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Company Information

Home » Market » Company Information

Asian Paints Ltd.

Nov 21, 11:39
1163.20 -4.90 ( -0.42 %)
 
VOLUME : 7711
Prev. Close 1168.10
Open Price 1157.60
TODAY'S LOW / HIGH
1157.60
 
 
 
1170.00
Bid PRICE (QTY.) 1162.20 (46)
Offer PRICE (Qty.) 1163.20 (95)
52 WK LOW / HIGH
850.10
 
 
 
1261.25
Nov 21, 11:39
1162.05 -4.30 ( -0.37 %)
 
VOLUME : 126425
Prev. Close 1166.35
Open Price 1168.60
TODAY'S LOW / HIGH
1161.00
 
 
 
1175.00
Bid PRICE (QTY.) 1162.05 (114)
Offer PRICE (Qty.) 1162.35 (24)
52 WK LOW / HIGH
851.10
 
 
 
1262.00
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Market Cap. ( ₹ ) 111463.58 Cr. P/BV 14.66 Book Value ( ₹ ) 79.26
52 Week High/Low ( ₹ ) 1262/851 FV/ML 1/1 P/E(X) 57.47
Bookclosure 01/11/2017 EPS ( ₹ ) 20.22 Div Yield (%) 0.89
NOTES TO ACCOUNTS
You can view the entire text of Notes to accounts of the company for the latest year
Year End :2017-03 

Notes:

~ The Company had partnered with National Skill Development Corporation (NSDC) for undertaking a painter skill development project. Under the arrangement, the Company was granted a financial assistance of Rs, 0.31 crores from NSDC disbursable in five tranches. The assistance was secured by a bank guarantee provided by the Company to NSDC on the outstanding amount. The assistance carried an interest @ 6% p.a. and was repayable over a period of nine years including a moratorium of three years on the principal amount, starting from the date of first disbursement. During the year 2014-15, the Company received Rs, 0.06 crores as per the schedule of disbursement and no amounts were repayable during the next one year. During the year 2016-17, the loan was repaid on 26th September, 2016.

# Interest free loan from The Pradeshiya Industrial Corporation of U.P Limited (PICUP) under Sales Tax Deferment Scheme of Government of Uttar Pradesh was secured by a first charge on the CompanyRs,s immovable properties of the paint plant at Kasna and by way of hypothecation of all movable properties at the above location. This interest free loan had a deferment period of 10 years and was repayable in 9 yearly installments starting from May, 2007 as per repayment schedule. Out of the total loan of Rs, 30.60 crores, the Company had already repaid Rs, 27.36 crores till 31st March, 2015 and the balance amount of Rs, 3.24 crores was paid during the previous year by 31st May, 2015. Pursuant to the repayment of loan, the charge on Company's immovable properties was released.

## The Company is eligible to avail interest free loan in respect of 50% of VAT paid within Haryana on the sale of goods produced at Rohtak plant for a period of 7 financial years beginning from April, 2010. For the year ended 31st March, 2011, 31st March, 2012 and 31st March, 2013, the Company has already received the interest free loan of Rs, 3.41 crores, Rs, 5.90 crores and Rs, 7.89 crores respectively. Loan of Rs, 7.89 crores received during the current year and Rs, 5.90 crores received during the last year (after the date of transition to Ind AS) are recognized at fair value using prevailing market interest rates for an equivalent loan. The fair value of loans received in 2016-17 and 2015-16 is estimated at Rs, 4.84 crores and Rs, 3.62 crores, respectively, on initial recognition. The difference between the gross proceeds and fair value of the loan is the benefit derived from the interest free loan and is recognized as deferred income (Refer Note 19(b)). Loan as at 1st April, 2015 (date of transition to Ind As) is carried at historical cost (Refer point 5 under Exemptions availed under Note 31). This loan is secured by way of a bank guarantee issued by the Company and is repayable after a period of 5 years from the date of receipt of interest free loan. For the year ended 31st March, 2014, 31st March, 2015 and 31st March, 2016, the Company had made the necessary application to the Haryana Government for the issue of eligibility certificate and for the year ended 31st March, 2017, the Company is in the process of making the necessary application.

### Sales tax deferment scheme- State of Andhra Pradesh represents sales tax deferment availed under the Sales tax deferment scheme of the Government of Andhra Pradesh. It had a deferment period of 14 years and was repayable over 9 years. Out of the total loan of ' 40.70 crores, the Company had already repaid Rs, 12.08 crores till 31st March, 2016. The balance amount was settled during the current year by early repayment of Rs, 25.08 crores resulting in a gain of Rs, 3.54 crores accounted as other income.

@ Overdraft in current account carries interest rate @ 8.90% p.a. (as at 31st March, 2016 and 1st April, 2015 it was 12.50% p.a.)

* Default in terms of repayment of principal and interest - NIL.

NOTE 29(C) : FINANCIAL RISK MANAGEMENT - OBJECTIVES AND POLICIES

The Company's financial liabilities comprise mainly of borrowings, trade payables and other payables. The Company's financial assets comprise mainly of investments, cash and cash equivalents, other balances with banks, loans, trade receivables and other receivables.

