8.81
(e) Other receipts 9.42 7.35
137.23 102.57

14. The Company’s new paint plant at Sriperumbudur, near Chennai in the state of Tamil Nadu commenced production on
20th January, 2005 with an initial installed capacity of 30,000 MTs per annum.
15. Sundry debtors include Rs. 31.95 million (Previous year Rs. 23.34 million) due from subsidiary companies.
16. Revenue expenses amounting to Rs. 96.36 million (Previous year Rs. 75.89 million) on Research and Development have been
included under the respective heads of expenses.
17. Interest expense includes:
2004-2005 2003-2004
On Debentures and other fixed loans 4.13 31.35
Other interest 23.41 21.30
27.54 52.65

18. Hitherto, the Company has been recognising inter-division transfers of Phthalic Anhydride and Pentaerythritol to paint
plants for captive consumption as revenue and the same was disclosed separately in Schedule H ‘Sales & Operating Income’.
The value of such inter-division transfers was included in material consumption of the consuming divisions.
With effect from the financial year ended 31st March 2005, the Company has discontinued the method of recognising inter-
division transfers as sales as well as material consumption. The previous year’s figures have been restated accordingly. The
above change in the method of revenue recognition has resulted in a reduction in Net Sales and operating income by
Rs. 600.28 million (previous year Rs. 458.16 million) with a corresponding reduction in material consumption and has no
impact on the profits of the Company.
19. (A) Pursuant to Accounting Standard (AS 28) - Impairment of Assets issued by the Institute of Chartered Accountants of
India, the company made an assessment as at 1st April 2004 for any indication of impairment in the carrying amount
of the Company’s fixed assets and determined impairment loss on certain fixed assets. As required by AS 28, the
impairment loss as at 1st April 2004 is adjusted against opening balance of revenue reserves net of deferred tax credit,
being the impairment loss relating to prior periods. The details of the same are as under :
(a) Fixed assets, being tinting systems leased to the dealers, have been written down by Rs. 248.21 million as the
carrying amount of such assets was significantly higher than the current replacement cost.
(b) Fixed assets being plant & machinery (including information technology assets and electric & pipe fittings),
scientific research equipment, furniture & fittings and office equipment have been written down by Rs. 206.24
million mainly due to technological obsolescence and expected disposal of such assets before the previously
estimated useful life.

Asian Paints (India) Ltd.


annual report 2004-2005 71
Schedules forming part of the accounts
The total impairment provision of Rs. 291.42 million (Gross - Rs 454.45 million less Deferred Tax credit - Rs. 163.03)
has been adjusted against the opening General Reserves of the company as at 1st April 2004. After recognising the
impairment loss, the Company has provided depreciation on the asset’s revised carrying amount less its residual value
(if any), over its remaining useful life. Consequent to the above provision for impairment, the depreciation for the year
ended 31st March, 2005 has reduced by Rs. 100.92 million and the deferred tax liability for the year has increased by
Rs. 33.97 million resulting in net increase in the profits of the Company by Rs. 66.95 million.
The Company has assessed its fixed assets for impairment as at 31st March, 2005 and concluded that there has been
no significant change in the above impairment provision.
(B) Till the financial year ended 31st March, 2004, the company had been providing depreciation on its fixed assets under
Straight Line Method and at rates specified under Schedule XIV to the Companies Act, 1956 except tinting systems
(excluding computers which are part of tinting systems) leased to dealers which are depreciated over the estimated
useful life of nine years. Based on the management’s estimate of useful life, the Company has increased the rate of
depreciation of certain classes of assets as follows:
Asset Class Rate of Depreciation (%) Revised Useful Revised Rate of
till 31st March, 2004. Life (years) Depreciation (%)
Information Technology Assets 16.21 4 25.00
Scientific Research Equipment 4.75 8 12.50
Furniture 6.33 8 12.50
Office Equipment 4.75 5 20.00
Vehicles 9.50 5 20.00
The carrying amount of the above assets as at 1st April, 2004 is being depreciated over the revised remaining useful life.
The above revision in useful life has resulted in additional depreciation amounting to Rs. 83.13 million for the financial
year ended 31st March, 2005 which has been charged to Profit and Loss account as required under Accounting
Standard (AS 6) Depreciation Accounting. Consequently, the Deferred Tax Liability for the year ended 31st March,
2005 has reduced by Rs 27.98 million resulting in net decrease in the profits of the company by Rs. 55.15 million.
The combined impact of (A) and (B) above has resulted in a net reduction in depreciation by Rs. 17.79 million, a net
increase in Deferred Tax Liability by Rs. 5.99 million, and net increase in the profits for the financial year ended 31st
March, 2005 by Rs. 11.80 million.
20. Sundry balances write back (net) include 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.
21. Interest income includes Rs. 1.53 million (previous year Rs. 2.63 million) from non-trade investments. Interest income for the
year ended 31st March, 2004 included Rs. 29.78 million received on account of completion/disposal of various tax
assessments/appeals.
22. 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.
23. During the year the Company sold its investment in its subsidiary Asian Paints (Mauritius) Ltd. aggregating to 6,670,755
ordinary shares of Mauritian Rupees 10/- each being 89.58% of total ordinary share capital to some of the existing shareholders
of the subsidiary company for a consideration of Rs. 0.76 million (equivalent to Mauritian Rupees 500,000). The Company
had invested Rs. 111.12 million in the subsidiary till the date of transfer. The Company had made a provision of Rs. 68.06
million towards permanent diminution in the value of investments in the financial year ended 31st March 2004. The balance
amount of Rs. 42.31 million net of consideration received has been recognised in the Profit and Loss Account as an
extraordinary item towards loss on sale of investment.
24. ‘Miscellaneous Expenses‘ includes initial project expenses incurred in setting up a paint plant at Pondicherry amounting to
Rs. 22.90 million written off during the year as the project is no longer pursued.
25. ‘Profit on sale of Assets’ includes Rs. 31.90 million towards profit on disposal of the Company’s property in Mumbai.
26. 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, 2005 is as follows:

72
Schedules forming part of the accounts
(Rs. in Millions)
*Provision for *Provision for discounts Provision for Leave Provision for Bad and
Excise(1) and sales promotional Encashment(3) Doubtful Debts(4)
expenses(2)
2004-05 2003-04 2004-05 2003-04 2004-05 2003-04 2004-05 2003-04
Opening Balance 59.96 69.86 158.02 161.27 123.70 120.91 38.97 24.18
Additions 0.56 0.18 200.32 158.02 2.72 13.37 9.45 23.09
Utilization --- --- 144.01 157.47 --- 10.58 8.52 5.05
Reversals 8.53 10.08 14.01 3.80 --- --- 7.01 3.25
Closing Balance 51.99 59.96 200.32 158.02 126.42 123.70 32.89 38.97
* Provision for Excise and Provision for discounts & Sales promotional expenses have 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 towards discounts and sales promotion, but yet to be quantified at customer level.
(3)
Provision is made based on actuarial valuation.
(4)
Provision for doubtful debts is made based on the management’s estimate.
27. 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, 2005
are as follows :
(Rs. in Millions)
As at As at
31st March, 2005 31st March, 2004

Deferred tax Assets/(Liabilities)


Difference between the Written Down Value of assets as
per books of accounts and Income Tax Act, 1961. (397.17) (583.21)
Expenses allowed for tax purpose on payment basis 58.16 52.37
Provision for doubtful debts 11.07 13.95
Voluntary Retirement Scheme (VRS) expenditure debited to
Profit & Loss Account but allowed under the Income tax Act over five years 4.80 3.44
Capital Losses carried forward under the Income Tax Act, 1961. 17.76 26.89
Net Deferred tax Assets/(Liabilities) (305.38) (486.56)
Excess Liability created in 2001-2002 transferred back to
General Reserve --- 50.56
Deferred tax liability reversed on assets impaired as at 1st April, 2004. 163.03 ---
Deferred tax Assets/(Liabilities) for the year 18.16 44.46

28. 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
nine and ten years. Lease rentals are payable monthly. 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.
b) Future minimum lease rentals receivable as at 31st March, 2005 as per the lease agreements:
(Rs. in Millions)
2004-2005 2003-2004
i) Not later than one year 80.42 136.83
ii) Later than one year and not later than five years 27.51 105.83
iii) Later than five years 0.30 1.49
108.23 244.15
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.

Asian Paints (India) Ltd.


annual report 2004-2005 73
Schedules forming part of the accounts
c) Total amount of contingent rents recognised as income —NIL (Previous Year - NIL).
d) The initial direct cost relating to acquisition of tinting systems 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 like cars, computers etc., on an operating lease basis for a period of 48 months.
The lease rentals are payable on a monthly/quarterly basis by the Company.
b) Future minimum lease rentals payable as at 31.03.2005 as per the lease agreements :
(Rs. in Millions)

2004-2005 2003-2004
i) Not later than one year 30.09 29.17
ii) Later than one year and not later than five years 36.13 53.92
iii) Later than five years --- ---
66.22 83.09

c) Lease payments recognised in the Profit and Loss Account for the period are Rs. 29.22 million (Previous year Rs. 22.60
million).

29. Pursuant to the Accounting Standard (AS 27) - Financial Reporting of Interests in Joint Venture, the disclosures relating to
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 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, 2005 is as follows:
(Rs. in Millions)

2004-2005 2003-2004
i) Assets 563.73 459.82
ii) Liabilities 197.26 174.96
iii) Income 1,025.74 787.60
iv) Expenses 927.59 731.83

c) The Company’s share of capital commitments in the JV as at 31st March, 2005 is Rs. 2.54 million (Previous year
Rs. Nil).
d) The Company’s share of contingent liabilities of the JV as at 31st March, 2005 is Rs. 1.32 million (Previous year
Rs. 1.32 million).
e) No contingent liabilities and capital commitments have been incurred as at 31st March, 2005 in relation to the Company’s
interests in the JV along with the other venturer (Previous year Rs. Nil).

30. Earnings per share:


2004-2005 2003-2004
a) Basic and diluted earnings per share before extraordinary item in rupees
(face value - Rs. 10/- per share) 18.53 16.12
b) Profit after tax and prior period items but before extraordinary item
as per Profit & Loss Account (Rs. in million) 1,777.13 1,545.93
c) Weighted average number of equity shares outstanding 95,919,779 95,919,779

74
Schedules forming part of the accounts
31. Information on related party transactions as required by Accounting Standard (AS 18) for the year ended 31st March, 2005.
(Rs. in Millions)
Particulars Joint Venture Subsidiaries Key Management Relatives of Key Companies Employee benefit Others
Personnel Management Controlled by plans where
Personnel (*) Directors/Relatives control exists

2004-05 2003-04 2004-05 2003-04 2004-05 2003-04 2004-05 2003-04 2004-05 2003-04 2004-05 2003-04 2004-05 2003-04

Processing of goods
(Income) 65.41 65.78 4.96 4.42
Sale of goods 91.67 50.21 71.25 46.53 7.15 3.01
Purchase of goods 10.87 10.44 --- 0.11 260.65 156.49
Processing of goods
(Expense) 138.58 106.48
Consignment sales 0.03 0.99
Royalty received 9.91 6.23 24.69 20.47
Consultancy 1.59 ---
Other recoveries 48.57 45.83 1.11 7.35 0.14 0.32
Interest on loan 0.06 0.20
Rent deposit --- (0.10)
Sale of investments --- 0.05 --- --- 1.25 3.00 8.12
Equity contribution 99.88 211.24
Share Application 28.43 ---
Repayment of
loan given 17.47 14.33 13.00 1.20
Rent paid 19.50 19.50
Remuneration 29.84 25.98 7.29 6.89
Commission to Non-
Executive Directors 0.40 0.28 1.20 0.84
Sitting fees paid to
Non-Executive Directors 0.07 --- 0.33 ---
Sitting fees received
(From subsidiaries
for nominee Directors) 1.68 ---
Other services -
receipts 5.74 ---
Retainership fee
and other
reimbursements 1.83 1.91
Fixed Deposits
accepted --- 0.15
Fixed Deposits
repaid 0.15 0.02
Donation 1.20 2.90
Sale of assets 7.14 ---
Dividend received 29.25 --- 5.42 8.81 2.26 0.25
Contribution during
the year 204.45 163.26
Outstanding as
on 31.3.2005 :
Loans 158.02 145.69 --- 1.30
Deposits (0.65) (0.65) --- --- --- (0.15) --- --- (0.10) (0.10)
Others 26.74 39.69 34.43 34.43 (14.20) (12.07) (1.20) (0.84) (15.33) (7.48) (54.08) (22.03)

Corporate guarantee issued by the Company on behalf of its subsidiaries amounting to Rs. 879.17 million as at 31st March, 2005 (Previous year Rs. 769.68 million).
* 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.

