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Asian Paint_ AR_2004-05

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Asian Paint_ AR_2004-05 Powered By Docstoc
					                                www.asianpaints.com
                                Asian Paints (India) Ltd.
                                   6 A Shanti Nagar,
                                     Santacruz (E),
                                    Mumbai 400 055




Asian Paint Ar 2k4-5 Cover1-4 With Spine.P65 1              5/26/05, 5:28 PM
Asian Paint Ar 2k4-5 Cover1-4 With Spine.P65 2   5/26/05, 5:28 PM
contents
Board of Directors                          02

Chairman’s Letter                           04

Highlights                                  06

Directors’ Report                           18

Management Discussion and Analysis          22

Five Year Review                            33

Corporate Governance                        37

Shareholder Information                     44

Auditors’ Report                            48

Balance Sheet                               52

Profit and Loss Account                     53

Cash Flow Statement                         54

Schedules                                   55

Auditors’ Report on Consolidated
Financial Statements                        82

Consolidated Balance Sheet                  84

Consolidated Profit and Loss Account        85

Consolidated Cash Flow Statement            86

Schedules for Consolidated Accounts         87




                                         Asian Paints (India) Ltd.
                                       annual report 2004-2005
                                 board of directors



in remembrance
                                  Ashwin C Choksi
                                     Chairman




                                   Ashwin S Dani        Abhay A Vakil
                                  Vice Chairman &      Managing Director
                                  Managing Director



   Shri K. Rajagopalachari
   (10.1.1935 - 14.3.2005)
Leader, Philosopher and Mentor




                                                      Company Secretary
                                                           Jayesh Merchant

                                                                 Auditors
                                                                 Shah & Co.
                                                      Chartered Accountants
                                                                                        03




Mahendra Choksi     Amar A Vakil         Hasit Dani




Ms. Tarjani Vakil   Dipankar Basu   Deepak M Satwalekar




   R A Shah         Dr. S Sivaram    Mahendra M Shah

                                                            Asian Paints (India) Ltd.
                                                          annual report 2004-2005
chairman’s letter

Dear Shareholders,

In the last year’s annual report, I had spoken of
our focus to become more proactive and aggressive
in our efforts to gain market share, while steadily
improving profits. The success of our efforts is
reflected in the results for the year. While sales for
the group grew by 15.4 per cent to Rs. 25,605
million, profit after tax and extraordinary item grew
by 20.2 per cent to Rs. 1,741 million.

All the business units have performed well. The
decorative business in India, which is the largest
contributor to the group’s revenue, has
accomplished significant growth in the topline over
the satisfactory performance seen in the previous
year. The emphasis in the decorative business has
been on sales growth and market share. Changing
market dynamics and a keener competitive
environment is fostering a transformation of the
price-value equation across industries. Consumers
benefit from such a shift; the reward for suppliers
who move in step with this trend is access to a bigger
market. Our strategy of striking a better alignment
with the market on pricing and of coming out with
new offerings in the economy segment is clearly
paying off. Sale of distemper has moved up smartly
after a long time, even as the performance of interior
and exterior emulsions has remained strong.

Rising input costs, uncertainties in the
implementation of the Value Added Tax system and
ambiguities in the interpretation of rules and
procedures associated with it have, to an extent
impacted our performance. I see this as a passing
phase. The introduction of VAT which was long
overdue, is a step in the right direction and the
economy will see its benefits as we move ahead. I
hardly need to emphasise the advantages of such
a unified system of taxation for a company like Asian
Paints with a manufacturing and customer network
spread across different states.
                                                                                                                    05




Every adversity brings with it an opportunity. To         the top three players in each market that it is present
off-set the impact of rising costs, economies were        in, by harnessing the combined strengths of the
brought about in overhead expenses. The steps             group. The units in Malta and Mauritius which did
taken have helped reduce the pressure on margins          not fit in our strategy matrix were divested during
and drive volume growth in the decorative business;       the year. We will continue to review our investments
they have also rendered us stronger and more              in other countries on an ongoing basis.
competitive for the future.
                                                          Though input costs remain a cause for concern in
A measure of our confidence in the emerging future        the near term, I am optimistic on the outlook for
is the investment that we are committing to new           the current year. As always, our effort will be to
green field sites. For many years now, our philosophy     realize the potential that our people and the
has been to get more out of investments already           resources at our command represent and stay
made in our existing facilities in the country before     focused on growing shareholder value.
looking at fresh expansion at new locations. The
                                                          I conclude by thanking my colleagues on the Board
time is now ripe to make such investments that will,
                                                          for their guidance, the employees for their dedication
over time, alter our manufacturing footprint and
                                                          and other stakeholders for their continued support.
enhance our capability in many ways.
                                                          I would also like to make a special mention of
Industrial coatings continue to be our fastest            Mr. K. Rajagopalachari, whose demise in March
growing business: last year has seen yet another          this year ended a forty-six year long association with
big stride with the business expanding by more than       the Company. Well read in history and law,
a third in size. Accelerating pace of industrialisation   Mr. Rajagopalachari brought to bear his immense
and rising investments in infrastructural projects will   knowledge of both to shape strategy. His sense of
only increase the demand for quality industrial           professionalism, fair play, equity and personal values
coatings. Dovetailing our organisational capability       inspired colleagues and associates. Asian Paints will
to mesh in with this emerging future is a strategic       miss him.
imperative that your Company is focused on. The
                                                          With regards,
Directors’ Report speaks of the steps initiated in this
direction.                                                Yours sincerely,
The process of integration of our international
acquisitions continues and we are beginning to feel
the beneficial impact arising out of it. Sales of the     Ashwin C. Choksi
international business crossed the 100 million US
Dollar mark during the year. The task ahead is to
improve profitability. International units will now be
managed on a regional basis, with focus on
building scale in the Middle East and South East
Asia. The objective is to place Asian Paints amongst


                                                                                        Asian Paints (India) Ltd.
                                                                                     annual report 2004-2005
highlights




Ø   Net Sales and Operating Income of Asian Paints (India)
    Ltd. grew by 14.4% from Rs. 16,966 million (US $ 388
    million*) in 2003-04 to Rs. 19,415 million (US $ 444
    million) in 2004-05.

Ø   Net Profit increased by 17.4% from Rs. 1,478 million
    (US $ 34 million) in 2003-04 to Rs. 1,735 million
    (US $ 40 million) in 2004-05.

Ø   The Board of Directors have recommended dividend of
    95% for the year 2004-05 with a payout ratio of 60%.

Ø   Return on Average Net Worth has increased from 29.3%
    in 2003-04 to 31.4 % in 2004-05.

Ø   State of the art emulsion paint manufacturing facility
    commissioned at Sriperumbudur near Chennai.

Group :

Ø   Net Sales and Operating Income for the group grew by
    15.4% from Rs. 22,179 million (US $ 507 million) in
    2003-04 to Rs. 25,605 million (US $ 585 million) in
    2004-05.

Ø   Net Profit to shareholders after minority share grew by
    20.2% from Rs. 1,449 million (US $ 33 million) in
    2003-04 to Rs. 1,741 million (US $ 40 million) in
    2004-05.

Ø   The revenue of Berger International Limited has increased
    by 10.9%. SCIB Chemical, Egypt has reported a profit for
    the first time after its acquisition in 2002.

Ø   International business sales crossed US $ 100 million.

*1US $ = Rs. 43.75 as on March 31, 2005
                                                                                                  07


                                    PROFIT BEFORE TAX &            NET WORTH &
 GROSS SALES & NET SALES             PROFIT AFTER TAX             SHARE CAPITAL




               RETURN ON CAPITAL EMPLOYED &                  REVENUE TO
                   RETURN ON NET WORTH                       EXCHEQUER




DISTRIBUTION OF INCOME


                                     MATERIAL COST

                                     EMPLOYEE REMUNERATION

                                     OTHER EXPENSES

                                     INTEREST

                                     DEPRECIATION

                                     EXTRAORDINARY ITEM

                                     CORP. TAX & DEF. TAX

                                     DIVIDEND & DIV. TAX

                                     RETAINED EARNINGS

                                                                      Asian Paints (India) Ltd.
                                                                    annual report 2004-2005
new capacity




Asian Paints’ new paint plant at Sriperumbudur, near
Chennai in the State of Tamil Nadu commenced production
on January 20, 2005. It is located at SIPCOT (State Industrial
Promotion Corporation of Tamil Nadu) Industrial Park,
Sriperumbudur. This state-of-the-art plant, erected in record
time, has been established to manufacture emulsion paints
alone with an initial capacity of 30,000 KL per annum. This
is Asian Paints’ fifth paint plant in India.


The capacity will be raised to 1,00,000 KL per annum
making it a world scale facility. A rapid ramp-up of
production is planned to keep up with the increased demand
for emulsion paints.
                                                                                              09




The plant is presently equipped with:·


    Modern material handling facilities including
    storage of raw material in silos.


    Capability to handle batch sizes upto 20 KL;
    High speed packing lines.


    The latest automated process control system.


    Pollution abatement, waste usage in a closed loop
    manufacturing system and advanced pollution treatment
    facilities.


These facilities will enable the Company to implement ‘Right
First Time’ and ‘Zero Defect’ concepts. The plant is a Zero
Discharge plant and has Environment, Health and Safety
(EHS) features of the highest standard.


The Company is also investing in greenfield manufacturing
facilities in the areas of industrial coatings and powder
coatings (through its subsidiary) to cater to the good growth
expected in these segments. These are being set up at Taloja,
Maharashtra (for industrial coatings) and at Baddi, Himachal
Pradesh (for powder coatings) with final capacities of 30,000
KL and 6,500 KL per annum, respectively.

                                                                  Asian Paints (India) Ltd.
                                                                annual report 2004-2005
new strides




In an attempt to provide a major thrust to the global vision of
“Think Global, Synergize Regional and Act Local”, Asian
Paints has embarked on one of its biggest international
initiatives -   the launch of ‘e-Strides’- an Enterprise
Resource Planning (ERP) initiative which would involve all
its overseas operations.


‘e-Strides’ will reassess the significance of the current
business processes and will improve them in the context of
the changing business scenarios. This will involve
benchmarking processes with industry best practices,
standardising them to leverage global knowledge and
providing adequate controls. Individuals drawn from various
functions and working full-time with consultants have created
a global template that has already been implemented at
some of the units and implementation at the remaining
units would be completed by the end of 2005.
                                                                                                                      11




A view of Berger Paints (Ningbo) Co. Ltd.’s plant in China




                                   A view of registered office of Berger International Ltd., Singapore




A view of Berger Paints Jamaica Ltd.’s plant.


                                                                                          Asian Paints (India) Ltd.
                                                                                        annual report 2004-2005
product portfolio



                                                 Interior Wall
                                                  Finish Matt

                           Tractor Emulsion
                          Smooth Wall Finish




       Premium Emulsion




                                  Elastomeric Hi-Performance
                                         Exterior Paint


Royale Luxury
Emulsion




                                               Apcolite Premium
                                                Gloss Enamel




                                         PU Wood Finish
                                            Exterior
                                                                                                                                       13

        Interior Wall Paints




                     Interior Wall
                     Finish Lustre                      Tractor Acrylic
                                                     Distemper Washable

                                                                                 Tractor Synthetic
                                                                               Distemper Washable
        Exterior Wall Paints




                                                                                                     Utsav Distemper

Elastomeric Hi-Performance
       Exterior Paint            Elastomeric Hi-Performance
                                        Exterior Paint
                                                                     Apex textured Exterior
                                                                           Emulsion



                                                                                                                             Utsav Acrylic
                                                                                                                              Distemper


     Wood and Metal Paints




                                                                     Utsav Enamel

 Apcolite Premium Satin
                                     Gattu Synthetic Enamel
         Enamel



            Wood Finishes




                                                                          Touch Wood



       PU Wood Finish                     Melamyne
                                                                                                           Asian Paints (India) Ltd.
          Interior
                                                                                                         annual report 2004-2005
opportunities




Asian PPG Industries Limited, a joint venture between Asian
Paints (India) Limited and PPG Industries Inc., USA, has
continuously outpaced industry growth for the last two years.
In just eight years since inception, the Company has
emerged as the second largest automotive coatings
supplier in the country.

Coatings for the automotive industry fall under two segments
viz., the OE (original equipment) and the refinish segment.
For the OE segment, the Company supplies coatings
directly to automobile, two wheeler and tractor manufacturers
at their manufacturing facilities.

The refinish segment is distribution led and in many
respects similar to the Asian Paints Decorative
coatings business. Aspa and Apca – the alkyd
resin and nitrocellulose based refinish paints service the
conventional end of this market. At the high end is the
polyurethane range, which presently has two PPG
brands, D e l t r o n a n d B i l u x . While Deltron is the
premium brand, Bilux is the economy brand of the Company.
Asian PPG Industries Limited also has the ‘Harlequin’
range from PPG, which gives eight different tones when
viewed from different angles.

The joint venture leverages strengths of both PPG Industries
and Asian Paints and it is for this reason that in such a
short time it has evolved into a leading automotive coating
supplier in the country.
                                                                                                                     15




The non-auto industrial coatings segment consists of the       Protective coatings
following:
Ø Protective coatings
Ø Road marking coatings
Ø Floor coatings
Ø General industrial coatings
Ø Powder coatings
To Asian Paints, these provide yet another opportunity to
demonstrate its growing reputation as a pioneer of
                                                               Floor coatings
innovative products in a high growth market. Asian Paints
Industrial Coatings Limited (APICL), a wholly owned
subsidiary of Asian Paints (India) Limited (APIL) services
the requirements of the powder coatings segment and
the rest of the segments are serviced by APIL.

APICL has entered into a technology agreement in March,
2004 with Canada based Protech Chemicals, one of the
top ten powder coating companies in the world. APICL
services the powder coatings business through its products     Road marking coatings

under the two brands Apcoshield and Hawcoplast.

Other industrial product offerings include the Metacare
range of industrial coatings servicing a range of industrial
applications, Apcoflor range of floor coatings and hot melt
thermoplastic road marking coatings.




                                                                                         Asian Paints (India) Ltd.
                                                                                       annual report 2004-2005
global presence




        JAMAICA
                         BARBADOS
                       TRINIDAD & TOBAGO

                  CARIBBEAN
                                                                                                                                   17




                     EGYPT
                                  BAHRAIN
                                       UAE                           NEPAL
                                                                              CHINA
                          MIDDLE EAST     OMAN                          BANGLADESH

                                                             INDIA           MYANMAR
                                                                                 THAILAND       SOUTH EAST ASIA
                                                                   SRI
                                                                 LANKA       MALAYSIA

                                                                     SINGAPORE

                                                                                                          SOLOMON ISLANDS

                                                                                                                         SAMOA


                                                                                                      VANUATU     FIJI
                                                                                                                         TONGA
                                                                                                     AUSTRALIA




                                                                                    SOUTH PACIFIC


 Regions              Countries                                  Operating Company
 South Pacific        Australia, Fiji, Solomon Islands, Samoa,   Asian Paints and its subsidiaries
                      Tonga, Vanuatu
 South East Asia      China, Malaysia, Myanmar, Singapore,       Berger International and its
                      Thailand                                   subsidiaries
 South Asia           India, Bangladesh, Nepal, Sri Lanka        Asian Paints and its subsidiaries
 MIddle East          Bahrain, UAE                               Berger International and its
                                                                 subsidiaries
                      Oman                                       Asian Paints and its subsidiaries
                      Egypt                                      SCIB Chemical
 Caribbean            Barbados, Jamaica, Trinidad &              Berger International and its
                      Tobago                                     subsidiaries
Berger International Ltd. has no operations in India




                                                                                                       Asian Paints (India) Ltd.
                                                                                                     annual report 2004-2005
                                                              directors’ report




                                                              Dear Members,
                                                              Your Directors have pleasure in presenting the 59th Annual
                                                              Report of the Company and the audited accounts for the
                                                              financial year ended 31st March, 2005.

                                                              COMPANY PERFORMANCE
                                                              FINANCIAL HIGHLIGHTS
                                                                                                           (Rs. in Millions)
                                                                             APIL            AP Group Consolidated
                                                              2004-2005       2003-2004      2004-2005      2003-2004
GROSS      SALES                                                  23,388            20,260      29,853           25,729
Operating Profit                                                   3,254             2,912       3,675            3,235
Less : Interest                                                       28                53         108              152
Less : Depreciation/Amortisation/Impairment                          476              480          614               628
Add : Profit/(Loss) from associate                                     —                —             2               39
Profit Before EOI, Goodwill Amortisation and Tax                   2,750             2,379       2,955            2,494
Less : Extraordinary item (EOI)                                        42              68            —                 —
Less : Goodwill Amortisation                                           —                —           77                78
Profit Before Tax                                                  2,708             2,311       2,878            2,416
Less : Provision for Current and Deferred tax                        970              836        1,061               941
Profit After Tax                                                   1,738             1,476       1,818            1,475
Add/(Less): Prior period items                                         (3)              2            (5)                2
Net Profit after prior period items                                1,735             1,478       1,813            1,477
Less : Minority Interest                                               —                —           72                28
Attributable to shareholders of the Company                        1,735             1,478       1,741            1,449
Add : Balance brought forward from the previous year                 820              720          820               646
Add : Balance brought forward of Pentasia Investments Ltd.,
      on merger                                                        —                8            —                 —
DISPOSABLE          PROFIT                                         2,555             2,206       2,561            2,095
That the Directors recommend for appropriation as under:                                                                 
Dividend - Interim                                                   384              336          384               336
          - Final                                                    528              480          528               480
Tax on dividend                                                      125              104          130               104
Transfer to General Reserve                                          518              466          520               355
Balance carried to Balance Sheet                                   1,000              820        1,000               820
                                                                                                                                         19


The detailed analysis on the performance of the Company is           ASIAN PAINTS INDUSTRIAL COATINGS LIMITED
discussed in Management Discussion and Analysis.
                                                                     Asian Paints Industrial Coatings Limited (APICL), a wholly
Pursuant to Accounting Standard (AS 28) – Impairment of Assets       owned subsidiary of the Company, reported Profit Before Tax
issued by the Institute of Chartered Accountants of India, your      of Rs. 9.97 million in 2004-2005 as compared to Rs. 4.46
Company made an assessment for any indication of impairment          million in 2003-2004.
loss on fixed assets as at 1st April, 2004. The Company has          During the year, APICL acquired land in Baddi near
adjusted an amount of Rs. 291.42 million (Gross – Rs. 454.45         Chandigarh, at an outgo of Rs. 0.90 million by acquiring
million less Deferred Tax Credit – Rs. 163.03 million) against the   100% equity of Surya Gel Caps Ltd., for adding to its capacity
opening balance of revenue reserves, being the impairment loss       in powder coatings to cater to an increase in demand. The
pertaining to prior periods. The Company has also increased the      name of the Company was subsequently changed to Surya
rate of depreciation of certain classes of fixed assets and the      Powder Coating Ltd.
above has been dealt with in accordance with Accounting
Standard (AS 6) - Depreciation Accounting based on                   Management Discussion and Analysis annexed to this Report
management’s assesment of the useful lives of such assets. Details   deals with APICL under the heading – Industrial Paints.
of the provision for impairment loss on fixed assets and increase    TECHNICAL INSTRUMENTS                    MANUFACTURERS
in rate of depreciation are stated in Note 19 of Schedule `M’-B,     (INDIA) LIMITED
being Notes on Balance Sheet and Profit and Loss Account.
                                                                     Your Company holds 100 per cent of the equity interest in
CONSOLIDATED ACCOUNTS                                                Technical Instruments Manufacturers (India) Limited (TIM).
In respect of subsidiaries in India and abroad, both direct          TIM owns the building which houses your Company’s
and indirect, your Company has applied for approval from             corporate office. It has no other income except the rent it
the Department of Company Affairs, Ministry of Law, Justice          receives from your Company.
& Company Affairs, Govt. of India, exempting compliance              JOINT VENTURE WITH PPG INDUSTRIES, INC. –
with the provisions of Section 212(8) of the Companies Act,          ASIAN PPG INDUSTRIES LIMITED
1956. Subsequent to the date of this report, the Company
                                                                     Asian PPG Industries Limited, a 50:50 joint venture between
has received approval from the government.
                                                                     Asian Paints (India) Limited and PPG Industries, USA saw yet
In terms of approval granted by the Central Government under         another year of good performance. Both sales and profits
Section 212(8) of the Companies Act, 1956, copies of the             have seen good growth in the current year. The Joint Venture
Balance Sheet, Profit & Loss Account, Report of the Board of         Company has paid an interim dividend of 10 % for the
Directors and Report of the Auditors of Subsidiary Companies         financial year 2004-05 in March 2005. In May 2004, it also
have not been attached to the Balance Sheet of the Company.          paid a dividend of 10% for the financial year 2003-04.
The Company will make available these documents/details              INTERNATIONAL OPERATIONS
upon request by any member of the Company interested in
obtaining the same. Pursuant to the approval, a statement of         During the year 2004, sales of international operations grew
the summarised financials of all the subsidiaries is attached        by 16.7% to touch Rs. 4956 million and crossed US $100
along with the consolidated financial statements. Pursuant to        million.
Accounting Standard (AS 21) issued by the Institute of               Berger International Limited (BIL) a subsidiary of your
Chartered Accountants of India, Consolidated Financial               Company and listed on the Singapore Stock Exchange
Statements presented by the Company include the financial            performed satisfactorily during the year. Revenues of BIL grew
information of all its subsidiaries.                                 by 10.9% to Singapore $ 122.33 million (equivalent to
DIVIDEND                                                             Rs. 3244 million). BIL reported a profit of S $ 2.2 million
                                                                     (equivalent to Rs. 58 million) in 2004 as against a profit of
The Company declared an interim dividend of Rs. 4.00 per             S $ 2.95 million (equivalent to Rs. 78 million) in 2003.
equity share in October, 2004. Your Directors recommend              Lower profits are mainly due to additional provisions for
the payment of a final dividend of Rs. 5.50 per equity share.        inventories and receivables made during the year in order
The total dividend recommended for the year under review             to align with the group accounting policies.
comes to Rs. 9.50 per equity share as against Rs. 8.50 per
equity share declared for the previous year. The final dividend      Another subsidiary of your Company, SCIB Chemical S.A.E.,
                                                                     Egypt, reported a profit for the first time after its acquisition
on equity shares, if approved, would amount to Rs. 601.55
                                                                     in 2002.
million (including corporate dividend tax of Rs. 73.99 million)
and will be paid to those members whose names appear on              Your Company divested its total investment of 89.6% equity
the Register of Members on 27 June, 2005.                            in the Mauritian subsidiary to two existing shareholders
                                                                                                         Asian Paints (India) Ltd.
                                                                                                      annual report 2004-2005
of the subsidiary at a total consideration of Mauritius            during the year and with this, the total amount of deferment
Rs. 5,00,000/- (equivalent to Rs. 0.76 million ). The              availed up to 31 March, 2005 is Rs. 363.60 million.
balance investment of Rs. 43 million (after adjusting a sum
                                                                   The Company also continues to avail of sales tax deferment
of Rs. 68 million provided last year for permanent
                                                                   benefit for the expanded capacity at Kasna for which eligibility
diminution) net of sale consideration of Rs. 0.76 million is
                                                                   certificate for Rs. 254.30 million has been received. A sum
booked to the Profit and Loss Account of your Company.
                                                                   of Rs. 53.31 million has been availed during the year and
BIL has provided for a permanent diminution in the value of        with this, the total amount of deferment availed up to
its investments in Malaysia and Myanmar due to accumulated         31 March, 2005 is Rs. 106.71 million.
losses.
                                                                   FIXED DEPOSITS
Asian Paints (International) Ltd., a 100% subsidiary of your
                                                                   Fixed deposits from public and shareholders stood at
Company has provided for a permanent diminution in the
                                                                   Rs. 3.22 million at the end of the year. A sum of
value of its investment in Sri Lanka due to erosion of net
worth.                                                             Rs. 0.78 million from 55 depositors pertains to deposits that
                                                                   have not been claimed or for which disposal instructions
The Management Discussion and Analysis has dealt with              have not been received by the Company. Since close of the
the International Business in detail.                              year, no deposits have been repaid.
PAINT PLANT                                                        INSURANCE
In the last annual report, it was mentioned that your Company      All the insurable interests of the Company including
is setting up a paint plant with an ultimate capacity of 100,000   inventories, buildings, plant and machinery and liabilities
KL per annum in phases at Sriperumbudur near Chennai with          under legislative enactments are adequately insured. Loss of
an initial capacity of 30,000 KL per annum. Your Directors         profit risk for financial year 2004-2005 was self insured.
are happy to inform you that the plant commenced production
on 20th January, 2005 well in time and within the budgeted         CONSERVATION OF ENERGY AND TECHNOLOGY
cost.                                                              ABSORPTION

INDUSTRIAL COATINGS PLANT                                          Particulars in respect of conservation of energy and
                                                                   technology absorption by the Company as per Section 217(1)
Given the sharp growth in sales over the past few years and        (e) of the Companies Act, 1956, are given as Annexure to
the forecast for the future, your Company has decided to set       this report in Form A and B respectively.
up a greenfield and dedicated industrial coatings
manufacturing facility at Taloja, Maharashtra. The Plant which     SAFETY AND ENVIRONMENT
will be set up in two phases, will have an initial capacity to     Your Company started implementing the British Safety Council
produce 14,000 KL per annum of industrial paints. This             Standards at all its paint manufacturing locations about three
facility will help in meeting the specific requirements of         years ago. The Company’s good performance in the area
industrial customers and further enhance servicing capability      of safety has continued this year as well. Kasna plant which
of your Company.                                                   had received Five-Star rating by the British Safety Council
CORPORATE GOVERNANCE                                               last year was also awarded the “Sword of Honor” in 2004.
                                                                   All four paint plants of the Company have now been awarded
The Company continues to comply with the requirements of
                                                                   the “Sword of Honor” in their first attempt.
the Listing Agreement with the Stock Exchanges where the
Company’s shares are listed. The Management Discussion             The Company’s new paint plant at Sriperumbudur is equipped
and Analysis and the report on Corporate Governance are            with state of the art safety and environmental infrastructure.
included as a part of the Directors’ Report.
                                                                   Your Company, as an organisation has always been making
A certificate from the Auditors of the Company regarding           a proactive effort on environmental management and views
compliance with the conditions of Corporate Governance             conservation of resources as a driver of efficiency and
as stipulated under Clause 49 of the Listing Agreement is          productivity. The Company’s four paint plants and the two
attached to this report.                                           chemical plants have the ISO 14001 certification for environment
SALES TAX DEFERMENT BENEFIT                                        management standards.

The Company continues to avail of sales tax benefit at             FOREIGN EXCHANGE EARNINGS & OUTGO
Patancheru plant for the expanded capacity under Target 2000       Details of expenditure and earnings in foreign currencies
scheme, for which eligibility certificate has been granted for     are given in Notes B -12 and B -13 respectively of Schedule
Rs. 407 million. A sum of Rs. 81.55 million has been availed       ‘M’ to the financial statements.
                                                                                                                                       21


PERSONNEL                                                           Shri Manubhai G. Patel resigned from the Directorship with
Industrial relations during the period were cordial and             effect from 25 March, 2005 due to personal reasons and
peaceful. Negotiations for the three year settlement with the       the Board accepted his resignation with regret.
union at Mumbai Plant are in progress.                              The Board places on record its appreciation of the invaluable
Information as per Section 217 (2A) of the Companies Act,           services rendered by late Shri K. Rajagopalachari and
1956 read with the Companies (Particulars of Employees)             Shri Manubhai G. Patel.
Rules, 1975, forms part of this report.                             Ms. Tarjani Vakil, Shri Dipankar Basu, and Shri Deepak
CHANGE OF NAME                                                      Satwalekar retire by rotation at the conclusion of this Annual
                                                                    General Meeting and being eligible, offer themselves for
The overseas acquisitions have put the Company on the               reappointment. Appropriate resolutions for their appointment
global map. The Company, through its subsidiaries, is               are being placed before you for your approval at the
competing in highly competitive markets dominated by well           forthcoming Annual General Meeting.
known international brands. The Company’s strength in
logistics and distribution networking is ably supported by          The Board of Directors at its meeting held on 11th May, 2005
right technology and prudent financial management                   have revised the commission payable to Shri Ashwin Choksi,
practices. The Company’s growth is not confined solely to           Chairman, Shri Ashwin Dani, Vice Chairman and Managing
the boundaries of Indian markets. The Company has drawn             Director and Shri Abhay Vakil, Managing Director with effect
up ambitious plans for attaining and sustaining leadership          from 1st April, 2005. The necessary resolutions for the revision
status in international markets in which it operates and in         in commission are being placed before you for your approval
the light of this, it is appropriate to change the name of the      at the forthcoming Annual General Meeting.
Company to ‘Asian Paints Limited’.
                                                                    COMMITTEES OF THE BOARD
The process of passing a Special Resolution under Section
21 of the Companies Act, 1956 by way of postal ballot under         The Audit Committee, the Remuneration Committee, the Investor
Section 192A of the Companies Act, 1956, seeking                    Grievance Committee and the Share Transfer Committee have
shareholders’ consent for change of name of the Company             been reconstituted during the year. The Corporate Governance
has been initiated.                                                 Section appended to this report contains the necessary details
                                                                    of the aforementioned committees.
DIRECTORS’ RESPONSIBILITY STATEMENT
                                                                    AUDITORS
Pursuant to Section 217(2AA) of the Companies Act, 1956             The Company’s Auditors, M/s. Shah & Co., Chartered
the Directors confirm that :                                        Accountants, retire and are eligible for reappointment. Your
•    In the preparation of the annual accounts, applicable          Directors commend their appointment for the ensuing year.
     accounting standards have been followed along with             COST AUDITOR
     proper explanations relating to material departures.
                                                                    The Company has received the approval of the Central
•    The accounting policies have been selected and applied
     consistently and the judgements and estimates made,            Government for appointment of Shri Damji Keshavji Visariya as
     are reasonable and prudent, so as to give a true and           Cost Auditor to conduct the audit for the financial year
     fair view of the state of affairs of the Company at the        2004-2005.
     end of the financial year and of the profit or loss of the     APPRECIATION
     Company for that period.
                                                                    Your Directors wish to place on record their appreciation of
•    Proper and sufficient care has been taken for the              the employees at all levels for their dedicated service and
     maintenance of adequate accounting records in                  contribution to the growth and prosperity of the Company.
     accordance with the provisions of the Companies Act,
     1956, for safeguarding the assets of the Company and           Your Directors also wish to place on record their appreciation
     for preventing and detecting fraud and other irregularities.   of banks and other financial institutions, shareholders, dealers
                                                                    and consumers for their wholehearted support.
•    The annual accounts have been prepared on a going
     concern basis.                                                                   FOR AND ON BEHALF OF THE BOARD
DIRECTORS
Your Directors report with deep regret the sad demise of
Shri K. Rajagopalachari, Director of the Company on                                                          ASHWIN C.CHOKSI
14 March, 2005. He will be remembered for his rich                                                                 CHAIRMAN
contribution to the Company.                                        Mumbai: 11 May 2005.