The Company is exposed to Market risk, Credit risk and Liquidity risk. The Board of Directors (‘Board') oversee the management of these financial risks through its Risk Management Committee. The Risk Management Policy of the Company formulated by the Risk Management Committee and approved by the Board, states the Company's approach to address uncertainties in its Endeavour to achieve its stated and implicit objectives. It prescribes the roles and responsibilities of the Company's management, the structure for managing risks and the framework for risk management. The framework seeks to identify, assess and mitigate financial risks in order to minimize potential adverse effects on the Company's financial performance.

The following disclosures summarize the Company's exposure to financial risks and information regarding use of derivatives employed to manage exposures to such risks. Quantitative sensitivity analysis have been provided to reflect the impact of reasonably possible changes in market rates on the financial results, cash flows and financial position of the Company.

1) Market Risk

Market risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market prices. Market risk comprises three types of risks: interest rate risk, currency risk and other price risk. Financial instruments affected by market risk includes borrowings, investments, trade payables, trade receivables, loans and derivative financial instruments.

a) Interest Rate Risk

Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. Since the Company has insignificant interest bearing borrowings, the exposure to risk of changes in market interest rates is minimal. The Company has not used any interest rate derivatives.

b) Foreign Currency Risk

Foreign currency risk is the risk that the fair value or future cash flows of an exposure will fluctuate due to changes in foreign exchange rates. The Company enters into forward exchange contracts with average maturity of less than one month to hedge against its foreign currency exposures relating to the recognized underlying liabilities and firm commitments. The Company's policy is to hedge its exposures above predefined thresholds from recognized liabilities and firm commitments that fall due in 20-30 days. The Company does not enter into any derivative instruments for trading or speculative purposes.

The Company is mainly exposed to changes in USD. The below table demonstrates the sensitivity to a 5% increase or decrease in the USD against INR, with all other variables held constant. The sensitivity analysis is prepared on the net unhedged exposure of the Company as at the reporting date. 5% represents management's assessment of reasonably possible change in foreign exchange rate.

c) Other Price Risk

Other price risk is the risk that the fair value of a financial instrument will fluctuate due to changes in market traded price. Other price risk arises from financial assets such as investments in equity instruments and bonds. The Company is exposed to price risk arising mainly from investments in equity instruments recognized at FVTOCI. As at 31st March, 2017, the carrying value of such equity instruments recognized at FVTOCI amounts to Rs,454.74 crores (Previous year Rs,323.97 crores and Rs,343.81 crores as at 1st April, 2015). The details of such investments in equity instruments are given in Note 4 (I)(A)(a).

The Company is also exposed to price risk arising from investments in bonds recognized at FVTOCI. As at 31st March, 2017, the carrying value of such instruments recognized at FVTOCI amounts to Rs,80.28 crores (Rs,77.55 crores as at 31st March, 2016 and Rs,28.70 crores as at 1st April, 2015). These being debt instruments, the exposure to risk of changes in market rates is minimal. The details of such investments in bonds are given in Note 4 (I)(C).

The Company is mainly exposed to change in market rates of its investments in equity investments recognized at FVTOCI. A sensitivity analysis demonstrating the impact of change in market prices of these instruments from the prices existing as at the reporting date is given below:

If the equity prices had been higher/lower by 10% from the market prices existing as at 31st March, 2017, Other Comprehensive Income for the year ended 31st March, 2017 would increase/decrease by Rs,45.47 crores (2015-16 Rs,32.40 crores, 2014-15 Rs,34.40 crores) with a corresponding increase/decrease in Total Equity of the Company as at 31st March, 2017. 10% represents management's assessment of reasonably possible change in equity prices.

2) Credit Risk

Credit risk refers to risk that a counterparty will default on its contractual obligations resulting in financial loss to the Company. Credit risk arises primarily from financial assets such as trade receivables, investment in mutual funds, derivative financial instruments, other balances with banks, loans and other receivables. The Company's exposure to credit risk is disclosed in Note 4 (except equity shares and bonds), 5, 6, 10 and 11B.

The Company has adopted a policy of only dealing with counterparties that have sufficiently high credit rating. The Company's exposure and credit ratings of its counterparties are continuously monitored and the aggregate value of transactions is reasonably spread amongst the counterparties.

Credit risk arising from investment in mutual funds, derivative financial instruments and other balances with banks is limited and there is no collateral held against these because the counterparties are banks and recognized financial institutions with high credit ratings assigned by the international credit rating agencies.

The average credit period on sales of products is less than 30 days. Credit risk arising from trade receivables is managed in accordance with the Company's established policy, procedures and control relating to customer credit risk management. Credit quality of a customer is assessed based on a detailed study of credit worthiness and accordingly individual credit limits are defined/modified. The concentration of credit risk is limited due to the fact that the customer base is large. There is no customer representing more than 5% of the total balance of trade receivables.

For trade receivables, as a practical expedient, the Company computes credit loss allowance based on a provision matrix. The provision matrix is prepared based on historically observed default rates over the expected life of trade receivables and is adjusted for forward-looking estimates. The provision matrix at the end of the reporting period is as follows:

3) Liquidity Risk

Liquidity risk is the risk that the Company will encounter difficulty in raising funds to meet commitments associated with financial instruments that are settled by delivering cash or another financial asset. Liquidity risk may result from an inability to sell a financial asset quickly at close to its fair value.

The Company has an established liquidity risk management framework for managing its short term, medium term and long term funding and liquidity management requirements. The Company's exposure to liquidity risk arises primarily from mismatches of the maturities of financial assets and liabilities. The Company manages the liquidity risk by maintaining adequate funds in cash and cash equivalents. The Company also has adequate credit facilities agreed with banks to ensure that there is sufficient cash to meet all its normal operating commitments in a timely and cost-effective manner.

