Kansai Nerolac Annual Report 2018
Kansai Nerolac Annual Report 2018
Kansai Nerolac Annual Report 2018
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In today’s hyper expanding business environment, KNPL has always believed in the power of Technology
there is a heightened need to ensure that as a key driving force for innovation in businesses.
organization has the right mix of products, Many breakthrough concepts and development
operations, technologies and services to balance in businesses have been primarily driven by the
risk and capitalize on growth opportunities, all while development of new generation technology.
responding to evolving customer demand. Kansai The Company has laid the foundation for new
Nerolac Paints Limited (KNPL) has been strategically manufacturing technologies which has provided a
investing in a number of ideas and initiatives which new dimension in the production value chain.
will help in offering long term sustained value to its
The experience garnered by KNPL over the years
valued stakeholders.
has made it evident that success depends on
Digitalization has strongly emerged as a tool to innovation so as to create differentiated value to
achieve desired business results with the ability our valued customers. Innovation is what KNPL
to drive organization-wide process optimization is passionate about and so the Company is in the
and change. KNPL has believed and invested in the process of kick starting operations at the cutting-
power of digitalization to not only drive massive edge global Research & Development center in
improvements in internal operations but also to Navi Mumbai.
bring untapped sources of value to the customers. Aiming to leverage KNPL’s core competencies, the
In this respect to boost KNPL’s digital quotient, the Company has forayed into allied business segments
Company has forayed into the space of Machine like Construction Chemicals, Coil Coatings, Rebar
Learning (ML) with the adoption of next generation Coatings, Adhesives and Floor Coatings. KNPL
technology SAP Leonardo. plans to establish product platforms aligned to the
capabilities that the Company has developed over
Embracing the need to make the growth momentum
the last many years.
sustainable, KNPL has invested in setting up
3 green-field state-of-the-art Plants. The plants are With emphasis on moving towards new frontiers
strategically located in different geographical zones and creating new possibilities all while leveraging
so as to cater to different growing markets. The first its existing capabilities, KNPL is poised to take
of these 3 plants has commenced trial production advantage of the opportunities that arise in the
this year. years ahead.
Annual Report
2018
DIRECTORS
P. P. SHAH (Chairman)
M. TANAKA
H. FURUKAWA
MRS. B. SOMAYA
K. KATO
A. JAIN ( Whole-time Director – from April 1, 2018)
COMPANY SECRETARY
G. T. GOVINDARAJAN
BANKERS
• UNION BANK OF INDIA
• STANDARD CHARTERED BANK
• HDFC BANK LTD.
• BNP PARIBAS
AUDITORS
B S R & CO. LLP, MUMBAI
SOLICITORS
KANGA & CO., MUMBAI
REGISTERED OFFICE
NEROLAC HOUSE, GANPATRAO KADAM MARG,
LOWER PAREL, MUMBAI-400 013
Tel: +91-22-24934001
Fax: +91-22-24973704
Website: www.nerolac.com
Investors Relations e-mail ID: [email protected]
Corporate Identity Number (CIN): L24202MH1920PLC000825
1
Contents
Auditors’ Report on
Standalone Financial Statements . . 109-115
Standalone Statement of
Changes in Equity . . 118
Auditors’ Report on
Consolidated Financial Statements . . 157-161
Consolidated Statement of
Profit and Loss . . 163
Consolidated Statement of
Changes in Equity . . 164
Summarised Statement of
Profit and Loss of 15 Years . . 202
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Annual Report
2018
Registered Office : ‘Nerolac House’, Ganpatrao Kadam Marg, Lower Parel, Mumbai 400 013.
Tel: +91-22-24934001 • Fax: +91-22-24973704 • Website: www.nerolac.com
Investors Relations e-mail Id: [email protected] • Corporate Identity Number (CIN): L24202MH1920PLC000825
NOTICE
Notice is hereby given that the Ninety-Eighth Annual re-enactment(s) thereof, for the time being
General Meeting of KANSAI NEROLAC PAINTS LIMITED will in force), B S R & Co. LLP, Chartered Accountants
be held at M. C. Ghia Hall, Bhogilal Hargovindas Building, (Registration No. 101248W/W-100022), be and are
4th Floor, 18/20, Kaikhushru Dubash Marg, Behind Prince hereby re-appointed as Auditors of the Company, to
of Wales Museum, Kala Ghoda, Mumbai 400 001 on hold office from the conclusion of this meeting until
Thursday, 21st June, 2018 at 11.00 a.m. to transact the the conclusion of the next Annual General Meeting of
following business: the Company and that their remuneration be fixed by
the Audit Committee in addition to the reimbursement
Ordinary Business:
of service tax and actual out of pocket expenses
1.
To receive, consider and adopt the Financial
incurred in connection with the audit of accounts
Statements of the Company for the year ended
of the Company for the financial year ending
31st March, 2018 including audited Balance Sheet as
31st March, 2019.”
at 31st March, 2018 and Statement of Profit and Loss
for the year ended on that date and the Reports of 7. To consider and if thought fit, to pass with or without
the Directors and the Auditors thereon. modification(s), the following Resolution as an Ordinary
Resolution:
2.
To declare a normal dividend of ` 2.60 (260%) per
Equity Share of the nominal value of ` 1 each for the “RESOLVED that in accordance with the provisions of
year ended 31st March, 2018. Section 148 of the Companies Act, 2013, read with
Companies (Audit and Auditors) Rules, 2014 and the
3. To appoint a Director in place of Mr. Masaru Tanaka
Companies (Cost Records and Audit) Amendment
(holding DIN 06566867), who retires by rotation and
Rules, 2016, the remuneration of the Cost Auditor,
being eligible, offers himself for re-appointment.
D. C. Dave & Co., Cost Accountants, for the year
4. To appoint a Director in place of Mr. Hidenori Furukawa
ending 31st March, 2019, as recommended by the
(holding DIN 06924589), who retires by rotation and
Audit Committee and approved by the Board of
being eligible, offers himself for re-appointment.
Directors be and is hereby ratified.”
5. To appoint a Director in place of Mr. Katsuhiko Kato
(holding DIN 07556964), who retires by rotation and Special Business:
being eligible, offers himself for re-appointment. 8. To consider and, if thought fit, to pass with or without
6. To consider and if thought fit, to pass with or without modification(s), the following Resolution as an Ordinary
modification(s), the following Resolution as an Ordinary Resolution:
Resolution:
“RESOLVED that pursuant to the provisions of
“RESOLVED that pursuant to the provisions of Sections 160, 161 and other applicable provisions,
Sections 139, 141 and 142 and other applicable if any, of the Companies Act, 2013, Mr. Anuj Jain
provisions, if any, of the Companies Act, 2013, read (holding DIN 08091524), whose term of office expires
with the Companies (Audit and Auditors) Rules, at this Annual General Meeting be and is hereby
2014 (including any statutory amendment(s) or appointed as a Director of the Company.”
3
“RESOLVED FURTHER that pursuant to the provisions 3.
The Explanatory statement pursuant to Section 102
of Sections 196, 197, 198 and other applicable of the Companies Act, 2013 relating to Item Nos. 6,
provisions, if any, of the Companies Act, 2013, read with 7 and 8 of the Notice of the Annual General Meeting
Schedule V to the said Act, the consent of the Company (AGM) is annexed hereto.
be and is hereby accorded to the appointment of 4.
The Board of Directors has recommended for
Mr. Anuj Jain as a Whole-time Director of the Company consideration of the Members a dividend of ` 2.60
for a period of five years commencing from 1st April, (260%) per Equity share of the nominal value of ` 1
2018 to 31st March, 2023 (both days inclusive) on the each for the year ended 31st March, 2018.
remuneration and perquisites as set out in the draft
5.
The Register of Members and Share Transfer books
Agreement to be entered into between the Company
of the Company will remain closed from Friday
and Mr. Jain placed before this meeting and initialled
15th June, 2018 to Thursday 21st June, 2018 (both
by the Chairman for the purpose of identification.
days inclusive), for the purpose of Annual General
RESOLVED FURTHER that the Directors of the Company Meeting and Dividend. Dividend, if declared, will be
be and are hereby authorised to enter into an payable on or after 26th June, 2018 to those members
Agreement on behalf of the Company with Mr. Jain, whose names are registered as such in the Register of
in terms of the aforesaid draft Agreement.” Members of the Company as on 14th June, 2018 and
For and on behalf of the Board to the Beneficiary holders as per the beneficiary list as
on 14th June, 2018 provided by the NSDL and CDSL.
P. P. Shah
In accordance with Rule 20 of the Companies
6.
Chairman
(Management and Administration) Amendment Rules,
Mumbai, 2nd May, 2018. 2015, the Company has fixed 14th June, 2018 as the
NOTES: “cut-off date” to determine the eligibility to vote by
electronic means or in the general meeting. A person
1.
A MEMBER ENTITLED TO ATTEND AND VOTE AT THE whose name is recorded in the register of members
MEETING IS ENTITLED TO APPOINT ONE OR MORE or in the register of beneficial owners maintained by
PROXIES TO ATTEND AND VOTE INSTEAD OF HIMSELF/ the depositories as on the cut-off date, i.e. 14th June,
HERSELF AND SUCH A PROXY NEED NOT BE A MEMBER. 2018, shall be entitled to avail the facility of remote
A person can act as proxy on behalf of members not e-voting or voting in the general meeting.
exceeding fifty (50) and holding in the aggregate not
7.
Shareholders may be aware that the Companies
more than ten percent of the total share capital of the
Act, 2013, permits service of the Notice of the Annual
Company carrying voting rights. A member holding
General Meeting through electronic mode. Electronic
more than ten (10) percent of the total share capital
copy of the Annual Report including Notice of the
of the Company carrying voting rights may appoint a
98th Annual General Meeting of the Company
single person as proxy and such person shall not act
inter alia indicating the process and manner of e-voting
as proxy for any other person or shareholder.
along with Admission Slip and Proxy Form is being sent
The instrument of Proxy in order to be effective should to all the members whose email IDs are registered
be duly completed and deposited at the registered with the Company/Depository Participant(s) for
office of the Company, not less than 48 hours before communication purposes. However, those members
the commencement of the Meeting. who desire to have a physical copy may request for
2. Corporate Members intending to send their authorized the same to the Registrar & Transfer Agent (RTA), TSR
representatives to attend the meeting pursuant to Darashaw Ltd. For members who have not registered
Section 113 of the Companies Act, 2013 are requested their email IDs, physical copies of the Annual Report
to send to the Company a certified copy of the are being sent in the permitted mode.
relevant Board resolution together with the specimen 8.
The Securities and Exchange Board of India (SEBI)
signatures of their authorized representatives to attend has mandated the submission of Permanent
and vote on their behalf at the meeting. Account Number (PAN) by every participant
4
Annual Report
2018
in securities market. Members holding shares in Secretary, as the Scrutiniser for conducting the
electronic form are, therefore, requested to submit remote e-voting and the voting process at the AGM
their PAN to the Depository Participants with whom in a fair and transparent manner. The Scrutiniser
they maintain their demat accounts. Members holding shall make a consolidated Scrutiniser’s report of the
shares in physical form should submit their PAN to total votes cast in favour or against, if any, during the
TSR Darashaw Ltd. remote e-voting and voting at the AGM, not later
than three days of conclusion of the meeting, to the
9.
The shareholders who are holding shares in demat
Chairman or a person, authorised by him in writing.
form and have not yet registered their e-mail IDs with
The Chairman or a person, authorised by him in
their Depository Participant are requested to register
writing, shall declare the results of the AGM forthwith.
their e-mail address at the earliest, to enable the
The results declared along with the Scrutiniser’s report
Company to use the same for serving documents
shall be placed on the Company’s website and on
to them electronically, hereinafter. Shareholders
the website of CDSL and shall be communicated to
holding shares in physical form may kindly provide
the Stock Exchanges.
their e-mail address to the RTA by sending an e-mail
at [email protected]. The Annual Report of Members holding shares in physical form or in demat
the Company would also be made available on the form as on 14th June, 2018, the cut-off date shall only
Company’s website www.nerolac.com. be eligible for e-voting.
10. Voting through Electronic means The instructions for voting electronically are as under:
In compliance with Section 108 and other applicable (i) The voting period begins on Sunday, 17th June,
provisions of the Companies Act, 2013, if any, read 2018 at 9.00 a.m. and ends on Wednesday,
with Rule 20 of the Companies (Management 20th June, 2018 at 5.00 p.m. During this period, the
and Administration) Amendment Rules, 2015, and eligible shareholders of the Company, holding
Regulation 44 of the SEBI (Listing Obligations and shares either in physical form or in dematerialized
Disclosure Requirements) Regulations, 2015, the form, may cast their vote electronically.
Company is pleased to provide its Shareholders with The e-voting module shall be disabled by CDSL
the facility of “remote e-voting” (e-voting from a place for voting thereafter.
other than venue of the AGM), to enable them to cast
(ii) The shareholders should log on to the e-voting
their votes at the 98th Annual General Meeting (AGM)
website www.evotingindia.com.
and the business at the 98th AGM may be transacted
through such voting. The Company has entered into (iii) Click on Shareholders/Members
an agreement with Central Depository Services (India)
(iv) Now Enter your User ID
Ltd. (CDSL) for facilitating e-voting to enable all its
Shareholders to cast their vote electronically. a. For CDSL: 16 digits beneficiary ID,
5
(vii) If you are a first time user follow the steps given (xi) Click on the EVSN of KANSAI NEROLAC PAINTS
below: LIMITED on which you choose to vote.
For Members holding shares in Demat Form and (xii) On the voting page, you will see “RESOLUTION
Physical Form
DESCRIPTION” and against the same the option
PAN* Enter your 10 digit alpha-numeric *PAN
“YES/NO” for voting. Select the option YES or NO
issued by Income Tax Department
(Applicable for both demat as desired. The option YES implies that you assent
shareholders as well as physical to the Resolution and option NO implies that you
shareholders)
dissent to the Resolution.
• Members who have not updated
their PAN with the Company/
(xiii) Click on the “RESOLUTIONS FILE LINK” if you wish
Depository Participant are
requested to use the first two letters to view the entire Resolution details.
of their name and the last 8 digits of
the demat account/folio number in (xiv) After selecting the resolution you have decided
the PAN field. to vote on, click on “SUBMIT”. A confirmation
• In case the folio number is less
box will be displayed. If you wish to confirm your
than 8 digits enter the applicable
number of 0’s before the number vote, click on “OK”, else to change your vote,
after the first two characters of the click on “CANCEL” and accordingly modify
name in CAPITAL letters. Eg. If your
name is Ramesh Kumar with folio your vote.
number 100 then enter RA00000100
in the PAN field. (xv) Once you “CONFIRM” your vote on the resolution,
Dividend Enter the Dividend Bank Details or you will not be allowed to modify your vote or
Bank Details Date of Birth (in dd/mm/yyyy format) cast your vote again.
OR as recorded in your demat account
Date of Birth or in the Company records in order to (xvi) You can also take a print of the voting done by
(DOB) login.
you by clicking on “Click here to print” option on
• If both the details are not recorded
the Voting page.
with the depository or company
please enter the number of shares
held by you as on the cut off date
(xvii) If the Demat account holder has forgotten the
in the Dividend Bank details field. changed login password then Enter the User ID
and the image verification code and click on
(viii) After entering these details appropriately, click
Forgot Password & enter the details as prompted
on “SUBMIT” tab.
by the system.
(ix) Members holding shares in physical form will then
(xviii) Shareholders can also cast their vote using
directly reach the Company selection screen.
CDSL’s mobile app m-Voting available for
However, members holding shares in demat
android based mobiles. The m-Voting app can
form will now reach ‘Password Creation’ menu
be downloaded from Google Play Store. Apple
wherein they are required to mandatorily enter
and Windows phone users can download the
their login password in the new password field.
app from the App Store and the Windows Phone
Kindly note that this password is to be also used
Store respectively.
by the demat holders for voting for resolutions
of any other company on which they are (xix)
Note for Non-Individual Shareholders and
eligible to vote, provided that Company opts Custodians
for e-voting through CDSL platform. It is strongly
• Non-Individual shareholders (i.e. other than
recommended not to share your password with
Individuals, HUF, NRI etc.) and Custodians are
any other person and take utmost care to keep
required to log on to www.evotingindia.com
your password confidential.
and register themselves as Corporates.
(x)
For Members holding shares in physical form, • A scanned copy of the Registration Form
the details can be used only for e-voting on the bearing the stamp and sign of the entity should
resolutions contained in this Notice. be emailed to [email protected].
6
Annual Report
2018
7
Annexure to the Notice available for inspection of the Shareholders at the
Registered Office of the Company during business hours
EXPLANATORY STATEMENT UNDER SECTION 102 OF THE on any working day, except Saturday.
COMPANIES ACT, 2013
In terms of Section 148 (3) of the Companies Act, 2013 read
ITEM NO. 6 with the Companies (Audit and Auditors) Rules, 2014, the
remuneration recommended by the Audit Committee for
The Shareholders of the Company have appointed
the Cost Auditor and approved by the Board of Directors
B S R & Co. LLP, Chartered Accountants as the
is required to be ratified subsequently by the Shareholders.
Statutory Auditors of the Company from the conclusion of
Hence the resolution of Item No. 7 of the Notice.
94th Annual General Meeting until the conclusion
of the 99th Annual General Meeting. The appointment None of the Directors and the Key Managerial Personnel
of B S R & Co. LLP, Chartered Accountants, as Statutory of the Company and their relatives are concerned or
Auditors of the Company is placed for the ratification interested, financial or otherwise, in the resolution set out
of the shareholders at this Annual General Meeting of at Item No. 7.
the Company.
In accordance with Section 139 of the Act, B S R & Co. ITEM NO. 8
LLP, Chartered Accountants have certified that they The Board of Directors of the Company at its meeting
are eligible to be appointed as the Statutory Auditors of dated 19th January, 2018, approved the appointment of
the Company and they satisfy the criteria as provided Mr. Anuj Jain as an Additional Director of the Company
in Section 141 of the Act. The certificate is available for with effect from 1st April, 2018. Pursuant to Section 161 of
inspection of the Shareholders at the Registered Office of the Companies Act, 2013 (“the Act”) read with Article 113
the Company during business hours on any working day, of the Articles of Association of the Company, Mr. Jain
except Saturday. holds the office of Director only up to the date of the
None of the Directors and the Key Managerial Personnel forthcoming Annual General Meeting.
of the Company and their relatives are concerned or Notice in writing has been received from some
interested, financial or otherwise, in the resolution set out shareholders of the Company, pursuant to Section 160 of
at Item no. 6. the Act, signifying their intention to propose Mr. Jain as a
candidate for the office of Director.
ITEM NO. 7
Mr. Anuj Jain was also appointed at the aforesaid Board
In accordance with the Companies (Cost Records and Audit
meeting as a Whole-time Director of the Company for
Rules) 2014, read with the Companies (Cost Records and
a period of five years commencing from 1st April, 2018
Audit) Amendment Rules, 2016, the Company is required
to 31st March, 2023 (both days inclusive). The Board of
to conduct cost audit of its cost records pertaining to the
Directors at its meeting dated 2nd May, 2018, approved
products falling under the product categories – Organic &
the remuneration and perquisites to be paid or granted
Inorganic chemicals, Ores and mineral products, Plastics
to Mr. Jain as set out in the draft Agreement between the
& Polymers and Rubber & Allied products for the year
Company and Mr. Jain referred to in the Resolution at
ending 31st March, 2019. The products of the Company
Item No. 8 of the Notice.
covered under the aforesaid categories are different
types of thinners, floor coating products, powder coating The appointment of Mr. Jain as a Whole-time Director
products & hardeners and Construction Chemicals. of the Company and the remuneration and perquisites
The Board of Directors of the Company, based on proposed to be paid or granted to him as set out in the
the recommendation of the Audit Committee, has aforesaid draft Agreement are in conformity with the
approved the appointment of D. C. Dave & Co., Cost provisions and requirements of Schedule V to the Act.
Accountants as the Cost auditor for the aforesaid product Accordingly, no approval of the Central Government is
categories for the financial year 2018-19 on the same required to be obtained for the appointment of Mr. Jain as
remuneration as was approved for the previous year, i.e. the Whole-time Director of the Company or the proposed
remuneration.
` 2,50,000 plus service tax and out of pocket expenses.
D. C. Dave & Co., has also conveyed its willingness to The appointment of Mr. Jain as the Whole-time Director of
act as cost auditor of the Company for the year ending the Company on the remuneration and perquisites as set
31st March, 2019. The eligibility and consent letter is out in the aforesaid draft Agreement is however subject
8
Annual Report
2018
to the approval of the Shareholders in general meeting the Company for each financial year as the
pursuant to Section 196 of the Act. Hence the Resolution Board may in its absolute discretion determine,
at Item No. 8 of the Notice. depending on performance.
Mr. Anuj Jain, aged 49 years, B.Sc. and Master of c) House Rent Allowance: 40% of annual salary. In
Management Studies, University of Bombay (Mumbai), has case Company accommodation is provided, no
a varied experience of 27 years. Mr. Jain had joined the House Rent Allowance will be paid.
Company on 4th June, 1990 and was Director – Decorative
d) Leave Travel Allowance: 10% of annual salary.
and Industrial Sales & Marketing prior to his appointment
on the Board as a Whole-time Director with effect from e) Other Perquisites and Allowances:
1st April, 2018. i)
Mr. Jain shall be entitled to perquisites and
The material terms of the draft Agreement referred to in allowances like bonus, reimbursement of
the Resolution at Item No. 8 are as follows: expenses or allowances for utilities such
as gas, electricity, water, soft furnishing,
1. The appointment of Mr. Jain as a Whole-time Director hard furnishings and repairs and such other
of the Company shall be for the period commencing perquisites and allowances in accordance
from 1st April, 2018 and ending on 31st March, 2023 with the rules of the Company, applicable
(both days inclusive), subject to the same being from time to time, or as may be agreed to
previously determined as provided in the Agreement. by the Board of Directors, the value of which
2.
Mr. Jain shall be primarily responsible for and be shall not in the aggregate exceed 75% of the
in charge of Sales & Marketing, Manufacturing annual salary.
and Technical functions of the Company and shall For the purposes of calculating the above
ii)
exercise such powers and perform such duties as may ceiling, perquisites and allowances shall be
be entrusted to him by the Managing Director and/or evaluated as per Income-tax Rules, wherever
the Board of Directors of the Company. applicable. In the absence of any such rules,
3.
Mr. Jain shall report to the Managing Director and perquisites and allowances shall be evaluated
shall be responsible for his actions to the Board as well at actual cost.
as to the Managing Director. Management of the iii) Company's contribution to Provident Fund shall
whole or substantially the whole of the affairs of the be at 12% of Salary (including Commission).
Company will not vest in Mr. Jain. Company’s contribution to Superannuation
Fund shall be up to a limit exempt from taxation
Mr. Jain shall devote his whole time, attention and
4.
under the Income-tax Act, as amended from
abilities during business hours to the business of the
time to time. Company’s contribution to
Company and use his best endeavours to promote
Provident Fund and Superannuation Fund as
the interest and welfare of the Company.
aforesaid, gratuity payable as per the rules of
5. Mr. Jain shall be entitled to the following emoluments, the Company, encashment of leave during
benefits, perquisites subject to the limits laid down the term of employment in accordance with
under Section 197, 198 and Schedule V of the the rules of the Company and/or at the end
Companies Act, 2013: of the tenure and other retirement benefits
a) Salary: ` 3,30,000 per month. including but not limited to benefits under the
Company Policy as approved by the Board
Increments, subject to the limit laid down under of Directors on provision of retirement benefits
Section 197, 198 and Schedule V of the Companies for Managing Director/Executive Directors/
Act, 2013, will be decided upon from time to Non-Board Directors, reimbursement of
time by the Board each year and will be merit expenses incurred for travelling, boarding and
based and will take into account the Company's lodging during business trips, provision for use
performance. of the Company's car and driver for official
b)
Commission: Subject to the overall ceiling in duties and for personal purpose, provision
Section 197 of the Companies Act, 2013, the of telephone and internet at residence
Company shall pay to Mr. Jain remuneration (including payment for local calls and
by way of commission based on net profits of long distance official calls), reimbursement
9
of medical expenses, reimbursement of 11. Mr. Jain’s employment shall be determined herewith
telephone, internet and petrol expenses, shall if he commits a material breach of any of the terms,
not be included in the computation of limits provisions or covenants herein contained, disqualifies
for the remuneration or perquisites aforesaid. himself to act as a Director for any reason besides
breach of Section 167 of the Companies Act, 2013,
Minimum Remuneration: or becomes insolvent, makes any composition or
In the event of loss or inadequacy of profits during arrangement with his creditors or ceases to be a
any financial year, in the aforesaid period, the Director of the Company.
Company will pay remuneration by way of salary,
12. In the event there is no breach of the terms of the
perquisites and allowances (including Leave
Agreement by Mr. Jain, but the Company exercises
Travel Allowance and House Rent Allowance,
its discretion to terminate his services during the
where applicable) as specified above, not
term of his Agreement, without assigning any reason
exceeding the limits specified in Section II of
therefor, then and in that event, Mr. Jain shall be paid
Part II of Schedule V to the Companies Act, 2013,
compensation in accordance with the provisions of
subject to requisite approvals being obtained, if
the Companies Act, 2013.
required.
6.
Mr. Jain nor shall not be paid any sitting fees for 13.
In the event Mr. Jain is not in position to discharge
attending meetings of the Board or of any Committee his official duties due to any physical or mental
thereof. incapacity, the Board of Directors shall be entitled
to terminate this agreement on such terms as the
7. Mr. Jain shall be entitled to reimbursement of actual Board of Directors may consider appropriate in the
expenses including entertainment and travelling circumstances.
incurred during the course of Company’s business.
14. All personnel policies of the Company and the related
8.
Mr. Jain will be granted Privilege Leave, Sick Leave rules which are applicable to other employees of the
and Casual Leave in accordance with the rules and Company shall also be applicable to Mr. Jain, unless
regulations of the Company. specifically provided otherwise.
9. Mr. Jain shall not during the term of this agreement, The Directors consider the aforesaid remuneration to
whether the employment runs through the full period be commensurate with the duties and responsibilities of
of five years from the date of appointment or is Mr. Jain as a Whole-time Director of the Company.
terminated by the Company or Mr. Jain anytime
during the term of this Agreement for whatever T he draft Agreement between the Company and Mr. Jain
reason, directly or indirectly engage himself in any referred to in the Resolution at Item No. 8 will be open for
business or activity substantially similar to or competing inspection by the Shareholders at the Registered Office of
with the business or activity of the Company or do the Company during business hours on any working day,
any deed , matter or thing so as to solicit the custom except Saturday.
of the clients of the Company or offer to provide
The Board commends the Resolution at Item No. 8 for
any services to such clients otherwise than through
acceptance by the Shareholders.
the Company. It shall however be permissible for
Mr. Jain, with the previous written sanction of the r. Jain is interested in the Resolution since it relates to
M
Board to hold any directorship(s) or share(s) of any his own appointment. None of the other Directors of the
other company or companies and the holding of such Company is in any way concerned or interested, financial
permitted directorships or shares shall not be deemed or otherwise, in the Resolution.
a contravention of this clause.
10
Annual Report
2018
Disclosure in terms of Regulation 26(4) of the SEBI (Listing Obligations and Disclosure Requirements)
Regulations, 2015.
Name of the Director seeking Shares held as on 31st March, 2018
re-appointment (Own or held for other persons
on beneficial basis)
Mr. Masaru Tanaka Nil*
Mr. Hidenori Furukawa Nil*
Mr. Katsuhiko Kato Nil*
* Mr. Masaru Tanaka, Mr. Hidenori Furukawa and Mr. Katsuhiko Kato are the nominees of Kansai Paint Co. Ltd., Japan.
They do not hold any share in their personal capacity.
11
BOARD´S REPORT
Dear Members,
Your Directors are pleased to present the 98th Annual Report and the Audited Accounts for the year ended
31st March, 2018.
1. Financial Highlights
1st April, 2017 1st April, 2016
to to
31st March, 2018 31st March, 2017
` in Crores ` In Crores
2. Dividend
The Directors recommend for consideration of the Members, a normal dividend of ` 2.60 ( 260%) per share of the face
value of ` 1 each for the year.
This compares with a normal dividend of ` 2.50 per share (250%) and a special dividend of ` 0.50 per share
(50%), thus aggregating to a total dividend of ` 3.00 per share (300%) of the face value of ` 1 each declared
last year.
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Annual Report
2018
3
MANAGEMENT DISCUSSION AND ANALYSIS
KNPL is one the most preferred vendors for Industrial Customer satisfaction is the central goal around which
paints in the country. Over the years the Company KNPL functions. The requirements of customers are
has worked tirelessly to create value for its customers paramount and are constantly evolving. KNPL uses
and is acknowledged as the market leader in Industrial its Research and Development to develop unique
coatings. Many of the leading players in the Automobile customised solutions for its customers. KNPL has
industry trust Nerolac to service their paint requirements. continuously focussed on introducing new technology
This leadership has been made possible through a for the customer every year. Notable introductions this
combination of customer insights, customised R&D, year were products such as Anti-Graffiti coatings, Rebar
quality, service, value engineering and delivery. Coating for Concrete and Super durable Powder.
13
In a market which is growing and a strong foundation, Innovations were plenty in various formats of advertising
KNPL is now looking towards unleashing the next era of such as TV, Outdoor and digital amongst others. These
growth for the Company. were well received.
The Company continued its growth momentum in Nepal KNPL continued its association with IPL for the year 2017,
with high double digit volume and value growth. The and partnered with SunRisers Hyderabad and Gujarat
Company successfully completed brand migration Lions franchisees. In addition, Nerolac deepened its
from ‘Nerolac’ to ‘KNP’. The company name was also association with cricket by becoming the title sponsor of
changed to KNP Japan Private Limited. Star Sports pre-programming live show, which was called
“Nerolac Cricket Live”.
The Company entered Sri Lankan paint market by
way of a joint venture with Capital Holdings Maharaja,
which is one of the biggest conglomerates in Sri
Lanka. The Company successfully started a greenfield
plant and launched entire range of Decorative Paints
(Water-based and Solvent-based).
[C] Marketing
Decorative
For a Consumer facing Company like KNPL, Marketing
plays a pivotal role in generating consumer and
customer awareness and interest. KNPL undertook
various marketing activities in the year gone by, aimed
at capturing a larger mindshare of the consumer. This
along with efforts on the ground and distribution saw
Nerolac increase its presence across. Nerolac At Awards
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Annual Report
2018
The largest category of Decorative Paints for Nerolac is the Popular Category with a high growth potential. Keeping
that in mind Nerolac Paints put together another memorable TVC film for this category.
15
KNPL launched Nerolac Colour Guides – Interior and
Exterior, during the year, to showcase latest colour trends
in the home decor space. These colour guides were the
outcome of a five months long research whereby KNPL
employees travelled the length and the breadth of the
country to map the changing lifestyle of modern Indian
to understand choices. Colour Guides were launched
at the Economic Times Architecture and Design Summit
2017 and at the A&D Summit at Mumbai and Kolkata.
Another first for KNPL was the association with India’s first
web series for family viewing – The Aam Aadmi Family –
Season 2 from The Viral Fever (TVF). The series has a total
of 7 episodes where Nerolac based content integration
Cyclathon has been done in 4 episodes.
Nerolac Colour
Guide
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Annual Report
2018
During Diwali, an innovation in branding was successfully – a first of its kind national competition was held for
run wherein one luggage conveyor belt at Mumbai architects and designers, in which they had to express
domestic airport was brought to life with 250 different colours of their city through a design intervention.
colours from Nerolac shade gallery.
KNPL undertook a collaborative initiative with Neemrana
Architects and designers are one of the key influencers group to paint 850+ structures including homes,
for KNPL especially in cities. Nerolac Breathing City school and other public facilities at Sarhetta village
Mumbai Airport
17
(Alwar, Rajasthan). This led to a lot of interest amongst A Livelihood Enhancement Project was conducted in a
local population and helped showcase the transformation remote set of villages of Mala & Sirasu in Paurhi Garhwal
paints can bring to lives and spaces through colours Mountains. As part of this project, Master painter trainers
and cleaning. The initiative received wide publicity with conducted a full day workshop to provide first-hand
news channels covering the village transformation and experience on various aspects of painting products and
dubbing it as the ‘Rangeela Gaon’, social media views processes for the young men from these villages.
have crossed 4 Million.
Industrial
KNPL has strengthened its leadership in industrial coatings
despite a challenging business environment, especially
in the first half. KNPL has been able to not just maintain
its leadership but has also seen an increase in its
market share.
Skill Development
Project
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Annual Report
2018
KNPL has strengthened its leadership in Powder Coating • Real Estate Sector & Interest Rates
in segments like Auto Ancillaries, Furniture, White Goods
The real estate sector was expected to make a
by leveraging its collaboration with Protech, Canada.
turnaround during the past year, however, the
New products such as Rebar coating for concrete and
weakness in the market continued for most of the
Reinforcing Rebar for structural stability along with super
year despite low interest rates. During the final
durable powder as per AMA 2014 were introduced
quarter, demand started to pick up and is expected
during the year.
to continue this year while interest rates continue to
In Auto refinishes, the Company has grown at a much remain low.
higher rate than the market. The Company provides a
complete range of products in this segment. The year • Opportunities due to climate change
saw the introduction of Nova Plus, an alkyd range of The Company has embarked upon growth agenda
shades for the Auto Refinish Channel. During the year using climate change as an opportunity. The
KNPL has focused on strengthening its distribution network Company’s innovation in products and technology
coupled with focus on garages and applicator training. has helped to curtail energy consumption on
19
customer production lines. Super durable coating brand, technology, industry dynamics like takeovers
solutions have been helping its customers to and alliances. Identifying and mitigating these are a
enhance life of their products. In its operations, the strategic priority at KNPL.
Company is taking advantage of lower rates of
• Operational Risks
renewable energy.
New business models, new service offerings, growing
Threats volume of operations, bring in risks related to delivery
and adherence of SLA (Service Level Agreements)
• New Competitors
terms and conditions. KNPL has a strict review
New Competitors are entering the Indian Paint mechanism to ensure these risks are addressed and
Market. KNPL endeavours to be proactive in mitigated. In addition to this, supplier risks as well as
countering any challenges that may arise due to market risks are monitored carefully.
increased competition in the market.
• Legal & Compliance Risk
• Crude Oil Prices and Inflation With increase in geographical spread, KNPL is
Crude oil prices are putting pressure on raw material subjected to multitudes of constantly changing
prices used for Paint manufacturing, which is in local legislations. There is a risk of non-compliance
turn putting pressure on the bottom line. Inflation or delay in compliance with statutory requirements.
is expected to be high. KNPL is trying to offset this KNPL uses the services of professional consultants
effect through a combination of internal initiatives to ensure compliance with domestic laws and
and price increases from its customers. regulations. We have also implemented tools and
processes to ensure that internal stakeholders of
• Availability of raw materials the Company are aware and comply with various
statutory requirements.
With the tightening of environmental controls in
China, there is a cascading effect on global supply • Financial Risks
chains for key raw materials for the paint industry. Finance risks originating out of currency fluctuations
and market volatility have the potential to affect the
Company bottom line directly. These risks are dealt
[E] Segment wise performance with advance planning and taking necessary steps
The Company has only one segment of activity named for hedging against such outcomes.
paints, in accordance with the definition of “Segment” • System risk
covered under Indian Accounting Standard (Ind AS) 108
With all operations conducted using business
on Operating Segments. The performance of the
software, ensuring high availability of systems as well
Company is discussed in this Report. as proper controls to ensure that operations are not
compromised remains a top management priority.
KNPL has taken many steps proactively to ensure
[F] Risks and Concerns that potential risks are minimized.
isk Management is important in an organization which
R • People Risk
is catering to both industrial and decorative customers.
With the industry growing at a fast pace and
Risk profiling is put in place for all the areas of operations
demand for experienced and trained manpower
and well integrated in the business cycle.
outstripping supply, the ability to retain existing talent
The Risk Committee periodically meets to monitor the and attract new professional talent assumes crucial
framework set and find ways of mitigating the risks and importance. The Company has a structured process
tracks the action points. The Company’s automated for potential identification and talent management.
Risk Management dashboard helps track the risks more
• Environmental & Social Sustainability risks
effectively.
Increasing water scarcity: India is facing water crisis
• Strategic Risk in many regions. Pollution of fresh water resources
Strategic risk relates to the Company’s future and over exploitation of ground water makes this
business plans and strategies. They are risks around risk more significant in Indian context. Water scarcity
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Annual Report
2018
has been topic of political discussion as well as Excel Rainguard Water Proof Primer with reinforcement.
media. The Company understands potential of A new range of products in the adhesive segment was
this risk in coming future and addressing it through developed for woods & Laminates.
water efficient approach in its operations. Our major
For our automotive customers many new exciting shades
manufacturing plants are provided with zero effluent
based on market feedback and research were presented
discharge facilities to recycle whole treated water.
for vehicle launches. Common painting system for multi
nergy Security: India is majorly dependent on coal
E metal surfaces, High performance anticorrosive primer
for its energy needs. Increasing prices of fossil fuels for multi metal, High Solid/Medium Solid products and
and associated air pollution problems represent high performance primer for automotive industry were
challenging situation for today’s energy sector. developed in FY 18.
Grid energy prices are also seen to be increasing
In Powder coatings, the focus was on developing
steadily. Indian government is keen on encouraging
functional coatings. KNPL has introduced Rebar coating
renewable energy. In order to secure its energy
for concrete, reinforcing rebar to enhance structural
requirement, the Company is striving for adoption of
stability in powder coating and super durable powder as
renewable energy in its operation and improve upon
per AAMA 2604.
energy efficiency.
Changes in environmental regulations: Changing
environmental regulations in the country majorly
focussing upon self- discipline and extended
producer responsibility. Last year, we saw various
new notifications and up-gradations in the areas
of air & water emission monitoring, plastic waste
rules, biomedical waste rules etc. The Company
keeps itself aware of changing regulations through
subscription to legal update agencies. It ensures
compliance with environmental regulations through
its legal tracking module. The Company liaises with
government sections on new regulations through
industry body such as IPA, CII.
Social license to operate: In today’s scenario, Scanning Electron Microscope – Energy Dispersive X Ray
companies need to be good corporate citizen and (SEM-EDS)
neighbour to local communities. In order to continue
operations, it is very important to understand social
needs of communities where we operate and be
helpful for their needs. The Company addresses
some of the social needs through its CSR programs.
21
[H] Information Technology frequently referred by all the employees time to time.
It plays a crucial role in facilitating horizontal deployment
During the year, embedded digital, Business continuity,
of best practices in organization. KNPL also has various
GST readiness and Security were the key IT initiatives.
other platforms for sharing knowledge. This includes
Continuing the investment made in the in-memory
Group Discussions, Book reviews and knowledge
computation capabilities, in the current year, KNPL has
sharing sessions.
taken steps towards leveraging new embedded digital
technologies like Machine Learning, IOTs and Advanced The Organizational Business Plan is aligned with the
Analytics. These technologies would enable KNPL to have Key Result Areas for each position. The performance
a deeper insight into the data. This would help enhance review mechanism which is digitalized has ensured
the service capabilities of the Sales and Manufacturing transparency, real time information and involvement of
functions to the market. all employees towards achievement of the goals. The
daily performance dashboard is available to all the
To provide real time information to the customers and
employees and it enables every employee to remain
influencers, KNPL has implemented the Dealer portal for
focussed on the priorities which contribute to the
the Decorative customers and enhanced the call centre
organization’s goals. This digital framework links Company
to connect with the influencers. Various processes in
goals to an individual in a transparent manner.
supply chain, procurement, Manufacturing and Finance
were re-engineered to provide visibility into the various
Development of employees is of utmost importance.
Key Performance Indicators and enhance effectiveness.
New capability building programs have been launched
Further KNPL aligned all its IT systems to the GST enabled
for frontline sales staff in order to equip them with new
Eco system.
sales techniques and drive the top-line of the Company.
As part of the Business Continuity initiative, Near Disaster Assessment and Development centres are being
Recovery site was made operational for key applications. conducted to objectively evaluate the managerial
Taking cognizance of the changing IT environment and potential of select personnel.
to insulate against the various security risks, KNPL has
In order to drive corporate objectives with respect to
augmented its security solutions framework.
HR processes & systems, departmental connect models
were introduced where the endeavour was to connect
[I] People with the employees and enhance engagement.
At KNPL, people are an essential part of the
KNPL also continued the rewards and recognition
organization. People provide the skills and competencies
program with an employee recognition platform
necessary to make organizational strategies work. With
called GEMS. GEMS is a framework for employees to
advancements in technology, the significance of people
acknowledge support and help by colleagues in their
gets augmented multi-fold. Many efforts are taken to
day to day interaction. It is a company-wide rewards
engage the energies and enthusiasm of KNPL employees
program that fosters an environment of appreciation.
in the most effective way. KNPL believes that success
In-house training workshops on people management,
would not be possible without our talented, diverse and
excellence and KNPL competency framework were
dedicated employees.
designed and conducted by HR.
The workforce is highly aligned to the Company’s goals
through various media like newsletters, MD’s address, KNPL conducts annual Employee engagement survey
Works manager address etc. Interactive sessions like to get insights into the organisation as well as to gauge
open house with top management are also conducted the pulse of employees on organizational initiatives
at Plants. Employees are apprised of KNPL initiatives which foster, connect and boost employee engagement
through internal monthly Impressions newsletter, and morale.
Decorative Sales Annual Conferences and Industrial
KNPL continues with its good practices of Corporate
Zonal Meets.
Governance through the Whistle Blower Policy,
In-house Knowledge management portal is used to share encouraging growth of individuals irrespective of gender,
and gain knowledge on key business elements. This is religion, caste or community as well as policy on
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Annual Report
2018
23
Community Development: Signal School, Thane
KNPL is committed to contributing in as many ways training kiosk system to automate training process
as possible and will continue to contribute towards through standard audio visual safety instructions. The
the economic, social, environmental and educational Company has planned for coverage of all employees
prosperity of our country. including contract employees through these training
modules.
