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Berger Paints India

BSE: 509480|NSE: BERGEPAINT|ISIN: INE463A01038|SECTOR: Paints & Varnishes
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Directors Report Year End : Mar '19    Mar 18

The Directors have pleasure in presenting the Annual Report of the Company, together with the audited accounts for the financial year ended on 31st March, 2019.

FINANCIAL RESULTS

(Rs. in Crore)

Particulars

Financial Year ended

Standalone

Consolidated

2018-19

2017-18

2018-19

2017-18

Profit before Exceptional Items, Depreciation, Finance Cost and Tax

863.82

789.93

941.60

852.86

Add: Exceptional Item

(28.60)

-

-

-

Add: Share of Profit/Loss from Joint Ventures

-

-

(0.90)

0.64

Less:

Depreciation and Amortisation Expense

122.17

111.92

137.77

124.21

Finance Cost

20.79

16.20

32.33

24.55

Profit Before Tax

692.26

661.81

770.60

704.74

Less:

Provision for Taxation

253.23

229.97

273.15

243.91

Profit After Taxation

439.03

431.84

497.45

460.83

Add:

Other comprehensive income (loss for the year net of tax)

(2.05)

1.16

(10.73)

34.44

Total comprehensive income

436.98

433.00

486.72

495.27

FINANCIAL PERFORMANCE

Highlights of the Standalone Results:

a. Revenue from Operations (excluding GST and excise duty, as applicable) for the year ended 31st March, 2019 was Rs.5,515.55 crore (previous year: Rs.4,705.09 crore), representing an increase of 17.23%.

b. PBDIT (Profit Before Exceptional Items, Depreciation, Interest and Tax) for the year ended 31st March, 2019 was Rs.863.82 crore as against Rs.789.93 crore in the year 2017-18, representing an increase of 9.35%.

c. Net profit for the year ended 31st March, 2019 was Rs.439.03 crore as against Rs.431.84 crore in the previous year, representing an increase of 1.66%.

d. The Exceptional Item in the statement of Profit and Loss for the standalone results above is the impairment adjustment of Rs.28.60 crore recognised in the current year towards carrying value of the Company’s investment in its wholly owned subsidiary, Berger Paints Cyprus Limited, Cyprus, on account of accumulated losses sustained by the ultimate wholly owned subsidiary, Berger Paints Overseas Limited, Russia due to downturn in the Russian economy. However, this does not have any impact on the consolidated financial results of the Company since year-wise losses have been fully recognised in the respective consolidated financial results in the normal course.

Highlights of the Consolidated Results:

a. Revenue from operations (excluding GST and excise duty, as applicable) for the year ended 31st March, 2019 was Rs.6,061.86 crore (previous year : Rs.5,147.16 crore) - an increase of 17.77%.

b. PBDIT (Profit Before Exceptional Items, Depreciation, Interest and Tax) for the year ended 31st March, 2019 was Rs.941.60 crore as against Rs.852.86 crore in the year 2017-18, representing an increase of 10.40%.

c. Net profit for the year ended 31st March, 2019 was Rs.497.45 crore as against Rs.460.83 crore in the previous year, representing an increase of 7.95%.

d. It is to be noted that the Company acquired 51% of the paid up equity share capital of Saboo Hesse Wood Coatings Private Limited (“SHWCPL”) after close of business hours on 28th January, 2019. Accordingly, the consolidated financial results incorporate the financial results of SHWCPL for the relevant period.

The Board recommended dividend ofRs.1.90 (190%) per equity share ofRs.1/- each for the financial year ended 31st March, 2019.

POLICY FOR PREVENTION OF SEXUAL HARASSMENT

Your Company has framed a policy on the Prevention of Sexual Harassment of Women at workplace which commits to provide a workplace that is free from all forms of discrimination, including sexual harassment. The Policy can be viewed at the following weblink: www.bergerpaints.com/about-us/sexual-harassment-policy.html

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. There was no such complaint during the year. ICC comprises the following members who have been reappointed by the Board for another period of 3 years with effect from 1st February, 2018as per the Regulations:

1. Ms Rishma Kaur (The Presiding Officer)

2. Mr Srijit Dasgupta

3. MrAniruddhaSen

4. Ms Supama Mitra (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, Nepal (“BJN”) and (v) Saboo Coatings Private Ltd (now renamed SBL Specialty Coatings Private Limited).