For the purpose of the Company's capital management, capital includes issued capital and all other equity reserves attributable to the equity shareholders of the Company. The primary objective of the Company when managing capital is to safeguard its ability to continue as a going concern and to maintain an optimal capital structure so as to maximize shareholder value.

As at 31st March, 2017, the Company has only one class of equity shares and has low debt. Consequent to such capital structure, there are no externally imposed capital requirements. In order to maintain or achieve an optimal capital structure, the Company allocates its capital for distribution as dividend or re-investment into business based on its long term financial plans.

Proposed Dividend:

The Board of Directors at its meeting held on 11th May, 2017 have recommended a payment of final dividend of Rs,5.65 (Rupees five and paise sixty five only) per equity share of face value of Rs,1 each for the financial year ended 31st March, 2017. The same amounts to Rs,652.27 crores including dividend distribution tax of Rs,110.33 crores.

In addition, the Board of Directors have recommended a one-time special dividend of Rs,2 (Rupees two only) per equity share of the face value of Rs,1 each for celebrating 75 years of Excellence at Asian Paints. The same amounts to Rs,230.89 crores including dividend distribution tax of Rs,39.05 crores.

The above is subject to approval at the ensuing Annual General Meeting of the Company and hence is not recognized as a liability.

NOTE 4 : FIRST TIME ADOPTION OF Ind AS

For all periods up to and including the year ended 31st March, 2016, the Company had prepared its financial statements in accordance with the accounting standards notified under Section 133 of the Companies Act, 2013, read together with Rule 7 of the Companies (Accounts) Rules, 2014 (‘Previous GAAP'). This note explains the principal adjustments made by the Company in restating its financial statements prepared under Previous GAAP for the following-

a) Balance Sheet as at 1st April, 2015 (Transition date);

b) Balance Sheet as at 31st March, 2016;

c) Statement of Profit and Loss for the year ended 31st March, 2016; and

d) Statement of Cash flows for the year ended 31st March, 2016.

EXEMPTIONS AVAILED:

Ind AS 101- First-time adoption of Indian Accounting Standards, allows first-time adopters, exemptions from the retrospective application and exemption from application of certain requirements of other Ind AS. The Company has availed the following exemptions as per Ind AS 101:

1. The Company has elected not to apply Ind AS 103- Business Combinations, retrospectively to past business combinations that occurred before 1st January, 2015. Consequent to use of this exemption from retrospective application:

- the carrying amounts of assets and liabilities acquired pursuant to past business combinations and recognized in the financial statements prepared under Previous GAAP, are considered to be the deemed cost under Ind AS, on the date of acquisition. After the date of acquisition, measurement of such assets and liabilities is in accordance with respective Ind AS. Also, there is no change in classification of such assets and liabilities;

- the Company has not recognized assets and liabilities that neither were recognized in the financial statements prepared under Previous GAAP nor qualify for recognition under Ind AS in the Balance Sheet of the acquiree;

- the Company has excluded from its opening Ind AS Balance Sheet (as at 1st April, 2015), those assets and liabilities which were recognized in accordance with Previous GAAP but do not qualify for recognition as an asset or liability under Ind AS; and

- use of these exemption from retrospective application of Ind AS 103- Business Combinations requires that the carrying amount of goodwill as per financial statements prepared under Previous GAAP should be recognized in the opening Ind AS Balance Sheet after adjusting for impairment, if any. The Company has therefore tested goodwill for impairment as at the date of transition to Ind AS and accordingly, no goodwill impairment was deemed necessary.

2. For financial instruments, wherein fair market values are not available (viz. interest free and below market rate security deposits or loans) the Company has elected to adopt fair value recognition prospectively to transactions entered after the date of transition.

3. The Company has elected to consider the carrying value of all its items of property, plant and equipment and intangible assets recognized in the financial statements prepared under Previous GAAP and use the same as deemed cost in the opening Ind AS Balance Sheet.

4. The carrying amounts of the Company's investments in its subsidiary and associate companies as per the financial statements of the Company prepared under Previous GAAP, are considered as deemed cost for measuring such investments in the opening Ind AS Balance Sheet.

5. The requirements of Ind AS 20- Accounting for Government Grants and Disclosure of Government Assistance and Ind AS 109-Financial Instruments, in respect of recognition and measurement of interest free loans from government authorities is opted to be applied prospectively to all grants received after the date of transition to Ind AS. Consequently, the carrying amount of such interest free loans as per the financial statements of the Company prepared under Previous GAAP is considered for recognition in the opening Ind AS Balance Sheet.

1. Non-Current Investments:

In the financial statements prepared under Previous GAAP, Non-current Investments of the Company were measured at cost less provision for diminution (other than temporary). Under Ind AS, the Company has recognized such investments as follows:

- Government securities - At amortised cost

- Debt oriented Mutual Funds and Fixed Maturity Plans - At fair value through profit and loss (FVTPL)

- Debentures or Bonds - At fair value through other comprehensive income (FVTOCI)

- Equity shares of subsidiary and associate companies - At cost

- Quoted equity shares - At FVTOCI through an irrevocable election

- Unquoted equity shares - At FVTPL through an irrevocable election

Ind AS requires the above investments to be recognized at fair value (except investments in equity shares of subsidiary and associate companies).