[L] Environment, Health & Safety Occupational health is one of the important factors
KNPL believes that Environment, Health & Safety (EHS) of Safety. To cater to employee health, all KNPL
excellence is a basic element of manufacturing manufacturing sites are equipped with dedicated
excellence. the Company’s proactive focus on EHS aspects Occupational Health Centre (OHC) and Ambulance for
in business has helped to strengthen manufacturing emergency situations. KNPL facilitates periodic medical
excellence. Last year, the Company continued KYT check-ups for its employees and also continued its
(KikenYochi Training – Hazard prediction) exercises on focus on employee visits to OHC and their complaints
production activities and proactively addressed real analysis.
time operation hazards. Our practical safety training
programs (Danger Experience program) at Safety Internal training on Bio-Medical Waste Management
laboratory has helped to strengthen safety awareness Rules, 2016 was imparted to 8 employees in 2017-18. All
amongst employees and thereby safety compliance. identified employees have been covered. The training
Our esteemed industrial customers also appreciated included topics such bio-medical waste segregation,
our efforts towards EHS excellence during their visits and storage, packing and disposal and also safe handling
audits. Last year, the Company implemented Safety and transportation.
24
Annual Report
2018
KNPL continued with its water conservation agenda and at various stages of manufacturing. Progress in these
achieved reduction in specific water consumption. Zero initiatives are being tracked through system and reviewed
liquid discharge facilities at our plant locations have periodically to sustain process controls to reduce waste
helped to ensure recycling of whole treated water into its at source.
process and curtail fresh water consumption. In coming
As a part of energy security, KNPL invested in solar
year, KNPL has further planned for water reduction at
projects across all plant locations and at its head
source and recycling initiatives.
office. Ambit of renewable energy solid fuel boilers
Solid waste management is another key focus area. increased in the last year. With this, major proportion
Major focus is on reduction of waste generation at of process heat and steam is being produced through
source and recovery and reuse of material sticking losses renewable energy.
KikenYochi Training
25
Medical Camp, Danger Experience Program Training
[N]
Internal Control system and their
adequacy [O] Affirmative Action
With an aim to monitor and control day-to-day The Company has adopted a Code of Conduct
operations at KNPL, the Company has set up internal for affirmative action for the purpose of providing
control systems for regular tracking and reporting. employment opportunities for the socially disadvantaged.
26
Annual Report
2018
27
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Annual Report
2018
29
4. Unclaimed Dividend Profit before Tax has increased to ` 9.05 crores as
compared to ` 6.87 crores last year. Profit after Tax
During the year, dividend amounting to ` 3.98 lacs
has increased to ` 6.51 crores as compared to ` 5.12
that had not been claimed by the shareholders for the
crores last year.
year ended 31st March, 2010, was transferred to the
credit of Investor Education and Protection Fund as b. Operations in Srilanka
required under Section 124 and 125 of the Companies
Our subsidiary in Srilanka, Kansai Paints Lanka Pvt.
Act, 2013. As on 31st March, 2018, dividend amounting
Ltd., commenced operations in April 2017. The
to ` 101.19 lacs has not been claimed by shareholders
Turnover for the year 2017-18 was ` 8.06 Crores.
of the Company. Shareholders are required to lodge
The Company incurred a loss of ` 6.83 crores as the
their claims with the Registrar, TSR Darashaw Ltd., for
Company was able to stabilize its operations only in
unclaimed dividend. Pursuant to the provisions of
the fourth quarter of financial year 2017-18.
Investor Education and Protection Fund (Uploading of
Information regarding unpaid and unclaimed amounts Consolidated financial statement of the Company and
lying with Companies) Rules, 2012, the Company has of the subsidiaries, forms part of the Annual Report.
uploaded the details of unpaid and unclaimed amounts A separate statement containing the salient features
lying with the Company on 21st June, 2017 (date of of the financial statement of KNP Japan Private
the last Annual General Meeting) on the website of Limited and Kansai Paints Lanka Pvt. Ltd. is part of this
the Company, www.nerolac.com. The same is also Annual Report.
available on the website of the Ministry of Corporate Annual Audited Accounts of KNP Japan Private Limited
Affairs, www.mca.gov.in. and Kansai Paints Lanka Pvt. Ltd. are available on the
website of the Company.
5. Collaboration
The Directors record their appreciation for the 7. Acquisition of Marpol Private Limited
contribution made and support provided by Kansai
In April 2018, our Company acquired 100% equity
Paint Co. Ltd., Japan (KPJ). KPJ continues to provide
shareholding in Marpol Private Limited, Goa (Marpol),
support on process design, quality improvement, world
which too, like our Company, is one of the leading
class technology which has helped the Company
companies in powder coating business, for an aggregate
in maintaining market leadership in the industrial
consideration of ` 36 crores before adjustments due to
business including automotive coatings, by servicing
legal and financial due diligence. Marpol is a pioneer in
existing customers better and adding new lines.
powder coating business and its brand is very reputed.
KPJ also provides technology for manufacture of
Marpol manufactures products such as epoxy polyester,
architectural coatings.
pure polyester, pure epoxy and polyurethane powder.
The Company also has Technical Assistance Agreement Our Company expects post acquisition synergy benefits
with Oshima Kogyo Co. Ltd., Japan, for manufacturing in raw material and other miscellaneous costs. The
heat resistance coatings, Cashew Co. Ltd., Japan for necessary disclosures regarding the acquisition were
manufacturing coatings products MICRON TXL SK-1 made to BSE and NSE, where the shares of our Company
and Thinner for MICRON and with Protech Chemicals are listed.
Limited, Canada for manufacturing powder coating
products. The Directors record their appreciation for
the co-operation from these collaborators.
8. New Projects
The Shareholders were informed last year that the
6. Overseas Operations: Company had started setting up of paint manufacturing
units at Sayakha Industrial Estate in Gujarat, Goindwal
a. Operations in Nepal Sahib near Amritsar in Punjab and a Global R &
D
For the financial year ended 31st March, 2018, Centre at Vashi, Navi Mumbai. The Shareholders
the Turnover of KNP Japan Private Limited, the were also informed last year that the Company had
subsidiary of our Company in Nepal, increased to initiated a project at Achutapuram, Vishakhapatnam
` 64.14 crores as compared to ` 53.95 crores for the district in Andhra Pradesh to set up a paint
financial year ended 31st March, 2017. manufacturing unit.
30
Annual Report
2018
At Sayakha Industrial Estate in Gujarat, all activities Mr. Chaudhari for the Company during his association
of Phase-1 of the manufacturing unit have been with the Company.
completed and the unit is likely to commence operations
Mr. Anuj Jain was appointed as a Whole-time Director
shortly. At Goindwal Sahib near Amritsar in Punjab, the
on the Board for a period of 5 years with effect from
construction work of the manufacturing unit is in full
1st April, 2018 to 31st March, 2023, subject to the
swing and operations are likely to commence during
approval of the Shareholders at the ensuing Annual
the year. At Achutapuram, Visakhapatnam district in
General Meeting to be held on 21st June, 2018. The
Andhra Pradesh, land acquisition is over and the project
material terms of the appointment of Mr. Anuj Jain are
is in the planning stage. The construction activities at
stated in the Explanatory Statement at Item No. 8 of the
Global R & D Centre at Vashi, Navi Mumbai have
Notice of the Annual General Meeting.
been completed and the unit is likely to commence
operations in 2018-19. None of the Directors is disqualified for appointment/
re-appointment under Section 164 of the Companies Act,
9. Cost Audit 2013. As required by law, this position is also reflected in
the Auditors’ Report.
The Company had appointed D. C. Dave and
Co., Cost Accountants, to audit its cost accounting All the Independent Directors on the Board have given
records relating to Thinners and Resins for the financial a declaration of their independence to the Company
year 2016-17. The Cost Audit Report submitted by as required under section 149(6) of the Companies
D.C. Dave & Co. for the financial year 2016-17 is clean Act, 2013.
and there are no qualifications in their Report. The Cost The composition of the Board, meetings of the Board
Audit Report was filed with Ministry of Corporate Affairs held during the year and the attendance of the
on 18th October, 2017. Directors thereat have been mentioned in the Report on
The Company has appointed D. C. Dave & Co. as the Corporate Governance in the Annual Report.
Cost auditor for the financial year 2018-19 to conduct For the year ended 31st March, 2018, Mr. H. M. Bharuka,
cost audit of its cost records pertaining to the products Vice Chairman and Managing Director, received a
falling under the product categories – Organic & remuneration of ` 17.25 lacs as a member of the Global
Inorganic chemicals, Ores and mineral products, Plastics Steering Committee of Kansai Paint Co. Ltd., Japan,
& Polymers and Rubber & Allied products. The products holding Company and also received a remuneration of
of the Company covered under the aforesaid categories ` 54.11 lacs during the year as a Non-Executive Director
are different types of thinners, floor coating products, of Kansai Paint Co. Ltd., Japan.
powder coating products & hardeners and Construction
Chemicals. D. C. Dave & Co. are appointed on a
remuneration of ` 2,50,000 plus service tax and out of 11. Key Managerial Personnel
pocket expenses. The Company is seeking the ratification Consequent to the resignation of Mr. P. D. Chaudhari
of the Shareholders for the remuneration to be paid to as Whole-time Director with effect from the close of
D. C. Dave & Co. vide Resolution No. 7 of the Notice of business on 31st March, 2018 and appointment of
the Annual General Meeting. Mr. Anuj Jain as a Whole-time Director with effect from
1st April, 2018, the Company has noted that Mr. H. M.
10. Directors Bharuka, Vice Chairman and Managing Director,
In accordance with Articles of Association of the Mr. Anuj Jain, Whole-time Director, Mr. P. D. Pai, Chief
Company, Mr. Masaru Tanaka, Mr. Hidenori Furukawa Financial Officer and Mr. G. T. Govindarajan, Company
and Mr. Katsuhiko Kato retire by rotation at this Annual Secretary are the Key Managerial Personnel of the
General Meeting and being eligible offer themselves for Company in terms of Section 203 of the Companies
re-appointment. Act, 2013.
31
process has been explained in the Report on Corporate • For Directors, the Performance Pay will be linked to
Governance in this Annual Report. The Board noted the achievement of Business Plan.
evaluation results that were collated and presented to
• For Heads of Department, the Performance Pay will
the Board.
be linked to achievement of functional plan which is
derived from the business plan. The functional plan
13. Remuneration Policy includes both, short-term and long-term objectives.
The Board of Directors of the Company has adopted • The above will take into consideration industry
a Remuneration Policy for determining qualifications, performance, customer performance and overall
positive attributes and independence of a Director and economic environment.
criteria for Director’s appointment and remuneration. The
features of the Policy are as follows: • For other management personnel, the Performance
Pay will be linked to achievement of individual set
• The Company, while constituting the Board shall objectives and part of this will also be linked to
draw members from diverse fields such as finance, overall Company performance.
law, management, architecture, technical,
marketing, manufacturing, corporate governance,
14. Risk Management Policy
operations or other disciplines related to the
Company’s business. There shall be no discrimination Risk profiling is put in place for all the areas of operations
on the basis of gender, while determining the Board in the Company and well integrated in the business
composition. cycle. The Company has identified the risk areas in
its operations along with its probability and severity,
• A director shall be a person of integrity, who department wise. The various risks to which the Company
possesses relevant expertise and experience. He shall is exposed are as mentioned in the Management and
uphold ethical standards of integrity and probity Discussion Analysis Report under the relevant heading.
and act objectively and constructively. He shall An effective Risk Management Framework is put in
exercise his responsibilities in a bona-fide manner place in the Company in order to analyze, control and
in the interest of the Company; devote sufficient mitigate risk.
time and attention to his professional obligations for
informed and balanced decision making; and assist The Risk Management Framework comprises of Risk
the Company in implementing the best corporate Management Committee and the Risk Officers. The
governance practices. Risk Management Committee of our Company consists
of the Management Committee and the Chief Risk
• An Independent director should meet the Officer. The Vice Chairman and Managing Director, the
requirements of the Companies Act, 2013 and the Executive Director and the functional heads constitute
SEBI (Listing Obligations and Disclosure Requirements) the Management Committee. The Company Secretary
Regulations, 2015, concerning independence of is the Chief Risk Officer. The Risk Officers have been
directors. The Company shall also obtain certification appointed by the functional heads and represent the
of independence from the Independent Director in various functions. The requirements of Regulation 21 of
accordance with the Companies Act, 2013. SEBI (Listing Obligations and Disclosure Requirements)
Regulations, 2015, with regard to the constitution of
• The objective of the policy is to have a compensation
a Risk Management Committee are not applicable
framework that will reward and retain talent.
to our Company as this Regulation is applicable only
• The remuneration will be such as to ensure that the to top 100 listed entities, determined on the basis of
correlation of remuneration to performance is clear market capitalization, as at the end of the immediate
and meets appropriate performance benchmarks. previous financial year. The Board of Directors and the
Audit Committee review the effectiveness of the Risk
• Remuneration to Key Managerial Personnel, Senior
Management framework and provide advice to the
Management and other employees will involve a
Risk Management Committee at regular intervals.
balance between fixed and variable pay reflecting
short and long term performance objectives of the The functions of the Risk Management Committee
employees in line with the working of the Company includes preparation of company-wide framework
and its goals. for risk management, fixing roles and responsibilities,
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Annual Report
2018
communicating the risk management objective, The Dividend (including interim and/or final) for any
allocating resources, drawing action plan, determining financial year shall be declared or paid by the
criteria for defining major and minor risks, deciding Company for any financial year out of the profits of
strategies for escalated major risk areas, updating the Company for that year arrived at after providing
company-wide Risk register and preparing MIS report for for depreciation in accordance with the provisions of
review of Audit Committee. the Companies Act, 2013 or out of the profits of the
Company for any previous financial year(s) arrived at
The Risk Management Framework aims to:
after providing for depreciation in accordance with the
(a) address our Company’s strategies, operations provisions of the Companies Act, 2013 and remaining
and compliances and provide a unified and undistributed, or out of both. The Company may, before
comprehensive perspective; the declaration of any dividend in any financial year,
transfer such percentage of its profits for that financial
(b) establish the risk appetite;
year as it may consider appropriate to the reserves of
(c) be simplistic and intuitive to facilitate a speedy and the Company. The Company shall follow the provisions
appropriate identification of potential and actual of the Companies Act and all the relevant rules and
risks and its communication; regulations of the Companies Act and/or any regulatory
enactment(s) as may be applicable while declaring and
(d) seek escalation of the identified risk events to paying dividend for any financial year.
the appropriate persons to enable a timely and
satisfactory risk response; The rate of Dividend shall be fixed by the Board of
Directors of the Company. Final dividend proposed
(e) reduce surprises and losses, foresee opportunities by the Board of Directors, if any, would be subject
and improve deployment of resources; to the approval of the shareholders at the Annual
(f) develop a mechanism to manage risks. General Meeting.
f. Contingent liabilities,
The Board may consider not declaring dividend
or may recommend a lower payout for a given g.
Deployment of funds in short term marketable
financial year, after analyzing the prospective investments and/or long term investments,
opportunities and threats or in the event of challenging
h. Capital expenditure(s), and
circumstances such as regulatory and financial
environment. i. The ratio of debt to equity.
33
(ii) External factors: 16. Corporate Social Responsibility
a. Economic environment,
The Board has constituted a Corporate Social
b.
Cost and availability of alternative sources of Responsibility (CSR) Committee as per the provisions of
financing, Section 135 of the Companies Act, 2013. The functions of
the CSR Committee are to:
c. Inflation rate,
(a) formulate and recommend to the Board, a Corporate
d. Industry outlook and stage of business cycle for Social Responsibility Policy which shall indicate the
underlying businesses, activities to be undertaken by the Company as
specified in Schedule VII of the Act;
e. Prevailing Taxation Policy or any amendments
expected thereof, with respect to Dividend (b) recommend the amount of expenditure to be
distribution, incurred on the activities referred to in clause (a);
and
f.
Changes in the Government policies, industry
specific rulings & regulatory provisions, and (c) monitor the CSR policy of the Company from time to
time.
g. Any other relevant factors that the Board may
The members of the CSR Committee, upto 31st March,
deem fit to consider before declaring Dividend.
2018, were Mr. H. M. Bharuka, Mr. N. N. Tata and
Apart from the above, the Board also considers Mr. P. D. Chaudhari.
past dividend history and track record of previous
With effect from 1st April, 2018, Mr. H.M. Bharuka,
Dividends distributed by the Company. The Board may
Mr. N. N. Tata and Mr. Anuj Jain are the members of the
additionally recommend special dividend in special
CSR Committee.
circumstances.
Mr. H.M. Bharuka is the Chairman of the CSR Committee.
Subject to the applicable regulations, the Company’s Mr. N. N. Tata is the independent Director on the CSR
retained earnings shall be applied for: Committee.
ã Funding inorganic and organic growth needs The Board has also framed a CSR Policy for the Company,
including working capital, capital expenditure, on the recommendations of the CSR Committee. The
repayment of debt, etc. Report on CSR activities as required under Companies
(Corporate Social Responsibility) Rules, 2014, including a
ã Buyback of shares subject to applicable limits,
brief outline of the Company’s CSR Policy, total amount
ã Capitalisation of shares, to be spent under CSR for the financial year and details
of amount spent on CSR during the year is set out at
ã Issue of Bonus shares, Annexure – 1 forming part of this Report.
ã Payment of Dividend in future years,
17. P
articulars of Loans, Guarantees or
ã Investment in new business(es) and / or additional
investment in existing business(es),
Investments under Section 186 of the
Companies Act, 2013
ã General corporate purposes, including contingencies,
Loans, Guarantees and Investments covered under
ã Any other permissible usage as per law. the provisions of Section 186 of the Companies Act,
2013, are given in the notes to the financial statements
The Company currently has only one class of shares, provided in this Annual Report.
viz. Equity shares, for which this policy is applicable.
The policy will be subject to review if and when the
Company issues different classes of shares.
18. Related Party Transactions
All transactions entered into with the Related Parties in
The Dividend Distribution Policy of the Company is terms of Section 2(76) and Section 188 of the Companies
also available on the website of the Company at Act, 2013 read with Regulation 2 (zc) and Regulation
https://nerolac.com/financial/policies.html#scroll. 23 of the SEBI (Listing Obligations and Disclosure
34
Annual Report
2018
Requirements) Regulations, 2015 during the financial Auditors’ Certificate of the compliance with Corporate
year were in the ordinary course of business and on Governance requirements by the Company is attached
arm’s length basis and do not attract the provisions of to the Report on Corporate Governance.
Section 188 of the Companies Act, 2013. There were
no Material Related Party transactions during the year.
23. General Shareholder Information
Thus, disclosure in Form AOC-2 is not required.
General Shareholder Information is given in Item No. 9
of the Report on Corporate Governance forming part of
19. Audit Committee
the Annual Report.
The Company has an Audit Committee in place,
constituted as per the provisions of Section 177 of
the Companies Act, 2013. The members of the Audit
24. Business Responsibility Report
Committee, its terms of reference, the meetings of Regulation 34(2)(f) of SEBI (Listing Obligations and
the Audit Committee and attendance thereat of Disclosure Requirements) Regulations, 2015, as amended
the members of the Committee is mentioned in the with effect from 1st April, 2016, requires that in case
Corporate Governance Report under the appropriate of the top 500 listed companies based on market
heading. capitalisation, the Annual Report shall contain a Business
Responsibility Report describing the initiatives taken
20. Whistle Blower Policy by the Company from an environmental, social and
governance perspective, in the format specified by SEBI.
The Company has a Whistle Blower Policy to report The Business Responsibility Report in the format suggested
genuine concerns and grievances. The implementation by SEBI forms part of the Annual Report.
of the Whistle Blower Policy has been mentioned in the
Report of Corporate Governance.
25. P
articulars regarding Employees
21. P
revention of Sexual Harassment at Remuneration
workplace The statement containing particulars of employees as
required under Section 197(12) of the Companies Act,
The Company has adopted a policy with the name
2013 read with Rule 5(2) of the Companies (Appointment
“Policy on Appropriate Social Conduct at Workplace”.
and Remuneration of Managerial Personnel) Rules, 2014
The policy is applicable for all employees of the forms part of this Report as Annexure – 2.
organization, which includes corporate office, branches,
depots and manufacturing locations etc. 26. Directors’ Responsibility Statement
The policy is applicable to non-employees as well i.e. As stipulated under the provisions contained in Section
business associates, vendors, trainees etc. 134(3)(c) read with Section 134(5) of the Companies Act,
A Complaints Committee has also been set up to 2013 the Directors hereby state that:
redress complaints received on sexual harassment as (i) in the preparation of the annual accounts, the
well as other forms of verbal, physical, written or visual applicable accounting standards have been
harassment. followed along with proper explanation relating to
During the financial year under review, the Company material departures;
has not received any complaints of sexual harassment. (ii) the Directors have selected such accounting policies
and applied them consistently and made judgments
22. Corporate Governance and estimates that are reasonable and prudent so
as to give a true and fair view of the state of affairs
As required by Schedule V(C) of the SEBI (Listing
of the Company at the end of the financial year
Obligations and Disclosure Requirements) Regulations,
and of the profit of the Company for that period;
2015, a detailed report on Corporate Governance is
given as a part of the Annual Report. The Company (iii) the Directors have taken proper and sufficient care
is in full compliance with the requirements and for the maintenance of adequate accounting
disclosures that have to be made in this regard. The records in accordance with the provisions of this
35
Act for safeguarding the assets of the Company the Company for a period of 5 years shall be subject to
and for preventing and detecting fraud and other ratification by shareholders at every AGM. Accordingly,
irregularities; the appointment of B S R & Co. LLP, as the Auditors of
the Company from this AGM till the conclusion of next
(iv) the Directors have prepared the annual accounts
AGM is put forth for your approval.
on a going concern basis;
The Auditors’ Report is clean and there are no
(v) the Directors have laid down internal financial
qualifications in their Report.
controls to be followed by the Company and that
such internal financial controls are adequate and
are operating effectively; and 30. Secretarial Auditor
(vi) the Directors have devised proper systems to ensure Pursuant to the provisions of Section 204 of the
compliance with the provisions of all applicable laws Companies Act, 2013, the Company had appointed
and that such systems are adequate and operating JHR & Associates, Company Secretaries, as the
effectively. Secretarial Auditor of the Company for the year 2017-18
to conduct secretarial audit and to ensure compliance
by the Company with various Acts applicable to the
27. E
nergy, Technology Absorption &
Company. The Secretarial Audit Report for the financial
Foreign Exchange year 2017-18 issued by JHR & Associates is annexed to
Statement giving the particulars relating to conservation this Report as Annexure – 5. There are no qualifications
of energy, technology absorption and foreign exchange or adverse remarks in their Report.
earnings and outgo, as required under Section 134(3)(m)
read with Rule 8(3) of the Companies (Accounts) Rules, 31. Acknowledgements
2014 is enclosed as Annexure – 3 to this Report.
Your Directors wish to express their grateful appreciation
for the co-operation and support received from
28. Extract of Annual Return customers, parent company, collaborators, vendors,
In accordance with Section 134 (3)(a) of the Companies shareholders, financial institutions, banks, regulatory
Act, 2013, an extract of the Annual Return in the authorities and the society at large.
prescribed format is appended as Annexure – 4 to Deep appreciation is also recorded for the dedicated
this Report. efforts and contribution of the employees at all levels,
as without their focus, commitment and hard work, the
29. Statutory Auditors Company’s consistent growth would not have been
possible, despite the challenging environment.
The Company Auditors, B S R & Co. LLP, Chartered
Accountants, have been appointed for a period of
5 years from the 94th AGM till the 99th AGM. Pursuant to For and on behalf of the Board
provisions of Section 139(1) of the Companies Act, 2013 P. P. Shah
read with the Companies (Audit and Auditors) Rules, Chairman
2014, the appointment of B S R & Co. LLP, as Auditors of Mumbai, 2nd May, 2018
36
Kansai Nerolac Paints Limited • Annual Report 2017-2018
2. Composition of the CSR Committee : Mr. H. M. Bharuka, Vice Chairman and Managing Director
Mr. N. N.Tata (Independent Director)
Mr. P. D. Chaudhari, Whole-time Director upto 31st March, 2018
Mr. Anuj Jain, Whole-time Director from 1st April, 2018
The CSR Committee confirms that the implementation and monitoring of the CSR Policy is in compliance with CSR
objectives and Policy of the Company.
H. M. Bharuka
Vice Chairman and Managing Director
(Chairman of the CSR Committee)
37
Kansai Nerolac Paints Limited • Annual Report 2017-2018
The Mission and philosophy of CSR function of the Company is “To contribute positively to the development of
the society, by acting as a good neighbour, considerate of others, playing the role of a good corporate citizen with
passion and compassion.” Hence the CSR activities undertaken by the organisation essentially focus on four
core areas of Environment, Health, Education and Community Development. The focus of the Company is to
contribute to various institutions and initiatives around the manufacturing locations to provide social services to
the needy.
The CSR vision of the Company is to strive to be a responsible corporate by proactively partnering in the Environmental,
Social and Economic development of the communities through the use of innovative technologies, products as well as
through activities beyond normal business.
The Company endeavours to make a positive and significant contribution to the society by targeting social and cultural
issues, maintaining a humanitarian approach and focusing on areas in and around its plants and where its establishments
are located.
The Company would continue to carry out CSR activities as it has been carrying out over the years in the areas of
Environment, Health, Education and Community Development. In particular, the Company will undertake CSR activities
as specified in Schedule VII to the Companies Act, 2013 (including any amendments to Schedule VII and any other
activities specified by the Government through its notifications and circulars) as follows :
1. Eradicating hunger, poverty and malnutrition, promoting preventive health care and sanitation, including contribution
to the Swach Bharat Kosh set up by the Central Government for the promotion of sanitation and making available
safe drinking water;
2. Promoting education, including special education and employment enhancing vocational skills especially among
children, women, elderly and the differently abled and livelihood enhancement projects;
3. Promoting gender equality, empowering women, setting up homes and hostels for women and orphans, setting up
old age homes, day care centres and such other facilities for senior citizens and measures for reducing inequalities
faced by socially and economically backward groups;
4. Ensuring environmental sustainability, ecological balance, protection of flora and fauna, animal welfare, agro forestry,
conservation of natural resources and maintaining quality of soil, air and water including contribution to the Clean
Ganga Fund set up by the Central Government for rejuvenation of river Ganga;
5. Protection of national heritage, art and culture including restoration of buildings and sites of historical importance
and works of art; setting up public libraries; promotion and development of traditional art and handicrafts;
6. Measures for the benefit of armed forces veterans, war widows and their dependents;
7. Training to promote rural sports, nationally recognized sports, paralympic sports and Olympic sports;
8. Contribution to the Prime Minister’s National Relief Fund or any other fund set up by the Central Government for
socio-economic development and relief and welfare of the scheduled castes, the scheduled tribes, other backward
classes, minorities and women;
9. Contributions or funds provided to technology incubators located within academic institutions which are approved
by the Central Government;
CSR activities will be undertaken either by the Company itself or through a Trust/Section 8 Company to be established
by the Company or through any other Trust engaged in similar projects and activities. The Company may also collaborate
with other companies to carry out its CSR activities.
38
Kansai Nerolac Paints Limited • Annual Report 2017-2018
Sr. CSR Project / Sector in which Location of Projects / Amount Outlay Actual Amount Cumulative Actual Amount
No. Activity Project is covered Programs (Budget) Spent on the Expenditure Spent : Direct
Project or Projects or Upto the or through
Program Wise Programs Reporting Agency
(` in Lacs) (` in Lacs) Period (` in Lacs)
(` in Lacs)
A. 1. Basic Training in Painting Livelihood & Skill In various States such as Bihar, 30.00 23.56 23.56 23.56
to the unemployed youth Enhancement Gujarat, Jharkhand, Maharashtra,
Program Karnataka, Madhya Pradesh,
Tamil Nadu, Uttar Pradesh,
Uttarakhand, West Bengal
2. Advanced Open Training Livelihood & Skill In various states such as Punjab, 600.00 636.87 636.87 636.87
in Painting Enhancement Madhya Pradesh, Kerala,
Program Karnataka, Gujarat, Rajasthan,
Andhra Pradesh, Delhi, Goa,
Puducherry,
Tamil Nadu, Maharashtra,
Telangana, U.P., Bihar, Odisha,
Uttarakhand, Haryana, Assam,
Himachal Pradesh, Chhatisgarh,
J&K, Jharkhand, West Bengal
3. Creation of Model Livelihood & Skill Hosur, Tamil Nadu 20.00 5.00 5.00 5.00
Training Centre with Enhancement
NSDC Program
Sub-total 650.00 665.43 665.43 665.43
B. 1. Health Camp for Preventive Health Bawal 3.00 1.20 1.20 1.20
villagers Care & Sanitation
2. Providing Dust Bins Preventive Health Bawal 1.00 0.68 0.68 0.68
in village for Waste Care & Sanitation
collection
3. AIDS Awareness Activity Preventive Health Bawal 1.00 0.15 0.15 0.15
Care & Sanitation
4. Health Camps for Preventive Health Hosur 3.00 2.56 2.56 2.56
villagers Care & Sanitation
5. Construction of Girls Preventive Health Hosur 4.00 3.50 3.50 3.50
Toilet in High School Care & Sanitation
6. Health Camps for Preventive Health Lote 2.00 1.94 1.94 1.94
villagers in Awashi, Care & Sanitation
Pir Lote
7. Deep Freezers to Govt. Preventive Health Lote 6.00 4.53 4.53 4.53
of Maharashtra’s AIDS Care & Sanitation
Control Society
8. Health Camps for Preventive Health Jainpur 3.00 2.70 2.70 2.70
villagers Care & Sanitation
9. Construction of Toilets Preventive Health Jainpur 5.00 4.15 4.15 4.15
and Urinals in Deaf and Care & Sanitation
Dumb School
10. Health Camp for Preventive Health Sayakha 1.00 0.90 0.90 0.90
villagers Care & Sanitation
11. Construction of Girls’ Preventive Health Goindwal Sahib 5.00 5.72 5.72 5.72
Toilets in Secondary Care & Sanitation
School
12. Health camps near Preventive Health In 26 cities such as Bangalore, 25.00 18.96 18.96 18.96
Depots Care & Sanitation Gulbarga, Hyderabad, Chennai,
Indore, Akola, Nagpur, Muzaffarpur,
Durgapur, Faridabad, Raipur etc.
13. Activities under Swachh Preventive Health In various states such as Punjab, 130.00 138.15 138.15 138.15
Bharat Abhiyan Care & Sanitation Madhya Pradesh, Kerala,
Karnataka, Gujarat, Rajasthan,
Andhra Pradesh, Delhi, Goa,
Puducherry, Tamil Nadu,
Maharashtra, Telangana, U.P., Bihar,
Odisha, Uttarakhand, Haryana,
Assam, Himachal Pradesh,
Chhatisgarh, J&K, Jharkhand, West
Bengal
Sub-total 189.00 185.14 185.14 185.14
39
Kansai Nerolac Paints Limited • Annual Report 2017-2018
Sr. CSR Project / Sector in which Location of Projects / Amount Outlay Actual Amount Cumulative Actual Amount
No. Activity Project is covered Programs (Budget) Spent on the Expenditure Spent : Direct
Project or Projects or Upto the or through
Program Wise Programs Reporting Agency
(` in Lacs) (` in Lacs) Period (` in Lacs)
(` in Lacs)
3. Provision of Solar lights Rural Development / Hosur 2.00 1.35 1.35 1.35
in the road sides in Community
Kothur village Development
4. Road repairing with Rural Development / Hosur 3.00 20.04 20.04 20.04
Paver Blocks for villagers Community
in Moranapalli Development
5. Bus Pick up Sheds Rural Development / Lote 10.00 8.53 8.53 8.53
in Shivtar Khindwadi, Community
Gunade Tambad Wadi, Development
Saveni and Mani villages
6. Assistance for Pipeline Rural Development / Lote 6.00 6.00 6.00 6.00
and pumps in Sakhar Community
village. Development
8. Passengers Bus shed at Rural Development / Jainpur 5.00 3.75 3.75 3.75
Kanpur road bus stand Community
Development
10. Bus Shelter in Aragama Rural Development / Sayakha 5.00 4.30 4.30 4.30
and Ankot villages Community
Development
11. Community Hall Rural Development / Sayakha 3.00 2.21 2.21 2.21
renovation in Aragama Community
Development
12. Development of Sports Rural Development / Sayakha 3.00 2.25 2.25 2.25
complex for rural youth in Community
Aragama Development
13. Providing Benches and Rural Development / Sayakha 1.00 1.03 1.03 1.03
other facilities for public Community
in Juned village Development
14. Boundary wall to the Rural Development / Sayakha 5.00 4.80 4.80 4.80
river to avoid flood Community
situation and other public Development
facilities in Vilayat village
15. Providing Public facilities Rural Development / Sayakha 1.00 0.70 0.70 0.70
near Police Station Community
Development
16. Development of Basic Rural Development / Mumbai 12.00 10.13 10.13 10.13
Skills of youth Community
Development
17. Donation to Bhansali Rural Development / Mumbai 20.00 20.00 20.00 20.00
Trust, Mumbai Community
Development
40
Kansai Nerolac Paints Limited • Annual Report 2017-2018
Sr. CSR Project / Sector in which Location of Projects / Amount Outlay Actual Amount Cumulative Actual Amount
No. Activity Project is covered Programs (Budget) Spent on the Expenditure Spent : Direct
Project or Projects or Upto the or through
Program Wise Programs Reporting Agency
(` in Lacs) (` in Lacs) Period (` in Lacs)
(` in Lacs)
41
Kansai Nerolac Paints Limited • Annual Report 2017-2018
Sr. CSR Project / Sector in which Location of Projects / Amount Outlay Actual Amount Cumulative Actual Amount
No. Activity Project is covered Programs (Budget) Spent on the Expenditure Spent : Direct
Project or Projects or Upto the or through
Program Wise Programs Reporting Agency
(` in Lacs) (` in Lacs) Period (` in Lacs)
(` in Lacs)
42
Kansai Nerolac Paints Limited • Annual Report 2017-2018
Remuneration for the purpose of the computation above in the case of Vice Chairman and Managing Director, Whole-time
Director and other Key Managerial Personnel (KMP) is considered as the income earned during the financial year 2017-18
which is reflected in the Income-tax Computation Sheet as “Gross Income” (inclusive of perquisites) together with the Company’s
Contribution to Provident Fund and Superannuation Fund. The remuneration to Mr. P. D. Chaudhari as shown above does not
include Gratuity and Leave encashment paid to him at the time of separation on 31st March, 2018.
# Almost the same as in Financial Year 2016-17.
* Mr. M. Tanaka, Mr. H. Furukawa and Mr. K. Kato did not receive any sitting fees for attending Board Meetings, nor were they
paid any commission.
@ Mr. D. M. Kothari was the Vice Chairman of the Company upto close of business on 2nd May, 2017.
Mr. H. M. Bharuka was Managing Director of the Company upto 2nd May, 2017. He was designated as Vice Chairman and
Managing Director with effect from 3rd May, 2017.
43
Kansai Nerolac Paints Limited • Annual Report 2017-2018
(iii) The Median Remuneration of Employees (MRE) of the Company is ` 6,37,967 for the Financial Year 2017-18.
The MRE for the year increased by 7.62% compared to the previous financial year.
(iv) The number of permanent employees on the rolls of the Company is 2861 as on March 31, 2018.
(v) Average percentage increase made in the salaries of employees other than key managerial personnel in
the last Financial Year was 7.43%. The percentage increase in remuneration of key managerial personnel
was 8.48%. The increase in remuneration is determined based on the performance by the employees of
the Company.
(vi) It is hereby affirmed that the remuneration paid is as per the Remuneration Policy of the Company.
2. Statement pursuant to Section 197(12) of the Companies Act, 2013 read with Rule 5(2) of the Companies
(Appointment and Remuneration of Managerial Personnel) Rules, 2014.
Sr. Name Designation / Remu- Qualification Experi- Date of Age Last Employment Held
No. Nature of Duties neration ence Commence- (in
(`) (in ment of years) Name of the Designation held
years) Employment Employer
(A) Employed throughout the Financial Year under review and in receipt of remuneration for the Financial Year in the aggregate of not less than ` 1,02,00,000 per annum.
1. Mr. H. M. Bharuka Vice Chairman and 6,00,60,417 B.Com., AICWA 37 01.10.1985 57 Rohit Pulp and Manager – Costing
Managing Director Paper Mills Ltd.
2. Mr. P. D. Chaudhari Executive Director – 1,94,78,600 B.E., MMS 25 14.06.1993 49 Bharat Bijlee Ltd. Graduate
Manufacturing & Apprentice
Technical
3. Mr. Anuj Jain Director – Decorative 1,25,37,800 B.Sc., MMS 27 04.06.1990 49 First Employment –
and Industrial Sales (Mktg.)
& Marketing
(B) Employed for the part of the Financial Year under review and in receipt of remuneration at the rate of not less than ` 8,50,000/- per month : None.
Notes:
1. The appointment is as per the contract/letter of appointment. Other terms and conditions as per Company’s rules.
2. Remuneration as mentioned above comprises of Salary, Commission, Company’s contribution to Provident fund & Superannuation, House Rent Allowance, Leave
Travel Allowance and Other Perquisites and Allowances but excludes Gratuity. The remuneration to Mr. P. D. Chaudhari as shown above does not include Gratuity and
Leave encashment paid to him at the time of separation on 31st March, 2018.
3. There was no employee either throughout the financial year or part thereof who was in receipt of remuneration which in the aggregate was in excess of that drawn
by the Managing Director or Whole-time Director and who held by himself or alongwith his spouse or dependent children two percent of the Equity Shares of the
Company.
P. P. Shah
Mumbai, 2nd May, 2018 Chairman
44
Kansai Nerolac Paints Limited • Annual Report 2017-2018
As part of our agenda of migrating towards Renewable sources of Energy, both in Heat and Power, we have adopted
various measures which have helped increase our Green foot print, thereby reducing our dependency on fossil fuels
as well as keeping our Energy costs under control.
As a Technology upgrade, we have switched over conventional Metal Halide/CFL/FTL lighting systems to
Energy Efficient LED Lighting systems in continuation of the initiative taken in FY16-17. With this upgrade we
have accrued Energy cost savings of ` 50 Lacs in FY17-18.
(2) Steps taken by the Company for utilizing alternate sources of energy:
iii) Installation and commissioning of Captive Solar Power plants across locations.
Details as below:
Through this initiative, we have shifted our Resin process Steam demand on Biomass which was earlier
on High Speed Diesel. With this in place, the steam requirements for Resin processing are catered
through “Thermic Fluid Steam Generator” with Biomass as fuel thereby enhancing capacity utilization of
Biomass Heater as well as eliminating Diesel consumption in existing RX Boilers.
As part of this project we are now generating heat for Acrylic and CED Resin processing, through
Thermax operated Solid Fuel fired Heater VTRG 30 with Biomass as fuel which was earlier catered
through diesel fired TP-10 Thermopacs. This has helped in enhancing the capacity utilization of Biomass
Heater in turn eliminating the diesel consumption in existing 2 numbers TP-10 Thermopacs at Hosur.
iii) Captive Green Power through roof top Solar Power plant across locations:
We have installed and commissioned 2640 KW roof top Solar Power plants across manufacturing
locations. Through this, we will be generating around 39 Lacs units per annum through Solar Power
which is equivalent to around 14 Lacs kg of Carbon dioxide emissions reduction. Through this we have
reduced our dependency on Grid Power. Of the total power requirements across locations, we would now
cater around 13% of our Power requirements through Green Energy.
We have installed and commissioned SOLA TUBES across locations equivalent to 23 KW load, with
an approximate units generation of 8700 KWH/month. Through this we are utilizing Solar radiations for
meeting ware house/shop floor lighting loads, thereby reducing our dependency on Grid Power.
45
Kansai Nerolac Paints Limited • Annual Report 2017-2018
— Development of new products for Automotive, Performance Coatings and Decorative segments
— Green initiatives
2. The benefits derived like product improvement, cost reduction, product development or import substitution:
— Fast drying pigmented PU wood finish variants, Primer, Matt & Glossy, product
— High durable PU Monocoat system for tractor chassis & sheet metal parts
— Super Durable Stoving Top Coat for four wheeler & tractor industry
— Common low bake paint for metal and plastic for two wheeler industry
— Anti-carbonation coating
— Super durable coating for clean room partition based on dry-blending technology
— Rebar Coating
46
Kansai Nerolac Paints Limited • Annual Report 2017-2018
3.
In case of imported technology (imported during last three years reckoned from the beginning of the
financial year):
a. Details of technology imported
Particulars Year of Import
1. Monocoat metallic base coats successfully absorbed for two wheeler industry 2015-16
2. 1K Super Anti Corrosive Primer 2016-17
3. Acrylic and Epoxy RED CED 2016-17
4. Super Durable Aluminum Extrusion 2016-17
5. High Performance 3C-1B Primer 2017-18
6. Special 3210 Conductive Primer for four wheeler customers 2017-18
7. Resin for Monocoat Metallic Paint System 2017-18
b. Whether the technology has been fully absorbed: The same has been fully absorbed.
c. If not fully absorbed, areas where absorption has not taken place, and reasons thereof– The technology
has been fully absorbed.
(D) F
oreign Exchange earned in terms of actual inflows during the year and foreign exchange outgo during the
year in terms of actual outflows
Details of expenditure in foreign exchange are given in Notes 27.1 and 31.3 and earnings in foreign exchange are
given in Note 25.1 of Notes to Financial Statements.
P. P. Shah
Mumbai, 2nd May, 2018 Chairman
47
Kansai Nerolac Paints Limited • Annual Report 2017-2018
Sr. Name and Description of NIC Code of the Product/Service % to total turnover of the Company
No. main products/services
1. Paints 20221 100%
2. — — —
3. — — —
Sr. Name and Address of the CIN / GLN PAN Holding / % of Shares Applicable
No. Company Subsidiary / held Section
Associate
1. Kansai Paint Co. Ltd., Japan 1400-01-048243 AADCK0435B Holding 74.99 2(46)
6-14, Imabashi 2 – Chome, Chuo-Ku,
Osaka 541-8523, Japan.
2. KNP Japan Pvt. Ltd. (formerly known 20268/059/60 — Subsidiary 68.00 2(87)
as Kansai Paints Nepal Pvt. Ltd.)
Adarsh Nagar, Ward No. 13, Birganj,
Nepal-44301.
3. Kansai Paints Lanka (Private) Ltd. PV 107458 — Subsidiary 60.00 2(87)
No. 146, Dawson Street,
Colombo-02.