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 Insolations Thermique Exterieure SAS, France (“Soltherm France”).

Surefire Management Services Ltd., UK (“SMS”), clarified as Subsidiary in the previous year, is determined to be a Joint Venture of Bolix S.A., Poland with Agility Eco Systems Limited, UK, based on the criteria of joint control. Details in respect of SMS are provided in Part B of AOC-1 forming a part of the Financial Statement.

The Company now has two other subsidiaries viz., Berger Rock Paints Private Limited and Saboo Hesse Wood Coatings Private Limited.

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.

During the year under review, BJN-Nepal showed good performance with a revenue from operations ofRs.197.2 crore.

Saboo Coatings Private Ltd (now renamed SBL Specialty Coatings Private Limited) continued to perform well with a revenue from operations ofRs.106.3 crore during the year 2018-19. The name of Saboo Coatings Private Limited has been changed to SBL Specialty Coatings Private Limited with effect from 6th May, 2019.

Bolix S.A.(including its subsidiaries) also posted encouraging results with a revenue from operations ofRs.251.4 crore.

The performance ofBeepee Coatings was satisfactory, with a revenue from operations ofRs.24.9 crore.

Berger Paints Cyprus Limited (“BPCL”) is a special purpose vehicle for the purpose of making investments in your Company’s interests abroad. So is Lusako Trading Limited.

As mentioned earlier in the report, considering the accumulated losses of Berger Paints Overseas Limited (“BPOL”), the Company’s investments in Berger Paints Cyprus Limited, Cyprus, the holding company of BPOL, were assessed on a prudent basis for impairment provision of Rs.28.60 crore in the year 2018-19. This appears as an exceptional item in the standalone financial results, towards carrying value of the Company’s investments in Berger Paints Cyprus Limited. However, this does not have any impact on the consolidated

financial results of the Company since year wise losses have been fully recognised in the respective consolidated financial results in the normal course. The revenue from operations ofBerger Paints Overseas Limited (“BPOL”) was Rs.9.8 crore.

Berger Rock Paints Private Limited (“Berger Rock”), which had just started operations, recorded revenue from operations of Rs.1.5 crore during the year ended 31st March, 2019. It had commenced sales in January, 2019.

Saboo Hesse Wood Coatings Private Limited (“SHWCPL”) recorded revenue from operations ofRs.1.35 crore during the year ended 31st March, 2019, after acquisition of its shares by the Company after close ofbusiness hours on 28th January, 2019.

Berger Becker Coatings Private Limited, the Company’s joint venture with Becker Industrifarg, Sweden, showed good performance with revenue from operations ofRs.365.1 crore.

Berger Nippon Paint Automotive Coatings Private Limited (“BNPA”), the Company’s joint venture with Nippon Paint Automotive Coatings Co., Ltd. of Japan (“NPAU”) posted revenue from operations ofRs.156.6 crore. BNPA now supplies coatings to 4 wheeler passenger cars and SUVs, 3 wheelers and related ancillaries, apart from coatings for plastic automotive substrates. It plans to progressively enhance its capabilities in this area over the next few years. During the year, the Company invested an amount of Rs.39.20 crore in BNPA by way of subscription to 3,92,000 equity shares of BNPA of face value ofRs.1,000 each. NPAU also subscribed to 4,08,000 equity shares of BNPA. The funds will be used for the proposed expansion of BNPA’s facilities to cater to its new customers and increasing businesses.

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, pursuant to first proviso to sub-section (3) of Section 129 of the Companies Act, 2013 read with Rule 5 of the Companies (Accounts) Rules, 2014.

