Berger Paints India Ltd

#MDStart#

MANAGEMENT DISCUSSION AND ANALYSIS

Your Directors have pleasure in presenting the Annual Report of the Company, together with the audited accounts for the financial year ended on 31st March, 2022.

FINANCIAL RESULTS

(Rs. in Crore)

FINANCIAL PERFORMANCE Highlights of the Standalone Results:

a. Revenue from Operations for the year ended 31st March, 2022 was '7740.93 crore as against '6021.41 crore in the corresponding last financial year, representing an increase of 28.56% over the last financial year.

b. EBIDTA (excluding other income and exceptional item) for the year ended 31st March, 2022 was '1182.53 crore as against '1096.95 crore in the corresponding last financial year, representing an increase of 7.80% over the last financial year.

c. Net Profit for the financial year ended 31st March, 2022 was '749.86 crore as against '680.78 crore recorded in the previous financial year, representing an increase of 10.15% over the corresponding period of last financial year.

Highlights of the Consolidated Results:

a. Revenue from Operations for the year ended 31st March, 2022 was '8761.78 crore as against '6817.59 crore in the corresponding last financial year, representing an increase of 28.52% over the last financial year.

b. EBIDTA (excluding other income) for the year ended 31st March, 2022 was '1331.07 crore as against '1187.98 crore in the corresponding last financial year, representing an increase of 12.04% over the last financial year.

c. Net Profit for the year ended 31st March, 2022 was '832.95 crore as against '719.72 crore in the corresponding last financial year, representing an increase of 15.73% over the last financial year.

The Board of Directors have recommended a dividend of '3.10 (310%) per equity share of '1/- each fully paid up for the financial year ended 31st March, 2022. Dividend is subject to approval of the shareholders.

MANAGEMENT DISCUSSION AND ANALYSIS

INDUSTRY STRUCTURE AND DEVELOPMENT

Just when the world was coming to terms with the loss of lives, disruptions, lock-downs, restrictions caused due to COVID 19 pandemic, fresh challenges are at our door step caused by the conflict in Europe. As the war draws on and sanctions and retaliatory actions intensify, shortages, volatility in commodity and financial markets, supply dislocations and most alarmingly, persistent and rapidly spreading inflationary pressures are becoming more acute day by day.

Over the first half of 2021, an uneven and divergent global recovery began to take shape with the ebbing of the ‘Delta’ variant driven COVID 19 infections and the gathering pace and scale of vaccination. In the second half of 2021, the global recovery became hostage to the ‘Omicron’ variant though the wave turned out to be short lived and global trade recovered amidst supply and logistics bottlenecks. The International Monetary Fund’s April, 2022 World Economic Outlook placed global GDP growth for the year at 6.1%.

The Indian Economy has shown resilience, drawing upon the innate strength of its underlying fundamentals and supported by a prudent and favourable policy mix. The rebound in domestic economic activity that took hold with the waning of the Omicron wave is turning out to be increasingly broad based. Private consumption is regaining traction on the back of recuperating contact-intensive services and rising of discretionary spending. Government consumption has crossed pre-pandemic levels and overall the Indian economy consolidated its recovery with most constituents surpassing pre-pandemic levels of activity.

INDIAN PAINT INDUSTRY

The Indian Paint Industry is today worth over INR 62000 crore (USD 8 billion), and is the fastest growing major paint economy the world over, with a consistent double digit growth over the last two decades except 2020 and 2021. The last two years have not been the best of times for the Indian paints and coatings industry due to multiple waves of COVID 19 pandemic though it did not retard the pace of new investments and capacity expansions in the Indian paint and coatings industry. Almost all major producers have announced and gone ahead with a slew of investments resulting in capacity expansions and greenfield projects.

The decorative paint category constitutes almost seventy-five percent of the overall market and includes multiple categories like exterior wall paints, interior wall paints, wood finishes and enamel as well as auxiliary products like primers and putty. The Industrial paint category constitutes the balance twenty-five percent of the paint market and includes a broad array of sectors like protective, automotive, general industrial, marine, powder, specialty coatings, etc.

The residential housing sector registered recovery in the fourth quarter of 2021-2022, with sales and construction launches improving sequentially, and inventory overhang declining to the lowest in eight quarters. The optimism in the sector was reflected in the number of units launched, the highest in the last fifteen quarters. The construction sector benefited from the thrust by the government on infrastructure coupled with activity in the housing segment. The Pradhan Mantri Awaas Yojana with a sizable allocation of funds is expected to support growth in construction sector along with generation of mass employment in the economy. In the last few years, the Construction Chemicals and Waterproofing segment has been growing fast and is one of the major contributors to the Paints and Coatings business.

COMPANY’S OPERATIONS

Berger’s consistent focus on transforming challenges into opportunities has been the pivot which has enabled the Company to do well even during tough times. The inherent challenges brought about by multiple waves of the COVID-19 pandemic and the escalation of geographical tensions resulting in war in Eastern Europe towards the end of the financial year made it imperative that we focus on our strengths and look for all available opportunities. Berger’s tremendous progress over the past decade has been possible because of an organizational culture that encourages and rewards innovation and value to the customer. The ability of the teams to consistently craft and execute winning strategies while ensuring that the corporate governance standards are maintained at the highest levels have ensured robust and consistent growth of the Company. Despite the undeniable challenges, Berger has been agile, focused to adapt to the new normal and understanding to the core value of business - people, process and technology more than ever, thus strengthening its position in the paint industry.

Aggressive network expansion drives in the rural and up-country markets and renewed emphasis on the infrastructure and project segment in the urban markets helped the Company to stride forward. Paint and coatings skill remains an under-penetrated category in India with a huge scope of increasing our footprint in newer geographies. Focus was on increasing the number of Colorbank machines and entering new markets. At present, Berger has a network strength of 38,500 Colorbank machines. On top of this, the Company had undertaken a distributor initiative three years back which has further added to the spread. In all, the Company caters to a total network size of 50,000 dealers and retailers. Further, the sales teams underwent rigorous training programs that facilitated the network expansion efforts. The Company made use of technology to map the network including non-paint channels. The initiatives produced good results.

Initiatives taken to drive premium-luxury segment including launch of new products, new advertisements and revamping of existing portfolio helped drive up profitability and resulted in Operating profit growth which was more than the industry average. The Company registered good growth in numbers both in top-line as well as bottom-line. Margin pressure was there due to escalating raw material prices and the Company took series of steps to cut costs, improve margins and increase prices to mitigate the price increase pressure. The Company’s path breaking and leading products such as Easy Clean, Anti Dustt, Homeshield waterproof putty were revered and emulated by all.