48
Kansai Nerolac Paints Limited • Annual Report 2017-2018
IV. SHAREHOLDING PATTERN: (Equity Share Capital Breakup as percentage of Total Equity)
i) Category-wise Shareholding:
Category of Shareholders No. of Shares held at the beginning of the year No. of Shares held at the end of the year % change
Demat Physical Total % of Total Demat Physical Total % of Total during the
Shares Shares year
A. Promoters
(1) Indian
(a) Individuals / Hindu Undivided Family — — — — — — — — —
(b)
Central Government — — — — — — — — —
State Government(s)
(c) — — — — — — — — —
(d)
Bodies Corporate — — — — — — — — —
(e) Financial Institutions / Banks — — — — — — — — —
(f) Any Other (Trust) — — — — — — — — —
Sub-total (A) (1):- — — — — — — — — —
(2) Foreign
(a) NRIs - Individuals — — — — — — — — —
(b) Other - Individuals — — — — — — — — —
Bodies Corporate.
(c) 40,41,35,898 0 40,41,35,898 74.99 40,41,35,898 0 40,41,35,898 74.99 0.00
(d)
Banks/FI — — — — — — — — —
(e) Qualified Foreign Investor — — — — — — — — —
(f) Any Other (specify) — — — — — — — — —
Sub-total (A) (2):- 40,41,35,898 0 40,41,35,898 74.99 40,41,35,898 0 40,41,35,898 74.99 0.00
Total Shareholding of Promoter
(A) = (A) (1) + (A) (2) 40,41,35,898 0 40,41,35,898 74.99 40,41,35,898 0 40,41,35,898 74.99 0.00
B. Public Shareholding
(1) Institutions
(a)
Mutual Funds 1,43,39,785 12,320 1,43,52,105 2.66 2,38,73,937 13,150 2,38,87,087 4.43 1.77
(b) Financial Institutions / Banks 51,388 0 51,388 0.01 74,478 0 74,478 0.01 0.00
Central Government
(c) — — — — — — — — —
State Government(s)
(d) — — — — — — — — —
(e) Venture Capital Funds — — — — — — — — —
(f) Insurance Companies 2,50,12,564 0 2,50,12,564 4.64 2,51,95,166 0 2,51,95,166 4.68 0.04
(g) Foreign Institutional Investors 55,62,311 0 55,62,311 1.03 25,690 0 25,690 0.00 -1.03
(h) Foreign Venture Capital Funds — — — — — — — — —
(i) Foreign Portfolio Investors (Corporate) 3,36,68,608 0 3,36,68,608 6.25 3,32,58,702 0 3,32,58,702 6.17 -0.08
(i-1) Any Other (Alternate Investment Funds) 0 0 0 0.00 16,11,915 — 16,11,915 0.30 0.30
Sub-total (B) (1):- 7,86,34,656 12,320 7,86,46,976 14.59 8,40,39,888 13,150 8,40,53,038 15.60 1.01
(2) Non-Institutions
Bodies Corporate
(a)
(i) Indian 68,54,401 51,200 69,05,601 1.28 37,62,590 48,590 38,11,180 0.71 -0.57
(ii) Overseas — — — — — — — — —
(b) Individuals
Individual shareholders holding
(i)
nominal share capital upto ` 1 lakh 3,31,25,624 41,54,600 3,72,80,224 6.92 3,18,01,925 37,61,380 3,55,63,305 6.60 -0.32
(ii)
Individual shareholders holding
nominal share capital in excess of
` 1 lakh 78,26,841 3,02,840 81,29,681 1.51 82,36,855 3,02,840 85,39,695 1.58 0.07
(c) Any Other (specify)
(i) Non Resident Indians 13,76,573 22,400 13,98,973 0.26 13,84,346 22,400 14,06,746 0.26 0.00
(ii)
Overseas Corporate Bodies — — — — — — — — —
(iii)
Foreign Nationals — — — — — — — — —
Clearing Members
(iv) 8,41,709 0 8,41,709 0.16 5,89,704 0 5,89,704 0.11 -0.05
(v)
Trusts 5,07,386 0 5,07,386 0.09 4,00,719 0 4,00,719 0.07 -0.02
(vi)
Foreign Bodies — — — — — — — — —
(vii)
Unclaimed Suspense Account 3,12,150 0 3,12,150 0.06 2,69,730 0 2,69,730 0.05 -0.01
(viii)
NBFC’s 7,61,122 0 7,61,122 0.14 1,49,705 0 1,49,705 0.03 -0.11
Sub-total (B) (2):- 5,16,05,806 45,31,040 5,61,36,846 10.42 4,65,95,574 41,35,210 5,07,30,784 9.41 -1.01
Total Public Shareholding
(B) = (B) (1) + (B) (2) 13,02,40,462 45,43,360 13,47,83,822 25.01 13,06,35,462 41,48,360 13,47,83,822 25.01 0.00
C. Shares held by Custodians and against
which Depository Receipts have been issued — — — — — — — — —
Grand Total (A + B + C) 53,43,76,360 45,43,360 53,89,19,720 100.00 53,47,71,360 41,48,360 53,89,19,720 100.00 0.00
49
Kansai Nerolac Paints Limited • Annual Report 2017-2018
(iv) Shareholding Pattern of Top Ten Shareholders (other than Directors, Promoters and Holders of GDRs and ADRs):
Sr. No. Name of the Shareholders Shareholding at the beginning Cumulative Shareholding
of the year (01-04-2017) / At the during the year (01-04-2017
end of the year (31-03-2018) Increase/ to 31-03-2018)
Date Reason Decrease in
No. of Shares % of total Shareholding No. of Shares % of total
Shares of the Shares of the
Company Company
1. Aberdeen Asset Management –
Asia Limited
At the beginning of the year 1,67,34,630 3.11 01.04.2017 1,67,34,630 3.11
28.04.2017 Sale -5,56,000 1,61,78,630 3.00
05.05.2017 Sale -1,03,267 1,60,75,363 2.98
05.05.2017 Purchase 1,75,091 1,62,50,454 3.02
12.05.2017 Sale -42,733 1,62,07,721 3.01
12.05.2017 Purchase 1,24,909 1,63,32,630 3.03
19.05.2017 Sale -84,159 1,62,48,471 3.02
26.05.2017 Sale -1,294 1,62,47,177 3.01
09.06.2017 Sale -22,967 1,62,24,210 3.01
14.06.2017 Sale -11,580 1,62,12,630 3.01
23.06.2017 Sale -1,367 1,62,11,263 3.01
30.06.2017 Sale -1,356 1,62,09,907 3.01
07.07.2017 Sale -1,825 1,62,08,082 3.01
21.07.2017 Sale -1,90,000 1,60,18,082 2.97
04.08.2017 Sale -1,70,000 1,58,48,082 2.94
25.08.2017 Sale -58,607 1,57,89,475 2.93
01.09.2017 Sale -2,16,393 1,55,73,082 2.89
08.09.2017 Sale -59,100 1,55,13,982 2.88
15.09.2017 Sale -2,44,498 1,52,69,484 2.83
22.09.2017 Sale -1,41,373 1,51,28,111 2.81
29.09.2017 Sale -1,33,250 1,49,94,861 2.78
06.10.2017 Sale -3,25,377 1,46,69,484 2.72
27.10.2017 Sale -1,40,000 1,45,29,484 2.70
03.11.2017 Sale -2,55,000 1,42,74,484 2.65
01.12.2017 Sale -1,23,000 1,41,51,484 2.63
50
Kansai Nerolac Paints Limited • Annual Report 2017-2018
Sr. No. Name of the Shareholders Shareholding at the beginning Cumulative Shareholding
of the year (01-04-2017) / At the during the year (01-04-2017
end of the year (31-03-2018) Increase/ to 31-03-2018)
Date Reason Decrease in
No. of Shares % of total Shareholding No. of Shares % of total
Shares of the Shares of the
Company Company
08.12.2017 Sale -1,07,000 1,40,44,484 2.61
15.12.2017 Sale -3,04,637 1,37,39,847 2.55
22.12.2017 Sale -1,05,000 1,36,34,847 2.53
29.12.2017 Sale -1,47,300 1,34,87,547 2.50
05.01.2018 Sale -52,700 1,34,34,847 2.49
02.02.2018 Purchase 11,580 1,34,46,427 2.50
09.02.2018 Purchase 15,017 1,34,61,444 2.50
23.02.2018 Sale -4,041 1,34,57,403 2.50
23.02.2018 Purchase 9,974 1,34,67,377 2.50
02.03.2018 Sale -12,965 1,34,54,412 2.50
02.03.2018 Purchase 22,113 1,34,76,525 2.50
09.03.2018 Purchase 1,54,615 1,36,31,140 2.53
16.03.2018 Sale -10,160 1,36,20,980 2.53
23.03.2018 Sale -1,24,000 1,34,96,980 2.50
30.03.2018 Sale -3,26,000 1,31,70,980 2.44
31.03.2018 — 0 1,31,70,980 2.44
At the end of the year 1,31,70,980 2.44
2. Aditya Birla Sun Life Trustee
Private Limited Account
At the beginning of the year 54,87,131 1.02 01.04.2017 54,87,131 1.02
07.04.2017 Sale -69,850 54,17,281 1.01
07.04.2017 Purchase 69,850 54,87,131 1.02
12.05.2017 Purchase 55,000 55,42,131 1.03
09.06.2017 Purchase 20,000 55,62,131 1.03
16.06.2017 Purchase 34,000 55,96,131 1.04
28.07.2017 Purchase 4,94,500 60,90,631 1.13
04.08.2017 Sale -378 60,90,253 1.13
04.08.2017 Purchase 5,04,286 65,94,539 1.22
11.08.2017 Purchase 1,45,677 67,40,216 1.25
01.09.2017 Purchase 2,00,100 69,40,316 1.29
08.09.2017 Purchase 4,38,300 73,78,616 1.37
15.09.2017 Sale -11,140 73,67,476 1.37
15.09.2017 Purchase 11,140 73,78,616 1.37
17.11.2017 Purchase 5,04,000 78,82,616 1.46
24.11.2017 Purchase 2,02,500 80,85,116 1.50
01.12.2017 Sale -564 80,84,552 1.50
22.12.2017 Purchase 2,33,000 83,17,552 1.54
05.01.2018 Purchase 1,55,469 84,73,021 1.57
12.01.2018 Sale -336 84,72,685 1.57
12.01.2018 Purchase 336 84,73,021 1.57
02.02.2018 Sale -2,36,300 82,36,721 1.53
09.02.2018 Sale -40,500 81,96,221 1.52
09.02.2018 Purchase 2,77,006 84,73,227 1.57
30.03.2018 Purchase 75,000 85,48,227 1.59
31.03.2018 — 0 85,48,227 1.59
At the end of the year 85,48,227 1.59
51
Kansai Nerolac Paints Limited • Annual Report 2017-2018
Sr. No. Name of the Shareholders Shareholding at the beginning Cumulative Shareholding
of the year (01-04-2017) / At the during the year (01-04-2017
end of the year (31-03-2018) Increase/ to 31-03-2018)
Date Reason Decrease in
No. of Shares % of total Shareholding No. of Shares % of total
Shares of the Shares of the
Company Company
52
Kansai Nerolac Paints Limited • Annual Report 2017-2018
Sr. No. Name of the Shareholders Shareholding at the beginning Cumulative Shareholding
of the year (01-04-2017) / At the during the year (01-04-2017
end of the year (31-03-2018) Increase/ to 31-03-2018)
Date Reason Decrease in
No. of Shares % of total Shareholding No. of Shares % of total
Shares of the Shares of the
Company Company
08.12.2017 Sale -98,255 91,02,247 1.69
53
Kansai Nerolac Paints Limited • Annual Report 2017-2018
Sr. No. Name of the Shareholders Shareholding at the beginning Cumulative Shareholding
of the year (01-04-2017) / At the during the year (01-04-2017
end of the year (31-03-2018) Increase/ to 31-03-2018)
Date Reason Decrease in
No. of Shares % of total Shareholding No. of Shares % of total
Shares of the Shares of the
Company Company
5. HDFC Standard Life Insurance
Company Limited
At the beginning of the year 30,33,881 0.56 01.04.2017 30,33,881 0.56
07.04.2017 Purchase 1,02,251 31,36,132 0.58
14.04.2017 Sale -1,466 31,34,666 0.58
21.04.2017 Sale -350 31,34,316 0.58
28.04.2017 Sale -1,003 31,33,313 0.58
05.05.2017 Purchase 50,000 31,83,313 0.59
12.05.2017 Purchase 3,68,674 35,51,987 0.66
19.05.2017 Purchase 3,904 35,55,891 0.66
26.05.2017 Sale -35,55,891 0 0.00
26.05.2017 Purchase 35,83,830 35,83,830 0.67
09.06.2017 Purchase 2,647 35,86,477 0.67
16.06.2017 Purchase 11,608 35,98,085 0.67
21.06.2017 Purchase 54 35,98,139 0.67
14.07.2017 Sale -23,839 35,74,300 0.66
21.07.2017 Sale -450 35,73,850 0.66
21.07.2017 Purchase 4,902 35,78,752 0.66
18.08.2017 Purchase 7,113 35,85,865 0.67
25.08.2017 Purchase 1,350 35,87,215 0.67
01.09.2017 Sale -1,050 35,86,165 0.67
08.09.2017 Purchase 250 35,86,415 0.67
15.09.2017 Purchase 1,02,666 36,89,081 0.68
22.09.2017 Purchase 25,472 37,14,553 0.69
29.09.2017 Purchase 24,700 37,39,253 0.69
06.10.2017 Purchase 1,75,000 39,14,253 0.73
13.10.2017 Purchase 2,50,000 41,64,253 0.77
20.10.2017 Sale -28,981 41,35,272 0.77
03.11.2017 Sale -540 41,34,732 0.77
10.11.2017 Purchase 62,840 41,97,572 0.78
17.11.2017 Purchase 11,960 42,09,532 0.78
24.11.2017 Purchase 25,012 42,34,544 0.79
15.12.2017 Purchase 49,911 42,84,455 0.80
22.12.2017 Purchase 50,077 43,34,532 0.80
05.01.2018 Purchase 35,409 43,69,941 0.81
26.01.2018 Purchase 87,083 44,57,024 0.83
02.02.2018 Purchase 99,213 45,56,237 0.85
09.02.2018 Purchase 16,017 45,72,254 0.85
23.02.2018 Purchase 29,981 46,02,235 0.85
02.03.2018 Purchase 19,005 46,21,240 0.86
09.03.2018 Purchase 25,000 46,46,240 0.86
16.03.2018 Purchase 20,000 46,66,240 0.87
23.03.2018 Purchase 30,000 46,96,240 0.87
30.03.2018 Purchase 75,000 47,71,240 0.89
31.03.2018 — 0 47,71,240 0.89
54
Kansai Nerolac Paints Limited • Annual Report 2017-2018
Sr. No. Name of the Shareholders Shareholding at the beginning Cumulative Shareholding
of the year (01-04-2017) / At the during the year (01-04-2017
end of the year (31-03-2018) Increase/ to 31-03-2018)
Date Reason Decrease in
No. of Shares % of total Shareholding No. of Shares % of total
Shares of the Shares of the
Company Company
6. Franklin Templeton Mutual Fund
Account
At the beginning of the year 28,21,373 0.52 01.04.2017 28,21,373 0.52
05.05.2017 Purchase 1,00,000 29,21,373 0.54
19.01.2018 Purchase 4,27,251 33,48,624 0.62
26.01.2018 Purchase 1,73,207 35,21,831 0.65
02.02.2018 Purchase 5,41,109 40,62,940 0.75
16.03.2018 Purchase 1,14,213 41,77,153 0.78
23.03.2018 Purchase 22,117 41,99,270 0.78
30.03.2018 Purchase 25,000 42,24,270 0.78
31.03.2018 — 0 42,24,270 0.78
At the end of the year 42,24,270 0.78
7. The Oriental Insurance
Company Limited
At the beginning of the year 43,10,416 0.80 01.04.2017 43,10,416 0.80
07.04.2017 Sale -27,500 42,82,916 0.79
14.04.2017 Sale -35,121 42,47,795 0.79
21.04.2017 Sale -12,379 42,35,416 0.79
28.04.2017 Sale -40,176 41,95,240 0.78
05.05.2017 Sale -32,324 41,62,916 0.77
12.05.2017 Sale -37,500 41,25,416 0.77
19.05.2017 Sale -10,000 41,15,416 0.76
02.06.2017 Sale -9,000 41,06,416 0.76
09.06.2017 Sale -46,039 40,60,377 0.75
14.06.2017 Sale -29,961 40,30,416 0.75
16.06.2017 Sale -12,869 40,17,547 0.75
21.06.2017 Sale -23,947 39,93,600 0.74
23.06.2017 Sale -13,000 39,80,600 0.74
30.06.2017 Sale -40,184 39,40,416 0.73
07.07.2017 Sale -26,164 39,14,252 0.73
14.07.2017 Sale -46,131 38,68,121 0.72
21.07.2017 Sale -49,705 38,18,416 0.71
28.07.2017 Sale -52,717 37,65,699 0.70
04.08.2017 Sale -50,076 37,15,623 0.69
11.08.2017 Sale -10,000 37,05,623 0.69
18.08.2017 Sale -15,000 36,90,623 0.68
25.08.2017 Sale -3,938 36,86,685 0.68
22.09.2017 Sale -20,751 36,65,934 0.68
06.10.2017 Sale -26,093 36,39,841 0.68
13.10.2017 Sale -33,907 36,05,934 0.67
20.10.2017 Sale -20,000 35,85,934 0.67
27.10.2017 Sale -3,551 35,82,383 0.66
03.11.2017 Sale -15,181 35,67,202 0.66
10.11.2017 Sale -20,000 35,47,202 0.66
17.11.2017 Sale -22,189 35,25,013 0.65
24.11.2017 Sale -22,811 35,02,202 0.65
01.12.2017 Sale -17,500 34,84,702 0.65
55
Kansai Nerolac Paints Limited • Annual Report 2017-2018
Sr. No. Name of the Shareholders Shareholding at the beginning Cumulative Shareholding
of the year (01-04-2017) / At the during the year (01-04-2017
end of the year (31-03-2018) Increase/ to 31-03-2018)
Date Reason Decrease in
No. of Shares % of total Shareholding No. of Shares % of total
Shares of the Shares of the
Company Company
08.12.2017 Sale -41,000 34,43,702 0.64
15.12.2017 Sale -35,534 34,08,168 0.63
22.12.2017 Sale -28,466 33,79,702 0.63
29.12.2017 Sale -19,935 33,59,767 0.62
05.01.2018 Sale -5,065 33,54,702 0.62
12.01.2018 Sale -19,910 33,34,792 0.62
19.01.2018 Sale -689 33,34,103 0.62
02.03.2018 Sale -45,000 32,89,103 0.61
09.03.2018 Sale -8,000 32,81,103 0.61
16.03.2018 Sale -67,000 32,14,103 0.60
23.03.2018 Sale -15,000 31,99,103 0.59
30.03.2018 Sale -65,000 31,34,103 0.58
31.03.2018 — 0 31,34,103 0.58
At the end of the year 31,34,103 0.58
8. General Insurance Corporation
Of India
At the beginning of the year 32,50,000 0.60 01.04.2017 32,50,000 0.60
26.05.2017 Sale -17,859 32,32,141 0.60
02.06.2017 Sale -32,141 32,00,000 0.59
10.11.2017 Sale -50,000 31,50,000 0.58
02.03.2018 Sale -50,000 31,00,000 0.58
16.03.2018 Sale -1,00,000 30,00,000 0.56
31.03.2018 — 0 30,00,000 0.56
At the end of the year 30,00,000 0.56
9. DSP Blackrock Equity Fund
At the beginning of the year 11,01,615 0.20 01.04.2017 11,01,615 0.20
07.04.2017 Purchase 2,75,000 13,76,615 0.26
28.04.2017 Purchase 27,539 14,04,154 0.26
05.05.2017 Purchase 1,26,570 15,30,724 0.28
26.05.2017 Purchase 54,093 15,84,817 0.29
02.06.2017 Purchase 30 15,84,847 0.29
30.06.2017 Purchase 55,629 16,40,476 0.30
07.07.2017 Purchase 36,148 16,76,624 0.31
01.09.2017 Sale -50,865 16,25,759 0.30
10.11.2017 Purchase 50,000 16,75,759 0.31
24.11.2017 Purchase 86,532 17,62,291 0.33
01.12.2017 Purchase 2,28,984 19,91,275 0.37
08.12.2017 Purchase 5,74,480 25,65,755 0.48
15.12.2017 Purchase 40,873 26,06,628 0.48
31.03.2018 — 0 26,06,628 0.48
At the end of the year 26,06,628 0.48
10. Carnegie Indienfond 01.04.2017 19,91,530 0.37
At the beginning of the year 19,91,530 0.37 22.12.2017 Sale -18,865 19,72,665 0.37
31.03.2018 — 0 19,72,665 0.37
At the end of the year 19,72,665 0.37
56
Kansai Nerolac Paints Limited • Annual Report 2017-2018
Note: There is no shareholding in the Company by any other Director or Key Managerial Personnel.
V. INDEBTEDNESS:
Indebtedness of the Company including interest outstanding / accrued but not due for payment
(` in Crores)
Sr.
Particulars of Remuneration Name of the MD / WTD / Manager Total Amount
No.
H. M. Bharuka P. D. Chaudhari
1. Gross Salary:
(a) Salary as per provisions contained in Section 17(1) of the Income Tax Act,1961 270.70 101.25 371.95
(b) Value of Perquisites u/s.17(2) of the Income Tax Act, 1961 0.40 0.40 0.80
(c) Profits in lieu of Salary u/s.17(3) of the Income Tax Act, 1961 0.00 0.00 0.00
2. Stock Option 0.00 0.00 0.00
3. Sweat Equity 0.00 0.00 0.00
4. Commission:
— as % of Profit 280.00 77.00 357.00
— others (specify) 0.00 0.00 0.00
5. Others, please specify:
Employer’s contribution to Provident Fund & Superannuation Fund 49.50 16.14 65.64
Total (A) 600.60 194.79 795.39
Ceiling as per the Act 3,782.85 3,782.85 7,565.70
57
Kansai Nerolac Paints Limited • Annual Report 2017-2018
Name of Directors
Sr.
Particulars of Remuneration Total Amount
No.
P. P. Shah D. M. Kothari N. N. Tata B. Somaya
1. Independent Directors
Fee for Attending Board / Committee Meetings 1.30 0.30 1.40 0.70 3.70
Commission 35.00 50.00 30.00 15.00 130.00
Others, specify — — — — —
Total (1) 36.30 50.30 31.40 15.70 133.70
2. Other Non-Executive Directors
Fee for Attending Board / Committee Meetings — — — — —
Commission — — — — —
Others, specify — — — — —
Total (2) — — — — —
Total B = 1 + 2 36.30 50.30 31.40 15.70 133.70
Total Managerial Remuneration (A) + (B) 929.09
C. Remuneration To Key Managerial Personnel other than Managing Director / Manager / Whole-time Director:
(` in Lacs)
Sr.
Particulars of Remuneration Key Managerial Personnel Total Amount
No.
Company CFO
Secretary
1. Gross Salary:
a) Salary as per provisions contained in Section 17(1) of the Income Tax Act,1961 45.64 74.39 120.03
b) Value of Perquisites u/s. 17(2) of the Income Tax Act, 1961 1.02 0.28 1.30
c) Profits in lieu of Salary u/s.17(3) of the Income Tax Act, 1961 — — —
2. Stock Option — —
3. Sweat Equity — — —
4. Commission:
— as % of Profit — — —
— others (specify) — — —
5. Others, please specify:
Employer’s contribution to Provident Fund & Superannuation Fund 3.51 3.89 7.40
Total 50.17 78.56 128.73
P. P. Shah
Mumbai, 2nd May, 2018 Chairman
58
Kansai Nerolac Paints Limited • Annual Report 2017-2018
Form No. MR - 3
SECRETARIAL AUDIT REPORT
FOR THE FINANCIAL YEAR ENDED 31st MARCH, 2018
[Pursuant to Section 204(1) of the Companies Act, 2013 and Rule No. 9 of the Companies
(Appointment and Remuneration of Managerial Personnel) Rules, 2014]
The Members,
Kansai Nerolac Paints Limited
Nerolac House, Ganpatrao Kadam Marg,
Lower Parel, Mumbai - 400 013
We have conducted the Secretarial Audit of the compliance of applicable statutory provisions and the adherence to
good corporate practices by Kansai Nerolac Paints Limited (hereinafter called ‘the Company’). Secretarial Audit was
conducted in a manner that provided us a reasonable basis for evaluating the corporate conducts/statutory compliances
and expressing our opinion thereon.
Based on our verification of the Company’s books, papers, minute books, forms and returns filed and other records
maintained by the Company and also the information provided by the Company, its officers, agents and authorised
representatives during the conduct of Secretarial Audit, we hereby report that in our opinion, the Company has during
the audit period covering the financial year ended on 31st March, 2018, complied with the statutory provisions listed
hereunder and also that the Company has proper Board-processes and compliance-mechanism in place to the extent,
in the manner and subject to the reporting made hereinafter:-
We have examined the books, papers, registers, minute books, forms and returns filed and other records maintained by
the Company if any for the financial year ended on 31st March, 2018 according to the provisions of:
i. The Companies Act, 2013 (the Act) and the rules made thereunder;
ii. The Securities Contracts (Regulation) Act, 1956 (‘SCRA’) and the rules made thereunder;
iii. The Depositories Act, 1996 and the Regulations and Bye-laws framed thereunder;
iv. Foreign Exchange Management Act, 1999 and the rules and regulations made thereunder to the extent of Foreign
Direct Investment, and Overseas Direct Investment.
v. The following Regulations and Guidelines prescribed under the Securities and Exchange Board of India Act, 1992
(‘SEBI Act’):-
a. The Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 2011;
b. The Securities and Exchange Board of India (Prohibition of Insider Trading) Regulations, 1992;
c. The Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations,
2009; (Not applicable to the Company during audit period)
d. The Securities and Exchange Board of India (Employee Stock Option Scheme and Employee Stock Purchase
Scheme) Guidelines, 1999 / Securities and Exchange Board of India (Share Based Employee Benefits)
Regulations, 2014; (Not applicable to the Company during audit period)
e. The Securities and Exchange Board of India (Issue and Listing of Debt Securities) Regulations, 2008;
(Not applicable to the Company during audit period)
f. The Securities and Exchange Board of India (Registrars to an Issue and Share Transfer Agents) Regulations,
1993 regarding the Companies Act and dealing with client;
g. The Securities and Exchange Board of India (Delisting of Equity Shares) Regulations, 2009; (Not applicable
to the Company during audit period)
h. The Securities and Exchange Board of India (Buyback of Securities) Regulations, 1998; (Not applicable to the
Company during audit period)
i. SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015.
vi. There are no laws which specifically apply to the type of activities undertaken by the Company.
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Kansai Nerolac Paints Limited • Annual Report 2017-2018
We have also examined compliance with the applicable clauses of the following:
(i) Secretarial Standards issued by The Institute of Company Secretaries of India as in force from time to time.
(ii) The Listing Agreements entered into by the Company with National Stock Exchange of India Limited and BSE
Limited.
During the period under review the Company has complied with the provisions of the Act, Rules, Regulations and
Guidelines, etc. mentioned above.
We further report that:-
The Board of Directors of the Company is duly constituted with proper balance of Executive Directors, Non-Executive
Directors and Independent Directors. There was no change in the Composition of the Board of Directors during the audit
period.
Adequate notice of at least seven days was given to all Directors to schedule the Board Meetings, agenda and detailed
notes on agenda were sent at least seven days in advance, and a system exists for seeking and obtaining further
information and clarifications on the agenda items before the meeting and for meaningful participation at the meeting.
Majority decision was carried through while the dissenting members’ views (if any) are captured and recorded as part of
the minutes.
We further report that there are adequate systems and processes in the Company commensurate with the
size and operations of the Company to monitor and ensure compliance with applicable laws, rules, regulations
and guidelines.
For JHR & Associates
Company Secretaries
J. H. Ranade
Place: Thane (Partner)
Date: 30th April, 2018 FCS: 4317, CP: 2520
The Members,
Kansai Nerolac Paints Limited
Nerolac House, Ganpatrao Kadam Marg,
Lower Parel, Mumbai - 400 013
Our Secretarial Audit Report of even date for financial year 2017-18 is to be read along with this letter.
1. It is the responsibility of the management of the Company to maintain secretarial records, devise proper systems
to ensure compliance with the provisions of all applicable laws and regulations and to ensure that the systems are
adequate and operate effectively.
2. Our responsibility is to express an opinion on these secretarial records, systems and procedures based on our audit.
3. Wherever required, we have obtained the management’s representation about the compliance of laws, rules and
regulations and happening of events etc.
4. The Secretarial Audit Report is neither an assurance as to the future viability of the Company nor of the efficacy or
effectiveness with which the management has conducted the affairs of the Company.
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Kansai Nerolac Paints Limited • Annual Report 2017-2018
Pursuant to Schedule V (C) of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, a Report
on Corporate Governance is given below:
2. Board of Directors
The strength of Board as on 31st March, 2018 is eight Directors. The Board comprises of Executive and
Non‑Executive Directors. The Managing Director and a Whole-time Director are the two Executive Directors.
There are six Non-Executive Directors, of which three Directors, including the Chairman, are Independent
Directors. The Board also consists of one Woman Independent Director. The number of Independent Directors on
the Board is in conformity with the requirement of Regulation 17(1)(b) of SEBI (Listing Obligations and Disclosure
Requirements) Regulations, 2015. Three Non-Executive Directors namely, Mr. M. Tanaka, Mr. H. Furukawa and
Mr. K. Kato are nominees of Kansai Paint Co. Ltd., Japan, Promoter Company.
Five Board Meetings were held during the year ended 31st March, 2018, i.e. on 2nd May, 2017, 20th July, 2017,
16th October, 2017, 19th January, 2018 and 9th March, 2018.
@ Mr. D. M. Kothari retired from the Board of Directors of the Company with effect from the close of business
on 2nd May, 2017.
# Mr. P. D. Chaudhari resigned from the Board of Directors of the Company with effect from the close of
business on 31st March, 2018.
Every Director has personally attended at least one Board/Committee of Directors’ Meeting in the financial
year 2017-18.
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Kansai Nerolac Paints Limited • Annual Report 2017-2018
Certificates have also been obtained from the Independent Directors confirming their position as Independent
Directors on the Board of the Company in accordance with Section 149 of the Companies Act, 2013 read with
Regulation 16(1)(b) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.
Number of Board of Directors or Board Committees other than Kansai Nerolac Paints Limited in which the Director
is a Chairman / Member (excluding private limited companies, foreign companies and companies registered under
section 8 of the Companies Act, 2013) as on 31st March, 2018, is as follows:
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Kansai Nerolac Paints Limited • Annual Report 2017-2018
Access to information
The Directors, including independent directors, visit the various manufacturing locations of the Company. They are
not necessarily accompanied by the Managing Director. The purpose is to ensure that the independent directors
have free and independent access to the Company’s officials and records, so that they can form an independent
opinion about the state of affairs of the Company.
Apart from this, reports of the audit carried out by the internal auditors and the statutory auditors are circulated
to all the directors. Independent audits are also carried out by the parent company, Kansai Paint’s auditors.
Monthly Performance Report is also forwarded to the Chairman updating him with the performance on various parameters.
It is ensured that the Board receives qualitative and quantitative information in line with the best management
practices adopted.
The familiarization programme for our Directors is also given on the website https://nerolac.com/financial/policies.html.
Code of Conduct for Board of Directors and Senior Management
The Company has adopted a Code of Conduct for Board of Directors and Senior Management (the Code).
The Code has been communicated to the Directors and the members of Senior Management. The Code has
also been posted on the Company’s website at www.nerolac.com. All Board members and senior management
have confirmed compliance with the Code for the year ended 31st March, 2018. The Annual Report contains a
declaration to this effect signed by the Managing Director who is the Chief Executive Officer.
3.
Audit Committee
The Audit Committee acts in accordance with the terms of reference specified by the Board which includes the
recommendation for appointment, remuneration and terms of appointment of auditors of the Company, review and
monitor the auditor’s independence and performance and effectiveness of the audit process, examination of the
financial statements and the auditor’s report thereon, approval or any subsequent modification of transactions of
the Company with related parties, scrutiny of inter-corporate loans and investments, valuation of undertakings or
assets of the Company wherever it is necessary, evaluation of internal financial controls and risk management
systems, monitoring the end use of funds raised through public offers and related matters.
The members of the Audit Committee are Mr. Pradip P. Shah, Mr. N. N. Tata and Mrs. Brinda Somaya.
All the members of the Audit Committee are Non-Executive and Independent Directors. All the members possess
sound knowledge of accounts, audit, financial management expertise, etc.
Mr. Pradip P. Shah is the Chairman of the Audit Committee.
Mr. Pradip P. Shah, Chairman of the Audit Committee, was present at the last Annual General Meeting held on
21st June, 2017.
Mr. G. T. Govindarajan, Company Secretary acts as the Secretary to the Audit Committee.
There were four meetings of the Audit Committee during the year ended 31st March, 2018, i.e. on 2nd May, 2017,
20th July, 2017, 16th October, 2017 and 19th January, 2018.
Name of the Director Number of Audit Committee Meetings attended during
the year ended 31st March, 2018
Mr. P. P. Shah 4
Mr. N. N. Tata 4
Mrs. Brinda Somaya 2
(Member of the Committee from 3rd May, 2017)
Mr. D. M. Kothari 1
(Member of the Committee upto 2nd May, 2017)
Besides this, another meeting of the Audit Committee was held on 2nd May, 2018 at which meeting the Audited
Annual Accounts for the year ended 31st March, 2018, were placed before the Committee for consideration.
The Internal Auditor and the representatives of the Statutory Auditors also attend the Audit Committee meetings,
besides the executives invited by the Audit Committee to be present thereat.
The Internal Auditors report directly to the Audit Committee.
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Kansai Nerolac Paints Limited • Annual Report 2017-2018
5. Remuneration of Directors
The Company has adopted a Remuneration Policy for its Directors, Key Managerial Personnel and other
employees. The Remuneration Policy has laid down the criteria for determining qualifications, positive attributes,
independence of Director and Board diversity. The Policy lays down the factors for determining remuneration of
Whole time Directors, Non-Executive Directors, Key Managerial Personnel and other employees. The policy also
lays down the evaluation criteria of the Independent Directors and the Board.
The Nomination and Remuneration Committee decides the remuneration for the Whole-time Directors.
Remuneration Policy:
A. Remuneration to Whole-time Directors:
The remuneration paid to Whole-time Directors is subject to the limits laid down under Section 197 and
Schedule V to the Companies Act, 2013, and in accordance with the terms of appointment approved
by the Shareholders of the Company. The remuneration of the Whole-time Directors is determined by
the Nomination & Remuneration Committee based on factors such as the Company’s performance and
performance/track record of the Whole-time Directors. The remuneration consists of Salary, Commission,
Company’s contribution to Provident Fund and Superannuation Fund, House Rent Allowance (HRA),
Leave Travel Allowance (LTA) and other perquisites and allowances in accordance with the rules of the
Company, applicable from time to time.
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Kansai Nerolac Paints Limited • Annual Report 2017-2018
The Whole-time Directors are not paid any sitting fees for attending the meetings of the Board of
Directors or Committees thereof.
The Agreement with the Whole-time Director is for a period not exceeding five years at a time. In
the event that there is no breach of the terms of the Agreement by the Whole-time Director, but
the Company exercises the discretion to terminate his services during the term of his Agreement,
without assigning any reason therefor, then and in that event, the Whole-time Director shall be paid a
compensation in accordance with the provisions of the Companies Act, 2013.
Presently, the Company does not have a scheme for grant of stock options either to the Whole-time
Directors or employees.
The details of remuneration (including perquisites and allowances) as recommended by the Nomination &
Remuneration Committee and approved by the Board of Directors, for FY 2017-18 are as follows:
(` in lacs)
Break-up of Remuneration Mr. H. M. Bharuka Mr. P. D. Chaudhari
(Managing Director) (Whole-time Director)
Fixed Component
Salary 120.00 45.00
Company’s contribution
to Provident Fund and
Superannuation Fund (on Salary) 15.90 6.90
HRA, LTA and other perquisites 150.00 56.25
285.90 108.15
Variable Component
Commission 280.00 77.00
Company’s contribution to
Provident Fund (on Commission) 33.60 9.24
313.60 86.24
Total 599.50 194.39
Note:
Remuneration excludes provision for commission and related contribution to Provident Fund thereon for
the current year but includes commission and such related contribution thereon for the previous year
paid in the current year, where the Director was a Whole-time Director during the previous year ended
31st March, 2017.
The Non-Executive Directors are also paid sitting fees for attending the meetings of the Board or Committee
thereof within the limits prescribed under the Companies Act as approved by the Shareholders of the
Company.
Apart from the commission and sitting fees paid by the Company, the Non-Executive Directors, in their
individual capacity, did not have any pecuniary relationship or transactions with the Company during the
financial year 2017-18.
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Kansai Nerolac Paints Limited • Annual Report 2017-2018
The details of payments made to Non-Executive Directors during the year ended 31st March, 2018 are as under:
(` in lacs)
Independent Directors:
Pursuant to the provisions of Section 149 of the Companies Act, 2013, the Independent Directors of the
Company have been appointed for a period of 5 years.
Pursuant to Schedule IV to the Companies Act, every Independent Director has been issued a letter of
appointment containing the terms and conditions of his/her appointment. The terms and conditions of
appointment have been posted on the website of the Company at www.nerolac.com.
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Kansai Nerolac Paints Limited • Annual Report 2017-2018
A meeting of the Independent Directors with the Statutory Auditors and Internal Auditors of the Company
was held on 16th October, 2017.
Another meeting of the Independent Directors was held on 26th March, 2018, inter alia to:
a. Review the performance of the non-independent Directors and the Board as a whole;
b. Review the performance of the Chairman of the Company, taking into account the views of the executive
directors and non-executive directors;
c. Assess the quality, quantity and timeliness of flow of information between the Company management
and the Board that is necessary for the Board to effectively and reasonably perform their duties.
Mr. P. P. Shah, Chairman of the Company, who is an Independent Director was the Chairman of the meetings
of Independent Directors held on 16th October, 2017 and 26th March, 2018. The Independent Directors
discussed matters pertaining to the Company’s affairs and functioning of the Board and presented their
views to the Managing Director for appropriate action.
Notes on Directors seeking appointment / re-appointment as required under Regulation 36(3) of the
SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.
Mr. M. Tanaka
Mr. Masaru Tanaka is a Non-Executive Director on the Board of the Company.
Mr. Tanaka graduated from the Faculty of Technology, Doshisha University, Japan and joined Kansai Paint
Co. Ltd., Japan in April 1981.
Mr. Tanaka is Director, Managing Executive Officer of Kansai Paint Co. Ltd., Japan.
Mr. Tanaka does not hold any shares in the Company.
Mr. H. Furukawa
Mr. Hidenori Furukawa is a Non-Executive Director on the Board of the Company.
Mr. Furukawa is a graduate from Graduate School of Engineering, Osaka University and joined Kansai Paint
Co. Ltd., Japan in April 1983.
Mr. Furukawa is Director, Managing Executive Officer of Kansai Paint Co. Ltd., Japan.
Mr. Furukawa does not hold any shares in the Company.
Mr. K. Kato
Mr. Katsuhiko Kato is a Non-Executive Director on the Board of the Company.
Mr. Kato graduated from the Waseda University, Dept of Politics & Economy, Faculty of Economy, Japan and
joined Kansai Paint Co. Ltd., Japan in March 2014.
Mr. Kato is Executive Officer of Kansai Paint Co. Ltd., Japan.
Mr. Kato does not hold any shares in the Company.
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Kansai Nerolac Paints Limited • Annual Report 2017-2018
(iv) Normally all complaints/queries are disposed off expeditiously. The Company had no complaint pending at
the close of the financial year.
(v) The Committee considers and resolves the grievances of the security holders of the Company including
complaints related to transfer of shares, non-receipt of balance sheet, non-receipt of declared dividends. The
Committee attends to share-transfer formalities every fortnight.
(ii) One Special Resolution authorizing the Company to keep the Register and Index of Members and the copies
of Annual Returns at the office of the new Registrar & Transfer Agent of the Company – TSR Darashaw Ltd.
was passed in the 96th AGM, out of previous 3 AGMs.
(iii) No Postal Ballot was conducted last year.
(iv) No Special Resolution is proposed to be conducted through Postal Ballot.
(v) Postal Ballot whenever conducted will be carried out as per the procedure mentioned in Rule 22 of Companies
(Management and Administration) Rules, 2014, including any amendment thereof.
8. Means of Communication
(i) Quarterly Results:
The quarterly results are published in accordance with the requirements of the Listing Agreement of the BSE
and the NSE.
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Kansai Nerolac Paints Limited • Annual Report 2017-2018
(iv) Whether it also displays official news releases; and presentation made to institutional investors or to the
analysts:
Relevant information is displayed on the website.
As the financial results of the Company are published in the Newspapers and also displayed on the
Company’s website, a separate half yearly declaration of financial performance is not sent to each household
of shareholders.
BSE 500165
NSE KANSAINER
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Kansai Nerolac Paints Limited • Annual Report 2017-2018
(vii) Market Price Data: High, Low during each month in last financial year and performance in comparison to
broad based indices such as BSE Sensex, CRISIL index etc.
(viii) The securities of the Company have never been suspended from trading.
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Kansai Nerolac Paints Limited • Annual Report 2017-2018
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Kansai Nerolac Paints Limited • Annual Report 2017-2018
The particulars of Promoter holding as against Non-Promoter holding in the Company is given in (xi) of
“General Shareholder Information” of this Corporate Governance Report.
(xiii) Outstanding GDRs/ADRs/Warrants or any Convertible Instruments:
Not Issued.
(xiv) Commodity price risk or foreign exchange risk and hedging activities:
Commodity Risk
There are several raw materials which are directly driven by crude oil. These are monitored on regular basis
using pricing trends and forecast from internationally reputed news agencies. Appropriate coverage is taken
on rising trends and inventory is cut in declining trends. Wherever direct co-relation exists, cost sheet is
monitored to calculate delta changes and accordingly purchase prices are decided. For metal related buying,
price indices such as LME are used to check on trends. Additionally, import data is tracked to compare average
import prices and buying prices. Accordingly, appropriate actions are taken to minimise commodity risks.