                                                                                                       Asian Paints (India) Ltd.
                                                                                                     annual report 2004-2005
                                                                        management
                                                                        discussion & analysis
From all indications, the Indian Economy did fairly well during         ASIAN PAINTS (INDIA) LIMITED GROUP : CONSOLIDATED
2004-05. While agriculture declined marginally by 2%, industry          (AP GROUP)
and services grew at an estimated 7.1% and 8.9% respectively.           •    Net Sales and Operating Income for the group has increased
Accordingly, India is expected to have had a 6.9 % real GDP growth           by 15.4% from Rs. 22,179 million in 2003-04 to Rs. 25,605
in 2004-05. This is well below the 8.0% recorded in the previous             million in 2004-05.
year, largely due to the poor performance of the agricultural sector.
                                                                        •    Profit Before Tax and amortization of goodwill for the group
Even so, India was among the fastest growing large economies in
                                                                             has increased by 18.5% from Rs. 2,494 million in 2003-04 to
the world. Impressive as the growth may be, in comparison to many
                                                                             Rs. 2,955 million in 2004-05.
other countries, the economy continues to perform below its
potential due to the halting pace of reforms and slow progress on       •    Profit attributable to shareholders (after tax and minority interest)
infrastructure development. A good example is the introduction of            has increased by 20.2% from Rs. 1,449 million in 2003-04 to
Value Added Tax (VAT); talked about for many years, it was finally           Rs. 1,741 million in 2004-05.
introduced in only some states and that too, with inadequate            •    Return on Capital Employed was 31.4% in 2003-04 and has
preparation. However, even if the economy performs below                     increased to 34.6% in 2004-05.
potential, sustained growth will lead to greater business confidence.   •    Return on Net Worth was 28.8% in 2003-04 and has increased
2004-05 was different from the recent past, in that inflation and            to 31.7% in 2004-05.
shortage of materials were significant. Crude oil was the main          •    Basic and diluted Earnings Per Share (EPS) have increased from
cause. Prices of crude oil were extremely volatile during the year.          Rs. 15.11 in 2003-04 to Rs. 18.15 in 2004-05.
Fuelled by the price of crude and its derivatives, prices of many raw
materials and packing materials used by your Company witnessed
                                                                              Chart A : Share of Group Sales
an unanticipated and large surge. Given these circumstances, Asian
Paints had a fairly good year. Net sales and operating income of the
Company have grown satisfactorily. We were able to maintain
excellent control on costs and have succeeded in growing post-tax
profit of the standalone entity by 17.4%.
We give below a snapshot of the salient features of the Company’s
performance during 2004-05 as a stand alone entity as well as the
consolidated group.
ASIAN PAINTS (INDIA) LIMITED: STAND ALONE
•    Net Sales and Operating Income have increased by 14.4%
     from Rs. 16,966 million in 2003-04 to Rs. 19,415 million in
     2004-05.
•    Revenue (net of discounts and excise) from the paint segment
     has grown by 14.2% from Rs. 16,435 million in 2003-04 to
                                                                        PAINTS
     Rs. 18,765 million in 2004-05.
•    Profit Before Tax and Extraordinary item has increased by          The Company’s paints business in India consists of Decorative and
     15.6% from Rs. 2,379 million in 2003-04 to Rs. 2,750 million       Industrial Coatings. In 2004-05, these accounted for 78% of the
     in 2004-05.
                                                                        group sales. We estimate that the local market for all paints including
•    Profit After Tax (PAT) has increased by 17.4% from Rs. 1,478
     million in 2003-04 to Rs. 1,735 million in 2004-05.                cement paints and other powder products manufactured by all

•    Return on Capital Employed was 37.7% in 2003-04 and has            companies big and small would have been around Rs. 82 billion in
     increased to 41.5% in 2004-05.                                     2004-05. Chart B shows APIL paint sales over the last five years.
•    Return on Net Worth was 29.3% in 2003-04 and has                   Growth of the decorative paints segment has been lower than the
     increased to 31.4% in 2004-05.
                                                                        growth of the Industrial segment. The growth in Industrial products is
•    Basic and diluted Earnings Per Share (EPS) have increased
                                                                        led by the growth in the Automotive Original Equipment sector and
     from Rs. 16.12 in 2003-04 to Rs. 18.53 in 2004-05.
                                                                        in powder coatings.
                                                                                                                                               23


             Chart B : APIL Paint Sales (Gross)                             After a sluggish start to the year, we had an excellent season period
                                                                            from August to November. This also coincided with the period of
                                                                            shortages which was exacerbated by the transporters’ strike at the
                                                                            end of August. Your Company was able to cope with the situation,
                                                                            thanks to its very capable and flexible Supply Chain. As stated in the
                                                                            Annual Report for 2003-04, we had resolved to be aggressive so as
                                                                            not to concede space to competition and to ensure that we got good
                                                                            growth in the large and important segments of Distemper and
                                                                            Enamels. Thus, the price increases that became necessary due to
                                                                            inflation were postponed to post Diwali and effected from the 1st of
                                                                            December, 2004. Due to these factors, growth during 2004-05 was
                                                                            volatile quarter on quarter.

                                                                            Your Company is the leader in Interior wall finishes and has an entire
                                                                            range of products for this segment. During 2004-05, we extended
                                                                            Utsav Acrylic Distemper throughout the country as the economy
DECORATIVE PAINTS
                                                                            Distemper, aggressively pushed Tractor Emulsion to upgrade the market,
Decorative paints accounts for over 75% of the overall paint market         introduced extremely attractive dark shades in the high priced emulsion
in India. In this segment, your Company has been a leader for almost        product range and stepped up marketing activities. As a result, we had
four decades. Decorative paints include Interior and Exterior Wall          a robust growth in the Distemper segment after a gap of some years
finishes, Enamels, Wood Finishes and ancillary products such as             and excellent growth in the emulsion category as a whole.
Primers, Putty etc. Decorative paint sale in India accounts for about
                                                                            While we will continue to face competition from lower priced products
70% of the entire group’s sales in 2004-05. Early estimates place
                                                                            from large companies and from a large number of regional players
the overall Decorative paints market growth including the small and
                                                                            in the Distemper category which we dominate, we believe that the
medium scale segment in India at about 11-12% in volume and
                                                                            strategy shift undertaken is in the right direction.
marginally higher in value. Market conditions were, on the whole,
                                                                            The fastest growing segment in Decorative products is undoubtedly
good. There was robust demand in most parts of the country, especially
                                                                            Exterior Wall Finishes. Your Company has been the principal driver
during the season period around the festival ‘Diwali’. The off-take
                                                                            of the growth in this segment ever since it launched its two winning
during the fourth quarter was affected due to the announcement of
                                                                            products, Apex and Ace. Apart from products of very good quality,
the introduction of VAT from 1st April, 2005. As the rules were
                                                                            aggressive marketing activity to improve consumer awareness for
unclear regarding credit for tax on goods purchased prior to
                                                                            usage of quality emulsion paints on the exterior surfaces has yielded
1st April and there was to be a drop in effective tax in many parts of
                                                                            excellent results. Your Company has continued to expand its portfolio
the country, dealers reduced their off-take resulting in higher inventory
                                                                            of Exterior products. Apex Ultima, a premium product was launched
as on 31st March, 2005. The reduction in tax rate was as high as
                                                                            with a novel warranty scheme in Kerala. This product along with
5.9 % in Karnataka, 4.75% in Kerala and 3.3% in Maharashtra. The
                                                                            warranty is being extended to the rest of the country. Ace Supreme, a
slowdown in the last quarter would have impacted all trade oriented
                                                                            high-end version of Ace, has been introduced very recently in select
sellers. However, the introduction of VAT is expected to be beneficial
                                                                            markets. Exterior Wall finishes performed exceedingly well during
in the long run for the economy and your Company expects that
                                                                            the year. With a full range of these products, we were able to improve
once all states implement the new system, which is clear and uniform
                                                                            upon our already strong position in the market.
and the trade gets used to VAT, the benefits will flow in.



                                                                                                                  Asian Paints (India) Ltd.
                                                                                                               annual report 2004-2005
The enamel segment is by far the largest segment, which has been             SUPPLY CHAIN
growing slower than Decorative paints as a whole for some years              Your Company has been justifiably proud of its supply chain which
now. This is because it is being replaced by other materials on              uses contemporary technologies to integrate its plants, contract
hoardings, signboards and the like. Aggressive marketing and pricing         manufacturers, regional distribution centres and branches. This supply
policies coupled with extension of Utsav Enamel, an economy product,         chain was severely tested during the year that went by when there
enabled us to grow well in the category.                                     was a transport strike and shortage of materials just as the season
Your Company’s Colour World initiative has enabled us to bring to            was getting underway. The integrated supply chain responded
the consumer a very large range of shades in several products.               effectively and with supply chain management tools providing the
Penetration has increased significantly with the addition of 1200            ability to make rapid changes, service levels could be maintained.

Colour Worlds during 2004-05. We today have close to 5500                    As reported last year, your Company undertook setting up of a new
Colour Worlds across the country and Colour World dealers account            plant at Sriperumbudur, near Chennai. Construction began in March
for over two-thirds of the Company’s total Decorative sales. The             2004 and was completed in record time with production commencing
company has successfully secured economies of scale not only in the          in January 2005. This first phase has a capacity of 30,000 KL per
cost of equipment but also in maintenance charges so that dealers            annum. This will be expanded in phases to 100,000 KL per annum.
find it more and more attractive to install Colour World in their            The facilities at the Sriperumbudur Plant are contemporary by world
shops. The availability of a range of products from distempers to high       standards and will enable extremely rapid ramp up of capacity. The
price emulsions in a very large number of shades, including new              “right first time” capability that was aimed for in the plant has been
uniquely formulated dark shades, at 5500 installations across the            fully secured. This plant will manufacture only emulsion paints and is
country has given us great strength.                                         expected to help us continue to grow rapidly in this segment.

Asian Paints Home Solutions is a unique and complete paint solution          Our supply chain has focused on several areas. By sweating
for customers. It has been extended to Ahmedabad and Pune during the         existing assets, we have succeeded in postponing capital
course of 2004-05. The effort here is to provide service to individual       expenditure for several years. During the year, we have received
household consumers and the company takes particular care to provide         permission to raise production at Kasna to 80,000 KL per annum.
high quality of service. Service is measured objectively by a professional   Thus, with only modest capital expenditure we now have inhouse
agency and we track customer satisfaction every month. We believe            production capacity of 270,000 KL per annum plus the new capacity
that this service adds to the strength of the Asian Paints brand.            at Sriperumbudur.

Due to the sharp rise in the price of crude and its derivatives, prices of   INDUSTRIAL COATINGS
many raw materials and packing materials witnessed an upward swing.          Industrial Coatings are classified into automotive and non-automotive
Apart from petroleum derivatives, the prices of titanium dioxide also        industrial paints. This market is catered to by three entities: the parent
went up due to the gap between the supply and demand widening due            Company Asian Paints (India) Limited (APIL), its subsidiary company
to robust growth in many world markets. Inflation was accompanied            Asian Paints Industrial Coatings Limited (APICL) and the joint venture
by shortages in several materials. This was particularly acute during        Asian PPG Industries Ltd. Together, these contribute to around 8% of
the September – November period, which also impacted service levels          the group’s sales in 2004-05. While Asian PPG Industries Ltd., caters
to a small extent.                                                           to the automotive coating segments, the wholly owned subsidiary
The Company’s management believes that robust growth is of prime             APICL services the powder coatings segment. APIL services the
importance and while we possess strength in most segments of the             remaining non-auto industrial coating segments viz., protective
market, our strategies need to be continuously fine-tuned so that we         coatings, road markings, floor coatings and general industrial liquid
remain agile and focused.                                                    paints.
                                                                                                                                             25


                                                                          Given the extremely good sales growth witnessed by the Company in
                                                                          the last few years and continued buoyancy expected in the industrial
   Chart C :Total Sales of Industrial Paints*
                                                                          coatings segment, your Company has decided to invest in a greenfield
                                                                          manufacturing facility at Taloja, Maharashtra dedicated exclusively
                                                                          for Industrial Coatings. The plant will be set up in two phases to have
                                                                          a final capacity of 30,000 KL per annum.

                                                                          ASIAN PAINTS INDUSTRIAL COATINGS LIMITED (APICL)

                                                                          APICL, the Company’s wholly owned subsidiary which services the
                                                                          requirements of powder coating customers in the country registered
                                                                          an impressive net sales growth of 23%.

                                                                          APICL has a technology collaboration with Canada based Protech
                                                                          Chemicals Ltd., one of the top ten powder coating companies in the
                                                                          world. The process of technology absorption is well underway and
                                                                          several products based on Protech technology have been developed
                                                                          at APICL. Trials for commercialisation of these products have

         *includes 100% sales of Asian PPG Industries Ltd.
                                                                          commenced. Simultaneously, in-house R&D efforts at APICL have
                                                                          continued and efforts to enter into specific large OE accounts have
                                                                          borne fruit. The combination of inputs from Protech and in-house
With the automobile industry continuing on its growth trajectory, white
                                                                          R&D efforts will enable APICL to provide customers with state of the
good manufacturers registering good growth and the focus on enhancing
                                                                          art technology products for existing and new applications.
the road network in the country, the Company’s overall performance in
industrial coatings has been commendable. The group’s total sales of      With the demand for Powder Coatings expected to grow at a healthy

industrial coatings in India grew by 35%. Given below is the detailed     pace, the Company has decided to build a second manufacturing

performance of industrial coatings for 2004-05.                           facility for Powder Coatings at Baddi in Himachal Pradesh. The new
                                                                          facility will have a capacity of 6500 MT and will be set up in two
INDUSTRIAL COATINGS – APIL
                                                                          phases. The first phase is expected to be commissioned in the last
The industrial coatings market where APIL operates is estimated to
                                                                          quarter of financial year 2005-06.
have grown by around 15% during the year. APIL industrial coatings
                                                                          ASIAN PPG INDUSTRIES LIMITED
has registered a value growth of 48%, due to strong growth in the
protective coatings and road marking segments, which have grown           Asian PPG Industries Limited, the 50:50 joint venture between Asian

by 50% and 60%, respectively. While we are the second largest             Paints and PPG Industries, saw yet another year of vigorous growth.

player in protective coatings in the country, we have also emerged as     The venture benefitted from the excellent performance of the

the second largest player in road marking paint in just a few years of    automobile industry during the year. Besides the impact of increased

entering this segment.                                                    volumes resulting from the growth of the automobile industry, Asian
                                                                          PPG Industries Ltd., was also able to increase its share of the market
Another segment in which we plan to grow aggressively during the
                                                                          by offering new and improved products and by providing enhanced
next year is the floor coatings segment. We have, during the year,
                                                                          value to its customers. Net sales of Asian PPG Industries Ltd.,
through in-house R&D, been successful in commercialising a number
                                                                          increased by 30% from Rs. 1,570 million in 2003-04 to
of products which constitute the bulk of the range presently in use for
                                                                          Rs. 2,038 million in 2004-05.
the Indian floor coating market.




                                                                                                               Asian Paints (India) Ltd.
                                                                                                             annual report 2004-2005
A part of the increase in turnover has come from the improved             An initiative to implement Microsoft Navision, an Enterprise Resource
performance of Asian PPG’s refinish business. Aspa, the alkyd refinish    Planning (ERP) software has been undertaken across all its overseas
product and Bilux, its second tier PU refinish system have performed      subsidiaries. In November 2004, the software was implemented at
very well. The Company was able to improve market share in both           the subsidiary in Bahrain and subsequently in four other subsidiaries.
the auto OE and the auto refinish segments.                               The solution is expected to provide consistent, timely and accurate

The year saw a sharp rise in prices of raw materials resulting from the   information that would facilitate better and faster decision making as

twin impact of rising crude prices and increase in world-wide demand.     well as improve controls. The implementation of the software at the

Simultaneously, continuing efforts by customers to cut costs limited      other overseas subsidiaries will be completed in the next financial

the scope for improved price realisation. This posed a serious            year.

challenge to the ability of coating suppliers to sustain margins and      During the year, the company divested its 84.2% stake in its subsidiary,
manage earnings growth. Asian PPG has performed creditably in this        Berger Paints (Malta) Limited. The Company decided to exit operations
area through aggressive cost management, introducing technically          from the country as there was no strategic fit. Subsequent to this
advanced products and by improving the product mix.                       divestment, a licensing arrangement has been entered into with the

OTHERS                                                                    Company. Berger International Limited, in which your company has a
                                                                          controlling stake, has entered into technical support arrangements
APIL also has chemicals businesses consisting of phthalic anhydride
                                                                          with Dutch Boy Philippines Inc, an associate company and Berger
and pentaerythritol. These two chemicals manufactured at Ankleshwar
                                                                          Paints (Pakistan) Limited. The latter is not a subsidiary. These agreements
in Gujarat and Cuddalore in Tamil Nadu respectively were set up as
                                                                          are fee based. Your Company has also divested its 89.6% stake in its
backward integration initiatives in the 90s and are not seen as growth
                                                                          Mauritius based subsidiary, Asian Paints (Mauritius) Limited to local
drivers for the Company. Today, approximately half of APIL’s chemical
                                                                          shareholders. The company decided to exit Mauritius as the paint
production is consumed in-house while the remaining is sold in the
                                                                          market has not been growing for the past few years and the subsidiary
open market.
                                                                          has been making losses for several years.
The chemicals business fared well during the year registering growth
                                                                          FINANCIAL PERFORMANCE - INTERNATIONAL BUSINESS
of 18% in external sales from Rs. 637 million in 2003-04 to Rs. 753
                                                                          During the year under review, the volume of paint sold has increased by
million in 2004-05. The profitability of the chemicals business also
                                                                          16.5% to 65.3 million liters and the revenue from paint sales has
improved significantly by 145%, mainly driven by higher price
                                                                          increased by 12.3% to Rs. 4,648 million. Adjusted for the exchange rate
realisation in the phthalic anhydride business.
                                                                          impact, the value growth would have been 15.6%. The revenue of Berger
The entire chemical business is not seen as core to the company’s
                                                                          International     Limited     has    increased      by    10.9%      from
growth and it’s percentage contribution to the overall sales of the
                                                                          Rs. 2,926 million in 2003-04 to Rs. 3,244 million in 2004-05. SCIB
group is on the decline. We will continue to manage this business for
                                                                          Chemical S.A.E., Egypt has reported a profit for the first time after its
value.
                                                                          acquisition in 2002. SCIB Chemical’s revenue has grown by 51% percent
INTERNATIONAL BUSINESS UNIT
                                                                          from Rs. 320 million in 2003-04 to Rs. 484 million in 2004-05.
During the year under review, the focus of the International Business
                                                                          Material prices have risen sharply but the impact of higher material
Unit has been on increasing the top line and strengthening its presence
                                                                          prices has been partly neutralised by improved efficiencies in both
in various markets through initiatives such as installation of dealer
                                                                          product mix and control of overheads. The strategy has been to gain
tinting systems, launch of new products, market research to enable
                                                                          market share and minimise upward revision in selling prices. Group
fine tuning of marketing strategies, advertising and promotional
                                                                          policies in respect of general provisioning for stock and debtors have
activities and improved service levels.
                                                                          been implemented in stages over the last two financial years. Interest
                                                                                                                                                27


  cost is lower due to a combination of finer rates and swapping of high   perform well. The subsidiary in Egypt has improved its presence in the
  cost borrowings with cheaper alternatives.                               retail segment by launching new products and has made profits for

  With the exit of operations in Mauritius and Malta, the group now        the first time since it was taken over in 2002. The subsidiary in Bahrain

  operates in five regions across the world i.e., South Pacific, South     has taken steps to increase its presence in the Saudi Arabian market

  East Asia, South Asia, Middle East and the Caribbean.                    and augment its manufacturing capacity to meet increasing demand.
                                                                           The subsidiary in Oman has reported profits for the first time since its
  Chart D shows the percentage sales contribution of each region to
                                                                           inception. The subsidiary in UAE has recorded good revenue growth
  overall international operations for 2004-05.
                                                                           due to increased sales to the domestic decorative projects segment
                                                                           and exports to the Commonwealth of Independent States (CIS)
    Chart D: Regionwise share of International Business sales              markets.

                                                                           SOUTH ASIA REGION

                                                                           The business unit, after the disposal of the subsidiary in Mauritius in
                                                                           March 2005, has operations in Nepal, Bangladesh and Sri Lanka.
                                                                           The volume of paint sold in the region (excluding India) increased
                                                                           by 24.8% to 5.7 million liters. The revenue from paint sales has
                                                                           increased by 24.8% to Rs. 400 million. The subsidiary in Nepal
                                                                           performed well registering impressive sales growth but profits were
                                                                           lower due to provisioning for stock and debtors. Losses for the year
                                                                           were lower in both Sri Lanka and Bangladesh. The subsidiary in
                                                                           Sri Lanka reported a loss due to higher interest cost and provisioning
                                                                           for doubtful debts.

                                                                           SOUTH EAST ASIA REGION
CARIBBEAN REGION
                                                                           The business unit operates in China, Malaysia, Myanmar, Singapore and
The business unit has operations in Jamaica, Trinidad & Tobago and
                                                                           Thailand. The business unit also has a sales office in Hong Kong. The
Barbados. During the year, the volume of paint sold in the region has
                                                                           volume of paint sold in the region increased by 10.9 % to 10.8 million
increased by 5.7% to 8.5 million liters. The revenue from paint sales
                                                                           liters. The revenue from paint sales has increased by 8.6% to Rs. 699
has increased by 1.3% to Rs. 1,342 million. The highlight of the year
                                                                           million. The subsidiaries in Thailand and Singapore recorded satisfactory
was the improved sales performance by Barbados and Trinidad &
                                                                           profit performance. The unit in Thailand recorded excellent sales growth.
Tobago. Higher material cost and additional provisioning made by the
                                                                           Malaysia and Myanmar units are a cause for concern.
subsidiary in Jamaica towards stock obsolescence has impacted profits
                                                                           SOUTH PACIFIC REGION
of the region. During the year, dealer tinting systems were launched in
all the three subsidiaries.                                                The business unit operates in Fiji, Tonga, Solomon Island, Vanuatu,
                                                                           Samoa and Australia. The volume of paint sold in the region decreased
MIDDLE EAST REGION
                                                                           by 3.9% to 4.4 million liters. The revenue from paint sales has
The business unit has operations in Egypt, Bahrain, United Arab Emirates
                                                                           increased by 6.8% to Rs. 618 million. Barring Australia, all the
(UAE) and Oman. The volume of paint sold in the region has increased
                                                                           subsidiaries in the region recorded improved sales and profit
by 22.9% to 35.5 million liters. The revenue has increased by 24.9% to
                                                                           performance. Taubmans Paints (Fiji) Limited and Samoa Paints Limited,
Rs. 1565 million. The subsidiaries in Egypt, Bahrain and Oman have
                                                                           in their first full year of performance post acquisition by Asian Paints
recorded impressive revenue and profit growth which helped the region
                                                                           (India) Ltd., recorded improved performance.



                                                                                                                  Asian Paints (India) Ltd.
                                                                                                               annual report 2004-2005
OUTLOOK FOR INTERNATIONAL BUSINESS                                                      B.   ENVIRONMENT INITIATIVES

While the business unit has performed well in terms of revenue growth,                       Asian Paints has always taken a proactive stance on
the sharp increase in raw material prices has impacted margins and                           environmental management and the Company views
profitability in the current year. Raw material prices are expected to be                    conservation of resources as a driver of efficiency and
buoyant in the next year and efforts will continue to reduce the impact                      productivity. The Company’s four paint plants and the two
of increasing raw material prices through cost optimisation in all                           chemical plants have the ISO 14001 certification for
areas. The outlook for international operations for the next financial                       environment management standards. The Company follows a

year, barring unforeseen developments, is positive.                                          two-pronged approach:

SAFETY, HEALTH AND ENVIRONMENT                                                               •     ”Waste Minimisation” through waste reduction at source
                                                                                                   and recycle of waste.
A.   SAFETY AT APIL PAINT PLANTS
                                                                                             •     Resource Conservation.
     Your Company continues to invest in the area of safety. Due to
     this continued focus, Kasna plant which received the Five-Star                     The organization has been able to reduce waste generation by

     rating by the British Safety Council last year was also awarded                    implementing pneumatic conveying systems for powder raw materials,

     the “Sword of Honor” in this year. All the four paint plants in                    employing superior cleaning systems and carrying out mass balance

     India have now been awarded with the “Sword of Honor” in                           audits for waste minimization. With the help of rain water harvesting
                                                                                        schemes implemented across all the plants and their colonies and
     their first attempt. The reduction in the time wasted due to
                                                                                        the implementation of drip irrigation systems and ground water
     accidents is given in the tables here in below :
                                                                                        recharging schemes, the company has been able to reduce water
     Frequency Rate                           Severity Rate                             consumption significantly. Energy audits have been done at all the

     Number of reportable lost time injury   Man-days lost due to reportable lost
                                                                                        plants to save energy. Implementation of waste recycle schemes have
     per million man-hours worked            time injury per million man-hours worked   enabled all paint plants achieve ‘zero industrial discharge’ capability.
                                                                                        All manufacturing streams now have closed loop recycle schemes in
      Ye a r            Co. level             Ye a r               Co. level
                                                                                        place to minimize waste generation.
      2000                        3.1         2000                         93.6
                                                                                        HUMAN RESOURCES
      2001                        4.4         2001                         91.6
                                                                                        To meet the challenges of a constantly evolving environment, we
      2002                        1.8         2002                         57.0         have restructured our training programmes.