Asian Paints (India) Ltd.


annual report 2004-2005 75
Schedules forming part of the accounts
a) Joint Venture : Asian PPG Industries Ltd.
b) Subsidiaries :
Asian Paints (Nepal) Pvt. Ltd. Berger Paints Singapore Pte Ltd. Berger International Ltd.
Asian Paints (International) Ltd. Berger Building Services (Singapore) Pte. Ltd. Berger Paints Trinidad Ltd.
Asian Paints (South Pacific) Holdings Ltd. Berger International Sdn Bhd. Enterprise Paints Ltd.
Asian Paints Industrial Coatings Ltd. Berger Paints (Thailand) Ltd. Lewis Berger (Overseas Holdings) Ltd.
Asian Paints (S.P.) Ltd. Berger Paints Manufacturing Ltd. Nirvana Investments Ltd.
Asian Paints (Tonga) Ltd. Berger Paints (Ningbo) Co. Ltd. Samoa Paints Ltd.
Asian Paints (S.I.) Ltd. Berger Paints (Hong Kong) Ltd. SCIB Chemical, S.A.E.
Asian Paints (Vanuatu) Ltd. Berger Contractor (Singapore) Pte. Ltd. Surya Powder Coating Limited (Formerly known as
Asian Paints (Queensland) Pty. Ltd. Berger Paints Emirates Ltd. Surya Gelcaps Limited)*
Asian Paints (Lanka) Ltd. Berger Paints Jamaica Ltd. Taubmans Paints Fiji Ltd.
Asian Paints (Bangladesh) Ltd. Berger Paints Barbados Ltd. Technical Instruments Manufacturers (India) Ltd.
Asian Paints (Middle East) LLC Berger Paints Bahrain WLL Universal Paints Ltd.

* acquired on 25th October, 2004.


The following subsidiaries have been liquidated/struck off/disposed off during the year :
Name of Subsidiary Date of disposal/liquidation
Asian Paints Distributors (Private) Ltd.
Sri Lanka Under voluntary liquidation
Asian Paints (Mauritius) Limited 30th March, 2005
Berger Paints (Malta) Ltd. 12th May, 2004
Berger Paints (Shanghai) Ltd. 23rd February, 2004
c) Associate Company :
Dutch Boy Philippines Inc.
d) Key management personnel :
Name of the Director Designation
Ashwin C. Choksi Chairman
Ashwin S. Dani Vice Chairman & Managing Director
Abhay A. Vakil Managing Director
K. Rajagopalachari Non-Executive Director (till 14th March, 2005)

76
Schedules forming part of the accounts
e) Relatives of Key management personnel :
Directors :
Mahendra C. Choksi Non-Executive Director
Amar A. Vakil Non-Executive Director
Hasit A. Dani Non-Executive Director
Employees :
Jalaj Dani, Manish Choksi, Nehal Vakil, Amrita Vakil, Rupen Choksi and Malav Dani.
f) Companies controlled by directors/relatives :
AR Intertect Design Pvt. Ltd. Gujarat Organics Ltd. Resins and Plastics Ltd.
Ashwin Holdings Pvt. Ltd. Geetanjali Trading & Investments Ltd. Ricinash Oil Mill Ltd.
Asteroids Trading and Investments Pvt. Ltd. Hitech Plast Ltd. Rita Choksi Holdings Pvt. Ltd.
Castle Investments and Industries Pvt. Ltd. Himanshu Holdings Pvt. Ltd. Rupen Investments and Industries Pvt. Ltd.
Centaurus Trading and Investments Pvt. Ltd. Jalaj Trading and Investments Pvt.Ltd. S.C. Dani Research Foundation Ltd.
Clear Plastic Ltd. Jaldhar Investments and Trading Co. Pvt. Ltd. Sadavani Investments and Trading Co. Pvt. Ltd.
Coatings Specialities (India) Ltd. Jatayu Investments Ltd. Sanjivani Chemicals Ltd.
Dani Capital and Investments Pvt. Ltd. Kalica Paper Industries Pvt. Ltd. Sapan Investments Pvt. Ltd.
Dani Enterprises Pvt. Ltd. Lambodar Investments & Trading Co. Ltd. Satyadharma Investments & Trading Co. Pvt. Ltd.
Dani Finance and Investments Co. Pvt. Ltd. Lyon Investments and Industries Pvt. Ltd. Sudhanva Investments and Trading Co. Pvt. Ltd.
Dani Finlease Ltd. Multitech Plast Containers Ltd. Suprasad Investments & Trading Co. Ltd.
Dani Holdings & Trading Co. Pvt. Ltd. Murahar Investments and Trading Co. Ltd. Suptaswar Investments and Trading Co. Ltd.
Dani Securities Ltd. Navbharat Packaging Industries Ltd. Tru Trading and Investments Pvt. Ltd.
Dani Trading and Investments Ltd. Nehal Trading and Investments Pvt. Ltd. Unnati Trading and Investments Pvt. Ltd.
Doli Trading and Investments Pvt. Ltd. Omega Properties Pvt. Ltd. Urvashi Holding Pvt. Ltd.
Elcid Investments Ltd. Pragati Chemicals Ltd. Vikatmev Containers Ltd.
ELF Trading and Chemical Mfg. Co. Ltd. Rangmeet Investments Ltd.

g) 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.
h) Other entities over which there is significant control : Asian Paints Charitable Trust.

Asian Paints (India) Ltd.


annual report 2004-2005 77
Schedules forming part of the accounts
32. Segment Information for the year ended 31st March, 2005:
(Rs. in Millions)

2004-2005 2003-2004
Paints Others* Total Paints Others* Total
Revenue
Net sales
External 18,665.64 749.51 19,415.15 16,329.39 637.07 16,966.46
Inter-Segment --- 600.28 600.28 — 458.16 458.16
Other Income 99.50 31.56 131.06 105.89 17.82 123.71
Total Revenue 18,765.14 1,381.35 20,146.49 16,435.28 1,113.05 17,548.33
Result
Segment result 2,915.22 121.57 3,036.79 2,661.89 49.57 2,711.46
Unallocated Corporate expenses (444.00) (372.74)
Operating Profit 2,592.79 2,338.72
Interest Expenses (27.54) (52.65)
Interest Income 4.60 37.06
Dividends 93.78 15.54
Profit/(Loss) on sale of long term
investments 0.50 0.01
Profit/(Loss) on sale of short term
investments 23.90 1.65
Profit on sale of assets 32.10 ---
Miscellaneous income 30.18 39.07
Extraordinary items (42.31) (68.06)
Income taxes (969.84) (835.54)
Net Profit 1,738.16 1,475.80
Other Information
Segment assets 7,785.29 691.69 8,476.98 6,427.06 553.99 6,981.05
Unallocated corporate assets 3,227.69 3,497.92
Total assets (after impairment loss) 11,704.67 10,478.97
Segment liabilities 3,696.30 245.94 3,942.24 3,270.14 51.98 3,322.12
Unallocated corporate liabilities 2,040.23 1,841.44
Total liabilities 5,982.47 5,163.56
Capital Expenditure 699.43 22.18 721.61 238.90 10.62 249.52
Unallocated corporate capital
expenditure 26.79 13.36
Total 748.40 262.88
Depreciation 387.36 36.04 423.40 404.61 34.72 439.33
Unallocated corporate depreciation 52.64 40.77
Total 476.04 480.10

Impairment loss on segment assets as on


1st April, 2004 384.17 2.30 386.47 --- --- ---
Impairment loss on unallocated corporate
assets as on 1st April, 2004 67.98 ---

Total 454.45 ---

78
Schedules forming part of the accounts
* Others include Company’s business units manufacturing Phthalic Anhydride and Pentaerythritol.
33. 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 C. Choksi Ashwin S. Dani Abhay A. Vakil Tarjani Vakil
Chartered Accountants Chairman Vice Chairman & Managing Director Director
Managing Director
H. N. Shah
Partner Jayesh Merchant
Membership No. 8152 Vice President -
Corporate Finance &
Company Secretary
Mumbai Mumbai
11th May, 2005 11th May, 2005

Asian Paints (India) Ltd.


annual report 2004-2005 79
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. State Code
0 4 5 9 8 1 1
Balance Sheet Date 3 1 0 3 2 0 0 5
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
6 8 6 6 3 5 0 6 8 6 6 3 5 0
Sources of Funds
Paid-up Capital Reserves and Surplus
9 5 9 1 9 8 4 7 6 3 0 0 0
Secured Loans Unsecured Loans Deferred Tax Liability
2 8 3 6 5 1 5 5 5 1 2 1 3 0 5 3 8 0
Application of Funds
Net Fixed Assets Investments
3 1 9 5 0 9 0 2 5 8 4 2 7 0

Net Current Assets Accumulated Losses


1 0 8 6 9 9 0 N I L

V. Performance of the Company (Amount - Rs. in Thousands)


Turnover Total Expenditure
2 3 3 8 8 3 7 0 2 0 6 8 0 3 7 0
+ - Profit/(Loss) Before Tax + - Profit/(Loss) After Tax
 2 7 0 8 0 0 0  1 7 3 4 8 2 0
(Please tick Appropriate box + for profit, - for loss)

Earnings Per Share (Rs.) Dividend Rate (%)


1 8 . 5 3 0 9 5

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

80
Consolidated
Financial Statements
Auditors’ Report to the Board of Directors of Asian Paints (India) Limited group on the
Consolidated Financial Statements of Asian Paints (India) Limited and its
subsidiaries

We have audited the attached consolidated Balance Sheet of We report that the consolidated financial statements have been
Asian Paints (India) Limited group as at 31st March 2005, prepared by the Company in accordance with the requirements
and also the Consolidated Profit and Loss Account and the of Accounting Standard (AS-21) - Consolidated Financial
cash flow statement for the year ended on that date annexed Statements, (AS-23) Accounting for Investments in Associates
thereto. These financial statements are the responsibility of the in Consolidated Financial Statements and (AS-27) Financial
Asian Paints (India) Limited’s management and have been Reporting of Interests in Joint Ventures issued by the Institute of
prepared by the management on the basis of the separate Chartered Accountants of India.
financial statements and other financial information regarding
Based on our audit of financial statements of Asian Paints (India)
its subsidiaries. Our responsibility is to express an opinion on
Limited and on consideration of reports of other auditors of
these financial statements based on our audit.
subsidiaries, included in the consolidated financial statements
We conducted our audit in accordance with generally accepted read with Notes 5 and 6, of Schedule ’M’ - B, and to the best of
auditing standards in India. These standards require that we our information and according to explanations given to us, we
plan and perform the audit to obtain reasonable assurance are of the opinion that the attached consolidated financial
whether the financial statements are prepared, in all material statements give a true and fair view in conformity with the
respects, in accordance with and identified financial reporting accounting principles generally accepted in India:
framework and are free of material misstatements. An audit
a) In the case of consolidated Balance Sheet, of the state of
includes examining on a test basis, evidence supporting the
affairs of Asian Paints (India) Limited group as at 31st
amounts and disclosures in the financial statements. An audit
March 2005;
also includes assessing the accounting principles used and
significant estimates made by management, as well as b) In the case of consolidated Profit and Loss Account, of
evaluating the overall financial statements. We believe that the profit for the year ended on that date; and
our audit provides a reasonable basis for our opinion.
c) in the case of the consolidated cash flow statement, of
We did not audit the financial statements of subsidiaries the cash flows for the year ended on that date.
mentioned in Annexure to this report whose total assets and
total revenues are mentioned in the annexure to this report
except Asian Paints Industrial Coatings Ltd. and Technical
Instruments Manufacturers (India) Ltd. whose accounts are For Shah & Co.
audited by us. The financial statements of other subsidiaries Chartered Accountants
other than those mentioned above have been audited by other
auditors whose reports have been furnished to us, and our
opinion, in so far as it relates to the amounts included in respect Mumbai H. N. Shah
of subsidiaries, is based solely on the reports of the other 11th May, 2005 Partner
auditors. Membership No. 8152