Pursuant to Regulation 16(c) of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, 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 ofRegulation 36 ofSecurities and Exchange Board oflndia (Listing Obligations and Disclosure Requirements) Regulations, 2015 and Section 136 of the Companies Act, 2013 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 2018-19.

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 Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015.

Pursuant to the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, 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 continue as directors of the companies by the Securities and Exchange Board of India/Ministry of Corporate Affairs, forms part of the report as Annexure D.

During the year under review, your Company has carried out the Secretarial Audit pursuant to Section 204 of the Companies Act, 2013. The Secretarial Audit Report is attached as Annexure 4A to this Report. An Annual Secretarial Compliance report as per Securities and Exchange Board oflndia circular dated 8th February, 2019 is also attached as Annexure 4B as an additional disclosure.

The Board of Directors has appointed Messrs Anjan Kumar Roy & Co., Practising Company Secretaries (FCS No. 5684, CP. No. 4557), as the Secretarial Auditor to conduct audit of the secretarial records for the financial year 2018-19 and 2019-20.

The SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 and the SEBI (Prohibition of Insider Trading) Regulations, 2015 were amended during the year and the Company is taking all steps to comply with the requirements thereof.

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 Companies Act, 2013, all unclaimed deposits have been transferred to Investor Education and Protection Fund (IEPF) Account.

EXTRACT OF ANNUAL RETURN

The extract of the Annual Return of the Company as on 31st March, 2019 in Form MGT 9 in accordance with Section 92(3) of the Act read with Companies (Management and Administration) Rules, 2014, is available on the website of the Company at https://www.bergerpaints.com/investors/annual-reports.html and is set out in Annexure 1 to this Report.

MEETINGS OF THE BOARD OF DIRECTORS AND ATTENDANCE THEREAT

The details of meetings of the Board and attendance of Directors are given in the Report on Corporate Governance - Annexure B.

A. AUDIT COMMITTEE

The details of Audit Committee are given in the Report on Corporate Governance - Annexure B. The Board has accepted and implemented all recommendations of the Audit Committee.

WHISTLE BLOWER POLICY

Pursuant to Section 177 of the Companies Act, 2013 the Company along with its subsidiaries have complied with the laws and the codes of conduct applicable to them and have ensured that the business is conducted with integrity and that the Company’s financial information flow is accurate. In case of any violation or complaint, a report may be made under the Whistle-Blower Policy established by the Company. The said policy has been modified pursuant to the amended Regulations of the SEBI (Prohibition oflnsider Trading) Regulations, 2015. Also, the “Prevention of Insider Trading Code” in Corporate Governance Report contains highlights of the same. The Policy can be accessed at https://www.bergerpaints.com/about-us/whistleblower-policy.html

B. CORPORATE SOCIAL RESPONSIBILITY COMMITTEE

The Company has constituted a Corporate Social Responsibility Committee in accordance with the terms of reference of Section 135 of the Companies Act, 2013. The details of the Committee are given in the Report on Corporate Governance - Annexure B. The required details as specified in Companies CSR Policy Rules, 2014 is given in Annexure 2.

C. COMPENSATION & NOMINATION & REMUNERATION COMMITTEE

The details of the Committee are given in the Report on Corporate Governance - Annexure B.

D. SHAREHOLDERS’ COMMITTEES

The details of the Committees are given in the Report on Corporate Governance - Annexure B.

BUSINESS RESPONSIBILITY REPORT

SEBI has made it mandatory to publish a Business Responsibility Report (BRR) by the top 500 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 has been nominated as the director responsible for implementing the Business Responsibility Policy and Mr Aniruddha Sen, Senior Vice President and Company Secretary has been nominated as the Business Responsibility Head. As required, the BRR for 2018-19 is attached to this report as Annexure 6.

DIRECTORS’ RESPONSIBILITY STATEMENT

Your Directors wish to inform that the Audited Accounts containing Financial Statements for the financial year ended 31st March, 2019 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 in preparation of the Annual Accounts:

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.