The Company launched new products out of which significant ones are as follows:

"WeatherCoat Longlife Flexo" in addition to the existing WeatherCoat Longlife 7 and WeatherCoat Longlife 10 promises to be a high- performance exterior paint with elastomeric properties that help cover hairline cracks on exterior walls and silicon additives that help protect from heavy rains. Its superior dust pickup resistance comes with an eight-year performance warranty. "Luxol PU Enamel" formulated with specially designed proprietary polyurethane resins, gives a long lasting glossy finish with superior coverage suitable for metal, wood and masonry surface. "BP White Primer Lite", a specially formulated economy acrylic primer for interiors, gives good performance at low cost. It has excellent whiteness and coverage coupled with good opacity. "BP Anti Corrosive 1K epoxy primer", specially formulated with epoxy-based resin gives it excellent anti- corrosive properties and is superior to ordinary metal primers. "Berger Imperia BreatheEasy", a zero smell, one component water based polyurethane is easy to apply on both new and pre-coated heritage furniture in clear opaque and transparent shades. "Woodkeeper Rainbow" and "Berger Imperia Polyster" add to our product range in terms of wood finishes. While the consumers spend more time in their homes, Berger launched a range of Do-It-Yourself products under the "i-Paint" umbrella. The product range turned out to be an instant success as it helped the customers make aesthetic changes to their accessories, furniture, and decor items on their own. "Bison Flex Wall Putty", a white cement based premium putty fortified with polymers and additives is ideal for use on exterior and interior wall surfaces to provide a smooth aesthetic finish and an extended life to the topcoat.

Further, the Company also re-branded some of its products like ‘Silk Illusions’, premium range of interior textures now been rebranded as "Silk GlamArt". The textures are designed to make your home a thing of beauty while defining your personality. The tagline "Live Your Style", aims at making the home an ultimate style statement. The "Silk Glamor" range of products formulated using the crystal reflective technology to give walls a durable, glamourous and rich appearance for many years is being endorsed by Kareena Kapoor Khan. It is free from alkylphenol ethoxylates (APEO), formaldehyde and is low in VOC. Silk Glamor range is available in metallic and non-metallic shades.

Express Painting, a home painting service innovation from Berger Paints launched in 2015, has been growing from strength to strength. Express Painting™ became "Safe Express Painting" with the slogan "Faster-Cleaner-Safer" service with a safety upgrade and a contactless service availed of through a consumer friendly mobile application crafted to solve all the pain-points faced by a customer. Available pan-India, the service that enjoys a 95%+ Customer Satisfaction Score, delivered 35,000 beautiful homes to happy customers in 100 cities. Specialised personal consultancy, precision, mechanized tools and trained painters have truly transformed the journey of Express Painting consumers and Berger is a sought after brand when it comes to Express Painting.

With 47 iTrain painter training academies, Berger Paints manages the largest skilling activity in the industry and trained more than 1 lac people last year on painting skills. 19 mobile academies covered 2.65 lac km across the length and breadth of India visiting and training painters of 1040 towns. All 3 winners in the decorative painting category at the National Skills Competition were trained at various Berger iTrains.

Waterproofing and construction chemical business has grown by more than 50% overall; revenue has tripled in many markets as well. Berger Home Shield has now become one of the major players in this segment with strong presence in more than 30000 outlets across the country. Berger Homeshield has been able to establish itself as a scientific waterproofing specialist. Strong forays were made into industries, government, builders and repair segment. Scientific waterproofing solution has been provided across the country through more than 20000 trained applicators. Many prestigious projects have been executed with Berger Homeshield product range including housing, national highway, hydro-power, airport, bridges etc. A complete range of tile adhesive with ancillary products has also been launched under the prestigious "Homeshield" brand. Akshay Kumar is the Brand Ambassador for Berger Home Shield.

‘Berger Prolinks’ division provides customized painting solutions for India’s urban landmarks, old and new. Auditorium and cinemas, malls and multiplexes, high-end housing complexes, hotels and resorts, multi-speciality hospitals, international schools and university campuses, all have their unique needs and require considerable outlays to build and maintain. The professionalism and experience that Prolinks bring to the table has made it an ideal partner for such construction activity.

‘Berger Protecton’ has coated more than 500 railway and metro coaches using a coating system complying with Research Designs and Standards Organisation (RDSO) specification. Berger’s Protecton business is the undisputed leader in the protective coatings segment and has remained since its inception. Ranging from pipe coatings to refinery projects, railways, iron and steel plants, road marking business, thermal power plants, floor-coating, airports- Berger Protecton is present everywhere and is handling many prestigious projects during the year under review. This business registered record revenue in spite of great challenge bought about by escalating raw material prices which were passed on to the customers partially. The future for the Protecton business is extremely bright and with an array of innovative offerings, it is expected to grow rapidly.

The Auto, General Industrial and Powder Coating business faired satisfactorily during FY 2021-22. General Industrial in particular recorded a sizeable value growth during the period and a number of new OEMs were added during the year. Powder Coatings also grew considerably and commenced exporting to various countries.

The Research and Development (R&D) activity of the Company has been effectively supporting the business and is responsible for the Company’s robust growth. The differentiated product offerings have been possible because of the effects carried out by the R & D. R & D not only provides support to its existing businesses but contribute to profitability through constant innovation as well as focus on customer requirement and satisfaction. It further adds value when it comes to cost saving thus contributing towards increasing profitability of the Company. The Company has filed two patent applications during the year under review and plans to accelerate in this area.

Procurement and management of inventory, especially during the restrictions imposed due to the outbreak of the second wave and third wave of the COVID-19 pandemic posed a challenge like last year but was managed efficiently. Multiple waves of the pandemic, supply chain and logistic disruptions, elevated inflation with the prices of crude, metals and fertilizers hitting the roof and bouts of financial market turbulence still throw open lot of uncertainty and efficient and effective management of resources are required to be made in order to ensure seamless supply of raw materials and finished goods. Judicious cash flow management ensured that Company operations were carried out smoothly.

The extent of digital adoption by the Indian consumers led to multiple transformational digital initiatives which were taken on the consumer, dealer and contractor front. Berger’s investments in IT and technology platforms to enhance ease of doing business for our sales team, channel partners and influencers and the supply chain initiatives have been worth their weight in gold. Distance today is no longer a barrier given the advancements in technology. The training and mentorship programs of our teams through digital platforms to deliver unsurpassed consumer engagements has been a key area of focus for us looking at the evolving market landscape both on competitiveness and aesthetics.

The manufacturing focus of the Company was on energy efficiency improvement, manpower optimization and related Environmental, Social and Governance (ESG) initiatives while maintaining COVID protocols. The manufacturing function successfully ensured that there is no dearth in supply of finished goods. Reduction of carbon emissions, roof top solar power plant, bio briquette fired thermic fluid heaters, LED lights are only a few sustainability and energy conservation initiatives among many other undertaken by the Company in all its manufacturing locations without compromising on health and safety of its work force.

Berger won "Deloitte India’s Best Managed Companies 2021" Award for overall business performance and sustained growth with the prestigious "Best Managed" title. Among several other awards and accolades received during the year, corporate EHS department won Environmental Protection Award 2021 by Greentech Foundation, as winner in gold category competing with large public sector organizations and multinational companies. This only indicates the Company’s constant endeavour towards a better environment and sustainability. Your organization also co-created a program called "Memorable Walls" to provide a platform to the budding designers to showcase their skills despite the limitations imposed by Covid-19.

The subsidiaries and joint ventures also contributed significantly to the overall growth of the Company with state-of-the-art manufacturing facilities, innovation and wide range of products, market penetration and economies of scale.