Annexure
The subsidiary companies considered in the consolidated financial statements are:
Direct Subsidiaries: (Rs. in Millions)
Name of the Company Financial Year Total Assets Total Revenues
Asian Paints (Nepal) Limited 15th Jan-14th Jan 128.89 139.61
Asian Paints (Mauritius) Limited (Refer note below) Jan-Dec 0.00 25.06
Asian Paints (International) Limited Jan-Dec 4,227.08 4861.15
Asian Paints Industrial Coatings Limited. Apr-Mar
Technical Instruments Manufacturers (India) Limited Apr-Mar
Note –
Subsequent to the Balance Sheet date of Asian Paints (Mauritius) Limited, the parent Company has sold its 89.58% stake in
Asian Paints (Mauritius) Limited on 30th March 2005.

82
Indirect Subsidiaries:
i) Subsidiaries of the wholly owned subsidiary, Asian Paints (International) Limited, Mauritius.
Accounting period
Asian Paints (South Pacific) Holdings Limited Jan-Dec
Asian Paints (South Pacific) Limited Jan-Dec
Asian Paints (Tonga) Limited Jan-Dec
Asian Paints (Soloman Island) Limited Jan-Dec
Asian Paints (Vanuatu) Limited Jan-Dec
Asian Paints (Queensland) Pty. Limited Jan-Dec
Asian Paints (Lanka) Limited Jan-Dec
Asian Paints (Bangladesh) Limited Jan-Dec
Asian Paints (Middle East) LLC Jan-Dec
SCIB Chemical, S.A.E., Egypt Jan-Dec
Berger International Limited, Singapore Jan-Dec
ii) Subsidiary of Asian Paints (South Pacific) Limited:
Taubmans Paints (Fiji) Limited Jan-Dec
iii) Subsidiar y of Taubmans Paint (Fiji) Limited:
Samoa Paints Limited Jan-Dec
i v ) Subsidiar y of Asian Paints Lanka Limited:
Asian Paints Distributors (Pvt.) Limited
(In voluntary liquidation) Jan-Dec
v ) Subsidiaries of Berger International Limited, Singapore
Accounting period
Berger Paints Singapore Pte. Ltd. Jan - Dec
Berger Building Services (Singapore) Pte. Ltd. Jan - Dec
Berger International Sdn Bhd. Jan - Dec
Berger Paints (Thailand) Ltd. Jan - Dec
Berger Paints Manufacturing Ltd. Jan - Dec
Berger Paints (Ningbo) Co. Ltd. Jan - Dec
Berger Paints (Hong Kong) Ltd. Jan - Dec
Berger Paints (Malta) Ltd., (Disposed on 12th May, 2004) Jan - Dec
Enterprise Paints Limited Jan - Dec
Universal Paints Limited Jan - Dec
Lewis Berger (Overseas Holdings) Ltd. Jan - Dec
Berger Paints (Shanghai) Ltd. (Liquidated on 23rd February, 2004) Jan - Dec
vi) Subsidiary of Berger Building Services (Singapore) Pte Ltd.
Berger Contractor (Singapore) Pte. Ltd. Jan - Dec
vii) Subsidiary of Enterprise Paints Limited:
Nirvana Investments Ltd. Jan - Dec
viii) Subsidiary of Nirvana Investments Ltd.
Berger Paints Emirates Ltd. Jan - Dec
i x ) Subsidiaries of Lewis Berger (Overseas Holdings) Ltd.:
Berger Paints Jamaica Ltd. Jan - Dec
Berger Paints Trinidad Ltd. Jan - Dec
Berger Paints Barbados Ltd. Jan - Dec
x) Subsidiary of Universal Paints Limited:
Berger Paints Bahrain W.L.L. Jan - Dec
xi) Subsidiary of Asian Paints Industrial Coatings Limited:
Surya Powder Coatings Limited
(Formerly known as Surya Gelcaps Limited) Apr - Mar
Joint Venture:
The Joint Venture unit considered in the consolidated financial statements is Asian PPG Industries Limited, a joint venture
between the parent company and PPG Industries Inc., U.S.A. wherein the parent company has equal equity participation.
Associate Company:
Dutch Boy Philippines, Inc., wherein one of the indirect subsidiaries i.e. Berger International Limited is holding 30% equity interest.
For Shah & Co.
Chartered Accountants
Mumbai H. N. Shah
11th May, 2005 Partner
Membership No. 8152

Asian Paints (India) Ltd.


annual report 2004-2005 83
Consolidated Balance Sheet as at 31st March, 2005
(Rs. in Millions)
As at As at
Schedules 31.03.2005 31.03.2004
FUNDS EMPLOYED
Shareholders’ Funds
Share Capital A 959.20 959.20
Reserves and Surplus B 4,690.13 4,313.15
Capital Reserve on consolidation 22.42 22.42
5,671.75 5,294.77
Loan Funds C
Secured Loans 982.64 441.88
Unsecured Loans 1,412.40 1,251.34
2,395.04 1,693.22
Deferred Tax Liability (Net) 353.37 533.41
(Refer Note B - 17 in Schedule ‘M’)
Minority Interest 638.53 697.81
Total 9,058.69 8,219.21
APPLICATION OF FUNDS
Fixed Assets D
Gross Block 9,363.80 8,867.74
Less: Depreciation/Amortisation/Impairment 5,090.95 4,174.24
Net Block 4,272.85 4,693.50
Capital Work in Progress 96.70 46.47
4,369.55 4,739.97
Investments E 1,138.36 1,018.06
Current Assets, Loans and Advances F
Interest accrued on investments 0.03 0.87
Inventories 4,545.44 3,181.85
Sundry debtors 2,958.67 2,649.77
Cash and Bank Balances 608.19 698.00
Other receivables 163.93 184.73
Loans and Advances 800.31 760.92
9,076.57 7,476.14
Retirement benefit assets (Refer Note B - 7 (vi) in Schedule M) 152.10 123.73
Less : Current Liabilities and Provisions G
Current Liabilities 5,005.99 4,751.31
Provisions 1,172.03 969.10
6,178.02 5,720.41
Net Current Assets 3,050.65 1,879.46
Goodwill on consolidation 500.13 581.72
Miscellaneous Expenditure --- 0.01
(To the extent not written off)
Total 9,058.69 8,219.21
Notes M

As per our report of even date For and on behalf of the Board
For Shah & Co. Ashwin C. Choksi Ashwin S. Dani Abhay A. Vakil Tarjani Vakil
Chartered Accountants Chairman Vice Chairman & Managing Director Director
Managing Director
H. N. Shah
Partner Jayesh Merchant
Membership No. 8152 Vice President -
Corporate Finance &
Company Secretary
Mumbai Mumbai
11th May, 2005 11th May, 2005

84
Consolidated Financial Statements

Consolidated Profit & Loss Account


for the year ended 31st March, 2005
(Rs. in Millions)
Year Year
Schedules 2004-2005 2003-2004
INCOME
Sales and operating income (Net of discounts) H 28,966.96 24,916.05
Less: Excise 3,361.74 2,736.97
Sales and operating income (Net of discounts and excise) 25,605.22 22,179.08
Other income I 323.69 263.55
25,928.91 22,442.63
EXPENDITURE
Materials Consumed J 14,892.88 12,463.37
Employees’ remuneration and benefits K 2,015.52 1,851.41
Manufacturing, administrative, selling and distribution expenses L 5,345.50 4,892.72
22,253.90 19,207.50
PROFIT BEFORE INTEREST, DEPRECIATION AND TAX 3,675.01 3,235.13
Less : Interest 108.15 152.03
Less : Depreciation/Amortisation D 613.60 628.35
Add : Profit from Associate Company 2.18 39.14
PROFIT BEFORE TAX AND AMORTISATION OF GOODWILL 2,955.44 2,493.89
Less : Amortisation of Goodwill 77.10 78.26

PROFIT BEFORE TAX 2,878.34 2,415.63


Less : Provision For Current Tax 1,079.68 999.75
Less : Provision For Deferred Tax Liability/(Asset)
(Refer Note B - 17 in Schedule ‘M’) (18.86) (59.25)
PROFIT AFTER TAX BEFORE PRIOR PERIOD ITEMS 1,817.52 1,475.13
Add/(Less) : Prior period items (Net) (4.98) 2.07
PROFIT AFTER TAX AND PRIOR PERIOD ITEMS 1,812.54 1,477.20
Less : Minority Interest 71.63 28.31
ATTRIBUTABLE TO SHAREHOLDERS 1,740.91 1,448.89
Add : Balance brought forward from previous year 820.00 646.16
DISPOSABLE PROFIT 2,560.91 2,095.05
DISPOSAL OF ABOVE PROFIT
Dividend to shareholders of parent company
Equity Shares - Interim 383.69 335.73
- Final 527.56 479.60
Tax on Dividend 130.01 104.47
Transfer to General Reserve 519.65 355.25
Balance carried to Balance sheet 1,000.00 820.00
2,560.91 2,095.05
Earnings per share (Rs.) Basic and diluted - (Face value of Rs.10/- each) 18.15 15.11
(Refer Note B - 18 in Schedule ‘M’)
Notes M
As per our report of even date For and on behalf of the Board
For Shah & Co. Ashwin C. Choksi Ashwin S. Dani Abhay A. Vakil Tarjani Vakil
Chartered Accountants Chairman Vice Chairman & Managing Director Director
Managing Director
H. N. Shah
Partner Jayesh Merchant
Membership No. 8152 Vice President -
Corporate Finance &
Company Secretary
Mumbai Mumbai
11th May, 2005 11th May, 2005

Asian Paints (India) Ltd.


annual report 2004-2005 85
Cash Flow Statement for the year ended 31st March, 2005
(Rs. in Millions)