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Kansai Nerolac Paints Limited • Annual Report 2017-2018
Shareholders can also contact the Secretarial Department at the Registered Office of the Company at:
Nerolac House, Ganpatrao Kadam Marg,
Lower Parel, Mumbai - 400 013
Tel. No.: +91 22 24992796, 24992807
E-mail ID for Investor Grievances:
The Company has created an e-mail ID for redressal of Investor Complaints named [email protected].
10. Disclosures:
(i) Related Party Transactions
All transactions entered into with the Related Parties as defined under the Companies Act, 2013 and
Regulation 23 of SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015, during the
financial year were in the ordinary course of business and on arm’s length basis and do not attract provisions
of Section 188 of the Companies Act, 2013. There were no materially significant transactions with the
related parties during the financial year that may have potential conflict with the interests of the Company
at large.
Related party transactions have been disclosed in Note 34 to the financial statements. A statement in summary
form of transactions with related parties in the ordinary course of business and arm’s length basis is periodically
placed before the Audit Committee for its review. Omnibus approval was obtained for transactions which were
repetitive in nature. Transactions entered into pursuant to omnibus approval were placed before the Audit
Committee for its review during the year. The Company has a Related Party Transaction Policy in place, which
has been posted on the website of the Company at https://nerolac.com/financial/policies.html.
(ii) Non-compliance by the Company, penalties, and strictures imposed on the Company by Stock Exchanges,
or SEBI or any statutory authority, on any matter related to capital markets, during the last three
years: Nil.
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Kansai Nerolac Paints Limited • Annual Report 2017-2018
(viii) Risk Management: The Company has a Risk Management Framework in place, the details of which are
provided in the Board’s report.
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Kansai Nerolac Paints Limited • Annual Report 2017-2018
Shareholders are requested to encash their dividend warrants immediately on receipt as dividends remaining
unclaimed for seven years are to be transferred to the Investor Education and Protection Fund.
Pursuant to Section 124 of the Companies Act, 2013 read with Investor Education and Protection Fund
Authority (Accounting , Audit, Transfer and Refund) Rules, 2016, as amended, shares, in respect of which
dividend is not claimed for seven consecutive years, is required to be transferred by the Company in the
name of Investor Education and Protection Fund (IEPF). Any claimant of such transferred shares would
be entitled to claim the transfer of shares from IEPF in accordance with the procedure as laid down in the
aforesaid Rules.
Shareholders are requested to visit the website of the Company at https://nerolac.com/financial/
shareholders.html#scroll for details of amounts lying in the unclaimed dividend accounts of the Company,
unclaimed dividend for 2009-10 transferred to the IEPF, the shares transferred to IEPF and the shares due
to be transferred to IEPF.
Disclosure with respect to demat suspense account/unclaimed suspense account as required under
Schedule V (F) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015:
P. P. SHAH
Mumbai, 2nd May, 2018 Chairman
DECLARATION
As required under Schedule V(D) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015,
the Board Members and the Senior Management Personnel have confirmed compliance with the Code of Conduct for
the Board of Directors and the Senior Management for the year ended 31st March, 2018.
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Kansai Nerolac Paints Limited • Annual Report 2017-2018
Independent Auditors’ Certificate on Compliance with the Corporate Governance requirements under
SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015
Auditors’ Responsibility
4. Our examination was limited to procedures and implementation thereof adopted by the Company for ensuring
the compliance of the conditions of Corporate Governance. It is neither an audit nor an expression of opinion on
the financial statements of the Company.
5. Pursuant to the requirements of the Listing Regulations, it is our responsibility to provide a reasonable assurance
whether the Company has complied with the conditions of Corporate Governance as stipulated in Listing Regulations
for the year ended 31 March 2018.
6. We conducted our examination in accordance with the Guidance Note on Reports or Ce2rtificates for Special
Purposes issued by the Institute of Chartered Accountants of India. The Guidance Note requires that we comply
with the ethical requirements of the Code of Ethics issued by the Institute of Chartered Accountants of India.
7. We have complied with the relevant applicable requirements of the Standard on Quality Control (SQC) 1, Quality
Control for Firms that Perform Audits and Reviews of Historical Financial Information, and Other Assurance and
Related Services Engagements.
Opinion
8. In our opinion, and to the best of our information and according to explanations given to us, we certify that the
Company has complied with the conditions of Corporate Governance as stipulated in the above-mentioned Listing
Regulations.
9. We state that such compliance is neither an assurance as to the future viability of the Company nor the efficiency
or effectiveness with which the management has conducted the affairs of the Company.
Restriction on use
10. The certificate is addressed and provided to the members of the Company solely for the purpose to enable the
Company to comply with the requirement of the Listing Regulations, and it should not be used by any other person
or for any other purpose. Accordingly, we do not accept or assume any liability or any duty of care for any other
purpose or to any other person to whom this certificate is shown or into whose hands it may come without our prior
consent in writing.
Aniruddha Godbole
Partner
Mumbai Membership No: 105149
2 May 2018
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Kansai Nerolac Paints Limited • Annual Report 2017-2018
SEBI vide its Notification dated 22nd December, 2015, amended Regulation 34 (2)(f) of SEBI (Listing Obligations
and Disclosure Requirements) Regulations, 2015 and made inclusion of Business Responsibility Report (BRR) in
the Annual Report mandatory for the top 500 listed companies based on market capitalisation as on March 31 of
every year. Our Company comes under the list of top 500 listed companies based on market capitalisation. SEBI has
suggested a format for the BRR, vide its circular CIR/CFD/CMD/10/2015 dated November 4, 2015. The Business
Responsibility Report is based on the format suggested by SEBI.
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Kansai Nerolac Paints Limited • Annual Report 2017-2018
Principle 1 (P1) Businesses should conduct and govern themselves with ethics, transparency and
accountability
Principle 2 (P2) Businesses should provide goods and services that are safe and contribute to sustainability
throughout their life cycle
Principle 3 (P3) Businesses should promote the well being of all employees
Principle 4 (P4) Businesses should respect the interests of, and be responsive towards all stakeholders,
especially those who are disadvantaged, vulnerable and marginalised
Principle 6 (P6) Businesses should respect, protect, and make efforts to restore the environment
Principle 7 (P7) Businesses, when engaged in influencing public and regulatory policy, should do so in
a responsible manner
Principle 8 (P8) Businesses should support inclusive growth and equitable development
Principle 9 (P9) Businesses should engage with and provide value to their customers and consumers in
a responsible manner
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Kansai Nerolac Paints Limited • Annual Report 2017-2018
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Kansai Nerolac Paints Limited • Annual Report 2017-2018
(b) If answer to the question at serial number 1 against any principle, is ‘No’, please explain why: (Tick up to
2 options)
Since all answers are yes, the following is not applicable.
No. Questions P1 P2 P3 P4 P5 P6 P7 P8 P9
4 It is planned to be — — — — — — — — —
done within next
6 Months
5 It is planned to be — — — — — — — — —
done within the
next 1 year
3. Governance related to BR
(a) The Board of Directors assess the BR performance of the Company on a periodic basis.
(b) The Company publishes the information on BR which forms part of the Annual Report of the Company. The
Company publishes the Sustainability Report and starting from 2017-18, the Sustainability Report forms
part of the Annual Report of the Company. The Annual report is available on the website of the Company
at www.nerolac.com.
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Kansai Nerolac Paints Limited • Annual Report 2017-2018
How many stakeholder complaints have been received in the past financial year and what percentage
was satisfactorily resolved by the management? If so, provide details thereof, in about 50 words
or so.
KNPL has institutionalized various mechanisms for receiving and resolving complaints
from its stakeholders. There are dedicated resources to respond to the complaints within a time bound
manner.
During the year, KNPL received 2 shareholder complaints which were answered and resolved
satisfactorily. During the year, KNPL did not receive any complaint under the Whistle blower mechanism.
Principle 2 : Businesses should provide goods and services that are safe and contribute to sustainability
throughout their life cycle
List up to 3 of your products or services whose design has incorporated social or environmental
concerns, risks and/or opportunities.
KNPL has a sustainability agenda which highlights its commitment to creating value through the
reduction or elimination of hazardous substances. KNPL’s Decorative products have no added lead. In
Automotive the products are free from substance of concern. The Company is moving its automotive
products to higher solids from conventional solid products.
In line with the Ministry of Environment, Forest and Climate change stipulated regulation on lead
restriction which mandates paint manufacturers to restrict lead in all decorative products within
90 ppm with effect from 1st November 2017, KNPL is fully compliant to this regulation because of
various measures proactively taken before time.
Old material which is shelf life expired and lying in KNPL’s warehouses is sent back to the factories to
be re-worked or disposed-off safely.
KNPL continues to conduct research and introduce sustainable products and solutions for its customers.
Some of its latest offerings in the current year are:
Common Painting System: In Automotive two wheeler Segment, the Company has developed a common
painting system which can be applied on both Sheet Metal and Plastic together and can be baked
together as well. In general conventional process both these components use different Technology
Products. Application and baking was being done at different spray booth and oven, where sheet Metal
bake at 140°C/30 Minutes and Plastic parts bake at 80°C/30 Minutes. With the New Common Painting
system products, customer can do the painting at common spray booth and also can bake both the
parts at common Temperature of 80°C/30 Minutes. With this customers will save energy due to low
baking product as well as will have saving on inventory control.
Monocoat system: KNPL has developed Monocoat products for Automotive Coating application. The
technology has replaced existing 2 Coats system with only 1 coat application at OEM. This will save
one coat application of Clear coat, and in turn will reduce material consumption and energy for painting
besides saving on inventory.
For each such product, provide the following details in respect of resource use (energy, water, raw
material etc.) per unit of product (optional):
(a)
Reduction during sourcing/production/distribution achieved since the previous year throughout the
value chain?
KNPL as part of its Sustainability Agenda continues to make progress on measurement of carbon
footprint index (Kg of CO2 equivalent per Ton of finished product) of water based architectural
products. Steps to reduce Carbon footprint index are initiated, wherever possible, by pursuing
energy efficiency in operations and adoption of renewable energy.
Paint production is done by KNPL on flexible production lines with multiple brands produced on
same line. In addition, common infrastructure is used for production and distribution of different
paints. So, there is practical difficulty in isolating data on resource utilisation for above mentioned
products.
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Kansai Nerolac Paints Limited • Annual Report 2017-2018
Through a combination of 100 plus depots and IT systems, KNPL has ensured that kilometres
travelled by the finished goods is minimised. The Company has also taken various measures to
ensure that spillages and damages incurred during transportation are minimized. At plants various
initiatives are undertaken in a systemic manner to reduce wastages like residual raw materials in
bags and barrels, solvent used for cleaning amongst others.
Information on initiatives is covered in Sustainability Report section of this Annual Report.
Common Painting System: 2 products combined into 1 product, hence 50% reduction in inventory
levels for the equivalent set of product previous year.
Monocoat system: 50% reduction during sourcing/production and distribution for the equivalent set
of product previous year.
(b)
Reduction during usage by consumers (energy, water) has been achieved since the previous year?
Actual change in usage by consumers/customer varies depending on area of application,
method of application, type of line, operating conditions and a host of other variables. It is estimated
that in
Common Painting System: 50% reduction during usage by consumer over equivalent set of product
previous year.
Monocoat system: 50% reduction during usage by consumer over equivalent set of product previous
year
Does the Company have procedures in place for sustainable sourcing (including transportation)?
If yes, what percentage of your inputs was sourced sustainably? Also, provide details thereof, in
about 50 words or so.
KNPL encourages suppliers to adhere to green procurement guidelines. More than 50% of sourcing
is being done from manufacturers which have a formal sustainability program. KNPL uses raw
materials which are heavy metal-free in over 90 % of its production. KNPL encourages suppliers
to provide raw material and transportation and storage solutions which reduce emissions or energy
consumption either directly or indirectly. Where ever possible, bulk liquids are transported in tankers
instead of using barrels, thereby reducing barrel waste generation. Most of packing material used
is sourced from suppliers within 10 KM radius of production sites to minimise transportation.
Has the Company taken any steps to procure goods and services from local & small producers,
including communities surrounding their place of work? If yes, what steps have been taken to
improve their capacity and capability of local and small vendors?
Yes, all packing material used is sourced from local and /or small suppliers within 10 KM radius of
production sites. KNPL actively encourages and works with local and small producers to improve
their capability and capacity through quality programs, suggestions, price competitiveness feedback,
vendor ratings, and audit at supplier factories by purchase and QA and interactions with senior
management.
Does the Company have a mechanism to recycle products and waste? If yes, what is the
percentage of recycling of products and waste (separately as <5%, 5-10%, >10%)? Also, provide
details thereof, in about 50 words or so.
Yes, KNPL has a mechanism to recycle products and waste. KNPL has a strong mechanism in
place to ensure products and waste is recycled. KNPL has zero effluent discharge at three of its
facilities. A standard process to recycle products is followed across all the plants wherein local
team in consultation with the technical team advises for recycling of the product based on the
chemical composition. Tracking mechanism is put in place for batch wise tracking of recycling of
the products.
Along with recycling of products, KNPL also ensures waste is recycled and reused in the plants.
A Solvent Recovery Unit (SRU) is installed in plants for distillation of solvent. SRU removes sludge
present in the used solvent thus making it reusable. Recycling of products and waste is also a Key
Performance Indicator of the plant employees thus linking it to their performance appraisal process.
Percentage of recycling of products: >10%. Percentage of waste recycled: >10%
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Kansai Nerolac Paints Limited • Annual Report 2017-2018
Principle 3 : Businesses should promote the well being of all its employees.
Please indicate the Total number of employees.
KNPL strives hard to create an environment of shared growth and ownership amongst all its employees.
The Company had 2861 employees as on 31st March, 2018.
KNPL provides employees with opportunities to undertake various programs to ensure that they are
up to date on skills and competencies needed to perform their job to the best of their ability. KNPL has
defined a set of core values for the organisation. In addition, KNPL has a competency / skill framework
for all its employees in various cadres.
Regular forums like conferences, workshops and focussed group meetings are held to familiarise
employees on various happenings across the Company as well as to provide an employee with an
opportunity to highlight issues being faced on the ground. The Company keeps all its employees
up to date on company happenings through monthly newsletter, letter from MD, Quarterly results
amongst others.
Employees participate in employee surveys both internal and externally and are encouraged to give
their views freely. The Company has provided relevant employees with a system to write down their
issues in various operating areas and ensures that within 72 hours the issue is addressed to the
employee’s satisfaction. The Company has a Social conduct committee in place to address challenges
of behaviour at the work place.
Eligible employee in managerial cadre has a predefined KRA (Key Result Area) with clear performance
expectation and guidelines which tells an employee what is expected of them in order that the
Company achieves its objectives. The employee is kept up to date on his or her performance on
a month to month basis. The Company has a transparent on line appraisal system which is based
on the KRAs set. The Company has a formal talent and succession planning process in place.
It also does periodic benchmarking of salary and other benefits amongst relevant companies across
the industry.
At the manufacturing plants various investments are made towards occupational health and safety of
the employees. All statutory norms are complied with at both depots and manufacturing plants towards
the protection and well being of the employees.
At its manufacturing facilities regular monthly meetings are held with the union by management to
ensure the overall well-being of the workmen. Collective bargaining and timely settlement of long
term wage contracts is encouraged. For contract workmen who are deployed in manufacturing
and depots of KNPL, at each location, various checks are maintained in the system to ensure
that wage payments, statutory contribution and provisions of safety and other such obligations are
met by the contractor. The Company provides welfare facilities like subsidised food, bus service,
medical check-up amongst others for its workmen. The Company also provides mediclaim facility
to employees.
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What percentage of your permanent employees is members of this recognized employee association?
KNPL’s trade unions represent 100% of its workers, which is about 26% of the permanent employees
of the Company.
Please indicate the Number of complaints relating to child labour, forced labour, involuntary labour,
sexual harassment in the last financial year and pending, as on the end of the financial year.
Principle 4 :
Businesses should respect the interests of, and be responsive towards all stakeholders,
especially those who are disadvantaged, vulnerable and marginalised
Has the Company mapped its internal and external stakeholders? Yes/No
Yes, the Company has mapped its internal and external stakeholders.
Internal stakeholders:
• Employees
• Shareholders and investors
External stakeholders:
• Customers
• Vendors, suppliers and other business partners
• Contractual employees
Local community and society
• Regulatory authorities
• Influencers
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Kansai Nerolac Paints Limited • Annual Report 2017-2018
Out of the above, has the Company identified the disadvantaged, vulnerable & marginalized stakeholders
Local communities are considered as those who are vulnerable.
Are there any special initiatives taken by the Company to engage with the disadvantaged, vulnerable
and marginalized stakeholders? If so, provide details thereof, in about 50 words or so.
KNPL’s CSR program covers the vulnerable sections of society as part of the overall scope.
How many stakeholder complaints have been received in the past financial year and what percent was
satisfactorily resolved by the management?
The Company did not receive any stakeholder complaint regarding human rights during the
reporting period.
Principle 6 : Business should respect, protect, and make efforts to restore the environment
Does the policy related to Principle 6 cover only the Company or extends to the Group/Joint Ventures/
Suppliers/Contractors/NGOs/others.
KNPL has a well-defined sustainability program. It has been disclosing various initiatives under the
same in accordance with the GRI guidelines for the last 6 years in its sustainability report which
is available on the website. This year the Sustainability Report is part of the Annual Report. KNPL
continuously upgrades its customers on new technology products which are environmental friendly.
KNPL conducts various Value Engineering and Value Analysis activities at its Automotive Customers
to explore projects jointly which will help reduce energy needs. KNPL has implemented the SAP EHS
Module way back in 2011 and has adopted the Tagline of Healthy Home Paints for its Decorative
Products to show its commitment to the environment. KNPL’s plants are ISO 14001 certified. Policy
related to Principle 6 covers the Company and its subsidiaries.
Does the Company have strategies/initiatives to address global environmental issues such as climate
change, global warming, etc? Y/N. If yes, please give hyperlink for webpage etc.
KNPL’s endeavour is to adopt an inclusive approach to protect and conserve the environment.
KNPL has been constantly working towards improving its carbon and water footprint while optimally
utilising natural resources. KNPL has an Environment, Health and Safety (EHS) Policy which is
communicated to all employees. The EHS Policy is available on KNPL’s website and can be accessed at
https://nerolac.com/sustainability.html#scroll. Information on detailed initiatives is covered in
Sustainability Report section of this Annual Report.
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Kansai Nerolac Paints Limited • Annual Report 2017-2018
Does the Company identify and assess potential environmental risks? Y/N
Yes, the Company has formal mechanism to identify and assess potential environmental risks.
Information on the process is covered in Sustainability Report section of this Annual Report.
Does the Company have any project related to Clean Development Mechanism? If so, provide details
thereof, in about 50 words or so. Also, if Yes, whether any environmental compliance report is filed?
The Company has undertaken multiple projects for emission reduction and improvement of environmental
footprint of the Company. Although no project is registered under Clean Development Mechanism,
emission reduction initiatives have been covered in Sustainability Report section of this Annual Report.
Has the Company undertaken any other initiatives on – clean technology, energy efficiency, renewable
energy, etc. Y/N. If yes, please give hyperlink for web page etc.
Reduction of carbon footprint, reduction in waste water, zero discharge at plants, rain water harvesting,
use of natural sunlight are amongst the various initiatives done by the Company. Information on detailed
initiatives is covered in Sustainability Report section of this Annual Report.
Are the Emissions/Waste generated by the Company within the permissible limits given by CPCB/
SPCB for the financial year being reported?
Yes
Number of show cause/ legal notices received from CPCB/SPCB which are pending (i.e. not resolved
to satisfaction) as on end of Financial Year.
None
Principle 7 :
Businesses, when engaged in influencing public and regulatory policy, should do so in a
responsible manner
Is your company a member of any trade and chamber or association? If Yes, Name only those major
ones that your business deals with:
The Company engages with the public and regulatory bodies in a responsible manner. It participates
in the same on a need basis. The Company is a member of the following trade associations:
• Employers Federation of India
• Bombay Management Association
• Indian Chemical Council
• Indian Paint Association
• Bombay Chamber of Commerce
• Maharashtra Economic Development Council
Have you advocated/lobbied through above associations for the advancement or improvement of public
good? Yes/No; if yes, specify the broad areas (drop box: Governance and Administration, Economic
Reforms, Inclusive Development Policies, Energy Security, Water, Food Security, Sustainable Business
Principles, Others)
The Company participates in various programs of these associations, and supports them with appropriate
inputs in governance and administration, Economic reforms, environmental standards amongst
others.
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Kansai Nerolac Paints Limited • Annual Report 2017-2018
Principle 9 :
Businesses should engage with and provide value to their customers and consumers in a
responsible manner
What percentage of customer complaints/consumer cases are pending as on the end of financial year.
KNPL actively engages with its customers in a responsible manner. The Company’s technical and
production teams and if needed, Kansai Paint Co. Ltd., Japan work to ensure that a customer’s issue
is successfully resolved.
For Automotive and certain Industrial OEM customers, KNPL provides technical sales service personnel
who are stationed at the customer lines to ensure that the product provided by the Company runs
smoothly on the line. These personnel work round the clock at the customer lines and provide various
value added and value engineering activities to customers. The Company’s R&D team works with
OEM customers to develop long term product roadmaps. Various colour presentations and trainings
are provided to OEM customers as needed. The Company also seeks to align the supply chain with
some of its large customers to ensure minimal inventory at customer end. KNPL also allows its OEM
customers to audit its manufacturing facilities. KNPL has institutionalised a mechanism to get feedback
from its automotive OEM customers as regards the Technical Sales Service personnel working
at their site.
All customer product complaints either directly from OEM or given to KNPL via dealers or the sales
team are recognised and recorded in the SAP system. Each complaint has a unique reference number.
They are then tracked to closure at the customer end by the Quality Assurance function as per internal
laid down timeline norms. Most products are batch managed and the Company conducts root cause
analysis to ascertain the issue with the product when needed.
KNPL also extends this rigour of monitoring and control of quality to its suppliers as well.
The Company has set up a dedicated consumer helpline 1800-209-2092 for consumers to record their
issues. In addition dealers can call up KNPL and record any grievance they may have regarding KNPL.
These are then tracked to successful resolution.
There are 7 consumer related legal cases pending at the end of the financial year.
Does the Company display product information on the product label, over and above what is mandated
as per local laws? Yes / No / N.A. / Remarks (additional information)
The products of KNPL display all information which is mandated by law including the directions for use.
Product information is available in the Product Information Sheet that is available with the dealers of
the Company and on the website of the Company.
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Kansai Nerolac Paints Limited • Annual Report 2017-2018
Is there any case filed by any stakeholder against the Company regarding unfair trade practices,
irresponsible advertising and/or anti-competitive behaviour during the last five years and pending as
on end of financial year. If so, provide details thereof, in about 50 words or so.
There are no cases filed by any stakeholder against the Company regarding unfair trade practices,
irresponsible advertising and/or anti-competitive behaviour during the last five years and pending as at
the end of financial year.
Did your company carry out any consumer survey / consumer satisfaction trends?
KNPL regularly engages with customers to get their feedback on products and gauge their
satisfaction level. Engagement mechanisms include brand track, customer meets, customer
satisfaction feedback and surveys, customer and product trainings at customer end. For Automotive
OEM customers detailed customer surveys are carried out every year once by internal team and
once by external independent agency to get the feedback. Based on the feedback received, KNPL
undertakes and tracks various initiatives to ensure that the overall satisfaction level of the customer
is improved.
H. M. Bharuka
Mumbai, 2nd May, 2018 Vice-Chairman and Managing Director
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DECORATIVE RANGE
OTHERS
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VOTED PRODUCT OF THE YEAR 2018
Winner Paint Category. Survey by Nielsen.
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Sustainability Report
Message from the Vice Chairman and Report Profile, Scope and Boundary
Managing Director
This report aims to disclose sustainability performance
Dear Stakeholders, of Kansai Nerolac Paints Limited (KNPL) as per Global
I am delighted to present the Company’s first Reporting Initiative (GRI) guidelines for financial year
integrated annual report which covers the sustainability 2017-18 (1st April, 2017 – 31st March, 2018). This report
report for the financial year 2017-18. This section
is based on GRI G4.0 – Core Guidelines. Sustainability
focuses on KNPL’s sustainability agenda and progress
made thereof. report is compiled and published every year based
on GRI reporting principles i.e. Balance, Comparability,
In line with the sustainability program of the organisation,
KNPL continued work on environmental and social Accuracy, Timeliness, Clarity, and Reliability. This is seventh
sustainability aspects of business. KNPL exercised consecutive sustainability report and this is the first time
stewardship in all major aspects of sustainability and it is being published in an integrated manner along
strengthened due diligence. with Annual Financial Report and Business Responsibility
Product stewardship: KNPL continues to focus on Report (BRR). References to GRI indicators are
environment friendly product innovations which
provided in GRI Content Index. Quantitative data
have helped the Company to offer innovative and
in this report with respect to material aspects has
sustainable products to valued customers.
been derived from various system reports internally.
Safety stewardship: KNPL believes in achieving Safety
excellence through employee participation and Qualitative information has been published after review
consultation. Amongst the highlights of last year, are with concerned functional heads. Draft sustainability
strengthening of the training system and bringing report content is reviewed by Management committee
about training automation through implementation of followed by rigorous review by Executive Director and
self-training kiosk. This will facilitate maximum coverage
Managing Director of the Company. After reviewing
of employees through customised audio-visual training
report content and approval from Top management,
modules and strengthen awareness on safety concepts
at all employee levels. sustainability report is published.
Environmental stewardship: The Company has been Financial data and CSR expenditure in this report
proactive in order to reduce its environmental footprints
have been externally assured. For any clarification
from its operation. Water footprints at our production
with respect to the report or to request for
sites have been reduced by ~5% in the last year.
The Company has strategically focussed on water additional copies, please contact through mail at –
reduction at source and invested in dry or close loop [email protected]
process technologies to curtail water consumption.
The Corporate office of KNPL is at Nerolac House,
Serving Society: KNPL, on its journey to sustainable
Ganpatrao Kadam Marg, Lower Parel, Mumbai – 400013,
growth has always believed in being a responsible
corporate citizen. We have been investing in social Maharashtra, INDIA.
projects under themes of Livelihood Enhancement,
This report covers KNPL operations in India. KNPL has
Preventive Healthcare and Sanitation, Community
four manufacturing facilities in India located at Lote,
Development and Promoting Education. Social
projects are being taken up in collaboration with local Bawal, Hosur and Jainpur. The fifth facility at Sayakha
stakeholders like government agencies, institutions will be commissioned in the near future. There are
amongst others. no significant changes in organization structure,
In summary, KNPL will pursue sustainable business ownership and operations during the reporting period.
growth with the help of all of our stakeholders and There are no restatements of information provided in
relentless efforts from our employees.
previous reports. Scope and aspect boundaries with
H. M. Bharuka respect to material elements are similar to that of
Vice Chairman and Managing Director
previous sustainability report.
93
KNPL Supply Chain Supplier
KNPL supply chain is illustrated in simplified format in We consider vendors as our business partners and hence
the diagram below. We cater to industrial as well as we have developed appropriate vendor engagement
Decorative customers. The Planning and Distribution part and development platforms. To deliver Quality paint
of supply chain differs for two major group of customers product to end customer, it is necessary to receive
– Industrial and Decorative as mentioned below. For consistent Quality from our Raw Material and Packing
Industrial customers, planning is carried out as per Material vendors. To manage objectives of Quality
“Make to Order” philosophy, while decorative customers performance, Timely delivery and other development
are served through our wide distribution network and initiatives, KNPL has adopted a Vendor Performance
planning is carried out based on forecasted demand. management system. To emphasize these aspects, KNPL
Quality Assurance team assesses vendor performance
Production plan is the output of planning phase, which
on Quarterly basis. An audit of critical vendors as per
provides input for manufacturing in terms of finished
need is carried out if required. Vendor audit is based
goods and to purchase department with respect to raw
on multiple criteria such as Quality performance, ISO
materials to be procured to fulfill the demand. Purchasing
9001 certification, ISO 14001 certification, OHSAS 18001,
of required materials and manufacturing of paint is
Factories Act amongst others. During vendor audit
carried out as per production plan. This is followed by
following major points related to Environment, Health
distribution to customer through the distribution network.
and Safety are assessed:
Demand Planning 1. Systems followed – ISO 14001, OHSAS 18001 amongst
Producon others.
Planning
Producon plan 2. Compliance to statutory and regulatory requirements
Paint processing at Outside Processing Manufacturing such as Factory license renewal, Explosive license,
manufacturing site Centers Hazardous handling, Pollution Control Board
Finished Goods Finished Goods
(FG) - Paints (FG) - Paints clearance, Air & Water Consent renewal
FG
3. Safety – Availability and accessibility of fire-fighting
Regional Distribuon
FG Distribuon equipment and their controls. Availability of Material
Depot Customers Network
Centre (RDC) Safety Data Sheet (MSDS) for materials
Retailers 4. Sustainability and green initiatives
5. Safety and housekeeping standards
KNPL Membership
6. Awareness of operating people towards safety and
Membership details are covered in the Business quality
Responsbility Report through disclosure on principle 7.
For better collaboration with our vendors we have
Commitment to External standards/principles adopted Nerolac supplier portal to facilitate supply
• ISO 9001:2015 – All plants chain visibility of order processing. KNPL also engages
• ISO 14001: 2007 – Hosur and Bawal plant with its vendors for joint improvement projects.
• ISO 14001: 2015 – Lote and Jainpur plant
• OHSAS 18001 Regulatory Authority
• IATF 16949: 2016 KNPL interacts and communicates with various
government authorities such as Pollution Control
Stakeholder Management Boards (PCBs), State Industrial Development Centre
(SIDC), Ministry of Environment and Forest (MoEF) either
KNPL’s stakeholders are covered as part of the Business
directly or through industry associations as per need.
Responsibility Report through disclosure on principle 4.
For various government approvals such as consent to
While information regarding key engagement activities operate, Environmental clearance, Fire NOC, Company
with Customers, Influencers, Employees, shareholders representatives interact with government officials as and
and investors as well as Local community are covered when required. The Company expresses its views and
in other sections of the Annual report, information on suggestions on various government gazettes through
engagement activities with Suppliers and Regulatory industry associations like Indian Paint Association (IPA)
Authorities are given as follows. amongst others.
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Annual Report
2018
Materiality Aspects and Scope Material aspects related to Labour practices (Contd.)
Labour/ KNPL is committed to conduct its activities
Material Aspects Materiality and Scope for KNPL Management in such a way as to take the foremost
Economic Aspects Relations account of the Occupational Health and
Occupational Safety (OH & S) of its employees and all
Economic Strong economic performance is the individuals working in its plants.
Health and Safety
Performance necessary for an organization to be
sustainable. Training and Training and Education of workforce is
Education necessary to upgrade skills of employees
Market Presence KNPL caters to its valued customers working in various functions. It helps the
through its distribution network of depots organization to be competitive through
and dealers across INDIA. Contribution enhanced employee participation and
to local areas and communities through engagement.
employment is an important aspect. KNPL
contributes to local employment in a Human Rights KNPL complies with all applicable
market wherever it operates. regulations and standards with respect to
human rights.
Employment is generated directly such
as at manufacturing sites, depots or Material aspects In today’s era, it is important to be a good
indirectly for sourcing of various materials related to corporate citizen and neighbour in order
or services from local market. Society - Local to maintain social license to operate.
Community KNPL has a policy to guide Corporate
Indirect Economic KNPL addresses this material aspect Social Responsibility (CSR) activities in
activity through its Corporate Social Responsibility areas around its operational sites. The
(CSR) activities. manufacturing locations and corporate
office drives planned CSR programs in the
Procurement KNPL tries to procure its raw materials scheduled quarter by involving external
practices from local vendors to the extent possible. agencies or on their own.
However, certain ingredients are imported
to fulfill specific Quality/specification and Anti Corruption KNPL has well established code of
Safety requirements. conduct and whistle blower mechanism
to address corruption related risks.
Environmental Aspects
Material Aspects related to Product Responsibility
Materials Environmental performance is an Marketing KNPL complies with all applicable
important component of triple bottom communications regulations with respect to Marketing
Energy
line performance. It is necessary for an communications, labeling and customer
Product and
Water organization to reduce environmental privacy. It also tries to promote healthier
Service labelling
impact of its operation through efficient and safer nature of its products through
Biodiversity manufacturing processes and by packaging labels.
Emissions adopting cleaner technologies. It is the
Customer Privacy KNPL maintains customer privacy in terms
need of the hour to efficiently use natural
Effluents and of sharing and publishing of customer
resources like water, materials efficiently
waste details.
while reducing waste, emissions and
effluents. KNPL has always been keen on Customer health KNPL products have gained popularity
Compliance and safety as Healthy Home paints in the market.
development of eco-friendly products
Transport and technologies to help reduce their It has pioneered and introduced low
impact during paint application. VOC paints with no added lead in Indian
Overall markets.
Products and KNPL has always been keen on leveraging
Services its technological edge to develop
innovative products and technologies to Economic Aspects
reduce environmental footprint during
application phase. Being the leader Data on revenue and profit growth is covered as part of
in Industrial coatings, it has developed the annual report.
products which are made of concern
free ingredients and are low in energy The Company received no financial assistance
consumption during application. It has
from government in last financial year as per IAS 20
differentiated its decorative products as
Healthy Home paints. Accounting for Government Grants and Disclosure of
Supplier Supplier assessment and due diligence Government Assistance, 2001.
Assessment for is important aspect for sustainability.
labour practices KNPL exercise it through supplier audits
There has been no political contribution by the Company
and Environment on various aspects such as ISO 14001, in last year.
OHSAS 18001 certifications, statutory
compliance amongst others. All strategic economic decisions are taken by the Board
Material aspects related to Labour practices of Directors and executed by the Managing Director,
Management Committee and departmental heads
Employment Employees are an important asset to
organization. as the case may be. The economic decision making
Diversity and KNPL is an equal opportunity employer. responsibility with respect to daily business is assigned
equal opportunity to the Managing Director, Management Committee
95
and Departmental Heads and so on. Management function guides plant EHS teams for accomplishment of
committee forms the highest governance body of environmental objectives of organization. Environment
organization under the aegis of Managing Director. review meetings are conducted on monthly basis at
Management committee members are responsible for respective plant location where works manager acts as
economic decisions with respect to areas under their chairperson and EHS head acts as Secretary.
purview. These are approved by Managing Director and
Board of Directors as per laid down policy. Execuve Director
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Annual Report
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Environmental Sustainability Risks planned. The Company identifies other risks driven
by physical changes in climate conditions through
Environmental risks in operations are identified
various data available on government websites,
through aspect – impact study of processes and are
sustainability assessment platforms such as CDP, GRI
addressed through control measures and environmental
based sustainability reports. Various publications from
management programs. Legal updates subscription
governments such as National Action Plan on Climate
communicates draft government notifications on timely
Change (NAPCC), resources on websites of environment
basis. The Company also participates in liaisoning
and water resource ministry also help understand
with government bodies on draft notifications through
environmental risks. The Company also leverages climate
industry associations such as IPA. Based on external
change as an opportunity in the relevant context.
factors and liaisoning, the Company evaluates potential
In operations, the Company gets benefits by energy
environmental risks in the Company’s context and the
efficiency, renewable energy and material efficiency
timeline for action. Based on requirements, investments
initiatives. While in product marketing, environment and
are proposed for approval and implementation is
health friendly products are major themes.
97
Environment and Safety Expenditure process has helped reduce cartridge waste reduction
from industrial processes. In resin manufacturing,
Last year, the Company spent around ` 7.51 crores
cleaning solvents of all major resins are reused in the
capital expenditure on EHS requirements at existing
next batch of same resins and losses are being kept at
plants. It includes upgradation of assets for environmental
the minimal. In paint section, system controls have been
monitoring, effluent treatment, water conservation,
implemented to ensure reuse of paint filled in part filled
energy efficiency, emergency preparedness and safety
cans in the the next compatible batch of paint. In order
equipment upgradation.
to reduce sticking material losses and barrel handling in
There had been ` 2.78 crores of revenue expenditure on manufacturing processes, the Company procures bulk
EHS requirements at the existing plants. liquid chemicals in tankers instead of barrels and these
raw materials are stored in tanks for further usage in
Apart from this, the Company has invested ` 10.66 crores
manufacturing.
of capital expenditure in its to be commissioned plant
at Sayakha. It includes zero liquid discharge facility, In operations, cleaning solvent is reused after
emergency equipment and occupational health center distillation process again for equipment cleaning. The
to name a few. Company uses all fresh raw materials in its products to
maintain high quality standards. Major hazardous wastes
Material and Waste Management generated from our manufacturing sites are Distillation
residue, ETP Sludge, Mixed Paint, off specification paint
Paint manufacturing is a material intensive process. Paint amongst others. These wastes are being disposed off as
is a mixture of binder, pigment, additive and solvents. per statutory requirement to authorized Treatment and
Material cost is significant proportion of final product cost disposal facilities. No waste is transported internationally
in case of paints. Quality raw material procurement and from our sites. In last financial year, there have not
its wastage during processing are key focus area of the been any cases of significant spillage at any of our
Company. Table below illustrates material consumption manufacturing sites.
along broad categories of raw materials. KNPL currently does not reclaim packing material
generated from products sold.
Raw Material 2014-15 2015-16 2016-17 2017-18
category
Pigments, Extenders 125722 146114 169546 185715 Raw Material Procurement and Due
and Resins (in MT) Diligence
Organic acids and 13551 15097 17560 18529 The Company has a supplier base of total 500 plus
anhydrides (in MT)
material suppliers. Out of this, ~350 plus are local
Solvent oils and 79906 87741 95467 95822 suppliers. The Company tries to source its raw materials
fatty acids (in MT) from local vendors to the extent possible; but it needs to
import some of the specialized raw materials as there is
In order to reduce material wastage at source, the
no local alternative.
Company has implemented close loop manufacturing
processes in most of its decorative operations. Process Raw Materials 2014-15 2015-16 2016-17 2017-18
parameters are monitored through SCADA controls where (in %)
feasible to exercise strict control on material additions. Imported 40 46 42 45
It has also helped reduce worker exposure to various
Indigenous 60 54 58 55
workplace hazards. Implementation of silo system for
close loop powder addition has helped reduce worker
As a part of due diligence with respect to its raw material
exposure to dust on shop floor. In decorative process,
supply, the Company has introduced a mechanism to
most of the wash water is reused in the product itself.
evaluate local vendors based on various criteria such
Last year, the Company strengthened its material as compliance with statutory requirements, environment
recovery and reuse initiatives as well; specifically management system, safety management system,
material losses due to sticking in supplied packaging. sourcing from conflict region amongst others. New local
It is tracked through system and reuse is ensured. vendors are being evaluated based on checklist and
Implementation of reusable cartridge in the filtration audited through a factory visit. Last year, 12 suppliers
98
Annual Report
2018
1.3
Water Management FY 2013-14 FY 2014-15** FY 2015-16 FY 2016-17 FY 2017-18
Water scarcity issue is visible around the globe and At Lote plant, collected rain-water is being used in
in India. Water is going to be an important resource processes during rainy season. At other plants, the
going forward. The world’s demand for water is likely Company has installed groundwater recharge setup.
to surge in next few decades, majorly driven by rapidly
growing population, farm activities and companies. 7000 Rain water usage in process at Lote 6476
In Indian scenario as well, some of the regions are 6000 5543 5834
(in Cu.m)
4000 3609
Ground water depletion and polluted water sources 2964
3000
are key challenges of the country. Indian government 2000
is also seen to acknowledge this impending issue and 1000
99
Air Emissions KNPL has been following two pronged approach to
overcome this sustainability challenge. Firstly, it has
Ambient air Quality is monitored on periodic basis at
focused on improvement in energy efficiency through
different locations for all manufacturing units of KNPL.
energy consumption monitoring and adoption of
Air quality monitoring exercise includes measurement
cleaner technologies. Secondly, it has been proactively
of ambient air quality, Stack emissions, VOC level at
adopting renewable energy to fulfill some of its energy
shop floor, Noise level amongst others at designated
requirement.
locations in our factories. Air pollution control devices
such as cyclonescrubbers have been installed at stacks
to filter our air emission before discharge into ambient
atmosphere. Pollutant load discharged through our
factories is well within statutory limits. Dust collectors
have been installed at Powder charging area to control
emissions on shop floor and to enable reuse of collected
powder. To ensure adequate ventilation on shop floor,
our work areas are installed with Forced Draft Ventilation
system. Fume extractor system has been installed at
shop floor in critical areas to control VOC at work
place. The Company has installed close loop processing
to the extent possible to avoid any air emissions into
atmosphere during paint processing.
ODS is relevant only with respect to air conditioning of Grid Energy 46821
our work areas. It is not part of our product formulations. Diesel Generator set 1439
100
Annual Report
2018
Specific Power consumption: Below table illustrates outcome of our efforts in the area.
renewable energy
190 188 sources (Solar, Wind
183 & Biomass)
185 182
180 % of process heat 82% 83% 90% 94%
175 & steam through
FY 2014-15 FY 2015-16 FY 2016-17 FY 2017-18 renewable energy
(Biomass based)
* Method of calculation of specific power consumption has been
changed. Accordingly previous year data has also been modified for
comparability. Last year, the Company implemented below major
projects to progress further in its energy security agenda.
Method of Calculation: Specific power consumption is It will help the Company to increase its renewable
ratio of electricity consumed (from all sources) to total energy proportion in coming year.
paint production at respective facility during specified
period. Electricity consumption is sum of electricity
No. Implemented Projects in Renewable energy
received from grid (i.e. state electricity board), electricity 2017-18 harnessed/Energy saved
generated from DG set and electricity from renewable
energy sources at respective manufacturing facility. 1 Solar power plant 583 MWH
commissioning across
locations
Fuel (High Speed Diesel) Consumption
(in LT/Tonne of finished goods) 2 Sola tube installation at 19 MWH
58.00 57 warehouses
56.00
in LT/Tonne of FG
54.00 53
3 LED lighting installation 437 MWH
52.00 51 across locations
50.00 49
48.00
4 Steam generation on solid 175 Tons
46.00
fuel at Lote
44.00
FY 2014-15 FY 2015-16 FY 2016-17 FY 2017-18
5 Diesel fired Thermopac 890 Lac Kcal
* Method of calculation of specific power consumption has been load shifted to Renewable
changed. Accordingly previous year data has also been modified for fuel
comparability.
