Akzo Nobel India Ltd

As an integral contributor to India's unprecedented transformation, Akzo Nobel India's milestone 70th anniversary is a matter of great pride for us. Not only because we are coating almost every surface but more so going beyond to contribute to a more equitable future for communities in need through our CSR initiatives.

Our journey started in 1954 and we now celebrate 70 years of contribution to the prosperity and development of India. Our wide range of sustainability-driven innovations across paint products (Decorative and Coatings) brought alive by the strength of our iconic global brands, including Dulux, International, Sikkens and Interpon is protecting and beautifying homes, and infrastructural sectors that touch lives everyday – be it on water, land or air – power, shipping, oil and gas, steel, construction, consumer durables, packaged food and beverages and more.

As an integral contributor to India's unprecedented transformation, Akzo Nobel India's milestone 70th anniversary is a matter of great pride for us. Not only because we are coating almost every surface but more so going beyond to contribute to a more equitable future for communities in need through our CSR initiatives, such as education of girl child and Project Indradhanush that promotes micro-entrepreneurship amongst rural women. Equally, this milestone is an opportune moment to renew our commitment towards painting the future for India and our stakeholders.

The global economy is projected to maintain its growth pace of 3.2 percent in 2024 and 2025 with a decline in inflation levels (as per the International Monetary Fund). The world too is convinced of India's role as one of the fastest-growing economies in 2024, with the robustness reflecting the continuing strength in domestic demand and a continuously rising working-age population. India's transition from the 11^th largest economy in the world a decade ago to the 5^th largest today with massive and sustained investments in both digital and physical public infrastructure augur well not only for the India of today, but also lay the foundation for the Viksit Bharat of tomorrow.

Driven by new investments and sustained demand from both industrial segments and end-users, the Indian Paints and Coatings industry continues to register vibrant growth. Increased government focus on affordable housing and infrastructure development, robust real estate demand, higher per-capita incomes driving new demand and shortened re-painting cycle and rise of new consumers in tier 3 and beyond geographies are some of the key reasons why the sectoral growth outlook continues to be robust. This attractiveness of the sector has also led to new entrants in the market. In turn, I am delighted to share that your Company continues to move from strength to strength and is geared up for meeting the requirements and expectations of the Viksit Bharat.

On the business front, building on our record growth trajectory for the third straight year, your Company closed FY'24 with new highs in absolute performance across revenue, gross margin, EBIT from operations and Profit After Tax. In performing so, our double-digit profitable momentum of five years gained further traction during FY'24.

While the pressure of industry-wide price corrections was witnessed in the later part of the fiscal, sustained raw material deflation and favourable mix allowed us to invest in brand visibility and growth, while delivering further margin and profit expansion. In parallel, ccontinued improvement in working capital resulted in stronger operating cash flow.

With India becoming the regional headquarters of the new ‘South Asia' organization structure in decorative paints within AkzoNobel Group, the focus of AkzoNobel to grow in this key market is evident.

We are now in a unique position – leveraging AkzoNobel's global brands, expertise and breakthrough innovations with empowered decision making and faster speed to market acting as a tailwind to our profitable growth momentum in India.

Building on our strong foundation, AkzoNobel strategy for India is aligned to the socio-economic and consumer demand shifts with a strong sustainability and innovation focus.

While continuing to strengthen our Premium product portfolio with differentiated offerings and investments across our operating segments, we are accelerating our play in mass market and value segments as well as increasing our width of play in adjacent categories.

In Decorative paints, our commitment to best-in-class quality was brought alive by Dulux Assurance^TM - our first warranty program. Innovations such as the tintable shades in Sadolin range of premium PU wood coatings and specialized solutions like Dulux Weathershield Protect Rainproof as developed for high humidity and rainfall areas were launched for retail consumers. Our portfolio expansion continued in entry-level retail and professional segments.

Also contributing to our double-digit volume growth was sustained investment in our marquee brands, as exemplified with Rocking Star Yash becoming the new brand ambassador of our flagship Dulux Weathershield exterior emulsions, coupled with efficient spends.

Sustainability and innovation remained high on our strategic agenda, highlighted by the launch of several pioneering products designed to help our customers becoming more efficient with reduced carbon emissions. These include Interpon D 3020, our latest hyper durable powder coating for architectural aluminum that delivers required film thickness in a single coat compared to the three-coat liquid paints.

We also showcased our digital capability, as illustrated by our International HullCare – the marine industry's most environmentally sustainable hull management package to date that integrates big data performance monitoring with proven hull management techniques. Now more than ever, digital power is enriching our customer experience. Case in point, the new My Interpon Portal for Powder Coatings. Digitalization is also transforming our operations – be it our distributor replenishment model in decorative paints, boosting productivity of Integrated Supply Chain to helping us make progress on our journey towards carbon-neutral factories.

Sustainability is at the core of our identity at AkzoNobel. It has been a core value for many years and forms an integral part of who we are. Our actions show how we are prioritizing the three focus pillars:

Producing durable solutions in a more sustainable manner, nearly 65% of our raw materials are sustainably sourced and we are already at 80% level with regard to circular use of materials.

Helping our customers become more sustainable, 33% of our portfolio now comprises of EPD (Environment Product Declaration) certified products.

By Empowering local communities and people, we continue to make a positive difference. With a strong DE&I focus, our Corporate Social Responsibility programs in the three identified areas of education, vocational skill training and community healthcare have benefitted communities in need, leading to financial inclusion, empowerment and healthcare at doorsteps. We also continued our efforts to be an employer of choice through the launch of our new employer engagement platform, Voices, which saw 94% participation rate and a level of engagement that far surpassed the industry benchmark. The insights we gained from that are helping us further act to create an even better work environment where everyone can thrive.

In this backdrop, it was invigorating to note that our robust Corporate Governance practices that guide us to conduct business in ethical, transparent and sustainable manner were validated with the Gold Award for Excellence in Business Responsibility and Sustainable Reporting from the Institute of Chartered Accountants of India in FY'24.

Committed to continuously creating long term value for you, our esteemed shareholders, your Company's Board has recommended a final dividend of H 25/- per share, taking the aggregate dividend for FY'24 to H 75/- per share, riding on yet another year of record performance,

As we enter FY'25 with confidence and optimism, we are cognizant of the renewed competitive intensity in the Indian paints market. More importantly, Your Company is future-ready on all fronts. Further building on our two centuries of global expertise in Paints and Coatings with our differentiated strategy, sharp innovation focus and a bias for action, we're confident of our right to win the hearts and minds of Indian consumers on a long-term and sustainable basis.

Finally, on behalf of the Country Leadership team, I want to express my gratitude to you all, our shareholders, customers, suppliers, distributors, painters, regulators and other stakeholders, for your support throughout the FY24. I'd also like to thank our employees across India for their unflinching and remarkable efforts, thus cementing our position as the Top 2 in incremental growth in the paints industry. With your support in FY'25 and beyond, we are excited and committed to deliver a strong performance that furthers build on our profitable growth momentum.

Chairman & Managing Director