2004-2005 2003-2004
A. Cash from Operating Activities:
Net profit before prior period items and tax: 2,878,34 2,415.63
Adjustments for:
Depreciation 613.60 628.35
Amortisation of Goodwill 77.10 78.26
Interest Income (10.42) (46.01)
Interest Expense 108.15 152.03
Prior Period adjustments (4.98) 2.07
Dividend Income (62.52) (7.34)
Adjustment on Consolidation (8.41) (28.46)
Profit from Associate Company (2.18) (39.14)
Foreign exchange translation (34.73) (34.46)
Profit on sale of Investments (24.51) (1.61)
Loss on disposal of subsidiary 16.10 ---
Profit on disposal of subsidiary (14.22) ---
Retirement benefit assets (33.10) 18.06
Profit on sale of assets (30.01) ---
Loss on sale of assets 0.06 (2.54)
Operating Profit before working capital changes 3,468.27 3,134.84
Adjustment for:
Trade receivables (327.84) (93.76)
Other receivables (17.60) (206.69)
Inventories (1,385.59) 40.07
Trade and other payable 287.40 467.50
Cash generated from Operations 2,024.64 3,341.96
Less: Income tax paid (net of refund) (957.47) (854.16)
Net Cash generated from Operating Activities 1,067.17 2,487.80
B. Cash flow from Investing Activities:
Purchase of Fixed Assets (966.95) (441.88)
Sale of Fixed Assets 242.79 202.66
Purchase of Investments (269.71) (865.80)
Sale of Investment 168.76 ---
Additional Interest in Subsidiaries --- (38.83)
Cash outflow on acquisition of Subsidiaries (0.33) (34.40)
Cash inflow on disposal of Subsidiaries 13.16 (7.01)
Interest received 11.26 46.48
Dividend received 62.52 7.34
Net Cash used in Investing Activities (738.50) (1,131.44)
C. Cash flow from Financing Activities:
Availment of secured loans 716.59 ---
Repayment of debentures and other secured loans (156.29) (900.73)
Repayment of unsecured loans (1.23) ---
Availment of unsecured loans 163.98 624.57
Interest paid (109.88) (167.68)
Dividends paid (including paid to minority shareholders) (1,031.65) (894.81)
Net Cash used in Financing Activities (418.48) (1,338.65)
D. Net Increase/(Decrease) in Cash and Cash Equivalents (89.81) 17.70
Cash and Cash Equivalents as on 01.04.2004 698.00 680.30
Cash and Cash Equivalents as on 31.03.2005 608.19 698.00
As per our report of even date For and on behalf of the Board
For Shah & Co. Ashwin C. Choksi Ashwin S. Dani Abhay A. Vakil Tarjani Vakil
Chartered Accountants Chairman Vice Chairman & Managing Director Director
Managing Director
H. N. Shah
Partner Jayesh Merchant
Membership No. 8152 Vice President -
Corporate Finance &
Company Secretary
Mumbai Mumbai
11th May, 2005 11th May, 2005

86
Consolidated Financial Statements

Schedules forming part of the accounts


(Rs. in Millions)
As at As at
31.03.2005 31.03.2004

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:
a) 93,989,940 Bonus Shares of Rs. 10/- each fully paid up issued
on capitalisation of Share premium (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 53.74 53.74
General Reserve
As per last Balance Sheet 3,431.46 3,233.79
Add : Transfer from Profit and Loss Account 519.65 355.25
Add : Transfer from Debenture Redemption Reserve 42.50 141.25
Add : Realised on disposal of subsidiary transferred from foreign currency translation reserve 19.50 ---
Add : Excess Deferred Tax Liability created in 2001-2002 transferred back --- 50.56
Add/(Less) : Adjustments on consolidation 3.48 (28.46)
Less : Capitalised for issue of Bonus shares --- (320.93)
Less : Provision for impairment on fixed assets as on 1st April, 2004 (454.45) ---
(Refer Note - B 16A in Schedule M)
Add : Reduction in the deferred tax liability on impairment of fixed assets 163.03 ---
(Refer Note - B 16A in Schedule M)
3,725.17 3,431.46
Foreign Currency Translation Reserve
As per last Balance Sheet (34.56) ---
Add : Currency translation during the year (34.73) (34.56)
Less : Realised on disposal of subsidiary transferred to General Reserve (19.50) ---
(88.79) (34.56)
Debenture Redemption Reserve
As per last Balance Sheet 42.50 183.75
Less : Transfer to General Reserve (42.50) (141.25)
--- 42.50

Profit and Loss Account 1,000.00 820.00


4,690.13 4,313.15

Asian Paints (India) Ltd.


annual report 2004-2005 87
Schedules forming part of the accounts
(Rs. in Millions)
As at As at
31.03.2005 31.03.2004

SCHEDULE C : SECURED AND UNSECURED LOANS


Secured Loans
Long Term :
Debentures
13.75% Non-Convertible Debentures (Note No. 1) --- 85.00
Loans and advances
From Banks and Financial Institution (Note No. 2) 374.13 266.05
374.13 351.05
Short Term :
Loans and advances from banks
Cash Credit Accounts (Note No. 3) 608.51 ---
Foreign Currency Loan --- 90.83
982.64 441.88
Unsecured Loans
Long Term :
Fixed Deposits 3.22 3.32
Trade deposits - Interest free 189.14 191.96
Other loans (Note No. 4) 1,220.04 1,056.06
1,412.40 1,251.34

Notes:
(1) Nil, (Previous year - 850) 13.75 % Secured Redeemable Non-Convertible Debentures
of Rs. 100,000/- each privately placed redeemable at par. 850 debentures were
redeemed during the year (Previous year - 825). --- 85.00
Debentures were secured by pari passu charge on the Company’s movable and --- 85.00
immovable properties pertaining to the paint plants situated at Bhandup, Ankleshwar
and Patancheru, excluding inventories at the above locations.
(2) (a) Interest free Term loan from the Pradeshiya Industrial Corporation of U.P. Ltd.,
(PICUP) under Sales Tax deferment scheme of Govt. 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, subject to prior charge in favour of the Company’s bankers. 106.71 53.40
(b) Secured either by fixed/floating charge on the assets of various subsidiaries 267.42 212.65
374.13 266.05
(3) Secured by hypothecation of inventories, book debts and other current assets. 608.51 90.83
(4) Other loans represent :
(a) Interest free loan availed under the Sales tax deferment scheme of the
Government of Andhra Pradesh by parent Company. 363.60 282.05
(b) Loans availed by various subsidiaries through guarantee/comfort letter
from the parent Company. 836.86 749.19
(c) Finance leases of subsidiaries. 19.58 24.82
1,220.04 1,056.06

88
SCHEDULE D : FIXED ASSETS (Rs. in Millions)
Impairment
Gross Block Depreciation/Amortisation (Refer Note B - 16A Net Block
in Schedule M)

As at Cost of Additions Deductions/ Disposal As at Upto During Deductions/ Depreciation Disposal As at As at As at As at As at


01.04.2004 assets during Adjustments of subsidiaries 31.03.2005 31.03.2004 the Adjustments on assets of subsidiaries 31.03.2005 01.04.2004 31.03.2005 31.03.2005 31.03.2004
taken over the year taken over
on year on acquisition
acquisition

Tangible Assets:
Schedules forming part of the accounts

Land - Owned 131.39 4.52 7.29 0.08 --- 143.12 --- --- --- --- --- — --- --- 143.12 131.39
Land - Leasehold 360.69 --- 10.01 241.58 --- 129.12 38.02 1.03 32.35 --- --- 6.70 --- --- 122.42 322.67
Buildings 1,836.61 --- 355.35 16.43 28.74 2,146.79 499.98 59.54 (16.51) --- 3.41 572.62 --- --- 1,574.17 1,336.63
Plant and Machinery 4,493.82 --- 488.37 35.13 44.53 4,902.53 2,564.81 328.42 39.46 --- 34.37 2,819.40 178.65 178.65 1,904.48 1,929.01
Scientific Research:
Equipment 90.19 --- 9.79 9.29 --- 90.69 45.20 18.97 2.56 --- --- 61.61 5.96 5.96 23.12 44.99
Buildings 7.33 --- 7.55 --- --- 14.88 4.54 0.25 --- --- --- 4.79 --- --- 10.09 2.79
Furniture and Fixtures 478.05 --- 26.08 19.92 10.73 473.48 298.21 62.12 24.01 --- 8.46 327.86 21.63 21.63 123.99 179.84
Office Equipment 1.21 --- 0.10 --- --- 1.31 0.32 0.06 --- --- --- 0.38 --- --- 0.93 0.89
Vehicles 146.94 --- 9.09 12.78 7.97 135.28 83.89 23.42 18.29 --- 6.24 82.78 --- --- 52.50 63.05
Assets acquired on
financial lease:
Plant & Machinery 9.89 --- 5.62 0.74 --- 14.77 1.70 2.06 (2.57) --- --- 6.33 --- --- 8.44 8.19
Vehicles 33.48 --- 7.44 11.18 --- 29.74 15.10 8.29 (1.80) --- --- 25.19 --- --- 4.55 18.37
Assets given under
operating lease 991.31 --- 0.89 4.05 --- 988.15 435.35 63.53 3.07 --- --- 495.81 248.20 248.20 244.14 555.96
Intangible Assets 286.83 --- 7.11 --- --- 293.94 187.13 45.91 --- --- --- 233.04 --- --- 60.90 97.78
Total 8,867.74 4.52 934.69 351.18 91.97 9,363.80 4,174.24 613.60 98.86 --- 52.48 4,636.51 454.45 454.45 4,272.85 4,691.56
Previous Year 8,815.47 53.04 349.87 350.64 --- 8,867.74 3,678.74 628.35 150.52 17.67 --- 4,174.24 --- --- 4,693.50

annual report 2004-2005


Asian Paints (India) Ltd.
Consolidated Financial Statements

89
Schedules forming part of the accounts
(Rs. in Millions)
Nos. Face value As at As at
(Rs.) (Unless 31.03.2005 31.03.2004
specified otherwise)

SCHEDULE E : INVESTMENTS
Long Term Investments
Unquoted
(i) In Government Securities
National Savings Certificates, Indira Vikas Patra and
Defence Certificates deposited with Government authorities. 0.05 0.07
(National Savings Certificate sold during the year Rs. 20,000)
(ii) Trade Investments (Preference shares)
9% Preference shares of
Multitech Plast Containers Ltd. 2,510,000 10/- 25.10 25.10
(iii) Trade Investments (Fully paid Equity shares)
(a) Multitech Plast Containers Ltd. --- 10/- --- 1.90
(190,000 Shares sold during the year) (190,000)
(b) Ricinash Oil Mill Ltd. --- 10/- --- 1.10
(110,000 shares sold during the year) (110,000)
(c) Patancheru Enviro-tech Ltd. 12,900 10/- 0.13 0.13
(d) SIPCOT Common Utilities Ltd. 2,830 100/- 0.28 0.28
(e) Bharuch Eco-Acqua Infrastructure Ltd. 434,790 10/- 4.35 4.35
(f) Apco Coatings (NZ) Ltd. 23,500 1 NZ 0.72 0.72
(g) Danish for Wood 2,500 10 LE 0.18
Less : Provision for diminution in the value of investments (0.18) --- ---
(h) Masters Builders Technologies Egypt 500 10 LE 0.04 0.04
(i) Maseter Builders Technologies 125 10 LE 0.01 0.01
(j) Misr Quena 1,000 10 LE 0.07 0.07
(k) Den Braven 500 10 LE 0.04 0.04
30.74 33.74

(iv) Other Investments


(a) Units of Unit Trust of India under
Venture Capital Unit Scheme - 1990 --- 100/- --- 0.04
(370 units redeemed during the year) (370)
(b) Contribution to Gujarat Venture Capital Fund -
1990 (5% amounting to Rs. 25,000 0.09 0.11
redeemed during the year)
(c) 10.5% tax free Bonds of
Konkan Railway Corporation Ltd. --- 1,000/- --- 25.64
(25,000 bonds redeemed during the year) (25,000)
(d) Equity shares of Mark Auto Industries Ltd. 62,500 10/- 5.00 5.00
(v) Dutch Boy Philippines, Inc. (including share of profit) 427,500 100/- 58.96 64.24
(Refer Note No. B - 13 in Schedule M) in Peso
64.05 95.03
Total long term unquoted investments 94.84 128.84

90
Consolidated Financial Statements

Schedules forming part of the accounts


(Rs. in Millions)

Nos. Face value As at As at


(Rs.) 31.03.2005 31.03.2004

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 Lattices Ltd. 3,418 10/- 0.11 0.11
Total long term quoted investments 773.81 773.81
Total long term investments 868.65 902.65
Short Term Investments (Unquoted)
DSP Merrill Lynch Liquidity Fund - Growth Plan --- 10/- --- 20.00
(13,09,036.220 units sold during the year) (13,09,036.220)
Birla Cash Plus Institutional Plan - Growth --- 10/- --- 20.00
(11,76,829.370 units sold during the year) (11,76,829.370)
Birla Cash Plus Institutional Premium Plan -
Dividend Growth - acquired during the year 1,996,477.315 10/- 20.01 ---
JM Fixed Maturity Plan - Dividend Option
acquired during the year 15,131,481.727 10/- 151.32 ---
SBI Magnum Instacash Fund - Dividend Plan --- 10/- --- 75.41
(7,158,442,130 units sold during the year) (7,158,442,130)
Birla FMP Quarterly series 1 - Plan A - 3,699,029.008 10/- 37.01 ---
Dividend Pay out
(3,699,029.008 units purchased during the year)
Birla FMP Quarterly series 2 - Plan A - 999,412.044 10/- 10.00 ---
Dividend Pay out
(999,412.044 units purchased during the year)
Birla FMP Quarterly series 3 - Plan A - 5,129,887.603 10/- 51.37 ---
Dividend Pay out
(5,129,887.603 units purchased during the year)
Total short term investments 269.71 115.41
Total Investments 1,138.36 1,018.06

Aggregate market value of Long term Quoted Investments : 924.99 748.05


Note : Figures in brackets indicate that of previous year.