101
Methodology followed
The Company has been accounting GHG emissions
through its customized GHG accounting tool, wherein
various data such as fuel and electricity consumption,
transportation etc data is collated and further converted
to CO2 emissions. Conversion factors used for GHG
footprint calculation are taken from IPCC default
emission factors, CEA (Central Electrical Authority)
database. Following table gives GHG emissions from
KNPL India operations.
Other Initiatives which are to be implemented and 2013-14 11033 29448 4124 44605 0.21
planned for this financial year are as follows: 2014-15 8811 33998 5120 47929 0.21
2015-16 6886 36532 8752 52171 0.20
No. Description of Potential Activity Type
2016-17 6449 38273 9702 54423 0.20
project Renewable
energy/Energy 2017-18 5461 40228 6242 51931 0.17
saving
1 Capital Wind 60 Lac units per Low carbon Biodiversity
turbine at Hosur annum energy
All operational facilities are located in the State Industrial
2 Shift towards 300 KL Diesel Low Carbon
Development Corporation area. None of these sites
Environmental consumption to be energy
friendly Bio-fuel in shifted to Bio-fuel are located near any protected area or area of high
lieu of Diesel biodiversity or ecologically fragile area. There are no
significant adverse impacts on biodiversity because of
GHG Emissions KNPL activities. All of our expansions projects are have
been undertaken after due environmental impact
KNPL has achieved reduction in GHG emissions over
assessment (EIA) and stakeholder consultation as
the last few years. Focused approach towards energy
applicable. There is no IUCN Red listed species affected
management in the Company has led to efficient
by any of the KNPL’s activities. There have been no
energy usage and thereby reducing corresponding
significant initiatives from KNPL for protection or restoration
Scope 1 & 2 GHG emissions. It has not only helped
of any biodiversity rich habitat. But our initiatives
reduce environmental impacts but also to achieve cost
towards tree plantation have created manmade small
saving objectives.
eco-system which serves as habitat for native fauna.
102
Annual Report
2018
In Industrial products, the Company is moving its products KNPL with due focus ensures strict compliance with
to higher solids from conventional solid products to give legislations related to product formulations and sale of
benefit in terms of VOC reduction and solvent losses banned products in Indian context. In last financial year,
during application. Automotive products are free from there have not been any complaints regarding breach
substance of concern. of customer privacy and losses of customer data.
KNPL follows guidelines provided by “The Advertising Grand Total 685 Grand Total 522
103
through training programmes as well as other employee KNPL is an equal opportunity employer. All recruitment
engagement forums such as Kaizen competitions, for senior positions is based on talent and suitability
Performance review process, monthly review of section of candidate with respect to a job vacancy.
performance etc. Local candidates are preferred in case their portfolio
matches with job requirement. During last financial
Categories of Training: year, there have been no reported incidents of
discrimination.
1. Induction Training – Induction training is given as
an initial preparation to new hires upon taking up
a post.
2.
Competency Based Training – Competency Based
Training emphasizes on enhancing the competencies
required by a person for a particular job and
position, in order to achieve individual growth and
organizational goals.
4. S
kill Development Program – Skill Development
programs aims at upgrading and multi skilling the
employees’ current skill level by means of Work
Instructions, Standard Operating Procedures and
Single Point Lessons.
5. Sales Trainings:
104
Annual Report
2018
Occupational Health and Safety safety and static charge prevention. This will help us to
train all employees in a timely and efficient manner.
Last year, the Company continued its efforts on
It would add to the safety leading indicators in order to
strengthening “Safety First” culture with utmost focus on
influence safe behaviour at workplace.
EHS training, fire prevention programs and emergency
preparedness. As a part of Safety excellence, we pursued The Company encourages worker participation in health
sustenance of safety process controls such as interlocks and safety topics. Each of our manufacturing sites
and past Corrective and Preventive Action (CAPA) has established Safety committee with at least 50% of
compliance. Through its specialized Danger Experience representatives from operators and is in compliance with
training program and Kiken Yochi Training (KYT – Hazard Factories Act, 1948. Safety committee meeting at plant
Prediction) program, the Company has embarked level acts as platform to take feedback and consultation
upon a journey to instill maximum safety awareness from workforce representatives. Plant works manager
and subsequently promote safe behavior across plants. acts as chairman in this meeting to preside over and
Corporate safety team evaluated safety awareness at guide discussion.
plant through online safety test and analyzed results In coming year, the Company has planned for various
further to drive improvement measures. Safety culture safety theme competitions in order to popularize safe
survey was conducted through the HR portal for process work practices and behaviour. It will further help to
employees and feedback was recorded. It led to strengthen “Safety First” culture through employee
improvement opportunities to work upon. Last year, the participation at all levels. To enhance safety vigilance,
Company also invested upon Safety training Kiosk system the Company will be implementing a tool for reporting
with customized Safety training modules on machine of safety concerns and tracking to ensure timely closure.
The Company continued its operations with zero frequency rate and severity rate in this year as well. As a result, KNPL
achieved 36.76 Million man-hours without any LTI (Lost Time Injury).
105
Human Rights bargaining agreement at all of our manufacturing sites
cover 100% of Company workers. It covers health and
The Company ensures compliance with statutory
safety related topics such as adherence to safety norms,
provisions related to child labour. There is no risk of
upkeep of emergency equipment amongst others.
forced or compulsory labour with respect to any of our
To resolve issues that may significantly impact service
manufacturing facilities. All new joinees are made aware
conditions of employees, formal mechanisms have been
on KNPL code of conduct as well as whistle blower
put in place to communicate and address employee
policy. All KNPL policies regarding code of conduct
concerns at regular intervals. Monthly communication
and ethics have been well communicated through
and works manager dialogue at manufacturing sites help
HRSCAPES portal. The Company did not receive any
to communicate organisation progress, its expectation
complaints related to child labour, forced labour or
to employees including workers. Monthly meeting with
sexual harassment during last year. Also, the Company
union management also help address issues pertaining
did not receive any complaint from local community
to management as well as employment. All issues with
with respect to violation of human rights.
respect to labour are addressed through collective
KNPL is an equal opportunity employer and there have bargaining and are resolved. There is no significant risk
not been any incident of discrimination in the Company. with respect to violation of right to exercise freedom of
The Company encourages freedom of association and association and collective bargaining at manufacturing
collective bargaining. All of KNPL plants have labour unions sites. There have not been any human rights grievances
to facilitate collective bargaining process. Collective reported in the last financial year.
CSR Sub-committee for 3. Monitoring the CSR Policy of the Company from time to time.
execution
CSR Sub-Committee ensures execution of various CSR activities.
KNPL Focus areas for CSR programs are as mentioned below. Details of expenditure in each of the focused areas are
mentioned in annual report.
106
Annual Report
2018
107
General Standard Disclosure Specific Standard Disclosure
GRI Parameter Ref. Page No. Material Aspects GRI Ref. section Page No.
section Parameter
4-45 SR 96, 106 Child labour HR5 SR 106
4-46 SR 32, 96, 106 Forced or Compulsory labour HR6 SR 106
4-47 SR 96 Security practices HR7 SR 106
4-48 SR 93 Indigenous rights HR8 SR 106
4-49 SR 96 Assessment HR9 SR 106
4-50 MDA 32 Supplier human rights assessment HR10 SR 98
4-51 CG 64-66 Supplier human rights assessment HR11 – NR
4-52 CG 64-66 Human rights grievance Mechanisms HR12 SR 106
4-53 CG 64-66 Labour Practices Indicators
4-54 MDA 43 Employment LA1 SR 103
4-55 MDA 43 Employment LA2 Note 29, 35 144, 149
Ethics and integrity Employment LA3 SR 103
4-56 SR 80, 106 Labour/Management relations LA4 SR 106
4-57 SR 80, 106 Occupational Health and safety LA5 SR 105
4-58 SR 80, 106 Occupational Health and safety LA6 SR 105
Occupational Health and safety LA7 SR 105
Occupational Health and safety LA8 SR 106
Training and Education LA9 SR 104
Training and Education LA10 SR 104
Training and Education LA11 SR 104
Diversity and equal opportunity LA12 BRR 83
Equal remuneration for women and men LA13 SR 104
Supplier assessment for labour practices LA14 SR 98
Supplier assessment for labour practices LA15 – NR
Labour practices grievance mechanisms LA16 SR 106
Product Responsibility Indicators
Customer Health and safety PR1 – NR
Customer Health and safety PR2 SR 103
Product and service labeling PR3 SR 102
Product and service labeling PR4 SR 103
Product and service labeling PR5 SR 102-103
Marketing Communications PR6 SR 103
Marketing Communications PR7 SR 103
Customer Privacy PR8 SR 103
Compliance PR9 SR 103
Indicators – Society
Local Community SO1 MDA 39-42
Local Community SO2 BRR 87
Anti Corruption SO3 BRR 80-81
Anti Corruption SO4 BRR 80-81
Anti Corruption SO5 BRR 80-81
Public policy SO6 SR 95
Anti Competitive behaviour SO7 SR 103
Compliance SO8 BRR 86
Supplier assessments for impacts on society SO9 SR 98
Supplier assessments for impacts on society SO10 – NR
Grievance mechanisms for impacts on society SO11 – NR
SR – Sustainability Report
CG – Corporate Governance Report
MDA – Management Discussion and Analysis
BRR – Business Responsibility Report
NR – Not Reported
Note 29, 35 are from Notes to the Standalone Financial Statements.
108
Independent Auditors’ Report
To the Members of
Kansai Nerolac Paints Limited
Report on the Audit of the Standalone Ind AS Financial Statements
We have audited the accompanying standalone Ind AS financial statements of Kansai Nerolac Paints Limited
(“the Company”), which comprise the standalone balance sheet as at 31 March 2018, the standalone Statement of profit
and loss (including other comprehensive income), the standalone Statement of changes in equity and the standalone
Statement of cash flows for the year then ended, and a summary of the significant accounting policies and other
explanatory information (hereinafter referred to as “standalone Ind AS financial statements”).
109
KANSAI NEROLAC PAINTS LIMITED
Independent Auditors’ Report (continued)
Opinion
In our opinion and to the best of our information and according to the explanations given to us, the aforesaid standalone
Ind AS financial statements give the information required by the Act in the manner so required and give a true and fair
view in conformity with the accounting principles generally accepted in India of the statement of affairs of the Company
as at 31 March 2018, its profit and other comprehensive income, changes in equity and its cash flows for the year ended
on that date.
Aniruddha Godbole
Partner
Mumbai, 2 May 2018 Membership No.: 105149
110
KANSAI NEROLAC PAINTS LIMITED
ANNEXURE A TO THE INDEPENDENT AUDITORS’ REPORT – 31 MARCH 2018
With reference to the Annexure A referred to in the Independent Auditors’ Report to the members of the Company on the
standalone Ind AS financial statements for the year ended 31 March 2018, we report the following:
(i) (a) The Company has maintained proper records showing full particulars, including quantitative details and
situation of property, plant and equipment and investment properties.
(b) The Company has a regular programme of physical verification of its property, plant and equipment and
investment properties by which the property, plant and equipment and investment properties are verified by
the management according to a phased programme designed to cover all the items over a period of three
years. In our opinion, this periodicity of physical verification is reasonable having regard to the size of the
Company and the nature of its assets. In accordance with the policy, the Company has physically verified
certain property, plant and equipment and investment properties during the year and we are informed that no
material discrepancies were noticed on such verification, and the same have been dealt with in the books of
account.
(c) According to the information and explanations given to us and on the basis of our examination of the records
of the Company, the title deeds of immovable properties (other than leasehold land) as disclosed in Note 2
and Note 3 to the standalone Ind AS financial statements, are held in the name of the Company. In respect
of leasehold lands, we have verified the lease agreements duly registered with the appropriate authorities as
disclosed in Note 2 and Note 3 to the standalone Ind AS financial statements.
(ii) The inventory, except for goods-in-transit and stocks lying with third parties, has been physically verified by the
management during the year. In our opinion, the frequency of such verification is reasonable. In respect of stocks
lying with third parties at the year-end, written confirmations have been obtained. The discrepancies noticed on
verification between the physical stocks and the book records were not material and have been dealt with in the
books of account.
(iii) According to the information and explanations given to us, the Company has not granted any loans, secured or
unsecured, to companies, firms, limited liability partnerships or other parties covered in the register maintained
under Section 189 of the Companies Act, 2013 (‘the Act’). Accordingly, paragraphs 3 (iii) (a), (b) and (c) of the Order
are not applicable to the Company.
(iv) In our opinion and according to the information and explanation given to us, the Company has not granted any
loans, or provided any guarantees or security to the parties covered under Section 185 of the Act. The Company
has complied with the provisions of Section 186 of the Act in respect of the investments made.
(v) In our opinion, and according to the information and explanations given to us, the Company has not accepted
deposits as per the directives issued by the Reserve Bank of India and the provisions of Sections 73 to 76 or any
other relevant provisions of the Act and the rules framed thereunder. Accordingly, paragraph 3 (v) of the Order is not
applicable to the Company.
(vi) We have broadly reviewed the books of accounts maintained by the Company pursuant to the rules prescribed by
the Central Government for the maintenance of cost records under Section 148(1) of the Act and are of the opinion
that prima facie, the prescribed accounts and records have been made and maintained.
(vii) (a) According to the information and explanations given to us and on the basis of our examination of the records
of the Company, amounts deducted / accrued in the books of account in respect of undisputed statutory dues
including Provident fund, Employees’ State Insurance, Duty of customs, Duty of excise, Sales-tax, Service
tax, Value added tax, Goods and Service tax, Cess, Profession tax and other material statutory dues have
been regularly deposited during the year with the appropriate authorities. According to the information and
explanations given to us and on the basis of our examination of the records of the Company, amounts deducted/
accrued in the books of account in respect of undisputed statutory dues of Income-tax have generally been
regularly deposited during the year with the appropriate authorities, though there have been slight delays in a
few cases. As explained to us, the Company did not have any dues on account of wealth tax.
According to the information and explanations given to us, no undisputed amounts payable in respect of
Provident fund, Employees’ State Insurance, Profession tax, Income-tax, Duty of customs, Duty of excise,
Sales-tax, Service tax, Goods and Service tax, Value added tax, Cess, Profession tax and other material
statutory dues were in arrears as at 31 March 2018 for a period of more than six months from the date they
became payable.
111
KANSAI NEROLAC PAINTS LIMITED
ANNEXURE A TO THE INDEPENDENT AUDITORS’ REPORT – 31 MARCH 2018 (continued)
(b) According to the information and explanations given to us, there are no dues of Income-tax, Sales tax, Service
tax, Duty of customs, Duty of excise, Goods and Service tax and Value added tax as at 31 March 2018, which
have not been deposited with the appropriate authorities on account of any dispute, except as stated below:
(` in crores)
Name of Act Nature of Dues Amount Amount not Period to which amount Forum where dispute is
Demanded Deposited relates pending
Under
Disputes
Sales Tax and Tax, Penalty 0.62 0.62 1980-1981 Commissioner
Value Added Tax and Interest 1991-1992
1996-1997
2001-2007
2009-2010
0.51 0.43 1995-96 to 2009-10 Appellate Authorities and
Tribunal
The Central Excise Tax, Penalty 1.03 1.03 1994-1996 Commissioner
Act, 1944 and Interest 1998 to 2001,
2015-2016
(viii) In our opinion and according to the information and explanations given to us, the Company has not defaulted
in repayment of dues to the government. The Company did not have any outstanding dues to bankers, financial
institutions and debenture holders during the year.
(ix) According to the information and explanations given to us and based on our examination of the records of the
Company, the Company has not raised any moneys by way of initial public offer or further public offer (including debt
instruments) and has not obtained any term loans during the year. Accordingly, paragraph 3 (ix) of the Order is not
applicable to the Company.
(x) During the course of our examination of the books and records of the Company, carried out in accordance with
the generally accepted auditing practices in India, and according to the information and explanations given to us,
we have neither come across any instance of material fraud by the Company or on the Company by its officers or
employees, noticed or reported during the year, nor have we been informed of any such case by the management.
(xi) According to the information and explanations given to us and based on our examination of the records of the
Company, the Company has paid / provided for managerial remuneration in accordance with the requisite approvals
mandated by the provisions of Section 197 read with Schedule V to the Act.
(xii) In our opinion and according to the information and explanations given to us, the Company is not a Nidhi company
and the Nidhi Rules, 2014 are not applicable to it. Accordingly, paragraph 3 (xii) of the Order is not applicable to the
Company.
(xiii) According to the information and explanations given to us and based on our examination of the records of the
Company, transactions with the related parties are in compliance with Sections 177 and 188 of the Act where
applicable and details of such transactions have been disclosed in the standalone Ind AS financial statements as
required by applicable Ind AS.
112
KANSAI NEROLAC PAINTS LIMITED
ANNEXURE A TO THE INDEPENDENT AUDITORS’ REPORT – 31 MARCH 2018 (continued)
(xiv) According to the information and explanations given to us and based on our examination of the records of the
Company, the Company has not made any preferential allotment or private placement of shares or fully or partly
convertible debentures during the year. Accordingly, paragraph 3 (xiv) of the Order is not applicable to the Company.
(xv) According to the information and explanations given to us and based on our examination of the records of the
Company, the Company has not entered into any non-cash transactions with directors or persons connected with
them. Accordingly, paragraph 3 (xv) of the Order is not applicable to the Company.
(xvi) In our opinion and according to the information and explanations given to us, the Company is not required to be
registered under Section 45-IA of the Reserve Bank of India Act, 1934. Accordingly, paragraph 3 (xvi) of the Order
is not applicable to the Company.
Aniruddha Godbole
Partner
Mumbai, 2 May 2018 Membership No.: 105149
113
KANSAI NEROLAC PAINTS LIMITED
ANNEXURE B TO THE INDEPENDENT AUDITORS’ REPORT – 31 MARCH 2018
(Referred to in our report of even date)
Report on the Internal Financial Controls under Clause (i) of Sub-section 3 of Section 143 of the Companies Act,
2013 (“the Act”)
We have audited the internal financial controls over financial reporting of Kansai Nerolac Paints Limited (“the Company”)
as of 31 March 2018 in conjunction with our audit of the standalone Ind AS financial statements of the Company for the
year ended on that date.
Auditors’ Responsibility
Our responsibility is to express an opinion on the Company's internal financial controls over financial reporting based
on our audit. We conducted our audit in accordance with the Guidance Note on Audit of Internal Financial Controls Over
Financial Reporting (the “Guidance Note”) and the Standards on Auditing, issued by ICAI and deemed to be prescribed
under Section 143(10) of the Act, to the extent applicable, to an audit of internal financial controls, both applicable to
an audit of Internal Financial Controls and, both issued by the ICAI. Those Standards and the Guidance Note require
that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether
adequate internal financial controls over financial reporting was established and maintained and if such controls operated
effectively in all material respects.
Our audit involves performing procedures to obtain audit evidence about the adequacy of the internal financial controls
system over financial reporting and their operating effectiveness. Our audit of internal financial controls over financial
reporting included obtaining an understanding of internal financial controls over financial reporting, assessing the risk that
a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based
on the assessed risk. The procedures selected depend on the auditors’ judgement, including the assessment of the risks
of material misstatement of the standalone Ind AS financial statements, whether due to fraud or error.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion
on the Company’s internal financial controls system over financial reporting.
114
KANSAI NEROLAC PAINTS LIMITED
ANNEXURE B TO THE INDEPENDENT AUDITORS’ REPORT – 31 MARCH 2018 (continued)
Opinion
In our opinion, the Company has, in all material respects, an adequate internal financial controls system over financial
reporting and such internal financial controls over financial reporting were operating effectively as at 31 March 2018, based
on the internal control over financial reporting criteria established by the Company considering the essential components
of internal control stated in the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting issued by
the ICAI.
Aniruddha Godbole
Partner
Mumbai, 2 May 2018 Membership No.: 105149
115
KANSAI NEROLAC PAINTS LIMITED
STANDALONE BALANCE SHEET AS AT 31st March, 2018
` in Crores
As per our attached report of even date For and on behalf of the Board of Directors
For B S R & Co. LLP P.P. SHAH Chairman DIN 00066242
Chartered Accountants H.M. BHARUKA Vice Chairman and Managing Director DIN 00306084
Firm’s Registration No. 101248W/W-100022
N.N. TATA Director DIN 00024713
Aniruddha Godbole G.T. GOVINDARAJAN P.D. PAI BRINDA SOMAYA Director DIN 00358908
Partner Company Secretary CFO DIN 08091524
Anuj Jain Wholetime Director
Membership No. 105149 ACS No. 8887
116
KANSAI NEROLAC PAINTS LIMITED
STANDALONE Statement of Profit and Loss for the year ended 31st March, 2018
` in Crores
Year ended Year ended
Note 31st March, 2018 31st March, 2017
Income
Revenue from Operations........................................................ 25 4737.01 4531.05
Expenses
As per our attached report of even date For and on behalf of the Board of Directors
For B S R & Co. LLP P.P. SHAH Chairman DIN 00066242
Chartered Accountants H.M. BHARUKA Vice Chairman and Managing Director DIN 00306084
Firm’s Registration No. 101248W/W-100022
N.N. TATA Director DIN 00024713
Aniruddha Godbole G.T. GOVINDARAJAN P.D. PAI BRINDA SOMAYA Director DIN 00358908
Partner Company Secretary CFO DIN 08091524
Anuj Jain Wholetime Director
Membership No. 105149 ACS No. 8887
117
KANSAI NEROLAC PAINTS LIMITED
STANDALONE Statement of changes in equity
` in Crores
Balance as at 1st April, 2016......................................................................................................................................................... 53.89
Changes in Equity Share Capital during 2016-2017..................................................................................................................... —
B. Other Equity
` in Crores
Securities
Capital General Retained
Premium Total
Reserve Reserve Earnings
Reserve
Balance as at 1st April, 2016................................................. 0.30 12.56 452.09 1984.03 2448.98
Profit for the Year.................................................................... — — — 505.94 505.94
Other Comprehensive Income:
Remeasurement of Defined Benefit Liability ...................... — — — (7.23) (7.23)
Deferred Tax on Remeasurement of Defined Benefit Liability.. — — — 2.50 2.50
Total Other Comprehensive Income for the Year, net of tax. — — — (4.73) (4.73)
Total Comprehensive Income for the Year........................... — — — 501.21 501.21
Transaction with Owners in their Capacity as Owners,
recorded directly in equity:
Dividends ............................................................................ — — — (164.37) (164.37)
Dividend Distribution Tax..................................................... — — — (34.39) (34.39)
— — — (198.76) (198.76)
Transfer from Retained Earnings.......................................... — — — (35.58) (35.58)
Transfer to General Reserve.................................................. — — 35.58 — 35.58
Balance as at 31st March, 2017............................................. 0.30 12.56 487.67 2250.90 2751.43
` in Crores
Securities
Capital General Retained
Premium Total
Reserve Reserve Earnings
Reserve
Balance as at 1st April, 2017................................................. 0.30 12.56 487.67 2250.90 2751.43
Profit for the Year.................................................................... — — — 516.40 516.40
Other Comprehensive Income:
Remeasurement of Defined Benefit Liability ...................... — — — (1.67) (1.67)
Deferred Tax on Remeasurement of Defined Benefit Liability.. — — — 0.58 0.58
Total Other Comprehensive Income for the Year, net of tax. — — — (1.09) (1.09)
Total Comprehensive Income for the Year........................... — — — 515.31 515.31
Transaction with Owners in their Capacity as Owners,
recorded directly in equity:
Dividends ............................................................................ — — — (161.68) (161.68)
Dividend Distribution Tax..................................................... — — — (33.83) (33.83)
— — — (195.51) (195.51)
Balance as at 31st March, 2018............................................. 0.30 12.56 487.67 2570.70 3071.23
As per our attached report of even date For and on behalf of the Board of Directors
For B S R & Co. LLP P.P. SHAH Chairman DIN 00066242
Chartered Accountants H.M. BHARUKA Vice Chairman and Managing Director DIN 00306084
Firm’s Registration No. 101248W/W-100022
N.N. TATA Director DIN 00024713
Aniruddha Godbole G.T. GOVINDARAJAN P.D. PAI BRINDA SOMAYA Director DIN 00358908
Partner Company Secretary CFO DIN 08091524
Anuj Jain Wholetime Director
Membership No. 105149 ACS No. 8887
118
KANSAI NEROLAC PAINTS LIMITED
STANDALONE STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 31ST MARCH, 2018
` in Crores
18.03 (9.26)
(153.73) (180.78)
Net Cash Flow (used in) from Investing Activities................................... (154.77) (566.75)
Net Increase / (Decrease) in Cash and Cash Equivalents ........................... 16.64 (433.38)
119
KANSAI NEROLAC PAINTS LIMITED
STANDALONE STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 31ST MARCH, 2018 (contd.)
` in Crores
Opening Balances
Long-term Borrowing............................................................................................................... 28.78 41.61
Short-term Borrowing.............................................................................................................. – –
Movements
Long-term Borrowing............................................................................................................... (10.45) (12.83)
Short-term Borrowing.............................................................................................................. – –
Closing Balances
Long-term Borrowing............................................................................................................... 18.33 28.78
Short-term Borrowing.............................................................................................................. – –
Notes:
(i) Figures in brackets are outflows / deductions.
(ii) The above Cash Flow Statement is prepared under the “Indirect Method” as set out in the Indian Accounting Standards (Ind AS-7) – Statement
of Cash Flows.
As per our attached report of even date For and on behalf of the Board of Directors
For B S R & Co. LLP P.P. SHAH Chairman DIN 00066242
Chartered Accountants H.M. BHARUKA Vice Chairman and Managing Director DIN 00306084
Firm’s Registration No. 101248W/W-100022
N.N. TATA Director DIN 00024713
Aniruddha Godbole G.T. GOVINDARAJAN P.D. PAI BRINDA SOMAYA Director DIN 00358908
Partner Company Secretary CFO DIN 08091524
Anuj Jain Wholetime Director
Membership No. 105149 ACS No. 8887
120
KANSAI NEROLAC PAINTS LIMITED
Notes to the STANDALONE Financial Statements
A. Corporate Information
Kansai Nerolac Paints Limited (the ‘Company’) is a public limited company domiciled in India and incorporated under the provisions of the Companies
Act. The Company’s shares are listed on National Stock Exchange and Bombay Stock Exchange. The registered office of the Company is located at
Nerolac House, Ganpatrao Kadam Marg, Lower Parel, Mumbai-400013. The Company is principally engaged in the manufacturing of Paints.
Kansai Paints Co. Ltd. is immediate and ultimate holding company of Kansai Nerolac Paints Limited and is based and listed in Japan.
Financial Statements of Kansai Paints Co. Ltd. are available in public domain.
B. Basis of Preparation
1. Statement of Compliance
The Standalone Financial Statements have been prepared in accordance with Indian Accounting Standards (Ind AS) as per the Companies
(Indian Accounting Standards) Rules, 2015 notified under Section 133 of Companies Act, 2013, (the ‘Act’) and other relevant provisions of the Act.
The Standalone Financial Statements for the year ended 31st March, 2018 have been reviewed by the Audit Committee and approved by the
Board of Directors at their meetings held on 2nd May, 2018.
Details of the Company’s Accounting Policies are included in Note 1.
3. Basis of Measurement
The Standalone Financial Statements have been prepared on the historical cost basis except for investments in mutual funds, non-trade equity
shares, bonds and provision for employee defined benefit plans.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in
which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods if the revision affects both
current and future periods.
121
KANSAI NEROLAC PAINTS LIMITED
Notes to the STANDALONE Financial Statements
B. Basis of Preparation (contd.)
4. Use of Estimates and Judgements (contd.)
(ii) Key sources of Estimation Uncertainty (contd.)
Allowances for Inventories
Management reviews the inventory age listing on a periodic basis. This review involves comparison of the carrying value of the
aged inventory items with the respective net realizable value. The purpose is to ascertain whether an allowance is required to be made
in the financial statements for any obsolete and slow-moving items. Management is satisfied that adequate allowance for obsolete and
slow-moving inventories has been made in the financial statements.
Under Ind AS 115, an entity recognises revenue when (or as) a performance obligation is satisfied, i.e. when ‘control’ of the goods or services
underlying the particular performance obligation is transferred to the customer.
The Company is evaluating the requirements of the Ind AS 115 and the effect on the financial statements is being evaluated.
122
KANSAI NEROLAC PAINTS LIMITED
Notes to the STANDALONE Financial Statements
Note 1: Significant Accounting Policies
1. Classification of Assets and Liabilities
Schedule III to the Act, requires assets and liabilities to be classified as either Current or Non-current.
(a) An asset shall be classified as current when it satisfies any of the following criteria:
(i) it is expected to be realised in, or is intended for sale or consumption in, the Company’s normal operating cycle;
(iii) it is expected to be realised within twelve months after the reporting date; or
(iv) it is cash or cash equivalent unless it is restricted from being exchanged or used to settle a liability for at least twelve months after the
reporting date.
(b) All assets other than current assets shall be classified as non-current.
(c) A liability shall be classified as current when it satisfies any of the following criteria:
(i) it is expected to be settled in the Company’s normal operating cycle;
(iii) it is due to be settled within twelve months after the reporting date; or
(iv) the Company does not have an unconditional right to defer settlement of the liability for at least twelve months after the reporting date.
Terms of a liability that could, at the option of the counterparty, result in its settlement by the issue of equity instruments do not affect
its classification.
(d) All liabilities other than current liabilities shall be classified as non-current.
2. Operating Cycle
An operating cycle is the time between the acquisition of assets for processing and their realisation in cash or cash equivalents. The Company has
ascertained the operating cycle as twelve months for the purpose of current or non-current classification of assets and liabilities.
The cost of an item of Property, Plant and Equipment comprises its purchase price, including import duties and non-refundable purchase
taxes, after deducting trade discounts and rebates and any costs directly attributable to bringing the asset to the location and condition
necessary for it to be capable of operating in the manner intended by management. The initial estimate of the costs of dismantling and
removing the item and restoring the site on which it is located is included in the cost of an item of property, plant and equipment.
The cost of a self-constructed item of Property, Plant and Equipment comprises the cost of materials and direct labor, any other costs
directly attributable to bringing the item to working condition for its intended use, and estimated costs of dismantling and removing the item
and restoring the site on which it is located.
Tangible Property, Plant and Equipment under construction are disclosed as Capital Work-in-progress. Item of Capital Work-in-progress is
carried at cost using the principles of valuation of item of property, plant and equipment till it is ready for use, the manner in which intended
by management.
(c) Depreciation
The depreciable amount of an item of Property, Plant and Equipment is allocated on a systematic basis over its useful life. The Company
provides depreciation on the straight line method. The Company believes that straight line method reflects the pattern in which the
asset’s future economic benefits are expected to be consumed by the Company. Based on internal technical evaluation, the management
believes useful lives of the assets are appropriate. The depreciation method is reviewed at least at each financial year-end and, if there
has been a significant change in the expected pattern of consumption of the future economic benefits embodied in the asset, the method
is changed to reflect the changed pattern. Such a change is accounted for as a change in an accounting estimate in accordance with
Ind AS 8 – Accounting Policies, Changes in Accounting Estimates and Errors.
Each part of an item of Property, Plant and Equipment with a cost that is significant in relation to the total cost of the item is depreciated
separately.
The depreciation charge for each period is generally recognised in the Standalone Statement of Profit and Loss unless it is included in the
carrying amount of another asset.
123
KANSAI NEROLAC PAINTS LIMITED
Notes to the STANDALONE Financial Statements
Note 1: Significant Accounting Policies (contd.)
3. Property, Plant and Equipment (contd.)
(c) Depreciation (contd.)
The residual value and the useful life of an asset is reviewed at least at each financial year-end and, if expectations differ from previous
estimates, the change(s) is accounted for as a change in an accounting estimate in accordance with Ind AS 8 – Accounting Policies,
Changes in Accounting Estimates and Errors. The estimated useful lives for the current and comparative periods are as follows:
(d) Disposal
The carrying amount of an item of Property, Plant and Equipment is derecognised on disposal or when no future economic benefits are
expected from its use or disposal. The gain or loss arising from the derecognition of an item of Property, Plant and Equipment is included
in Standalone Statement of Profit and Loss when the item is derecognised.
4. Investment Property
(a) Recognition and Measurement
Land or building held to earn rentals or for capital appreciation or both rather than for use in the production or supply of goods or services
or for administrative purposes; or sale in the ordinary course of business is recognised as Investment Property. Land held for a currently
undetermined future use is also recognised as Investment Property.
An investment property is measured initially at its cost. The cost of an investment property comprises its purchase price and any directly
attributable expenditure. After initial recognition, the Company carries the investment property at the cost less accumulated depreciation
and accumulated impairment, if any.
(b) Depreciation
After initial recognition, the Company measures all of its investment property in accordance with Ind AS 16 – Property, Plant and Equipment
requirements for cost model. The depreciable amount of an item of investment property is allocated on a systematic basis over its useful
life. The Company provides depreciation on the straight line method. The Company believes that straight line method reflects the pattern
in which the asset’s future economic benefits are expected to be consumed by the Company. Based on internal technical evaluation, the
management believes useful lives of the assets are appropriate. The depreciation method is reviewed at least at each financial year-end
and, if there has been a significant change in the expected pattern of consumption of the future economic benefits embodied in the asset,
the method is changed to reflect the changed pattern. Such a change is accounted for as a change in an accounting estimate in accordance
with Ind AS 8 – Accounting Policies, Changes in Accounting Estimates and Errors.
The depreciation charge for each period is generally recognised in the Standalone Statement of Profit and Loss.
The residual value and the useful life of an asset is reviewed at least at each financial year-end and, if expectations differ from previous
estimates, the change(s) is accounted for as a change in an accounting estimate in accordance with Ind AS 8 – Accounting Policies,
Changes in Accounting Estimates and Errors. The estimated useful lives for the current and comparative periods are as follows:
124
KANSAI NEROLAC PAINTS LIMITED
Notes to the STANDALONE Financial Statements
Note 1: Significant Accounting Policies (contd.)
5. Other Intangible Assets
(a) Recognition and Measurement
An intangible asset is an identifiable non-monetary asset without physical substance. Intangible assets are initially measured at its cost and
then carried at the cost less accumulated depreciation and accumulated impairment, if any.
Research and Development
Research is original and planned investigation undertaken with the prospect of gaining new scientific or technical knowledge and
understanding. Expenditure incurred on research of an internal project is recognised as an expense in Standalone Statement of Profit
and Loss, when it is incurred.
Development is the application of research findings or other knowledge to a plan or design for the production of new or substantially
improved materials, devices, products, processes, systems or services before the start of commercial production or use. An intangible asset
arising from development is recognised if, and only if, the following criteria are met:
(a) it is technically feasibile to complete the intangible asset so that it will be available for use or sale.
(b) the Company intends to complete the intangible asset and use or sell it.
(c) the Company has ability to use or sell the intangible asset.
(d) the Company can demonstrate how the intangible asset will generate probable future economic benefits.
(e) the Company has adequate technical, financial and other resources to complete the development and to use or sell the intangible
asset.
(f) the Company has ability to measure reliably the expenditure attributable to the intangible asset during its development.
Expenditure on research activities is recognised in Standalone Statement of Profit and Loss as incurred.
Amortised intangible asset is displayed as amortisation on the face of Standalone Statement of Profit and Loss.
7. Employee Benefits
(a) Short-term Employee Benefits:
Short-term employee benefit obligations are measured on an undiscounted basis and are expensed as the related service is provided.
A liability is recognised for the amount expected to be paid e.g., under short-term cash bonus, if the Company has a present legal or
constructive obligation to pay this amount as a result of past service provided by the employee, and the amount of obligation can be
estimated reliably.
125
KANSAI NEROLAC PAINTS LIMITED
Notes to the STANDALONE Financial Statements
Note 1: Significant Accounting Policies (contd.)
7. Employee Benefits (contd.)
(b) Post-Employment Benefits:
The eligible employees of the Company are entitled to receive post employment benefits in respect of provident and family pension
fund, in which both the employees and the Company make monthly contributions at a specified percentage of the employees’ eligible
salary (currently 12% of employees’ eligible salary). The contributions are made to the Regional Provident Fund Commissioner (RPFC)
which are charged to the Standalone Statement of Profit and Loss as incurred.
In respect of contribution to RPFC, the Company has no further obligations beyond making the contribution, and hence, such employee
benefit plan is classified as Defined Contribution Plan. The Company’s contribution is recognised as an expense in the Standalone
Statement of Profit and Loss.
(ii) Superannuation
The eligible employees of the Company are entitled to receive post employment benefits in respect of superannuation fund in which
the Company makes annual contribution at a specified percentage of the employees’ eligible salary (currently 15% of employees’
eligible salary). The contributions are made to the Life Insurance Corporation of India (LIC). Superannuation is classified as Defined
Contribution Plan as the Company has no further obligations beyond making the contribution. The Company’s contribution is recognised
as an expense in the Standalone Statement of Profit and Loss.
A defined benefit plan is a post-employment benefit plan other than a defined contribution plan. The Company’s net obligation in respect of
defined benefit plans is calculated by estimating the amount of future benefit that employees have earned in the current and prior periods,
discounting that amount and deducting the fair value of any plan assets.
The calculation of defined benefit obligation is performed annually by a qualified actuary using the projected unit credit method. When the
calculation results in a potential asset for the Company, the recognised asset is limited to the present value of economic benefits available
in the form of any future refunds from the plan or reductions in future contributions to the plan (‘the asset ceiling’). In order to calculate the
present value of economic benefits, consideration is given to any minimum funding requirements.
Remeasurements of the net defined benefit liability, which comprise actuarial gains and losses, the return on plan assets (excluding interest)
and the effect of the asset ceiling (if any, excluding interest), are recognised in Other Comprehensive Income. The Company determines
the net interest expense (income) on the net defined benefit liability (asset) for the period by applying the discount rate used to measure
the defined benefit obligation at the beginning of the annual period to the then-net defined benefit liability (asset), taking into account any
changes in the net defined benefit liability (asset) during the period as a result of contributions and benefit payments. Net interest expense
and other expenses related to defined benefit plans are recognised in Standalone Statement of Profit and Loss.
When the benefits of a plan are changed or when a plan is curtailed, the resulting change in benefit that relates to past service (‘past service
cost’ or ‘past service gain’) or the gain or loss on curtailment is recognised immediately in profit or loss. The Company recognises gains and
losses on the settlement of a defined benefit plan when the settlement occurs.
Gratuity
The Company has an obligation towards gratuity, a defined benefit retirement plan covering eligible employees. The plan provides a lump
sum payment to vested employees at retirement, death while in employment or on termination of employment of an amount equivalent to
15 days to one month salary payable for each completed year of service or part thereof in excess of six months depending upon category
of employee. Vesting occurs upon completion of five years of service. The Company has obtained insurance policies with the Life Insurance
Corporation of India (LIC) and makes an annual contribution to LIC for amounts notified by LIC. The Company accounts for gratuity benefits
payable in future based on an independent external actuarial valuation carried out at the end of the year using the projected unit credit
method. Actuarial gains and losses are recognised as Other Comprehensive Income.
The Company provides for encashment of leave or leave with pay subject to certain rules. The employees are entitled to accumulate
leave subject to certain limits for future encashment / availment. The Company makes provision for compensated absences based on an
independent actuarial valuation carried out at the end of the year. Actuarial gains and losses are recognised in the Standalone Statement
of Profit and Loss.
126
KANSAI NEROLAC PAINTS LIMITED
Notes to the STANDALONE Financial Statements
Note 1: Significant Accounting Policies (contd.)
8. Inventories
(a) Measurement of Inventory
The Company measures its inventories at the lower of cost and net realisable value.
127
KANSAI NEROLAC PAINTS LIMITED
Notes to the STANDALONE Financial Statements
Note 1: Significant Accounting Policies (contd.)
11. Provisions and Contingent Liabilities (contd.)
Warranties
A provision for warranties is recognised when the underlying products or services are sold. The provision is based on technical evaluation,
historical warranty data and a weighting of all possible outcomes by their associated probabilities.
Restructuring
A provision for restructuring is recognised when the Company has approved a detailed formal restructuring plan, and the restructuring either has
commenced or has been announced publicly.
Onerous Contracts
A contract is considered to be onerous when the expected economic benefits to be derived by the Company from the contract are lower than
the unavoidable cost of meeting its obligations under the contract. The provision for an onerous contract is measured at the present value of the
lower of the expected cost of terminating the contract and the expected net cost of continuing with the contract. Before such a provision is made,
the Company recognises any impairment loss on the assets associated with that contract.
Sale of Goods
Revenue from the sale of goods shall be recognised when all the following conditions have been satisfied:
(a) the entity has transferred to the buyer the significant risks and rewards of ownership of the goods;
(b) the entity retains neither continuing managerial involvement to the degree usually associated with ownership nor effective control over the
goods sold;
(c) the amount of revenue can be measured reliably;
(d) it is probable that the economic benefits associated with the transaction will flow to the entity; and
(e) the costs incurred or to be incurred in respect of the transaction can be measured reliably.
The Company measures revenue at the fair value of the consideration received or receivable taking into account the amount of any sales returns,
trade discounts and volume rebates allowed by the Company. No element of financing is deemed present as the sales are made with credit term
in line with market practice.
Interest Income
Interest income is recognised using the effective interest method as set out in Ind AS 109 – Financial Instruments: Recognition and Measurement,
when it is probable that the economic benefits associated with the transaction will flow to the Company and the amount of the revenue can be
measured reliably. The effective interest method is a method of calculating the amortised cost of a financial asset or a financial liability (or group
of financial assets or financial liabilities) and of allocating the interest income or interest expense over the relevant period.
Royalty Income
Royalty income is recognised on an accrual basis in accordance with the substance of the relevant agreement when it is probable that the
economic benefits associated with the transaction will flow to the Company and the amount of the revenue can be measured reliably.
Dividend Income
Dividend income is recognised when right to receive payment is established and it is probable that the economic benefits associated with the
transaction will flow to the Company and the amount of the revenue can be measured reliably.
A foreign currency transaction is recorded, on initial recognition in the functional currency, by applying to the foreign currency amount the spot
exchange rate between the functional currency and the foreign currency at the date of the transaction.
