The Directors present with pleasure their report for the year ended 31
 March 2011.
 
 BUSINESS ENVIRONMENT
 
 Year on year, Indias GDP growth remained strong, spreading positive
 energy across the business environment.  Estimates for the ?fiscal year
 2010-11 suggest a GDP growth of about 8.5% (previous year 8%). There is
 every reason to believe that the growth in FY 2011-12 will be sustained
 at around 8%, assuming a normal monsoon and effective control on
 inflation. The credit policy announcements by the RBI indicate that
 inflation continues to be a cause of worry.
 
 Inclusive growth and infrastructure development were clearly the
 priorities of the Union Budget for 2011-12, with significant increase
 in allocation and a string of incentives for fresh investment in these
 sectors. On the taxation front, your Company stands to gain from the
 drop in corporate surcharge. Operating costs could, however, increase
 with the new levies in indirect taxes, restrictions on availing CENVAT
 set off and other similar measures.
 
 The new IFRS converged accounting standards have been notified by the
 Government. While your Company is gearing itself to adopt these
 standards, more details about the timetable for their adoption are
 awaited.
 
 FINANCE AND ACCOUNTS
 
 Total income for the year at Rs 11,955 m grew 15% while profit before
 tax at Rs 2,199 m, grew by 10% over the previous year. Profit for the
 year is not comparable with the previous year because of exceptional
 item in the current year. Keeping in view your Companys performance
 and other relevant factors, the Board has recommended a dividend of Rs
 18.00 per share for the year 2010-11 (previous year Rs 16.00), which
 will be paid after the approval of the members at the forthcoming
 Annual General Meeting.
 
 Performance highlights                                  (Rs million)
 
                                               2010-11        2009-10
 
 Total Income                                   11,955         10,433
 
 Operating Profit                                2,077          2,198
 
 Depreciation                                    (217)          (212)
 
 Interest income (net)                             226             14
 
 Profit before tax from operations               2,086          2,000
 
 Exceptional item                                  113              -
 
 Profit before tax                               2,199          2,000
 
 Tax                                             (433)          (407)
 
 Profit after tax for the year                   1,766          1,593
 
 Balance in Profit & Loss Account 
 brought forward from previous year              6,071          5,924
 
 Total available for appropriation               7,837          7,517 
 
 Appropriations
 
 Transfer to General Reserve                     (790)          (760)
 
 Proposed Dividend (net)                         (663)          (588)
 
 Tax on Dividend                                 (108)           (98)
 
 Balance carried to Balance Sheet                6,276          6,071
 
 
 No public deposits were accepted by your Company during the year.
 Unclaimed dividends amounting to Rs 4 m pertaining to financial year
 2002-03 were remitted into the Investor Education and Protection Fund
 of the Central Government as required under section 205C of the
 Companies Act, 1956.
 
 MANAGEMENT DISCUSSION & ANAlYSIS
 
 Paints
 
 Your Companys Paints segment consists of the Decorative and Automotive
 businesses. Continued innovations in product development and strong
 marketing efforts contributed to a revenue growth of 16%. Segment
 profit for the year grew by 1.3%, as your Company invested in building
 and strengthening the brand as well as in enhancing the capability of
 human resources, after absorbing input cost inflation.
 
 Dulux Promise, a new product for the Exterior mid-tier category, was
 launched in December 2010. With its Colour Guard technology, the
 product offers a wide range of colours and longevity. The business also
 re-launched two of its products during the year after renovating them
 for quality and ease of application. In addition, an international
 product Dulux All was also introduced to the Indian market.
 
 Colour Solution machines continue to play a vital role in driving
 revenue growth. To ensure high utilisation of these machines, your
 Company has pledged to improve service levels and deliver quicker
 complaint resolution in the market place.
 
 In order to stay close to the customer and enhance service levels,
 judicious investments in strengthening warehousing facilities and
 adding new depots have been implemented. Special care is being taken to
 transport the Companys products in a safe and cost-efficient manner.
 