      2003                        1.4         2003                         45.4         Training activity is divided in three areas : the ones that support the

      2004                        1.5         2004                         46.7         initiatives of the business units, those that help develop leaders from
                                                                                        within and others that help employees upgrade their skills or acquire
     The new paint plant at Sriperumbudur is equipped with state of                     new skills. Training man-days have increased to over five per executive.
     the art safety and environment infrastructure. The plant is                        A large part of the training is aligned to support initiatives of the
     designed for ‘zero-discharge’ of industrial effluent. The plant                    business units.

     has a state of the art effluent treatment system, a reverse osmosis                The International Business Unit [IBU] represents a group of individual
     plant and a multiple effect evaporator that allows the plant to                    units, some of which were set up as greenfield units by Asian Paints
     recycle more than 99% of the effluent back into the process.                       while some others were recently added through the acquisition process.
     Based on the British Safety Council guidelines, several safety                     The success of the group, where each unit has its own operating
     features have been incorporated in the design of the plant.                        systems, processes and cultural identity, depends on introduction of
                                                                                                                                                    29


common systems, particularly the Performance Management system              Community initiatives have also been undertaken in different countries
and a common value system. The Performance Management system                by the company’s overseas subsidiaries. Contributions have been made
was upgraded during the year and a variable pay plan introduced to          by the group to the International Red Cross to help victims affected by
bring in greater performance orientation. Defining organisational values    the Tsunami tragedy. The subsidiaries in the Caribbean, especially

[‘Guiding Principles’] and reaching out to all key managers through         Jamaica have supported various educational, cultural and sports

several value workshops has been completed during the year which            activities for the development of youth. One major initiative run in

will strengthen the integration process.                                    Jamaica is the adoption of the Rivertown Meadows Early Childhood
                                                                            Education Centre which has around 120 students aged 3-6 years.
CORPORATE SOCIAL RESPONSIBILITY

Asian Paints approaches Corporate Social Responsibility (CSR) from          INFORMATION            TECHNOLOGY

the perspective of being a responsible corporate citizen. There has         In the last few years, your Company has derived immense benefit
been a continued effort to take up initiatives in various quarters and      from reduced working capital, increased transparency in transaction
ensure sufficient resources for the sustenance and continuity of the        reporting and greater speed and efficiency in decision making from
same. The Company has identified projects across all its manufacturing      the revamp of the Information Technology solutions. The year under

locations in the country primarily in the areas of education, health        review has been a year of consolidation as also expanding the scope

care, and rain water harvesting.                                            to better serve the needs of our growing international business. Focus
                                                                            has been on improving robustness and utilization whilst maximizing
In the area of education, the Company has been involved in supporting
                                                                            the benefit from information technology solutions.
various schools around its plants including the setting up of the ‘Gattu’
school at Ankleshwar which provides education to around 2,500               In order to reflect the increase in our international presence as well as to
students from various strata of society. In the area of health care, the    provide an integrated view from the outside to the Asian Paints group, it
Company continued operating mobile medicare units (MMU) around              was felt necessary to have a modern and contemporary web presence
Patancheru (Andhra Pradesh) and Kasna (UP) plants collaborating             for corporate and customer information and transactions. A few months
with HelpAge India, an NGO. The Company also took the initiative            back, we unveiled the new web presence. In months to come, we will be

of treating people with cataract and successfully got around 460            rolling out new additions, such as a painting tool, web store and decor

patients operated at recognised eye-hospitals.                              related information. As mentioned elsewhere in this report, a common
                                                                            ERP solution is being implemented at all our overseas units. This is being
Another part of the company’s CSR initiative is the harvesting of rain
                                                                            done so that our overseas units have the ability to speedily adapt to
water. In Mumbai, which faces a severe water shortage problem, our
                                                                            changes in the environment and deliver value to our customers.
Bhandup plant pursued the objective of increasing awareness about
rain water harvesting. Before taking the concept to the masses, we          Several improvements have been made in our backend infrastructure

first implemented the rain water harvesting scheme in all our plants        to improve our support for new applications and take advantage of

and their residential colonies. The Company organised seminars              the improved communication and telecom infrastructure to leverage
                                                                            information technology.
free of cost to bring about awareness and influence other organisations
to adopt this concept. The Company has designed a rain water                RESEARCH & DEVELOPMENT
harvesting scheme for its corporate office in Mumbai, which will be a       Research and Development (R&D) plays an important role in
unique example of a commercial building implementing such a project.        developing new products and reducing cost by re-engineering
During the year, your Company contributed Rs. 3.5 million to the            formulations. R&D operates in tandem with the Company’s long
Prime Minister’s and Chief Minister’s Relief Fund to aid the victims of     term strategy and demands of the market place. In the last few years,
the Tsunami tragedy. Employees of the Company also contributed              our R&D efforts have been focused on developing new exterior
Rs. 1.2 million out of their salary towards this purpose.                   finishes, economy emulsions, distempers and wood finishes.



                                                                                                                    Asian Paints (India) Ltd.
                                                                                                                 annual report 2004-2005
FINANCIALS

ABRIDGED PROFIT AND LOSS STATEMENT                                                                                         Rs. in Millions

                                                                    APIL                             AP Group (Consolidated)

                                                  2004-05        2003-04          Growth       2004-05       2003-04         Growth

  Net sales and operating income                     19,415         16,966          14.4%         25,605        22,179          15.4%

  Other income                                           316             217                         324            264

  Total Income                                       19,731         17,183          14.8%         25,929        22,443          15.5%

  Total Expenditure                                  16,477         14,271          15.5%         22,254        19,208          15.9%

  Operating profit                                     3,254         2,912          11.7%          3,675          3,235         13.6%

  Less : Interest                                         28              53        -47.7%           108            152        -28.9%

  Less : Depreciation/Amortization/

        Impairment                                       476             480                         614            628

  Add : Profit/(Loss) from associate                        -               -             -             2            39

  Profit before EOI, Goodwill Amortization

  and Tax                                              2,750         2,379          15.6%          2,955          2,494         18.5%

  Less : Extraordinary Item                               42             68               -              -             -              -

  Less : Goodwill Amortization                              -               -             -            77            78               -

  Profit Before Tax                                    2,708         2,311          17.2%          2,878          2,416         19.2%

  Less : Provision for Current & Deferred tax            970             836              -        1,061            941               -

  Profit After Tax                                     1,738         1,476           17.8%         1,818          1,475         23.2%

  Add/(Less) : Prior period items                         (3)              2              -            (5)             2              -

  Net Profit after prior period items                  1,735         1,478          17.4%          1,813          1,477         22.7%

  Less : Minority interest                                  -               -             -            72            28               -

  Available to shareholders                            1,735         1,478          17.4%          1,741          1,449         20.2%


Net Sales and Operating Income for APIL standalone has increased           percentage to sales (standalone accounts) increased to 57.5% in
by 14.4% whereas that of the group has increased by 15.4%. The             2004-05 against 55.6% in the previous year. However, the Company
higher growth for the group reflects the good growth in industrial and     has minimized the impact of the same through prudent overheads
international revenues. Profit after tax (PAT) has increased by 17.4%      management. As a result, Profit Before Tax and Extraordinary item as
and 20.2% for the standalone entity and group respectively.                a percentage to sales is marginally higher at 14.2% in 2004-05 as
Raw material prices continued their upward trend in 2004-05,               against 14% in 2003-04.
resulting in pressure on gross margins. Material consumption as a
                                                                                                                                                                  31


Other income in the standalone accounts for year 2004-05 is higher                                 The year-end net working capital trend (measured as “Sales/Net
than the previous year by Rs. 99 million mainly due to dividend received                           Current Assets”) is as under :
on trade investments and profit on disposal of certain vacant property.                                                Sales/Net Current Assets

The extraordinary item in the standalone accounts of 2004-05 is on
account of the balance loss of Rs. 42 million recognized by the parent
company arising on the sale of investments in its subsidiary – Asian
Paints (Mauritius) Ltd. Out of the total loss of Rs.110 million arising
on sale, an amount of Rs. 68 million had already been recognized in
2003-04 as a provision for diminution in the value of investment.

Efficient working capital management has been a strength of the
Company over the years. However, there has been an increase in
levels of finished good and raw material inventory towards the year-
end in 2004-05 due to VAT related uncertainties and also in
anticipation of higher material prices.


Overall, the Company has improved its financial performance despite margin pressures and year-end VAT uncertainties. The ratios below
summarize the financial performance for the year :



Key Financial Ratios

                                                                                                            APIL                           AP Group
                                                                                                                                         (Consolidated)

                                                                                               2004-05             2003-04           2004-05          2003-04

    PBDIT/Sales                                                                                  16.8%                 17.2%            14.4%             14.8%
    PBT before EOI/Sales                                                                         14.2%                 14.0%            11.2%             10.9%
    PAT/Sales                                                                                     8.9%                  8.7%              6.8%             6.5%
    Return on Average Capital Employed1                                                          41.5%                 37.7%            34.6%             31.4%
    Return on Average Net Worth1                                                                 31.4%                 29.3%            31.7%             28.8%
    EPS (Rs.)                                                                                    18.53                 16.12             18.15            15.11
    Debt : Equity                                                                                0.15:1                0.13:1           0.38:1            0.28:1
    Interest Cover
    (PBIT/Interest)                                                                                101                     46               28               17

1
     Capital Employed and Networth as at 31.03.2005 are after providing for impairment loss.




                                                                                                                                      Asian Paints (India) Ltd.
                                                                                                                                    annual report 2004-2005
RISKS AND OUTLOOK

The overall outlook for 2005-06 is positive. The government’s             control across its operations to ensure that all assets are safeguarded
renewed thrust on infrastructure and the continuation of tax incentives   and protected against loss from unauthorised use or disposition.
on housing loans will continue to help the paint industry. If the         Your Company has well defined independent procedures to execute
monsoons are normal, we expect the rural economy to perform well.         financial transactions. Your Company’s internal audit department
For the industrial coatings segment, increasing investments in the        continuously monitors the adequacy of internal control processes
development of core infrastructure, increasing industrialization, and     across the business units and ensures compliance with regulatory
growing needs for consumer durables and automobiles augur well            requirements as well as internal policies. The internal audit also
for the continued growth of this segment. However, the Company is         ensures that internal controls and checks and balances in the system
confident that it will grow above industry average due to its forays in   are adequate and up-to-date. Internal audits are undertaken on a
fast growing areas like powder coatings and road markings.                continuous basis covering both domestic and international operations

APIL continues to see three risks that can affect its performance.        with specific focus on processes, risks and statutory compliances. A

Firstly, if input costs continue to rise, pressure on operating margins   summary of audit observations and the ‘action taken reports’ are

will continue. Secondly, if India’s GDP growth rate significantly slows   regularly placed before the Audit Committee.

down, the industry may not see adequate demand for coatings. Thirdly,     CAUTIONARY STATEMENT
if overseas economies in which we have a large presence do not
                                                                          Statements in this Management Discussion and Analysis describing
perform well, the performance of the international business can be
                                                                          the Company’s objectives, projections, estimates and expectation
affected.
                                                                          may be “forward looking statements” within the meaning of applicable
INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY                               laws and regulations. Actual results might differ materially from those

Your Company is committed to ensuring comprehensive internal              either expressed or implied.
Five year review
                                                                                      (Rs. in millions except for per share data, number of employees and ratios)

         Results for the Accounting Year              2004-2005               2003-2004              2002-2003              2001-2002             2000-2001


REVENUE ACCOUNT
Gross Sales                                             23,388.4               20,259.5              18,066.6             15,984.5               14,695.1
Net Sales and Operating Income                          19,415.1               16,966.5              15,302.5             13,613.5               12,333.5
Growth Rates (%)                                            14.43                 10.87                 12.41                 10.38                  13.18
Materials Consumed                                      11,154.0                9,441.5               8,023.5               7,173.6                6,611.6
% to Net Sales                                              57.45                 55.65                 52.43                 52.70                  53.61
Overheads                                                5,323.3                4,829.6               4,587.7               4,176.8                3,699.4
% to Net sales                                              27.42                 28.47                 29.98                 30.68                  29.99
Operating Profit                                         3,253.9                2,912.2               2,817.2               2,407.8                2,115.0
Interest Charges                                             27.5                   52.7                  83.5                145.8                  221.2
Depreciation                                                476.1                 480.1                 485.2                 447.9                  334.9
Profit Before Tax and Extraordinary item                 2,750.3                2,379.4               2,248.5               1,814.1                1,558.9
% to Net Sales                                              14.17                 14.02                 14.69                 13.33                  12.64
Extraordinary item                                           42.3                   68.1                     ---                   ---                    ---
Profit Before Tax and after Extraordinary item           2,708.0                2,311.3              2,248.50             1,814.10               1,558.90
% to Net Sales                                              13.95                 13.62                 14.69                 13.33                  12.64
Profit After Tax                                         1,738.2                1,475.8               1,433.7               1,153.3                1,063.9
Prior period items                                           (3.3)                    2.1               (13.6)                (10.2)                   (8.1)
Profit After Tax and prior period items                  1,734.8                1,477.9               1,420.1               1,143.1                1,055.8
Return on average net worth (RONW) (%) *                    31.43                 29.32                 32.01                 27.82                  27.47
CAPITAL ACCOUNT
Share Capital                                               959.2                 959.2                 641.9                 641.9                  641.9
Reserves and Surplus                                     4,763.0                4,356.2               4,124.3               3,463.7                3,470.1
Deferred Tax Liability (Net)                                305.4                 486.6                 581.6                 611.8                       ---
Loan Funds                                                  838.8                 704.7               1,036.2               1,107.7                2,268.2
Fixed Assets                                             3,195.1                3,444.3               3,662.4               3,895.0                3,804.6
Investments                                              2,584.3                2,424.9               1,476.9                 633.4                  440.7
Net Current Assets                                       1,087.0                  637.5              1,244.58               1,296.7                2,134.9
Debt-Equity Ratio                                         0.15: 1                0.13: 1                0.22:1                0.27:1                 0.55:1
Market Capitalisation                                   37,514.2               29,135.6              21,187.8             21,056.2               15,802.6
PER SHARE DATA
Earnings Per Share (Rs.)                                     18.5                 # 16.1                # 14.8                  17.8                   16.5
Dividend (%)                                                 95.0                 $ 85.0                110.0                   90.0                   70.0
Book Value (Rs.)                                             59.7                 $ 55.4                  74.3                  64.0                   64.1
OTHER INFORMATION
Number of Employees                                         3,627                 3,430                 3,400                 3,258                  3,197

*    RONW is calculated after provision for impairment on fixed assets in 2004-2005
#    EPS is calculated after adjusting for Bonus issue and the reduction of capital on account of merger of Pentasia Investments Ltd. in accordance with Accounting
     Standard (AS 20) - Earnings per share
$    On increased capital




                                                                                                                               Asian Paints (India) Ltd.
                                                                                                                             annual report 2004-2005                  33
     Annexure to Directors’ Report
     FORM A                                                                              FORM B
     Disclosure of particulars with respect to Conservation of Energy :                  Disclosure of Particulars with Respect to Technology Absorption :
                                                                                         Research and Development (R&D)
                                                          2004-05 2003-04
     A. Power and fuel consumption :                                                     1.   Specific area in which R&D is carried out by the Company:
        1. Electricity :                                                                      i) Development of new products and processes related
           a) Purchased :                                                                         to surface coatings and intermediates.
                 Units (‘000 KWH)                             22,836      23,600
                                                                                              ii)   Continuous improvement in quality and cost of existing
                 Total Amount (Rs. in million)                   101         105
                 Rate/Unit (Rs.)                                4.42        4.45                    products.
           b) Own Generation :                                                                iii) Upgradation of products and processes to improve
                 Through Diesel Generator -                                                        environmental and safety concerns.
                 Units (‘000 KWH)                              1,929           2,148
                 Units per ltr. of diesel oil                   2.90            3.26          iv) Identification of alternate raw materials and vendors
                 Cost/unit (Rs.)                                8.17            6.57              enabling quality improvement, cost benefits, supply
                 Natural Gas ----                                                                 chain flexibility and crisis management.
                 Units (‘000 KWH)                              7,040           5,556
                 Units per cubic nm.                            3.25            3.35          v)    Development of analytical test methods,
                 Cost/Unit (Rs.)                                3.12            2.65                characterisation techniques and application essential
        2. Coal :                                                                                   for product development, benchmarking, process
           (Steam coal used in                                                                      control and customer services.
           Boiler to generate steam
           for the process)*                                                             2.   Benefits derived as a result of the above R&D:
           Quantity (in MTs)                                  15,210      16,252
           Total cost (Rs. in million)                            40          31              i) Development of new products such as special effect
           Average Rate/MT (Rs.)                               2,648       1,886                  finish - Royale play, Utsav range of stainers for water
           * includes Leco/Raw Lignite                                                            based paints and polyester wood finishes.
           expressed in equivalent
           tons of coal                                                                       ii)   Professional acrylic distemper designed for specific
        3. Furnace Oil :                                                                            customer segment.
           Quantity (in MTs)                                   1,720           1,688          iii) A premium product, AP melamyne gold clear in the
           Total Amount (Rs. in million)                          38              31               category of acid cure system developed and launched
           Average Rate/Kg. (Rs.)                              21.87           18.45
                                                                                                   in Mumbai market. Similarly a fast drying PU coating
        4. Natural Gas :
                                                                                                   developed and launched in selected markets.
           Quantity (in cubic nm.)                             3,045           3,005
           Total Amount (Rs. in million)                          28              28          iv) Exterior paint with superior features and high
           Average Rate/cubic nm. (Rs.)                         9.13            9.25              durability under the name Apex Ultima developed and
                                                                                                  launched.
     B. Consumption per unit of production :
                                                                                              v)    Water borne retro-reflective road marking paint
                      Electricity   Furnace Oil       Natural Gas        Coal                       commercialised under the brand ‘Apcotrak WBR’.
                    (KWH/Ton/KL)     (Ton/KL)          (Ton/KL)          (Ton)                vi) Epoxy tank lining suitable for usage in contact with
                    04-05 03-04 04-05 03-04 04-05 03-04 04-05 03-04                               potable water and for wet heat resistance up to 150
                                                                                                  degree celsius developed for refineries.
     Paints,
     Enamels                                                                                  vii) Self leveling epoxy floor coating for automotive and
     and                                                                                           chemical industries commercialized.
     Varnishes
     (including                                                                               viii) Development of products like metallic and pearlescent
     Synthetic                                                                                      finish in latex glaze, economy emulsion paint and wall
     Resins for                                                                                     putty for overseas subsidiaries. Thermal insulating
     captive use)     89     100     41       43       36       40      ----      ----              coating, vintage exterior finish and self leveling epoxy
     Phthalic                                                                                       floor coating have been launched in few countries.
     Anhydride        36      40      ----     ----    68       71      ----      ----        ix) Technological assistance provided to Licencees.
     Pentae-
     rythritol       916     997    1.16     0.02      ----      ----    3         4




34
Annexure to Directors’ Report
3.   Future plan of action:                                            4.   Expenditure on R & D during the year is as follows:
     Company will continue efforts towards development of new                                                             (Rs. in Millions)
     products/product systems for domestic and international
     markets meeting the requirements of customer needs, society,                                                  2004-05    2003-04
     and continuously improve quality, cost, availability and               a)   Capital                             17.33         3.56
     environment.                                                           b)   Recurring                           96.36        75.89
                                                                                                                    113.69        79.45
                                                                            Total R & D expenditure as a
                                                                            percentage of turnover                   0.59%        0.47%

Technology absorption, adaptation and innovation:
All developments were done indigenously.
Foreign exchange earnings and outgo:

With the entry and direct presence in several international            There is no plan to supply material in the near future to any new
markets the major focus in exports currently is to service the         export markets from India. All the new markets would be serviced
needs of the subsidiaries. Hence the exports are primarily to the      from the overseas subsidiary closest to the market.
overseas subsidiaries and not to distributors and customers. The
                                                                       Details of expenditure in foreign currency have been given
main exported materials are raw materials, resins and tinting
                                                                       separately under Note B-12 in Schedule ‘M’ - Notes to accounts.
colorants. About 20% of exports also include engineering supplies
and marketing material. Going forward, the export growths will
be primarily driven by tinting colorants, where with the focus on
improving the retail presence through introduction of retail tinting
systems, demand for tinting colorants will grow.

                                                                                                       For and on behalf of the Board




Mumbai                                                                                                                Ashwin C. Choksi
11th May, 2005                                                                                                               Chairman




                                                                                                             Asian Paints (India) Ltd.
                                                                                                           annual report 2004-2005            35
     Annexure to Directors’ Report
     Information as per Section 217(2A) read with the Companies (Particulars of Employees) Rules, 1975 and forming part of the
     Directors’ Report dated 11th May, 2005 for the year ended 31st March, 2005.
     Name                        Age      Designation/                                    Remuneration    Qualifications                            Date of   Expe-      Last Employment Held
                                          Nature of Duties                                         Rs.                                      commencement of   rience     Name of the Company, Designation
                                                                                                                                                employment    No. of
                                                                                                                                                               years

     (a) Particulars of employees employed throughout the financial year and who are in receipt of remuneration of not less than Rs. 2,400,000/- in terms of Section 217(2A)(i):
     Shri K. B. S. Anand             49   Vice President - Sales & Marketing                  4,994,195   B.Tech., P.G.D.M.                          01.06.1979   25     ----
     Shri Ashwin C. Choksi           63   Chairman                                            9,857,179   M.Com.                                     01.01.1965   40     ----
     Shri Manish M. Choksi           38   Vice President - Strategic Planning & IT            2,921,363   B.Chem, Engg., MBA                         17.09.1992   14     E.I.Du.Pont De Nemours, Summer Intern
     Shri Ashwin S. Dani             63   Vice Chairman & Managing Director                  10,045,335   B.Sc.(Hons.), B.Sc.(Tech.),M.S.            01.10.1968   37     Interchemical Corpn., Development Chemist
     Shri Jalaj Dani                 35   Vice President - International                      2,939,943   B.S., S.M.                                 18.01.1999   12     Gujarat Organics Ltd., Managing Director
     Shri Vikram Jaisinghani         42   GM - Manufacturing                                  2,844,821   B.E., M.F.M.                               01.09.1999   19     GE Lighting Ltd., General Manager -
                                                                                                                                                                         Materials & Sourcing
     Shri I. K. Jaiswal              46   Regional Vice President                             3,870,261   B.Tech., P.G.D.M.                          03.05.1982   23     ----
     Shri S. S. Kini                 50   Vice President - Supply Chain                       5,348,164   B.Tech., P.G.D.M.                          01.06.1979   25     ----
     Shri Gokul Manjeshwar           50   Financial Controller                                3,318,253   M.Com., M.M.S.                             15.01.1985   26     Price Waterhouse & Co., Assistant Manager
     Shri Jayesh Merchant            47   Vice President - Corporate Finance &                3,827,137   B.Com., A.C.A, A.C.S., L.L.B.              01.11.2002   21     UTV Software Communications,
                                          Company Secretary                                                                                                              Director - Finance
     Shri P. M. Murty                54   President - Decoratives (India)                     6,430,205   B.Sc.(Hons.), P.G.D.M.                     03.05.1971   33     ----
     Shri Vivek Patwardhan           53   Vice President - Human Resources                    3,247,393   B.Sc. (Hons.), M.L.W.                      01.03.1984   31     Herbertson Ltd., Personnel Manager
     Shri V. S. Ram @                54   Chief Executive - Asian PPG Industries Ltd.         6,424,446   B.Tech., P.G.D.M.                          20.05.1974   30     ----
     Shri J. N. Shahani              58   Vice President - Industrial, Penta & Phthalic       5,376,501   B.Chem., Engg.                             01.02.1974   34     Resins & Plastics Pvt. Ltd., Plant Supervisor
     Shri Vivek Subramanian          41   General Manager - Retail Sales                      2,623,799   B.Tech.(Mech.),P.G.D.M.                    11.05.1987   18     ----
     Shri Amit Syngle                38   General Manager - Marketing                         2,583,061   B.E., M.B.A.                               01.06.1990   15     Sea Services, Marketing Incharge
     Shri Abhay A. Vakil             54   Managing Director                                   9,935,262   B.Sc.,B.S.                                 05.08.1974   30     ----

     (b) Particulars of employees employed for the part of the year who were in receipt of remuneration at the rate of not less than Rs. 200,000/- p.m. in terms of Section 217(2A)(ii):
     Shri Rajiv Kumar Garodia        31   Marketing Manager                                     318,272   B.E., P.G.D.M.                             06.06.1996    7     ----
     Shri Nikhil Mathur              37   Finance & Strategic Planning Manager                  218,658   B.Com., CA, P.G.D.B.M.                     02.06.1993   11     M/s. Ray & Ray, Chartered Accountants
     Shri A. V. S. Murthy            67   Vice President - Accounts & Taxation                2,520,283   B.Com.(Hons.), A.I.C.W.A.                  15.04.2002   46     Apar Pvt Ltd., Cost & Budget Manager
     Shri Girish Pradhan             39   Materials Executive                                   216,827   B.Com., P.G.D.M                            03.03.1987   17     ----
     Shri P. Rambabu                 37   General Manager - Systems                             200,168   B.E., P.G.D.M.                             01.06.1990   14     ----
     Shri Mahendra Rawat             45   Manager - Product Development                         237,436   M.Sc.                                      20.07.1996   17     Devidayal (Sales) Pvt.Ltd.- Research Chemist
     Shri Mayur Toshniwal            36   Purchase Manager                                      205,744   B.Tech.(Mech.),P.G.D.M.                    04.06.1992   11     ----

     @     Employee seconded to joint venture company Asian PPG Industries Ltd.

     Notes:
     1. Nature of employment whether contractual or otherwise:
           a.     The employment of Shri Ashwin C. Choksi, Shri Ashwin S. Dani and Shri Abhay A. Vakil is contractual for five years and terminable by six months notice on either side.
           b.     The employment of the remaining persons is contractual and the terms and conditions are subject to the rules and regulations of the Company as in force from time to time.
     2.    Relatives of Directors.
           a.     Names of Directors:
                  Shri Ashwin C. Choksi, Chairman is related to Shri Mahendra C. Choksi, Director of the Company.
                  Shri Ashwin S. Dani,Vice- Chairman & Managing Director is related to Shri Hasit A. Dani, Director of the Company.
                  Shri Abhay A. Vakil, Managing Director is related to Shri Amar A. Vakil, Director of the Company.
           b.     Names of employees:
                  Shri Jalaj A. Dani is related to Shri Ashwin S. Dani, Vice- Chairman & Managing Director and Shri Hasit A. Dani, Director
                  Shri Malav Dani is related to Shri Ashwin S. Dani, Vice- Chairman & Managing Director and Shri Hasit A. Dani, Director
                  Shri Manish M. Choksi is related to Shri Mahendra C. Choksi, Director
                  Ms. Nehal A. Vakil is related to Shri Abhay A. Vakil, Managing Director
                  Ms. Amrita A. Vakil is related to Shri Amar A. Vakil, Director
                  Shri Rupen Choksi is related to Shri Ashwin C. Choksi, Chairman.
           The remuneration of Ms. Nehal A. Vakil, Ms. Amrita A. Vakil and Shri Rupen Choksi was less than the limit prescribed in terms of Section 217(2A) for the year. No remuneration has been
           paid to Shri Malav Dani, pending statutory approvals.
     3.    Remuneration includes, salary, dearness allowance, performance incentive, arrears paid, commission, house rent allowance, leave encashment, conveyance allowance, Company’s contribu-
           tion to provident fund and superannuation fund, medical and leave travel allowance etc., as well as monetary value of perquisites as per Income Tax Rules. It excludes provision for accrued
           leave salary and the Company’s contribution to Gratuity Fund as the same is a lumpsum amount based on actuarial valuation.



                                                                                                                                                                       For and on behalf of the Board


     Mumbai                                                                                                                                                                                   Ashwin C. Choksi
     11th May, 2005                                                                                                                                                                                  Chairman




36
Corporate Governance
Asian Paints’ philosophy has always been to practice the best           BOARD OF DIRECTORS
standards of Corporate Governance for the welfare of                    Composition of Board
stakeholders. The Company lays significant emphasis on the
                                                                        As on 31 March 2005, the Board comprised of twelve Directors,
principles of accountability, integrity and transparency.
                                                                        out of whom, six are promoter-Directors. Three of the six
The Securities and Exchange Board of India (SEBI) has prescribed        promoter-Directors, including the executive Chairman, are
mandatory standards of corporate governance for all companies           whole-time executive Directors, while the other three are
listed on Indian stock exchanges and notified them under Clause         non-executive. The remaining six Directors are non-executive
49 of the listing agreement. This chapter, along with chapters          and independent.
on Management Discussion and Analysis and Additional
                                                                        Number of Board meetings
Shareholders Information, constitutes Asian Paints’ compliance
with Clause 49 of the listing agreement.                                The Asian Paints Board met six times during the year. The Board
                                                                        meetings took place on 11 May 2004, 28 July 2004,
Asian Paints has already adopted a Code of Conduct which
                                                                        27 October 2004, 3 December 2004, 19 January 2005 and
lays down the standards of values, ethics and business principles
                                                                        25 March 2005.
of the Management. Our business strategy and day to day affairs
of the Company are conducted with highest level of compliances,
sincerity and consistency.