At the end of each reporting period, foreign currency monetary items are translated using the closing rate whereas non-monetary items
that are measured in terms of historical cost in a foreign currency are translated using the exchange rate at the date of the transaction; and
non-monetary items that are measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value
was measured.
Exchange differences arising on the settlement of monetary items or on translating monetary items at rates different from those at which they
were translated on initial recognition during the period or in previous Financial Statements are recognised in the Standalone Statement of Profit
and Loss in the period in which they arise. When a gain or loss on a non-monetary item is recognised in Other Comprehensive Income, any
exchange component of that gain or loss is recognised in Other Comprehensive Income. Conversely, when a gain or loss on a non-monetary item
is recognised in Standalone Statement of Profit and Loss, any exchange component of that gain or loss is recognised in Standalone Statement
of Profit and Loss.
128
KANSAI NEROLAC PAINTS LIMITED
Notes to the STANDALONE Financial Statements
Note 1: Significant Accounting Policies (contd.)
14. Taxation
Income Tax
Income tax comprises current and deferred tax. It is recognised in Standalone Statement of Profit and Loss except to the extent that it relates to
a business combination or to an item recognised directly in Equity or in Other Comprehensive Income.
Current Tax
Current tax comprises the expected tax payable or receivable on the taxable income or loss for the year and any adjustment to the tax payable
or receivable in respect of previous years. The amount of current tax reflects the best estimate of the tax amount expected to be paid or received
after considering the uncertainty, if any, related to income taxes. It is measured using tax rates (and tax laws) enacted or substantively enacted
by the reporting date.
Deferred Tax
Deferred tax is recognised in respect of temporary differences between the carrying amounts of assets and liabilities for financial reporting
purposes and the corresponding amounts used for taxation purposes. Deferred tax is also recognised in respect of carried forward tax losses
and tax credits. Deferred tax is not recognised for:
a. temporary differences arising on the initial recognition of assets or liabilities in a transaction that is not a business combination and that
affects neither accounting nor taxable profit or loss at the time of the transaction;
b. taxable temporary differences arising on the initial recognition of goodwill.
Deferred tax assets are recognised to the extent that it is probable that future taxable profits will be available against which they can be used. The
existence of unused tax losses is strong evidence that future taxable profit may not be available. Therefore, in case of a history of recent losses,
the Company recognises a deferred tax asset only to the extent that it has sufficient taxable temporary differences or there is convincing other
evidence that sufficient taxable profit will be available against which such deferred tax asset can be realised. Deferred tax assets – unrecognised
or recognised, are reviewed at each reporting date and are recognised / reduced to the extent that it is probable / no longer probable respectively
that the related tax benefit will be realised.
Deferred tax is measured at the tax rates that are expected to apply to the period when the asset is realised or the liability is settled, based on
the laws that have been enacted or substantively enacted by the reporting date.
The measurement of deferred tax reflects the tax consequences that would follow from the manner in which the Company expects, at the
reporting date, to recover or settle the carrying amount of its assets and liabilities.
Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset current tax liabilities and assets, and they relate to
income taxes levied by the same tax authority on the same taxable entity, or on different tax entities, but they intend to settle current tax liabilities
and assets on a net basis or their tax assets and liabilities will be realised simultaneously.
15. Leases
Leases of Property, Plant and Equipment where the Company, as lessee, has substantially all the risks and rewards of ownership are classified
as finance leases. Finance leases are capitalised at the lease’s inception at the fair value of the leased property or, if lower, the present value
of the minimum lease payments. The corresponding rental obligations, net of finance charges, are included in borrowings or the financial
liabilities as appropriate. Each lease payment is allocated between the liability and finance cost. The finance cost is charged to the Standalone
Statement of Profit and Loss over the lease period so as to produce a constant periodic rate of interest on the remaining balance of the liability for
each period.
At inception of an arrangement, it is determined whether the arrangement is or contains a lease. At inception or on reassessment of the
arrangement that contains a lease, the payments and other consideration required by such an arrangement are separated into those for the lease
and those for other elements on the basis of their relative fair values. If it is concluded for a finance lease that it is impracticable to separate the
payments reliably, then an asset and a liability are recognised at an amount equal to the fair value of the underlying asset. The liability is reduced
as payments are made and an imputed finance cost on the liability is recognised using the incremental borrowing rate.
Leases in which a significant portion of the risks and rewards of ownership are not transferred to the Company as lessee are classified as
operating leases. Payments made under operating leases (net of any incentives received from the lessor) are charged to Standalone Statement
of Profit and Loss on straight-line basis over the period of the lease unless the payments are structured to increase in line with expected general
inflation to compensate for the lessor’s expected inflationary cost increases.
A financial asset or financial liability is initially measured at fair value plus, for an item not at Fair Value through Profit and Loss (FVTPL),
transaction costs that are directly attributable to its acquisition or issue.
129
KANSAI NEROLAC PAINTS LIMITED
Notes to the STANDALONE Financial Statements
Note 1: Significant Accounting Policies (contd.)
16. Financial Instruments (contd.)
(b) Classification and Subsequent Measurement
Financial assets:
On initial recognition, a financial asset is classified as measured at
— Amortised cost;
— Fair Value through Other Comprehensive Income (FVOCI) – debt investment;
— Fair Value through Other Comprehensive Income – equity investment; or
— FVTPL
Financial assets are not reclassified subsequent to their initial recognition, except if and in the period the Company changes its business
model for managing financial assets.
A financial asset is measured at amortised cost if it meets both of the following conditions and is not designated as at FVTPL:
— the asset is held within a business model whose objective is to hold assets to collect contractual cash flows; and
— the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest
on the principal amount outstanding.
A debt investment is measured at FVOCI if it meets both of the following conditions and is not designated as at FVTPL:
— the asset is held within a business model whose objective is achieved by both collecting contractual cash flows and selling financial
assets; and
— the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest
on the principal amount outstanding.
On initial recognition of an equity investment that is not held for trading, the Company may irrevocably elect to present subsequent changes
in the investment’s fair value in OCI (designated as FVOCI – equity investment). This election is made on an investment‑by‑investment
basis.
All financial assets not classified as measured at amortised cost or FVOCI as described above are measured at FVTPL. This includes
all derivative financial assets. On initial recognition, the Company may irrevocably designate a financial asset that otherwise meets the
requirements to be measured at amortised cost or at FVOCI as at FVTPL if doing so eliminates or significantly reduces an accounting
mismatch that would otherwise arise.
Financial assets at FVTPL These assets are subsequently measured at fair value. Net gains and losses, including any interest or
dividend income, are recognised in Standalone Statement of Profit and Loss.
Financial assets at amortised These assets are subsequently measured at amortised cost using the effective interest method. The
cost amortised cost is reduced by impairment losses. Interest income, foreign exchange gains and losses and
impairment are recognised in Standalone Statement of Profit and Loss. Any gain or loss on derecognition
is recognised in Statement of Profit and Loss.
Debt investments at FVOCI These assets are subsequently measured at fair value. Interest income under the effective interest
method, foreign exchange gains and losses and impairment are recognised in Standalone Statement of
Profit and Loss. Other net gains and losses are recognised in OCI. On derecognition, gains and losses
accumulated in OCI are reclassified to Standalone Statement of Profit and Loss.
Equity investments at FVOCI These assets are subsequently measured at fair value. Dividends are recognised as income in Standalone
Statement of Profit and Loss unless the dividend clearly represents a recovery of part of the cost of the
investment. Other net gains and losses are recognised in OCI and are not reclassified to Standalone
Statement of Profit and Loss.
(c) Derecognition
Financial Assets
The Company derecognises a financial asset when the contractual rights to the cash flows from the financial asset expire, or it transfers the
rights to receive the contractual cash flows in a transaction in which substantially all of the risks and rewards of ownership of the financial
asset are transferred or in which the Company neither transfers nor retains substantially all of the risks and rewards of ownership and does
not retain control of the financial asset.
If the Company enters into transactions whereby it transfers assets recognised on its balance sheet, but retains either all or substantially
all of the risks and rewards of the transferred assets, the transferred assets are not derecognised.
130
KANSAI NEROLAC PAINTS LIMITED
Notes to the STANDALONE Financial Statements
Note 1: Significant Accounting Policies (contd.)
16. Financial Instruments (contd.)
(c) Derecognition (contd.)
Financial Liabilities
The Company derecognises a financial liability when its contractual obligations are discharged or cancelled, or expire.
The Company also derecognises a financial liability when its terms are modified and the cash flows under the modified terms are
substantially different. In this case, a new financial liability based on the modified terms is recognised at fair value. The difference between
the carrying amount of the financial liability extinguished and the new financial liability with modified terms is recognised in Standalone
Statement of Profit and Loss.
(d) Offsetting
Financial assets and financial liabilities are offset and the net amount presented in the balance sheet when, and only when, the Company
currently has a legally enforceable right to set off the amounts and it intends either to settle them on a net basis or to realise the asset and
settle the liability simultaneously.
The Company calculates diluted earnings per share amounts for profit or loss attributable to ordinary equity holders and, if presented, profit or
loss from continuing operations attributable to those equity holders.
For the purpose of calculating diluted earnings per share, the Company adjusts profit or loss attributable to ordinary equity holders, and the
weighted average number of shares outstanding, for the effects of all dilutive potential ordinary shares, if any.
For the purpose of calculating diluted earnings per share, the weighted average number of ordinary shares calculated for calculating basic
earnings per share and adjusted the weighted average number of ordinary shares that would be issued on the conversion of all the dilutive
potential ordinary shares into ordinary shares. Dilutive potential ordinary shares are deemed to have been converted into ordinary shares at the
beginning of the period or, if later, the date of the issue of the potential ordinary shares.
The Company recognises loss allowances for expected credit losses on:
— financial assets measured at amortised cost; and
— financial assets measured at FVOCI – debt investments.
At each reporting date, the Company assesses whether financial assets carried at amortised cost are credit‑impaired. A financial asset is ‘credit‑
impaired’ when one or more events that have a detrimental impact on the estimated future cash flows of the financial asset have occurred.
In accordance with Ind AS 109 – Financial Instruments, the Company follows ‘simplified approach’ for recognition of impairment loss allowance
on trade receivables. The application of simplified approach does not require the Company to track changes in credit risk. Rather, it recognises
impairment loss allowance based on lifetime expected credit loss at each reporting date, right from its initial recognition.
The gross carrying amount of a financial asset is written off (either partially or in full) to the extent that there is no realistic prospect of recovery.
This is generally the case when the Company determines that the debtor does not have assets or sources of income that could generate sufficient
cash flows to repay the amounts subject to the write‑off. However, financial assets that are written off could still be subject to enforcement
activities in order to comply with the Company’s procedures for recovery of amounts due.
131
KANSAI NEROLAC PAINTS LIMITED
Notes to the STANDALONE Financial Statements
Note 1: Significant Accounting Policies (contd.)
19. Impairment Loss (contd.)
The Company assesses at the end of each reporting period whether there is any indication that an asset is impaired. In assessing whether there
is any indication that an asset may be impaired, the Company considers External as well as Internal Source of Information. If any such indication
exists, the Company estimates the recoverable amount for the individual asset. If, and only if, the recoverable amount of an asset is less than its
carrying amount, the carrying amount of the asset is reduced to its recoverable amount. An impairment loss is recognised immediately in profit
or loss, unless the asset is carried at revalued amount in accordance with another Standard.
If it is not possible to estimate the recoverable amount of the individual asset, the Company determines the recoverable amount of the cash-
generating unit to which the asset belongs (the asset’s cash-generating unit). A cash-generating unit is the smallest identifiable group of assets
that generates cash inflows that are largely independent of the cash inflows from other assets or groups of assets. The Company recognises
impairment loss for a cash-generating unit if, and only if, the recoverable amount of the cash-generating unit is less than the carrying amount
of the cash-generating unit. The Company allocates impairment loss of cash-generating units first to the carrying amount of goodwill allocated
to the cash-generating units, if any, and then, to the other assets of the cash-generating units pro rata on the basis of the carrying amount of
each asset in the cash-generating unit. These reductions in carrying amounts shall be treated as impairment losses on individual assets and
recognised accordingly.
The Company has an established control framework with respect to the measurement of fair values. This includes a valuation team that
has overall responsibility for overseeing all significant fair value measurements, including Level 3 fair values, and reports directly to the
Chief Financial Officer.
The valuation team regularly reviews significant unobservable inputs and valuation adjustments. If third party information, such as broker quotes
or pricing services, is used to measure fair values, then the valuation team assesses the evidence obtained from the third parties to support the
conclusion that these valuations meet the requirements of Ind AS, including the level in the fair value hierarchy in which the valuations should be
classified.
Fair values are categorised into different levels in a fair value hierarchy based on the inputs used in the valuation techniques as follows:
Level 1 : quoted prices (unadjusted) in active markets for identical assets or liabilities.
Level 2 : inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly
(i.e. derived from prices).
Level 3 : inputs for the asset or liability that are not based on observable market data (unobservable inputs).
When measuring the fair value of an asset or a liability, the Company uses observable market data as far as possible. If the inputs used to
measure the fair value of an asset or a liability fall into different levels of the fair value hierarchy, then the fair value measurement is categorised
in its entirety in the same level of the fair value hierarchy as the lowest level input that is significant to the entire measurement.
The Company recognises transfers between levels of the fair value hierarchy at the end of the reporting period during which the change
has occurred.
132
KANSAI NEROLAC PAINTS LIMITED
Notes to the STANDALONE Financial Statements
Description As at As at As at As at As at
1st April, Additions Deductions 31st March, 1st April, Additions Deductions 31st March, 31st March,
2017 2018 2017 2018 2018
Buildings
.................................... 430.96 5.53 — 436.49 94.29 12.89 — 107.18 329.31
(423.62) (7.34) (—) (430.96) (81.52) (12.77) (—) (94.29) (336.67)
Plant and Equipment .................. 700.34 63.74 — 764.08 269.63 32.09 — 301.72 462.36
(675.09) (25.31) (0.06) (700.34) (239.97) (29.72) (0.06) (269.63) (430.71)
Furniture and Fixtures................. 15.91 1.08 0.01 16.98 12.93 0.68 0.01 13.60 3.38
(15.18) (0.73) (—) (15.91) (12.18) (0.75) (—) (12.93) (2.98)
Computers................................... 36.74 3.40 1.57 38.57 27.50 3.90 1.57 29.83 8.74
(32.83) (4.50) (0.59) (36.74) (24.94) (3.15) (0.59) (27.50) (9.24)
Assets for Scientific Research*..... 25.70 0.55 — 26.25 11.03 1.18 — 12.21 14.04
(19.83) (5.87) (—) (25.70) (10.05) (0.98) (—) (11.03) (14.67)
Assets given on Operating Lease 246.35 32.87 — 279.22 183.71 23.41 — 207.12 72.10
(Refer Note 2.5) (217.34) (29.01) (—) (246.35) (163.56) (20.15) (—) (183.71) (62.64)
Total Tangible Assets................ 1556.17 134.16 1.61 1688.72 610.64 75.38 1.58 684.44 1004.28
(1468.34) (88.62) (0.79) (1556.17) (542.48) (68.89) (0.73) (610.64) (945.53)
* Net block includes Buildings ` 0.34 Crores (2016-2017 ` 0.35 Crores), Plant and Equipment ` 13.50 Crores (2016-2017 ` 14.08 Crores) and Furniture and Fixtures ` 0.20 Crores
(2016-2017 ` 0.24 Crores).
2.1. Figures in the brackets are the corresponding figures in respect of the previous year.
2.2. No items of Property, Plant and Equipment were pledged as security for liabilities during any part of the current and comparative period.
2.3. Nil amount of borrowing costs is capitalised during the current and comparative period.
2.4. Nil amount of impairment loss is recognised during the current and comparative period.
Note 2.5:
The Company has given Colour Dispenser Machines on operating lease to its dealers. Particulars in respect of such leases are as follows:
(a) (i) The gross carrying amount and the accumulated depreciation at the Balance Sheet date are ` 279.22 Crores (2016-2017 ` 246.35 Crores)
and ` 207.12 Crores (2016-2017 ` 183.71 Crores) respectively.
(ii) Depreciation recognised in the Standalone Statement of Profit and Loss is ` 23.41 Crores (2016-2017 ` 20.15 Crores).
(b) The Company enters into three years cancellable lease agreements. However, the corresponding lease rentals may be receivable for a
shorter period or may be waived off. The minimum aggregate lease payments to be received in future is considered as ` Nil. Accordingly, the
disclosure of the present value of minimum lease payments receivable at the Balance Sheet date is not made.
133
KANSAI NEROLAC PAINTS LIMITED
Notes to the STANDALONE Financial Statements
Description As at As at As at As at As at
1st April, Additions Deductions 31st March, 1st April, Additions Deductions 31st March, 31st March,
2017 2018 2017 2018 2018
3.1. Figures in the brackets are the corresponding figures in respect of the previous year.
3.2. Nil amount of borrowing costs is capitalised during the current and comparative period.
3.3. Nil amount of impairment loss is recognised during the current and comparative period.
3.4. During the financial year, no rental income was generated from the investment properties whereas direct operating expenses of ` 0.18 Crores (2016-2017 ` 0.40 Crores) were incurred and
recorded as expense in the Standalone Statement of Profit and Loss.
3.5. Total fair value of Investment Property is ` 1381.20 Crores (2016-2017 ` 1362.70 Crores).
Description As at As at As at As at As at
1st April, Additions Deductions 31st March, 1st April, Additions Deductions 31st March, 31st March,
2017 2018 2017 2018 2018
Total Other Intangible Assets.. 13.75 1.64 — 15.39 12.86 0.41 — 13.27 2.12
(12.78) (0.97) (—) (13.75) (12.26) (0.60) (—) (12.86) (0.89)
4.1. Figures in the brackets are the corresponding figures in respect of the previous year.
4.2. Nil amount of borrowing costs is capitalised during the current and comparative period.
4.3. Nil amount of impairment loss is recognised during the current and comparative period.
134
KANSAI NEROLAC PAINTS LIMITED
Notes to the STANDALONE Financial Statements
` in Crores
Note 5: Non-current Investments As at As at
31st March, 2018 31st March, 2017
Note 6: Loans
Unsecured and Considered Good:
Security Deposits........................................................................................................................ 11.26 10.31
11.26 10.31
150.49 121.64
Note 8: Inventories
Raw Materials [Including goods-in-transit of ` Nil (2016-2017 ` 4.00 Crores)] .......................... 311.01 236.35
Work-in-progress......................................................................................................................... 65.04 44.69
Finished Goods........................................................................................................................... 395.29 388.48
Stock-in-trade.............................................................................................................................. 30.12 18.37
Stores and Spares...................................................................................................................... 4.30 3.42
805.76 691.31
No inventories were pledged as security for liabilities during the current and comparable period.
Nil amount of inventories were written down to net realisable value during the current and comparable period. Similarly, Nil amount of reversal of write
down was accounted during the current and comparable periods.
135
KANSAI NEROLAC PAINTS LIMITED
Notes to the STANDALONE Financial Statements
` in Crores
136
KANSAI NEROLAC PAINTS LIMITED
Notes to the STANDALONE Financial Statements
` in Crores
` in Crores
Note 10: Trade Receivables As at As at
31st March, 2018 31st March, 2017
Overdue for a Period Exceeding Six Months:
Secured, Considered Good......................................................................................................... — —
Unsecured, Considered Good..................................................................................................... 6.16 1.98
Doubtful....................................................................................................................................... 14.40 12.64
20.56 14.62
Less: Provision for Bad and Doubtful Debts................................................................................ 14.40 12.64
6.16 1.98
Other Receivables:
Secured, Considered Good......................................................................................................... — —
Unsecured, Considered Good*#................................................................................................. 669.53 569.73
Doubtful....................................................................................................................................... — 0.60
669.53 570.33
Less: Provision for Bad and Doubtful Debts................................................................................ — 0.60
669.53 569.73
675.69 571.71
includes ` 0.93 Crores (2016-2017 ` 2.23 Crores), receivable from subsidiary company –
*
KNP Japan Private Limited (formerly known as Kansai Paints Nepal Private Limited),
private company in which director of the Company is a director
includes ` 0.42 Crores (2016-2017 ` Nil) receivable from subsidiary company – Kansai Paints
#
Lanka (Private) Limited, private company in which director of the Company is a director
137
KANSAI NEROLAC PAINTS LIMITED
Notes to the STANDALONE Financial Statements
` in Crores
60.51 43.87
Note 12: Bank Balance other than Cash and Cash Equivalents
Unpaid Dividend Accounts............................................................................................................. 1.01 0.88
300.40 205.82
* Deposited under Capital Gain Accounts Scheme, 1988 in respect of long-term capital gain,
includes fixed deposit of ` 0.50 Crores
3.32 11.19
* The Company had provided working capital loan to its Subsidiary Company, private company
in which director of the Company is a director, which carried an interest of 5.5% p.a. Maximum
amount outstanding during the year – Nil (2016-2017 ` 7.87 Crores). This loan was within the
limit of Section 186 of the Companies Act, 2013
27.02 234.22
* Deposited under Capital Gain Accounts Scheme, 1988 in respect of long-term capital gain
# I ncludes ` 1.57 Crores (2016-2017 ` Nil) receivable from subsidiary company – KNP Japan
Private Limited (formerly known as Kansai Paints Nepal Private Limited), private company in
which director of the Company is a director
137.97 65.79
138
KANSAI NEROLAC PAINTS LIMITED
Notes to the STANDALONE Financial Statements
` in Crores
3. Details of Shareholders holding more than 5% of shares and details of shares held by
Holding Company:
% No. of % No. of
Shares Shares
Holding Company:
Kansai Paint Co., Ltd., Japan........................................................................................... 74.99 40,41,35,898 74.99 40,41,35,898
4. Aggregated number of bonus share issued during the period of five years immediately
preceding the reporting date by capitalisation of security premium reserve Nil Nil
5. The Company has issued one class of shares, i.e. equity shares, which enjoys similar rights
in respect of voting, payment of dividend and repayment of capital. On winding up of the
Company, the holders of equity shares will be entitled to receive the residual assets of
the Company, remaining after distribution of all preferential amounts in proportion to the
number of equity shares held.
7. Capital Management
For the purpose of the Company’s capital management, capital includes issued equity
share capital and all other equity reserves attributable to the equity holders of the Company.
The Company’s policy is to maintain a strong capital base so as to maintain investor, creditor
and market confidence and to sustain future development of the business. Management
monitors the return on capital, as well as the levels of dividends to equity shareholders.
The Company is not subject to any externally imposed capital requirements.
139
KANSAI NEROLAC PAINTS LIMITED
Notes to the STANDALONE Financial Statements
` in Crores
Note 17: Other Equity
Securities
Capital General Retained
Premium Total
Reserve Reserve Earnings
Reserve
Balance as at 1st April, 2016................................................. 0.30 12.56 452.09 1984.03 2448.98
Profit for the Year.................................................................... — — — 505.94 505.94
Other Comprehensive Income:
Remeasurement of Defined Benefit Liability ...................... — — — (7.23) (7.23)
Deferred Tax on Remeasurement of Defined Benefit Liability.. — — — 2.50 2.50
Total Other Comprehensive Income for the Year, net of tax. — — — (4.73) (4.73)
Total Comprehensive Income for the Year........................... — — — 501.21 501.21
Transaction with Owners in their Capacity as Owners,
recorded directly in equity:
Dividends ............................................................................ — — — (164.37) (164.37)
Dividend Distribution Tax..................................................... — — — (34.39) (34.39)
— — — (198.76) (198.76)
Transfer from Retained Earnings.......................................... — — — (35.58) (35.58)
Transfer to General Reserve.................................................. — — 35.58 — 35.58
Balance as at 31st March, 2017............................................. 0.30 12.56 487.67 2250.90 2751.43
` in Crores
Securities
Capital General Retained
Premium Total
Reserve Reserve Earnings
Reserve
Balance as at 1st April, 2017................................................. 0.30 12.56 487.67 2250.90 2751.43
Profit for the Year.................................................................... — — — 516.40 516.40
Other Comprehensive Income:
Remeasurement of Defined Benefit Liability ...................... — — — (1.67) (1.67)
Deferred Tax on Remeasurement of Defined Benefit Liability.. — — — 0.58 0.58
Total Other Comprehensive Income for the Year, net of tax. — — — (1.09) (1.09)
Total Comprehensive Income for the Year........................... — — — 515.31 515.31
Transaction with Owners in their Capacity as Owners,
recorded directly in equity:
Dividends ............................................................................ — — — (161.68) (161.68)
Dividend Distribution Tax..................................................... — — — (33.83) (33.83)
— — — (195.51) (195.51)
Balance as at 31st March, 2018............................................. 0.30 12.56 487.67 2570.70 3071.23
Capital Reserve
Capital reserve includes profit on re-issue of forfeited shares.
Securities Premium Reserve
Securities premium reserve is used to record the premium received on issue of shares. It is utilised in accordance with the provisions of the Companies
Act, 2013.
General Reserve
General reserve was created by transfers of profits as per Companies (Transfer of Profits to Reserves) Rules, 1975. As general reserve is created by
transfer from one component of equity to another and is not an item of other comprehensive income, items included in the general reserve will not be
reclassified subsequently to profit or loss.
Dividend
For the year 2016-2017, the Directors had recommended and Shareholders had approved a dividend of 300%, including special dividend of 50%,
(` 0.50 per share), which has been accounted in current year. For the year 2017-2018, the Directors have recommended a normal dividend of 260%
(` 2.60 per share) for the year. The dividend proposed by the Directors is subject to approval of Shareholders at the annual general meeting.
The proposed dividend of ` 140.12 Crores (2016-2017 ` 161.68 Crores) alongwith dividend distribution tax of ` 29.66 (2016-2017 ` 33.83 Crores)
have not been recognised as liabilities.
140
KANSAI NEROLAC PAINTS LIMITED
Notes to the STANDALONE Financial Statements
` in Crores
9.71 18.33
B. Reconciliation of tax expense and the accounting profit for the year is as under:
Profit before tax......................................................................................................................... 786.40 759.42
Income tax expense calculated at 34.608% ............................................................................. 272.71 263.14
Tax effect on non-deductible expenses..................................................................................... 4.17 2.93
Incentive tax credits.................................................................................................................. (3.69) (8.47)
Effect of Income that is exempted from tax............................................................................... (0.84) (4.31)
Others ...................................................................................................................................... (2.35) 0.19
Total................... 270.00 253.48
Tax expense as per Standalone Statement of Profit and Loss........................................... 270.00 253.48
The tax rate used for reconciliation above is the corporate tax rate of 34.608% payable by corporate entities in India on taxable profits under Indian tax law.
C. The major components of deferred tax (liabilities) / assets arising on account of timing differences are as follows:
Particulars Balance Profit and Balance Balance Profit and Other Balance
OCI OCI
Sheet Loss Sheet Sheet Loss Adjustments Sheet
01.04.2017 2017-2018 2017-2018 31.03.2018 01.04.2016 2016-2017 2016-2017 2016-2017 31.03.2017
Difference between written down value / capital
work in progress of fixed assets as per the books
of accounts and Income Tax Act,1961..................... (101.16) (6.86) — (108.02) (92.59) (8.57) — — (101.16)
Tax adjustment on account on indexation of
freehold land............................................................ 12.27 1.88 — 14.15 11.54 0.73 — — 12.27
Provision for Diminution in Value of Fixed Assets .. — — — — 0.12 (0.12) — — —
Expense claimed for tax purpose on payment basis. 5.54 1.41 — 6.95 4.85 0.69 — — 5.54
Provision for doubtful debts and Advances............. 4.59 0.40 — 4.99 2.89 1.70 — — 4.59
Voluntary Retirement Scheme (VRS) expenditure
(allowed in Income Tax Act, 1961 over 5 years)...... 0.30 (0.28) — 0.02 0.60 (0.30) — — 0.30
Remeasurement benefit of the defined benefit
plans through OCI .................................................. 2.50 — 0.58 3.08 — — 2.50 — 2.50
MAT Credit Entitlements ........................................ — — — — 60.77 — — (60.77) —
Net fair value loss on investment in through
FVTPL..................................................................... (3.25) 1.66 — (1.59) (0.80) (2.45) — — (3.25)
Deferred tax (expense) / income
Net Deferred tax liabilities........................................ (79.21) (1.79) 0.58 (80.42) (12.62) (8.32) 2.50 (60.77) (79.21)
141
KANSAI NEROLAC PAINTS LIMITED
Notes to the STANDALONE Financial Statements
` in Crores
*
Includes payable toward TDS, Excise duty, Service tax, VAT, GST and Employee Related
Statutory Obligations.
` in Crores
*
With restructuring of the production facilities, the timing of the outflow of
provision ` 4.66 Crores (2016-2017 ` 4.66 Crores) recognised in respect
of matters relating to indirect taxes is dependent on the outcome of the
settlement with the appropriate authorities.
# The Company was selling certain products with a warranty of seven years.
Accordingly, provision had been recognised on the basis of management’s
expectation of warranty claims on such products.
142
KANSAI NEROLAC PAINTS LIMITED
NOTES TO THE STANDALONE FINANCIAL STATEMENTS
` in Crores
2.62 2.70
Interest Income
Interest on Loans and Deposit............................................................... 19.65 9.55
Interest on bonds recognised through FVTPL....................................... 0.78 2.22
20.43 11.77
Profit on Sale of Investment (Net)............................................................... 30.04 56.17
Fair Value Gain on Financial Instruments recognised through FVTPL......... 4.94 11.04
Other Non-operating Income
Profit on Sale of Property, Plant and Equipment .................................. 0.04 0.04
Foreign Exchange Gain (Net)................................................................ 11.24 11.52
Insurance Claims Received .................................................................. 2.86 2.96
Miscellaneous Income........................................................................... 0.25 2.02
14.39 16.54
72.42 98.22
143
KANSAI NEROLAC PAINTS LIMITED
NOTES TO THE STANDALONE FINANCIAL STATEMENTS
` in Crores
451.54 408.32
Less: Closing Stock
490.45 451.54
Add: Excise Duty Related to the Difference between the Closing Stock
and Opening Stock of Finished Goods............................................... (75.54) 8.96
(114.45) (34.26)
Contribution to Provident and Other Funds (Refer Note 35)....................... 13.50 12.61
226.56 * 198.12 *
75.79* 69.49*
144
KANSAI NEROLAC PAINTS LIMITED
NOTES TO THE STANDALONE FINANCIAL STATEMENTS
` in Crores
In other capacity
Certification............................................................................................ 0.09 0.09
Other matters......................................................................................... 0.10 0.15
Reimbursements of Expenses................................................................. 0.03 0.03
0.60 0.65
145
KANSAI NEROLAC PAINTS LIMITED
NOTES TO THE STANDALONE FINANCIAL STATEMENTS
` in Crores
Note 32: Contingent Liabilities and Commitments Year ended Year ended
(to the extent not provided for) 31st March, 2018 31st March, 2017
The Company has made adequate provisions in the accounts for claims
against the Company related to direct and indirect taxes matters, except
for certain claims not acknowledged as debts, totalling to ` 7.29 Crores
(2016-2017 ` 6.41 Crores) from the Excise / Service Tax Authorities, in
respect of disallowance of Excise / Service Tax Cenvat Credit. In addition,
the Company is subject to other legal proceedings in respect of other
matters arisen in the ordinary course of business. The Company’s
management is of the opinion that ultimate liability in respect of these
litigations shall not exceed the amount provided in books of account, and
shall not have any material adverse effect on the Company’s operation
and financial position.
Commitments:
Corporate guarantee
162.05 240.25
Numerator:
Denominator:
Weighted Average Number of ordinary shares at the beginning and
end of the year....................................................................................... 53,89,19,720 53,89,19,720
Basic and Diluted Earnings Per Share (in `).......................................... 9.58 9.39
146
KANSAI NEROLAC PAINTS LIMITED
NOTES TO THE STANDALONE FINANCIAL STATEMENTS
(b) An entity is related to a reporting entity if any of the following conditions applies:
(i) The entity and the reporting entity are members of the same group (which means that each parent, subsidiary and fellow subsidiary is
related to the others).
(ii) One entity is an associate or joint venture of the other entity (or an associate or joint venture of a member of a group of which the other
entity is a member).
(iii) Both entities are joint ventures of the same third party.
(iv) One entity is a joint venture of a third entity and the other entity is an associate of the third entity.
(v) The entity is a post-employment benefit plan for the benefit of employees of either the reporting entity or an entity related to the reporting
entity. If the reporting entity is itself such a plan, the sponsoring employers are also related to the reporting entity.
(vi) The entity is controlled or jointly controlled by a person identified in (a).
(vii) A person identified in (a)(i) has significant influence over the entity or is a member of the key management personnel of the entity (or of a
parent of the entity).
(viii) The entity, or any member of a group of which it is a part, provides key management personnel services to the reporting entity or to the
parent of the reporting entity.
A related party transaction is a transfer of resources, services or obligations between a reporting entity and a related party, regardless of
whether a price is charged.
Subsidiary Companies
147
KANSAI NEROLAC PAINTS LIMITED
NOTES TO THE STANDALONE FINANCIAL STATEMENTS
` in Crores
Dividend Paid
— Kansai Paint Co., Ltd., Japan..................................................... Parent and ultimate 121.24 123.26
controlling entity
Dividend Income
— KNP Japan Private Limited........................................................ Subsidiary 1.66 —
148
KANSAI NEROLAC PAINTS LIMITED
NOTES TO THE STANDALONE FINANCIAL STATEMENTS
a. Gratuity
The following tables setout the funded status of the gratuity plans and the amounts recognised in the Company’s Financial Statements as
at 31st March, 2018 and 31st March, 2017:
` in Crores
Particulars Year ended Year ended
31st March, 2018 31st March, 2017
Change in Defined Benefit Obligation
Defined Benefit Obligation at the beginning........................................................................... 33.34 24.16
Remeasurements – Return on plan assets excluding amounts included in interest income (1.37) 0.32
Defined Benefit Cost recognised in the Standalone Statement of Profit and Loss ................. 2.89 3.18
149
KANSAI NEROLAC PAINTS LIMITED
NOTES TO THE STANDALONE FINANCIAL STATEMENTS
Defined Benefit Cost recognised in the Statement of Other Comprehensive Income........... 1.67 6.14
The assumptions used to determine net periodic benefit cost are set out below:
Particulars Valuation Date
31st March, 2018 31st March, 2017
Discount Rate......................................................................................................................... 7.70% 7.20%
Salary Escalation.................................................................................................................... 7.50% 7.50%
Weighted average duration of the Defined Benefit Obligation (years)....................................... 12.78 12.82
Sensitivity Analysis:
Discount Rate, Salary Escalation Rate and Withdrawal Rate are significant actuarial
assumptions. The change in the Present Value of Defined Benefit Obligation for a change
of 100 Basis Points from the assumed assumption is given below:
` in Crores
Scenario 31st March, 2018 31st March, 2017
Under Base Scenario............................................................................................................. 34.93 33.33
Salary Escalation – Up by 1%................................................................................................ 37.89 35.68
Salary Escalation – Down by 1%............................................................................................ 32.31 30.31
Withdrawal Rates – Up by 1%................................................................................................ 34.79 32.66
Withdrawal Rates – Down by 1%........................................................................................... 35.08 33.03
Discount Rates – Up by 1%.................................................................................................... 32.52 29.61
Discount Rates – Down by 1%............................................................................................... 37.71 35.08
Assumptions regarding future mortality experience are set in accordance with the published statistics by the Life Insurance Corporation
of India.
The Company contributes all ascertained liabilities towards gratuity to the fund maintained by the Life Insurance Corporation of India.
The Company expects to contribute ` 2.80 Crores (2016-2017 ` 6.53 Crores) to the fund during the subsequent accounting year.
b. Provident Fund (Managed by the Trust set up by the Company)
The Company has contributed ` 2.09 Crores (2016-2017 ` 1.90 Crores) to the Provident Fund Trust. The Company has an obligation to
fund any shortfall on the yield of the trust’s investments over the guaranteed interest rates on an annual basis. These administered rates
are determined annually predominantly considering the social rather than economic factors and in most cases the actual return earned by
the Company has been higher in the past years. The actuary has provided a valuation for provident fund liabilities on the basis of guidance
issued by Actuarial Society of India and based on the below provided assumptions there is no shortfall.
150
KANSAI NEROLAC PAINTS LIMITED
NOTES TO THE STANDALONE FINANCIAL STATEMENTS
Particulars As at As at
31st March, 2018 31st March, 2017
Plan assets at period end, at fair value....................................................................... 58.78 50.21
c. Compensated Absences
The increase in provision for compensated absences for the year is ` 1.85 Crores (2016-2017 ` 3.06 Crores).
151
KANSAI NEROLAC PAINTS LIMITED
NOTES TO THE STANDALONE FINANCIAL STATEMENTS
` in Crores
Year At FVTPL Other Level 1 Level 2 Level 3 Total
Financial
Assets /
Liabilities -
Amortised
Cost
Financial Assets measured at Fair Value
Non-current Assets: Investments (Note 5) 2018 0.71 25.10 0.69 — 0.02 25.81
2017 0.69 21.34 0.67 — 0.02 22.03
Current Assets: Investments (Note 9) 2018 519.96 — — 519.96 — 519.96
2017 530.75 — — 530.75 — 530.75
Financial Assets not measured at Fair Value
Non-current Assets: Loans (Note 6) 2018 — 11.26 — — — 11.26
2017 — 10.31 — — — 10.31
Current Assets: Trade Receivables (Note 10) 2018 — 675.69 — — — 675.69
2017 — 571.71 — — — 571.71
Current Assets: Cash and Cash Equivalent 2018 — 60.51 — — — 60.51
(Note 11)
2017 — 43.87 — — — 43.87
Current Assets: Bank Balances other than 2018 — 300.40 — — — 300.40
Cash and Cash Equivalent (Note 12)
2017 — 205.82 — — — 205.82
Current Assets: Loans (Note 13) 2018 — 3.32 — — — 3.32
2017 — 11.19 — — — 11.19
Current Assets: Other Financial Assets 2018 — 27.02 — — — 27.02
(Note 14)
2017 — 234.22 — — — 234.22
Financial Liabilities not measured at Fair Value
Non-current Liabilities: Borrowings (Note 18) 2018 — 9.71 — — — 9.71
2017 — 18.33 — — — 18.33
Current Liabilities: Trade Payable (Note 20) 2018 — 683.58 — — — 683.58
2017 — 550.20 — — — 550.20
Current Liabilities: Other Financial Liabilities 2018 — 114.35 — — — 114.35
(Note 21)
2017 — 80.24 — — — 80.24
152
KANSAI NEROLAC PAINTS LIMITED
NOTES TO THE STANDALONE FINANCIAL STATEMENTS
Note 38: Financial Instruments: Fair Values and Risk Management (contd.)
(B) Financial Risk Management (contd.)
(ii) Credit Risk
Credit Risk is the risk of financial loss to the Company if a customer or counterparty to a financial instrument fails to meet its contractual
obligations, and arises principally from the Company’s receivables from customers, loans and investments in debt securities. The carrying
amounts of financial assets represent the maximum credit risk exposure.
Trade Receivables and Loans:
The Company’s exposure to credit risk is influenced mainly by the individual characteristics of each customer. The Risk Management
Committee has established a credit policy under which each new customer is analysed individually for creditworthiness before the
Company’s standard payment and delivery terms and conditions are offered. The Company’s review includes financial statements, credit
agency information, industry information and in some cases bank references. Sales limits are established for each customer and reviewed
constantly. Any sales exceeding those limits require approval from the management.
Financial Instruments and Cash Deposits:
Credit risks from balances with banks and financial institutions is managed by the Company’s Treasury Department in accordance with
the Company’s policy. Investments of surplus funds are made only with approved counterparties and within credit limits assigned to each
counterparty. The limits are set to minimise the concentration of risks and therefore mitigate financial loss through counterparty’s potential
failure to make payments.
` in Crores
Trade Advances....................... 31-03-2018 0.37 43.61 0.89 0.10 0.03 0.01 13.91 49.74 108.66
Financial Liabilities
Trade Payables........................ 31-03-2018 (0.13) (6.76) (20.89) — (0.03) — (121.61) (534.16) (683.58)
Net exposure to Foreign 31-03-2018 0.24 36.85 (20.00) 0.10 (105.77) 189.34 100.76
Currency Risk (Liabilities)........
31-03-2017 (0.18) 2.28 (10.57) (0.06) — — (59.19) 155.27 87.55
153
KANSAI NEROLAC PAINTS LIMITED
NOTES TO THE STANDALONE FINANCIAL STATEMENTS
Note 38: Financial Instruments: Fair Values and Risk Management (contd.)
(v) Foreign Currency Sensitivity Analysis
The following table demonstrate the sensitivity to a reasonable possible change in CHF, EURO, JPY and USD exchange rates, with all
other variable held constant.
` in Crores
Profit or Loss Equity net of tax
Strengthening Weakening Strengthening Weakening
31st March, 2018
CHF (5% movement)........................................................ 0.01 (0.01) 0.01 (0.01)
EURO (5% movement)..................................................... 1.84 (1.84) 1.20 (1.20)
JPY (5% movement) ........................................................ (1.00) 1.00 (0.65) 0.65
USD (5% movement) ....................................................... (5.29) (5.29) (3.46) 3.46
31st March, 2017
CHF (5% movement)........................................................ (0.01) 0.01 (0.01) 0.01
EURO (5% movement)..................................................... 0.11 (0.11) 0.07 (0.07)
JPY (5% movement) ........................................................ (0.53) 0.53 (0.35) 0.35
USD (5% movement) ....................................................... (2.96) 2.96 (1.94) 1.94
Note 39:
Disclosure under the Micro, Small and Medium Enterprises Development Act, 2006 are provided as under for the year 2017-18, to the extent
the Company has received intimation from the “Suppliers” regarding their status under the Act.
` in Crores
As at As at
31st March, 2018 31st March, 2017
(i) Principal amount and the interest due thereon remaining unpaid to each supplier at the end
of each accounting year (but within due date as per the MSMED Act)
Principal amount due to micro and small enterprise......................................................... — —
Interest due on above....................................................................................................... — —
(ii) Interest paid by the Company in terms of Section 16 of the Micro, Small and Medium
Enterprises Development Act, 2006, along-with the amount of the payment made to the
supplier beyond the appointed day during the period............................................................. — —
(iii) Interest due and payable for the period of delay in making payment (which have been paid
but beyond the appointed day during the period) but without adding interest specified under
the Micro, Small and Medium Enterprises Act, 2006............................................................. — —
(iv) The amount of interest accrued and remaining unpaid at the end of each accounting year.. — —
(v) Interest remaining due and payable even in the succeeding years, until such date when the
interest dues as above are actually paid to the small enterprises.......................................... — —
Dues to Micro and Small Enterprises have been determined to the extent such parties have been identified on the basis of information collected
by the Management. This has been relied upon by the auditors.