Asian Paints (India) Ltd.


annual report 2004-2005 91
Schedules forming part of the accounts
(Rs. in Millions)

As at As at
31.03.2005 31.03.2004

SCHEDULE F : CURRENT ASSETS, LOANS AND ADVANCES


Current Assets
(i) Interest accrued on investments 0.03 0.87

(ii) Inventories
(a) Raw and packing materials 1,849.22 1,240.54
(b) Finished goods 2,379.26 1,683.45
(c) Work-in-process 237.50 193.86
(d) Stores, spares, fuel and other traded goods 79.46 64.00
4,545.44 3,181.85
(iii) Sundry debtors (Unsecured)
(a) Outstanding for more than six months
Considered good 246.65 75.33
Considered doubtful 427.29 484.76
673.94 560.09
Less: Provision for doubtful debts 427.29 484.76
246.65 75.33
(b) Other debts (considered good) 2,712.02 2,574.44
2,958.67 2,649.77
(iv) Cash and Bank Balances
(a) Cash on hand 9.21 21.06
(b) Balances with Banks:
(i) Current Accounts 480.81 513.83
(ii) Cash Credit Accounts --- 17.16
(iii) Term Deposits 118.17 145.95
608.19 698.00
(v) Other receivables 163.93 184.73

Loans and Advances


(i) Loans and Advances :
Unsecured and considered good
(a) Balances with Customs, Central Excise etc. 145.59 68.74
(b) Sundry deposits 134.12 138.80
(c) Advances/claims recoverable in cash or in kind 302.69 242.85
(d) Advances to employees 17.15 19.56
(e) Advances against Capital expenditure 42.76 60.71
(f) Income Tax Refund Receivable --- 187.35
(g) Prepaid expenses 0.73 ---
(h) Others 157.27 42.91
800.31 760.92
9,076.57 7,476.14

92
Consolidated Financial Statements

Schedules forming part of the accounts


(Rs. in Millions)

As at As at
31.03.2005 31.03.2004

SCHEDULE G : CURRENT LIABILITIES AND PROVISIONS


Current Liabilities
(i) Acceptances 1,141.74 819.03
(ii) Sundry creditors:
— Trade 2,018.73 2,445.54
— Others 926.35 278.78
2,945.08 2,724.32
4,086.82 3,543.35
(iii) Unpaid/unclaimed dividend 19.92 18.02
Unpaid/unclaimed matured deposits 0.78 0.52
Unclaimed interest 0.31 0.38
21.01 18.92
(iv) Interest accrued but not due 0.19 1.85
(v) Other liabilities 897.97 1,187.19
5,005.99 4,751.31
Provisions
(i) Proposed final dividend 527.56 479.60
(ii) Provision for tax on proposed final dividend 73.99 61.45
(iii) Provision for taxation (net of advance taxes paid) 177.28 55.07
(iv) Provision for leave encashment 127.78 133.69
(v) Other provisions 265.42 239.29
1,172.03 969.10
6,178.02 5,720.41

Asian Paints (India) Ltd.


annual report 2004-2005 93
Schedules forming part of the accounts
(Rs. in Millions)

Year Year
2004-2005 2003-2004

SCHEDULE H : SALES AND OPERATING INCOME


Sales:
Sales 30,163.16 26,036.60
Less: Goods returned 310.25 307.33
Turnover 29,852.91 25,729.27
Less: Discounts 1,127.47 1,095.58
Sales (Net of discounts) 28,725.44 24,633.69
Processing charges 69.88 65.78
Lease Rent 130.79 189.38
Revenue from Home Solutions operations 40.85 27.20
28,966.96 24,916.05

SCHEDULE I : OTHER INCOME


Interest received 10.42 46.01
Claims received 3.68 5.47
Dividends 62.52 7.34
Royalty 21.91 9.44
Profit on sale of subsidiaries 14.22 ---
(Refer Note B - 8 in Schedule M)
Sundry balances written back (net) 17.15 56.19
Profit on sale of investments 24.51 1.66
Profit on sale of assets 30.01 6.25
Exchange difference (net) 2.71 9.97
Miscellaneous income 136.56 95.78
Retirement Benefit Fund revaluation --- 25.44
323.69 263.55

94
Consolidated Financial Statements

Schedules forming part of the accounts


(Rs. in Millions)

Year Year
2004-2005 2003-2004

SCHEDULE J : MATERIALS CONSUMED


Raw and Packing Materials Consumed
Opening Stock 1,240.54 1,267.69
Add: Purchases and expenses 15,373.59 11,832.43
16,614.13 13,100.12
Less: Closing Stock 1,852.02 1,240.54
14,762.11 11,859.58
Purchase of Paints for resale 623.95 310.37
Cost of other goods sold 247.31 273.89
15,633.37 12,443.84
Add/(Less) :Decrease/(Increase) in finished and semi-finished stock
Opening Stock 1,877.31 1,896.84
Closing Stock 2,617.80 1,877.31
(740.49) 19.53
14,892.88 12,463.37

SCHEDULE K : EMPLOYEES’ REMUNERATION AND BENEFITS


Salaries, wages, allowances, commission, provisions for
bonus and accrued leave salary 1,791.97 1,601.73
Staff welfare expenses 79.21 107.58
Contribution to Provident Fund, Gratuity and other funds 144.34 142.10
2,015.52 1,851.41

Asian Paints (India) Ltd.


annual report 2004-2005 95
Schedules forming part of the accounts
(Rs. in Millions)

Year Year
2004-2005 2003-2004

SCHEDULE L : MANUFACTURING, ADMINISTRATIVE, SELLING


AND DISTRIBUTION EXPENSES
Stores and spares 159.55 158.65
Power and fuel 290.23 260.30
Processing charges 208.61 111.89
Freight and handling charges 942.40 786.06
Repairs and maintenance:
Buildings 27.53 25.54
Machinery 61.90 65.11
Other assets 115.83 121.37
205.26 212.02
Rent 198.31 187.90
Rates and taxes 163.14 139.78
Insurance 71.03 71.33
Advertisement and sales promotional expenses 956.05 873.75
Cash discount and Payment performance discount 908.88 805.41
Printing, stationery and communication expenses 174.65 177.79
Travelling expenses 208.77 212.77
Commission on sales 162.03 21.25
Donations 10.58 11.20
Loss on sale of assets 0.06 3.71
Loss on sale of short term investments --- 0.05
Miscellaneous expenses 603.16 746.56
Commission to Non-executive directors 4.28 3.89
Directors’ sitting fees 1.06 ---
Bad and doubtful debts 44.67 89.37
Auditors’ remuneration 16.24 19.04
Loss on sale of subsidiary (Refer Note B - 9 in Schedule M) 16.10 ---
Exchange difference (net) 0.44 ---
5,345.50 4,892.72

96
Consolidated Financial Statements

Schedules forming part of the accounts


SCHEDULE M: NOTES ON CONSOLIDATED FINANCIAL STATEMENTS
A. Statement of Significant Accounting Policies
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 of accounting.
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 the 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 lives.
At the 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, the asset’s recoverable amount is estimated. An impairment
loss is recognised whenever the carrying amount of asset exceeds its recoverable amount.
After recognition of impairment loss, 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 on consolidation is amortised over a period of ten years.
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 exclusive of sales tax/VAT.
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 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 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.
Amounts due from lessees under finance leases 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.

Asian Paints (India) Ltd.


annual report 2004-2005 97
Schedules forming part of the accounts
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 on the basis of standard cost method, duties (if applicable) and other costs
incurred in bringing the inventories to their present location and condition. Traded goods are valued at cost.
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 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 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’.
12. Employees’ Retirement Benefits
In respect of the holding company, contribution to Provident fund, Superannuation fund and Pension is charged to Profit and
Loss Account on accrual basis. Liability for Gratuity and Leave encashment benefits are charged to profit and loss account on
the basis of actuarial valuation.
In respect of some of the subsidiaries -
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.
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 vest.

98
Consolidated Financial Statements

Schedules forming part of the accounts


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

Asian Paints (India) Ltd.


annual report 2004-2005 99
Schedules forming part of the accounts
(Rs. in Millions)
2004-2005 2003-2004

B. NOTES :
1. Estimated amount of contracts remaining to be executed
on capital account and not provided for. 117.64 412.96
2. Letters of credit and bank guarantees issued by bankers and outstanding
as at the Balance Sheet date 491.87 530.17
3. Contingent liabilities:
i. Guarantees given -
a) to a bank on behalf of the parent Company’s dealers in respect of
loans granted to them by a bank for acquiring tinting systems 279.56 417.77
b) to others 42.42 11.53
ii. Claims against the Company not acknowledged as debts
a) Tax matters in dispute under appeal 234.28 120.15
b) Others 17.68 37.09

4. One of the subsidiaries, 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.2241 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.
5. Details of Subsidiaries, Joint Venture and Associate Company :
Subsidiaries:
The subsidiary companies considered in the consolidated financial statements are:
Name of the Company Country of % of Financial
Incorporation voting power Year
Direct Subsidiaries
Asian Paints (Nepal) Pvt. Limited Nepal 51% 15th Jan-
14th Jan
Asian Paints (Mauritius) Limited (Refer note below) Mauritius 89.58% Jan-Dec
Asian Paints (International) Limited Mauritius 100% Jan-Dec
Asian Paints Industrial Coatings Limited India 100% Apr-Mar
Technical Instruments Manufacturers (India) Limited India 100% Apr-Mar

Notes : Subsequent to the Balance Sheet date of Asian Paints (Mauritius) Limited, the Group has sold its 89.58% stake in
Asian Paints (Mauritius) Limited on 30th March, 2005 to certain local shareholders of the Company for a consideration
of Rs. 0.76 million.