FOCUS AND OUTLOOK FOR 2022-23

With 86.8% of the adult population in India already vaccinated with the first and second dose, the Indian economy is relatively better placed to consolidate the recovery that is underway and improve the macro-economic prospects going forward. The pessimistic feeling is over and things look ‘back to normal’.

Berger as a brand, with its differentiated products, strong distribution network, state of the art technology backed by a strong research and development facility and always supported by an enthusiastic workforce is sufficiently equipped to handle competition and take long strides forward, penetrating into newer geographies, increasing sales and enriching customer experience. The Company is sufficiently equipped to tackle the situation and ensure smooth raw material supply, production, quality checks in order to ensure smooth distribution of its products and services. Efforts are constantly on to reduce cost through constant efforts without effecting the quality of products.

The pandemic for the last two years has been a huge lesson for us as regards maintaining health and hygiene and being vigilant about cleanliness at home and workplace. With an aim to keep our homes clean and free from infection, regular painting has now turned into a habit for many. The demand for protective coatings, water proofing, insulated floor coatings etc. are rising by every passing day. The demand for general industrial, automotive and powder coatings have recovered and it is expected that the Company would cater to an even large demography for consumers.

PROJECT

During the year under review, the Company successfully completed brownfield expansions in water-based paint at Hindupur, Goa, Jammu, Rishra and for solvent based paint in Jejuri and Hindupur. At Naltali unit, a raw material and finished goods warehouse has been constructed in sync with increased production volumes. Installation of large integrated production facility having decorative, industrial paint and wood coatings, resin, putty, emulsion and construction chemical manufacturing facility at Sandila Industrial Area, Hardoi, Lucknow (Uttar Pradesh) is expected to be commissioned during 2022 subject to receipt of statutory approval(s).

The Company also acquired land at Panagarh, Paschim Bardhaman District, West Bengal from the West Bengal Industrial Development Corporation Limited (WBIDC) for setting up a manufacturing unit for resin, construction chemicals and putty. Process of setting up of the factory is in full swing.

Rooftop solar power plants have been installed in Hindupur, Jejuri, Rishra, Naltali, VVN, Goa, Pondicherry and Sandila. The Company has successfully commissioned bio-briquette fire thermic fluid heaters in almost all its resin plants. LED lights along with automation in lighting system have been installed in order to save energy. Overall, the Company took a lot of initiatives and was able to generate substantial savings from various energy saving projects. Rainwater conservation initiatives at various manufacturing facilities provides alternative for freshwater consumption. Collected water is being reused in operations, gardening, toilets, floor-washing etc.

OPPORTUNITIES AND THREATS

The financial year 2021-22 has seen uncertainties and complexities which were never seen before, owing to the COVID 19 pandemic, war in Europe at the later part of the financial year which is still dragging on at the time of writing this report. Though the situation remains complicated, the paint and coatings industry in India, which is more than 100 years old, shows lot of growth potential.

Various legislations enacted by the government supported by a prudent and favourable policy mix along with the headroom for per capita paint consumption in India displays a favourable picture all around. With the government consumption crossing pre-pandemic levels, increased focus on home improvement, stress on having a cleaner and safer interior, culture of working from home which in turn translates to spending more time inside one’s house, all indicate significant opportunity for the paint and coatings industry. With differentiated products on offer especially water proofing, construction chemicals, wood coatings, protective coatings and home hygiene products the future looks even more promising. The overall thrust on housing for all/ affordable housing measures by the Government results in fresh demand for paints and future repainting jobs thus benefiting the paints and coatings business.

The threat caused due to COVID 19 pandemic and its mutant strains are still looming large and the continuing conflict in Eastern Europe adds to the anxiety and uncertainty coupled with rising prices of raw materials, crude oil, supply chain disruptions, inflationary pressures, employee health and wellness all of which will have an impact during the financial year 2022-23. With the paint and coatings industry doing well, it is expected that competition will be stiffer, with new entrants knocking at the door. The dearth of skilled labour force is one of the biggest threats being faced by the paint and coatings industry on account of the skill deficit wherein the skill gap is more apparent. There is a massive mismatch between the client’s demands and the services provided by the largely unskilled painters till date.

To sum up, it may be stated that digitization, planning and execution coupled with technological support, human resources, differentiated and innovative product offerings, active sales and service force with ever increasing market share puts the Company in a position to take advantage of the additional demand created both from the domestic and industrial consumers. Beyond the uncertainties, it is expected that the strong growth trajectory will soar higher on the wings of increasing market penetration, market share gains, new value added products and services. Strong brand equity will lead to a limited risk of disruption from peers and new entrants. The paint industry as a whole is expected to surge ahead in spite of such challenges.

RISKS AND CONCERNS

The Company has a Risk Management and Materiality Policy approved by the Business Process and Risk Management Committee, Audit Committee and the Board of Directors. The Policy provides a well-articulated framework for identification of risks inherent in the business operations of the Company and the methods of mitigation in a lucid manner on a continuous basis which are periodically reviewed and modified considering the size and the complexity of the business and the regulatory requirements from time to time. The Risk Management Policy has been renamed as Risk Management and Materiality Policy which can be viewed at the following https://www.bergerpaints.com/about-us/risk-management-policy.html.

Considering the huge uncertainties prevailing in the market due to war in Europe and the vagaries caused by the COVID 19 pandemic, the major economies of the world are passing through difficult times wherein many questions remain unanswered till date. There continues to be a concern with the rise of inflation, disruption in supplies, the fear of the COVID 19 pandemic coming back with the virus mutating itself and the length of the war in Europe which may result in the market feeling the pressure with the rise in the prices of raw materials and finished goods.

Fortunately, beyond the uncertainties, with proper and intricate planning and execution coupled with technological support, human resources, products, services and market presence, the Company is well positioned to take the advantage of additional demand generated both from domestic and industrial consumers. With its focus on digitization, data analytics, market penetration and strong brand image the Company is placed to tide over uncertainties. In spite of stiff competition and new entrants knocking at the door, the Company with its differentiated offerings and focus on transforming the living space into a safer and cleaner environment holds the key for its continued success.

With the major economies of the world having a tough time because of the war in Eastern Europe and also battling COVID uncertainties and surprises, the decision making and short term and long term strategies and goals need to be reviewed regularly in order to be ready and adaptable to change.

INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY

The Internal Control Systems of the Company are robust and commensurate with the nature, size and complexity of its business. Well-designed internal financial control measures as laid down and adopted continue to be followed by the Company. Policies and procedures, as approved by the Board have been adopted by the Management of the Company for ensuring orderly and efficient conduct of its business, including adherence to Company’s policies, safeguarding of its assets, prevention and detection of frauds and errors, accuracy and completeness of accounting records and timely preparation of reliable financial information. Good governance, well defined systems and processes and policies, risk assessment, a vigilant control function, communication and monitoring and an independent internal audit function are the foundation of the internal control systems. The Internal Audit function of the Company continues to provide assurance on functioning and quality of internal controls along with adequacy and effectiveness through periodic reporting. The Internal Risk and Control function also evaluates organizational risk along with controls required for mitigating those risks. The control activities continue to incorporate, among others, continuous monitoring, routine reporting, digital business environment with minimum possible manual intervention, checks and balances, purchase policies, authorization and delegation procedures, audits including compliance audits, which are periodically reviewed by the Audit Committee and the Business Process and Risk Management Committee. The performance of the Internal Audit department is also reviewed by the Board and improvements advised. Your Company has a Code of Conduct for all employees and a clearly articulated and internalized delegation of financial authority. Your Company also takes prompt action on any violations of the Code of Conduct by its employees.