 Further, your Company has invested in enhancing its production capacity
 at the Hyderabad Plant for waterborne paints. The Tinter manufacturing
 facilities have been debottlenecked at the Mohali and Thane Plants.
 
 The Automotive business introduced an international brand Dynacoat
 from the AkzoNobel stable in the Indian market during the year. This
 launch showcases the technical expertise and international lineage of
 AkzoNobel, even as it demonstrates your Companys commitment to
 quality.
 
 Taken together, all the above developments reinforced the image of your
 Company as the leaders in innovation.
 
 The growth momentum of industrial activity is likely to continue in FY
 2011-12 supported by the increased thrust of the Government on
 infrastructure. Rising input prices, however, continue to raise
 concerns on profitability. Your Company has been monitoring the global
 trends in the availability and price movements of all key inputs and
 has been striving to safeguard its supply lines for critical materials
 at the lowest possible cost. Cost reduction and value enhancement
 projects were also pursued to counter inflation/supply security.
 
 Notwithstanding the constraints, your Company stays focused on growing
 ahead of the market, with particular emphasis on surprising and
 delighting its consumers and empowering its people.
 
 Others
 
 National Starch (Specialty Starches) business was divested during the
 year; the profit from this divestment has been reported as an
 exceptional item in the Accounts for the year 2010-11.
 
 Surface Chemistry business registered a marginal drop in sales over the
 previous year mainly due to intense competition.
 
 SUSTAINABIlITY/ RESPONSIBLE CARE
 
 Health, Safety, Environment & Security
 
 Your Company continued to drive its sustainability objectives by taking
 on challenging targets for managing energy, water and waste. The
 Hyderabad and Thane facilities reduced their energy consumption per ton
 of paint produced by 5%. Water consumption in the plants has also
 decreased by 15% from 2010 levels. A task force has been set up to find
 ways and means of containing SLOB generation and ensure their
 appropriate disposal at depots. Together, the factories registered 18%
 reduction in waste generation.
 
 Corporate Social Responsibility (CSR)
 
 Leaving a positive impact on the neighbouring communities is high on
 the priorities of your Company. During the year under review, your
 Company encouraged a number of CSR initiatives in such communities in
 partnership with NGOs for improving awareness levels among children
 towards health, safety and environment. Continuing its drive to add
 colour to peoples lives, your Company implemented a hygiene
 improvement programme for a local school of under-privileged children
 in Navi Mumbai and created colourful environment in their classrooms.
 Your Company also worked with an NGO, that focuses on people below
 poverty line, to set up rain-water harvesting facilities and colourful
 community centres in villages.
 
 Visits were taken up to critical vendors to support them with suitable
 inputs on safety and sustainability.
 
 CONSERVATION OF ENERGY, RESEARCH, DEVELOPMENT & INNOVATION
 
 Your Company continues to use its research and development base to
 bring new products with improved performance features to the consumers
 and products for special applications. Particulars in respect of
 Conservation of Energy, Technology Absorption and Foreign Exchange
 Earnings and Outgo, pursuant to Section 217(1)(e)of the Companies Act,
 1956, are given in Annexure I to this report.
 
 INFORMATION TECHNOlOGY
 
 SAP has stabilised at all sites. Implementation of the advanced modules
 of SAP, e.g. the Advanced Planning Optimisation for demand and
 distribution planning, Project Systems to manage projects end-to-end
 and the automation of Accounts Payable are in progress.
 
 A robust Distributor Automation System that manages the transfer and
 supply of all items in the distribution chain from the manufacturer to
 the retailer, is being rolled out to Re-distribution Stockists. This
 application, once fully rolled out, will be interfaced with back-end
 SAP for automatic replenishment of stocks to Distributors and will
 provide data to track and monitor secondary sales.
 