100
Consolidated Financial Statements

Schedules forming part of the accounts


Indirect Subsidiaries

Country of % Accounting
Incorporation holding period

i) Subsidiaries of the wholly owned subsidiary,


Asian Paints (International) Limited, Mauritius:
Asian Paints (South Pacific) Holdings Limited Vanuatu 100% Jan-Dec
Asian Paints (South Pacific) Limited Fiji Islands 51% Jan-Dec
Asian Paints (Tonga) Limited Kingdom of Tonga 51% Jan-Dec
Asian Paints (S.I.) Limited Solomon Islands 75% Jan-Dec
Asian Paints (Vanuatu) Limited Republic of Vanuatu 60% Jan-Dec
Asian Paints (Queensland) Pty. Limited Australia 88.57% Jan-Dec
Asian Paints (Lanka) Limited Sri Lanka 98.20% Jan-Dec
Asian Paints (Bangladesh) Limited Bangladesh 71.23% Jan-Dec
Asian Paints (Middle East) LLC Sultanate of Oman 49% Jan-Dec
SCIB Chemical S.A.E. Egypt 60% Jan-Dec
Berger International Limited Singapore 50.10% Jan-Dec

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


Taubmans Paints (Fiji) Limited Fiji Islands 100% Jan-Dec

iii) Subsidiary of Taubmans Paints (Fiji) Limited:


Samoa Paints Limited Samoa 80% Jan-Dec

iv) Subsidiary of Asian Paints (Lanka) Limited:


Asian Paints Distributors (Pvt.) Limited Sri Lanka 100% Jan-Dec
(under voluntary liquidation)

Asian Paints (India) Ltd.


annual report 2004-2005 101
Schedules forming part of the accounts
Country of % Accounting
Incorporation holding period

v) Indirect subsidiaries i.e. subsidiaries of Berger


International Limited, Singapore:
Berger Paints Singapore Pte Ltd. Singapore 100% Jan - Dec
Berger Building Services Singapore 100% Jan - Dec
(Singapore) Pte. Ltd.
Berger International Sdn Bhd. Malaysia 100% Jan - Dec
Berger Paints (Thailand) Ltd. Thailand 81.3% Jan - Dec
Berger Paints Manufacturing Ltd. Myanmar 60% Jan - Dec
Berger Paints (Ningbo) Co. Ltd. People’s Republic of 100% Jan - Dec
China
Berger Paints (Hong Kong) Ltd. Hongkong 100% Jan - Dec
Berger Paints (Malta) Ltd. Malta 84.2% Jan - Dec
(Disposed on 12th May, 2004)
Enterprise Paints Limited Isle of Man, U.K. 100% Jan - Dec
Universal Paints Limited Isle of Man, U.K. 100% Jan - Dec
Lewis Berger (Overseas Holdings) Ltd. U.K. 100% Jan - Dec
Berger Paints (Shanghai) Ltd. China 100% Jan - Dec
(Liquidated on 23rd February, 2004)

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


Berger Contractor (Singapore) Pte. Ltd. Singapore 100% Jan - Dec

vii) Subsidiary of Enterprise Paints Ltd.:


Nirvana Investments Ltd. Isle of Man, U.K. 100% Jan - Dec

viii) Subsidiary of Nirvana Investments Ltd.:


Berger Paints Emirates Ltd. U.A.E. 100% Jan - Dec

ix) Subsidiaries of Lewis Berger (Overseas Holdings) Ltd.:


Berger Paints Jamaica Ltd. Jamaica 51% Jan - Dec
Berger Paints Trinidad Ltd. Trinidad 70% Jan - Dec
Berger Paints Barbados Ltd. Barbados 100% Jan - Dec

x) Subsidiary of Universal Paints Ltd.:


Berger Paints Bahrain W.L.L. Bahrain 100% Jan - Dec

xi) Subsidiary of Asian Paints Industrial Coatings Ltd.:


Surya Powder Coating Limited India 100% Apr - Mar
(Formerly known as Surya Gelcaps Limited)
(Acquired on 25th October, 2004)

Joint Venture:
The Joint Venture unit considered in the consolidated financial statements is Asian PPG Industries Limited, a joint venture between
the parent company and PPG Industries Inc., U.S.A. wherein the parent company has 50% equity participation.
Associate Company:
Dutch Boy Phillippines, Inc., wherein one of the subsidiaries i.e. Berger International Limited is holding 30% equity interest.

102
Consolidated Financial Statements

Schedules forming part of the accounts


6. 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. All significant intra group
balances and transactions have been eliminated on consolidation. The amounts shown in respect of reserves comprise
of the relevant reserves as per the balance sheet of the parent company and its share in the increase in the post -
acquisition relevant reserves of the subsidiaries.
iii) The goodwill/capital reserve on consolidation has been recognised in the consolidated financial statements. The goodwill
is amortised over a period of ten years on straight line basis.
iv) 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.
v) Minority interest in the net income and net assets of the consolidated financial statements are computed and shown
separately.
7. Certain subsidiaries operate a defined benefit plans scheme. These plans are salary defined benefits plan and are fully
funded. The assets of the fund are held separately from those of the subsidiaries in an independently administered fund. The
plans are funded by payments from employees and the subsidiaries based on the recommendations of independent qualified
actuaries. These plans are valued by independent actuaries every one to three years using the projected unit credit method.
The actuarial valuation was carried out by the respective subsidiaries on 1st January, 2004 and 31st December 2004.
8. The Group disposed off its 84.2% stake in its subsidiary, Berger Paints (Malta) Limited on 12th May, 2004. The net assets of
Berger Paints (Malta) Limited as at the date of disposal were as follows:
Particulars (Rs. in Millions)

2004-05

Fixed Assets 4.67


Current Assets 50.77
Current Liabilities (10.75)
Capital Reserve (3.43)
Minority Interest (7.08)
34.18
Gain on Disposal 14.22
Total Consideration 48.40
Satisfied by:
Cash Consideration 23.66
Loan receivable 24.74
48.40
Net Cash inflow on disposal:
Cash Consideration 23.66
Cash and Cash Equivalents disposed off (11.02)
Net Cash Inflow 12.64

9. Subsequent to the Balance Sheet date of Asian Paints (Mauritius) Limited, the Group has sold its 89.58% stake in Asian Paints
(Mauritius) Limited on 30th March 2005 to certain local shareholders for a consideration of Rs. 0.76 Million. Hence the
financial statements of Asian Paints (Mauritius) Limited have been consolidated for the period from 1st January 2004 to 30th
March 2005 (i.e. till the date of disposal of stake in the subsidiary) The net assets of Asian Paints (Mauritius) Limited as on the
date of disposal were as follows:

Asian Paints (India) Ltd.


annual report 2004-2005 103
Schedules forming part of the accounts
Particular (Rs. in Millions)

Fixed Assets 34.81


Investments 0.02
Long Term Loan (1.44)
Current Assets 7.24
Current Liabilities (21.73)
Minority Interest (2.05)
16.85
Loss on Disposal (16.10)
Total Consideration 0.76
Satisfied by:
Cash Consideration 0.76
Net Cash inflow on disposal:
Cash consideration 0.76
Cash and Cash Equivalents (disposed off) (0.24)
Net Cash Inflow 0.52

10. On 25th October, 2004, one of the subsidiaries, Asian Paints Industrial Coatings Limited acquired 100% stake in Surya
Powder Coating Limited (previously known as Surya Gelcaps Limited). The goodwill arising on acquisition of Surya Powder
Coating Limited amounting to Rs. 0.43 million has been recognised in the consolidated financial statements.
The assets and liabilities of Surya Powder Coating Limited as on the date of acquisition were as follows:
Particulars (Rs. in Millions)

Fixed Assets (including Capital Work in Progress) 8.50


Long Term Loans (5.00)
Current Assets 0.57
Current Liabilities (3.60)
Net Assets as on the date of acquisition 0.47
Goodwill on Consolidation 0.43
Cash Consideration 0.90
Net Outflow of Cash and Cash Equivalents 0.33

11. Permanent diminution in the value of long term Investments in Asian Paints (Sri Lanka) Limited, Berger International Sdn Bhd,
Malaysia and Berger Paints Manufacturing Limited, Myanmar has been recognised in the financial statements of respective
holding Companies. Consequently, the Goodwill pertaining to the investment in the above subsidiaries amounting to Rs. 8.83
millions has been charged to the consolidated Profit and Loss Account.
12. During the financial year ended 31st December 2003, a decision was taken in the case of one of the subsidiaries, Berger
Paints (Jamaica) Limited to discontinue the provision of the medical benefits to its pensioners as at 31st December 2003.
However, during 2004, the decision was not effected as the directors, based on information available, were of the opinion
that such a position could not be sustained. As a result, the actuarial valuation as at 31st December 2003 was carried out to
reflect the liability in respect of this plan and the total provision of Rs. 7.91 millions have been charged to the consolidated
Profit and Loss Account as prior period item.
13. The investment in Dutch Boy Philippines Inc., where Berger International Limited, Singapore holds 30% has been accounted
for under equity method of accounting as under:
(Rs. in Millions)

2004-05 2003-04
Opening Balance of investment 64.24 ---
Investment in associate on acquisition of subsidiary --- 38.38
Add: Share of profit 2.18 39.14
Less: Share of taxation (0.70) (12.54)
Less: Exchange difference (6.76) (0.74)
Closing balance of investment 58.96 64.24

104
Consolidated Financial Statements

Schedules forming part of the accounts


14. As required under Accounting Standard (AS 27) - Financial Reporting of Interests in Joint Venture, the audited financial
statements of Asian PPG Industries Limited (hereinafter referred to as JV), the Joint Venture between the parent company and
PPG Industries 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.
 The parent company’s share of capital commitments in the JV as at 31st March, 2005 is Rs. 2.54 millions. (Previous
year Rs. Nil). (Included in Note B - 1 in Schedule ‘M’).
 The parent company’s share of contingent liabilities of the JV as at 31st March, 2005 is Rs. 1.32 millions (Previous year
Rs. 1.32 millions). (Included in Note B - 4 (a) in Schedule ‘M’).
 No contingent liabilities and capital commitments have been incurred as at 31st March, 2005 in relation to the parent
company’s interests in the JV along with the other venturer. (Previous year Rs. Nil)
15. Hitherto, the parent Company has been recognising inter-division transfers of finished goods for captive consumption as
revenue and the same was disclosed separately in Schedule ‘H’ - ‘Sales and Operating Income’. The value of such inter-
division transfers was included in material consumption of the consuming divisions.
With effect from the financial year ended 31st March 2005, the parent Company has discontinued the method of recognition
of inter-division transfers as sales as well as material consumption. The previous year’s figures have been restated accordingly.
The above change in the method of revenue recognition has resulted in a reduction in Net Sales by Rs. 600.28 Million
(previous year Rs. 458.16 million) with a corresponding reduction in material consumption. The above change does not have
any impact on the profits of the Group.
16. A. Pursuant to Accounting Standard (AS 28) – Impairment of Assets issued by the Institute of Chartered Accountants of
India, the parent Company made an assessment as at 1st April 2004 for any indication of impairment in the carrying
amount of the Company’s fixed assets. On the basis of such assessment, the parent Company has determined impairment
loss on certain fixed assets amounting to Rs. 454.45 millions. As required by AS 28, the impairment loss (net of
deferred tax credit amounting to Rs. 163.03) as at 1st April 2004 is adjusted against opening balance of revenue
reserves, being the impairment loss pertaining to prior periods. After recognising the impairment loss, the Company
has provided depreciation on the asset’s revised carrying amount less its residual value (if any), over its remaining
useful life. Consequent to the above provision for impairment, the depreciation for the year ended 31st March 2005
has reduced by Rs. 100.92 million and the deferred tax liability for the year has increased by Rs. 33.97 million
resulting in net increase in the profits of the group by Rs. 66.95 million.
B. Till the financial year ended 31st March 2004, the parent company had been providing depreciation on its fixed assets
under Straight Line Method and at rates specified under Schedule XIV to the Companies Act, 1956 except tinting
systems (excluding computers which are a part of tinting systems) leased to dealers which were depreciated over the
estimated useful life of nine years. Based on the management’s estimate of useful life, the parent company has increased
the rate of depreciation of certain classes of assets as follows:
Asset Class Rate of Depreciation (%) Revised Useful Revised Rate of
till 31st March, 2004 Life (years) Depreciation (%)
Information Technology Assets 16.21 4 25.00
Scientific Research Equipment 4.75 8 12.50
Furniture 6.33 8 12.50
Office Equipment 4.75 5 20.00
Vehicles 9.50 5 20.00
The carrying amount of the above assets as at 1st April, 2004 is being depreciated over the revised remaining useful life.
The above revision in useful life has resulted in additional depreciation amounting to Rs. 83.13 millions for the financial year
ended 31st March, 2005 which has been charged to Consolidated Profit and Loss account as required under Accounting
Standard (AS 6) – Depreciation Accounting. Consequently, the Deferred Tax Liability for the year ended 31st March, 2005
has reduced by Rs 27.98 millions resulting in net decrease in the profits of the Group by Rs. 55.15 millions.