STATEMENT OF DECLARATION BY INDEPENDENT DIRECTORS

The following are the Independent Directors of your Company:-

1) Mr Dhirendra Swarup

2) Mr Gopal Krishna Pillai

3) Mr Pulak Chandan Prasad

4) MrKamalRanjanDas

5) Mr Naresh Gujral

6) Mr Anoop Hoon*

7) Mrs Sonu Halan Bhasin*

* Appointed with effect from 1st February, 2019

The Company has received declarations from all the Independent Directors confirming that they meet the criteria for independence in the required format under the Companies Act, 2013 and as required under Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015.

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 Companies Act, 2013 and Rules thereof.

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

QUALIFICATION OR RESERVATIONS IN STATUTORY AUDIT REPORTS

Your Board has the pleasure in confirming that no qualification, reservation, adverse remark or disclaimer has been made by the Statutory Auditors or Company Secretary in Practice in their Audit Reports issued to the Company.

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 statement (please refer Notes 5a, 5b, 9a and 34 of the standalone financial statement).

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 has adopted the Related Party Transaction policy regarding materiality of related party transactions and also on dealings with Related Parties in terms of Regulation 23 of Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 with Stock Exchanges and Section 188 of the Companies Act, 2013. The policy is available at the following weblink:https://www.bergerpaints.com/about-us/rpt-policy.html

Pursuant to the amended Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 a policy on materiality of related party transactions and on dealing with related party transactions has to include clear threshold limit duly approved by the Board and such policy has to be reviewed by the Board once in every three years and updated accordingly. Accordingly, the Board has amended and adopted a new policy and the said policy has been uploaded on the website of the Company at https://www.bergerpaints.com/about-us/rpt-policy.html

All related party transactions have been carried out at arms’ length basis in the ordinary course of business. There is no material related party transaction i.e. transaction exceeding 10% of the annual consolidated turnover as per the last audited financial statements of the Company or a transaction involving payments made to a related party with respect to brand usage or royalty, which exceed 2% of the annual consolidated turnover of the Company as per last audited financial statements of the Company, entered during the year by your Company and accordingly, the disclosure of Related Party Transaction as required under section 134(3)(h) of the Companies Act, 2013in Form AOC-2 is not applicable.

POLICY TO DETERMINE MATERIAL EVENTS

As per the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 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-determine-material-events.html

POLICY FOR PRESERVATION OF DOCUMENTS

As per Regulation 9 of SEBI (Listing Obligations and Disclosures Requirements) Regulations, 2015 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 2018-19, no significant change has taken place which could have an impact over the financial position of the Company. However, during the year, as reported earlier in this Report, there were formation ofBerger Rock Paints Private Limited and acquisition of shares of Saboo Hesse Wood Coatings Private Limited.

DIVIDEND

The total comprehensive income of the Company is Rs.436.98 crore for the year 2018-19.

Your Directors recommend a dividend of Rs.1.90 per share i.e. @190% for the year under review. This, if approved, will absorb an amount ofRs.222.44 crore (compared to Rs.210.71 crore in the previous year), including Dividend Distribution Tax, based on the current paid-up capital of the Company and will be paid to those members holding shares in the physical mode whose names appear in the Register of Members as on 5th August, 2019 and for shares held in electronic form, to those whose names appear in the list ofbeneficial holders furnished by respective Depositories as at the end ofbusiness hours on 29th July, 2019.

In accordance with Regulation 43A of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Company has formulated a Dividend Distribution Policy. 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 Companies Act, 2013, your Company has transferred an amount ofRs.17,83,245 (Interim) and Rs.28,91,075 (Final) to the Investor Education and Protection Fund, in respect of dividend amounts lying unclaimed/ unpaid for more than seven years from the date they became due i.e., for the year ended 31st March, 2011.

Pursuant to the provisions of the Investor Education and Protection Fund (Uploading of Information Regarding Unpaid and Unclaimed Amounts Lying with Companies) Rules, 2012, the Company has filed the necessary form and uploaded the details of unclaimed amounts lying with the Company, ason31st March, 2011.