154
KANSAI NEROLAC PAINTS LIMITED
NOTES TO THE STANDALONE FINANCIAL STATEMENTS
Note 40: Disclosure as per Section 186 of the Companies Act, 2013
The details of loans, guarantees and investments under Section 186 of the Companies Act, 2013 read with the Companies (Meetings of Board and its
Powers) Rules, 2014 are as follows:
(i) Details of Investments made are given in Note 5(I).
(ii) Details of loans given by the Company are as follows:
` in Crores
Name of the party Relationship Amount as at Amount as at
31st March, 2018 31st March, 2017
KNP Japan Private Limited ........................................................ Subsidiary Company — 6.38
(formerly known as Kansai Paints Nepal Private Limited)
(iii) There are no guarantees issued by the Company in accordance with Section 186 of the Companies Act, 2013 read with rules issued thereunder.
Details of Specified Bank Notes held and transacted during the period from 8th November, 2016 to 30th December, 2016 were as follows:
` in Crores
SBNs Other Total
denomination
notes
Closing cash in hand as on 08.11.2016................................................................................... 0.15 0.02 0.17
(+) Permitted receipts............................................................................................................... — 0.25 0.25
(-) Permitted payments............................................................................................................. — 0.20 0.20
(-) Amount deposited in Banks................................................................................................. 0.15 — 0.15
Closing cash in hand as on 30.12.2016................................................................................... — 0.06 0.06
Note 42:
Consequent to the issuance of "Guidance Note on Division II — Ind AS Schedule III to the Companies Act, 2013", certain items of Financial Statements
have been regrouped/reclassified.
As per our attached report of even date For and on behalf of the Board of Directors
For B S R & Co. LLP P.P. SHAH Chairman DIN 00066242
Chartered Accountants H.M. BHARUKA Vice Chairman and Managing Director DIN 00306084
Firm’s Registration No. 101248W/W-100022
N.N. TATA Director DIN 00024713
Aniruddha Godbole G.T. GOVINDARAJAN P.D. PAI BRINDA SOMAYA Director DIN 00358908
Partner Company Secretary CFO DIN 08091524
Anuj Jain Wholetime Director
Membership No. 105149 ACS No. 8887
155
KANSAI NEROLAC PAINTS LIMITED
FORM AOC-I
(Pursuant to first proviso to sub-section (3) of Section 129 read with Rule 5 of Companies (Accounts Rules, 2014)
Statement containing salient features of the financial statement of SUBSIDIARIES /ASSOCIATE
COMPANIES / JOINT VENTURES
` in Crores
Name of the subsidiary KNP Japan Private KNP Japan Private Kansai Paints Lanka Kansai Paints Lanka
Limited Limited (Private) Limited (Private) Limited
(formerly known as (formerly known as
Kansai Paints Nepal Kansai Paints Nepal
Private Limited) Private Limited)
The date since when subsidiary was acquired... 1st October, 2012 1st October, 2012 30th July, 2015 30th July, 2015
Reporting Currency and Exchange Rate as on
the last date of the relevant Financial year in NPR NPR LKR LKR
the case of foreign subsidiary............................. 1 NPR = 0.62 INR 1 NPR = 0.61 INR 1 LKR = 0.42 INR 1 LKR = 0.42 INR
Share Capital...................................................... 8.17 7.97 28.05 21.06
Reserves and Surplus........................................ 19.76 15.57 (8.93) (1.09)
Total Assets........................................................ 47.98 47.78 39.96 20.30
Total Liabilities.................................................... 20.05 24.25 20.84 0.33
Investments........................................................ Nil Nil Nil Nil
Turnover.............................................................. 64.14 53.95 8.06 Nil
Profit / (Loss) before Taxation............................. 9.05 6.87 (6.83) (0.96)
Provision for Taxation......................................... 2.54 1.75 Nil (0.02)
Profit / (Loss) after Taxation................................ 6.51 5.12 (6.83) (0.98)
Proposed Dividend............................................. 2.41 Nil Nil Nil
Extent of Shareholding (in percentage).............. 68% 68% 60% 60%
Notes:
1. The Assets and Liabilities are translated at the exchange rate prevailing at the Balance Sheet date, and income and expense items are translated at
average rates of exchange for the year.
2. The reporting period of both subsidiary is same as that of holding company i.e. 1st April, 2017 to 31st March, 2018
3. Names of subsidiaries which are yet to commence operations as at 31st March, 2018 – Nil
4. Names of subsidiaries which have been liquidated or sold during the year – Nil
Since the company does not have any Associates or Joint Ventures, information pertaining to Part “B” to this form relating to Associates and Joint
Ventures is not given.
156
KANSAI NEROLAC PAINTS LIMITED
Auditors’ Responsibility
Our responsibility is to express an opinion on these consolidated Ind AS financial statements based on our audit. While
conducting the audit, we have taken into account the provisions of the Act, the accounting and auditing standards and
matters which are required to be included in the audit report under the provisions of the Act and the Rules made thereunder.
We conducted our audit in accordance with the Standards on Auditing specified under Section 143(10) of the Act. Those
Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance
about whether the consolidated Ind AS financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and the disclosures in the consolidated
Ind AS financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the
risks of material misstatement of the consolidated Ind AS financial statements, whether due to fraud or error. In making
those risk assessments, the auditor considers internal financial control relevant to the Holding Company’s preparation
of the consolidated Ind AS financial statements that give a true and fair view in order to design audit procedures that are
appropriate in the circumstances. An audit also includes evaluating the appropriateness of the accounting policies used and
the reasonableness of the accounting estimates made, as well as evaluating the overall presentation of the consolidated Ind
AS financial statements.
We are also responsible to conclude on the appropriateness of management’s use of the going concern basis of accounting
and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may
cast significant doubt on the ability of Group to continue as a going concern. If we conclude that a material uncertainty
exists, we are required to draw attention in the auditors’ report to the related disclosures in the consolidated Ind AS financial
statements or, if such disclosures are inadequate, to modify the opinion. Our conclusions are based on the audit evidence
obtained up to the date of our auditors’ report. However, future events or conditions may cause Group to cease to continue
as a going concern.
157
KANSAI NEROLAC PAINTS LIMITED
Opinion
In our opinion and to the best of our information and according to the explanations given to us and based on the consideration
of reports of other auditors on separate financial statements and on the other financial information of the subsidiaries, the
aforesaid consolidated Ind AS financial statements give the information required by the Act in the manner so required and
give a true and fair view in conformity with the accounting principles generally accepted in India, of the consolidated state of
affairs of the Group as at 31 March 2018, and their consolidated profit (including other comprehensive income), consolidated
statement of changes in equity and consolidated cash flows for the year ended on that date.
Other Matters
(a) We have not audited the financial statements of KNP Japan Private Limited (formerly known as Kansai Paints
Nepal Private Limited) and Kansai Paints Lanka (Private) Limited, whose financial statements reflect total assets of
` 87.94 crores as at the year ended 31 March 2018, total revenue of ` 72.45 crores and net cash outflow amounting
to ` 5.07 crores for the year then ended on that date, as considered in the consolidated Ind AS financial statements
These standalone financial statements have been audited by other auditors whose reports have been furnished to us
for the purpose of the consolidation, and our opinion on the consolidated Ind AS financial statements, in so far as it
related to the amounts and disclosures included in respect of the subsidiaries, and our report in terms of Section 143(3)
of the Act, in so far as it relates to the aforesaid subsidiaries, is based solely on the reports of the other auditors.
(b) The financial statements and other financial information of the two subsidiaries located outside India have been
prepared in accordance with accounting principles generally accepted in their respective countries and which have
been audited by other auditors under generally accepted auditing standards applicable in their respective countries.
The Holding Company’s management has converted the financial statements of such subsidiaries located outside
India from accounting principles generally accepted in their respective countries to accounting principles generally
accepted in India. We have audited these conversion adjustments made by the Holding Company’s management.
Our opinion in so far as it related to the balances and affairs of such subsidiaries located outside India is based on the
report of other auditors and the conversion adjustments prepared by the management of the Company and audited
by us.
Our opinion above on the consolidated Ind AS financial statements, and our report on Other Legal and Regulatory
Requirements below, is not modified in respect of the above matters with respect to our reliance on the work done and the
reports of the other auditors.
(a) We have sought and obtained all the information and explanations, which to the best of our knowledge and belief, were
necessary for the purposes of our audit of the aforesaid consolidated Ind AS financial statements;
(b) In our opinion, proper books of account as required by law relating to preparation of the aforesaid consolidated Ind AS
financial statements have been kept so far as it appears from our examination of those books and the reports of the
other auditors;
(c) The consolidated balance sheet, the consolidated Statement of profit and loss (including other comprehensive income),
the consolidated Statement of cash flows and the consolidated Statement of changes in equity dealt with by this report
are in agreement with the relevant books of account maintained for the purpose of preparation of the consolidated
Ind AS financial statements;
(d) in our opinion, the aforesaid consolidated Ind AS financial statements comply with the Indian Accounting Standards
(Ind AS) prescribed under Section 133 of the Act;
158
KANSAI NEROLAC PAINTS LIMITED
Aniruddha Godbole
Partner
Membership No: 105149
Mumbai, 2 May, 2018
159
KANSAI NEROLAC PAINTS LIMITED
Annexure A to the Independent Auditors' Report – 31 March 2018
Report on the Internal Financial Controls under Clause (i) of Sub-section 3 of Section 143 of the Companies
Act, 2013 (“the Act”)
In conjunction with our audit of the consolidated Ind AS financial statements of the Kansai Nerolac Paints Limited (“the
Holding Company”) as of and for the year ended 31 March 2018, we have audited the internal financial controls over
financial reporting of the Holding Company as of that date.
Auditors’ Responsibility
Our responsibility is to express an opinion on the Holding Company’s internal financial controls over financial reporting
based on our audit. We conducted our audit in accordance with the Guidance Note on Audit of Internal Financial Controls
Over Financial Reporting (the “Guidance Note”) issued by the ICAI and the Standards on Auditing, issued by ICAI and
deemed to be prescribed under Section 143(10) of the Companies Act, 2013, to the extent applicable to an audit of internal
financial controls, both applicable to an audit of Internal Financial Controls and, both issued by the ICAI. Those Standards
and the Guidance Note require that we comply with ethical requirements and plan and perform the audit to obtain reasonable
assurance about whether adequate internal financial controls over financial reporting was established and maintained and
if such controls operated effectively in all material respects.
Our audit involves performing procedures to obtain audit evidence about the adequacy of the internal financial controls
system over financial reporting and their operating effectiveness. Our audit of internal financial controls over financial
reporting included obtaining an understanding of internal financial controls over financial reporting, assessing the risk that
a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on
the assessed risk. The procedures selected depend on the auditor’s judgement, including the assessment of the risks of
material misstatement of the financial statements, whether due to fraud or error.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on
the Holding Company’s internal financial controls system over financial reporting.
160
KANSAI NEROLAC PAINTS LIMITED
Annexure A to the Independent Auditors' Report – 31 March 2018 (Continued)
Inherent Limitations of Internal Financial Controls Over Financial Reporting
Because of the inherent limitations of internal financial controls over financial reporting, including the possibility of collusion
or improper management override of controls, material misstatements due to error or fraud may occur and not be detected.
Also, projections of any evaluation of the internal financial controls over financial reporting to future periods are subject to
the risk that the internal financial control over financial reporting may become inadequate because of changes in conditions,
or that the degree of compliance with the policies or procedures may deteriorate.
Opinion
In our opinion, the Holding Company has, in all material respects, an adequate internal financial controls system over
financial reporting and such internal financial controls over financial reporting were operating effectively as at 31 March
2018, based on the internal control over financial reporting criteria established by the Holding Company considering the
essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls Over Financial
Reporting issued by the ICAI.
Aniruddha Godbole
Partner
Membership No: 105149
Mumbai, 2 May, 2018
161
KANSAI NEROLAC PAINTS LIMITED
CONSOLIDATED BALANCE SHEET AS AT 31ST MARCH, 2018
` in Crores
Note As at 31st March, 2018 As at 31st March, 2017
ASSETS
Non-current Assets
Property, Plant and Equipment......................................................................... 2 1030.72 954.11
Capital Work-in-progress.................................................................................. 345.98 154.37
Investment Property.......................................................................................... 3 0.18 0.18
Goodwill on Consolidation................................................................................ 2.27 2.27
Other Intangible Assets.................................................................................... 4 2.37 0.90
1381.52 1111.83
Financial Assets:
Investments................................................................................................. 5 0.71 0.69
Loans........................................................................................................... 6 12.21 11.29
12.92 11.98
Other Non-current Assets................................................................................. 7 150.49 122.17
Total Non-current Assets.................................................... 1544.93 1245.98
Current Assets
Inventories........................................................................................................ 8 829.18 703.20
Financial Assets:
Investments................................................................................................. 9 519.96 530.75
Trade Receivables....................................................................................... 10 702.64 590.44
Cash and Cash Equivalents........................................................................ 11 63.21 55.62
Bank Balances other than Cash and Cash Equivalents.............................. 12 300.40 205.82
Loans........................................................................................................... 13 3.32 3.32
Other Financial Assets................................................................................ 14 25.55 234.23
1615.08 1620.18
Other Current Assets........................................................................................ 15 140.73 66.89
Total Current Assets........................................................... 2584.99 2390.27
Total Assets......................................................................... 4129.92 3636.25
EQUITY AND LIABILITIES
Equity
Equity Share Capital......................................................................................... 16 53.89 53.89
Other Equity...................................................................................................... 17 3078.43 2760.61
Equity Attributable to Equity holders of the Parent Company.............. 3132.32 2814.50
Non-controlling interests................................................................................... 16.38 15.25
Total Equity.......................................................................... 3148.70 2829.75
Liabilities
Non-current Liabilities
Financial Liabilities:
Borrowings............................................................................................. 18 9.71 18.20
Provisions.................................................................................................... 19 0.13 —
Deferred Tax Liabilities (Net)....................................................................... 20 81.38 79.47
Total Non-current Liabilities............................................... 91.22 97.67
Current Liabilities
Financial Liabilities:
Borrowings............................................................................................. 21 16.83 —
Trade Payables....................................................................................... 22 699.87 560.66
Other Financial Liabilities....................................................................... 23 115.07 80.24
831.77 640.90
Other Current Liabilities............................................................................... 24 32.73 39.60
Provisions.................................................................................................... 25 21.14 23.46
Current Tax Liabilities (Net)......................................................................... 26 4.36 4.87
Total Current Liabilities...................................................... 890.00 708.83
Total Liabilities.................................................................... 981.22 806.50
Total Equity and Liabilities................................................. 4129.92 3636.25
Significant Accounting Policies............................................................................... 1
The notes referred to above form an integral part of
Consolidated Financial Statements
As per our attached report of even date For and on behalf of the Board of Directors
For B S R & Co. LLP P.P. SHAH Chairman DIN 00066242
Chartered Accountants H.M. BHARUKA Vice Chairman and Managing Director DIN 00306084
Firm’s Registration No. 101248W/W-100022
N.N. TATA Director DIN 00024713
Aniruddha Godbole G.T. GOVINDARAJAN P.D. PAI BRINDA SOMAYA Director DIN 00358908
Partner Company Secretary CFO
Anuj Jain Wholetime Director DIN 08091524
Membership No. 105149 ACS No. 8887
Mumbai, 2nd May, 2018 Mumbai, 2nd May, 2018
162
KANSAI NEROLAC PAINTS LIMITED
CONSOLIDATED STATEMENT OF PROFIT AND LOSS FOR THE YEAR ENDED 31ST MARCH, 2018
` in Crores
Year ended Year ended
Note 31st March, 2018 31st March, 2017
Income
Revenue from Operations...................................................................................... 27 4808.52 4584.53
Other Income......................................................................................................... 28 70.91 98.00
Total Income.................................................................................... 4879.43 4682.53
Expenses
Cost of Materials Consumed.................................................................................. 29 2717.66 2216.88
Purchases of Stock-in-trade................................................................................... 213.83 186.50
Changes in Inventories of Finished Goods, Stock-in-trade and Work-in-progress. 30 (117.93) (34.27)
Excise Duty on Sale of Goods............................................................................... 150.44 531.98
Employee Benefits Expense.................................................................................. 31 235.08 202.57
Depreciation and Amortisation Expenses.............................................................. 32 77.07 70.09
Other Expenses..................................................................................................... 33 816.32 743.47
Total Expense................................................................................. 4092.47 3917.22
Profit Before Tax........................................................................................................ 786.96 765.31
Tax Expense
Current Tax............................................................................................................. 270.72 248.24
Reversal of Tax Provision for earlier years............................................................. — (1.31)
Deferred Tax........................................................................................................... 2.49 8.30
Total Tax Expense........................................................................... 273.21 255.23
Profit for the year....................................................................................................... 513.75 510.08
Other Comprehensive Income
(i) items that will not be reclassified to Consolidated Statement of Profit and Loss
(a) Remeasurement of Defined Benefit Liability.................................................. (1.55) (7.23)
(b) Income tax relating to items that will not be reclassified to Consolidated
Statement of Profit and Loss......................................................................... 0.58 2.50
Net other comprehensive income not to be reclassified subsequently to
consolidated statement of profit and loss............................................................. (0.97) (4.73)
(ii) items that will be reclassified subsequently to Consolidated Statement of
Profit and Loss
(a) Exchange differences on translation of financial statements of foreign
operations...................................................................................................... (0.07) 0.03
(b) Income tax relating to items that will be reclassified to Consolidated
Statement of Profit and Loss......................................................................... — —
Net other comprehensive income to be reclassified subsequently to
consolidated statement of profit and loss............................................................. (0.07) 0.03
Other Comprehensive income for the year, net of income tax............................. (1.04) (4.70)
Total comprehensive income for the year.............................................................. 512.71 505.38
Profit attributable to:
Owners of the Company....................................................................................... 514.40 508.84
Non-controlling interests....................................................................................... (0.65) 1.24
Profit for the year................................................................................................ 513.75 510.08
Other comprehensive income attributable to:
Owners of the Company....................................................................................... (1.07) (4.63)
Non-controlling interests....................................................................................... 0.03 (0.07)
Other comprehensive income for the year....................................................... (1.04) (4.70)
Total comprehensive income attributable to:
Owners of the Company....................................................................................... 513.33 504.21
Non-controlling interests....................................................................................... (0.62) 1.17
Total comprehensive income for the year................................................................. 512.71 505.38
Earnings per Equity Share:
Basic and Diluted.................................................................................................. 35 9.55 9.44
Significant Accounting Policies.............................................................................. 1
The notes referred to above form an integral part of
Consolidated Financial Statements
As per our attached report of even date For and on behalf of the Board of Directors
For B S R & Co. LLP P.P. SHAH Chairman DIN 00066242
Chartered Accountants H.M. BHARUKA Vice Chairman and Managing Director DIN 00306084
Firm’s Registration No. 101248W/W-100022
N.N. TATA Director DIN 00024713
Aniruddha Godbole G.T. GOVINDARAJAN P.D. PAI BRINDA SOMAYA Director DIN 00358908
Partner Company Secretary CFO
Anuj Jain Wholetime Director DIN 08091524
Membership No. 105149 ACS No. 8887
Mumbai, 2nd May, 2018 Mumbai, 2nd May, 2018
163
KANSAI NEROLAC PAINTS LIMITED
CONSOLIDATED Statement of changes in equity
As per our attached report of even date For and on behalf of the Board of Directors
For B S R & Co. LLP P.P. SHAH Chairman DIN 00066242
Chartered Accountants H.M. BHARUKA Vice Chairman and Managing Director DIN 00306084
Firm’s Registration No. 101248W/W-100022
N.N. TATA Director DIN 00024713
Aniruddha Godbole G.T. GOVINDARAJAN P.D. PAI BRINDA SOMAYA Director DIN 00358908
Partner Company Secretary CFO
Anuj Jain Wholetime Director DIN 08091524
Membership No. 105149 ACS No. 8887
Mumbai, 2nd May, 2018 Mumbai, 2nd May, 2018
164
KANSAI NEROLAC PAINTS LIMITED
CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 31ST MARCH, 2018
` in Crores
Year ended Year ended
31st March, 2018 31st March, 2017
22.77 (5.96)
(174.01) (182.04)
165
KANSAI NEROLAC PAINTS LIMITED
CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 31ST MARCH, 2018 (contd.)
` in Crores
Year ended Year ended
31st March, 2018 31st March, 2017
Balances With Banks on Current, Margin and Fixed Deposit Accounts.. 32.42 458.42
55.62 477.87
Cash and Cash Equivalents at end of the year the components being:
Balances with Banks on Current, Margin and Fixed Deposit Accounts... 33.22 32.42
63.21 55.62
Opening Balances
Long-term Borrowing................................................................................ 28.65 41.48
Short-term Borrowing............................................................................... – –
Movements
Long-term Borrowing................................................................................ (10.45) (12.83)
Short-term Borrowing............................................................................... 16.83 –
Closing Balances
Long-term Borrowing................................................................................ 18.20 28.65
Short-term Borrowing............................................................................... 16.83 –
Notes:
i. Figures in brackets are outflows / deductions.
ii. The above Cash Flow Statement is prepared under the “Indirect Method” as set out in the Indian Accounting Standards(Ind AS-7)- Statement of
Cash Flows
As per our attached report of even date For and on behalf of the Board of Directors
For B S R & Co. LLP P.P. SHAH Chairman DIN 00066242
Chartered Accountants H.M. BHARUKA Vice Chairman and Managing Director DIN 00306084
Firm’s Registration No. 101248W/W-100022
N.N. TATA Director DIN 00024713
Aniruddha Godbole G.T. GOVINDARAJAN P.D. PAI BRINDA SOMAYA Director DIN 00358908
Partner Company Secretary CFO
Anuj Jain Wholetime Director DIN 08091524
Membership No. 105149 ACS No. 8887
Mumbai, 2nd May, 2018 Mumbai, 2nd May, 2018
166
KANSAI NEROLAC PAINTS LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
A. Corporate Information
Kansai Nerolac Paints Limited (the ‘Parent Company’) is a public limited company domiciled in India and incorporated under the provisions
of the Companies Act. The Company's shares are listed on National Stock Exchange and Bombay Stock Exchange. The registered office of
the Company is located at Nerolac House, Ganpatrao Kadam Marg, Lower Parel, Mumbai – 400013. The Company is principally engaged in the
manufacturing of Paints.
Kansai Paints Co., Ltd. is immediate and ultimate holding company of Kansai Nerolac Paints Limited and is based and listed in Japan. Financial
Statements of Kansai Paints Co., Ltd. are available in public domain.
The Consolidated Financial Statements relate to Kansai Nerolac Paints Ltd (the ‘Parent Company’) and its Subsidiary Companies, KNP Japan
Private Limited (formerly known as Kansai Paints Nepal Private Limited), a Company incorporated in Nepal in which the Parent Company has 68%
equity holding, and Kansai Paints Lanka (Private) Limited, a Company incorporated in Sri Lanka in which the Parent Company has 60% equity
holding hereinafter referred to as the “Group”.
B. Basis of Preparation
1. Statement of Compliance
The Consolidated Financial Statements have been prepared in accordance with Indian Accounting Standards (Ind AS) as per the Companies
(Indian Accounting Standards) Rules, 2015 notified under Section 133 of Companies Act, 2013, (the ‘Act’) and other relevant provisions of the Act.
The Consolidated Financial Statements for the year ended 31st March, 2018 have been reviewed by the Audit Committee and approved by the
Board of Directors at their meetings held on 2nd May, 2018.
Details of the Group's Accounting Policies are included in Note 1.
2. Functional and Presentation Currency
The Consolidated Financial Statements are presented in Indian Rupees (INR), which is also the Group's functional currency. All amounts have
been rounded-off to the nearest crores, unless otherwise indicated.
3. Basis of Measurement
The Consolidated Financial Statements have been prepared on the historical cost basis except for investments in mutual funds, non-trade equity
shares, bonds and provision for employee defined benefit plans.
4. Use of Estimates and Judgements
Critical accounting judgments and key sources of estimation uncertainty:
The preparation of the financial statements in conformity with the Ind AS requires management to make judgments, estimates and assumptions that
affect the application of accounting policies and the reported amounts of assets, liabilities and disclosures as at date of the financial statements and
the reported amounts of the revenues and expenses for the years presented. The estimates and associated assumptions are based on historical
experience and other factors that are considered to be relevant. Actual results may differ from these estimates under different assumptions and
conditions.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in
which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods if the revision affects both
current and future periods.
(i) Critical Judgments
In the process of applying the Group’s accounting policies, management has made the following judgments, which have the most significant
effect on the amounts recognised in the financial statements.
Discount rate used to determine the carrying amount of the Group’s defined benefit obligation.
In determining the appropriate discount rate for plans operated in India, the management considers the interest rates of government bonds
in currencies consistent with the currencies of the post-employment benefit obligation.
Contingences and Commitments
In the normal course of business, contingent liabilities may arise from litigations and other claims against the Group. Where the potential
liabilities have a low probability of crystallising or are very difficult to quantify reliably, we treat them as contingent liabilities. Such liabilities
are disclosed in the notes but are not provided for in the consolidated financial statements. Although there can be no assurance regarding
the final outcome of the legal proceedings, we do not expect them to have a materially adverse impact on our financial position or profitability.
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KANSAI NEROLAC PAINTS LIMITED
Notes to the CONSOLIDATED Financial Statements
B. Basis of Preparation (Contd.)
4. Use of Estimates and Judgements (contd.)
(ii) Key sources of Estimation Uncertainty (contd.)
Allowances for Inventories
Management reviews the inventory age listing on a periodic basis. This review involves comparison of the carrying value of the
aged inventory items with the respective net realizable value. The purpose is to ascertain whether an allowance is required to be made
in the financial statements for any obsolete and slow-moving items. Management is satisfied that adequate allowance for obsolete and
slow-moving inventories has been made in the financial statements.
Accruals for estimated product returns, which are based on historical experience of actual sales returns and adjustment on account of
current market scenario is considered by Group to be reliable estimate of future sales returns.
Under Ind AS 115, an entity recognises revenue when (or as) a performance obligation is satisfied, i.e. when ‘control’ of the goods or services
underlying the particular performance obligation is transferred to the customer.
The Group is evaluating the requirements of the Ind AS 115 and the effect on the financial statements is being evaluated.
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KANSAI NEROLAC PAINTS LIMITED
Notes to the CONSOLIDATED Financial Statements
D. Basis of Consolidation
The Consolidated Financial Statement comprise the financial statements of the Parent Company and its subsidiaries as at 31st March, 2018.
Subsidiaries are entities controlled by the Parent Company. The Parent Company controls an entity when it is exposed to, or has right to, variable
returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. The financial statements of
subsidiaries are included in the Consolidated Financial Statement from the date on which control commences until the date on which control ceases.
Goodwill arising on the acquisition of an entity represents the excess of the cost of acquisition over the Group’s interest in the net fair value of the
identifiable assets, liabilities and contingent liabilities of the entity recognised at the date of acquisition. Goodwill is initially recognised as an asset
at cost and is subsequently measured at cost less any accumulated impairment losses.
Non-controlling interests are that part of the net results of operations and of net assets of a subsidiary attributable to the interests which are
not owned directly or indirectly by the equity holders of the Group. They are shown separately in the consolidated statement of comprehensive
income, statement of changes in equity and balance sheet. Total comprehensive income is attributed to the non-controlling interests based on their
respective interests in a subsidiary, even if this results in the non-controlling interests having a deficit balance. Non-controlling interest (NCI) are
measured at their proportionate share of the acquiree’s net identifiable assets at the date of acquisition.
Intra-group balances and transactions, and any unrealised income and expenses arising from intra-group transactions, are eliminated. Unrealised
gains arising from transactions with equity accounted investees are eliminated against the investment to the extent of the Group’s interest in the
investee, Unrealised losses are eliminated in the same way as unrealised gains, but only to the extent that there is no evidence of impairment.
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KANSAI NEROLAC PAINTS LIMITED
Notes to the CONSOLIDATED Financial Statements
Note 1: Significant Accounting Policies (contd.)
3. Property, Plant and Equipment (contd.)
(c) Depreciation (contd.)
the useful lives of the assets are appropriate. The depreciation method is reviewed at least at each financial year-end and, if there has
been a significant change in the expected pattern of consumption of the future economic benefits embodied in the asset, the method
is changed to reflect the changed pattern. Such a change is accounted for as a change in an accounting estimate in accordance with
Ind AS 8 – Accounting Policies, Changes in Accounting Estimates and Errors.
Each part of an item of Property, Plant and Equipment with a cost that is significant in relation to the total cost of the item is depreciated
separately.
The depreciation charge for each period is generally recognised in the Consolidated Statement of Profit and Loss unless it is included in
the carrying amount of another asset.
The residual value and the useful life of an asset is reviewed at least at each financial year-end and, if expectations differ from previous
estimates, the change(s) is accounted for as a change in an accounting estimate in accordance with Ind AS 8, Accounting Policies,
Changes in Accounting Estimates and Errors. The estimated useful lives for the current and comparative periods are as follows:
(d) Disposal
The carrying amount of an item of Property, Plant and Equipment is derecognised on disposal or when no future economic benefits are
expected from its use or disposal. The gain or loss arising from the derecognition of an item of Property, Plant and Equipment is included
in Consolidated Statement of Profit and Loss when the item is derecognised.
4. Investment Property
(a) Recognition and Measurement
Land or building held to earn rentals or for capital appreciation or both rather than for use in the production or supply of goods or services
or for administrative purposes; or sale in the ordinary course of business is recognised as Investment Property. Land held for a currently
undetermined future use is also recognised as Investment Property.
An investment property is measured initially at its cost. The cost of an investment property comprises its purchase price and any directly
attributable expenditure. After initial recognition, the Group carries the investment property at the cost less accumulated depreciation and
accumulated impairment, if any.
(b) Depreciation
After initial recognition, the Group measures all of its investment property in accordance with Ind AS 16 – Property Plant and Equipment
requirements for cost model. The depreciable amount of an item of investment properties is allocated on a systematic basis over its useful
life. The Group provides depreciation on the straight line method. The Group believes that straight line method reflects the pattern in which
the asset’s future economic benefits are expected to be consumed by the Group. Based on internal technical evaluation, the management
believes the useful lives of the assets are appropriate. The depreciation method is reviewed at least at each financial year-end and, if
there has been a significant change in the expected pattern of consumption of the future economic benefits embodied in the asset, the
method is changed to reflect the changed pattern. Such a change is accounted for as a change in an accounting estimate in accordance
with Ind AS 8. Accounting Policies, Changes in Accounting Estimates and Errors.
The depreciation charge for each period is generally recognised in the Consolidated Statement of Profit and Loss.
The residual value and the useful life of an asset is reviewed at least at each financial year-end and, if expectations differ from previous
estimates, the change(s) is accounted for as a change in an accounting estimate in accordance with Ind AS 8 – Accounting Policies,
Changes in Accounting Estimates and Errors. The estimated useful lives for the current and comparative periods are as follows:
Useful Lives Useful Lives
Asset Class (in years) (in years)
– as per Companies Act, 2013 – as estimated by the Group
Buildings 30-60 30-60
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KANSAI NEROLAC PAINTS LIMITED
Notes to the CONSOLIDATED Financial Statements
Note 1: Significant Accounting Policies (contd.)
4. Investment Property (contd.)
(c) Fair Value
Fair value of investment property is based on a valuation by an independent valuer who holds a recognised and relevant professional
qualification and has recent experience in the location and category of the investment property being valued. The fair value of investment
property is disclosed in the Note 3.
(d) Gain or Loss on Disposal
Any gain or loss on disposal of an Investment Property is recognised in the Consolidated Statement of Profit and Loss.
Development is the application of research findings or other knowledge to a plan or design for the production of new or substantially
improved materials, devices, products, processes, systems or services before the start of commercial production or use. An intangible asset
arising from development is recognised if, and only if, the following criteria are met:
(a) it is technically feasible to complete the intangible asset so that it will be available for use or sale.
(b) the Group intends to complete the intangible asset and use or sell it.
(c) the Group has ability to use or sell the intangible asset.
(d) the Group can demonstrate how the intangible asset will generate probable future economic benefits.
(e) the Group has adequate technical, financial and other resources to complete the development and to use or sell the intangible asset.
(f) the Group has ability to measure reliably the expenditure attributable to the intangible asset during its development.
Expenditure on research activities is recognised in Consolidated Statement of Profit and Loss as incurred.
(c) Amortisation
The Group amortises Others Intangible Assets on the straight line method. The Group believes that straight line method reflects the pattern
in which the asset’s future economic benefits are expected to be consumed by the Group. The amortisation method is reviewed at least at
each financial year-end and, if there has been a significant change in the expected pattern of consumption of the future economic benefits
embodied in the asset, the method is changed to reflect the changed pattern. Such a change is accounted for as a change in an accounting
estimate in accordance with Ind AS 8 – Accounting Policies, Changes in Accounting Estimated and Errors.
The residual value and the useful life of an asset is reviewed at least at each financial year-end and, if expectations differ from previous
estimates, the change(s) is accounted for as a change in an accounting estimate in accordance with Ind AS 8 – Accounting Policies,
Changes in Accounting Estimates and Errors. The estimated useful lives as estimated by management are as follows:
Amortised intangible asset is displayed as amortisation on the face of Consolidated Statement of Profit and Loss.
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KANSAI NEROLAC PAINTS LIMITED
Notes to the CONSOLIDATED Financial Statements
Note 1: Significant Accounting Policies (contd.)
7. Employee Benefits
(a) Short-term Employee Benefits:
Short-term employee benefit obligations are measured on an undiscounted basis and are expensed as the related service is provided.
A liability is recognised for the amount expected to be paid e.g., under short-term cash bonus, if the Group has a present legal or
constructive obligation to pay this amount as a result of past service provided by the employee, and the amount of obligation can be
estimated reliably.
(b) Post-Employment Benefits:
Defined Contribution Plans
A defined contribution plan is a post-employment benefit plan under which an entity pays fixed contributions into a separate entity and will
have no legal or constructive obligation to pay further amounts.
(i) Provident and Family Pension Fund
The eligible employees of the Group are entitled to receive post employment benefits in respect of provident and family pension fund,
in which both the employees and the Group make monthly contributions at a specified percentage of the employees’ eligible salary
(currently 12% of employees’ eligible salary). The contributions are made to the Regional Provident Fund Commissioner (RPFC) which
are charged to the Consolidated Statement of Profit and Loss as incurred.
In respect of contribution to RPFC, the Group has no further obligations beyond making the contribution, and hence, such employee
benefit plan is classified as Defined Contribution Plan. The Group's contribution is recognised as an expense in the Consolidated
Statement of Profit and Loss.
(ii) Superannuation
The eligible employees of the Group are entitled to receive post employment benefits in respect of superannuation fund in which
the Group makes annual contribution at a specified percentage of the employees’ eligible salary (currently 15% of employees’
eligible salary). The contributions are made to the Life Insurance Corporation of India (LIC). Superannuation is classified as Defined
Contribution Plan as the Group has no further obligations beyond making the contribution. The Group’s contribution is recognised as
an expense in the Consolidated Statement of Profit and Loss.
Defined Benefit Plans
A defined benefit plan is a post-employment benefit plan other than a defined contribution plan. The Group's net obligation in respect of
defined benefit plans is calculated by estimating the amount of future benefit that employees have earned in the current and prior periods,
discounting that amount and deducting the fair value of any plan assets.
The calculation of defined benefit obligation is performed annually by a qualified actuary using the projected unit credit method. When the
calculation results in a potential asset for the Group, the recognised asset is limited to the present value of economic benefits available in
the form of any future refunds from the plan or reductions in future contributions to the plan (‘the asset ceiling’). In order to calculate the
present value of economic benefits, consideration is given to any minimum funding requirements.
Remeasurements of the net defined benefit liability, which comprise actuarial gains and losses, the return on plan assets (excluding interest)
and the effect of the asset ceiling (if any, excluding interest), are recognised in Other Comprehensive Income. The Group determines the net
interest expense (income) on the net defined benefit liability (asset) for the period by applying the discount rate used to measure the defined
benefit obligation at the beginning of the annual period to the then-net defined benefit liability (asset), taking into account any changes in
the net defined benefit liability (asset) during the period as a result of contributions and benefit payments. Net interest expense and other
expenses related to defined benefit plans are recognised in Consolidated Statement of Profit and Loss.
When the benefits of a plan are changed or when a plan is curtailed, the resulting change in benefit that relates to past service (‘past service
cost’ or ‘past service gain’) or the gain or loss on curtailment is recognised immediately in profit or loss. The Group recognises gains and
losses on the settlement of a defined benefit plan when the settlement occurs.
Gratuity
The Group has an obligation towards gratuity, a defined benefit retirement plan covering eligible employees. The plan provides a lump
sum payment to vested employees at retirement, death while in employment or on termination of employment of an amount equivalent to
15 days to one month salary payable for each completed year of service or part thereof in excess of six months depending upon category
of employee. Vesting occurs upon completion of five years of service. The Group has obtained insurance policies with the Life Insurance
Corporation of India (LIC) and makes an annual contribution to LIC for amounts notified by LIC. The Group accounts for gratuity benefits
payable in future based on an independent external actuarial valuation carried out at the end of the year using the projected unit credit
method. Actuarial gains and losses are recognised as Other Comprehensive Income.
Provident Fund Trust
In respect of contribution to the trust set up by the Group, since the Group is obligated to meet interest shortfall, if any, with respect to
covered employees, such employee benefit plan is classified as Defined Benefit Plan. Any obligation in this respect is measured on the
basis of independent actuarial valuation.
172
KANSAI NEROLAC PAINTS LIMITED
Notes to the CONSOLIDATED Financial Statements
Note 1: Significant Accounting Policies (contd.)
8. Inventories
(a) Measurement of Inventory
The Group measures its inventories at the lower of cost and net realisable value.
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KANSAI NEROLAC PAINTS LIMITED
Notes to the CONSOLIDATED Financial Statements
Note 1: Significant Accounting Policies (contd.)
11. Provisions and Contingent Liabilities (contd.)
Warranties
A provision for warranties is recognised when the underlying products or services are sold. The provision is based on technical evaluation,
historical warranty data and a weighting of all possible outcomes by their associated probabilities.
Restructuring
A provision for restructuring is recognised when the Group has approved a detailed formal restructuring plan, and the restructuring either has
commenced or has been announced publicly.
Onerous Contracts
A contract is considered to be onerous when the expected economic benefits to be derived by the Group from the contract are lower than the
unavoidable cost of meeting its obligations under the contract. The provision for an onerous contract is measured at the present value of the lower
of the expected cost of terminating the contract and the expected net cost of continuing with the contract. Before such a provision is made, the
Group recognises any impairment loss on the assets associated with that contract.
The Group measures revenue at the fair value of the consideration received or receivable taking into account the amount of any sales returns,
trade discounts and volume rebates allowed by the Group. No element of financing is deemed present as the sales are made with credit term in
line with market practice.
Interest Income
Interest income is recognised using the effective interest method as set out in Ind AS 109 – Financial Instruments: Recognition and Measurement,
when it is probable that the economic benefits associated with the transaction will flow to the Group and the amount of the revenue can be
measured reliably. The effective interest method is a method of calculating the amortised cost of a financial asset or a financial liability (or group
of financial assets or financial liabilities) and of allocating the interest income or interest expense over the relevant period.
Royalty Income
Royalty income is recognised on an accrual basis in accordance with the substance of the relevant agreement when it is probable that the
economic benefits associated with the transaction will flow to the Group and the amount of the revenue can be measured reliably.
Dividend Income
Dividend income is recognised when right to receive payment is established and it is probable that the economic benefits associated with the
transaction will flow to the Group and the amount of the revenue can be measured reliably.
A foreign currency transaction is recorded, on initial recognition in the functional currency, by applying to the foreign currency amount the spot
exchange rate between the functional currency and the foreign currency at the date of the transaction.
At the end of each reporting period, foreign currency monetary items are translated using the closing rate whereas non-monetary items
that are measured in terms of historical cost in a foreign currency are translated using the exchange rate at the date of the transaction; and
non-monetary items that are measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value
was measured.
Exchange differences arising on the settlement of monetary items or on translating monetary items at rates different from those at which they
were translated on initial recognition during the period or in previous Consolidated Financial Statements are recognised in the Consolidated
Statement of Profit and Loss in the period in which they arise. When a gain or loss on a non-monetary item is recognised in Other Comprehensive
Income, any exchange component of that gain or loss is recognised in Other Comprehensive Income. Conversely, when a gain or loss on a
non-monetary item is recognised in Consolidated Statement of Profit and Loss, any exchange component of that gain or loss is recognised in
Consolidated Statement of Profit and Loss.
174
KANSAI NEROLAC PAINTS LIMITED
Notes to the CONSOLIDATED Financial Statements
Note 1: Significant Accounting Policies (contd.)
14. Taxation
Income Tax
Income tax comprises current and deferred tax. It is recognised in Consolidated Statement of Profit and Loss except to the extent that it relates to
a business combination or to an item recognised directly in Equity or in Other Comprehensive Income.
Current Tax
Current tax comprises the expected tax payable or receivable on the taxable income or loss for the year and any adjustment to the tax payable or
receivable in respect of previous years. The amount of current tax reflects the best estimate of the tax amount expected to be paid or received after
considering the uncertainty, if any, related to income taxes. It is measured using tax rates (and tax laws) enacted or substantively enacted by the
reporting date.
Deferred Tax
Deferred tax is recognised in respect of temporary differences between the carrying amounts of assets and liabilities for financial reporting
purposes and the corresponding amounts used for taxation purposes. Deferred tax is also recognised in respect of carried forward tax losses and
tax credits. Deferred tax is not recognised for:
a. temporary differences arising on the initial recognition of assets or liabilities in a transaction that is not a business combination and that
affects neither accounting nor taxable profit or loss at the time of the transaction;
Deferred tax assets are recognised to the extent that it is probable that future taxable profits will be available against which they can be used.