The Company’s Enterprise Resource Management Systems with Standard Operating Procedures based on work flows and process flow charts also provide a comfort in this regard. The Company is fully geared to implement any statutory recommendation which may be made in this regard.

Key Financial Ratios

* Note: There was a 83.3% change in Company's Standalone debt equity ratio as well as 26.92% change in Company's Consolidated debt equity ratio on account of increase in debt balance.

ADEQUACY OF INTERNAL FINANCIAL CONTROLS RELATED TO FINANCIAL STATEMENTS

The Company has policies and procedures for ensuring orderly and efficient conduct of its business, including adherence to the Company’s policies, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of accounting records and the timely preparation of reliable financial disclosures, which are reviewed by the Board and Audit Committee from time to time.

EMPLOYEE STOCK OPTION SCHEME

Your Company had earlier re-introduced the ESOP Scheme, aligned with the Securities and Exchange Board of India (Share Based Employee Benefits) Regulations, 2014 in the year 2016 in accordance with the approval of the members granted at the Annual General Meeting held on 3rd August, 2016, to reward eligible employees.

In accordance with the aforesaid scheme of 2016, the Compensation and Nomination and Remuneration Committee has granted 75,910 options on 8th November, 2021 to 216 eligible employees (including 1,300 to Mr Abhijit Roy, being Key Managerial Personnel) and also allotted 28,452 equity shares of '1 each (face value) to eligible employees (including Key Managerial Personnel as per details below) upon exercise of their options earlier granted to them. The allotment of the aforesaid shares were made on 22nd December, 2021.

In accordance with Rule 12 of the Companies (Share Capital and Debenture) Rules, 2014, the Company had allotted shares to Key Managerial Personnel (KMP) on 22nd December, 2021, on their exercising the options earlier granted to them and the details of the allotments made are given herein-

For further details, please refer to Annexure II to this report where detailed information required to be disclosed in terms of the provisions of the SEBI (Share Based Employee Benefits) Regulations, 2014 are enclosed.

Please also visit the weblink: https://www.bergerpaints.com/investors/esop-disclosure.html for disclosures under Regulation 14 of the aforesaid Regulations.

HUMAN RESOURCES

The Company believes that building and nurturing a culture of innovation, execution excellence, collaboration and capability building are imperative to ensuring sustainable business growth and a future-ready organization.

The pandemic has accelerated workplace transformations worldwide to meet which we ushered-in digitalization of people-processes thus ensuring enhanced employee experience through data driven decision-making, delivering HR services "on the Go", and create a connected and engaged workplace.

During the year, we launched our flagship developmental programmes for the Mid and Senior level Leadership "Top Gun’’ and "Dronacharya". Co-crafted with institutes of global repute, these year-long capability building interventions are aimed at sharpening the Leadership and Functional capabilities of the participating members and cascading learnings across the Organization.

The Company believes in participative engagement across the entire hierarchy of the Organization. With a view to improve the productive participation of employees on the shop floor, a series of innovative programs were rolled out across all our manufacturing locations.

The overall Industrial Relations climate continued to remain harmonious and peaceful during the year. The number of employees as on 31st March, 2022 was 3,931 (31st March, 2021 - 3,814). The Industrial Relations were generally satisfactory during the financial year.

TRANSFER OF SHARES TO THE INVESTOR EDUCATION AND PROTECTION FUND

The Ministry of Corporate Affairs (MCA) vide notification no. S.O.2866 (E) dated 5th September, 2017 enforced Sections 124(6) and 125 of the Companies Act, 2013 (hereinafter "the Act") read with the Investor Education and Protection Fund [IEPF] (Accounting, Audit, Transfer and Refund) Rules, 2016 (as amended), which require companies to transfer the underlying shares to the IEPF, in respect of which the dividends have remained unclaimed for a consecutive period of seven years. Accordingly, during the year under review, on 19th November, 2021 the Company had transferred 1,33,841 equity shares (0.01% of paid up capital) to the IEPF.

PREVENTION OF SEXUAL HARASSMENT

Pursuant to Section 134(3)(q) read with the Companies (Accounts) Rules, 2014, the Company has complied with the provisions relating to constitution of Internal Complaint Committee (ICC) under the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013. As per the Policy, any complaint received shall be forwarded to an Internal Complaint Committee ("ICC") formed under the Policy for redressal. The investigation shall be carried out by ICC constituted for this purpose. From the date of inception, there has been no such complaint received. During 2021, initiatives were taken to demonstrate the Company’s zero tolerance philosophy against discrimination and sexual harassment, which included easy to understand training and communication material which was made easily accessable. The Company also conducted online workshop for the employees to cover various aspects in this matter.

Currently, the ICC comprises the following members:-

1. Ms Rishma Kaur (Presiding Officer)

2. Mr Srijit Dasgupta

3. Mr Aniruddha Sen

4. Ms Kakoli Dey (NGO representative).

SUBSIDIARY AND JOINT VENTURES

Your Company has the following 5 wholly-owned subsidiaries as on the date of this report: -

(i) Beepee Coatings Private Limited ("Beepee Coatings") in Gujarat;

(ii) Berger Paints (Cyprus) Limited ("Berger Cyprus") in Cyprus;

(iii) Lusako Trading Limited ("Lusako Trading") in Cyprus;

(iv) Berger Jenson & Nicholson (Nepal) Private Limited ("BJN-Nepal") in Nepal and

(v) SBL Specialty Coatings Private Limited ("SCPL") in Chandigarh.

The following companies are wholly-owned subsidiaries of the Company’s above named subsidiaries: -

(i) Bolix S.A., Poland - wholly-owned subsidiary of Lusako Trading;

(ii) Berger Paints Overseas Limited ("BPOL"), Russia - wholly-owned subsidiary of Berger Cyprus. Bolix S.A., Poland has 4 subsidiaries, viz.: Bolix UKRAINA sp.z.o.o., Ukraine ("Bolix Ukraine"), BUILD-TRADE sp.z.o.o.,Poland ("Build Trade Poland"), Soltherm External Insulations Limited, U.K. ("Soltherm U.K."), Soltherm Isolations Thermique Exterieure SAS, France ("Soltherm France").

Surefire Management Services Ltd., UK ("SMS"), is a joint venture of Bolix S.A., Poland with Green Dynamo Ltd., U.K. Details in respect of SMS are provided in Part B of AOC-1 forming a part of the Financial Statements.

The Company has three other subsidiaries viz., Berger Rock Paints Private Limited (the other shareholder being Rock Paints, Japan), Berger Hesse Wood Coatings Private Limited (the other shareholder being Hesse Shares GmbH, Germany) and STP Ltd. The statement relating to the above companies as specified in Sub-Section (3) of Section 129 of the Companies Act, 2013 is attached to the Report and Accounts of the Company.