Asian Paints (India) Ltd.


annual report 2004-2005 105
Schedules forming part of the accounts
17. The group 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 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, 2005 are
as follows :

(Rs. in millions)
As at As at
31.03.2005 31.03.2004
Deferred tax Liabilities
Difference between the Written Down Value of assets as per books of
accounts and Income Tax Act (406.27) (608.91 )
Acclerated Capital Allowances and Unremitted income (20.71) (15.52)
Deferred tax liability on account of income on retirement assets (48.24) (40.05)
Preconstruction interest capitalised in accounts, Deductions for the same
claimed under Income Tax Act over a period of 5 years (6.00) (5.32)
Total (481.22) (669.80)
Deferred tax Assets
Expenses allowed under the Income Tax Act purpose on payment basis 58.64 53.45
Provision for doubtful debts 13.73 16.43
Expenditure debited to Profit and Loss Account but allowed under Income
tax Act over a larger period. 5.73 3.57
Losses carried forward under Income Tax Act 49.75 62.94
Total 127.85 136.39
Net Deferred Tax Asset/(Liability) (353.37) (533.41)

18. Earnings per share:


2004-2005 2003-2004

(a) Basic and diluted earnings per share in rupees (face value -
Rs.10/- per share) 18.15 15.11
(b) Profit after tax as per Profit & Loss Account (Rs. in million) 1,740.91 1,448.89
(c) Weighted average number of equity shares outstanding 95,919,779 95,919,779

106
Consolidated Financial Statements

Schedules forming part of the accounts


19. Information on related party transactions as required by Accounting Standard (AS 18) for the year ended
31st March, 2005:
(Rs. in millions)

Particulars Key Management Relatives of Key Companies Employee benefit Others


Personnel Management Controlled by plans where
Personnel(*) Directors / Relatives / control exists
Associates
2004-05 2003-04 2004-05 2003-04 2004-05 2003-04 2004-05 2003-04 2004-05 2003-04

Processing of goods (Expense) 138.58 106.48


Sale of goods 62.67 60.57
Purchase of goods 274.76 169.36
Royalty paid 28.41 14.21
Consultancy 1.59 ---
Other recoveries 0.14 0.81
Interest on loan 0.06 0.20
Interest paid 6.67 15.71
Rent Deposit --- (0.10)
Sale of Investments --- 1.25 3.00 8.12
Repayment of loan 13.00 1.20
Remuneration 56.34 50.22 7.29 6.89
Commission to
Non-executive Directors 0.40 0.28 1.20 0.84
Sitting fees paid to Non-
executive Directors 0.07 --- 0.33 ---
Dividend paid 14.63 ---
Other services 3.50 ---
Retainership fee and
other reimbursements 1.83 1.91
Fixed Deposits accepted --- 0.15
Fixed Deposits repaid 0.15 0.02
Donation 1.20 2.90
Dividend received 2.26 0.25
Contribution during
the year 204.45 163.26
Outstanding as
on 31.03.05:
Loans --- 1.30
Deposits --- (0.15) (0.10) (0.10)
Others (14.20) (12.07) (1.20) (0.84) 3.50 (236.15) (54.08) (22.03)

* Under the employment of the parent company pursuant to the necessary approval from the shareholders and the Central
Govt. u/s. 314 of the Companies Act, 1956.

Asian Paints (India) Ltd.


annual report 2004-2005 107
Schedules forming part of the accounts
1. Key management personnel:
Directors of parent Company : Ashwin C. Choksi, Chairman, Ashwin S. Dani, Vice Chairman & Managing Director,
Abhay A. Vakil, Managing Director and K. Rajagopalachari, Non-Executive Director (till 14th March, 2005)
Directors/Key management personnel of subsidiaries/Joint venture:
V. S. Ram, Jagdish Acharya, J.N. Shahani, I.K. Jaiswal and Amitav Sur.
2. Relatives of Key management personnel: Mahendra C. Choksi, Non-Executive Director, Amar A. Vakil, Non-Executive
Director, Hasit A. Dani, Non-Executive Director, Jalaj Dani*, Manish Choksi, Nehal Vakil, Amrita Vakil, Rupen Choksi
and Malav Dani.
* Mr. Jalaj Dani, a relative of parent Company’s Vice Chairman & Managing Director is also a Director on most of the
subsidiary companies.
3. (a) Companies over which the Directors have significant influence or control:
AR Intertect Design Pvt. Ltd. Gujarat Organics Ltd. Resins and Plastics Ltd.
Ashwin Holdings Pvt. Ltd. Geetanjali Trading & Investments Ltd. Ricinash Oil Mill Ltd.
Asteroids Trading and Investments Pvt. Ltd. Hitech Plast Ltd. Rita Choksi Holdings Pvt. Ltd.
Castle Investments and Industries Pvt. Ltd. Himanshu Holdings Pvt. Ltd. Rupen Investments and Industries Pvt. Ltd.
Centaurus Trading and Investments Pvt. Ltd. Jalaj Trading and Investments Pvt.Ltd. S.C. Dani Research Foundation Ltd.
Clear Plastic Ltd. Jaldhar Investments and Trading Co. Pvt. Ltd. Sadavani Investments and Trading Co. Pvt. Ltd.
Coatings Specialities (India) Ltd. Jatayu Investments Ltd. Sanjivani Chemicals Ltd.
Dani Capital and Investments Pvt. Ltd. Kalica Paper Industries Pvt. Ltd. Sapan Investments Pvt. Ltd.
Dani Enterprises Pvt. Ltd. Lambodar Investments & Trading Co. Ltd. Satyadharma Investments & Trading Co. Pvt. Ltd.
Dani Finance and Investments Co. Pvt. Ltd. Lyon Investments and Industries Pvt. Ltd. Sudhanva Investments and Trading Co. Pvt. Ltd.
Dani Finlease Ltd. Multitech Plast Containers Ltd. Suprasad Investments & Trading Co. Ltd.
Dani Holdings & Trading Co. Pvt. Ltd. Murahar Investments and Trading Co. Ltd. Suptaswar Investments and Trading Co. Ltd.
Dani Securities Ltd. Navbharat Packaging Industries Ltd. Tru Trading and Investments Pvt. Ltd.
Dani Trading and Investments Ltd. Nehal Trading and Investments Pvt. Ltd. Unnati Trading and Investments Pvt. Ltd.
Doli Trading and Investments Pvt. Ltd. Omega Properties Pvt. Ltd. Urvashi Holding Pvt. Ltd.
Elcid Investments Ltd. Pragati Chemicals Ltd. Vikatmev Containers Ltd.
ELF Trading and Chemical Mfg. Co. Ltd. Rangmeet Investments Ltd.

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


LKP Hardware, Solomon Islands Al - Hassan Group, Oman
Sultan Bin Sulayem, UAE Dutch Boy Philippines Incorporated
PPG Industries, Inc. Port Vila Hardwares
Rene Ah Pow ABM Santo
Ariza Holdings Ltd. AP Vanuatu Shareholders
4. Employee Benefit Plans and other entities where control exists :
Asian Paints Office Provident Fund, Asian Paints Factory Employees’ Provident Fund, Asian Paints Management Cadres’
Superannuation Scheme and Asian Paints (India) Limited Employees’ Gratuity Fund.
5. Others: Asian Paints Charitable Trust.
20. 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 nine and ten years. The lease rentals are payable 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.

108
Consolidated Financial Statements

Schedules forming part of the accounts


d) Future minimum lease rentals receivable as at 31.03.2005 as per the lease agreements:
(Rs. in Millions)

2004-2005 2003-2004

i) Not later than one year 81.50 138.50


ii) Later than one year and not later than five years 28.89 106.59
iii) Later than five years 0.30 1.49
110.69 246.58

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. The lease rentals are reviewed
periodically taking into account prevailing market conditions.
e) Total amount of contingent rents recognised as income - Rs. NIL (Previous year - 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 certain assets like cars, computers etc., on an operating lease basis for a period
of 48 months. The lease rentals are payable on a monthly/quarterly basis by the parent company.
b) 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) Future minimum lease rentals payable as at 31.03.2005 as per the lease agreements:
(Rs. in Millions)

2004-2005 2003-2004

i) Not later than one year 33.73 52.54


ii) Later than one year and not later than five years 39.37 94.46
iii) Later than five years --- 37.00
73.10 184.00

d) Operating Lease payments recognised in the Profit and Loss Account for the period is Rs. 33.15 million (Previous
year Rs. 33.32 million).
e) Total amount of contingent rents recognised as expense - Rs. NIL (Previous year - NIL).
III. a) Certain overseas 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 31.03.2005 as per the lease agreements:
(Rs. in Millions)

2004-2005 2003-2004
Minimum Finance Present Minimum Finance Present
lease charge Value lease charge Value
payments allocated to payments allocated to
future periods future periods
i) Not later than
one year 7.92 1.23 6.69 13.50 2.18 11.32
ii) Later than one
year and
not later than
five years 13.28 1.48 11.80 15.82 2.32 13.50
iii) Later than
five years 1.20 0.11 1.09 --- --- ---
22.40 2.82 19.58 29.32 4.50 24.82

Asian Paints (India) Ltd.


annual report 2004-2005 109
Schedules forming part of the accounts
21. Segment Information for the year ended 31st March, 2005:
i) Primary segment information:
Business Segment: (Rs. in Millions)
2004-2005 2003-2004
Paints Others* Total Paints Others* Total
Revenue
External Sales (Net) 24,855.71 749.51 25,605.22 21,542.01 637.07 22,179.08
Inter-Segment Sales (Net) 600.28 600.28 458.16 458.16
Other Income 127.91 31.56 159.47 153.12 17.82 170.94
Total Revenue 24,983.62 1,381.35 26,364.97 21,695.13 1,113.05 22,808.18
Result
Segment result 3,144.70 121.57 3,266.67 2,805.69 49.57 2,855.26
Unallocated Corporate expenses 444.00 380.21
Operating Profit 2,822.27 2,475.05
Interest Expenses (108.15) (152.03)
Interest Income 10.42 46.01
Dividends 62.52 7.34
Exchange Difference
Profit/(Loss) on sale of
investments 24.51 1.66
Profit/(Loss) on sale of fixed
assets 29.95 ---
Profit/(Loss) on sale of subsidiaries (1.88) ---
Miscellaneous income 38.70 37.60
Income taxes (1,060.82) (940.50)
Net Profit before prior
period items 1,817.52 1,475.13
Other Information
Segment assets 12,068.73 691.69 12,760.42 10,625.39 553.99 11,179.38
Unallocated corporate assets 2,476.29 2,760.24
Total assets (after impairment loss) 15,236.71 13,939.62
Segment liabilities 4,994.89 245.94 5,240.83 4,957.37 51.98 5,009.35
Unallocated corporate liabilities 4,324.13 3,635.50
Total liabilities 9,564.96 8,644.85
Capital Expenditure 885.72 22.18 907.90 325.88 10.62 336.50
Unallocated corporate capital
expenditure 26.79 13.37
Total 934.69 349.87
Depreciation 522.91 36.04 558.95 550.85 34.72 585.57
Unallocated corporate
depreciation 54.65 42.78
Total 613.60 628.35
Unallocated corporate non-cash
expense other than depreciation 77.10 78.26
Total 77.10 78.26
Impairment loss on segment assets
as on 1st April, 2004 384.17 2.30 386.47 ---
Impairment loss on unallocated
corporate assets as on 1st April, 2004 67.98 ---

Total 454.45 ---

* Others include the parent company’s business units manufacturing Phthalic Anhydride and Pentaerythritol.