Conservation of Energy & Technology Absorption

Information pursuant to Section 134(3)(m) of the Companies Act, 2013 read with the Companies (Accounts) Rules, 2014, is annexed to Annexure 5 of this report.

Foreign Exchange Earnings and Outgo

Foreign Exchange Earning and Outgo of the Company are Rs.8.07 crore and Rs.740.29 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 134 read with Rule 5(2) of Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 particulars of certain category of employees have been set out in Annexure 3 of this report.

STATEMENT OF EVALUATION OF BOARD OF DIRECTORS AND COMMITTEES THEREOF

The Company follows the provisions of the Companies Act, 2013 and Securities & Exchange Board oflndia (Listing Obligations and Disclosure Requirements) Regulations, 2015 (“Listing Regulations”) in relation to Directors’ appointments, qualifications and independence.

Pursuant to Section 178(3) of the Companies Act, 2013 and the relevant provisions of the Listing Regulations, the Compensation and Nomination and Remuneration Committee is entrusted with responsibility of formulating criteria for determining qualifications, positive attributes and independence of a Director. The same is available at the following link: https:/bergerpaints.com/about-us/ criteria-policy.html

The Compensation and Nomination and Remuneration Committee have laid down the following criteria for evaluating the performance of the Board ofDirectors. The same is available at the following link: https:/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 Companies Act, 2013 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 2018-19.

DIRECTORS

Pursuant to Article 112 of the Articles of Association of the Company, Mr Kuldip Singh Dhingra (DIN: 00048406) and Mr Gurbachan Singh Dhingra (DIN: 00048465) retire by rotation and being eligible, offer themselves for re-appointment.

Mr Kuldip Singh Dhingra is an industrialist and promoter of the Company. He has over 50 years of experience in paint and related industries and his contribution to the paint industry is well known and internationally acclaimed. Mr Kuldip Singh Dhingra is a science graduate from Hindu College, University of Delhi and Chairman of the Board of Directors of the Company. Mr Kuldip Singh Dhingra is 72 years old.

Mr Gurbachan Singh Dhingra is a graduate from Punjab University and an industrialist. He is a promoter of the Company, holds the position of Vice-Chairman of the Board of Directors and has almost 50 years of experience in the paint industry. He has practical experience in building and commissioning of many paint factories and also has experience in the technical aspects of paint industry. Mr Gurbachan Singh Dhingra is 69 years old.

Mr Naresh Gujral (DIN: 00028444) (‘Mr Gujral’), Mr Dhirendra Swarup (DIN: 02878434) (‘Mr Swarup’) and Mr Gopal Krishna Pillai (DIN: 02340756) (‘Mr Pillai’) are Independent Directors of the Company, appointed pursuant to approval of Members under provisions of the Companies Act, 2013 through resolutions passed at the Annual General Meeting held on 3rd August, 2015. Their terms up to five years on the Board of Directors of the Company will expire on 19th August, 2019, 7th September, 2019 and 11th September, 2019 respectively.

The Company was received notice from a member proposing the candidature of Mr Gujral as Director. As per Section 149 and other applicable provisions of the Companies Act, 2013 and SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 and pursuant to the recommendation of the Compensation and Nomination and Remuneration Committee, the Board of Directors of the Company has recommended re-appointment of Mr Gujral for a second term of five years from 20th August, 2019 to 19th August, 2024 for approval of the members at the forthcoming Annual General Meeting, by way of a special resolution. Mr Gujral will not be liable to retire by rotation.

Mr Naresh Gujral is a fellow member of the Institute of Chartered Accountants of India. He is the founder of Span India Group, one of the leading exporter of high-end fashion garments to Europe from India. He is an eminent industrialist and social activist. Mr Gujral was a non-executive Director of the Company from 12th February, 2003 to 25th August, 2011. After a brief hiatus, he was appointed Independent Director on 20th August, 2014. Mr Gujral holds 7,000 equity shares ofRs.1/- each of the Company. Mr Gujral is71 years old.