Table 1: Details about Asian Paints’ Board of Directors
 Name of Director       Position                      Board meetings       Board        Whether      Directorships   Memberships
                                                      held during the      meetings     attended     in other        in board
                                                      year                 attended     last AGM     companies       committees of
                                                                                                     incorporated    other
                                                                                                     in India        companies*

 Ashwin C. Choksi       Executive Chairman/                    6                6          Yes              2              2(1)
                        Promoter
 Ashwin S. Dani         Executive Vice-Chairman/               6                6          Yes              6              4(2)
                        Managing Director/
                        Promoter
 Abhay A. Vakil         Managing Director/                     6                6          Yes              3              3(-)
                        Promoter
 K. Rajagopalachari @   Non-executive                          6                4          Yes              ---             ---
 Mahendra C. Choksi     Non-executive/Promoter                 6                6          Yes              3              1(-)
 Amar A. Vakil          Non-executive/Promoter                 6                5          No               3               ---
 Hasit A. Dani          Non-executive/Promoter                 6                6          Yes              3               ---
 Manubhai G. Patel #    Non-executive/                         6                5          Yes              2              4(3)
                        Independent
 Tarjani Vakil          Non-executive/                         6                6          Yes              4              4(3)
                        Independent
 Dipankar Basu          Non-executive/                         6                6          Yes              7              7(4)
                        Independent
 Deepak M.              Non-executive/                         6                5          Yes              7              5(2)
 Satwalekar             Independent
 Rajendra A. Shah       Non-executive/                         6                5          Yes              15            10(4)
                        Independent
 Swaminathan            Non-executive/                         6                3          Yes              3              1(-)
 Sivaram                Independent
 Mahendra M. Shah       Non-executive/                         6                6          Yes              4              2(-)
                        Independent

Notes:
* The figures in parenthesis denote the number of chairmanship(s) of board committees in other companies.
@ Mr. K. Rajagopalachari expired on 14 March 2005.
# Mr. Manubhai G. Patel resigned from the board effective 25 March 2005.


                                                                                                           Asian Paints (India) Ltd.
                                                                                                         annual report 2004-2005          37
     Corporate Governance
     Information supplied to the Board                                        Directors with materially significant related party transactions,
                                                                              pecuniary or business relationship with the Company
     The following, inter-alia, is provided to the board as a part of
     the agenda papers well in advance of the board meetings or is            None of the non-executive Directors of Asian Paints have any
     tabled in the course of the Board meetings:                              pecuniary relationships with the Company except late
         annual budgets, operating plans and budgets, capital budgets,        Mr. K. Rajagopalachari who had been appointed as an advisor
                                                                              for a period of five years with effect from 1 June 2000 and
         quarterly, half yearly and annual results of the Company             received a retainer fee of Rs.1,00,000 per month, a Company
         and its operating divisions or business segments,                    car and driver, telephone facilities at home and office, and
         minutes of meetings of the audit committee and other board           provision of medical facilities as applicable to executives of the
         committees,                                                          Company.
         information on recruitment and remuneration of senior                He also drew a monthly pension of Rs.50,737.50 as per
         officers just below the Board level,                                 Company rules. The appointment of late Mr. K. Rajagopalachari
         materially important show cause, demand, prosecution and             had received the approval of the Department of Company Affairs,
         penalty notices,                                                     Ministry of Law, Justice and Company Affairs, Government of
                                                                              India, under Section 309 (1)of the Companies Act,1956 (vide
         fatal or serious accidents or dangerous occurrences,                 6/33/2000-CLVII of 1.11.2000).
         any materially significant effluent or pollution problems,           As required under Accounting Standard 18 (AS-18) transactions
         any materially relevant defaults in financial obligations to         with related parties are furnished under Schedule M of the Notes
         and by the Company or substantial non-payment for goods              to the Accounts. There are no transactions of material nature
         sold by the Company,                                                 with the promoter Directors or their relatives etc., that may have
                                                                              a potential conflict with the interest of the Company.
         any issue which involves possible public or product liability
         claims of a substantial nature,                                      Disclosures have also been received from the Senior Managerial
         details of any joint venture or collaboration agreement,             Personnel relating to the financial transactions in which they or
                                                                              their relatives may have a personal interest. However, none of
         transactions that involve substantial payment towards                these transactions have a potential conflict with the interest of
         goodwill, brand equity or intellectual property,                     the Company at large.
         significant labour problems and their proposed solutions,            Remuneration of Directors
         significant initiatives and developments on the human
                                                                              The executive Chairman and other executive Directors are paid
         resource and industrial relations fronts,
                                                                              remuneration as per their agreements with the Company. These
         sale of a material nature of investments, subsidiaries and           agreements are approved by the Board, shareholders and such
         assets, which are not in the normal course of business,              other authorities as may be necessary. The remuneration structure
         investment of funds of the Company,                                  of the executive Chairman and other executive Directors comprises
                                                                              salary, house rent allowance, commission, perquisites, contribution
         quarterly details of foreign exchange exposure and the steps         to provident/superannuation fund, gratuity and leave travel
         taken by management to limit the risks of adverse exchange           allowance and these are reviewed by the Remuneration Committee
         rate movement,                                                       of the Board before being approved. The non-executive Directors
         status on legal cases,                                               receive commission and sitting fees, except for
                                                                              Mr. K. Rajagopalachari, who in addition, drew remuneration as
         non compliance of any statutory nature of listing requirement; and
                                                                              stated above. Table 2 gives the details of the remuneration package
         proposals for investment, mergers and acquisitions.                  of Directors and their relationship with each other.




38
Corporate Governance
Table 2: Details of the remuneration paid to Directors and their relationships with each other are as follows (in Rs.)
Name of Director         Relationship                     Salary          HRA       Perquisites*      Sitting     Commission           Total
                         with each other                                                                 fees
Ashwin C.Choksi          Brother of Mahendra C.Choksi   18,75,000      7,50,000       26,32,179            ---       46,00,000     98,57,179
Ashwin S.Dani            Father of Hasit A.Dani         18,75,000      7,50,000       28,20,335            ---       46,00,000   1,00,45,335
Abhay A.Vakil            Brother of Amar A.Vakil        18,75,000      7,50,000       27,10,262            ---       46,00,000     99,35,262
K.Rajagopalachari @      ---                                    ---           ---        15,000       60,000          4,00,000    **4,75,000
Mahendra C.Choksi        Brother of Ashwin C.Choksi             ---           ---              ---   1,40,000         4,00,000      5,40,000
Amar A.Vakil             Brother of Abhay A. Vakil              ---           ---              ---    60,000          4,00,000      4,60,000
Hasit Dani               Son of Ashwin S. Dani                  ---           ---              ---   1,30,000         4,00,000      5,30,000
Manubhai G.Patel #       ---                                    ---           ---              ---   1,10,000         4,40,000      5,50,000
Tarjani Vakil            ---                                    ---           ---              ---   1,60,000         4,00,000      5,60,000
Dipankar Basu            ---                                    ---           ---              ---   1,00,000         4,00,000      5,00,000
Deepak M. Satwalekar     ---                                    ---           ---              ---    90,000          4,00,000      4,90,000
Rajendra A.Shah          ---                                    ---           ---              ---    50,000          4,00,000      4,50,000
Swaminathan Sivaram      ---                                    ---           ---              ---    30,000          2,00,000      2,30,000
Mahendra M.Shah          ---                                    ---           ---              ---   1,40,000         4,00,000      5,40,000

Notes :
* Perquisites include company’s contribution to provident and superannuation fund, medical and leave travel allowance etc. as well as monetary
  value of perquisites as per Income Tax rules. Pension and leave encashment, as applicable have been included.
** Includes retainership of Rs.1.25 million and pension of Rs. 0.58 million paid during the year.
@ Mr. K. Rajagopalachari expired on 14 March 2005.
# Mr. Manubhai G. Patel resigned from the board effective 25 March 2005.


The employment of Mr. Ashwin C. Choksi, Mr. Ashwin S. Dani                of India. Ms. Nehal A. Vakil, daughter of Mr. Abhay A. Vakil, is
and Mr. Abhay A. Vakil as executive Directors is contractual              a Finance Executive and joined the Company on 18 January
for five years and can be terminated by six months notice on              1999.The gross remuneration paid to her for 2004-05 is
either side. During 2003-04, the Company renewed the contract             Rs. 739,266/- as per the approval of the members of the Company
with them for a period of five years.                                     and the Government of India.
Six employees are relatives of Directors of Asian Paints. Mr. Jalaj       The Board of Directors at its meeting held on 11th May, 2005,
A. Dani, son of Mr. Ashwin S. Dani, is Vice-President-International       based on the recommendation of the Remuneration Committee,
and joined the Company on 18 January 1999. The gross                      revised the service conditions of Mr. Jalaj Dani, Mr. Manish
remuneration paid to him for 2004-05 is Rs.2,939,943/- as per             Choksi and Ms. Nehal Vakil, subject to the approval of the
the approval of the members of the Company and the Government             shareholders at the general meeting and the Central Govt.
of India. Mr. Manish M. Choksi, son of Mr. Mahendra C. Choksi,            thereafter. Necessary resolutions for the revision of service
is Vice-President - Strategic Planning and Information Technology         conditions, including remuneration of the above three Executives
and joined the Company on 17 September 1992.The gross                     as well as the Explanatory Statement u/s. 173(2) of the
remuneration paid to him for 2004-05 is Rs. 2,921,363/- as per            Companies Act, 1956 are part of the Notice convening the
the approval of the members of the Company and the Government             Annual General Meeting of the shareholders.




                                                                                                                   Asian Paints (India) Ltd.
                                                                                                                 annual report 2004-2005         39
     Corporate Governance
     Ms. Amrita A. Vakil, daughter of Mr. Amar A. Vakil, HR                Reviewing the internal investigations by the internal auditors
     Executive, joined the Company on 6 January 2003 and left the          into matters where there is suspected fraud or irregularity
     Company on 31 March 2005.The gross remuneration paid to               or failure of internal control systems of a material nature
     her for 2004-05 was Rs. 354,161/- as per the approval of the          and reporting the matter to the Board.
     members of the Company. Mr. Rupen Choksi, son of Mr. Ashwin           Reviewing reports furnished by the internal auditors and statutory
     Choksi, joined the Company on 8 September 2003 and left the           auditors and ensuring suitable follow up thereon.
     Company on 3 November 2004 as an Executive Trainee. The               Reviewing the related party transactions.
     gross remuneration paid to him for 2004-05 was Rs. 331,752/-
                                                                       The audit committee met six times during the year on 10 May
     as per the approval of the members of the Company.
                                                                       2004, 27 July 2004, 13 September 2004, 12 October 2004,
     Mr. Malav Dani, son of Mr. Ashwin S. Dani, is Manager - Quality   26 October 2004, and 18 January 2005. The details of number
     Support in the Corporate Centre of the Company and joined the     of meetings held and attendance record of members are given
     Company on 21 February 2005. His appointment and                  in table 3. The Executive Chairman of the Company, Vice
     remuneration is subject to approval by the shareholders in the    President - Corporate Finance & Company Secretary, Financial
     forthcoming annual general meeting and the Central Government.    Controller, Accounts Manager and Corporate Audit Manager
     Committees of the Board                                           also attend audit committee meetings.
     Audit Committee                                                   Table 3: Details about audit committee meetings
     The Audit Committee comprised of Mr. Manubhai G. Patel             Name of Director                 No. of                  No. of
     (Chairman and independent Director), Mr. Mahendra C. Choksi                                         committee               committee
     (Non executive Director), Ms. Tarjani Vakil (independent                                            meetings held           meetings
                                                                                                                                 attended
     Director), Mr. Mahendra M. Shah (independent Director) and
     Mr. Hasit Dani (Non executive Director). The audit committee       Manubhai G. Patel #                       6                    6
     was reconstituted on 25 March 2005 and comprises of three          Mahendra C. Choksi                        6                    6
     non-executive independent Directors. The members of the            Tarjani Vakil                             6                    6
     Committee are Ms. Tarjani Vakil (Chairperson and independent       Mahendra M. Shah                          6                    6
     Director), Mr. Mahendra M. Shah (independent Director),            Hasit Dani                                6                    6
     Dipankar Basu (independent Director). All the members of the
                                                                       # Mr. Manubhai G. Patel resigned from the board, effective 25 March 2005.
     committee possess financial and accounting knowledge.
                                                                       The composition, procedures, powers, role and functions of
     The terms of reference of the Audit Committee include the
                                                                       the audit committee constituted by the Company comply with
     following:
                                                                       requirements of the Companies Act, 1956 as well as those of
        Overseeing the Company’s financial reporting process and       clause 49 of the listing agreement.
        the disclosure of its financial information.
                                                                       Remuneration Committee
        Recommending appointment and removal of the statutory
                                                                       Due to the sad demise of Mr. K. Rajagopalchari, Director of
        auditor, fixing of audit fees and approving payments for
                                                                       the Company, the Remuneration Committee of Directors has
        any other service.
                                                                       been reconstituted by the Board of Directors at its meeting held
        Reviewing with management quarterly, half-yearly and
                                                                       on 25 March 2005. The remuneration committee comprises of
        annual financial statements with primary focus on
                                                                       three non-executive independent Directors. The members of the
        accounting policies and practices, compliance with
                                                                       Committee are Mr. Dipankar Basu (Chairman and independent
        accounting standards and stock exchange and legal
                                                                       Director), Ms. Tarjani Vakil (independent Director) and
        requirements concerning financial statements.
                                                                       Mr. Deepak Satwalekar (independent Director). The details of
        Reviewing adequacy of internal control systems and the         number of meetings held and attendance record of members
        internal audit function.                                       are given in table 4.
        Reviewing the Company’s financial and risk management
        policies.




40
Corporate Governance
Table 4: Details about remuneration committee meetings                 of the number of meetings held and the attendance record of
                                                                       the members are given in table 5 and 6.
Name of Director                No.of                No.of
                                Committee            committee         Table 5: Details about shareholder/investor grievance
                                meetings held        meetings          committee meeting before reconstitution
                                                     attended
                                                                        Name of Director                No. of              No. of
Dipankar Basu                          4                4                                               committee           committee
Ms.Tarjani Vakil                       4                4                                               meetings held       meetings
Deepak Satwalekar                      4                4                                                                   attended
K. Rajagopalchari @                    4                1               K. Rajagopalachari @                    1               1
@ Mr. K. Rajagopalachari expired on 14 March 2005.                      Abhay A. Vakil                          1               1
The scope of the Remuneration Committee is as follows:                  Mahendra C. Choksi                      1               1

    To review and recommend to the Board, the salaries,                 Mahendra M. Shah                        1               1
    commission, other benefits, service agreements and                 @ Mr. K. Rajagopalachari expired on 14 March 2005.

    employment conditions of Executive Directors. The Committee        Table 6: Details about shareholder/investor grievance
    considers these based on Company performance as well as            committee meeting after its reconstitution on 25 March 2005
    individual performance vis-a-vis agreed goals, taking into
                                                                        Name of Director                No. of              No. of
    account prevailing practices in the corporate world.                                                committee           committee
    To review the remuneration policies and practices relating                                          meetings held       meetings
                                                                                                                            attended
    to senior management of the Company.
    To approve the selection and appointment of relatives of            Mahendra M. Shah                        1               1
    Directors as required by section 314 of the Companies Act,          Abhay A. Vakil                          1               1
    1956.                                                               Mahendra C. Choksi                      1               1
                                                                        Hasit Dani                              1               1
Shareholder/Investor Grievance Committee
The Company has constituted a Shareholder/Investor Grievance           MANAGEMENT
Committee of the Board of Directors to specifically look into          Management Discussion and Analysis
complaints received from the shareholders of the Company.              This annual report has a detailed section on Management
The Committee also oversees the performance of the Registrar           Discussion and Analysis.
and Transfer Agent of the Company and recommends measures
                                                                       Disclosures by management
for overall improvement in the quality of services to the investors.
The Board of Directors on 25 March 2005 reconstituted the                   The Company has complied with all requirements of the
Shareholders/ Investor Grievance Committee due to the sad                   Listing Agreement entered into with The Stock Exchange,
demise of Mr. K. Rajagopalchari, Director of the Company.                   Mumbai and The National Stock Exchange of India Ltd. as
The members of the Company’s newly constituted Shareholders/                well as SEBI regulations and guidelines. No penalties were
Investor Grievance Committee are Mr. Mahendra M. Shah                       imposed or strictures were passed against the Company
(Chairman and non-executive independent Director), Mr. Abhay                with regard to the capital market in the last three years.
A. Vakil (Managing Director), Mr. Mahendra C. Choksi (non-                  As required by SEBI (Prohibition of Insider Trading)
executive Director) and Mr. Hasit Dani (non- executive Director).           Regulations, 1992, the Company has adopted a policy
Mr. Jayesh Merchant, Vice President - Corporate Finance &                   for Corporate Disclosure Practices for prevention of insider
Company Secretary, is the compliance officer.                               trading with effect from June 2002. Mr. Jayesh Merchant,
The committee met twice during the year on 27 July 2004 and                 Vice President - Corporate Finance & Company Secretary
30 March 2005 to review investor grievances and the details                 has been appointed as the Compliance Officer.




                                                                                                              Asian Paints (India) Ltd.
                                                                                                            annual report 2004-2005        41
     Corporate Governance
     SHAREHOLDERS                                                          Presently he is the Managing Director of HDFC Standard Life
     Disclosures regarding re-appointment of Directors                     Insurance Company. He has been a consultant to the World
                                                                           Bank, the Asian Development Bank, United States Agency for
     As per the Companies Act, 1956, at least two-thirds of the
                                                                           International Development (USAID) and the United Nations
     Board should consist of retiring directors. Of these, one-third
                                                                           Centre for Human Settlement (HABITAT). He is on the Board of
     are required to retire every year. Nine out of the twelve directors
                                                                           Directors of several companies. He was involved in policy work
     of the Company are retiring directors.
                                                                           as a member of the Steering Committee on Urban Infrastructure
     Ms. Tarjani Vakil (68) completed her post-graduation from             and Housing for the Ninth Five Year Plan of the Govt. of India
     Mumbai University. She has extensive experience in                    and is actively involved in CII. He has been a Director in the
     international trade finance and export marketing strategy. She        Company since 30 May 2000.
     held the position of Chairperson of the Export-Import Bank of
                                                                           Information required under Clause 49 VI A of the listing
     India. She has been on the Board of Directors of IDBI, ECGC,
                                                                           agreement with The Stock Exchange, Mumbai (relating to
     STCI, BHEL, LIC and GIC. She is also on the local advisory
                                                                           Corporate Governance) with respect to the Directors retiring
     Board of ABN-Amro Bank. She has been a consultant to
                                                                           by rotation and being eligible and seeking re-appointment is
     developing countries for setting up export credit agencies. She
                                                                           given in notes to the notice convening the meeting.
     is a Managing Committee Member in Indian Merchant
     Chamber. She is a Trustee in General Electoral Trust and              Means of communication
     Qimpro Fundation. She is on the Board of Directors of Indian          The financial results of the Company are published in widely
     Rayon & Industries Ltd., Mahindra Intertrade Ltd., DSP Merrill        circulated newspapers such as the Business Standard and
     Lynch Trustee Company Pvt. Ltd., i-flex Solutions Ltd., Alkyl         Loksatta. The results are also displayed on the Company’s
     Amines Chemicals Ltd. She has been a Director in the Company          website www.asianpaints.com. The Company’s official news
     since 1 December 1998.                                                releases and presentations made to institutional investors and
     Shri Dipankar Basu (69) holds a Masters degree in Economics           analysts are available on the Company’s website. Pursuant to
     from the Delhi University. He is a former Chairman of State Bank      clause 51 of the listing agreement, financial information such
     of India. He is on the Boards of various Companies. He has spent      as the annual and quarterly financial statements, shareholding
     his entire professional career with State Bank of India. He           pattern and segment-wise results are also available on the SEBI
     spearheaded its foray into investment banking and was responsible     web-site www.sebiedifar.nic.in.
     for setting up SBI Capital Markets and SBI Mutual Fund.               Investor grievances
     He is a Director on the Boards of Securities Trading Corporation      As mentioned earlier, the Company has constituted a
     of India Ltd., Rain Calcining Ltd., Chambal Fertilizers and           Shareholder/Investor Grievance Committee for redressing
     Chemicals Ltd., Peerless General Finance and Investment Co.           shareholder and investor complaints. The status on complaints
     Ltd., iGate Global Solutions Ltd., Deepak Fertilizers and             is reported to the Board of Directors as an agenda item.
     Petrochemicals Corporation Ltd., Sun F&C Asset Management
                                                                           Share transfer
     (India) Pvt. Ltd., SBI Cards & Payment Services Pvt. Ltd., and
     Saregama India Ltd. He has been a Director in the Company             The Board of Directors has delegated the power to attend to
     since 15 April 2000.                                                  share transfer approvals to a share transfer committee. During
                                                                           the year the Share Transfer Committee was reconstituted. As
     Deepak Satwalekar (56) is a B.Tech from the Indian Institute
                                                                           on 31 March 2005, the committee comprised Mr. Abhay A.
     of Technology (IIT), Mumbai and completed his post graduation
                                                                           Vakil (Managing Director of Asian Paints), Mr. Ashwin S. Dani
     in business administration from the American University,
                                                                           (executive Vice-Chairman and Managing Director of Asian
     Washington DC. He was appointed Deputy Managing Director
                                                                           Paints) and Mr. Mahendra C. Choksi (non-executive Director).
     of HDFC in 1990 and became Managing Director in 1993.
                                                                           The committee ordinarily meets once every fortnight.




42
Corporate Governance
General body meetings                                                    Details regarding postal ballot to be passed for change of name
Location and time of the AGMs and EGMs held in the last three years      from Asian Paints (India) Limited to Asian Paints Limited during
                                                                         the financial year 2005-06
 Year        Location                  Meetings   Date      Time
                                                                         Notice under Section 192A of the Companies Act, 1956 along
 2003-2004 Yashwantrao Chavan          AGM        28 June   3:00 p.m.
                                                                         with postal ballot form in relation to a Special Resolution under
           Pratisthan Auditorium,                 2004
           Y. B. Chavan Centre,
                                                                         Section 21 of the Companies Act, 1956 seeking shareholders’
           General Jagannath Bhosle                                      consent for change of name of the Company from Asian Paints
           Marg, Next to Sachivalaya                                     (India) Limited to Asian Paints Limited was posted on
           Gymkhana,                                                     11 April 2005. The Board in its meeting dated 25 March 2005,
           Mumbai - 400 021.                                             has appointed Shri H.N. Shah, Chartered Accountant as
 2002-2003 Patkar Hall,                AGM        18 July   10:30 a.m.   Scrutinizer for conducting the postal ballot. The Company has
           Nathibai Thackersey Road,              2003
                                                                         fixed 14 May 2005 as the last date by which the postal ballot
           New Marine Lines,
           Mumbai 400 020.
                                                                         form duly completed and signed should reach the Scrutinizer.
                                                                         The declaration of result of postal ballot is scheduled on
 2002-2003 Patkar Hall,                EGM        18 July   1:00 p.m.
           Nathibai Thackersey Road,              2003                   30 May 2005.
           New Marine Lines,
           Mumbai 400 020.
 2001-2002 Patkar Hall,                AGM        26 July   3:00 p.m.
           Nathibai Thackersey Road,              2002
             New Marine Lines,
             Mumbai 400 020.
No special resolutions were put through postal ballot in 2004-05.




                                                                                                             Asian Paints (India) Ltd.
                                                                                                           annual report 2004-2005           43
     Additional Shareholders’ Information
     ANNUAL GENERAL MEETING                                             Table 2: High, low and volumes of Asian Paints’ shares for
     Date:  Monday, 27 June, 2005.                                      2004-05
     Venue: Patkar Hall, Nathibai Thackersey Road, New Marine                                                 High                          Low                              Volume
            Lines, Mumbai 400 020.                                                                         (Rupees)                     (Rupees)                       (No.of shares)
     Time:  15:00 hours                                                 April 04                                  323.75                   299.00                                 1698638
     Financial calendar                                                 May 04                                    315.95                   245.00                                  715429
     Financial year : 1 April to 31 March                               June 04                                   317.50                   282.25                                  282876
     For the year ended 31 March 2005, results were announced           July 04                                   323.75                   295.10                                  132987
     on:                                                                August 04                                 326.60                   307.55                                  160987
         28 July 2004 : First quarter                                   September 04                              338.00                   304.00                                  132973
         27 October 2004 : Half yearly                                  October 04                                325.00                   293.00                                  370521
         19 January 2005 : Third quarter                                November 04                               306.00                   289.00                                  718266
         11 May 2005 : Fourth quarter and annual.                       December 04                               330.00                   295.60                                 1546289
     For the year ending 31 March 2006, results will be announced:      January 05                                360.00                   302.60                                  492757
         on or around 27 July 2005: First quarter                       February 05                               363.00                   341.30                                  370701
         on or around 26 October 2005: Half yearly                      March 05                                  395.00                   350.05                                  926187
         on or around 31 January 2006: Third quarter                    Note: High and low are in rupees per traded share. Volume
                                                                               is the total monthly volume of trade in Asian Paints
           on or around 11 May 2006: Fourth quarter and annual.                shares on BSE.
     Book Closure                                                       Chart A shows the comparison of your Company's share price
     The dates of book closure are from 24 June 2005 to                 movement vis-à-vis the movement of the BSE Sensex:
     27 June 2005, inclusive of both days.                              Chart A: Asian Paints’ share performance versus the sensex
     Dividend Date                                                      for 2004-05
     An interim dividend of Rs. 4.00 per share (40 per cent dividend)
     was declared on 27 October 2004 and paid on 2 November             250

     2004. A final dividend of Rs. 5.50 (55 per cent dividend) per
     share has been recommended on 11 May 2005 and, subject             210
     to approval from the shareholders at the AGM, will be paid on
     or after 27 June 2005.
                                                                        170
     Listing
     The Company’s shares are listed on The Stock Exchange,
     Mumbai and the National Stock Exchange of India Limited            130
                                                                                                                                               BSE Sensex
     (NSE). The stock exchange codes assigned to your Company's
     shares at these stock exchanges are given in table 1.               90
                                                                                                                                               Asian Paints
     Table 1: Stock exchange codes
        Stock exchange                Code                               50
                                                                                                                                      Oct-04
                                                                                                                             Sep-04




                                                                                                                                                              Dec-04




                                                                                                                                                                                            Mar-05
                                                                                                                                                                         Jan-05
                                                                                                                                                   Nov-04




                                                                                                                                                                                   Feb-05
                                                                                                Jun-04

                                                                                                         Jul-04
                                                                                       May-04




                                                                                                                    Aug-04
                                                                              Apr-04




        BSE                           500820
        NSE                           ASIANPAINT                        Note: Both Asian Paints share prices and the BSE Sensex have been
                                                                        indexed to 100 as on 1 April 2004.
     Stock Data
     Table 2 gives the monthly high and low prices and volumes of       Distribution of Shareholder holdings
     your Company's shares at The Stock Exchange, Mumbai (BSE)          Table 3 and 4 give the distribution pattern of shareholding of
     for the year ended 31 March 2005.                                  your Company as on 31 March 2005 by ownership and size
                                                                        class respectively.




44
Additional Shareholders’ Information
Table 3: Distribution of shareholding by ownership                      Table 5: Number of shares in physical and demat form as on
                                   No. of shares         % of Shares    31 March 2005
                                            held                held                            No. of shares     Percentage of total
 Directors, relatives and                                                                                                    shares
 associates                          41111965                42.86      Physical segment           34962585                     36.45
 Other Directors and their                                              Demat segment              60957194                     63.55
 relatives                                   2923              0.00
                                                                        Total                      95919779                    100.00
 Individuals                         16790464                17.51
 Domestic companies                    843881                  0.88     Outstanding GDRs/ADRs/Warrants/Convertible Instruments
 Financial institutions              12451144                12.98      and their impact on equity
 Mutual Funds and Banks               2261262                  2.36     Not applicable.

 FIIs and OCBs                       20287955                21.15
                                                                        Details of public funding obtained in the last three years
 Non-Resident Individuals             2170185                  2.26
                                                                        Your Company has not obtained any public funding in the last
 Total                               95919779               100.00      three years.