Beepee Coatings Private Limited earned a revenue from operations of '30.66 crore during the year under review.

Berger Paints (Cyprus) Limited ("Berger Cyprus") is a special purpose vehicle for the purpose of making investments in your Company’s interests abroad and so is Lusako Trading Limited.

Bolix S.A. (including its subsidiaries) also posted encouraging results with a revenue from operations of '374.58 crore.

During the year under review, BJN-Nepal showed good performance with a revenue from operations of '255.88 crore.

SBL Specialty Coatings Private Limited (earlier known as Saboo Coatings Private Limited) continued to perform well with a revenue from operations of '152.66 crore during the year 2021-2022.

The revenue from operations of Berger Paints Overseas Limited ("BPOL") was '10 crore.

Berger Rock Paints Private Limited ("Berger Rock"), recorded revenue from operations of '16.21 crore during the year ended 31st March, 2022.

Berger Hesse Wood Coatings Private Limited ("BHWCPL") (earlier known as Saboo Hesse Wood Coatings Private Limited) recorded revenue from operations of '16.89 crore during the year ended 31st March, 2022.

STP Limited recorded revenue from operation of '244.90 crore during the year ended 31st March, 2022.

Berger Becker Coatings Private Limited, the Company’s joint venture with Becker Industrifarg, Sweden, showed good performance with revenue from operations of '293.84 crore.

Berger Nippon Paint Automotive Coatings Private Limited ("BNPA"), the Company’s joint venture with Issac Newton Corporation, posted revenue from operations of '182.79 crore.

The salient features of the financial statements of subsidiaries, associate companies and joint ventures are given in the Statement in Form AOC-1 forming a part of the financial statement attached to this Directors’ Report and pursuant to first proviso to Sub-section (3) of Section 129 of the Act read with Rule 5 of the Companies (Accounts) Rules, 2014.

Pursuant to Regulation 16(1)(c) of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 (hereinafter "Listing Regulations"), a material subsidiary in a year shall be a subsidiary whose income or net worth exceeds 10% of the consolidated income or net worth respectively of the Company and its subsidiaries, in the immediately preceding accounting year. At present, there is no such material subsidiary of the Company within the meaning of the above Regulation.

CONSOLIDATED FINANCIAL STATEMENTS

The duly audited Consolidated Financial Statements as required under the Indian Accounting Standard 110, provisions of Regulation 33 of the Listing Regulations and Section 136 of the Act have been prepared after considering the audited financial statements of your Company’s subsidiaries and appear in the Annual Report of the Company for the year 2021-22.

CORPORATE GOVERNANCE

Your Company re-affirms its commitment to the standards of corporate governance. This Annual Report carries a Section on Corporate Governance and benchmarks your Company with the relevant provisions of the Listing Regulations.

Pursuant to the Listing Regulations, as amended, a certificate obtained from a Practising Company Secretary certifying that the Directors of the Company are not debarred or disqualified from being appointed or to continue as directors of companies by the Securities and Exchange Board of India/Ministry of Corporate Affairs, forms part of the report as Annexure B to the Corporate Governance Report.

In terms of Section 204 of the Act read with Rule 9 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 (as amended), your Board at its meeting held on 26th May, 2021 appointed Messrs Anjan Kumar Roy & Co., Company Secretaries (FCS-5684/CP No.4557) as the Secretarial Auditor to conduct audit of the secretarial records for the financial year ended 31st March, 2022 and to submit the Secretarial Audit Report.

The Secretarial Audit Report as received from Messrs Anjan Kumar Roy & Co., Company Secretaries in the prescribed Form No. MR-3 is annexed to this Board’s Report and marked as Annexure V. The Secretarial Audit Report does not contain any qualification, reservation or adverse remark. An Annual Secretarial Compliance report as per Securities and Exchange Board of India circular dated 8th February, 2019 is also attached as Annexure VI as an additional disclosure.

COMPLIANCE WITH THE SECRETARIAL STANDARDS ON BOARD AND GENERAL MEETINGS

During the year under review, the Company has duly complied with the applicable provisions of the Secretarial Standards on meetings of the Board of Directors (SS-1) and General Meetings (SS-2) issued by the Institute of Company Secretaries of India (ICSI). In this regard, the Company has devised proper systems to ensure compliance of SS-1 and SS-2 and that such systems are adequate and operating effectively.

TECHNOLOGY AGREEMENTS

Your Company has a Technical License Agreement with Nippon Paint Automotive Coatings Co, Ltd. of Japan.

FIXED DEPOSIT

The Company had earlier discontinued acceptance of fixed deposits since 2002 and accordingly, no fresh deposit was accepted during the year. As per the provisions of Section 125 of the Act, all unclaimed deposits have been transferred to Investor Education and Protection Fund (IEPF).

WEBLINK OF ANNUAL RETURN

The draft Annual Return (e-form MGT-7) for the financial year ended 31st March, 2022 is placed on the website of the Company i.e., https://www.bergerpaints.com/investors/annual-returns.html which is in compliance with the Companies (Amendment) Act, 2017, effective from 28th August, 2020. The e-form MGT-7 shall be filed with the MCA upon the completion of the 98th Annual General Meeting of the Company as required under Section 92 of the Companies Act, 2013 and the Rules made thereunder and a copy of the same shall be furnished on the website of the Company.

BUSINESS RESPONSIBILITY REPORT

SEBI had made it mandatory to publish a Business Responsibility Report by the top 1000 listed companies based on market capitalization in their Annual Report in terms of Regulation 34(2)(f) of the Listing Regulations with the stock exchanges. The Company accordingly complied with the requirement and had framed a Business Responsibility Policy in line with the suggested framework as provided by SEBI based on the National Voluntary Guidelines on Social, Environmental and Economic Responsibilities of Businesses published by the Ministry of Corporate Affairs. The said Policy was adopted at the Board Meeting held on 30th May, 2017 and can be viewed at https://www.bergerpaints.com/about-us/business-responsibility-policy.html. Mr Abhijit Roy, Managing Director and CEO is the Director responsible for implementing the Business Responsibility Policy and Mr Arunito Ganguly, Vice President and Company Secretary is the Business Responsibility Head. As required, the BRR for 2021-22 is attached to this report as Annexure VIII.

In terms of amendment to Regulation 34 (2) (f) of LODR Regulations vide Gazette notification no. SEBI/LAD-NRO/GN/2021/22 dated May, 10, 2021, SEBI has instructed companies to replace the Business Responsibility Report (BRR) with a Business Responsibility and Sustainability Report (BRSR). The Company has accordingly initiated steps to adopt and publish Business Responsibility and Sustainability Report for the year 2022-23 in the Annual Report for the year 2022-23.

DIRECTORS’ RESPONSIBILITY STATEMENT

Your Directors wish to inform that the Audited Accounts containing Financial Statements for the financial year ended 31st March, 2022 are in full conformity with the requirements of the Act. They believe that the Financial Statements reflect fairly, the form and substance of transactions carried out during the year and reasonably present your Company’s financial condition and results of operations.