At the recommendation of the Compensation and Nomination and Remuneration Committee, the Board had appointed Mrs Sonu Halan Bhasin (DIN: 02872234) (“Mrs Bhasin”) and Mr Anoop Hoon (DIN: 00686289) (“Mr Hoon”) as additional Directors on the Board in non-executive, independent positions with effect from 1st February, 2019, to hold office up to the date of the next Annual General Meeting. The Company has received notices in writing from two members proposing the candidatures of Mrs Bhasin and Mr Hoon as Directors. As per Sections 149 and 160 and other applicable provisions of the Companies Act, 2013 and SEBI (Listing Obligations and Disclosure Requirements), Regulations, 2015 and pursuant to the recommendation of the Compensation and Nomination and Remuneration Committee, the Board of Directors of the Company has recommended the appointment of Mrs. Bhasin and Mr Hoon for five years till 31st January, 2024. Accordingly, approval has been sought from the members at the forthcoming Annual General Meeting for appointment of Mrs Bhasin and Mr Hoon as Independent Directors for the aforesaid period. Mrs Bhasin and Mr Hoon will not be liable to retire by rotation.

Mrs Bhasin is a B.Sc (Hons), Mathematics, St Stephen’s College, Delhi University and MBA: Faculty of Management Studies (FMS), Delhi University. She has a wide professional experience and was the Chief Operating Officer of Tata Capital Ltd. Before that, she worked with YES Bank, ING Barings Pvt Bank and ING Vysya Bank and Tata Administrative Services in senior positions. She is the Founder and Managing Partner of FAB-Families and Business and Editor-in-Chief of Families and Business Magazine. She has authored the book - The Inheritors - Stories of Entrepreneurship and Success. Mrs Bhasin was appointed a member of the Audit Committee on 1st February, 2019 and its Chairman on 30th May, 2019. She does not hold any share of the Company. Mrs Bhasin is 56 years old.

Mr Hoon is a graduate in Economics and post graduate in Industrial Relations and Personnel Management from XLRI, Jamshedpur. He was associated with Century Plywood (India) Ltd. as President (Marketing & OD) during the period 2008 to 2015. He was earlier associated with Bells Control Ltd., BOC Gases Ltd., Fortis Health Care Ltd., The Gramophone Co. of India (HMV) Ltd. (as the CEO), Dunlop Tyres, Asian Paints and others. He has experience in marketing, sales, organisational development, HR, supply chain and branch commercial functions and had served as Business Head of several businesses while in the companies in which he had worked. Mr Hoon was appointed member of the Business Process and Risk Management Committee and Compensation and Nomination and Remuneration Committee on 1st February, 2019. Mr Hoon does not hold any share of the Company. Mr Hoon is 64 years old.

Ms Rishma Kaur (Ms Kaur) (DIN : 00043154) and Mr Kanwardip Singh Dhingra (Mr Dhingra) (DIN: 02696670) were appointed as Directors in whole-time employment of the Company designated as Director & National Business Development Manager, Retail and Director & National Business Development Manager, Industrial respectively for a period of five years up to 2nd August, 2019at the Annual General Meeting held on 3rd August, 2015. Their terms of appointment will expire on 2nd August, 2019.

Ms Kaur holds a B.Sc. in Business Studies from University of Buckingham, U.K. Ms Kaur has been working with the Company since April, 2011 and has successfully led Business Development efforts in the Company in respect of Retail Business in addition to providing guidance and handling various other matters such as Marketing and Corporate Affairs. Ms Kaur is a member of the Business Process and Risk Management Committee and CSR Committee of the Board. Ms Kaur holds 6,00,000 equity shares of Rs.1/- each of the Company.