                                                                        Registrar & Transfer Agent
Table 4: Distribution of shareholding by number of shares held
                                                                        Sharepro Services (India) Pvt. Ltd. is the Registrar & Transfer
 No. of equity         No. of         % of      No. of     % of share
                                                                        Agent of the Company.
 shares held     shareholders shareholders      shares       holding
                                                                        Shareholders, beneficial owners and depository participants
 1-100                    23480     47.21      721950           0.75    (DPs) are requested to send/deliver the documents/
 101-200                   6017     12.10      892034           0.93    correspondence relating to the Company's share transfer activity
                                                                        etc. to Sharepro Services (India) Pvt. Ltd., Registrar and Share
 201-500                  10783     21.68     3844814           4.01
                                                                        Transfer Agent of the Company at the following addresses:
 501-2000                  7939     15.96     7506986           7.83
 2001-5000                  927      1.86     2949074           3.08    SHAREPRO SERVICES (INDIA) PVT. LTD.
 5001-10000                 235      0.47     1710082           1.78    Unit: Asian Paints (India) Ltd.
 10001 and                                                              Satam Estate, 3rd Floor, Above Bank of Baroda,
                                                                        Cardinal Gracious Road, Chakala,
 above                      358      0.72 78294839             81.62    Andheri (E), Mumbai 400 099.
 Total                    49739    100.00 95919779            100.00    Tel.No. 2821 5168, 2832 9828,
                                                                        2821 5991,2834 7719, 2834 8218
De-materialisation of shares                                            Fax No. 2837 5646
The shareholders have the option to hold Asian Paints’ shares           Email: sharepro@vsnl.com
in demat form through the National Securities Depository Limited
(NSDL) or Central Depository Securities Limited (CDSL). The
                                                                        SHAREPRO SERVICES (INDIA) PVT. LTD.
ISIN number allocated to Asian Paints by NSDL and CDSL is
INE021A01018.                                                           Unit: Asian Paints (India) Ltd.
                                                                        912, Raheja Centre, Free Press Journal Road,
At present, 63.55 per cent of the Company’s shares are held             Nariman Point, Mumbai 400 021.
in electronic form. Table 5 gives the break up of shares in             Tel.No.: 2288 1568, 2288 1569,
physical and demat form:                                                2282 5163, 2288 4527,
                                                                        Fax No. 2282 5484
                                                                        Email: sharepro_services@roltanet.com




                                                                                                           Asian Paints (India) Ltd.
                                                                                                         annual report 2004-2005           45
     Additional Shareholders’ Information
     For the benefit of shareholders, documents will also continue        Table 6: Dates of unclaimed dividend to be transferred to
     to be accepted at the following office of the Company:               Investor Education & Protection Fund (IEPF) u/s 205C.*

     ASIAN PAINTS (INDIA) LTD.                                            Year of Dividend          Date of Declaration   Date of Transfer
                                                                                                                                    to IEPF
     Asian Paints House
     6A Shantinagar, Santacruz (E)                                        1997-98 (Final)                  6 Aug 1998         5 Sept 2005
     Mumbai - 400 055                                                     1998-99 (Interim)               28 Oct 1998       27 Nov 2005
     Email: investor.relations@asianpaints.com                            1998-99 (Final)                  15 Jul 1999      14 Aug 2006
     Members are requested to quote their e-mail address, telephone       1999-2000 (1st Interim)         29 Oct 1999       28 Nov 2006
     number and full address for prompt reply to their                    1999-2000                      30 Mar 2000         29 Apr 2007
     communication.                                                       (2nd Interim/Final)
     Website (www.asianpaints.com)                                        2000-2001 (Interim)             23 Oct 2000       22 Nov 2007
     The Company’s website provides for the benefit of shareholders,      2000-2001 (Final)              28 Aug 2001         27 Sep 2008
     information on topics such as transfer and transmission of
                                                                          2001-2002 (Interim)             30 Oct 2001       29 Nov 2008
     shares, equity history, dematerialisation, nomination, change
     of address, loss of share certificates and the Company’s             2001-2002 (Final)                26 Jul 2002      25 Aug 2009
     performance and dividend policy.                                     2002-2003 (Interim)             23 Oct 2002       22 Nov 2009
     Electronic Clearance Scheme (ECS) for Dividend                       2002-2003 (Final)                18 Jul 2003      17 Aug 2010
     Your Company provides shareholders an option to receive              2003-2004 (Interim)             30 Oct 2003       29 Nov 2010
     dividends through the ECS facility. To avoid risk of loss/
                                                                          2003-2004 (Final)               28 Jun 2004        27 July 2011
     interception of dividend warrants in postal transit and/or
     fraudulent encashment, shareholders are requested to avail the       2004-2005 (Interim)             27 Oct 2004       26 Nov 2011
     ECS facility — where dividends are directly credited in electronic   *within 30 days the dividend account to be transferred to
     form to their respective bank accounts. This also ensures faster     unclaimed dividend account and thereafter, from that date it
     credit of dividend. Shareholders who desire receipt of their         should be transferred after seven years to IEPF.
     dividend through ECS can obtain the application form from            Number and nature of complaints
     the office of the Registrar and Transfer agent.
                                                                          Your Company received 62 complaints from its shareholders
     Shareholders are requested to update their bank account details      during 2004-05. Details are given in table 7.
     with their respective DPs. This would enable the Company to
                                                                          Table 7: Details of complaints received
     service its investors better.
     Shareholders located in places where ECS facility is not              A. Type of complaints
     available may submit their bank details. This will enable the         Non receipt of shares                                      20
     Company to incorporate this information on dividend warrants          Non receipt of dividend warrant                            34
     to minimise the risk of fraudulent encashment.
                                                                           Others                                                       8
     In terms of Sections 205A and 205C of the Companies Act,
                                                                           Total A                                                    62
     1956, the Company is required to transfer the amount of
     dividend remaining unclaimed for a period of seven years from         B. Complaints received through
     the date of transfer, to the unpaid dividend account with the         SEBI                                                         9
     Investor Education and Protection Fund. Accordingly, in the           Stock Exchanges                                              1
     year 2005 the Company would be transferring the final
                                                                           Department of Company Affairs                               ---
     dividend for the year 1997-1998 and the Interim Dividend for
     the year 1998-1999 to the Investor Education and Protection           Directly from shareholders                                 52
     Fund on 5 September 2005 and 27 November 2005                         Total B                                                    62
     respectively. Shareholders are requested to ensure that they
     claim the dividend(s) from the Company before transfer to the
     Investor Education and Protection Fund.




46
All the above complaints were attended to immediately. Your
Company endeavours to reply to all complaints received from
its shareholders within a period of two days. As on date, only
those cases, which are constrained by dispute or legal
proceedings or court orders, are pending.

Plant locations
Paint Plants:
Lal Bahadur Shastri Marg,
Bhandup, Mumbai 400 078, Maharashtra.

Plot No. 2602, GIDC Industrial Area,
Ankleshwar 393 002, Gujarat.

Plot Nos. 50-55, Industrial Development Area,
Phase II, Patancheru 502 309
Dist. Medak, Andhra Pradesh.

A-1, UPSIDC Industrial Area, Kasna - II,
Kasna Village, Tehsil Sikandarabad,
Dist. Bulandshahr 203 207, Uttar Pradesh.

SIPCOT Industrial Park,
Plot No. E6- F13,
Sriperumbudur 602 105,
Kancheepuram District, TamilNadu.

Phthalic Plant:
Plot No.2702, GIDC Industrial Area,
Ankleshwar 393 002, Gujarat.

Penta Plant:
B5-B10, Sipcot Industrial Complex,
Cuddalore 607 005, Tamil Nadu.

Registered Office:
Asian Paints (India) Ltd.,
6A, Shantinagar, Santacruz (East),
Mumbai 400 055.
Tel: +91-(0)22-5695 8000
Fax: +91-(0)22-5695 8888




                                                                   Asian Paints (India) Ltd.
                                                                 annual report 2004-2005       47
     Auditors’ Report on Corporate Governance to the members of Asian Paints (India) Limited
     We have examined the compliance of conditions of Corporate        We state that no investor grievances are pending for a period
     Governance by Asian Paints (India) Limited for the year ended     exceeding one month against the Company as per the records
     31 March, 2005 as stipulated in clause 49 of the Listing          maintained by the Shareholders/Investors Grievance Committee.
     Agreement entered into with the stock exchanges.
                                                                       We further state that such compliance is neither an assurance
     The compliance of conditions of Corporate Governance is the       as to the future viability of the Company nor the efficiency or
     responsibility of the management. Our examination was limited     effectiveness with which the management has conducted the
     to procedures and implementation thereof, adopted by the          affairs of the Company.
     Company for ensuring the compliance of the conditions of
     Corporate Governance. It is neither an audit nor an expression
                                                                                                                     For Shah & Co.
     of opinion on the financial statements of the Company.
                                                                                                              Chartered Accountants
     In our opinion and to the best of our information and according
     to the explanations given to us, and the representations made
     by the directors and the management, we certify that the          Mumbai                                           H. N. Shah
     Company has complied with the conditions of Corporate             11th May, 2005                                       Partner
     Governance as stipulated in the above mentioned Listing                                                  Membership No. 8152
     Agreement.




48
Auditors’ Report                          To the members of Asian Paints (India) Limited

We have audited the attached Balance Sheet of ASIAN PAINTS            (c)   The Balance Sheet, the Profit and Loss Account and the
(INDIA) LIMITED as at 31st March 2005, and also the Profit and              Cash Flow Statement referred to in this report are in
Loss Account and the cash flow statement of the Company for                 agreement with the books of account and with the audited
the year ended on that date, annexed thereto, incorporating                 accounts of Penta Division.
therein accounts of Penta Division audited by Branch Auditors.        (d)   In our opinion, the Balance Sheet, the Profit and Loss
These financial statements are the responsibility of the Company’s          Account and the Cash Flow Statement dealt with by this
management. Our responsibility is to express an opinion on                  report comply with the Accounting Standards referred to
these financial statements based on our audit.                              in Section 211(3C) of Companies Act, 1956.
We conducted our audit in accordance with auditing standards          (e)   On the basis of the written representations received from
generally accepted in India. Those Standards require that we                the directors, and taken on record by the Board of Directors,
plan and perform the audit to obtain reasonable assurance about             we report that none of the directors is disqualified as on
whether the financial statements are free of material misstatement.         31st March 2005 from being appointed as a director in
An audit includes examining, on a test basis, evidence supporting           terms of clause (g) of sub-section (1) of section 274 of the
the amounts and disclosures in the financial statements. An audit           Companies Act, 1956.
also includes assessing the accounting principles used and
                                                                      (f)   In our opinion and as per the information and according
significant estimates made by management, as well as evaluating
                                                                            to the explanations given to us, the said Balance Sheet,
the overall financial statement presentation. We believe that our
                                                                            Profit and Loss Account and the Cash Flow Statement read
audit provides a reasonable basis of our opinion.
                                                                            together with the notes thereon, give the information
As required by the Companies (Auditor’s Report) Order, 2003,                required by the Companies Act, 1956, in the manner so
issued by the Central Government of India in terms of sub-section           required and give a true and fair view in conformity with
(4A) of Section 227 of the Companies Act, 1956, we enclose in               the accounting principles generally accepted in India:
the Annexure a statement on the matters specified in paragraph
                                                                            (i)    in the case of the Balance Sheet, of the state of affairs
4 and 5 of the said order to the extent applicable.
                                                                                   of the Company as on 31st March 2005;
Further to our comments in the Annexure referred to in paragraph
                                                                            (ii)   in the case of the Profit and Loss Account, of the profit
3 above, we state that:
                                                                                   of the Company for the year ended on that date; and
(a)   We have obtained all the information and explanations,
                                                                            (iii) in the case of the Cash Flow Statement, of the cash
      which to the best of our knowledge and belief were
                                                                                  flows for the year ended on that date.
      necessary for the purpose of our audit.
                                                                                                                         For Shah & Co.
(b)   In our opinion proper books of account as required by law
                                                                                                                  Chartered Accountants
      have been kept by the Company so far as appears from
      our examination of those books. The Branch Auditor’s
                                                                                                                            H. N. Shah
      Report of Penta Division has been forwarded to us and has
                                                                      Mumbai                                                    Partner
      been appropriately dealt with.
                                                                      11th May, 2005                              Membership No. 8152




                                                                                                             Asian Paints (India) Ltd.
                                                                                                           annual report 2004-2005             49
     Annexure                  Referred to in paragraph 3 of the Auditors’ Report to the members of Asian Paints (India)
                               Limited for the year ended 31st March 2005

     1.   (a)   The Company has maintained proper records showing                     under Section 301 of the Companies Act, 1956 have
                full particulars including quantitative details and                   been made at prices which are reasonable having
                location of the Fixed Assets.                                         regard to the prevailing market prices.
          (b)   There is a regular program of physical verification,     6.    In our opinion and according to the information and
                which in our opinion is reasonable, having regard              explanations given to us, the Company has complied
                to the size of the Company and the nature of fixed             with the directives issued by the Reserve Bank of India
                assets. No material discrepancies have been noticed            and the provisions of Section 58A and 58AA or any
                in respect of the assets physically verified during            other relevant provisions of the Companies Act, 1956
                the year.                                                      and the rules framed there under.
          (c)   The Company has not disposed off substantial part of     7.    In our opinion, the Company has an internal audit system
                fixed assets during the year.                                  commensurate with the size and nature of its business.
     2.   (a)   Inventories have been physically verified during the     8.    We have broadly reviewed the books of accounts and
                year by the management. In our opinion, the                    other records maintained by the Company in respect of
                frequency of verification is reasonable.                       resins where pursuant to the rules made by the Central
          (b)   The procedures of physical verification of stocks              Government, the maintenance of cost records have been
                followed by the management are adequate in                     prescribed under Section 209(1)(d) of the Companies
                relation to the size of the Company and the nature             Act, 1956. We are of the opinion that prima facie the
                of its business.                                               prescribed accounts and records have been maintained.
          (c)   The Company is maintaining proper records of             9.    (a)    The Company is regular in depositing undisputed
                inventory. The discrepancies noticed on verification                  statutory dues including Provident Fund, Investor
                between the physical stocks and book records were                     Education and Protection Fund, Employees’ State
                not material and have been properly dealt with in                     Insurance, Income Tax, Sales Tax, Wealth Tax,
                the books of account.                                                 Service Tax, Custom Duty, Excise Duty, cess and
                                                                                      other statutory dues with the appropriate authorities.
     3.   (a)   The Company has not accepted any loans during
                the year from the parties covered in the register              (b)    Following dues are not deposited on account of
                maintained under section 301 of the Companies                         disputes pending at various forums.
                Act, 1956.                                               Name of       Nature        Financial          Amount      Forum where
                                                                         of the        of dues       Year               (Rs. in     dispute is
                In view of clause 4 (iii)(a) of the Companies            Statute                                        Millions)   pending
                (Auditor’s Report) Order, 2003, clause 4 (iii)(b, c &    Sales Tax     Assessment    F.Y.1993-94 to     47.08       First Appellate level
                d) are not applicable to the Company.                                  Dues          F.Y.1995-96 and
                                                                                                     F.Y.1997-98 to
          (b)   The Company has not granted any loans during the
                                                                                                     F.Y. 2002-03
                year to the parties covered in the register maintained                               F.Y. 1995-96 and   7.82        Second Appellate
                under section 301 of the Companies Act, 1956.                                        F.Y. 1998-99 to                level
                                                                                                     F.Y. 2001-02
                In view of clause 4 (iii)(e) of the Companies
                                                                                                     F.Y. 1991-92,      17.19       Tribunal
                (Auditor’s Report) Order, 2003, clause 4 (iii)(f & g)                                F.Y.1993-94 to
                are not applicable to the Company.                                                   F.Y.1996-97 and
                                                                                                     F.Y. 2000-01 to
     4.   In our opinion, and according to the information and
                                                                                                     2004-05
          explanations given to us, there are adequate internal                        Total (A)                        72.09
          control system commensurate with the size of the Company       Excise
          and the nature of its business with regard to purchase of      Central Excise Dispute      F.Y. 2004-05       0.21        Adjudication level
          stores, raw materials including components, packing            Act 1944      relating to
          materials, plant and machinery, equipment and other assets                   Cenvat
                                                                                       Credit
          and with regard to sale of goods and services. There is no
                                                                                                     F.Y.1986-87 to     8.48        First Appellate
          major weakness in the internal control procedures.                                         F.Y.1990-91,
     5.   (a)   The particulars of all contracts and arrangements                                    F.Y.1992-93 to
                                                                                                     F.Y.1995-96 and
                referred to in section 301 of the Companies Act,
                                                                                                     F.Y.1997-98 to
                1956 have been properly entered in the register                                      1999-2000
                maintained under section 301 of the Act.                                             F.Y.1993-94,       4.02        Second Appellate
                                                                                                     F.Y.1996-97 to
          (b)   In our opinion, and according to the information
                                                                                                     F.Y.1997-98 and
                and explanations given to us, the contracts and                                      F.Y.1999-2000
                arrangements entered in the register maintained                                      F.Y. 1987-88       0.55        High Court
                                                                                                     F.Y. 2004-05       0.56        Tribunal




50
Annexure                       Referred to in paragraph 3 of the Auditors’ Report to the members of Asian Paints (India)
                               Limited for the year ended 31st March 2005

Name of      Nature        Financial          Amount      Forum where          14. As the Company is not dealing or trading in shares,
of the       of dues       Year               (Rs. in     dispute is
Statute                                       Millions)   pending
                                                                                   securities, debentures and other investments, the provision
                                                                                   of clause 4(xiv) of the Companies (Auditor’s Report)
             Dispute       F.Y. 2003-04 and   6.79        Adjudication level
                                                                                   Order, 2003 is not applicable to the Company.
             relating to   F.Y. 2004-05
             valuation                                                         15. The Company has given certain guarantees on behalf of
                           F.Y.1986-87 to     47.35       First Appellate          its dealers and subsidiaries as mentioned in Note B - 3(a)
                           F.Y.1988-89,
                           F.Y.1992-93 to
                                                                                   & (b) of Schedule M to the financial statements. In our
                           F.Y.1993-94,                                            opinion based on the information and explanations
                           F.Y.1995-96,                                            received, the terms and conditions of these guarantees are
                           F.Y.1996-97 to
                                                                                   not prejudicial to the interest of the company.
                           F.Y.1997-98 and
                           F.Y.1999-2000                                       16. The Company has not taken any term loans during the
                           F.Y.2000-01 and    2.32        Second Appellate         year.
                           F.Y.2002-03
                           F.Y.1986-87 and    0.71        Tribunal             17. According to the information and explanations received
                           F.Y.03-04                                               the Company has not applied short term borrowings for
             Dispute       F.Y. 2003-04 and   5.94        Adjudication level
                                                                                   long term use.
             relating to   F.Y. 2004-05
             Service Tax                                                       18. The Company has not made any preferential allotment
             Total (B)                        76.93
                                                                                   of shares during the year.
Income Tax                 A.Y. 2000-01 and   68.56       First Appellate
                                                                               19. The Company has not issued any debentures during the
                           A.Y. 2002-03                                            year.
             Total (C)                        68.56                            20. The Company has not raised any money by way of public
             Grand                                                                 issue during the year.
             To t a l                         217.58
                                                                               21. As per the information and explanation given to us, no
                                                                                   material fraud on or by the Company has been noticed
10. The Company has not incurred cash loss in the current
                                                                                   during the year.
    year and in the immediately preceding financial year
    and there are no accumulated losses in the balance sheet
    as on 31st March, 2005.
11. The Company has not defaulted during the year in
    repayment of dues to any financial institutions, banks or
    debenture holders.
                                                                                                                             For Shah & Co.
12. The Company has not granted any loans and advances                                                                Chartered Accountants
    on the basis of security by way of pledge of shares,
    debentures and other securities.
13. As the Company is not a chit fund, nidhi, mutual benefit
    fund or society the provisions of clause 4(xiii) of the                    Mumbai                                          H. N. Shah
    Companies (Auditor’s Report) Order, 2003 is not                            11th May, 2005                                      Partner
    applicable to the Company.                                                                                       Membership No. 8152




                                                                                                                 Asian Paints (India) Ltd.
                                                                                                               annual report 2004-2005           51
     Balance Sheet as at 31st March, 2005
                                                                                                                    (Rs. in Millions)
                                                                                                         As at              As at
                                                          Schedules                                31.03.2005         31.03.2004

     FUNDS EMPLOYED
     Shareholders’ Funds
     Share Capital                                            A                   959.20                                      959.20
     Reserves and Surplus                                     B                 4,763.00                                    4,356.21
                                                                                                     5,722.20               5,315.41
     Loan Funds                                               C
     Secured Loans                                                                283.65                                     229.23
     Unsecured Loans                                                              555.12                                     475.50
                                                                                                          838.77             704.73
     Deferred Tax Liability (Net)                                                                         305.38             486.56
     (Refer Note B - 27 in Schedule ‘M’)
     Total                                                                                           6,866.35               6,506.70
     APPLICATION OF FUNDS
     Fixed Assets                                             D
     Gross Block                                                                7,127.04                                    6,511.93
     Less : Depreciation/Amortisation/Impairment                                4,014.73                                    3,106.49
     Net Block                                                                  3,112.31                                    3,405.44
     Add : Capital Work in Progress                                                82.78                                       38.89
                                                                                                     3,195.09               3,444.33
     Investments                                              E                                      2,584.27               2,424.84
     Current Assets, Loans
     and Advances                                             F
     Interest accrued on investments                                                0.03                                        0.83
     Inventories                                                                3,307.89                                    2,114.90
     Sundry debtors                                                             1,489.63                                    1,379.20
     Cash and Bank Balances                                                       210.42                                      245.53
     Other receivables                                                            190.12                                       81.45
     Loans and Advances                                                           727.25                                      787.88
                                                                                5,925.34                                    4,609.79
     Less : Current Liabilities and Provisions                G
            Current Liabilities                                                 3,721.32                                    3,087.23
            Provisions                                                          1,117.03                                      885.03
                                                                                4,838.35                                    3,972.26
     Net Current Assets                                                                              1,086.99                 637.53
     Total                                                                                           6,866.35               6,506.70
     Notes                                                    M


     As per our report of even date        For and on behalf of the Board
     For Shah & Co.                        Ashwin C. Choksi       Ashwin S. Dani      Abhay A. Vakil        Tarjani Vakil
     Chartered Accountants                 Chairman               Vice Chairman &     Managing Director     Director
                                                                  Managing Director
     H. N. Shah
     Partner                               Jayesh Merchant
     Membership No. 8152                   Vice President -
                                           Corporate Finance &
                                           Company Secretary
     Mumbai                                Mumbai
     11th May, 2005                        11th May, 2005




52
Profit & Loss Account for the year ended 31st March, 2005
                                                                                                                  (Rs. in Millions)
                                                                                                      Year              Year
                                                                            Schedules            2004-2005         2003-2004

INCOME
Sales and operating income (Net of discounts)                                   H                  22,553.86         19,531.92
Less: Excise                                                                                        3,138.71          2,565.46
Sales and operating income (Net of discounts and excise)                                           19,415.15         16,966.46
Other income                                                                     I                    316.14            216.77
                                                                                                   19,731.29         17,183.23
EXPENDITURE
Materials Consumed                                                              J                  11,154.04              9,441.50
Employees’ remuneration and benefits                                            K                   1,179.30              1,015.56
Manufacturing, administrative, selling and distribution expenses                L                   4,144.05              3,814.02
                                                                                                   16,477.39         14,271.08
PROFIT BEFORE INTEREST, DEPRECIATION, EXTRAORDINARY ITEM AND TAX                                    3,253.90          2,912.15
Less : Interest (Refer Note B - 17 in Schedule ‘M’)                                                    27.54             52.65
Less : Depreciation/Amortisation (Refer Note B - 19 in Schedule ‘M’)            D                     476.05            480.10
PROFIT BEFORE TAX AND EXTRAORDINARY ITEM                                                            2,750.31          2,379.40
Less : Extraordinary item (Refer Note B - 23 in Schedule ‘M’)                                          42.31             68.06
PROFIT BEFORE TAX                                                                                   2,708.00              2,311.34
Less : Provision For Current Tax                                                                      988.00                880.00
Less : Provision For Deferred Tax Liability/(Asset) (Refer Note B - 27 in Schedule ‘M’)               (18.16)               (44.46)
PROFIT AFTER TAX AND BEFORE PRIOR PERIOD ITEMS                                                      1,738.16              1,475.80
Add/(Less) : Prior period items                                                                        (3.34)                 2.07
PROFIT AFTER TAX                                                                                    1,734.82              1,477.87
Add : Balance of Profit & Loss Account brought forward of
      Pentasia Investments Ltd. on merger                                                                  ---                8.40
Add : Balance brought forward from previous year                                                      820.00                720.00
DISPOSABLE PROFIT                                                                                   2,554.82              2,206.27
DISPOSAL OF ABOVE PROFIT
Dividend:
Equity Shares    - Interim                                                                            383.69               335.73
                 - Final                                                                              527.56               479.60
Tax on Dividend                                                                                       125.36               104.47
Transfer to General Reserve                                                                           518.21               466.47
Balance carried to Balance Sheet                                                                    1,000.00               820.00
                                                                                                    2,554.82              2,206.27
Earnings per share (Rs.) Basic and diluted (Face value of Rs.10 each)                                    18.53               16.12
(Refer Note B - 30 in Schedule ‘M’)
Notes                                                                           M

As per our report of even date        For and on behalf of the Board
For Shah & Co.                        Ashwin C. Choksi       Ashwin S. Dani          Abhay A. Vakil       Tarjani Vakil
Chartered Accountants                 Chairman               Vice Chairman &         Managing Director    Director
                                                             Managing Director
H. N. Shah
Partner                               Jayesh Merchant
Membership No. 8152                   Vice President -
                                      Corporate Finance &
                                      Company Secretary
Mumbai                                Mumbai
11th May, 2005                        11th May, 2005


                                                                                                     Asian Paints (India) Ltd.
                                                                                                   annual report 2004-2005            53
     Cash Flow Statement for the year ended 31st March, 2005
                                                                                                                   (Rs. in Millions)

                                                                            2004-2005                       2003-2004
     A.   Cash Flow from Operating Activities
          Profit before prior period item, tax and after
          extraordinary item                                         2,708.00                       2,311.34
          Adjustments for :
          Depreciation                                                 476.05                         480.10
          Interest income                                               (7.68)                        (37.06)
          Dividend income                                              (93.78)                        (15.54)
          Interest expense                                               27.54                          52.65
          Prior Period items                                            (3.34)                           2.07
          Extraordinary item                                             42.31                          68.06
          Loss/(Profit) on Sale of Long Term Investments                (0.50)                          (0.01)
          Loss/(Profit) on Sale of Short Term Investments              (23.90)                          (1.65)
          Loss/(Profit) on Sale of Assets                              (27.44)                            3.52
          Operating Profit before working capital changes            3,097.26                       2,863.48
          Adjustments for :
          Trade Receivables                                           (110.43)                      (204.59)
          Other Receivables                                             (37.39)                     (215.06)
          Inventories                                               (1,192.99)                        (45.94)
          Trade and Other Payables                                      670.25                        818.63
          Cash generated from Operations                              2,426.70                      3,216.52
          Income Tax paid net of refund                               (853.56)                      (782.19)
          Net Cash generated from Operating Activities                                  1,573.14                          2,434.33
     B.   Cash Flow from Investing Activities
          Purchase of Fixed Assets                                       (774.52)                       (322.31)
          Sale of Fixed Assets                                             138.47                         17.60
          Purchase of Investments                                        (299.62)                       (988.95)
          Sale of Investments                                               93.88                         11.14
          Interest received                                                  8.54                         37.16
          Dividend received                                                 93.78                         15.54
          Net Cash used In Investing Activities                                         (739.47)                      (1,229.82)
     C.   Cash Flow from Financing Activities
          Proceeds from long term borrowings                               134.86                         112.04
          Proceeds from short term borrowings                              176.94                          90.83
          Repayment of long term borrowings                               (90.16)                       (288.38)
          Repayment of short term borrowings                              (86.92)                       (246.43)
          Interest paid                                                   (29.29)                        (52.94)
          Dividend and Dividend tax paid                                 (974.21)                       (846.03)
          Net Cash used in Financing Activities                                         (868.78)                      (1,230.91)
     D.   Net (Decrease) / Increase in Cash                                               (35.11)                         (26.40)
     Cash and cash equivalents as at 01.04.2004                                          245.53                          271.93
     Cash and cash equivalents as at 31.03.2005                                          210.42                          245.53

     As per our report of even date     For and on behalf of the Board

     For Shah & Co.                     Ashwin C. Choksi      Ashwin S. Dani        Abhay A. Vakil        Tarjani Vakil
     Chartered Accountants              Chairman              Vice Chairman &       Managing Director     Director
                                                              Managing Director
     H. N. Shah
     Partner                            Jayesh Merchant
     Membership No. 8152                Vice President -
                                        Corporate Finance &
                                        Company Secretary

     Mumbai                             Mumbai
     11th May, 2005                     11th May, 2005



54
Schedules forming part of the accounts
                                                                                                         (Rs. in Millions)

                                                                                                As at           As at
                                                                                          31.03.2005      31.03.2004

SCHEDULE A : SHARE CAPITAL
Authorised
99,500,000 Equity Shares of Rs. 10/- each                                                     995.00            995.00
    50,000 11% Redeemable Cumulative
           Preference shares of Rs. 100/- each                                                  5.00               5.00
                                                                                            1,000.00          1,000.00
Issued and Subscribed
 95,919,779 Equity Shares of Rs. 10/- each fully paid :
               a)   93,989,940 Bonus Shares of Rs. 10/- each fully paid up issued
                    on capitalisation of Share premium (Rs. 21.91 million)
                    and General Reserves (Rs. 917.98 million).
               b)   294,000 shares of Rs. 10/- each issued as fully paid up pursuant
                    to the Scheme of Rehabilitation / Amalgamation of Pentasia
                    Chemicals Ltd., without payment received in cash.                        959.20             959.20
                                                                                             959.20             959.20




