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Asian Paints (India) Ltd.
6 A Shanti Nagar,
Santacruz (E),
Mumbai 400 055
Chairmans Letter 04
Highlights 06
Directors Report 18
Corporate Governance 37
Shareholder Information 44
Auditors Report 48
Balance Sheet 52
Schedules 55
in remembrance
Ashwin C Choksi
Chairman
Shri K. Rajagopalachari
(10.1.1935 - 14.3.2005)
Leader, Philosopher and Mentor
Company Secretary
Jayesh Merchant
Auditors
Shah & Co.
Chartered Accountants
03
Dear Shareholders,
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
Group :
DISTRIBUTION OF INCOME
MATERIAL COST
EMPLOYEE REMUNERATION
OTHER EXPENSES
INTEREST
DEPRECIATION
EXTRAORDINARY ITEM
RETAINED EARNINGS
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
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
Utsav Enamel
Wood Finishes
Touch Wood
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
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
managements 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 Companys
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
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
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 groups 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.
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 Companys 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 groups sales in 2004-05. While Asian PPG Industries Ltd., caters
to a small extent. to the automotive coating segments, the wholly owned subsidiary
The Companys 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
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.
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
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.
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 Companys 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
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 companys 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 companys 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 Companys long
Prime Ministers and Chief Ministers 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.
Net sales and operating income 19,415 16,966 14.4% 25,605 22,179 15.4%
Less : Depreciation/Amortization/
Less : Provision for Current & Deferred tax 970 836 - 1,061 941 -
Net Profit after prior period items 1,735 1,478 17.4% 1,813 1,477 22.7%
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
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 :
APIL AP Group
(Consolidated)
1
Capital Employed and Networth as at 31.03.2005 are after providing for impairment loss.
The overall outlook for 2005-06 is positive. The governments 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 Companys 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 Indias 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 Companys 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
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
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%
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.
(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 ----
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.
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.
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.
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.
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
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.
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.
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.
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.
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
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
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
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
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
As at As at
31.03.2005 31.03.2004
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
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
58
Schedules forming part of the accounts
(Rs. in Millions)
(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.
(Rs. in Millions)
As at As at
31.03.2005 31.03.2004
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
As at As at
31.03.2005 31.03.2004
62
Schedules forming part of the accounts
(Rs. in Millions)
Year Year
2004-2005 2003-2004
Year Year
2004-2005 2003-2004
64
Schedules forming part of the accounts
(Rs. in Millions)
Year Year
2004-2005 2003-2004
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.
68
Schedules forming part of the accounts
6. 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.
(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.
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
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
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.
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
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.
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).
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.
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.
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
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
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
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
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
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
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)
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
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
90
Consolidated Financial Statements
As at As at
31.03.2005 31.03.2004
(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
92
Consolidated Financial Statements
As at As at
31.03.2005 31.03.2004
Year Year
2004-2005 2003-2004
94
Consolidated Financial Statements
Year Year
2004-2005 2003-2004
Year Year
2004-2005 2003-2004
96
Consolidated Financial Statements
98
Consolidated Financial Statements
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
Country of % Accounting
Incorporation holding period
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
2004-05
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:
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)
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
(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)
(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
* 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.
108
Consolidated Financial Statements
2004-2005 2003-2004
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
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
* Others include the parent company’s business units manufacturing Phthalic Anhydride and Pentaerythritol.
110
Consolidated Financial Statements
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
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.