110
Consolidated Financial Statements

Schedules forming part of the accounts


ii) Secondary segment information:
(Rs. in Millions)
Geographical Segment:
2004-2005 2003-2004
Domestic International Total Domestic International Total
Operations Operations Operations Operations
Segment Revenue 20,903.10 5,025.81 25,928.91 18,112.81 4,329.82 22,442.63
Carrying cost of
segment assets 10,912.37 4,324.34 15,236.71 9,942.70 3,996.92 13,939.62
Additions to Fixed assets
and intangible assets 763.96 170.73 934.69 277.62 72.25 349.87

22. 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 C. Choksi Ashwin S. Dani Abhay A. Vakil Tarjani Vakil
Chartered Accountants Chairman Vice Chairman & Managing Director Director
Managing Director
H. N. Shah
Partner Jayesh Merchant
Membership No. 8152 Vice President -
Corporate Finance &
Company Secretary

Mumbai Mumbai
11th May, 2005 11th May, 2005

Asian Paints (India) Ltd.


annual report 2004-2005 111
112
SUMMARY OF FINANCIAL STATEMENTS OF SUBSIDIARY COMPANIES.
All figures in INR millions

Capital Reserves Total Liabilities Total Assets Sales Other Income Profit before Tax Tax provision Profit after Tax Dividend
Subsidiary Name Currency Accounting
Period
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 93.77 55.52 -99.63 -60.59 196.85 156.16 190.98 151.09 111.13 52.74 0.18 0.00 -40.16 -42.36 0.00 -0.78 -40.16 -43.14 0.00 0.00
Asian Paints (International) Ltd US $ Jan to Dec 1090.86 973.40 -115.52 3.61 107.75 77.39 1083.09 1054.39 0.00 0.00 9.99 10.48 -120.69 6.61 -0.83 -0.98 -121.52 5.63 0.00 1.49
Asian Paints (Middle East) LLC Oman OR Jan to Dec 70.83 73.74 -54.64 -61.83 146.07 121.81 162.26 133.72 141.81 112.09 1.31 0.22 4.70 0.01 0.00 0.00 4.70 0.01 0.00 0.00
Asian Paints (Nepal) Pvt Ltd Nepal Rs 15th Jan to 14th Jan 13.47 13.70 61.29 71.78 54.13 49.24 128.89 134.72 148.35 120.46 2.21 1.99 8.43 14.41 -4.96 -3.63 3.47 10.78 12.38 12.27
Asian Paints (Queensland) Pty Ltd Aus $ Jan to Dec 81.19 81.29 -46.02 -41.04 108.86 103.42 144.03 143.66 187.77 171.62 0.47 1.44 -6.63 1.72 1.61 -0.48 -5.02 1.24 0.00 0.00
Asian Paints (S.I.) Ltd SI $ Jan to Dec 3.75 3.77 50.61 50.61 3.33 3.66 57.70 58.04 37.58 33.01 0.05 1.13 4.04 5.92 -0.09 -0.57 3.95 5.35 3.76 3.97
Asian Paints (South Pacific) Fiji Ltd Fiji $ Jan to Dec 11.38 11.31 222.43 209.77 48.90 65.31 282.70 286.39 271.44 258.02 9.14 11.71 31.88 30.89 -8.21 -9.63 23.67 21.26 13.69 9.58
Asian Paints (Tonga) Ltd $ Top Jan to Dec 2.73 2.72 47.49 45.34 1.26 3.90 51.48 51.97 25.97 23.23 0.46 1.14 0.03 -0.23 1.90 -0.02 1.93 -0.24 0.00 0.00
Asian Paints (Vanuatu) Ltd Vatu Jan to Dec 12.80 12.42 16.47 13.32 12.44 16.66 41.71 42.40 34.39 30.07 0.01 0.45 2.70 1.37 0.00 0.00 2.70 1.37 0.00 3.02
Asian Paints Industrial Coatings Ltd INR Apr to Mar 90.00 80.00 0.31 -6.23 132.86 114.53 223.17 188.30 285.67 232.78 0.50 1.19 9.93 4.46 -3.37 -3.04 6.56 1.43 0.00 0.00
Asian Paints Lanka Ltd SL Rs Jan to Dec 139.98 21.27 -88.45 -89.99 125.39 224.42 176.92 155.71 163.46 163.18 2.74 1.54 -9.49 -44.21 0.00 0.00 -9.49 -44.21 0.00 0.00
Asian Paints South Pacific Holdings Ltd US $ Jan to Dec 54.99 57.35 8.93 4.03 1.63 5.75 65.56 67.13 0.00 0.00 10.42 2.95 6.30 0.04 0.00 0.00 6.30 0.04 1.12 1.15
Berger Building Services (Singapore) Pte Ltd SG$ Jan to Dec 26.71 26.85 -29.70 -29.75 3.26 3.17 0.27 0.27 0.00 0.00 0.00 211.82 -0.11 211.42 0.00 0.00 -0.11 211.42 0.00 0.00
Berger Contractor (Singapore) Pte Ltd SG$ Jan to Dec 120.20 120.83 -121.78 -122.06 1.58 1.37 0.00 0.13 0.00 0.00 0.00 84.63 -0.35 84.61 0.00 0.00 -0.35 84.61 0.00 0.00
Berger International Ltd SG$ Jan to Dec 693.84 697.44 -220.24 33.46 978.62 1106.88 1452.22 1837.77 0.00 0.00 204.39 99.26 -229.19 -6.55 -8.20 -0.13 -237.39 -6.69 0.00 0.00
Berger International Sdn. Bhd. MYR (Malaysia) Jan to Dec 276.72 204.00 -294.41 -271.22 165.43 226.01 147.74 158.78 171.76 204.36 0.03 0.10 -34.50 -71.49 0.00 0.00 -34.50 -71.49 0.00 0.00
Berger Paints (Hong Kong) Ltd HK $ Jan to Dec 9.56 9.94 0.79 1.44 4.83 4.94 15.18 16.32 36.89 37.98 0.00 0.45 -0.61 3.95 0.00 0.00 -0.61 3.95 0.00 5.79
Berger Paints (Ningbo) Co. Ltd CNY Jan to Dec 266.40 257.51 -189.27 -168.71 72.58 61.14 149.71 149.95 22.51 6.60 0.00 0.00 -27.78 -28.11 0.00 0.00 -27.78 -28.11 0.00 0.00
Berger Paints (Thailand) Ltd THB Jan to Dec 55.95 57.59 -8.13 -11.88 130.63 70.40 178.45 116.12 202.76 161.72 1.16 0.90 3.46 -7.01 0.00 -2.53 3.46 -9.54 0.00 0.00
Berger Paints Bahrain W.L.L. BHD Jan to Dec 48.49 50.43 191.04 175.32 111.29 90.20 350.82 315.95 342.67 307.52 2.21 1.08 68.33 52.62 0.00 0.00 68.33 52.62 45.44 0.00
Berger Paints Barbados Ltd Barbados $ Jan to Dec 41.15 43.08 112.26 119.90 83.25 63.30 236.66 226.28 227.48 217.93 1.90 3.47 0.48 3.07 2.58 0.57 3.06 3.64 5.60 5.62
Berger Paints Emirates Ltd AED Jan to Dec 11.91 12.40 -115.48 -88.26 522.06 442.90 418.49 367.04 630.98 519.89 3.54 4.94 -31.34 1.28 0.00 0.00 -31.34 1.28 0.00 0.00
Berger Paints Jamaica Ltd Jamaican $ Jan to Dec 76.75 81.43 222.82 234.41 190.39 189.69 489.96 505.52 817.30 841.28 1.33 5.28 77.77 103.42 -28.31 -35.73 49.46 67.69 25.31 35.73
Berger Paints Manufacturing Ltd Kyat Jan to Dec 0.87 0.91 10.28 14.77 32.95 25.00 44.10 40.68 22.56 15.14 0.13 0.04 -3.86 -10.38 0.00 0.00 -3.86 -10.38 0.00 0.00
Berger Paints Singapore Pte Ltd SG$ Jan to Dec 388.44 390.46 -292.71 -321.26 101.48 105.98 197.21 175.17 498.48 318.57 44.48 44.72 58.09 70.19 -0.91 0.00 57.18 70.19 30.21 30.17
Berger Paints Trinidad Ltd Trinidad $ Jan to Dec 41.52 43.78 162.68 174.84 89.66 91.19 293.86 309.81 280.64 266.74 1.86 26.07 6.17 -9.15 -3.57 1.02 2.60 -8.12 6.34 6.64
Enterprise Paints Ltd GBP Jan to Dec 12.26 11.88 -4.93 -4.78 6.13 5.94 13.46 13.04 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Lewis Berger (Overseas Holdings) Ltd GBP Jan to Dec 157.55 152.65 185.94 254.86 28.56 4.65 372.05 412.17 0.00 0.00 47.86 95.33 28.53 54.57 -5.14 -3.99 23.39 50.58 99.28 0.00
Nirvana Investments Ltd GBP Jan to Dec 0.00 0.00 -1.23 -1.19 7.48 7.25 6.25 6.06 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Samoa Paints Ltd WST $ (Samoa) Jan to Dec 1.45 1.45 21.94 20.77 4.76 8.85 28.14 31.07 33.26 27.66 1.12 1.02 7.90 5.76 -2.35 -1.71 5.55 4.05 4.35 4.21
SCIB Chemicals S.A.E. Egpt pound Jan to Dec 224.13 221.90 -89.83 -100.47 237.37 211.43 371.68 332.85 495.79 320.13 1.37 0.24 11.60 -37.66 0.00 0.00 11.60 -37.66 0.00 0.00
Taubmans Paints Fiji Ltd Fiji $ Jan to Dec 4.26 4.23 46.64 43.95 15.77 18.84 66.67 67.02 77.82 63.28 7.31 0.21 10.63 2.39 -3.95 -0.83 6.68 1.56 4.25 9.95
Technical Instrument Manufacturers INR Apr to Mar 0.50 0.50 33.63 23.37 83.11 97.99 117.25 121.86 0.00 0.00 19.61 19.65 13.77 13.78 -3.51 -3.56 10.26 10.22 0.00 0.00
Universal Paints Ltd GBP Jan to Dec 36.16 35.04 -2.42 -1.82 0.00 0.00 33.75 33.22 0.00 0.00 12.01 21.44 11.48 21.44 0.00 0.00 11.48 21.44 12.01 21.44
Surya Powder Coating Limited INR Apr to Mar 0.50 0.00 0.00 0.00 8.09 0.00 8.59 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00

Notes :
1.
Asian Paints Distributors (Pvt.) Limited — Under voluntary Liquidation
Berger Paints (Malta) Ltd., — Disposed on 12th May 2004
Berger Paints (Shanghai) Ltd, — Liquidated on 23rd February 2004
Asian Paints (Mauritius) Limited — Disposed on 30th March 2005
Surya Powder Coatings Limited — Acquired on 25th October, 2004

2. Capital,Reserves,Total assets and Total liabilities have been translated at the rates prevailing at the end of the respective financial years.
3. Sales, Other Income, Profit before tax , Provision for tax , Profit after tax and dividend have been translated at average rates prevailing during the respective financial years.

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