SCHEDULE B : RESERVES AND SURPLUS
Capital Reserve                                                                                 0.01               0.01
Capital Redemption Reserve                                                                      5.00               5.00
General Reserve
As per last Balance Sheet                                                  3,488.70                           3,215.56
Add : Transfer from Profit and Loss Account                                  518.21                             466.47
Add : Transfer from Debenture Redemption Reserve                              42.50                             141.25
Add : Excess deferred tax liability created in 2001-2002
       transferred back                                                             ---                          50.56
Less : Capitalised for issue of Bonus shares                                        ---                       (320.93)
Less : Net reduction on account of merger of
       Pentasia Investments Ltd.                                                    ---                         (64.21)
Less : Provision for impairment of fixed assets as on
       1st April, 2004 (Refer Note B - 19 in Schedule ‘M’)                  (454.45)                                  ---
Add : Reduction in deferred tax liability on impairment
       of assets (Refer Note B - 19 in Schedule ‘M’)                         163.03                                  ---
                                                                                           3,757.99           3,488.70
Debenture Redemption Reserve
As per last Balance Sheet                                                      42.50                            183.75
Less : Transfer to General Reserve                                           (42.50)                          (141.25)
                                                                                                   ---           42.50
Profit and Loss Account                                                                     1,000.00            820.00
                                                                                           4,763.00           4,356.21




                                                                                             Asian Paints (India) Ltd.
                                                                                           annual report 2004-2005           55
     Schedules forming part of the accounts
                                                                                                                       (Rs. in Millions)

                                                                                                             As at            As at
                                                                                                       31.03.2005       31.03.2004

     SCHEDULE C : SECURED AND UNSECURED LOANS
     Secured Loans
     Long Term :
     Debentures
     13.75% Non-Convertible Debentures (Note No. 1)                                                              ---           85.00
     Loans and advances
     Financial Institution (Sales tax deferment scheme - State of Uttar Pradesh)
     (Note No. 2)                                                                                          106.71              53.40
                                                                                                           106.71             138.40
     Short Term :
     Loans and advances from banks
     Cash Credit Accounts (Note No. 3)                                                                     176.94                   ---
     Foreign Currency Loan (Note No. 3)                                                                          ---           90.83
                                                                                                           283.65             229.23
     Unsecured Loans
     Long Term :
     Fixed Deposits                                                                                          3.22                3.32
     (Repayable within one year Nil - Previous year Rs. 0.17 million)
     Interest accrued and due                                                                                   ---             0.01
     Trade deposits - Interest free                                                                        188.30             190.12
     Sales tax deferment - State of Andhra Pradesh (Note No. 4)                                            363.60             282.05

                                                                                                           555.12             475.50

     Notes:
     (1) Nil, (Previous year - 850) 13.75 % Secured Redeemable Non-Convertible Debentures
          of Rs. 100,000/- each privately placed redeemable at par. 850 debentures were
          redeemed during the year (Previous year - 825).                                                        ---           85.00
           Amount repayable within one year.                                                                     ---           85.00
           Debentures were secured by pari passu charge on the Company’s movable and
           immovable properties pertaining to the paint plants situated at Bhandup, Ankleshwar
           and Patancheru, excluding inventories at the above locations.
     (2)   Interest free term loan from the Pradeshiya Industrial Corporation of U.P. Ltd., (PICUP)
           under Sales Tax deferment scheme of U.P., is secured by a first charge on the Company’s
           immovable properties pertaining to the paint plant at Kasna and by way of hypothecation
           of all movable properties at the above location, subject to prior charge in favour of the
            Company’s bankers.                                                                             106.71               53.40
           Amount repayable within one year.                                                                11.18                   ---
     (3)   Secured by hypothecation of inventories, book debts and other current assets.                   176.94              90.83
     (4)   Sales tax deferment - State of Andhra Pradesh represents interest free loan availed
           under the Sales Tax deferment scheme of the Government of Andhra Pradesh.                       363.60             282.05
           Amount repayable within one year.                                                                     ---                ---




56
                              SCHEDULE D : FIXED ASSETS                                                                                                                                                   (Rs. in Millions)
                                                                         Gross Block                                    Depreciation/Amortisation                           Impairment                  Net Block
                                                                As at   Additions   Deductions          As at         Upto      During    Deductions          As at          As at      As at          As at         As at
                                                          01.04.2004       during       and/or    31.03.2005    31.03.2004    the year        and/or    31.03.2005     01.04.2004 31.03.2005     31.03.2005    31.03.2004
                                                                         the year     transfers                                             transfers                    (Refer Note
                                                                                                                                                                              B - 19
                                                                                                                                                                       Schedule ‘M’)

                              Tangible Assets :
                              Freehold Land                    40.42          ---        0.08          40.34           ----        ----           ---            ---             ---       ---        40.34         40.42
                              Leasehold Land                  162.01      10.00         90.82          81.19          5.39      0.85              ---         6.24               ---       ---        74.95        156.62
                                                                                                                                                                                                                              Schedules forming part of the accounts




                              Buildings                     1,081.04     236.58          8.29       1,309.33        253.98     32.48           1.41         285.05               ---       ---     1,024.28        827.06
                              Plant and Machinery           3,655.14     459.10         15.71       4,098.53      2,080.84    267.68          12.25       2,336.27         178.65      178.65      1,583.61      1,574.30
                              Scientific Research :
                                   Equipment                   90.19        9.78          9.29         90.68        45.20      18.97            2.57         61.60            5.96       5.96         23.12         44.99
                                   Buildings                    7.33        7.55            ---        14.88         4.54       0.25              ---         4.80              ----       ---        10.08          2.79
                              Furniture and
                              Office Equipment                192.82       16.17          2.07        206.92        91.85      39.61            1.09        130.37           21.63      21.63         54.92        100.97
                              Vehicles                         36.19        2.43          3.50         35.12        15.67      12.85            2.19         26.33               ---       ---         8.79         20.52
                              Leased Assets : Equipment       990.05        0.89          3.53        987.41       434.95      63,29            2.76        495.48         248.21      248.21        243.72        555.10
                              Intangible Assets :
                              Trademark                       119.24          ---           ---       119.24        57.56      23.85              ---        81.41               ---       ---        37.83         61.68
                              Software - License fees         137.50        5.90            ---       143.40       116.51      16.22              ---       132.73               ---       ---        10.67         20.99

                              Total                         6,511.93     748.40        133.29       7,127.04      3,106.49    476.05          22.27       3,560.28         454.45      454.45      3,112.31      3,405.44
                              Previous year                 6,305.55     262.89         56.51       6,511.93      2,661.76    480.10          35.37       3,106.49               ---       ---     3,405.44




annual report 2004-2005
  Asian Paints (India) Ltd.
57
     Schedules forming part of the accounts
                                                                                                                      (Rs. in Millions)
                                                                                Nos.     Face value          As at           As at
                                                                                               (Rs.)   31.03.2005      31.03.2004


     SCHEDULE E : INVESTMENTS
     Long Term Investments
     Unquoted
     (i)   In Government Securities
           National Savings Certificates, Indira Vikas Patra and
           Defence Certificates deposited with Government
           authorities.                                                                                      0.05               0.07
           (National Savings Certificate sold during the year Rs. 20,000)
     (ii) Trade Investments (Preference shares)
           9% Preference shares of
           Multitech Plast Containers Ltd.                            2,510,000               10/-          25.10             25.10
     (iii) Trade Investments (Fully paid Equity shares)
           (a) Multitech Plast Containers Ltd.                                ---             10/-              ---             1.90
                 (190,000 Shares sold during the year)                (190,000)
           (b) Ricinash Oil Mill Ltd.                                         ---             10/-              ---             1.10
                 (110,000 shares sold during the year)                (110,000)
           (c) Asian PPG Industries Ltd.                            14,625,000                10/-         146.25            146.25
           (d) Patancheru Enviro-tech Ltd.                               12,900               10/-           0.13              0.13
           (e) SIPCOT Common Utilities Ltd.                               2,830              100/-           0.28              0.28
           (f)   Bharuch Eco-Acqua Infrastructure Ltd.                  434,790               10/-           4.35              4.35
                                                                                                           151.01            154.01

     (iv)   Other Investments
            (a) Units of Unit Trust of India under
                 Venture Capital Unit Scheme - 1990                               ---        100/-              ---             0.04
                 (370 units redeemed during the year)                          (370)
            (b) Contribution to Gujarat Venture Capital Fund -
                 1990 (5% amounting to Rs. 25,000                                                            0.09               0.11
                 redeemed during the year)
            (c) 10.5% tax free Bonds of
                 Konkan Railway Corporation Ltd.                                   ---     1,000/-              ---           25.64
                 (25,000 bonds redeemed during the year)                    (25,000)
            (d) Equity shares of Mark Auto Industries Ltd.                    62,500          10/-           5.00               5.00
                                                                                                             5.09             30.79
     (v)    Subsidiary Companies
            (a) Equity shares of Technical Instruments
                 Manufacturers (India) Ltd.                                    5,000         100/-         181.85            181.85
            (b) Equity shares of Asian Paints Industrial
                 Coatings Ltd.                                             9,000,000          10/-          90.00             80.00
                 (1,000,000 shares allotted during the year)             (8,000,000)
            (c) Ordinary shares of Asian Paints (International) Ltd.,
                 Mauritius                                                24,945,444      US $ 1/-       1,184.79          1,094.91
                 (2,010,000 shares allotted during the year)            (22,935,444)




58
Schedules forming part of the accounts
                                                                                               (Rs. in Millions)

                                                          Nos.    Face value          As at           As at
                                                                        (Rs.)   31.03.2005      31.03.2004

       (d)   Equity shares of Asian Paints          1,084,770      NRs 10/-           1.24               1.24
             (Nepal) Pvt. Ltd., Nepal
       (e)   Ordinary shares of Asian Paints                ---   MRs 10/-               ---          111.12
             (Mauritius) Ltd., Mauritius.          (6,670,755)
             (6,670,755 shares sold
             during the year)
             Less: Provision for diminution
             (Refer Note B - 23 in Schedule ‘M’)                                         ---          (68.06)
                                                                                         ---            43.06
                                                                                  1,457.88          1,401.06
Total long term unquoted investments                                              1,639.13          1,611.03
Quoted (Fully Paid Equity shares)
(i)  Trade Investments
     ICI (India) Ltd.                               3,760,783          10/-         772.46            772.46
(ii)   Other Investments
       Housing Development Finance
       Corporation Ltd.                                93,000          10/-           1.24               1.24
       Apcotex Lattices Ltd.                            3,418          10/-           0.11               0.11
Total long term quoted investments                                                  773.81            773.81
Total long term investments                                                       2,412,94          2,384.84
Short Term Investments (Unquoted)
DSP Merrill Lynch Liquidity Fund -
Growth Plan                                                ---         10/-              ---           20.00
(13,09,036.220 units sold during the year)    (13,09,036.220)
Birla Cash Plus Institutional Plan -
Growth                                                     ---         10/-              ---           20.00
(11,76,829.370 units sold during the year)    (11,76,829.370)
Birla Cash Plus Institutional Premium Plan -
Dividend - acquired during the year           1,996,477.315            10/-          20.01                  ---
JM Fixed Maturity Plan - Dividend Option
acquired during the year                     15,131,481.727            10/-         151.32                  ---
Total Short Term Investments                                                        171.33             40.00
Total Investments                                                                 2,584.27          2,424.84
Aggregate market value of Long term Quoted Investments :                            924.99            748.05


Notes :
1.   Figures in brackets indicate that of previous year.




                                                                                   Asian Paints (India) Ltd.
                                                                                 annual report 2004-2005           59
     Schedules forming part of the accounts
     2.     The following investments were purchased and sold during the year :
                                                                                             Nos.   Face Value     Purchase Cost
                                                                                                          (Rs.)   (Rs. in Millions)
     Units in Mutual Funds
     (1) Birla Cash Plus - Institutional Premium Plan Growth                       43,470,784.103        10.00            440.00
     (2) Birla Cash Plus - Institutional Plan - Growth                              5,244,887.760        10.00             90.00
     (3) Birla Cash Plus - Institutional Premium Plan - Dividend                   24,304,455.310        10.00            243.52
     (4) Deutsche Insta Cash Plus Fund - Growth                                    10,325,555.492        10.00            110.00
     (5) Deutsche Insta Cash Plus Fund-Institutional Plan - Growth                 26,521,468.475        10.00            270.00
     (6) DSP Merrill Lynch Liquidity Fund - Growth                                 26,671,610.750        10.00            420.00
     (7) Grindlays Cash Fund - Super Inst Plan C - Growth                           9,818,456.735        10.00            100.00
     (8) HDFC Cash Management Fund - Savings Plan - Growth                         31,314,609.391        10.00            420.00
     (9) HSBC Cash Fund - Institutional Plus - Dividend                            30,184,972.680        10.00            302.02
     (10) HSBC Cash Fund - Institutional Plus - Growth                             32,501,655.427        10.00            330.00
     (11) HSBC Cash Fund Institutional Plan - Growth                               21,411,541.039        10.00            230.00
     (12) Prudential ICICI Institutional Liquid Plan - Growth                      10,831,652.045        10.00            170.00
     (13) Prudential ICICI Liquid Plan - Growth                                       631,915.526        10.00             10.00
     (14) Prudential ICICI Liquid Plan Institutional Plus - Dividend               33,084,005.087        10.00            392.10
     (15) Prudential ICICI Liquid Plan Institutional Plus - Growth                 31,434,353.917        10.00            500.00
     (16) Reliance Fixed Term Scheme - Monthly Plan -10 - Growth                    6,000,000.000        10.00             60.00
     (17) Reliance Fixed Term Scheme - Monthly Plan -7 - Growth                     6,000,000.000        10.00             60.00
     (18) Reliance Fixed Term Scheme - Monthly Plan -8 - Growth                     6,024,720.000        10.00             60.25
     (19) Reliance Fixed Term Scheme - Monthly Plan - 9 - Growth                   10,000,000.000        10.00            100.00
     (20) Reliance Fixed Term Scheme - Monthly Plan - 12 Growth                    10,000,000.000        10.00            100.00
     (21) Reliance Fixed Term Scheme - Monthly Plan - 13 Growth                    15,000,000.000        10.00            150.00
     (22) Reliance Fixed Term Scheme - Monthly Plan - 14 Growth                    20,000,000.000        10.00            200.00
     (23) Reliance Fixed Term Scheme - Monthly Plan - 15 Dividend                  25,000,000.000        10.00            250.00
     (24) Reliance Fixed Term Scheme - Monthly Plan - 16 Dividend                  15,000,000.000        10.00            150.00
     (25) Reliance Fixed Term Scheme - Monthly Plan - 17 Dividend                  15,000,000.000        10.00            150.00
     (26) SBI Magnum Insta Cash Fund - Cash Plan                                   27,297,209.536        10.00            390.00
     (27) SBI Magnum Institutional Income Fund-Savings - Dividend                  84,764,289.414        10.00            850.40
     (28) SBI Magnum Institutional Income Fund-Savings - Growth                   119,206,533.687        10.00          1,240.00
     (29) Tata Liquid Super High Investment Fund - Appreciation                    48,320,806.227        10.00            570.00
     (30) Tata Liquid Super High Investment Fund - Daily Dividend                   8,075,410.380        10.00             90.00
     (31) Tata Liquid Super High Investment Fund - Daily Dividend                      81,043.839     1,000.00             90.32
     (32) Templeton India Treasury Mgmt A/c Inst Plan - Growth                        158,515.065     1,000.00            160.00

                                                                                                                  (Rs. in Millions)

                                                                                                          As at          As at
                                                                                                    31.03.2005     31.03.2004

     SCHEDULE F : CURRENT ASSETS, LOANS AND ADVANCES
     CURRENT ASSETS
     (i) Interest accrued on investments                                                                   0.03             0.83
     (ii)   Inventories - valued and certified by the Management
            (a) Raw materials                                                           832.66                           517.14
            (b) Packing materials                                                       283.76                           164.24
            (c) Finished goods                                                        1,918.12                         1,216.11
            (d) Work-in-process                                                         202.42                           160.82
            (e) Stores, spares and fuel                                                  65.30                            50.14
            (f)   Other traded items                                                      5.63                             6.45
                                                                                                      3,307.89         2,114.90




60
Schedules forming part of the accounts
                                                                                                  (Rs. in Millions)

                                                                                         As at            As at
                                                                                   31.03.2005       31.03.2004
(iii)   Sundry debtors (Unsecured)
        (a) Outstanding for more than six months
             Considered good                                             21.45                            24.81
             Considered doubtful                                         32.89                            38.97
                                                                         54.34                            63.78
              Less: Provision for doubtful debts                         32.89                            38.97
                                                                          21.45                           24.81
        (b)   Other debts (Considered good)                            1,468.18                        1,354.39
                                                                                     1,489.63          1,379.20
(iv)    Cash and Bank Balances
        (a) Cash on hand                                                   1.66                             2.32
        (b) Balances with Scheduled Banks :
             (i)   Current Accounts                                     206.14                           200.29
             (ii) Term Deposits                                           2.62                             3.29
             (iii) Cash Credit Accounts                                      ---                          39.63
                                                                                      210.42             245.53
(v)     Other receivables                                                             190.12              81.45
LOANS AND ADVANCES
(i)     Wholly owned subsidiaries
        (a) Interest free loan - Secured and considered good
             Asian Paints Industrial Coatings Ltd.                       60.00                            60.00
             (Maximum outstanding during the year Rs. 60.00 million.
             Previous year Rs. 60.00 million)
             Technical Instruments Manufacturers (India) Ltd.            77.02                            85.69
             (Maximum outstanding during the year Rs. 85.69 million.
             Previous year Rs. 100.02 million).                                       137.02             145.69

(ii)    Company in which directors are interested
        Hitech Plast Ltd. - Unsecured and considered good
        (Maximum outstanding during the year Rs. 1.30 million.
        Previous year Rs. 2.50 million)                                                     ---             1.30
(iii)   Other Loans and Advances :
        Unsecured and considered good
        (a) Balances with Customs, Central Excise etc.                  141.77                            57.32
        (b) Income Tax refund receivable                                     ---                         187.35
        (c) Sundry deposits                                             105.41                           115.67
        (d) Advances/claims recoverable in cash or in kind              241.97                           199.15
        (e) Advances to employees                                         4.10                             7.99
        (f)  Share application money                                     28.43                                ---
        (g) Advances against capital expenditure                         42.48                            60.26
        (h) Other advances to subsidiaries                               26.07                            13.15
                                                                                      590.23             640.89
                                                                                      727.25             787.88
                                                                                     5,925.34          4,609.79




                                                                                      Asian Paints (India) Ltd.
                                                                                    annual report 2004-2005           61
     Schedules forming part of the accounts
                                                                                                           (Rs. in Millions)

                                                                                                   As at          As at
                                                                                             31.03.2005     31.03.2004

     SCHEDULE G : CURRENT LIABILITIES AND PROVISIONS
     Current Liabilities
     (i)  Acceptances                                                                           1,109.63          796.03
     (ii)    Sundry creditors
             -     Trade                                                          1,342.72                      1,119.31
             -     Others                                                           334.75                        271.87
             (Out of the above, the total outstanding dues to small scale
             industrial undertakings are Rs. 48.53 million - Previous year
             Rs. 60.01 million). (Refer Note B - 22 in Schedule ‘M’)                            1,677.47        1,391.18
                                                                                                2,787.10        2,187.21
     (iii)   Investor Education and Protection Fund *
             (a) Unpaid / Unclaimed dividend                                        19.92                          18.02
             (b) Unpaid / Unclaimed matured deposits                                 0.78                           0.52
             (c) Unclaimed interest                                                  0.31                           0.38
             (d) Unclaimed amount of sale proceeds of fractional
                   coupons of bonus shares                                           0.41                            0.44
                                                                                                   21.42           19.36
     (iv)    Interest accrued but not due                                                           0.15             1.85
     (v)     Other liabilities (Including Rs. 17.80 million due to Directors -
             Previous year Rs. 14.75 million).                                                   912.65           878.81
                                                                                                3,721.32        3,087.23
     *       There is no amount due and outstanding to be paid to the Investor
             Education and Protection Fund as at 31st March, 2005. These
             amounts shall be paid to the fund as and when they become due.
     Provisions
     (i)     Proposed Final Dividend                                               527.56                         479.60
     (ii)    Provision for tax on Proposed Final Dividend                           73.99                          61.45
     (iii)   Provision for tax (Net of advance tax)                                136.75                           2.31
     (iv)    Provision for Leave encashment (Refer Note B - 26 in Schedule ‘M’)    126.42                         123.70
     (v)     Other provisions (Refer Note B - 26 in Schedule ‘M’)                  252.31                         217.97
                                                                                                1,117.03          885.03
                                                                                                4,838.35        3,972.26




62
Schedules forming part of the accounts
                                                                                      (Rs. in Millions)

                                                                              Year           Year
                                                                         2004-2005      2003-2004

SCHEDULE H : SALES & OPERATING INCOME
Sales :
Home Market                                                              23,533.64       20,455.10
Exports                                                                     138.52           83.11
                                                                         23,672.16       20,538.21
Less : Goods returned                                                       283.79          278.72
Turnover (Refer Note B - 7 in Schedule ‘M’)                              23,388.37       20,259.49
Less : Discounts                                                          1,073.05         1,013.15
Sales (Net of discounts)                                                 22,315.32       19,246.34
Processing charges                                                           69.80           70.20
Lease Rent                                                                  127.89          188.18
Revenue from Home Solutions operations                                       40.85           27.20
                                                                         22,553.86       19,531.92


SCHEDULE I : OTHER INCOME
Interest (Refer Note B - 21 in Schedule ‘M’)                                  7.68            37.06
(TDS Rs. 0.68 million - Previous year Rs. 0.93 million)
Claims received                                                               3.41              0.28
Dividends from subsidiary companies                                           5.42              8.81
(TDS Rs. 0.27 million - Previous year Rs. 0.61 million)
Dividend from long term investments
-      Trade                                                                 78.52             0.28
-      Others                                                                 1.32             1.02
Dividend from short term investments                                          8.52             5.43
Royalty (TDS Rs. 4.22 million - Previous year Rs. 1.09 million)              34.59            26.70
Sundry balances written back (Net) (Refer Note B - 20 in Schedule ‘M’)       13.84            47.57
Profit on sale of long term investments (net)                                 0.50             0.01
Profit on sale of short term investments (net)                               23.90             1.65
Profit on sale of assets (net) (Refer Note B - 25 in Schedule ‘M’)           27.44                ---
Exchange difference (net)                                                     0.89             9.62
Miscellaneous income                                                        110.11            78.34
                                                                            316.14           216.77




                                                                           Asian Paints (India) Ltd.
                                                                         annual report 2004-2005          63
     Schedules forming part of the accounts
                                                                                                      (Rs. in Millions)

                                                                                              Year           Year
                                                                                         2004-2005      2003-2004

     SCHEDULE J : MATERIALS CONSUMED
     Raw Materials Consumed
     Opening Stock                                                              517.14                       568.61
     Add : Purchases and expenses                                             9,752.72                     7,463.59
                                                                             10,269.86                     8,032.20
     Less: Closing Stock                                                        832.66                       517.14
                                                                                          9,437.20         7,515.06
     Packing Materials Consumed
     Opening Stock                                                              164.24                       123.51
     Add : Purchases and expenses                                             2,154.61                     1,627.79
                                                                              2,318.85                     1,751.30
     Less : Closing Stock                                                       283.76                       164.24
                                                                                          2,035.09         1,587.06
     Purchase of Paints for resale                                                          182.70           199.51
     (Quantity 10,231 MT - Previous year 11,549 MT)
     Cost of other goods sold                                                               242.66           198.62
                                                                                         11,897.65         9,500.25
     Add / (Less) :
     Decrease / (Increase) in finished and semi-finished stocks
     Opening Stock                                                            1,376.93                     1,318.18
     Closing Stock                                                            2,120.54                     1,376.93
                                                                                           (743.61)          (58.75)
                                                                                         11,154.04         9,441.50




     SCHEDULE K : EMPLOYEES’ REMUNERATION AND BENEFITS
     Salaries, wages, allowances, commission, provision for
     bonus and accrued leave salary                                                         974.54           848.07
     Staff welfare expenses                                                                  64.40            54.67
     Contribution to Provident Fund, Gratuity Fund and Superannuation Fund                  140.36           112.82
                                                                                          1,179.30         1,015.56




64
Schedules forming part of the accounts
                                                                                   (Rs. in Millions)

                                                                          Year            Year
                                                                     2004-2005       2003-2004

SCHEDULE L :          MANUFACTURING, ADMINISTRATIVE,
                      SELLING AND DISTRIBUTION EXPENSES
Stores and spares                                                       100.00            111.89
Power and fuel                                                          254.38            228.30
Processing charges                                                      133.28            107.30
Freight and handling charges                                            836.88            697.34
Repairs and maintenance:
Buildings                                                    18.26                         19.85
Machinery                                                    41.88                         47.84
Other assets                                                 99.01                        109.49
                                                                        159.15            177.18
Rent                                                                    171.73            158.76
Rates and taxes                                                         147.37            126.06
Insurance                                                                33.41             33.74
Advertisement and sales promotional expenses                            699.17            682.42
Cash discount and Payment performance discount                          908.88            785.28
Printing, stationery and communication expenses                         121.30            129.08
Travelling expenses                                                     133.79            140.34
Commission on sales                                                      10.35             12.05
Donations                                                                 9.03              9.90
Loss on sale of assets (net)                                                 ---            3.52
Miscellaneous expenses (Refer Note B - 24 in Schedule ‘M’)              279.12            217.54
Commission to Non executive directors                                     4.24              3.12
Directors’ sitting fees                                                   1.06                 ---
Bad and doubtful debts                                                    9.27             28.01
Auditors’ remuneration                                                    4.52              3.76
Financial charges                                                        38.23             34.35
Information technology expenses                                          63.87             96.12
Legal and professional expenses                                          25.02             27.96
                                                                      4,144.05          3,814.02




                                                                       Asian Paints (India) Ltd.
                                                                     annual report 2004-2005           65
     Schedules forming part of the accounts
     SCHEDULE M: NOTES ON BALANCE SHEET AND PROFIT AND LOSS ACCOUNT
     A.   STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES FOLLOWED IN THE COMPILATION OF ACCOUNTS
     1.   Basis for preparation of financial statements
          The financial statements are prepared in accordance with the accounting principles generally accepted in India and comply
          with the Accounting Standards specified by the Institute of Chartered Accountants of India under section 211(3C) of the
          Companies Act, 1956.
     2.   Method of Accounting
          The Company is following accrual basis of accounting.
     3.   Fixed Assets
          a)    The ‘Gross Block’ of fixed assets is shown at the cost of acquisition, which includes taxes, duties (net of tax credits as
                applicable) and other identifiable direct expenses. Interest on borrowed funds attributable to the qualifying assets up
                to the period such assets are put to use, is included in the cost.
          b)    Know-how related to plans, designs and drawings of buildings or plant and machinery is capitalised under the relevant
                asset heads.
          c)    Depreciation on tinting systems except computers leased to dealers is provided under Straight Line Method over the
                estimated useful life of nine years as per technical evaluation. Depreciation on computers given on lease is provided
                under Straight Line Method and at rates specified under Schedule XIV to the Companies Act, 1956.
          d)    Leasehold land is amortised over the period of lease.
          e)    Depreciation on all other fixed assets is provided under Straight Line Method and at rates specified under Schedule XIV
                to the Companies Act, 1956 except for the following classes of fixed assets, where the depreciation is provided under
                Straight Line Method based on estimated useful life of the assets as under: -
                Information Technology Assets                   :     4 years
                Scientific Research Equipment                   :     8 years
                Furniture and Fixtures                          :     8 years
                Office Equipment and Vehicles                   :     5 years
          f)    Intangible Assets
                i)    User licence fees for major software are amortised over a period of four years.
                ii)   Trade Mark is amortised over a period of five years.
          g)    At the balance sheet date, an assessment is done to determine whether there is any indication of impairment in the
                carrying amount of the Company’s fixed assets. If any such indication exists, the asset’s recoverable amount is estimated.
                An impairment loss is recognised whenever the carrying amount of an asset exceeds its recoverable amount.
                After recognition of impairment loss, the depreciation charge for the asset is adjusted in future periods to allocate the
                asset’s revised carrying amount, less its residual value (if any), on Straight Line basis over its remaining useful life.
     4.   Revenue Recognition
          Sale of products is recognised when the risks and rewards of ownership are passed on to the customers, which is on despatch
          of goods. Sales are stated exclusive of sales tax.
          Processing income is recognised upon rendition of the services.
          Dividend income is recognised when the right to receive dividend is unconditional at the balance sheet date.
     5.   Lease Accounting
          The Company has provided tinting systems to dealers on an operating lease basis. Lease rentals are accounted on accrual
          basis in accordance with the respective lease agreements and any variation thereof.