Mr Dhingra holds a Bachelor’s Degree in Chemical Engineering from University of Akron, Akron, Ohio, U.S.A with specialization in Polymer Engineering and Minor in Chemistry. Prior to joining the Company, Mr Dhingra gathered working experience in the field of paints and specialty coatings in The Rohm & Haas Company, Texas, USA and The Sherwin Williams Company, Ohio, U.S.A. Mr Dhingra has been working with the Company since April, 2011 and has successfully led business development efforts in the Company in respect of Industrial Business in addition to providing guidance and handling various other matters such as Projects and Procurements. Mr Dhingra is a member of the Business Process and Risk Management Committee and CSR Committee of the Board. Mr Dhingra holds 6,00,000 equity shares ofRs.1/- each of the Company.

Since 2015, both Ms Kaur and Mr Dhingra had assumed major responsibilities in the business and operations of the Company and had engaged themselves in wide areas of activities. In recognition of their initiatives and in terms of the recommendation made by the Compensation and Nomination and Remuneration Committee, the Board of Directors increased their monthly remuneration to an amount not exceeding Rs.46,00,000 per annum with effect from 1st April, 2018 till the date of the next Annual General Meeting, subject to approval of the shareholders under Section 196 of the Companies Act, 2013 and designated them as Executive Directors.

The said increase in remuneration of Ms Kaur and Mr Dhingra will not fall within the purview of Section 188 of the Act and since their remuneration, individually or taken together with previous transactions during a financial year would not exceed ten percent of the annual consolidated turnover of the Company as per the last audited financial statements of the Company they will not qualify as a material related party transaction under the provisions of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (“Listing Regulations”).

Upon recommendation of the Compensation and Nomination and Remuneration Committee and pursuant to the provisions of Sections 196, 197, Schedule V and all other relevant provisions of the Companies Act, 2013 and the Listing Regulations, the Board of Directors has re-appointed Ms Kaur and Mr Dhingra as Executive Directors in whole-time employment of the Company for a period of five years with effect from 3rd August, 2019 to 2nd August, 2024, subject to approval of the shareholders at the forthcoming Annual General Meeting at a remuneration to be fixed by the Compensation and Nomination and Remuneration Committee subject to a ceiling of Rs.1,00,00,000 (Rupees one crore) per annum. As mentioned earlier, the aforesaid appointment and payment of remuneration will not attract the provisions of Section 188 of the Companies Act, 2013. They will also not qualify as material related party transaction under the provisions of Listing Regulations as long as their remuneration, individually or taken together with previous transactions during a financial year do not exceed ten percent of the annual consolidated turnover of the Company as per the last audited financial statements.

Structure of the Board of Directors

Name of Directors

Non-executive

Executive

Independent

Lady

Mr Kuldip Singh Dhingra

Y

N

N

N

Mr Gurbachan Singh Dhingra

Y

N

N

N

Mr Abhijit Roy

N

Y

N

N

Ms Rishma Kaur

N

Y

N

Y

Mr Kanwardip Singh Dhingra

N

Y

N

N

Mr Kamal Ranjan Das

Y

N

Y

N

Mr Naresh Gujral

Y

N

Y

N

Mr Gopal Krishna Pillai

Y

N

Y

N

Mr Pulak Chandan Prasad

Y

N

Y

N

Mr Dhirendra Swarup

Y

N

Y

N

Mr Anoop Hoon *

Y

N

Y

N

Mrs Sonu Halan Bhasin *

Y

N

Y

Y

*Appointed wef 1st February, 2019

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 are also undertaken from time to time. This can be seen 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 Companies Act, 2013 (“the Act”) read with Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the following disclosures are made:-

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

Name of Directors/KMPs

Remuneration

Ratio as to that of the

Percentage increase in

Received (Rs.)