Your Directors further confirm that:

i) The applicable accounting standards have been followed and wherever required, proper explanations relating to material departures have been given,

ii) The Directors have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profit or loss of the Company for that period,

iii) Proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities,

iv) The Accounts have been prepared on a going concern basis,

v) The Directors have laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and operating effectively,

vi) The Directors have devised proper systems to ensure proper compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

POLICY ON APPOINTMENT AND REMUNERATION OF DIRECTORS, KEY MANAGERIAL PERSONNEL AND OTHER EMPLOYEES

The Company has formulated a Remuneration Policy pursuant to the provisions of Section 178 and other applicable provisions of the Act and Rules thereof. The policy is based on the guiding principle aimed towards retaining and rewarding performers. There has been no change in the said policy during the financial year ended 31st March, 2022.

The Policy is available at the following weblink: www.bergerpaints.com/about-us/remuneration-policy.html.

QUALIFICATION OR RESERVATIONS IN THE STATUTORY/SECRETARIAL AUDIT REPORTS

Your Board has the pleasure in confirming that no qualification, reservation, adverse remark or disclaimer has been made by the Statutory Auditors and the Company Secretary in Practice in their Audit Reports issued to the members of the Company. The Statutory Auditors of the Company have not reported any fraud in terms of the second proviso to Section 143 (12) of the Act.

SHARE CAPITAL

The Authorised Share Capital of your Company as on 31st March, 2022 stood at '120,00,00,000 divided into 120,00,00,000 equity shares of '1/- each. The Issued Share Capital of your Company is '97,13,86,517 divided into 97,13,86,517 equity shares of '1/- each and the subscribed and paid-up capital is '97,13,23,489 divided into 97,13,23,489 equity shares of '1/- each fully paid-up.

CREDIT RATING

During the year under review, CRISIL Limited has reaffirmed the credit rating of the Company’s Bank Loan Facilities as CRISIL AAA (Long Term Rating) and CRISIL A1+ (Short Term Rating). CARE Ratings Ltd, during the year under review, has reaffirmed the credit rating of the Company’s Commercial Paper instrument as CARE A1+.

LOANS, COMMITMENTS AND CONTINGENCIES, INVESTMENTS

Particulars of loans given, investments made, guarantees given and securities provided, if any, along with the purpose for which the loan or guarantee or security is proposed to be utilised by the recipient are provided in the standalone financial statements (please refer Notes 7,8,13 and 46 of the standalone financial statements).

RELATED PARTY TRANSACTIONS

The Company has always been committed to good corporate governance practices, including in matters relating to Related Party Transactions (RPTs). Endeavour is consistently made to have only arm’s length transactions with all parties including Related Parties. The Board of Directors of the Company had a "Policy on Related Party Transactions" in terms of Regulation 23 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 and Section 188 of the Companies Act, 2013 since 26th September, 2014. However, in light of the various impactful changes pursuant to several amendments in the Listing Regulations and most of which have been made effective from 01.04.2022, it was necessary to amend the existing policy to align it with the changes as introduced by SEBI recently. The new policy is available at the following weblink: https://www.bergerpaints.com/about-us/rpt-policy.html. The Company has also developed a Related Party Transactions (‘RPTs’) Manual and Standard Operating Procedures to identify and monitor RPTs.

All transactions with related parties are placed before the Audit Committee for approval and Board as applicable. Prior omnibus approval of the Audit Committee is obtained for all the RPTs, which are foreseeable and repetitive and/or entered in the ordinary course of business and are at arm’s length basis.

All related party transactions during the year have been carried out at arms’ length basis in the ordinary course of business except for one instance where the transaction was carried out at an arms' length basis though not in the ordinary course of business. Since, the said transaction/arrangement was not material in terms of the provisions of Listing Regulations therefore it has not been reported in Form AOC-2 under the provisions of Section 134(3)(h) of the Companies Act, 2013.

POLICY TO DETERMINE MATERIAL EVENTS

As per the Listing Regulations, the Company has framed a policy for determination of materiality, based on criteria specified in the regulations. The Policy is available at the following web link: https://www.bergerpaints.com/about-us/policy-determme- material- events.html.

POLICY FOR PRESERVATION OF DOCUMENTS

As per Regulation 9 of Listing Regulations, the Company has framed a policy for Preservation of Documents, based on criteria specified in the said Regulations. The Policy is available at the following web link: https://www.bergerpaints.com/about-us/policy- preservation-documents.html.

SIGNIFICANT CHANGES

During the financial year 2021-22, no significant change has taken place which could have an impact over the financial position of the Company. Further, except those disclosed in this Annual Report, there are no material changes and commitments affecting the financial position of the Company between the end of the financial year i.e., 31st March, 2022 and the date of this Report.

DIVIDEND

The total comprehensive income of the Company is '750.68 for the year 2021-22.

Your Directors have recommended a dividend of '3.10 (310%) per equity share of '1/- each for the financial year ended 31st March, 2022. Dividend is subject to approval of the shareholders at the ensuing Annual General Meeting. The dividend, if approved, will absorb an amount of '301.11 (compared to '271.96 in the previous year), based on the current paid-up capital of the Company. The dividend will be paid to those members holding shares in the physical mode whose names appear in the Register of Members as on 26th August, 2022 and for shares held in electronic form, to those whose names appear in the list of beneficial holders furnished by respective Depositories as at the end of business hours on 19th August, 2022.

The Company has not transferred any amount to the General Reserve during the financial year ended 31st March, 2022.

In accordance with Regulation 43A of the Listing Regulations, the Company has formulated a Dividend Distribution Policy. The Dividend Distribution Policy (though optional) is annexed to this Report (marked as Annexure I). The Policy is available at the following weblink: https://www.bergerpaints.com/about-us/dividend-distribution-policy.html.

In terms of the provisions of Section 124 of the Act, your Company has transferred an amount of '70,55,011 for 2013-14 (Final) and '38,31,385 for 2014-15(Interim) to the Investor Education and Protection Fund, in respect of dividend amounts lying unclaimed or unpaid for more than seven years from the date they became due.

Pursuant to the provisions of the Investor Education and Protection Fund Authority (Accounting, Audit, Transfer and Refund) Rules, 2016, the Company has filed the necessary form and uploaded the details of unclaimed amounts lying with the Company, as on 31st March, 2014.

Pursuant to the changes introduced by the Finance Act, 2020 in the Income-tax, Act 1961, the dividend paid or distributed by a Company shall be taxable in the hands of the shareholders. Accordingly, in compliance with the said provisions, your Company shall make the payment after necessary deduction of tax at source.

Conservation of Energy & Technology Absorption

Information pursuant to Section 134(3)(m) of the Act read with the Companies (Accounts) Rules, 2014 (as amended), is annexed as Annexure VII of this report.

Foreign Exchange Earnings and Outgo

Foreign Exchange Earnings and Outgo of the Company are '8.66 crore and '1167.45 crore respectively. Primarily, earnings were from exports and consultancy services and outgo was towards import payments.

Particulars of Employees

In terms of the provisions of Section 197(12) read with Rule 5(2) and 5(3) of Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 particulars of certain category of employees have been set out in Annexure IV of this report.