66
Schedules forming part of the accounts
6.    Inventory
      a)    Inventories are valued at the lower of cost and net realisable value. Damaged, unserviceable and inert stocks are
            suitably depreciated.
      b)    In case of raw materials, packing materials, stores, spares and consumables, the cost includes duties and taxes (net of
            CENVAT, wherever applicable) and is arrived at on weighted average cost basis.
      c)    Cost of finished goods and work-in-process includes the cost of raw materials, packing materials, an appropriate share
            of fixed and variable production overheads on the basis of standard cost method, excise duty as applicable and other
            costs incurred in bringing the inventories to their present location and condition.
      d)    Traded goods are valued at cost on weighted average basis.
7.    Investments
      Short term investments are carried at the lower of cost and fair value computed category wise. Long term investments are
      carried at cost. Provision for diminution in the value of long term investments is made only if such a decline is not temporary
      in the opinion of the management.
8.    Transactions in Foreign Exchange
      Transactions in foreign currencies are recorded at the exchange rates prevailing on the date of the transactions. In respect of
      transactions covered by forward exchange contracts, the difference between the forward rate and the exchange rate on the
      date of the transaction is recognised as income or expense over the life of the contract. Transactions not covered by forward
      contracts and outstanding at year end are translated at exchange rates prevailing at the year end and the profit/loss so
      determined is recognised in the Profit and Loss Account.
9.    Sundry Debtors
      Sundry debtors are stated after writing off debts considered as bad. Adequate provision is made for debts considered
      doubtful. Discounts due, yet to be quantified at the customer level are included under the head ‘Current Liabilities and
      Provisions’.
10.   Employees’ Retirement Benefits
      Company’s contribution to Provident and Superannuation funds and Pension is charged to Profit and Loss Account on accrual
      basis. Liability for Gratuity and Leave encashment benefits are charged to Profit and Loss Account on the basis of actuarial
      valuation.
11.   Research and Development
      a)    Capital expenditure is shown separately under respective heads of fixed assets.
      b)    Revenue expenses including depreciation are included under the respective heads of expenses.
12.   Provision for Taxation
      Provision for current tax is computed as per ‘Total Income’ returnable under the Income Tax Act, 1961 taking into account
      available deductions and exemptions. Deferred tax is recognised for all timing differences being the differences between
      taxable income and accounting income that originate in one period and are capable of reversal in one or more subsequent
      periods.
13.   Proposed Dividend
      Dividend proposed by the Board of Directors is provided for in the accounts, pending approval at the Annual General
      Meeting.




                                                                                                        Asian Paints (India) Ltd.
                                                                                                      annual report 2004-2005           67
     Schedules forming part of the accounts
                                                                                                                                                    (Rs. in Millions)
                                                                                                                                     2004-2005         2003-2004
     B.      NOTES :
     1.      Estimated amount of contracts remaining to be executed on capital account
             and not provided for                                                                                                        86.94             378.79
     2.      Letters of credit and bank guarantees issued by bankers and outstanding as on 31.03.05                                     451.21             509.64
     3.      Contingent liabilities:
             (a) Guarantee given on behalf of Company’s dealers in respect of loans granted
                     to them by a bank for acquiring tinting systems                                                                    279.56             417.77
             (b) Corporate guarantee issued by the Company on behalf of its subsidiaries                                                879.17             769.68
             (c) Claims against the Company not acknowledged as debts:
                     (i)   Tax matters in dispute under appeal                                                                          231.60             116.03
                     (ii) Others                                                                                                         11.01              25.29
     4.      Auditors’ remuneration (including service tax, wherever applicable)
             Statutory audit fee                                                                                                           1.85               1.84
             Tax audit fees                                                                                                                0.40               0.40
             Certification fees                                                                                                            1.60               0.87
             Out of pocket expenses                                                                                                        0.38               0.37
             Cost audit fees                                                                                                               0.07               0.08
             Branch audit fees                                                                                                             0.07               0.05
             In addition, an associate firm of the statutory auditor’s firm has been paid
             Rs. 0.15 million for taxation services during the year (Previous year Rs. 0.16 million)
     5.      (a) Computation of Profit for the year ended 31st March, 2005
                     under section 349 of the Companies Act, 1956.
                     Net Profit as per Profit and Loss Account                                                                        1,738.16           1,475.80
             Add : Provision for taxation                                                                                               988.00             880.00
                     Provision for deferred tax                                                                                         (18.16)            (44.46)
                     Managerial remuneration                                                                                              35.72              29.71
                     Loss on sale of assets (net)                                                                                             ---             3.52
                                                                                                                                      2,743.72           2,344.57
             Less : Surplus on sale of long term investments (net)                                                                         0.50              0.01
                    Surplus on sale of short term investments (net)                                                                      23.90               1.65
                    Profit on sale of assets                                                                                             27.44                  ---
                    Extraordinary item (Refer Note 23)                                                                                   42.31              68.06
                    Prior period items (net)                                                                                             (3.34)              2.07
                    Profit under Section 198 of the Companies Act,1956                                                                2,652.91           2,272.78
                    Commission to Non-Executive Directors:
                    Subject to a ceiling of 1% of profit as computed above                                                               26.53              22.73
                    Commission actually paid                                                                                              4.24               3.12
                    Remuneration to Wholetime Directors:
                    Subject to a ceiling of 10% of profit as computed above                                                             265.29             227.28
                    Total remuneration actually paid                                                                                     30.42              26.59
             (b) Details of managerial remuneration under Section 198 of the
                    Companies Act, 1956
                    Salaries and allowances                                                                                                7.88               6.30
                    Commission to Executive Directors (0.17% of Profit before taxes for
                    each of the Executive Directors)                                                                                     13.80              11.79
                    Contribution to Provident and Superannuation funds                                                                    5.24               4.52
                    Perquisites                                                                                                           3.50               3.98
                    Sitting Fees to Non-Executive Directors                                                                               1.06                  ---
                    Commission to Non-Executive Directors                                                                                 4.24               3.12
     The above remuneration does not include contribution to gratuity fund and leave encashment as this contribution is a lump           35.72              29.71
     sum amount based on actuarial valuation.
     The Company depreciates certain fixed assets at higher rates of depreciation based on estimated useful lives which are lower
     or equal to the implicit estimated useful lives prescribed by Schedule XIV of the Companies Act, 1956. The above higher value
     of depreciation has been considered as deduction for the computation of managerial remuneration in (a) above.




68
Schedules forming part of the accounts
6.      Production :

                                              Unit          Location                Installed Capacity                             Production

                                                                                    As at                As at
                                                                              31st March,          31st March,          2004-2005                2003-2004
                                                                                    2005                 2004
(a)     Paints, enamels, varnishes             MT/KL           In-house(1)          300150               240150           220284(2)               187221(2)
        and blacks
                                                              Contract
                                                           Manufacture/
                                                              Purchase                      ---                  ---           71776                61215
(b)     Synthetic Resins (For mainly
        captive consumption)                     MT           In-house(1)             77880               70600                84306(3)             74831(3)
(c)     Phthalic Anhydride                       MT          Ankleshwar               24000               24000                22183(4)             21592(4)
(d)     Pentaerythritol                          MT           Cuddalore                3000                3000                 4430(5)              4235(5)
(e)     Sodium Formate                           MT           Cuddalore                1800                1800                  2505                 2230
(f)     Formaldehyde (50%)(6)                    MT           Cuddalore               13500               13500                 10598                10570
Capacities are expressed in terms of :
(i)     Double-shift working for a period of nine months and three shift working for the remaining period of three months in the year for Paints.
(ii)    Three shift working for Synthetic Resins, Phthalic Anhydride, Pentaerythritol, Sodium Formate and Formaldehyde, seven days a week,
        throughout the year.
        (As per certificate given by the Management).
        (1)
               Manufacturing plants at Mumbai, Ankleshwar, Patancheru, Kasna and Sriperumbudur.
        (2)
               Includes 6958 MT (Previous year 6275 MT) of products processed for third party.
        (3)
               Includes 3573 MT (Previous year 3029 MT) of resins processed for third party.
        (4)
               Includes 9166 MT (Previous Year 7695 MT) Phthalic Anhydride transferred to paint plants for captive consumption.
        (5)
               Includes 2926 MT (Previous Year 2398 MT) Pentaerythritol transferred to paint plants for captive consumption.
        (6)
               Mainly for internal consumption in the manufacture of Pentaerythritol.

7.      Stocks and Turnover :

                                                                  Opening Stock                      Closing Stock                         Turnover *
                                                 Unit           Qty.              Value           Qty.               Value                Qty.              Value
                                                                        (Rs. in millions)                  (Rs. in millions)                      (Rs. in millions)

(a) Paints, enamels, varnishes                 MT/KL        21353          1148.67            31004           1858.02    275252                     22194.59
    and blacks                                            (22549)        (1151.50)          (21353)         (1148.67) (243148)                    (19195.60)
(b) Phthalic Anhydride                           MT            102             4.14              411             20.23     12709                       674.00
                                                             (181)           (8.36)            (102)            (4.14)   (13975)                     (602.49)
(c) Pentaerythritol                              MT            930            61.23              421             35.93      1936                       172.68
                                                             (214)          (17.66)            (930)           (61.23)    (1129)                     (106.43)
(d) Sodium Formate                               MT               6            0.09              223              3.54      2088                        37.70
                                                              (95)           (1.48)               (6)           (0.09)    (2319)                      (36.92)
(e) Formaldehyde (50%)                           MT            191             1.98               51              0.40        315                        3.03
                                                             (134)           (2.02)            (191)            (1.98)      (672)                     (10.43)
(f)    Others (Refer Note (ii) below)                            ---              ---              ---               ---        ---                    306.37
                                                                                                                                                     (307.62)
       Total                                                               1216.11                            1918.12                               23388.37
                                                                         (1181.02)                          (1216.11)                             (20259.49)

*       Includes sale of materials processed outside, resale of finished paints and dealer tinting systems purchased.
i.      Figures in brackets are for the previous year.
ii.     This comprises of resins, machinery spares, stationery items, plant and machinery, dealer tinting systems and other miscellaneous
        items.


                                                                                                                          Asian Paints (India) Ltd.
                                                                                                                        annual report 2004-2005                       69
     Schedules forming part of the accounts
     8.    Raw materials consumed :

                                                                                              2004-2005                       2003-2004
                                                                    Unit               Qty.              Value              Qty.            Value
                                                                                               (Rs. in millions)                  (Rs. in millions)
     (a)   Pigments, Extenders, Minerals etc.                       MT           130,994                3,089.28       109,282                2,710.79
     (b)   Additives                                                MT            14,983                1,265.27        11,824                  956.74
     (c)   Solvents                                                 MT             5,295                                 4,314
                                                                    KL
                                                                           }      52,902
                                                                                              }         1,383.40        47,692
                                                                                                                                    }           941.74
     (d)   Resins                                                   MT             7,157                  450.72         3,933                  229.17
     (e)   Oils                                                     MT            22,865                1,038.53        20,206                  913.74
     (f)   Ortho Xylene                                             MT            23,632                  887.16        23,514                  704.58
     (g)   Methanol                                                 MT             6,659                  111.55         6,481                  130.24
     (h)   Acetaldehyde                                             MT             1,741                   64.45         1,581                   40.40
     (i)   Monomers                                                 MT             9,551                  763.42         8,291                  542.16
     (j)   Others                                                   MT            13,442                  383.42        11,114                  345.50
                                                                                                        9,437.20                              7,515.06
     9.    CIF value of direct imports :
                                                                                                                    2004-2005               2003-2004
                                                                                                                (Rs. in millions)       (Rs. in millions)
     (a)   Raw materials                                                                                               1,426.71                1,219.57
     (b)   Packing materials                                                                                              29.60                     5.62
     (c)   Stores and spares                                                                                              34.27                   19.36
     (d)   Capital goods                                                                                                  54.19                   21.08

     10.   Value of imported and indigenous raw materials and spares consumed and percentage of each to total consumption :

                                                                                  2004-2005                                  2003-2004
                                                                         (Rs. in millions) % to Total               (Rs. in millions) % to Total
     (a)   Raw materials :
           Direct imports                                                       1,737.49                18.41              1,458.07               19.40
           Others (Including value of consumption of
           imported raw materials purchased through
           indigenous sources Rs. 1,175.97 million -
           Previous year Rs. 800.59 million)                                    7,699.71                81.59              6,056.99               80.60
                                                                                9,437.20            100.00                 7,515.06              100.00
     (b)   Stores and spares :
           Direct imports                                                             27.65             27.65                  18.91              16.90
           Others                                                                     72.35             72.35                  92.98              83.10
                                                                                  100.00            100.00                   111.89              100.00

     11.   Net dividend remitted in foreign currency :

                                                             2004-2005                                                2003-2004
                                           Number of Non- Number of     Dividend                  Number of          Number of            Dividend
                                           resident       Equity Shares remitted                  Non-resident       Equity Shares        remitted
                                           Shareholders   held          (net of tax)              Shareholders       held                 (net of tax)
                                                                        (Rs. in millions)                                                 (Rs. in millions)
     Final Dividend 2002-2003              ---               ---               ---                21                 60,492               0.39
     Interim Dividend 2003-2004            ---               ---               ---                21                 90,734               0.32
     Final Dividend 2003-2004              19                87,031            0.44               ---                ---                  ---
     Interim Dividend 2004-2005            18                35,431            0.14               ---                ---                  ---




70
Schedules forming part of the accounts
                                                                                                                    (Rs. in Millions)
12.   Expenditure in foreign currency :
                                                                                                    2004-2005          2003-2004
      (a)   Annual maintenance for software                                                               8.31                7.09
      (b)   Royalty                                                                                          ---              0.10
      (c)   Procurement of software                                                                          ---              5.52
      (d)   Professional fees                                                                             1.47                3.48
      (e)   Shade cards and other sales promotional items                                                15.40                   ---
      (f)   Travelling and training expenses                                                              8.86                8.44
      (g)   Others                                                                                        4.92                4.01
                                                                                                         38.96              28.64

13.   Earnings in foreign currency :
                                                                                                    2004-2005          2003-2004
      (a)   Export of own products at FOB value                                                        102.08              52.06
      (b)   Export of traded goods at FOB value                                                          2.15              20.42
      (c)   Royalty                                                                                     18.16              13.93
      (d)   Dividend                                                                                     5.42               8.81
      (e)   Other receipts                                                                               9.42               7.35
                                                                                                        137.23             102.57

14.   The Company’s new paint plant at Sriperumbudur, near Chennai in the state of Tamil Nadu commenced production on
      20th January, 2005 with an initial installed capacity of 30,000 MTs per annum.
15.   Sundry debtors include Rs. 31.95 million (Previous year Rs. 23.34 million) due from subsidiary companies.
16.   Revenue expenses amounting to Rs. 96.36 million (Previous year Rs. 75.89 million) on Research and Development have been
      included under the respective heads of expenses.
17.   Interest expense includes:
                                                                                                 2004-2005       2003-2004
      On Debentures and other fixed loans                                                               4.13          31.35
      Other interest                                                                                   23.41          21.30
                                                                                                         27.54              52.65

18.   Hitherto, the Company has been recognising inter-division transfers of Phthalic Anhydride and Pentaerythritol to paint
      plants for captive consumption as revenue and the same was disclosed separately in Schedule H ‘Sales & Operating Income’.
      The value of such inter-division transfers was included in material consumption of the consuming divisions.
      With effect from the financial year ended 31st March 2005, the Company has discontinued the method of recognising inter-
      division transfers as sales as well as material consumption. The previous year’s figures have been restated accordingly. The
      above change in the method of revenue recognition has resulted in a reduction in Net Sales and operating income by
      Rs. 600.28 million (previous year Rs. 458.16 million) with a corresponding reduction in material consumption and has no
      impact on the profits of the Company.
19.   (A)   Pursuant to Accounting Standard (AS 28) - Impairment of Assets issued by the Institute of Chartered Accountants of
            India, the company made an assessment as at 1st April 2004 for any indication of impairment in the carrying amount
            of the Company’s fixed assets and determined impairment loss on certain fixed assets. As required by AS 28, the
            impairment loss as at 1st April 2004 is adjusted against opening balance of revenue reserves net of deferred tax credit,
            being the impairment loss relating to prior periods. The details of the same are as under :
            (a)   Fixed assets, being tinting systems leased to the dealers, have been written down by Rs. 248.21 million as the
                  carrying amount of such assets was significantly higher than the current replacement cost.
            (b)   Fixed assets being plant & machinery (including information technology assets and electric & pipe fittings),
                  scientific research equipment, furniture & fittings and office equipment have been written down by Rs. 206.24
                  million mainly due to technological obsolescence and expected disposal of such assets before the previously
                  estimated useful life.




                                                                                                       Asian Paints (India) Ltd.
                                                                                                     annual report 2004-2005            71
     Schedules forming part of the accounts
                 The total impairment provision of Rs. 291.42 million (Gross - Rs 454.45 million less Deferred Tax credit - Rs. 163.03)
                 has been adjusted against the opening General Reserves of the company as at 1st April 2004. After recognising the
                 impairment loss, the Company has provided depreciation on the asset’s revised carrying amount less its residual value
                 (if any), over its remaining useful life. Consequent to the above provision for impairment, the depreciation for the year
                 ended 31st March, 2005 has reduced by Rs. 100.92 million and the deferred tax liability for the year has increased by
                 Rs. 33.97 million resulting in net increase in the profits of the Company by Rs. 66.95 million.
                 The Company has assessed its fixed assets for impairment as at 31st March, 2005 and concluded that there has been
                 no significant change in the above impairment provision.
           (B)   Till the financial year ended 31st March, 2004, the company had been providing depreciation on its fixed assets under
                 Straight Line Method and at rates specified under Schedule XIV to the Companies Act, 1956 except tinting systems
                 (excluding computers which are part of tinting systems) leased to dealers which are depreciated over the estimated
                 useful life of nine years. Based on the management’s estimate of useful life, the Company has increased the rate of
                 depreciation of certain classes of assets as follows:
                 Asset Class                                 Rate of Depreciation (%)        Revised Useful         Revised Rate of
                                                              till 31st March, 2004.           Life (years)         Depreciation (%)
                 Information Technology Assets                         16.21                        4                    25.00
                 Scientific Research Equipment                         4.75                         8                    12.50
                 Furniture                                             6.33                         8                    12.50
                 Office Equipment                                      4.75                         5                    20.00
                 Vehicles                                              9.50                         5                    20.00
                 The carrying amount of the above assets as at 1st April, 2004 is being depreciated over the revised remaining useful life.
                 The above revision in useful life has resulted in additional depreciation amounting to Rs. 83.13 million for the financial
                 year ended 31st March, 2005 which has been charged to Profit and Loss account as required under Accounting
                 Standard (AS 6) Depreciation Accounting. Consequently, the Deferred Tax Liability for the year ended 31st March,
                 2005 has reduced by Rs 27.98 million resulting in net decrease in the profits of the company by Rs. 55.15 million.
                 The combined impact of (A) and (B) above has resulted in a net reduction in depreciation by Rs. 17.79 million, a net
                 increase in Deferred Tax Liability by Rs. 5.99 million, and net increase in the profits for the financial year ended 31st
                 March, 2005 by Rs. 11.80 million.
     20.   Sundry balances write back (net) include write back of provisions made in the earlier years towards statutory and other
           liabilities which have been determined to be no longer required in the current financial year.
     21.   Interest income includes Rs. 1.53 million (previous year Rs. 2.63 million) from non-trade investments. Interest income for the
           year ended 31st March, 2004 included Rs. 29.78 million received on account of completion/disposal of various tax
           assessments/appeals.
     22.   The amount due to Small Scale Industrial undertakings (SSIs) is furnished under the relevant head, on the basis of information
           available with the Company regarding small scale industry status of the suppliers. There are no amounts outstanding to such
           suppliers which are due for more than 30 days beyond the agreed credit period.
     23.   During the year the Company sold its investment in its subsidiary Asian Paints (Mauritius) Ltd. aggregating to 6,670,755
           ordinary shares of Mauritian Rupees 10/- each being 89.58% of total ordinary share capital to some of the existing shareholders
           of the subsidiary company for a consideration of Rs. 0.76 million (equivalent to Mauritian Rupees 500,000). The Company
           had invested Rs. 111.12 million in the subsidiary till the date of transfer. The Company had made a provision of Rs. 68.06
           million towards permanent diminution in the value of investments in the financial year ended 31st March 2004. The balance
           amount of Rs. 42.31 million net of consideration received has been recognised in the Profit and Loss Account as an
           extraordinary item towards loss on sale of investment.
     24.   ‘Miscellaneous Expenses‘ includes initial project expenses incurred in setting up a paint plant at Pondicherry amounting to
           Rs. 22.90 million written off during the year as the project is no longer pursued.
     25.   ‘Profit on sale of Assets’ includes Rs. 31.90 million towards profit on disposal of the Company’s property in Mumbai.
     26.   Pursuant to the Accounting Standard (AS 29) – Provisions, Contingent Liabilities and Contingent Assets, the disclosure relating
           to provisions made in the accounts for the year ended 31st March, 2005 is as follows:




72
Schedules forming part of the accounts
                                                                                                                             (Rs. in Millions)
                           *Provision for           *Provision for discounts        Provision for Leave            Provision for Bad and
                              Excise(1)              and sales promotional             Encashment(3)                  Doubtful Debts(4)
                                                          expenses(2)
                       2004-05       2003-04        2004-05        2003-04         2004-05        2003-04          2004-05       2003-04
Opening Balance           59.96         69.86        158.02         161.27          123.70          120.91           38.97          24.18
Additions                  0.56          0.18        200.32         158.02            2.72           13.37            9.45          23.09
Utilization                   ---           ---      144.01         157.47               ---         10.58            8.52           5.05
Reversals                  8.53         10.08         14.01           3.80               ---             ---          7.01           3.25
Closing Balance           51.99         59.96        200.32         158.02          126.42          123.70           32.89          38.97
* Provision for Excise and Provision for discounts & Sales promotional expenses have been grouped under the head ‘Other
    provisions’ of Schedule G.
(1)
     Excise provision is made towards matters disputed at various appellate levels.
(2)
     Provision is made towards discounts and sales promotion, but yet to be quantified at customer level.
(3)
     Provision is made based on actuarial valuation.
(4)
     Provision for doubtful debts is made based on the management’s estimate.
27. The Company has recognised deferred tax arising on account of timing differences, being the difference between the
       taxable income and accounting income, that originates in one period and is capable of reversal in one or more subsequent
       period(s) in compliance with Accounting Standard (AS 22) - Accounting for Taxes on Income issued by Institute of Chartered
       Accountants of India.
       The major components of deferred tax assets/(liabilities) arising on account of timing differences as at 31st March, 2005
       are as follows :
                                                                                                                   (Rs. in Millions)
                                                                                                           As at                    As at
                                                                                               31st March, 2005         31st March, 2004

      Deferred tax Assets/(Liabilities)
      Difference between the Written Down Value of assets as
      per books of accounts and Income Tax Act, 1961.                                                   (397.17)                  (583.21)
      Expenses allowed for tax purpose on payment basis                                                    58.16                     52.37
      Provision for doubtful debts                                                                         11.07                     13.95
      Voluntary Retirement Scheme (VRS) expenditure debited to
      Profit & Loss Account but allowed under the Income tax Act over five years                            4.80                      3.44
      Capital Losses carried forward under the Income Tax Act, 1961.                                       17.76                     26.89
      Net Deferred tax Assets/(Liabilities)                                                             (305.38)                  (486.56)
      Excess Liability created in 2001-2002 transferred back to
      General Reserve                                                                                          ---                   50.56
      Deferred tax liability reversed on assets impaired as at 1st April, 2004.                           163.03                         ---
      Deferred tax Assets/(Liabilities) for the year                                                       18.16                     44.46

28.   Pursuant to Accounting Standard (AS 19) - Leases issued by the Institute of Chartered Accountants of India, the following
      information is given :
      a)    The Company has provided tinting systems to its dealers on an operating lease basis. The lease period varies between
            nine and ten years. Lease rentals are payable monthly. A refundable security deposit is collected at the time of signing
            the agreement. The equipment shall be used only to tint products of the lessor.
      b)    Future minimum lease rentals receivable as at 31st March, 2005 as per the lease agreements:
                                                                                                                    (Rs. in Millions)
                                                                                                           2004-2005           2003-2004
            i)     Not later than one year                                                                         80.42            136.83
            ii)    Later than one year and not later than five years                                               27.51            105.83
            iii)   Later than five years                                                                            0.30              1.49
                                                                                                                 108.23             244.15
            The information pertaining to future minimum lease rentals receivable is based on the lease agreements entered into
            between the Company and the dealers and variation made thereto. Lease rentals are reviewed periodically taking into
            account prevailing market conditions.


                                                                                                                 Asian Paints (India) Ltd.
                                                                                                               annual report 2004-2005           73
     Schedules forming part of the accounts
           c)    Total amount of contingent rents recognised as income —NIL (Previous Year - NIL).
           d)    The initial direct cost relating to acquisition of tinting systems is capitalised.
           e)    The information on gross amount of leased assets, depreciation and impairment is given in Schedule ‘D’ to the Balance Sheet.
     II.   a)    The Company has taken certain assets like cars, computers etc., on an operating lease basis for a period of 48 months.
                 The lease rentals are payable on a monthly/quarterly basis by the Company.
           b)    Future minimum lease rentals payable as at 31.03.2005 as per the lease agreements :
                                                                                                                        (Rs. in Millions)

                                                                                                            2004-2005          2003-2004
                 i)     Not later than one year                                                                   30.09              29.17
                 ii)    Later than one year and not later than five years                                         36.13              53.92
                 iii)   Later than five years                                                                         ---                ---
                                                                                                                  66.22              83.09

           c)    Lease payments recognised in the Profit and Loss Account for the period are Rs. 29.22 million (Previous year Rs. 22.60
                 million).

     29.   Pursuant to the Accounting Standard (AS 27) - Financial Reporting of Interests in Joint Venture, the disclosures relating to
           Joint Venture viz., Asian PPG Industries Limited (hereinafter referred to as JV) are as follows:
           a)    The proportion of interest of the Company in the JV is by way of equal equity participation with PPG Industries Inc., U.S.A.
           b)    The aggregate amount of assets, liabilities, income and expenses related to the Company’s interests in the JV as at 31st
                 March, 2005 is as follows:
                                                                                                                            (Rs. in Millions)

                                                                                                            2004-2005          2003-2004
                 i)     Assets                                                                                  563.73             459.82
                 ii)    Liabilities                                                                             197.26             174.96
                 iii)   Income                                                                                1,025.74             787.60
                 iv)    Expenses                                                                                927.59             731.83

           c)    The Company’s share of capital commitments in the JV as at 31st March, 2005 is Rs. 2.54 million (Previous year
                 Rs. Nil).
           d)    The Company’s share of contingent liabilities of the JV as at 31st March, 2005 is Rs. 1.32 million (Previous year
                 Rs. 1.32 million).
           e)    No contingent liabilities and capital commitments have been incurred as at 31st March, 2005 in relation to the Company’s
                 interests in the JV along with the other venturer (Previous year Rs. Nil).

     30.   Earnings per share:
                                                                                                            2004-2005          2003-2004
           a)    Basic and diluted earnings per share before extraordinary item in rupees
                 (face value - Rs. 10/- per share)                                                                18.53              16.12
           b)    Profit after tax and prior period items but before extraordinary item
                 as per Profit & Loss Account (Rs. in million)                                               1,777.13           1,545.93
           c)    Weighted average number of equity shares outstanding                                      95,919,779         95,919,779




74
Schedules forming part of the accounts
31.        Information on related party transactions as required by Accounting Standard (AS 18) for the year ended 31st March, 2005.
                                                                                                                                                             (Rs. in Millions)
Particulars                 Joint Venture           Subsidiaries         Key Management      Relatives of Key         Companies          Employee benefit         Others
                                                                            Personnel         Management             Controlled by         plans where
                                                                                              Personnel (*)       Directors/Relatives     control exists

                          2004-05 2003-04 2004-05 2003-04 2004-05 2003-04 2004-05 2003-04 2004-05                            2003-04 2004-05 2003-04 2004-05 2003-04

Processing of goods
(Income)                   65.41     65.78          4.96       4.42
Sale of goods              91.67     50.21         71.25      46.53                                                  7.15       3.01
Purchase of goods          10.87     10.44            ---      0.11                                               260.65     156.49
Processing of goods
(Expense)                                                                                                         138.58     106.48
Consignment sales           0.03       0.99
Royalty received            9.91       6.23        24.69      20.47
Consultancy                                                                                                          1.59          ---
Other recoveries           48.57     45.83          1.11       7.35                                                  0.14       0.32
Interest on loan                                                                                                     0.06       0.20
Rent deposit                                                                                                           ---     (0.10)
Sale of investments                                   ---      0.05          ---                ---      1.25        3.00       8.12
Equity contribution                                99.88    211.24
Share Application                                  28.43           ---
Repayment of
loan given                                         17.47      14.33                                                13.00        1.20
Rent paid                                          19.50      19.50
Remuneration                                                              29.84     25.98     7.29       6.89
Commission to Non-
Executive Directors                                                        0.40      0.28     1.20       0.84
Sitting fees paid to
Non-Executive Directors                                                    0.07        ---    0.33          ---
Sitting fees received
(From subsidiaries
for nominee Directors)                              1.68           ---
Other services -
receipts                                            5.74           ---
Retainership fee
and other
reimbursements                                                             1.83      1.91
Fixed Deposits
accepted                                                                     ---     0.15
Fixed Deposits
repaid                                                                     0.15      0.02
Donation                                                                                                                                                      1.20         2.90
Sale of assets                                      7.14           ---
Dividend received          29.25            ---     5.42       8.81                                                  2.26       0.25
Contribution during
the year                                                                                                                                 204.45    163.26
Outstanding as
on 31.3.2005 :
Loans                                             158.02    145.69                                                     ---      1.30
Deposits                   (0.65)    (0.65)           ---          ---       ---    (0.15)      ---         ---    (0.10)      (0.10)
Others                     26.74     39.69         34.43      34.43      (14.20)   (12.07)   (1.20)     (0.84)    (15.33)      (7.48) (54.08)      (22.03)

Corporate guarantee issued by the Company on behalf of its subsidiaries amounting to Rs. 879.17 million as at 31st March, 2005 (Previous year Rs. 769.68 million).
* Under the employment of the Company pursuant to the necessary approvals from the shareholders and the Central Govt. under section 314 of the Companies Act, 1956.