On the date of transition to Ind AS, the difference between the fair value of Non-Current Investments as per Ind AS and their corresponding carrying amount as per financial statements prepared under Previous GAAP, has resulted in an increase in the carrying amount of these investments by Rs,327.81 crores which has been recognized directly in retained earnings (Equity). Deferred tax liability (net) amounting to Rs,1.40 crores has been recognized on such fair valuation gain.

As at 31st March, 2016, the difference between the fair value of Non-Current Investments as per Ind AS and their corresponding carrying amount as per financial statements prepared under Previous GAAP has resulted in an increase in the carrying amount of these investments by Rs,312.75 crores. On such fair valuation, net gain amounting to Rs,4.26 crores has been recognized in other income in the Statement of Profit and Loss and net loss amounting to Rs,19.32 crores has been recognized in OCI. Correspondingly, deferred tax expense amounting to Rs,1.64 crores has been recognized in the Statement of Profit and Loss and deferred tax benefit amounting to Rs,0.34 crores has been recognized in OCI.

The above transition has resulted in increase in equity by Rs,327.81 crores as at date of transition to Ind AS and by Rs,312.75 crores as at 31st March, 2016. Also, deferred tax on the same has resulted in decrease in equity by Rs,1.40 crores as at date of transition to Ind AS and by Rs,1.30 crores as at 31st March, 2016.

2. Current Investments:

In the financial statements prepared under Previous GAAP, Current Investments of the Company were measured at lower of cost or fair value. Under Ind AS, these investments have been classified as FVTPL on the date of transition. The fair value changes are recognized in the Statement of Profit and Loss.

On the date of transition to Ind AS, the difference between the fair value of Current Investments as per Ind AS and their corresponding carrying amount as per financial statements prepared under Previous GAAP has resulted in an increase in the carrying amount of these investments by Rs,24.34 crores, which has been recognized directly in retained earnings (Equity). Deferred tax liability (net) amounting to Rs,7.54 crores has been recognized on such fair valuation gain.

As at 31st March, 2016, the difference between the fair value of Current Investments as per Ind AS and their corresponding carrying amount as per financial statements prepared under Previous GAAP, has resulted in an increase in the carrying amount of these investments by Rs,44.20 crores.

Fair valuation gain for the year ended 31st March, 2016, amounted to Rs,19.87 crores and the same has been recognized in Other income in Statement of Profit and Loss. Correspondingly, deferred tax benefit amounting to Rs,2.09 crores has been recognized in Statement of Profit and Loss.

The above transition has impacted an increase in equity by Rs,24.34 crores as at transition date and by Rs,44.20 crores as at 31st March, 2016. Also, deferred tax on the same has resulted in decrease in equity by Rs,7.54 crores as at date of transition to Ind AS and increase in equity by Rs,2.09 crores as at 31st March, 2016.

3. Proposed Dividend

In the financial statements prepared under Previous GAAP, dividend on equity shares recommended by the Board of Directors after the end of reporting period but before the financial statements were approved for issue, was recognized as a liability in the financial statements in the reporting period relating to which dividend was proposed. Under Ind AS, such dividend is recognized in the reporting period in which the same is approved by the members in a general meeting.

On the date of transition, the above change in accounting treatment of proposed dividend has resulted in increase in Equity with a corresponding decrease in Provisions by Rs,496.43 crores. As at 31st March, 2016 above change has resulted in an increase in Equity with a corresponding decrease in Provisions by Rs,611.24 crores. The above change however, does not affect the Profit before tax and Profit after tax for the year ended 31st March, 2016.

4. Revenue from sale of products:

In the financial statements prepared under Previous GAAP, revenue from sale of products was presented net of excise duty. However, under Ind AS, revenue from sale of products includes excise duty. Excise duty expense amounting to Rs,1,533.50 crores is presented separately on the face of the Statement of Profit and Loss for the year ended 31st March, 2016.

In the financial statements prepared under Previous GAAP, cash discount and sales promotional expenses were shown as a part of other expenses. However, under Ind AS, such discounts and sales promotional expenses amounting to Rs,870.85 crores for the year ended 31st March, 2016, are reduced from revenue from sale of products.

Further, in the financial statements prepared under Previous GAAP, an amount of Rs,23.65 crores relating to sale of certain raw materials was presented by netting off directly from cost of materials consumed. The same has now been regrouped and presented in revenue from sale of products.

In light of the above, revenue from sale of products under Ind AS has increased by Rs,686.30 crores (Rs,1533.50 crores less Rs,870.85 crores plus Rs,23.65 crores) with an corresponding increase in excise duty by Rs,1533.50 crores, decrease in other expenses by Rs,870.85 crores and increase in Cost of materials consumed by Rs,23.65 crores in the Statement of Profit and Loss for the year ended 31st March, 2016.

The above changes do not affect equity as at date of transition to Ind AS, profit after tax for the year ended 31st March, 2016 and Equity as at 31st March, 2016.

5. Remeasurement benefit of defined benefit plans:

In the financial statements prepared under Previous GAAP, remeasurement benefit of defined plans (gratuity), arising primarily due to change in actuarial assumptions was recognized as employee benefits expense in the Statement of Profit and Loss. Under Ind AS, such remeasurement benefits relating to defined benefit plans is recognized in OCI as per the requirements of Ind AS 19- Employee benefits. Consequently, the related tax effect of the same has also been recognized in OCI.