Median Employee

Remuneration

Mr Kuldip Singh Dhingra

10,00,000

1.83:1

0.00

Mr Gurbachan Singh Dhingra

10,00,000

1.83:1

0.00

Mr Abhijit Roy

3,01,04,164*

55.09:1

18.23

Mr Kanwardip Singh Dhingra

45,32,366

8.29:1

94.40

Ms Rishma Kaur

45,35,787

8.30:1

93.50

Mr Kamal Ranjan Das

3,00,000

0.55:1

0.00

Mr Pulak Chandan Prasad

-

-

-

Mr Naresh Gujral

7,20,000

1.32:1

0.00

Mr Dhirendra Swarup

7,20,000

1.32:1

0.00

Mr Gopal Krishna Pillai

7,20,000

1.32:1

0.00

Mr Srijit Dasgupta

1,48,54,179*

27.18:1

7.82

Mr Aniruddha Sen

1,07,72,312*

19.71:1

16.83

Mr Anoop Hoon #

-

-

-

Mrs Sonu Halan Bhasin #

-

-

-

* Remuneration does not include value ofESOP’s granted.

# Appointed wef 1st February, 2019.

Note - The median employee remuneration for 2018-19 is : Rs.5,46,446 p.a.

2) Percentage (%) increase in remuneration during the Financial year 2018-19 : Please see (1) above.

3) Percentage (%) increase in the median remuneration of employees during the Financial year 2018-19 : 4.14 %

4) Number of permanent employees on the rolls of the Company as on31st March, 2019: 3,450

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 of employee was 15.88% as compared to an average percentile increase of 29.98% 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 Directors:

Name

Nature of Transaction

Amount (Rs.)

Ms Rishma Kaur, Executive Director and also a Director in U.K. Paints India Private Limited (Holding Company)

Consultancy fees received from U.K. Paints India Private Limited for consultancy rendered to U.K. Paints India Private Limited

33 Lakhs

Mr Kanwardip Singh Dhingra, Executive Director and also a Director in U.K. Paints India Private Limited (Holding Company)

Consultancy fees received from U.K. Paints India Private Limited for consultancy rendered to U.K. Paints India Private Limited

27 Lakhs

Affirmation

It is hereby affirmed by the Chairperson of the Company that the remuneration paid to all the employees, Directors and Key Managerial Personnel of the Company during the Financial Year 2018-19 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 The Calcutta Stock Exchange Limited, BSE Limited and National Stock Exchange of India Limited and the Company has paid the listing fees to each of the Exchanges. The addresses of these Stock Exchanges and other information for shareholders are given in this Annual Report.

COST AUDITORS

The Board of Directors have re-appointed M/s N. Radhakrishnan & Co., 11A, Dover Lane, Flat Bl/34, Kolkata - 700029, for conducting cost audit at the Company’s factories at Howrah, Rishra, Goa, Puducherry, Jejuri, Naltali and at the Nalbari and Hindupur factories of the Company’s British Paints Division and M/s Shome & Banerjee & Co., 2nd Floor, 5A Narulla Doctor Lane, West Range, Kolkata - 700017, for conducting cost audit at its Jammu factory and for the factories of British Paints Division at Jammu, Surajpur and Sikandrabad under Section 148 of the Companies Act, 2013 read with Companies (Cost Records and Audit) Rules, 2014 for the year 2019-20.The said reports for the year 2017-18 were filed on 13th October, 2018.

STATUTORY AUDITORS

The Statutory Auditors, Messrs. S.R. Batliboi & Co. LLP, Chartered Accountants, were appointed pursuant to the provisions of Sections 139,142 of the Companies Act, 2013 and the Rules made thereunder from the conclusion of the 91st Annual General Meeting up to the conclusion of the Sixth Annual General Meeting to be held after the 91st Annual General Meeting. Pursuant to Section 40 of the Companies Amendment Act, 2017 made effective from 7th May, 2018, ratification at every Annual General Meeting by Members is no longer necessary till the conclusion of the Sixth Annual General Meeting. The Statutory Auditors had furnished their eligibility to continue as Auditors from the conclusion of the ensuing Annual General Meeting till the subsequent Annual General Meeting.

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.

On behalf of the Board of Directors

Place: Kolkata Kuldip Singh Dhingra

Dated: 30th May, 2019 Chairman

Source : Dion Global Solutions Limited
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