STATEMENT OF EVALUATION OF BOARD OF DIRECTORS AND COMMITTEES THEREOF

Your Company understands the requirements of an effective Board Evaluation process and accordingly conducts the Performance Evaluation every year in respect of the following:

i. Board of Directors as a whole.

ii. Committees of the Board of Directors.

iii. Individual Directors including the Chairman of the Board of Directors.

In compliance with the requirements of the provisions of Section 178 of the Act, the Listing Regulations and the Guidance Note on Board Evaluation issued by SEBI in January 2017, your Company has carried out an Online Performance Evaluation process for the Board/Committees of the Board/Individual Directors including the Chairman of the Board of Directors for the financial year ended 31st March, 2022. During the year under review, the Company has complied with all the criteria of Evaluation as envisaged in the SEBI Circular on ‘Guidance Note on Board Evaluation’.

The key objectives of conducting the Board Evaluation process were to ensure that the Board and various Committees of the Board have appropriate composition of Directors and they have been functioning collectively to achieve common business goals of your Company. Similarly, the key objective of conducting performance evaluation of the Directors through individual assessment and peer assessment was to ascertain if the Directors actively participate in the Board/Committee Meetings and contribute to achieve the common business goals of the Company.

The Directors carry out the aforesaid Online Performance Evaluation in a confidential manner and provide their feedback on a rating scale of 1 - 5. Duly completed formats were sent to the Chairman of the Board and the Chairman/Chairperson of the respective Committees of the Board for their consideration. The Performance Evaluation feedback of the Chairman was sent to the Chairman of the Compensation and Nomination and Remuneration Committee.

This year also, the outcome of such Performance Evaluation exercise was discussed at a separate meeting of the Independent Directors held on 9th February, 2022 and was later tabled at the Compensation and Nomination and Remuneration Committee meeting held on the same day. The Compensation and Nomination and Remuneration Committee forwarded their recommendation based on such Performance Evaluation Process to the Board of Directors and the same was tabled at the Board Meeting held on 9th February, 2022.

After completion of online evaluation process, the Board of Directors at its Meeting held on 9th February, 2022, also discussed the Performance Evaluation of the Board, its Committees and individual directors. The performance evaluation of Independent Directors of the Company were done by the entire Board of Directors, excluding the Independent Directors being evaluated and after being satisfied with the outcome, it was noted that the Committees were working effectively.

Pursuant to Section 178(3) of the Act and Regulation 19 of the Listing Regulations, the Remuneration Committee is entrusted with responsibility of formulating criteria for determining qualifications, positive attributes and independence of an Independent Director. This can be viewed at https://www.bergerpaints.com/about-us/criteria-policy.html.

SIGNIFICANT AND MATERIAL ORDER PASSED BY REGULATORS OR COURTS OR TRIBUNALS IMPACTING THE GOING CONCERN STATUS AND OPERATIONS OF THE COMPANY

Pursuant to Section 134(3)(q) of the Act read with Companies (Accounts) Rules, 2014, it is stated that no material order has been passed by any regulator, court or tribunal impacting the Company's operations and its going concern status during the financial year 2021-22.

No application has been made under the Insolvency and Bankruptcy Code, 2016 against the Company; hence the requirement to disclose the details are not applicable. The requirement to disclose the details of difference between amount of the valuation done at the time of one-time settlement and the valuation done while taking loan from the Banks or Financial Institutions along with the reasons thereof, is not applicable.

BOARD OF DIRECTORS, BOARD MEETINGS AND KEY MANAGERIAL PERSONNEL

Your Company’s Board is duly constituted and in compliance with the requirements of the Act, the Listing Regulations and provisions of the Articles of Association of the Company. Your Board has been constituted with requisite diversity, wisdom, expertise and experience commensurate to the scale of operations of your Company.

COMPOSITION OF BOARD

The Board comprises 10 Directors of which, 3 are Executive Directors (2 of whom are part of the promoter group), 2 are NonExecutive (both are part of the promoter group) and 5 are Non-Executive, Independent Directors. The composition of the Board is in conformity with Regulation 17 of the Listing Regulations read with Section 149 of the Act.

MEETINGS

During the year under review, a total of six Meetings of the Board of Directors of the Company were held, i.e., on 26th May, 2021, 22nd and 23rd June, 2021, 6th August, 2021, 10th November, 2021, 28th December, 2021 and 9th February, 2022. Also, the Board of Directors have passed 11 (eleven) Resolutions by Circulation. Details of Board composition and Board Meetings held during the financial year 2021-2022 have been provided in the Corporate Governance Report - Annexure IX which forms part of this Annual Report.

CHANGES IN BOARD COMPOSITION

Details of Directors' appointment/reappointment and change in board composition during the financial year under review are as follows:

Details of Directors seeking appointment/reappointment at the ensuing AGM are as follows:

KEY MANAGERIAL PERSONNEL

Mr Abhijit Roy (DIN: 03439064), Managing Director & CEO and Mr Srijit Dasgupta, Director - Finance and Chief Financial Officer and Mr Arunito Ganguly, Vice President and Company Secretary are the Key Managerial Personnel (KMP) of the Company.

STATEMENT OF DECLARATION BY INDEPENDENT DIRECTORS

The following are the Independent Directors of your Company as on 31st March, 2022:

1) Mrs Sonu Halan Bhasin

2) Mr Naresh Gujral

3) Mr Pulak Chandan Prasad

4) Mr Anoop Hoon

5) Dr Anoop Kumar Mittal

The Company has received declarations from Independent Directors that they meet the criteria of independence as prescribed u/s 149(6) of the Act and as required under the Listing Regulations. In the opinion of the Board, they fulfil the condition for appointment/ re-appointment as Independent Directors on the Board.

The Board of Directors confirms that the Independent Directors have affirmed compliance with the Code for Independent Directors as prescribed in Schedule IV to the Act and also with the Company’s Code of Conduct applicable to all the Board Members and Senior Management Personnel of the Company for the financial year ended on 31st March, 2022.

STATEMENT REGARDING OPINION OF THE BOARD WITH REGARD TO INTEGRITY, EXPERTISE AND EXPERIENCE (INCLUDING THE PROFICIENCY) OF THE INDEPENDENT DIRECTORS APPOINTED DURING THE YEAR

In the opinion of the Board, the Independent Directors possess the attributes of integrity, expertise and experience as required to be disclosed under Rule 8(5)(iiia) of the Companies (Accounts) Rules, 2014 (as amended).

All the Independent Directors of the Company have registered themselves with the Indian Institute of Corporate Affairs (IICA) as was notified and required under Section 150(1) of the Act.

COMMITTEES OF THE BOARD

A. AUDIT COMMITTEE

The Board of Directors of your Company has duly constituted an Audit Committee in compliance with the provisions of Section 177 of the Act, the Rules framed thereunder read with Regulation 18 of the Listing Regulations. The composition of the Audit Committee has been disclosed in the Corporate Governance Report which forms part of the Board's Report (Annexure IX). The terms of reference of the Audit Committee have been duly approved by the Board of Directors.