For the year ended 31st March, 2016, remeasurement of gratuity liability resulted in a net benefit of Rs,2.63 crores which has now been removed from employee benefits expense in the Statement of Profit and Loss and recognized separately in OCI. This has resulted in increase in employee benefits expense by ' 2.63 crores and gain in OCI by Rs,2.63 crores for the year ended 31st March, 2016. Consequently, tax effect of the same amounting to Rs,0.91 crores is also recognized separately in OCI.

The above changes do not affect Equity as at date of transition to Ind AS and as at 31st March, 2016. However, Profit before tax and profit for the year ended 31st March, 2016 decreased by Rs,2.63 crores and Rs,1.72 crores respectively.

6. Goodwill:

In the financial statements prepared under Previous GAAP, acquired Goodwill was amortized over its useful life not exceeding five years unless a longer period could be justified. Under Ind AS, Goodwill is not required to be amortized but needs to be tested for impairment at least annually. The Company has assessed and concluded that no impairment is deemed necessary on Goodwill recognized as at date of transition to Ind AS and as at 31st March, 2016.

On the date of transition to Ind AS, there is no change in amount recognized as goodwill since the Company has opted for exemption from retrospective application of accounting of business combinations. The reversal of amortization expense for the year ended 31st March, 2016 has resulted in decrease in depreciation and amortization expense in the

Statement of Profit and Loss with a corresponding increase in goodwill in the Balance Sheet as at 31st March, 2016, by Rs,3.85 crores. Corresponding deferred tax expense on the same amounting to Rs,1.33 crores has been recognized in Statement of Profit and Loss for the year ended 31st March, 2016.

The above change has resulted in increase in profit after tax for the year ended 31st March, 2016 by Rs,2.52 crores, increase in deferred tax liability as at 31st March, 2016 by Rs,1.33 crores and increase in equity as at 31st March, 2016 by Rs,2.52 crores.

7. Interest free loan:

In the financial statements prepared under Previous GAAP, the carrying value of Interest free loan was recognized at the principal amounts payable by the borrower. Under Ind AS, Interest free borrowing being a financial liability is required to be recognized initially at fair value and subsequently measured at amortised cost using the effective interest method. The difference between such fair value and the carrying value is recognized as deferred income disclosed under Other liabilities.

On the date of transition, there is no change in the amount of Interest free loan since the Company has opted for exemption from retrospective application for fair valuation of such financial instruments. Interest free loan amounting to Rs,5.90 crores received subsequent to the date of transition to Ind AS has been recognized at fair value amounting to Rs,3.62 crores, thereby leading to creation of deferred income amounting to Rs,2.28 crores. Such loan was received on 31st March, 2016 and hence there is no effect arising from subsequent measurement.

The above changes do not affect Equity as at date of transition to Ind AS and as at 31st March, 2016. However, it has resulted in decrease in borrowings and increase in other liabilities by Rs,2.28 crores as at 31st March, 2016.

8. Deferred tax:

In the financial statements prepared under Previous GAAP, deferred tax was accounted as per the income statement approach which required creation of deferred tax asset/liability on temporary differences between taxable profit and accounting profit. Under Ind AS, deferred tax is accounted as per the Balance Sheet approach which requires creation of deferred tax asset/liability on temporary differences between the carrying amount of an asset/liability in the Balance Sheet and its corresponding tax base.

The application of Ind AS has resulted in recognition of deferred tax on new temporary differences which were not required to be recognized under Previous GAAP. In addition, the above mentioned transitional adjustments relating to current/non-current investments and goodwill have also led to temporary differences and creation of deferred tax thereon.

The above changes have resulted in creation of deferred tax liabilities (net) amounting to Rs,8.94 crores as at date of transition to Ind AS and Rs,9.48 crores as at 31st March, 2016. For the year ended 31st March, 2016, it has resulted in an increase in deferred tax expense by Rs,0.03 crores in the Statement of Profit and Loss and recognition of deferred tax benefit by Rs,0.57 crores in OCI.

9. Effect of Ind AS adoption on Statement of Cash flow for the year ended 31st March, 2016:

In the financial statements prepared under Previous GAAP, cash and cash equivalents represented by short term highly liquid mutual funds were recognized at cost. However, under Ind AS, such cash and cash equivalents being financial instruments, are required to be recognized at fair value.

The Company has recognized fair value gain amounting to Rs,1.16 crores on such cash and cash equivalents as at date of transition to Ind AS. Further, as at 31st March, 2016, the Company has recognized fair value gain amounting to Rs,1.95 crores on such cash and cash equivalents. The difference between the fair value gain/loss recognized as at the date of transition to Ind AS and as at 31st March, 2016 represents a cash flow impact amounting to Rs,0.79 crores which is adjusted in the profit after tax considered for the purpose of preparation of Statement of Cash Flow for the year ended 31st March, 2016.

NOTE 9 : PURSUANT TO Ind AS-17 - ‘LEASES’, THE FOLLOWING INFORMATION IS DISCLOSED

A. Assets given on operating lease

The Company does not have any assets given on operating lease during the reporting period.

B. Assets taken on operating lease

a) The Company has taken certain assets such as Vehicles, Computers, Information Technology hardware and Office space on operating lease. The lease rentals are payable by the Company on a monthly or quarterly basis.

c) Lease payments recognized in the Statement of Profit and Loss for the year is Rs,195.56 crores (Previous year Rs,156.13 crores).