 HUMAN RESOURCES
 
 Your Company ensured cordial relations with employees across all
 locations during the year. The total number of employees on the rolls
 of the Company as at 31 March 2011 was 1027.
 
 Information as per Section 217(2A) of the Companies Act, 1956, to be
 read with the Companies (Particulars of Employees) Rules 1975, forms
 part of this report. However, as per the provisions of Section
 219(1)(b)(iv) of the Act, the Report and Accounts are being sent to the
 members excluding the aforesaid information. Any member interested in
 obtaining such particulars may write to the Company Secretary.
 
 INTERNAL CONTROL SYSTEMS
 
 Your Company has an effective Risk Management framework, which helps
 the Board to monitor the exposure and state of preparedness in key
 business processes. Your Company has well-established procedures for
 internal controls commensurate with its size and operations. The
 organization is appropriately staffed with qualified and experienced
 personnel for implementing and monitoring the internal control
 environment. The Internal Audit function is adequately resourced and
 reports to the Audit Committee.
 
 CORPORATE GOVERNANCE
 
 Annexure II to this report summarizes the details of compliance with
 the Corporate Governance norms outlined in clause 49 of the Listing
 Agreements with the National Stock Exchange and Bombay Stock Exchange.
 
 DIRECTORS
 
 Mr N Kaviratne CBE took over as Chairman of the Company with effect
 from 1 October 2010, on the retirement of Mr Aditya Narayan from the
 Board.
 
 Mr N Kaviratne CBE and Ms R S Karnad, Directors, will be retiring by
 rotation at the forthcoming Annual General Meeting and are eligible for
 re-appointment.
 
 Mr P S Basu joined the Board as a Wholetime Director and CFO with
 effect from 1 November 2010. His appointment and remuneration are
 subject to approval by the members at the forthcoming Annual General
 Meeting.
 
 Mr G Armstrong and Mr A Uppal were appointed as Additional Directors
 with effect from 1 April 2011 and will hold office up to the date of
 the forthcoming Annual General Meeting. Their continued appointment to
 the Board is being placed for your approval. Your Board has also
 appointed Ms Sucheta Govil as the Alternate Director to Mr G Armstrong.
 
 The Board wishes to place on record its deep appreciation of the
 contribution of Mr. Aditya Narayan during his tenure as Chairman of the
 Board.
 
 AUDITORS
 
 M/s B S R & Associates retire as the Auditors of the Company at the
 conclusion of the forthcoming Annual General Meeting and, being
 eligible, have offered themselves for reappointment.
 
 DIRECTORS RESPONSIBILITY STATEMENT
 
 Your Directors confirm that:
 
 a) in the preparation of the Annual Accounts, the applicable accounting
 standards have been followed;
 
 b) they 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 as on 31 March 2011; and 
 
 – the profit for the year ended on that date;
 
 c) they have taken proper and sufficient care for the maintenance of
 adequate accounting records in accordance with the provisions of the
 Companies Act, 1956, for safeguarding the assets of the Company and for
 preventing and detecting fraud and other irregularities; and
 
 d) they have prepared the annual accounts on a going concern basis.
 
 CAUTIONARY STATEMENT
 
 Some of the statements in this report, describing your Companys
 objectives and expectations expressed in good faith, may constitute
 forward looking statements within the meaning of applicable laws and
 regulations. Actual results might differ materially from those, in the
 event of changes in the assumptions/market conditions.
 
 ACKNOWLEDGEMENT
 
 Your Directors wish to convey their gratitude and appreciation to all
 the employees of your Company for their valuable contribution during
 the year. They also wish to place on record their appreciation of your
 Companys customers, shareholders, investors, bankers, agents,
 suppliers, distributors and other business associates for their
 co-operation and support.
 
 
  
                                                On behalf of the Board
 
 
                                                       N Kaviratne CBE
                                                              Chairman
 
 Gurgaon 
 11 May 2011