The existence of unused tax losses is strong evidence that future taxable profit may not be available. Therefore, in case of a history of recent
losses, the Group recognises a deferred tax asset only to the extent that it has sufficient taxable temporary differences or there is convincing other
evidence that sufficient taxable profit will be available against which such deferred tax asset can be realised. Deferred tax assets – unrecognised
or recognised, are reviewed at each reporting date and are recognised / reduced to the extent that it is probable / no longer probable respectively
that the related tax benefit will be realised.
Deferred tax is measured at the tax rates that are expected to apply to the period when the asset is realised or the liability is settled, based on the
laws that have been enacted or substantively enacted by the reporting date.
The measurement of deferred tax reflects the tax consequences that would follow from the manner in which the Group expects, at the reporting
date, to recover or settle the carrying amount of its assets and liabilities.
Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset current tax liabilities and assets, and they relate to income
taxes levied by the same tax authority on the same taxable entity, or on different tax entities, but they intend to settle current tax liabilities and
assets on a net basis or their tax assets and liabilities will be realised simultaneously.
15. Leases
Leases of Property, Plant and Equipment where the Group, as lessee, has substantially all the risks and rewards of ownership are classified
as finance leases. Finance leases are capitalised at the lease's inception at the fair value of the leased property or, if lower, the present
value of the minimum lease payments. The corresponding rental obligations, net of finance charges, are included in borrowings or the financial
liabilities as appropriate. Each lease payment is allocated between the liability and finance cost. The finance cost is charged to the Consolidated
Statement of Profit and Loss over the lease period so as to produce a constant periodic rate of interest on the remaining balance of the liability
for each period.
At inception of an arrangement, it is determined whether the arrangement is or contains a lease. At inception or on reassessment of the arrangement
that contains a lease, the payments and other consideration required by such an arrangement are separated into those for the lease and those for
other elements on the basis of their relative fair values. If it is concluded for a finance lease that it is impracticable to separate the payments reliably,
then an asset and a liability are recognised at an amount equal to the fair value of the underlying asset. The liability is reduced as payments are
made and an imputed finance cost on the liability is recognised using the incremental borrowing rate.
Leases in which a significant portion of the risks and rewards of ownership are not transferred to the Group as lessee are classified as operating
leases. Payments made under operating leases (net of any incentives received from the lessor) are charged to Consolidated Statement of Profit
and Loss on straight-line basis over the period of the lease unless the payments are structured to increase in line with expected general inflation
to compensate for the lessor's expected inflationary cost increases.
A financial asset or financial liability is initially measured at fair value plus, for an item not at Fair Value through Profit and Loss (FVTPL),
transaction costs that are directly attributable to its acquisition or issue.
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KANSAI NEROLAC PAINTS LIMITED
Notes to the CONSOLIDATED Financial Statements
Note 1: Significant Accounting Policies (contd.)
16. Financial Instruments (contd.)
(b) Classification and Subsequent Measurement
Financial Assets: Classification
On initial recognition, a financial asset is classified as measured at
— Amortised cost;
— Fair Value through Other Comprehensive Income (FVOCI) – debt investment;
— Fair Value through Other Comprehensive Income – equity investment; or
— FVTPL
Financial assets are not reclassified subsequent to their initial recognition, except if and in the period the Group changes its business model
for managing financial assets.
A financial asset is measured at amortised cost if it meets both of the following conditions and is not designated as at FVTPL:
— the asset is held within a business model whose objective is to hold assets to collect contractual cash flows; and
— the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest
on the principal amount outstanding.
A debt investment is measured at FVOCI if it meets both of the following conditions and is not designated as at FVTPL:
— the asset is held within a business model whose objective is achieved by both collecting contractual cash flows and selling financial
assets; and
— the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest
on the principal amount outstanding.
On initial recognition of an equity investment that is not held for trading, the Group may irrevocably elect to present subsequent changes in
the investment’s fair value in OCI (designated as FVOCI – equity investment). This election is made on an investment‑by‑investment basis.
All financial assets not classified as measured at amortised cost or FVOCI as described above are measured at FVTPL. This includes
all derivative financial assets. On initial recognition, the Group may irrevocably designate a financial asset that otherwise meets the
requirements to be measured at amortised cost or at FVOCI as at FVTPL if doing so eliminates or significantly reduces an accounting
mismatch that would otherwise arise.
(c) Derecognition
Financial Assets
The Group derecognises a financial asset when the contractual rights to the cash flows from the financial asset expire, or it transfers the
rights to receive the contractual cash flows in a transaction in which substantially all of the risks and rewards of ownership of the financial
asset are transferred or in which the Group neither transfers nor retains substantially all of the risks and rewards of ownership and does not
retain control of the financial asset.
If the Group enters into transactions whereby it transfers assets recognised on its balance sheet, but retains either all or substantially all of
the risks and rewards of the transferred assets, the transferred assets are not derecognised.
176
KANSAI NEROLAC PAINTS LIMITED
Notes to the CONSOLIDATED Financial Statements
Note 1: Significant Accounting Policies (contd.)
16. Financial Instruments (contd.)
(c) Derecognition (contd,)
Financial Liabilities
The Group derecognises a financial liability when its contractual obligations are discharged or cancelled, or expire.
The Group also derecognises a financial liability when its terms are modified and the cash flows under the modified terms are substantially
different. In this case, a new financial liability based on the modified terms is recognised at fair value. The difference between the carrying
amount of the financial liability extinguished and the new financial liability with modified terms is recognised in Consolidated Statement of Profit
and Loss.
(d) Offsetting
Financial assets and financial liabilities are offset and the net amount presented in the balance sheet when, and only when, the Group
currently has a legally enforceable right to set off the amounts and it intends either to settle them on a net basis or to realise the asset and
settle the liability simultaneously.
Basic earnings per share is calculated by dividing profit or loss attributable to ordinary equity holders (the numerator) by the weighted average
number of ordinary shares outstanding (the denominator) during the period.
The weighted average number of ordinary shares outstanding during the period and for all periods presented shall be adjusted for events, other
than the conversion of potential ordinary shares, that have changed the number of ordinary shares outstanding without a corresponding change
in resources.
For the purpose of calculating diluted earnings per share, the Group adjusts profit or loss attributable to ordinary equity holders, and the weighted
average number of shares outstanding, for the effects of all dilutive potential ordinary shares, if any.
For the purpose of calculating diluted earnings per share, the weighted average number of ordinary shares calculated for calculating basic
earnings per share and adjusted the weighted average number of ordinary shares that would be issued on the conversion of all the dilutive
potential ordinary shares into ordinary shares. Dilutive potential ordinary shares are deemed to have been converted into ordinary shares at the
beginning of the period or, if later, the date of the issue of the potential ordinary shares.
At each reporting date, the Group assesses whether financial assets carried at amortised cost are credit‑impaired. A financial asset is ‘credit‑
impaired’ when one or more events that have a detrimental impact on the estimated future cash flows of the financial asset have occurred.
In accordance with Ind AS 109 – Financial Instruments, the Group follows ‘simplified approach' for recognition of impairment loss allowance
on trade receivables. The application of simplified approach does not require the Group to track changes in credit risk. Rather, it recognises
impairment loss allowance based on lifetime expected credit loss at each reporting date, right from its initial recognition.
The gross carrying amount of a financial asset is written off (either partially or in full) to the extent that there is no realistic prospect of recovery.
This is generally the case when the Group determines that the debtor does not have assets or sources of income that could generate sufficient
cash flows to repay the amounts subject to the write‑off. However, financial assets that are written off could still be subject to enforcement activities
in order to comply with the Group’s procedures for recovery of amounts due.
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KANSAI NEROLAC PAINTS LIMITED
Notes to the CONSOLIDATED Financial Statements
Note 1: Significant Accounting Policies (contd.)
19. Impairment Loss (contd.)
Impairment of Non Financial Assets
An impairment loss is the amount by which the carrying amount of an asset or a cash-generating unit exceeds its recoverable amount.
The recoverable amount of an asset or a cash-generating unit is the higher of its fair value less costs of disposal and its value in use. Fair value
is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the
measurement date. Value in use is based on the estimated future cash flows, discounted to their present value using a pre-tax discount rate.
The Group assesses at the end of each reporting period whether there is any indication that an asset is impaired. In assessing whether there is
any indication that an asset may be impaired, the Group considers External as well as Internal Source of Information. If any such indication exists,
the Group estimates the recoverable amount for the individual asset. If, and only if, the recoverable amount of an asset is less than its carrying
amount, the carrying amount of the asset is reduced to its recoverable amount. An impairment loss is recognised immediately in profit or loss,
unless the asset is carried at revalued amount in accordance with another Standard.
If it is not possible to estimate the recoverable amount of the individual asset, the Group determines the recoverable amount of the cash-
generating unit to which the asset belongs (the asset’s cash-generating unit). A cash-generating unit is the smallest identifiable group of assets
that generates cash inflows that are largely independent of the cash inflows from other assets or groups of assets. The Group recognises
impairment loss for a cash-generating unit if, and only if, the recoverable amount of the cash-generating unit is less than the carrying amount
of the cash-generating unit. The Group allocates impairment loss of cash-generating units first to the carrying amount of goodwill allocated
to the cash-generating units, if any, and then, to the other assets of the cash-generating units pro rata on the basis of the carrying amount of
each asset in the cash-generating unit. These reductions in carrying amounts shall be treated as impairment losses on individual assets and
recognised accordingly.
The Group has an established control framework with respect to the measurement of fair values. This includes a valuation team that has overall
responsibility for overseeing all significant fair value measurements, including Level 3 fair values, and reports directly to the Chief Financial Officer.
The valuation team regularly reviews significant unobservable inputs and valuation adjustments. If third party information, such as broker quotes
or pricing services, is used to measure fair values, then the valuation team assesses the evidence obtained from the third parties to support the
conclusion that these valuations meet the requirements of Ind AS, including the level in the fair value hierarchy in which the valuations should be
classified.
Fair values are categorised into different levels in a fair value hierarchy based on the inputs used in the valuation techniques as follows:
Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities.
Level 2: inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly
(i.e. derived from prices).
Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs)
When measuring the fair value of an asset or a liability, the Group uses observable market data as far as possible. If the inputs used to measure
the fair value of an asset or a liability fall into different levels of the fair value hierarchy, then the fair value measurement is categorised in its entirety
in the same level of the fair value hierarchy as the lowest level input that is significant to the entire measurement.
The Group recognises transfers between levels of the fair value hierarchy at the end of the reporting period during which the change has occurred.
178
KANSAI NEROLAC PAINTS LIMITED
Notes to the CONSOLIDATED Financial Statements
Note 2: Property, Plant and Equipment ` in Crores
Gross Block Accumulated Depreciation Net Block
Description As at As at As at As at As at
1st April, Additions Deductions 31st March, 1st April, Additions Deductions 31st March, 31st March,
2017 2018 2017 2018 2018
Plant and Equipments ................. 704.12 69.86 — 773.98 270.98 32.52 — 303.50 470.48
(678.84) (25.34) (0.06) (704.12) (241.14) (29.90) (0.06) (270.98) (433.14)
Furniture and Fixtures.................. 16.12 1.23 0.01 17.34 12.99 0.70 0.01 13.68 3.66
(15.30) (0.82) (—) (16.12) (12.22) (0.77) (—) (12.99) (3.13)
Vehicles........................................ 2.53 0.45 0.04 2.94 1.57 0.26 0.01 1.82 1.12
(2.44) (0.23) (0.14) (2.53) (1.42) (0.23) (0.08) (1.57) (0.96)
Computers.................................... 36.95 4.06 1.57 39.44 27.71 4.00 1.57 30.14 9.30
(33.03) (4.51) (0.59) (36.95) (25.09) (3.21) (0.59) (27.71) (9.24)
Assets for Scientific Research*...... 25.70 0.55 — 26.25 11.03 1.18 — 12.21 14.04
(19.83) (5.87) (—) (25.70) (10.05) (0.98) (—) (11.03) (14.67)
Assets given on Operating Lease .. 246.35 32.87 — 279.22 183.71 23.41 — 207.12 72.10
(Refer Note 2.5) (217.34) (29.01) (—) (246.35) (163.56) (20.15) (—) (183.71) (62.64)
Total Tangible Assets................ 1568.86 154.55 2.89 1,720.52 614.75 76.64 1.59 689.80 1,030.72
(1480.59) (89.06) (0.79) (1568.86) (545.97) (69.51) (0.73) (614.75) (954.11)
* Net block includes Buildings ` 0.34 Crores (2016-2017 ` 0.35 Crores), Plant and Equipment ` 13.50 Crores (2016-2017 ` 14.08 Crores) and Furniture and Fixtures ` 0.20 Crores
(2016-2017 ` 0.24 Crores).
Notes:
2.1. Figures in the brackets are the corresponding figures in respect of the previous year.
2.2. No items of property, plant and equipment were pledged as security for liabilities during any part of the current and comparative period.
2.3. Nil amount of borrowing costs is capitalised during the current and comparative period.
2.4. Nil amount of impairment loss is recognised during the current and comparative period.
2.5 The Group has given Colour Dispenser Machines on operating lease to its dealers. Particulars in respect of such leases are as follows:
(a) (i) The gross carrying amount and the accumulated depreciation at the Balance Sheet date are ` 279.22 Crores (2016-2017 ` 246.35 Crores) and ` 207.12
Crores (2016-2017 ` 183.71 Crores) respectively.
(ii) Depreciation recognised in the Consolidated Statement of Profit and Loss is ` 23.41 Crores (2016-2017 ` 20.15 Crores).
(b) The Group enters into three years cancellable lease agreements. However, the corresponding lease rentals may be receivable for a shorter period or may be
waived off. The minimum aggregate lease payments to be received in future is considered as ` Nil. Accordingly, the disclosure of the present value of minimum
lease payments receivable at the Balance Sheet date is not made.
179
KANSAI NEROLAC PAINTS LIMITED
Notes to the CONSOLIDATED Financial Statements
Note 3: Investment Property ` in Crores
Description As at As at As at As at As at
1st April, Additions Deductions 31st March, 1st April, Additions Deductions 31st March, 31st March,
2017 2018 2017 2018 2018
3.1. Figures in the brackets are the corresponding figures in respect of the previous year.
3.2. Nil amount of borrowing costs is capitalised during the current and comparative period.
3.3. Nil amount of impairment loss is recognised during the current and comparative period.
3.4. During the financial year, no rental income was generated from the investment properties whereas direct operating expenses of ` 0.18 Crores (2016-2017 ` 0.40
Crores) were incurred and recorded as expense in the Consolidated Statement of Profit and Loss.
3.5. Total fair value of Investment Property is ` 1381.20 Crores (2016-2017 ` 1362.70 Crores).
Description As at As at As at As at As at
1st April, Additions Deductions 31st March, 1st April, Additions Deductions 31st March, 31st March,
2017 2018 2017 2018 2018
Total Other Intangible Assets... 13.84 1.91 — 15.75 12.95 0.43 — 13.38 2.37
(12.87) (0.97) (—) (13.84) (12.32) (0.63) (—) (12.95) (0.89)
4.1. Figures in the brackets are the corresponding figures in respect of the previous year.
4.2. Nil amount of borrowing costs is capitalised during the current and comparative period.
4.3. Nil amount of impairment loss is recognised during the current and comparative period.
180
KANSAI NEROLAC PAINTS LIMITED
Notes to the CONSOLIDATED Financial Statements
` in Crores
Note 5: Non-current Investments As at As at
31st March, 2018 31st March, 2017
Note 6: Loans
Unsecured and Considered Good:
Security Deposits........................................................................................................................ 12.21 11.29
12.21 11.29
150.49 122.17
Note 8: Inventories
Raw Materials [including goods-in-transit of ` Nil (2016-2017 ` 4.00 Crores)]........................... 325.44 242.82
Work-in-progress......................................................................................................................... 65.08 44.92
Finished Goods........................................................................................................................... 403.93 393.42
Stock-in-trade.............................................................................................................................. 30.12 18.37
Stores and Spares...................................................................................................................... 4.61 3.67
829.18 703.20
No inventories were pledged as security for liabilities during any part of the current and comparable period.
Nil amount of inventories were written down to net realisable value during the current and comparable period. Similarly, Nil amount of reversal of write
down was accounted during the current and comparable period.
181
KANSAI NEROLAC PAINTS LIMITED
Notes to the CONSOLIDATED Financial Statements
` in Crores
182
KANSAI NEROLAC PAINTS LIMITED
Notes to the CONSOLIDATED Financial Statements
` in Crores
As at As at
31st March, 2018 31st March, 2017
702.64 590.44
183
KANSAI NEROLAC PAINTS LIMITED
Notes to the CONSOLIDATED Financial Statements
` in Crores
63.21 55.62
Note 12: Bank Balance other than Cash and Cash Equivalents
Unpaid Dividend Accounts............................................................................................................... 1.01 0.88
300.40 205.82
* Deposited under Capital Gain Accounts Scheme, 1988 in respect of long-term capital gain,
includes fixed deposit of ` 0.50 Crores
3.32 3.32
25.55 234.23
* Deposited under Capital Gain Accounts Scheme, 1988 in respect of long-term capital gain
140.73 66.89
184
KANSAI NEROLAC PAINTS LIMITED
Notes to the CONSOLIDATED Financial Statements
No. of No. of
3. Details of Shareholders holding more than 5% of shares: % Shares % Shares
Holding Company:
Kansai Paint Co., Ltd., Japan................................................................................................. 74.99 40,41,35,898 74.99 40,41,35,898
4.
Aggregated number of bonus share issued during the period of five years immediately
preceding the reporting date by capitalisation of security premium reserve............................. Nil Nil
5. The Parent Company has issued one class of shares, i.e. equity shares, which enjoys similar
rights in respect of voting, payment of dividend and repayment of capital. On winding up of the
Parent Company, the holders of equity shares will be entitled to receive the residual assets of
the Parent Company, remaining after distribution of all preferential amounts in proportion to
the number of equity shares held. ............................................................................................ 1 1
7. Capital Management
For the purpose of the Group's capital management, capital includes issued equity capital
and all other equity reserves attributable to the equity holders of the Parent Company. The
Group's policy is to maintain a strong capital base so as to maintain investor, creditor and
market confidence and to sustain future development of the business. Management monitors
the return on capital, as well as the levels of dividends to equity shareholders. The Group is
not subject to any externally imposed capital requirements.
185
KANSAI NEROLAC PAINTS LIMITED
Notes to the CONSOLIDATED Financial Statements
` in Crores
Note 17: Other Equity
Exchange
differences Total
Securities attributable
Capital General Retained on Attributable
Premium to owners Total
Reserve Reserve Earnings translation to NCI
Reserve of the
of foreign Company
operations
Balance as at 1st April, 2016.......................................................... 0.30 12.56 452.09 1990.90 (0.13) 2455.72 5.97 2461.69
Profit for the year — — — 508.84 — 508.84 1.17 510.01
Exchange differences on translation of foreign operations............ — — — — 0.07 0.07 — 0.07
Other Comprehensive Income:
Remeasurement of Defined Benefit Liability................................. — — — (7.23) — (7.23) — (7.23)
Deferred Tax on Remeasurement of Defined Benefit Liability.......... — — — 2.50 — 2.50 — 2.50
Exchange differences on translation of foreign operations.............. — — — 0.10 — 0.10 — 0.10
Other comprehensive Income (net of tax) attributable to
Non-controlling Interests................................................................. — — — (0.07) — (0.07) — (0.07)
Other Comprehensive Income for the year, net of tax .................. — — — (4.70) 0.07 (4.63) — (4.63)
Total Comprehensive Income for the year.................................... — — — 504.14 0.07 504.21 1.17 505.38
Other Adjustment ............................................................................ — — — — (0.56) (0.56) — (0.56)
Transaction with Owners in their Capacity as Owners, recorded
directly in equity:
Dividends..................................................................................... — — — (164.37) — (164.37) — (164.37)
Dividend Distribution Tax............................................................. — — — (34.39) — (34.39) — (34.39)
— — — (198.76) — (198.76) — (198.76)
Transfer from Retained Earnings .................................................. — — — (35.58) — (35.58) — (35.58)
Transfer to General Reserve........................................................... — — 35.58 — — 35.58 — 35.58
Share of NCI on Consolidation....................................................... — — — — — — 8.11 8.11
Balance as at 31st March, 2017...................................................... 0.30 12.56 487.67 2260.70 (0.62) 2760.61 15.25 2775.86
` in Crores
Exchange
Total
differences
Securities attributable
Capital General Retained on Attributable
Premium to owners Total
Reserve Reserve Earnings translation to NCI
Reserve of the
of foreign
Company
operations
Balance as at 1st April, 2017............................................................ 0.30 12.56 487.67 2260.70 (0.62) 2760.61 15.25 2775.86
Profit for the year — — — 514.40 — 514.40 (0.65) 513.75
Exchange differences on translation of foreign operations............ — — — — (0.06) (0.06) (0.01) (0.07)
Other Comprehensive Income:
Remeasurement of Defined Benefit Liability................................. — — — (1.59) — (1.59) 0.04 (1.55)
Deferred Tax on Remeasurement of Defined Benefit Liability.......... — — — 0.58 — 0.58 — 0.58
Other Comprehensive Income for the year, net of tax .................. — — — (1.01) (0.06) (1.07) 0.03 (1.04)
Total Comprehensive Income for the year...................................... — — — 513.39 (0.06) 513.33 (0.62) 512.71
Transaction with Owners in their Capacity as Owners, recorded — — — — —
directly in equity:
Issue of Share Capital................................................................... — — — — — — 2.50 2.50
Dividends....................................................................................... — — — — — (161.68) (0.75) (162.43)
Dividend Distribution Tax............................................................... — — — — — (33.83) — (33.83)
(195.51) 1.75 (193.76)
Balance as at 31st March, 2018........................................................ 0.30 12.56 487.67 2774.09 (0.68) 3078.43 16.38 3094.81
Exchange differences on translation of foreign operations. 31st March, 2018 31st March, 2017
Opening Balance............................................................................................................................ (0.62) (0.13)
Exchange differences on translation of foreign operations................................................................. (0.06) (0.49)
Closing Balance ............................................................................................................................. (0.68) (0.62)
186
KANSAI NEROLAC PAINTS LIMITED
Notes to the CONSOLIDATED Financial Statements
Capital Reserve
Capital reserve includes profit on re-issue of forfeited shares.
Securities Premium Reserve
Securities premium reserve is used to record the premium received on issue of shares. It is utilised in accordance with the provisions of the Companies
Act, 2013.
General Reserve
General reserve was created by transfers of profits as per Companies (Transfer of Profits to Reserves) Rules, 1975. As general reserve is created by
transfer from one component of equity to another and is not an item of other comprehensive income, items included in the general reserve will not be
reclassified subsequently to profit or loss.
Dividend
For the year 2016-2017, the Directors had recommended and shareholders had approved a normal dividend of 250% (` 2.50 per share) and a
special dividend of 50% (` 0.50 share), thus aggregating to a total dividend of 300% (` 3.00 per share), which has been accounted in current year. For
the year 2017-2018, the Directors have recommended a normal dividend of 260% (` 2.60 per share). The dividend proposed by the Directors is subject
to approval of shareholders at the annual general meeting. The proposed dividend of ` 140.12 Crores (2016-2017 ` 161.68 Crores) alongwith dividend
distribution tax of ` 29.66 Crores (2016-2017 ` 33.83 Crores) have not been recognised as liabilities.
` in Crores
Note 18: Borrowings As at As at
31st March, 2018 31st March, 2017
A.
The major components of income tax expense for the year ended 31st March 2018 are as
under:
(i) Income tax recognised in the Consolidated Statement of Profit and Loss
Current tax:
In respect of current year................................................................................................................. 270.72 248.24
Adjustments in respect of previous year ......................................................................................... — (1.31)
Deferred tax:
In respect of current year................................................................................................................. 2.49 8.30
Income tax expense recognised in the Consolidated Statement of Profit and Loss ............. 273.21 255.23
(ii) Income tax expense recognised in OCI
Deferred tax expense on remeasurements of defined benefit plans............................................... 0.58 2.50
Income tax expense recognised in OCI....................................................................................... 0.58 2.50
B. Reconciliation of tax expense and the accounting profit for the year is as under:
Profit Before Tax .................................................................................................................................. 786.96 765.31
Income tax expense calculated at 34.608% ........................................................................................ 272.35 264.91
Tax effect on non-deductible expenses................................................................................................. 4.64 2.93
Incentive tax credits.............................................................................................................................. (3.69) (8.47)
Effect of Income that is exempted from tax........................................................................................... (0.84) (4.31)
Others................................................................................................................................................... 0.75 0.17
Total...................................................................................................................................................... 273.21 255.23
Tax expense as per Consolidated Statement of Profit and Loss.................................................... 273.21 255.23
The tax rate used for reconciliation above is the corporate tax rate of 34.608% payable by corporate entities in India on taxable profits under Indian tax law.
187
KANSAI NEROLAC PAINTS LIMITED
Notes to the CONSOLIDATED Financial Statements
` in Crores
Note 20: Income Taxes
C. The major components of deferred tax (liabilities)/assets arising on account of timing differences are as follows:
Particulars Balance Profit and Balance Balance Profit and Other Balance
OCI OCI
Sheet Loss Sheet Sheet Loss Adjustment Sheet
16.83 —
Trade Payables
Payables to Micro and Small Enterprises*................................................................................. — —
Payables to Others..................................................................................................................... 699.87 560.66
699.87 560.66
* Based on the information and explaination available with management, there are no amounts
due to the suppliers covered under the Micro, Small and Medium Enterprises Development Act,
2006.
188
KANSAI NEROLAC PAINTS LIMITED
Notes to the CONSOLIDATED Financial Statements
` in Crores
Note 23: Other Financial Liabilities As at As at
31st March, 2018 31st March, 2017
32.73 39.60
* Includes payable toward TDS, Excise duty, Service tax, VAT, GST and Employee Related
Statutory Obligations.
7.77 7.77
— 0.25
21.14 23.46
* With restructuring of the production facilities, the timing of the outflow of provision ` 4.66
Crores (2016-2017 ` 4.66 Crores) recognised in respect of matters relating to indirect
taxes is dependent on the outcome of the settlement with the appropriate authorities.
#
The Parent Company was selling certain products with a warranty of seven years.
Accordingly, provision had been recognised on the basis of management's expectation of
warranty claims on such products.
4.36 4.87
189
KANSAI NEROLAC PAINTS LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
` in Crores
Interest Income
Interest on Loans and Deposit............................................................... 19.56 8.77
Interest on bonds recognised through FVTPL....................................... 0.78 2.22
20.34 10.99
Profit on Sale of Investments (Net)............................................................. 30.04 56.17
Fair Value Gain on Financial Instruments.................................................... 4.94 11.04
2386.23 1942.05
Packing Material Consumed
Opening Stock....................................................................................... 10.74 8.09
Add: Purchase....................................................................................... 333.36 277.48
Less: Closing Stock............................................................................... 12.67 10.74
331.43 274.83
2717.66* 2216.88*
190
KANSAI NEROLAC PAINTS LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
` in Crores
Note 30: Changes in Inventories of Finished Goods, Year ended Year ended
Stock-in-trade and Work-in-progress 31st March, 2018 31st March, 2017
Opening Stock
Finished Goods...................................................................................... 393.45 348.80
Work-in-progress................................................................................... 44.92 46.80
Stock-in-trade (in respect of goods acquired for trading)....................... 18.37 17.89
456.74 413.49
Less: Closing Stock
Finished Goods...................................................................................... 403.93 393.43
Work-in-progress................................................................................... 65.08 44.92
Stock-in-trade (in respect of goods acquired for trading)....................... 30.12 18.37
499.13 456.72
Add: Excise Duty Related to the Difference between the Closing Stock
and Opening Stock of Finished Goods............................................... (75.54) 8.96
(117.93) (34.27)
235.08* 202.57*
77.07* 70.09*
*Includes ` 1.18 Crores (2016-2017 ` 0.98 Crores) depreciation and
amortisation expenses on Research and Developments
191
KANSAI NEROLAC PAINTS LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
` in Crores
Note 33: Other Expenses (contd.)
Year ended Year ended
31st March, 2018 31st March, 2017
Note 33.1: Payments to Auditors'
Auditors’ Remuneration excluding Service Tax (Included in Miscellaneous
Expenses in Note 33)
As Auditor
Statutory Audit....................................................................................... 0.29 0.29
Report under Section 44AB of the Income-tax Act, 1961...................... 0.04 0.04
Limited Review of Quarterly Results...................................................... 0.09 0.09
In other capacity
Certification............................................................................................ 0.09 0.09
Other Matters......................................................................................... 0.10 0.15
Reimbursements of Expenses................................................................. 0.05 0.05
0.66 0.71
Note 33.2: Research and Development Expenses
Revenue Expenditure on Research and Development recognised in
Consolidated Statement of Profit and Loss is ............................................ 24.34 23.12
192
KANSAI NEROLAC PAINTS LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
` in Crores
Note 35: Earnings Per Equity Share Year ended Year ended
31st March, 2018 31st March, 2017
Numerator:
Profit attributable to Equity holders (` in Crores)................................... 514.40 508.84
Denominator:
Weighted Average Number of ordinary shares at the beginning and
end of the year....................................................................................... 53,89,19,720 53,89,19,720
Basic and diluted earnings per Equity Share (in `)............................... 9.55 9.44
(b) An entity is related to a reporting entity if any of the following conditions applies:
(i) The entity and the reporting entity are members of the same group (which means that each parent, subsidiary and fellow subsidiary is
related to the others).
(ii) One entity is an associate or joint venture of the other entity (or an associate or joint venture of a member of a group of which the other
entity is a member).
(iii) Both entities are joint ventures of the same third party.
(iv) One entity is a joint venture of a third entity and the other entity is an associate of the third entity.
(v) The entity is a post-employment benefit plan for the benefit of employees of either the reporting entity or an entity related to the reporting
entity. If the reporting entity is itself such a plan, the sponsoring employers are also related to the reporting entity.
(vi) The entity is controlled or jointly controlled by a person identified in (a).
(vii) A person identified in (a)(i) has significant influence over the entity or is a member of the key management personnel of the entity (or of a
parent of the entity).
(viii) The entity, or any member of a group of which it is a part, provides key management personnel services to the reporting entity or to the
parent of the reporting entity.
A related party transaction is a transfer of resources, services or obligations between a reporting entity and a related party, regardless of whether a
price is charged.
Parent and ultimate controlling entity
Name % Shareholding Type Principal Place of
Activities Incorporation
2018 2017
Kansai Paints Co., Ltd.................................................. 74.99 74.99 Parent and ultimate Manufacturing Japan
controlling entity Paints
Kansai Paints Co., Ltd. Is immediate and ultimate holding company of Kansai Nerolac Paints Ltd. and is based and listed in Japan. Financial
statements of Kansai Paints Co., Ltd is available in public domain.
Kansai Paint Philippines Inc. ................................................................................... Fellow Subsidiary Manufacturing Paints Philippines
Kansai Paint Asia Pacific SDN.BHD........................................................................ Fellow Subsidiary Manufacturing Paints Malaysia
Kansai Altan Boya Sanayi Ve Ticaret A.S................................................................ Fellow Subsidiary Manufacturing Paints Turkey
Kansai Plascon Kenya Ltd....................................................................................... Fellow Subsidiary Manufacturing Paints Kenya
Key management personnel are those persons having authority and responsibility for planning, directing and controlling the activities
of the entity, directly or indirectly, including any director (whether executive or otherwise) of that entity. Key management personnel includes
(1) Mr. P. P. Shah, Chairman (2) Mr. H. M. Bharuka, Vice Chairman and Managing Director, (3) Mr. N. N. Tata, Director (4) Mr. P. D. Chaudhari,
Wholetime Director, (5) Mrs. Brinda Somaya, Director (6) Mr. P. D. Pai, CFO and (7) Mr. G. T. Govindarajan, Company Secretary.
193
KANSAI NEROLAC PAINTS LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
– Kansai Altan Boya Sanayi Ve Ticaret A.S................................................................. Fellow Subsidiary 0.79 0.09
Dividend Paid
– Kansai Paint Co., Ltd., Japan .................................................................................. Parent and ultimate
controlling entity 121.24 123.26
– Kansai Paint Asia Pacific SDN.BHD. ....................................................................... Fellow Subsidiary 0.11 0.08
194
KANSAI NEROLAC PAINTS LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Contribution to defined contribution plan, recognised in the Consolidated Statement of Profit and Loss under Group’s Contribution to Provident
Fund and Other Funds in Employee Benefits Expenses for the year are as under:
Remeasurements – Return on plan assets excluding amounts included in interest income........ (1.37) 0.32
Defined Benefit Cost recognised in the Consolidated Statement of Profit and Loss.................... 2.93 3.22
195
KANSAI NEROLAC PAINTS LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
` in Crores
Defined Benefit Cost recognised in the Statement of Other Comprehensive Income.................. 1.55 6.22
The assumptions used to determine net periodic benefit cost are set out below:
Particulars Valuation Date Valuation Date
31st March, 2018 31st March, 2017
Sensitivity Analysis:
Discount Rate, Salary Escalation Rate and Withdrawal Rate are significant actuarial assumptions. The change in the Present Value of Defined
Benefit Obligation for a change of 100 Basis Points from the assumed assumption is given below:
` in Crores
Scenario 31st March, 2018 31st March, 2017
Under Base Scenario.................................................................................................... 35.05 33.54
Salary Escalation – Up by 1%....................................................................................... 38.02 35.89
Salary Escalation – Down by 1%................................................................................... 32.42 30.47
Withdrawal Rates – Up by 1%....................................................................................... 34.91 32.87
Withdrawal Rates – Down by 1%.................................................................................. 35.20 33.23
Discount Rates – Up by 1%........................................................................................... 32.63 29.79
Discount Rates – Down by 1%...................................................................................... 37.84 35.31
196
KANSAI NEROLAC PAINTS LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As at As at
31st March, 2018 31st March, 2017
The Group other than in India, contributes all ascertained liabilites towards provident fund as per rules and regulations inforce in respective
countries amounting ` 0.07 Crores ( 2016-2017: ` 0.06 Crores) to respective provident fund authority
c. Compenseted Absenses
The increase in provision for compensated absences for the year is ` 1.85 Crores (2016-2017 ` 3.06 Crores).
` in Crores
In Cash Yet to be paid in cash Total
(i) Construction/acquisitiion of any asset................................................ — — —
(ii) On purposes other than (i) above....................................................... 11.03 — 11.03
197
KANSAI NEROLAC PAINTS LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
198
KANSAI NEROLAC PAINTS LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Note 40: Financial Instruments: Fair values and Risk Management (contd.)
(B) Financial Risk Management (contd.)
(ii) Credit Risk
Credit Risk is the risk of financial loss to the Group if a customer or counterparty to a financial instrument fails to meet its contractual
obligations, and arises principally from the Group’s receivables from customers, loans and investments in debt securities. The carrying
amounts of financial assets represent the maximum credit risk exposure.
` in Crores
Upto 3 months to 6 months to 1 year to 3 years and
Year ended On demand 3 months 6 months 1 year 2 years above Total
Borrowings ......... 31-03-2018 3.22 11.14 2.47 8.49 9.71 — 35.03
199
KANSAI NEROLAC PAINTS LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Note 40: Financial Instruments: Fair values and Risk Management (contd.)
(iv) Market Risk (contd.)
Foreign Currency Sensitivity Analysis
The following table demonstrate the sensitivity to a reasonable possible change in CHF, EURO, JPY and USD exchange rates, with all
other variable held constant.
` in Crores
Profit or Loss Equity net of tax
Strengthening Weakening Strengthening Weakening
31st March, 2018
CHF (5% movement)........................................................ 0.01 (0.01) 0.01 (0.01)
EURO (5% movement)..................................................... 1.84 (1.84) 1.21 (1.21)
JPY (5% movement) ........................................................ (1.00) 1.00 (0.65) 0.65
USD (5% movement) ....................................................... (5.35) 5.35 (3.50) 3.50
31st March, 2017
CHF (5% movement)........................................................ (0.01) 0.01 (0.01) 0.01
EURO (5% movement)..................................................... 0.11 (0.11) 0.07 (0.07)
JPY (5% movement) ........................................................ (0.53) 0.53 (0.35) 0.35
USD (5% movement) ....................................................... (2.96) 2.96 (1.94) 1.94
Note 41:
Disclosure under the Micro, Small and Medium Enterprises Development Act, 2006 are provided as under for the year 2017-18, to the extent
the Company has received intimation from the “Suppliers” regarding their status under the Act.
` in Crores
As at As at
31st March, 2018 31st March, 2017
(i) Principal amount and the interest due thereon remaining unpaid to each supplier at the end
of each accounting year (but within due date as per the MSMED Act)
Principal amount due to micro and small enterprise...................................................... — —
Interest due on above..................................................................................................... — —
(ii) Interest paid by the Company in terms of Section 16 of the Micro, Small and
MediumEnterprises Development Act, 2006, along-with the amount of the payment made to
the supplier beyond the appointed day during the period....................................................... — —
(iii) Interest due and payable for the period of delay in making payment (which have been paid
but beyond the appointed day during the period) but without adding interest specified under
the Micro, Small and Medium Enterprises Act, 2006............................................................. — —
(iv) The amount of interest accrued and remaining unpaid at the end of each accounting year.. — —
(v) Interest remaining due and payable even in the succeeding years, until such date when the
interest dues as above are actually paid to the small enterprises.......................................... — —
Dues to Micro and Small Enterprises have been determined to the extent such parties have been identified on the basis of information collected
by the Management. This has been relied upon by the auditors.
200
KANSAI NEROLAC PAINTS LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Details of Specified Bank Notes held and transacted during the period from 8th November, 2016 to 30th December, 2016 were as follows:
` in Crores
SBNs Other Total
denomination
notes
Closing cash in hand as on 08.11.2016................................................................................... 0.15 0.02 0.17
(+) Permitted receipts............................................................................................................... — 0.25 0.25
(-) Permitted payments............................................................................................................. — 0.20 0.20
(-) Amount deposited in Banks................................................................................................. 0.15 — 0.15
Closing cash in hand as on 30.12.2016................................................................................... — 0.06 0.06
Note 43:
Consequent to the issuance of "Guidance Note on Division II — Ind AS Schedule III to the Companies Act, 2013", certain items of Consolidated
Financial Statements have been regrouped/reclassified.
As per our attached report of even date For and on behalf of the Board of Directors
For B S R & Co. LLP P.P. SHAH Chairman DIN 00066242
Chartered Accountants H.M. BHARUKA Vice Chairman and Managing Director DIN 00306084
Firm’s Registration No. 101248W/W-100022
N.N. TATA Director DIN 00024713
Aniruddha Godbole G.T. GOVINDARAJAN P.D. PAI BRINDA SOMAYA Director DIN 00358908
Partner Company Secretary CFO
Anuj Jain Wholetime Director DIN 08091524
Membership No. 105149 ACS No. 8887
Mumbai, 2nd May, 2018 Mumbai, 2nd May, 2018
201
KANSAI NEROLAC PAINTS LIMITED
` in Crores
Depreciation
Cost of Employee and Dividend Earnings Net Worth
Total Materials/ Benefits Other Finance Amortisation Tax Profit per Share per Share per Share
Year Revenue# Products Expense Expenses Costs Expenses Expense after Tax Dividend (`) (`) (`)
2003-2004 770.25 456.76 52.51 148.86 1.32 22.04 30.80 57.96 19.13 12.50 37.87 173.11
2004-2005 900.76 531.55 49.31 161.18 0.77 20.70 45.30 91.96 29.33 11.50 36.05† 126.78†
2005-2006 1084.59 610.96 55.92 185.56 0.78 31.78 61.01 138.59 51.02* 20.00* 54.40 159.19
2006-2007 1246.43 778.33 59.57 213.05 0.96 33.56 53.31 107.66 30.99 11.50 39.95 189.91@
2007-2008 1344.60 837.32 69.13 226.75 1.41 39.60 50.60 119.79 32.34 12.00 44.46 220.33
2008-2009 1396.71 899.58 73.30 244.20 1.84 37.61 41.60 98.59 32.34 12.00 36.59 242.87
2009-2010 1726.77 1071.82 75.05 295.83 1.20 44.26 73.11 165.50 40.42 15.00 30.71^ 286.80
2010-2011 2187.56 1400.25 91.64 356.34 0.84 49.36 83.15 205.99 53.89 10.00** 38.22 170.00+
2011-2012 2624.84 1740.41 106.94 415.91 0.09 56.35 89.24 215.89 59.28 11.00 40.06 197.28
2012-2013 2872.94 1942.62 118.14 459.76 0.02 47.11 90.80& 214.49& 59.28 11.00 39.80& 224.21&
2013-2014 3174.35 2133.95 135.88 532.10 0.45 64.98 100.42 206.57 59.28 1.10~ 3.83 $ 26.41$
2014-2015 3570.85 2364.44 143.30 596.50 0.02 67.69 127.23 271.67 75.45 1.40~ 5.04 $ 29.63$
2015-2016 3765.88 2348.36 170.11 640.08 — 67.72 176.10 363.51& 164.37 3.05^^ 6.65 & 46.44
2016-2017 4097.29 2342.95 198.12 727.31 — 69.49 253.48 505.94 161.68¢ 3.00¢ 9.39 52.06
2017-2018 4658.99 2774.07 226.56 796.17 — 75.79 270.00 516.40 140.12¢ 2.60¢ 9.58 57.99
# Net of Rebates and Excise Duty upto 2014-2015, from 2015-2016, net of Discounts, Rebates and Excise Duty.
† Consequent to the Bonus Issue in 2004-2005.
* Includes Special Interim Dividend of ` 8.50 per share.
@ Calculated on number of shares post amalgamation of Polycoat Powders Ltd. with the Company.
^ Re-calculated consequent to the Bonus Issue of 1:1 2010-2011.
** On enhanced Share capital consequent to the Bonus Issue in 2010-2011.
+ Consequent to the Bonus Issue in 2010-2011.
& Before Exceptional Items (Net of Tax).
$ Re-calculated consequent to the subdivision of Equity Share of face value of ` 10 each to 10 (ten) equity shares of ` 1 each.
~ Consequent to the subdivision of Equity Share.
^^ Includes Special Dividend of ` 1.25 per share.
¢ The dividend proposed by the Directors is subject to approval of shareholders at the annual general meeting. The proposed dividend alongwith dividend distribution
tax have not been recognised as liabilities.
Figures from financial year 2015-2016 are Ind AS compliant.
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