NOTE 40 : EMPLOYEE BENEFITS

1) Post-employment benefits :

The company has the following post-employment benefit plans:

a) Defined benefit gratuity plan (Funded)

The company has defined benefit gratuity plan for its employees, which requires contributions to be made to a separately administered fund. It is governed by the Payment of Gratuity Act, 1972. Under the Act, employee who has completed five years of service is entitled to specific benefit. The level of benefits provided depends on the member's length of service and salary at retirement age. The fund has the form of a trust and it is governed by the Board of Trustees. The Board of Trustees is responsible for the administration of the plan assets including investment of the funds in accordance with the norms prescribed by the Government of India.

Each year, the Board of Trustees and the Company review the level of funding in the India gratuity plan. Such a review includes the asset-liability matching strategy and assessment of the investment risk. The Company decides its contribution based on the results of this annual review. Generally, it aims to have a portfolio mix of sovereign debt instruments, debt instruments of Corporate and equity instruments. The Company aims to keep annual contributions relatively stable at a level such that no significant plan deficits (based on valuation performed) will arise.

Every two years an Asset-Liability -Matching study is performed in which the consequences of the investments are analysed in terms of risk and return profiles. The Board of Trustees, based on the study, takes appropriate decisions on the duration of instruments in which investments are done. As per the latest study, there is no Asset-Liability-Mismatch. There has been no change in the process used by the Company to manage its risks from prior periods.

As the plan assets include significant investments in quoted debt and equity instruments, the Company is exposed to the risk of impacts arising from fluctuation in interest rates and risks associated with equity market.

Fair value of the Company's own transferable financial instruments held as plan assets: NIL

b) Defined benefit pension plan (Unfunded)

The company operates a defined benefit pension plan for certain specified employees and is payable upon the employee satisfying certain conditions, as approved by the Board of Directors.

c) Defined benefit post-retirement medical benefit plan (Unfunded)

The company operates a defined post-retirement medical benefit plan for certain specified employees and payable upon the employee satisfying certain conditions.

Aforesaid post-employment benefit plans typically expose the Company to actuarial risks such as: investment risk, interest rate risk, longevity risk and salary risk.

Investment Risk The present value of the defined benefit liability is calculated using a discount rate which is determined by reference to market yields at the end of the reporting period on government bonds.

Interest Risk A decrease in the bond interest rate will increase the plan liability; however, this will be partially offset by an increase in the return on the plan's investments.

Longevity Risk The present value of the defined benefit liability is calculated by reference to the best estimate of the mortality of plan participants both during and after their employment. An increase in the life expectancy of the plan participants will increase the plan's liability.

Salary Risk The present value of the defined benefit liability is calculated by reference to the future salaries of plan participants. As such, an increase in salary of the plan participants will increase the plan's liability.

The most recent actuarial valuation of the plan assets and the present value of defined obligation were carried out as at 31st March, 2017 by Mr. Saket Singhal, Fellow of the Institute of Actuaries of India. The present value of the defined benefit obligation and the related current service cost were measured using the projected unit credit method.

Significant actuarial assumptions for the determination of the defined benefit obligation are discount rate and expected salary increase. The sensitivity analysis below have been determined based on reasonably possible changes of the respective assumptions occurring at the end of the reporting period, while holding all other assumptions constant.

The sensitivity analysis presented above may not be representative of the actual change in the defined benefit obligation as it is unlikely that the change in assumptions would occur in isolation of one another as some of the assumptions may be correlated. Furthermore, in presenting the above sensitivity analysis, the present value of the defined benefit obligation has been calculated using the projected unit credit method at the end of the reporting period, which is the same as that applied in calculating the defined benefit obligation liability recognized in the Balance Sheet.

NOTE 10 : EMPLOYEE BENEFITS (contd.)

1) Post-employment benefits : (contd.)

The average duration of the defined benefit plan obligation at the end of the reporting period is 11.17 years.

The Company expects to make a contribution of Rs,3.72 crores (Previous year Rs,10.20 crores) to the defined benefit plans during the next financial year.

d) Provident Fund

The Provident Fund assets and liabilities are managed by ‘Asian Paints Office Provident FundRs,and ‘Asian Paints Factory Employees Provident Fund' in line with The Employees' Provident Fund and Miscellaneous Provisions Act, 1952.

The plan guarantees minimum interest at the rate notified by the Provident Fund Authorities. The contribution by the employer and employee together with the interest accumulated thereon are payable to employees at the time of separation from the Company or retirement, whichever is earlier. The benefit vests immediately on rendering of the services by the employee. In terms of the guidance note issued by the Institute of Actuaries of India for measurement of provident fund liabilities, the actuary has provided a valuation of provident fund liability and based on the assumptions provided below, there is no shortfall as at 31st March, 2017.

The Company contributed Rs,11.76 crores (Previous Year Rs,10.29 crores) towards Asian Paints Office Provident Fund during the year ended 31st March, 2017. The Company contributed Rs,6.11 crores (Previous Year Rs,5.52 crores) crores towards Asian Paints Factory Employees Provident Fund during the year ended 31st March, 2017.