VIGIL MECHANISM/WHISTLE BLOWER POLICY

In terms of the provisions of Section 177 of the Act and the Rules framed therein read with Regulation 22 of the Listing Regulations, your Company has a Vigil Mechanism/Whistle Blower Policy in place for directors and employees of the Company through which genuine concern regarding various issues relating to inappropriate functioning of the organization can be raised. The Vigil Mechanism/ Whistle Blower Policy has been uploaded on the website of the Company https://www.bergerpaints.com/about-us/ whistleblower-policy.html.

B. CORPORATE SOCIAL RESPONSIBILITY COMMITTEE

Your Company has spent an amount of '17.37 crore during the financial year 2021-2022 as against its 2% obligation amounting to '17.16 crore, thereby exceeding its entire CSR obligation. The required details as specified in Companies CSR Policy Rules, 2014 are given in Annexure III.

The CSR Policy as recommended by the CSR Committee and as approved by the Board is available on the website of the Company and can be accessed at https://www.bergerpaints.com/about-us/csr-policy.html. The composition of the CSR Committee and a brief outline of the CSR Policy is annexed to this report (Annexure III).

The Company’s CSR activities majorly comprises iTrain programme aimed at skilling/ upskilling painters. The programme is carried out from fixed iTrain centers spread across the country and mobile iTrain centers which visit far flung areas for imparting this skill development exercise. During the year under review, the Company entered into a Memorandum of Understanding with Smile Foundation, a reputed NGO. In future, Smile Foundation will carry out the mobile iTrain programme and is expected to add value to the same based on their expertise.

While, the Company had donated two medical oxygen generation systems as a part of its CSR obligation during the second wave of the COVID 19 pandemic in May, 2021, an oxygen pipeline system and oxygen manifold and distribution system was also donated in June, 2021 for the benefit of covid affected patients.

C. COMPENSATION AND NOMINATION AND REMUNERATION COMMITTEE

The constitution of the Company’s Compensation and Nomination and Remuneration Committee is given in the Report on Corporate Governance - Annexure IX.

D. SHAREHOLDERS’ COMMITTEES

The constitution of the Company’s Shareholders’ Committees is given in the Report on Corporate Governance - Annexure IX.

E. BUSINESS PROCESS AND RISK MANAGEMENT COMMITTEE

The constitution of the Company’s Business Process and Risk Management Committee is given in the Report on Corporate Governance - Annexure IX.

Structure of the Board of Directors

FAMILIARIZATION PROGRAMME OF INDEPENDENT DIRECTORS

The Company believes that the best training is imparted when dealing with actual roles and responsibilities on the job. To this extent, the Company arranges detailed presentation by Business and Functional Heads on various aspects including the business environment, economy, performance of the Company, industry scenario, sales and marketing, production, raw materials, research and development, financial controls, the Company’s strategy, etc. Visits to factories, business units are also undertaken from time to time. Details of Familiarization Programmes imparted during the year under review has been uploaded on the Company’s website and is available at the following weblink: https://www.bergerpaints.com/about-us/familiarization-program.html.

INFORMATION AS TO REMUNERATION OF DIRECTORS AND EMPLOYEES

Pursuant to Section 197 of the Act read with Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 (as amended), the following disclosures are made:

1) Ratio of remuneration of Directors/KMP to the median remuneration of the employees:

* Remuneration does not includes value of ESOP’s granted.

Note - The median employee remuneration for 2021-22 is: '6,00,940 p.a.

2) Percentage (%) increase in remuneration during the financial year 2021-22: Please see (1) above.

3) Percentage (%) increase in the median remuneration of employees during the financial year 2021-22: 6.22%

4) Number of permanent employees on the rolls of the Company as on 31st March, 2022: 3,931

5) Average percentile increase already made in the salaries of employees other than the managerial personnel in the last financial year and its comparison with the percentile increase in the managerial remuneration and justification thereof and point out if there are any exceptional circumstances for increase in the managerial remuneration -The average percentile increase in salaries of employees was 10.58% as compared to an average percentile increase of 32.51% of managerial remuneration. The increase of managerial remuneration is based on growth criteria.

6) Pursuant to the requirement of Section 197(14) of the Act, the following disclosure is made in respect to remuneration received by the Whole time Directors:

Affirmation

It is hereby affirmed by the Chairman of the Company that the remuneration paid to all the employees, Directors and Key Managerial Personnel of the Company during the Financial Year 2021-22 are as per the Remuneration Policy framed by the Compensation and Nomination and Remuneration Committee of the Company.

LISTING WITH STOCK EXCHANGES

Your Company is listed with National Stock Exchange of India Limited, BSE Limited and The Calcutta Stock Exchange Limited and has paid the listing fees to each of the Exchanges. Your Company’s short term debt instruments (Commercial Papers) were listed with National Stock Exchange of India Limited as was required vide - SEBI Circular SEBI/HO/DDHS/DDHS/CIR/P/2019/115 dated 22nd October, 2019 w.e.f 24th December, 2019. The addresses of these Stock Exchanges and other information for shareholders are given in this Annual Report.

COST AUDITORS

The Board of Directors at its Meeting held on 26th May, 2021 re-appointed M/s N. Radhakrishnan & Co. (Firm Registration No. 000056), 11A, Dover Lane, Flat B1/34, Kolkata - 700029, for conducting audit of the cost records maintained under Section 148(1) of the Act for the Company’s factories situated at Howrah, Rishra, Goa, Puducherry, Jejuri and Naltali for the financial year 20212022. M/s Shome & Banerjee (Firm Registration No. 000001), 2nd Floor, 5A Narulla Doctor Lane, West Range, Kolkata - 700017, have been entrusted with the responsibility of conducting cost audit of the cost records maintained under Section 148(1) of the Act for the Company’s factory situated at Jammu and the factories of British Paints division located at Sikandrabad and Hindupur for the financial year 2021-22.

The cost audit reports for the financial year 2020-21 were filed on 20th October, 2021 on receipt of advice from the Ministry of Company Affairs.

STATUTORY AUDITOR

The Statutory Auditor, Messrs. S. R. Batliboi & Co. LLP, Chartered Accountants, (ICAI Firm Registration No. 301003E/E300005) was re-appointed pursuant to the provisions of Sections 139, 142 of the Act and the Rules made thereunder from the conclusion of the 96th Annual General Meeting upto the conclusion of the 101st Annual General Meeting of the Company at the Annual General Meeting held on 25th September, 2020. Accordingly they would continue as the Statutory Auditor for the Financial Year 2022-23.

CAUTIONARY STATEMENT

There are certain statements which have been made in the Management Discussion and Analysis Report describing the estimates, expectations or predictions which may be read as "forward-looking statement" within the meaning of applicable laws and regulations. The actual results may differ materially from those expressed or implied. The important factors that would make difference to the Company’s operations include demand/supply conditions, raw material prices, changes in government policies, government laws, tax regimes, global economic developments and other factors such as pandemic situation, litigations and labour negotiations.

APPRECIATION

Your Directors place on record their deep appreciation of the assistance and guidance provided by the Central Government and the Governments of the States of India, its suppliers, technology providers and all other stakeholders. Your Directors thank the financial institutions and banks associated with your Company for their support as well. Your Directors also thank the Company’s dealers and its customers for their unstinted commitment and valuable inputs.

Your Directors acknowledge the support received from you as shareholders of the Company.

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