NOTE 11: The Company's manufacturing facility at Khandala, Maharashtra has been granted “Mega Project Status” by Government of Maharashtra and hence is eligible for Industrial Promotion Subsidy (IPS) under Package Scheme of Incentive, 2007 in the form of refund of VAT paid to Maharashtra Government, exemption on electricity duty and stamp duty within a period of 9 years from the date of commencement of commercial production, restricted to a maximum of 100% of fixed capital investment as per the Eligibility Certificate issued by Director of Industries, Government of Maharashtra. In terms of the Ind AS 20 - “Accounting for Government Grants and Disclosure of Government Assistance”, eligible incentive as mentioned above amounting to Rs,136.53 crores (Previous year Rs,134.11 crores) for year ended 31st March, 2017 is credited to Statement of Profit and Loss and included under the head “Other operating income” on accrual basis.

# During the year, as part of consolidation of investments in overseas subsidiaries, Asian Paints (International) Limited, Mauritius, a wholly owned subsidiary of the Company, has transferred its entire holding in its subsidiary to its wholly owned subsidiary, Berger International Private Limited, Singapore. This does not have any impact on the financial results.

## During the previous year, as part of consolidation of investments in overseas subsidiaries, Asian Paints (International) Limited, Mauritius, a wholly owned subsidiary of the Company, has transferred its entire holding in its subsidiaries to its wholly owned subsidiary, Berger International Private Limited, Singapore. This does not have any impact on the financial results.

@ Berger International Private Limited, Singapore (“BIPL’), a wholly owned indirect subsidiary of the Company, acquired 51% stake in Kadisco Paint and Adhesive Industry Share company for a consideration of US$ 18.95 million (Rs,117 crores) in cash, on 9th February, 2015.

* PT Asian Paints Colour Indonesia was incorporated in Indonesia as a wholly owned subsidiary of Berger International Private Limited during the previous year.

** During the previous year, Kitchen Grace India Private Limited has been merged with Sleek International Private Limited pursuant to a scheme of amalgamation approved by Honourable High Court of Bombay, effective 1st April, 2015.

c) Key Managerial Personnel:

Name of the Director Designation

Shri K. B. S. Anand Managing Director & CEO

Shri Jayesh Merchant CFO & Company Secretary, President - Industrial JVs

d) Promoters and their relatives having control:

Directors

Shri. Ashwin Choksi Non-Executive Chairman

Shri. Ashwin Dani Non-Executive Vice Chairman

Shri. Mahendra Choksi Non-Executive Director

Shri. Abhay Vakil Non-Executive Director

Shri. Malav Dani Non-Executive Director

Ms. Amrita Vakil Non-Executive Director

Relatives of promoters who are under the employment of the Company:

Shri. Jalaj Dani* #

Shri. Manish Choksi**

Shri. Jigish Choksi (upto 3rd April, 2015)

Shri. Varun Vakil

Shri. Vivek Vakil (upto 29th July, 2015)

* Shri. Jalaj Dani, a relative of Company's Non-Executive Vice Chairman resigned from the services of the Company w.e.f. 3rd April, 2017.

# Shri. Jalaj Dani, a relative of Company's Non-Executive Vice Chairman was also a Non-Executive Chairman of Berger International Private Limited in the previous year till 9th September, 2015, Director on the Board of one of the subsidiary companies and the associate company.

** Shri. Manish Choksi, a relative of Company's Non-Executive Director is also Non-Executive Chairman of Berger International Private Limited w.e.f. 10th September, 2015, Director on the Board of two of the subsidiary companies.

NOTE 12 : INFORMATION ON RELATED PARTY TRANSACTIONS AS REQUIRED BY Ind AS- 24 - ‘RELATED PARTY DISCLOSURES’ FOR THE YEAR ENDED 31st MARCH, 2017. (Contd.)

e) Entities controlled by Directors/Relatives of Directors :

AR Intertect Design Pvt. Ltd. Haish Holding and Trading Company Pvt. Ltd. Parekh Plast India Ltd.

ARI Designs LLP* Hasit Dani (HUF) Pragati Chemicals Ltd.

Ashwin Suryakant Dani (HUF) Hitech Insurance Broking Services Ltd. Rayirth Holding and Trading Co. Pvt. Ltd.

Ashwin Ina Charitable Trust Hitech Plast Ltd. Resins and Plastics Ltd.

Asteroids Trading and Investments Pvt. Ltd. Hitech Skills Development Pvt. Ltd. Ria Enterprises

Avinash Holding and Trading Co. Pvt. Ltd. Hitech Specialities Solutions Ltd. Riash Realty Private Ltd.

Canes Venatici Trading Company Pvt. Ltd. Hydra Trading Pvt. Ltd. Ricinash Oil Mill Ltd.

Castle Investment and Industries Pvt. Ltd. ISIS Holding and Trading Co. Pvt. Ltd. Rituh Holding and Trading Company Pvt. Ltd.

Centaurus Trading and Investments Pvt. Ltd. Jalaj Trading and Investments Pvt. Ltd. Rupen Investment and Industries Pvt. Ltd.

Dani Charitable Foundation Jalaj Dani HUF S.C. Dani Research Foundation Pvt. Ltd.

Dani Finlease Ltd. Jaldhar Trading and Investments Pvt. Ltd. Satyadharma Investments & Trading Co. Pvt. Ltd.

Doli Trading and Investments Pvt. Ltd. Lambodar Investment and Trading Co. Ltd. Smiti Holding and Trading Co. Pvt. Ltd.

Elcid Investments Ltd. Lyon Investment and Industries Pvt. Ltd. Sudhanva Investments and Trading Co. Pvt. Ltd.

ELF Trading and Chemicals Mfg. Ltd. Murahar Investments and Trading Co. Ltd. Suptaswar Investments and Trading Co. Pvt. Ltd.

Geetanjali Trading and Investments Pvt. Ltd. Naradiya Commercial LLP Unnati Trading and Investments Pvt. Ltd.

Germinait Solutions Pvt. Ltd. Navbharat Packaging Industries Ltd. Vikatmev Containers Ltd.

Gujarat Organics Ltd. Nehal Trading and Investments Pvt. Ltd. Vijal Holding and Trading Company Pvt. Ltd.

Hiren Holdings Pvt. Ltd. Paladin Paints and Chemicals Pvt. Ltd.#

* w.e.f. 13th June, 2015

# w.e.f. 22nd April, 2015

f) Post employment-benefit plan entity:

Asian Paints (India) Limited Employees' Gratuity Fund

g) Other entity over which there is a significant influence:

Asian Paints Office Provident Fund (Employee benefit plan)

Asian Paints Factory Employees' Provident Fund (Employee benefit plan)

Asian Paints Management Cadres' Superannuation Scheme (Employee benefit plan)

Asian Paints Charitable Trust

NOTE 13 : INFORMATION ON RELATED PARTY TRANSACTIONS AS REQUIRED BY Ind AS- 24 - ‘RELATED PARTY DISCLOSURES’ FOR THE YEAR ENDED 31st MARCH, 2017. (contd.) Terms and conditions of transactions with related parties

1. The sales to and purchases from related parties are made on terms equivalent to those that prevail in arm's length transactions. Outstanding balances at the year-end are unsecured, interest free and will be settled in cash. There have been no guarantees received or provided for any related party receivables or payables.

2. Employee related recoverable balances are unsecured, interest free and will be settled in cash. During the year ended 31st March, 2017, the Company has recorded an amount of Rs,0.12 crores (previous year Rs,0.15 crores) as provision for doubtful debts on account of such receivables. As at 31st March, 2017, the provision for doubtful receivables from subsidiaries is Rs,0.52 crores (previous year Rs,0.40 crores).

The above mentioned assessment is undertaken each financial year through examining the financial position of related parties, the market in which related party operate and the accounting policy of the Company.

3. The Company had provided a loan to its wholly owned subsidiary, Maxbhumi Developers Limited for its business activities. The loan has been fully repaid during the year. The loan was unsecured and was repayable in two years on demand. The loan carries an interest @ 9.55% p.a. (previous year @ 10.10% p.a.)

* Key Managerial Personnel and Relatives of Promoters who are under the employment of the Company are entitled to post employment benefits and other long term employee benefits recognized as per Ind AS 19 - ‘Employee Benefits' in the financial statements. As these employee benefits are lump sum amounts provided on the basis of actuarial valuation, the same is not included above.

Basis of Segmentation:

Factors used to identify the reportable segments:

The Company has following business segments, which are its reportable segments. These segments offer different products and services, and are managed separately because they require different technology and production processes. Operating segment disclosures are consistent with the information provided to and reviewed by the chief operating decision maker.

A. In the previous year, the Company had made an assessment of the fair value of investment made in its subsidiary, Sleek International Private Limited (‘Sleek'), taking into account the past business performance, prevailing business conditions and revised expectations of the future performance given the understanding built up since acquisition. Based on above factors and as a matter of prudence, the Company had recognized an impairment loss in the value of investment made in Sleek to the tune of Rs,65.30 crores. The same is disclosed under “Exceptional items” in the Statement of Profit and Loss. The recoverable amount of the investment was determined at Rs,54.20 crores, which was based on its value in use. This value in use calculation was carried taking into account the discount rate of 14% per annum.

B. In the previous year, the Company had filed an application for striking off the name of Multifacet Infrastructure (India) Limited (‘Multifacet'), wholly owned non-operating subsidiary of the Company, under the “Fast Track Exit Mode” under Section 560 of Companies Act, 1956. Consequently, the Company had recognized an impairment loss in the value of investment in Multifacet for Rs,0.05 crores. During the current year, Multifacet's name has been struck off from Register of Companies w.e.f. 24th August, 2016.

NOTE 14: During the previous year, the Company had discovered certain irregularities at M/s Sharepro Services (India) Private Limited (‘Sharepro'), the erstwhile Registrar and Transfer Agent (R&T) of the Company, in respect of share related and dividend encashment activities. Subsequently the Company had filed a criminal complaint against Sharepro and its employees and appointed M/s TSR Darashaw Limited (‘TSR') as its R&T Agent with effect from 1st April, 2016. The process of transferring the records from Sharepro to TSR was delayed due to lack of reliable record maintenance and availability of appropriate support from Sharepro. Also, the Company could not rely on the data of unpaid dividend provided by Sharepro which required detailed verification before concluding the correctness of the same. Owing to this, unpaid final dividend for the financial year 2008-09 amounting to Rs,29.59 lakhs was transferred to Investor Education and Protection fund (‘IEPF') beyond the stipulated timeline as per the provisions of Section 124(5) of the Companies Act, 2013. The transfer to IEPF was effected on 21st October, 2016 as against the due date of 31st August, 2016.