                                                                                                                                            Asian Paints (India) Ltd.
                                                                                                                                          annual report 2004-2005                 75
     Schedules forming part of the accounts
     a)   Joint Venture : Asian PPG Industries Ltd.
     b)   Subsidiaries :
          Asian Paints (Nepal) Pvt. Ltd.               Berger Paints Singapore Pte Ltd.                 Berger International Ltd.
          Asian Paints (International) Ltd.            Berger Building Services (Singapore) Pte. Ltd.   Berger Paints Trinidad Ltd.
          Asian Paints (South Pacific) Holdings Ltd.   Berger International Sdn Bhd.                    Enterprise Paints Ltd.
          Asian Paints Industrial Coatings Ltd.        Berger Paints (Thailand) Ltd.                    Lewis Berger (Overseas Holdings) Ltd.
          Asian Paints (S.P.) Ltd.                     Berger Paints Manufacturing Ltd.                 Nirvana Investments Ltd.
          Asian Paints (Tonga) Ltd.                    Berger Paints (Ningbo) Co. Ltd.                  Samoa Paints Ltd.
          Asian Paints (S.I.) Ltd.                     Berger Paints (Hong Kong) Ltd.                   SCIB Chemical, S.A.E.
          Asian Paints (Vanuatu) Ltd.                  Berger Contractor (Singapore) Pte. Ltd.          Surya Powder Coating Limited (Formerly known as
          Asian Paints (Queensland) Pty. Ltd.          Berger Paints Emirates Ltd.                      Surya Gelcaps Limited)*
          Asian Paints (Lanka) Ltd.                    Berger Paints Jamaica Ltd.                       Taubmans Paints Fiji Ltd.
          Asian Paints (Bangladesh) Ltd.               Berger Paints Barbados Ltd.                      Technical Instruments Manufacturers (India) Ltd.
          Asian Paints (Middle East) LLC               Berger Paints Bahrain WLL                        Universal Paints Ltd.

          * acquired on 25th October, 2004.
          The following subsidiaries have been liquidated/struck off/disposed off during the year :
          Name of Subsidiary                           Date of disposal/liquidation
          Asian Paints Distributors (Private) Ltd.
          Sri Lanka                                Under voluntary liquidation
          Asian Paints (Mauritius) Limited         30th March, 2005
          Berger Paints (Malta) Ltd.               12th May, 2004
          Berger Paints (Shanghai) Ltd.            23rd February, 2004
     c)   Associate Company :
          Dutch Boy Philippines Inc.
     d)   Key management personnel :
          Name of the Director                         Designation
          Ashwin C. Choksi                             Chairman
          Ashwin S. Dani                               Vice Chairman & Managing Director
          Abhay A. Vakil                               Managing Director
          K. Rajagopalachari                           Non-Executive Director (till 14th March, 2005)




76
Schedules forming part of the accounts
e)   Relatives of Key management personnel :
     Directors :
     Mahendra C. Choksi                 Non-Executive Director
     Amar A. Vakil                      Non-Executive Director
     Hasit A. Dani                      Non-Executive Director
     Employees :
     Jalaj Dani, Manish Choksi, Nehal Vakil, Amrita Vakil, Rupen Choksi and Malav Dani.
f)   Companies controlled by directors/relatives :
     AR Intertect Design Pvt. Ltd.                 Gujarat Organics Ltd.                           Resins and Plastics Ltd.
     Ashwin Holdings Pvt. Ltd.                     Geetanjali Trading & Investments Ltd.           Ricinash Oil Mill Ltd.
     Asteroids Trading and Investments Pvt. Ltd.   Hitech Plast Ltd.                               Rita Choksi Holdings Pvt. Ltd.
     Castle Investments and Industries Pvt. Ltd.   Himanshu Holdings Pvt. Ltd.                     Rupen Investments and Industries Pvt. Ltd.
     Centaurus Trading and Investments Pvt. Ltd.   Jalaj Trading and Investments Pvt.Ltd.          S.C. Dani Research Foundation Ltd.
     Clear Plastic Ltd.                            Jaldhar Investments and Trading Co. Pvt. Ltd.   Sadavani Investments and Trading Co. Pvt. Ltd.
     Coatings Specialities (India) Ltd.            Jatayu Investments Ltd.                         Sanjivani Chemicals Ltd.
     Dani Capital and Investments Pvt. Ltd.        Kalica Paper Industries Pvt. Ltd.               Sapan Investments Pvt. Ltd.
     Dani Enterprises Pvt. Ltd.                    Lambodar Investments & Trading Co. Ltd.         Satyadharma Investments & Trading Co. Pvt. Ltd.
     Dani Finance and Investments Co. Pvt. Ltd.    Lyon Investments and Industries Pvt. Ltd.       Sudhanva Investments and Trading Co. Pvt. Ltd.
     Dani Finlease Ltd.                            Multitech Plast Containers Ltd.                 Suprasad Investments & Trading Co. Ltd.
     Dani Holdings & Trading Co. Pvt. Ltd.         Murahar Investments and Trading Co. Ltd.        Suptaswar Investments and Trading Co. Ltd.
     Dani Securities Ltd.                          Navbharat Packaging Industries Ltd.             Tru Trading and Investments Pvt. Ltd.
     Dani Trading and Investments Ltd.             Nehal Trading and Investments Pvt. Ltd.         Unnati Trading and Investments Pvt. Ltd.
     Doli Trading and Investments Pvt. Ltd.        Omega Properties Pvt. Ltd.                      Urvashi Holding Pvt. Ltd.
     Elcid Investments Ltd.                        Pragati Chemicals Ltd.                          Vikatmev Containers Ltd.
     ELF Trading and Chemical Mfg. Co. Ltd.        Rangmeet Investments Ltd.

g)   Employee Benefit Funds where control exists :
     Asian Paints Office Provident Fund, Asian Paints Factory Employees’ Provident Fund, Asian Paints Management
     Cadres’ Superannuation Scheme, Asian Paints (India) Limited Employees’ Gratuity Fund.
h)   Other entities over which there is significant control : Asian Paints Charitable Trust.




                                                                                                                Asian Paints (India) Ltd.
                                                                                                              annual report 2004-2005                77
     Schedules forming part of the accounts
     32.     Segment Information for the year ended 31st March, 2005:
                                                                                                                 (Rs. in Millions)

                                                                  2004-2005                               2003-2004
                                                        Paints     Others*          Total       Paints     Others*          Total
     Revenue
     Net sales
     External                                       18,665.64       749.51     19,415.15    16,329.39       637.07    16,966.46
     Inter-Segment                                          ---     600.28        600.28           —        458.16       458.16
     Other Income                                       99.50        31.56        131.06       105.89        17.82       123.71
     Total Revenue                                  18,765.14     1,381.35     20,146.49    16,435.28     1,113.05    17,548.33
     Result
     Segment result                                  2,915.22      121.57       3,036.79     2,661.89        49.57     2,711.46
     Unallocated Corporate expenses                                             (444.00)                               (372.74)
     Operating Profit                                                           2,592.79                               2,338.72
     Interest Expenses                                                            (27.54)                                (52.65)
     Interest Income                                                                 4.60                                  37.06
     Dividends                                                                      93.78                                  15.54
     Profit/(Loss) on sale of long term
     investments                                                                    0.50                                    0.01
     Profit/(Loss) on sale of short term
     investments                                                                    23.90                                   1.65
     Profit on sale of assets                                                       32.10                                      ---
     Miscellaneous income                                                           30.18                                  39.07
     Extraordinary items                                                          (42.31)                                (68.06)
     Income taxes                                                               (969.84)                               (835.54)
     Net Profit                                                                 1,738.16                               1,475.80
     Other Information
     Segment assets                                  7,785.29      691.69       8,476.98     6,427.06       553.99     6,981.05
     Unallocated corporate assets                                               3,227.69                               3,497.92
     Total assets (after impairment loss)                                      11,704.67                              10,478.97
     Segment liabilities                             3,696.30      245.94       3,942.24     3,270.14        51.98     3,322.12
     Unallocated corporate liabilities                                          2,040.23                               1,841.44
     Total liabilities                                                          5,982.47                               5,163.56
     Capital Expenditure                               699.43       22.18        721.61       238.90         10.62       249.52
     Unallocated corporate capital
     expenditure                                                                   26.79                                  13.36
     Total                                                                       748.40                                  262.88
     Depreciation                                      387.36       36.04        423.40       404.61         34.72       439.33
     Unallocated corporate depreciation                                           52.64                                   40.77
     Total                                                                       476.04                                  480.10

     Impairment loss on segment assets as on
     1st April, 2004                                   384.17           2.30     386.47             ---         ---            ---
     Impairment loss on unallocated corporate
     assets as on 1st April, 2004                                                  67.98                                       ---

     Total                                                                       454.45                                        ---




78
Schedules forming part of the accounts
* Others include Company’s business units manufacturing Phthalic Anhydride and Pentaerythritol.
33.   Previous year’s figures have been regrouped, wherever necessary.




                                               Signatures to Schedules A to M
As per our report of even date      For and on behalf of the Board
For Shah & Co.                      Ashwin C. Choksi      Ashwin S. Dani        Abhay A. Vakil         Tarjani Vakil
Chartered Accountants               Chairman              Vice Chairman &       Managing Director      Director
                                                          Managing Director
H. N. Shah
Partner                             Jayesh Merchant
Membership No. 8152                 Vice President -
                                    Corporate Finance &
                                    Company Secretary
Mumbai                              Mumbai
11th May, 2005                      11th May, 2005




                                                                                                    Asian Paints (India) Ltd.
                                                                                                  annual report 2004-2005       79
     Statement
     PURSUANT TO PART IV OF SCHEDULE VI TO THE COMPANIES ACT, 1956 BALANCE SHEET ABSTRACT AND COMPANY’S
     GENERAL BUSINESS PROFILE

     I.   Registration Details
          Registration No.                                                                                                                     State Code
                                                          0   4     5   9 8                                                                                     1 1
          Balance Sheet Date                                                  3 1                0 3               2 0          0 5
                                                                              Date              Month                      Year
     II. Capital Raised During the Year (Amount - Rs. in Thousands)
          Public Issue                                                           Cancellation of shares                         Rights Issue
                          N       I       L                                           N I L                                                    N   I   L
          Bonus Issue                                                                                                           Private Placement
                     N                I       L                                                                                              N I       L
     III. Position of Mobilisation and Deployment of Funds
           (Amount - Rs. in Thousands)
          Total Liabilities                                                                                                     Total Assets
                    6 8 6 6 3 5                               0                                                                          6 8 6 6 3 5                0
          Sources of Funds
          Paid-up Capital                                                                                                       Reserves and Surplus
                     9 5 9 1 9                                8                                                                          4 7 6 3 0 0                0
          Secured Loans                                                  Unsecured Loans                                        Deferred Tax Liability
                     2 8 3 6 5                                1                     5 5 5 1 2              1                               3 0 5 3 8 0
          Application of Funds
          Net Fixed Assets                                                                                                      Investments
                   3 1 9 5 0 9                                 0                                                                        2 5 8 4 2 7                 0

          Net Current Assets                                                                                                    Accumulated Losses
                  1 0 8 6 9 9                                  0                                                                          N I L

     V. Performance of the Company (Amount - Rs. in Thousands)
          Turnover                                                                                                              Total Expenditure
                 2    3 3         8 8 3 7                     0                                                                      2   0 6       8 0 3 7          0
            +     -    Profit/(Loss) Before Tax                                                                    +       -    Profit/(Loss) After Tax
                        2    7           0       8   0       0 0                                                                        1 7      3 4 8 2          0
          (Please tick Appropriate box + for profit, - for loss)

          Earnings Per Share (Rs.)                                                                                              Dividend Rate (%)
                          1 8 . 5                             3                                                                  0 9 5

     V. Generic Names of three Principal Products/Services of the Company
        (As per Monetary Terms)
          Item Code No. (ITC Code)                                                   Product Description
               3 2 0 8 9 0 0                                  3                        S Y N T H E T                   I C          E    N A M         E    L   ,

                                                                                      O   T H    E   R         C O             L O U     R     S
          Item Code No. (ITC Code)                                                   Product Description
               2 9 1 7 3 5 0                                  0                       P H     T H A        L   I       C         A N H Y D             R    I   D E
          Item Code No. (ITC Code)                                                   Product Description
               2 9 0 5 4 2 0                                  0                        P E N T A E R                   Y T H R           I     T O     L




80
   Consolidated
Financial Statements
     Auditors’ Report                           to the Board of Directors of Asian Paints (India) Limited group on the
                                                Consolidated Financial Statements of Asian Paints (India) Limited and its
                                                subsidiaries


     We have audited the attached consolidated Balance Sheet of            We report that the consolidated financial statements have been
     Asian Paints (India) Limited group as at 31st March 2005,             prepared by the Company in accordance with the requirements
     and also the Consolidated Profit and Loss Account and the             of Accounting Standard (AS-21) - Consolidated Financial
     cash flow statement for the year ended on that date annexed           Statements, (AS-23) Accounting for Investments in Associates
     thereto. These financial statements are the responsibility of the     in Consolidated Financial Statements and (AS-27) Financial
     Asian Paints (India) Limited’s management and have been               Reporting of Interests in Joint Ventures issued by the Institute of
     prepared by the management on the basis of the separate               Chartered Accountants of India.
     financial statements and other financial information regarding
                                                                           Based on our audit of financial statements of Asian Paints (India)
     its subsidiaries. Our responsibility is to express an opinion on
                                                                           Limited and on consideration of reports of other auditors of
     these financial statements based on our audit.
                                                                           subsidiaries, included in the consolidated financial statements
     We conducted our audit in accordance with generally accepted          read with Notes 5 and 6, of Schedule ’M’ - B, and to the best of
     auditing standards in India. These standards require that we          our information and according to explanations given to us, we
     plan and perform the audit to obtain reasonable assurance             are of the opinion that the attached consolidated financial
     whether the financial statements are prepared, in all material        statements give a true and fair view in conformity with the
     respects, in accordance with and identified financial reporting       accounting principles generally accepted in India:
     framework and are free of material misstatements. An audit
                                                                           a)   In the case of consolidated Balance Sheet, of the state of
     includes examining on a test basis, evidence supporting the
                                                                                affairs of Asian Paints (India) Limited group as at 31st
     amounts and disclosures in the financial statements. An audit
                                                                                March 2005;
     also includes assessing the accounting principles used and
     significant estimates made by management, as well as                  b)   In the case of consolidated Profit and Loss Account, of
     evaluating the overall financial statements. We believe that               the profit for the year ended on that date; and
     our audit provides a reasonable basis for our opinion.
                                                                           c)   in the case of the consolidated cash flow statement, of
     We did not audit the financial statements of subsidiaries                  the cash flows for the year ended on that date.
     mentioned in Annexure to this report whose total assets and
     total revenues are mentioned in the annexure to this report
     except Asian Paints Industrial Coatings Ltd. and Technical
     Instruments Manufacturers (India) Ltd. whose accounts are                                                             For Shah & Co.
     audited by us. The financial statements of other subsidiaries                                                  Chartered Accountants
     other than those mentioned above have been audited by other
     auditors whose reports have been furnished to us, and our
     opinion, in so far as it relates to the amounts included in respect   Mumbai                                             H. N. Shah
     of subsidiaries, is based solely on the reports of the other          11th May, 2005                                         Partner
     auditors.                                                                                                      Membership No. 8152




     Annexure
     The subsidiary companies considered in the consolidated financial statements are:
     Direct Subsidiaries:                                                                                                    (Rs. in Millions)
     Name of the Company                                             Financial Year             Total Assets            Total Revenues
     Asian Paints (Nepal) Limited                                   15th Jan-14th Jan               128.89                   139.61
     Asian Paints (Mauritius) Limited (Refer note below)                 Jan-Dec                      0.00                    25.06
     Asian Paints (International) Limited                                Jan-Dec                  4,227.08                  4861.15
     Asian Paints Industrial Coatings Limited.                          Apr-Mar
     Technical Instruments Manufacturers (India) Limited                Apr-Mar
     Note –
     Subsequent to the Balance Sheet date of Asian Paints (Mauritius) Limited, the parent Company has sold its 89.58% stake in
     Asian Paints (Mauritius) Limited on 30th March 2005.




82
Indirect Subsidiaries:
i)   Subsidiaries of the wholly owned subsidiary, Asian Paints (International) Limited, Mauritius.
                                                                                                        Accounting period
      Asian Paints (South Pacific) Holdings Limited                                                         Jan-Dec
      Asian Paints (South Pacific) Limited                                                                  Jan-Dec
      Asian Paints (Tonga) Limited                                                                          Jan-Dec
      Asian Paints (Soloman Island) Limited                                                                 Jan-Dec
      Asian Paints (Vanuatu) Limited                                                                        Jan-Dec
      Asian Paints (Queensland) Pty. Limited                                                                Jan-Dec
      Asian Paints (Lanka) Limited                                                                          Jan-Dec
      Asian Paints (Bangladesh) Limited                                                                     Jan-Dec
      Asian Paints (Middle East) LLC                                                                        Jan-Dec
      SCIB Chemical, S.A.E., Egypt                                                                          Jan-Dec
      Berger International Limited, Singapore                                                               Jan-Dec
ii) Subsidiary of Asian Paints (South Pacific) Limited:
      Taubmans Paints (Fiji) Limited                                                                          Jan-Dec
iii) Subsidiar y of Taubmans Paint (Fiji) Limited:
      Samoa Paints Limited                                                                                    Jan-Dec
i v ) Subsidiar y of Asian Paints Lanka Limited:
      Asian Paints Distributors (Pvt.) Limited
      (In voluntary liquidation)                                                                              Jan-Dec
v ) Subsidiaries of Berger International Limited, Singapore
                                                                                                        Accounting period
      Berger Paints Singapore Pte. Ltd.                                                                     Jan - Dec
      Berger Building Services (Singapore) Pte. Ltd.                                                        Jan - Dec
      Berger International Sdn Bhd.                                                                         Jan - Dec
      Berger Paints (Thailand) Ltd.                                                                         Jan - Dec
      Berger Paints Manufacturing Ltd.                                                                      Jan - Dec
      Berger Paints (Ningbo) Co. Ltd.                                                                       Jan - Dec
      Berger Paints (Hong Kong) Ltd.                                                                        Jan - Dec
      Berger Paints (Malta) Ltd., (Disposed on 12th May, 2004)                                              Jan - Dec
      Enterprise Paints Limited                                                                             Jan - Dec
      Universal Paints Limited                                                                              Jan - Dec
      Lewis Berger (Overseas Holdings) Ltd.                                                                 Jan - Dec
      Berger Paints (Shanghai) Ltd. (Liquidated on 23rd February, 2004)                                     Jan - Dec
vi) Subsidiary of Berger Building Services (Singapore) Pte Ltd.
      Berger Contractor (Singapore) Pte. Ltd.                                                                   Jan - Dec
vii) Subsidiary of Enterprise Paints Limited:
      Nirvana Investments Ltd.                                                                                  Jan - Dec
viii) Subsidiary of Nirvana Investments Ltd.
      Berger Paints Emirates Ltd.                                                                               Jan - Dec
i x ) Subsidiaries of Lewis Berger (Overseas Holdings) Ltd.:
      Berger Paints Jamaica Ltd.                                                                                Jan - Dec
      Berger Paints Trinidad Ltd.                                                                               Jan - Dec
      Berger Paints Barbados Ltd.                                                                               Jan - Dec
x) Subsidiary of Universal Paints Limited:
      Berger Paints Bahrain W.L.L.                                                                              Jan - Dec
xi) Subsidiary of Asian Paints Industrial Coatings Limited:
      Surya Powder Coatings Limited
      (Formerly known as Surya Gelcaps Limited)                                                                Apr - Mar
Joint Venture:
The Joint Venture unit considered in the consolidated financial statements is Asian PPG Industries Limited, a joint venture
between the parent company and PPG Industries Inc., U.S.A. wherein the parent company has equal equity participation.
Associate Company:
Dutch Boy Philippines, Inc., wherein one of the indirect subsidiaries i.e. Berger International Limited is holding 30% equity interest.
                                                                                                                     For Shah & Co.
                                                                                                              Chartered Accountants
Mumbai                                                                                                                 H. N. Shah
11th May, 2005                                                                                                             Partner
                                                                                                             Membership No. 8152


                                                                                                         Asian Paints (India) Ltd.
                                                                                                       annual report 2004-2005            83
     Consolidated Balance Sheet as at 31st March, 2005
                                                                                                                    (Rs. in Millions)
                                                                                                           As at            As at
                                                                            Schedules                31.03.2005       31.03.2004
     FUNDS EMPLOYED
     Shareholders’ Funds
     Share Capital                                                             A                         959.20               959.20
     Reserves and Surplus                                                      B                       4,690.13             4,313.15
     Capital Reserve on consolidation                                                                     22.42                22.42
                                                                                                       5,671.75             5,294.77
     Loan Funds                                                                C
     Secured Loans                                                                                       982.64               441.88
     Unsecured Loans                                                                                   1,412.40             1,251.34
                                                                                                       2,395.04             1,693.22
     Deferred Tax Liability (Net)                                                                        353.37               533.41
     (Refer Note B - 17 in Schedule ‘M’)
     Minority Interest                                                                                   638.53               697.81
     Total                                                                                             9,058.69             8,219.21
     APPLICATION OF FUNDS
     Fixed Assets                                                              D
     Gross Block                                                                                       9,363.80             8,867.74
     Less: Depreciation/Amortisation/Impairment                                                        5,090.95             4,174.24
     Net Block                                                                                         4,272.85             4,693.50
     Capital Work in Progress                                                                             96.70                46.47
                                                                                                       4,369.55             4,739.97
     Investments                                                               E                       1,138.36             1,018.06
     Current Assets, Loans and Advances                                        F
     Interest accrued on investments                                                                       0.03                 0.87
     Inventories                                                                                       4,545.44             3,181.85
     Sundry debtors                                                                                    2,958.67             2,649.77
     Cash and Bank Balances                                                                              608.19               698.00
     Other receivables                                                                                   163.93               184.73
     Loans and Advances                                                                                  800.31               760.92
                                                                                                       9,076.57             7,476.14
     Retirement benefit assets (Refer Note B - 7 (vi) in Schedule M)                                     152.10               123.73
     Less : Current Liabilities and Provisions                                 G
            Current Liabilities                                                                        5,005.99             4,751.31
            Provisions                                                                                 1,172.03               969.10
                                                                                                       6,178.02             5,720.41
     Net Current Assets                                                                                3,050.65             1,879.46
     Goodwill on consolidation                                                                           500.13               581.72
     Miscellaneous Expenditure                                                                                ---               0.01
     (To the extent not written off)
     Total                                                                                             9,058.69             8,219.21
     Notes                                                                     M


     As per our report of even date        For and on behalf of the Board
     For Shah & Co.                        Ashwin C. Choksi       Ashwin S. Dani        Abhay A. Vakil      Tarjani Vakil
     Chartered Accountants                 Chairman               Vice Chairman &       Managing Director   Director
                                                                  Managing Director
     H. N. Shah
     Partner                               Jayesh Merchant
     Membership No. 8152                   Vice President -
                                           Corporate Finance &
                                           Company Secretary
     Mumbai                                Mumbai
     11th May, 2005                        11th May, 2005



84
                                                                                             Consolidated Financial Statements




Consolidated Profit & Loss Account
for the year ended 31st March, 2005
                                                                                                                 (Rs. in Millions)
                                                                                                     Year               Year
                                                                       Schedules                2004-2005          2003-2004
INCOME
Sales and operating income (Net of discounts)                             H                      28,966.96          24,916.05
Less: Excise                                                                                      3,361.74           2,736.97
Sales and operating income (Net of discounts and excise)                                         25,605.22          22,179.08
Other income                                                               I                        323.69             263.55
                                                                                                 25,928.91          22,442.63
EXPENDITURE
Materials Consumed                                                        J                      14,892.88          12,463.37
Employees’ remuneration and benefits                                      K                       2,015.52           1,851.41
Manufacturing, administrative, selling and distribution expenses          L                       5,345.50           4,892.72
                                                                                                 22,253.90          19,207.50
PROFIT BEFORE INTEREST, DEPRECIATION AND TAX                                                      3,675.01            3,235.13
Less : Interest                                                                                     108.15              152.03
Less : Depreciation/Amortisation                                          D                         613.60              628.35
Add : Profit from Associate Company                                                                   2.18               39.14
PROFIT BEFORE TAX AND AMORTISATION OF GOODWILL                                                    2,955.44            2,493.89
Less : Amortisation of Goodwill                                                                      77.10               78.26

PROFIT BEFORE TAX                                                                                 2,878.34            2,415.63
Less : Provision For Current Tax                                                                  1,079.68              999.75
Less : Provision For Deferred Tax Liability/(Asset)
       (Refer Note B - 17 in Schedule ‘M’)                                                             (18.86)           (59.25)
PROFIT AFTER TAX BEFORE PRIOR PERIOD ITEMS                                                        1,817.52            1,475.13
Add/(Less) : Prior period items (Net)                                                                (4.98)               2.07
PROFIT AFTER TAX AND PRIOR PERIOD ITEMS                                                           1,812.54            1,477.20
Less : Minority Interest                                                                             71.63               28.31
ATTRIBUTABLE TO SHAREHOLDERS                                                                      1,740.91            1,448.89
Add : Balance brought forward from previous year                                                    820.00              646.16
DISPOSABLE PROFIT                                                                                 2,560.91            2,095.05
DISPOSAL OF ABOVE PROFIT
Dividend to shareholders of parent company
Equity Shares      - Interim                                                                        383.69              335.73
                   - Final                                                                          527.56              479.60
Tax on Dividend                                                                                     130.01              104.47
Transfer to General Reserve                                                                         519.65              355.25
Balance carried to Balance sheet                                                                  1,000.00              820.00
                                                                                                  2,560.91            2,095.05
Earnings per share (Rs.) Basic and diluted - (Face value of Rs.10/- each)                               18.15             15.11
(Refer Note B - 18 in Schedule ‘M’)
Notes                                                                     M
As per our report of even date        For and on behalf of the Board
For Shah & Co.                        Ashwin C. Choksi      Ashwin S. Dani         Abhay A. Vakil        Tarjani Vakil
Chartered Accountants                 Chairman              Vice Chairman &        Managing Director     Director
                                                            Managing Director
H. N. Shah
Partner                               Jayesh Merchant
Membership No. 8152                   Vice President -
                                      Corporate Finance &
                                      Company Secretary
Mumbai                                Mumbai
11th May, 2005                        11th May, 2005


                                                                                                   Asian Paints (India) Ltd.
                                                                                                 annual report 2004-2005             85
     Cash Flow Statement for the year ended 31st March, 2005
                                                                                                                   (Rs. in Millions)

                                                                                                 2004-2005           2003-2004
     A.     Cash from Operating Activities:
            Net profit before prior period items and tax:                                          2,878,34                2,415.63
            Adjustments for:
            Depreciation                                                                                613.60              628.35
            Amortisation of Goodwill                                                                      77.10               78.26
            Interest Income                                                                             (10.42)             (46.01)
            Interest Expense                                                                            108.15              152.03
            Prior Period adjustments                                                                      (4.98)               2.07
            Dividend Income                                                                             (62.52)              (7.34)
            Adjustment on Consolidation                                                                  (8.41)             (28.46)
            Profit from Associate Company                                                                (2.18)             (39.14)
            Foreign exchange translation                                                                (34.73)             (34.46)
            Profit on sale of Investments                                                               (24.51)              (1.61)
            Loss on disposal of subsidiary                                                                16.10                   ---
            Profit on disposal of subsidiary                                                            (14.22)                   ---
            Retirement benefit assets                                                                   (33.10)               18.06
            Profit on sale of assets                                                                    (30.01)                   ---
            Loss on sale of assets                                                                          0.06             (2.54)
            Operating Profit before working capital changes                                        3,468.27                3,134.84
            Adjustment for:
            Trade receivables                                                                       (327.84)                 (93.76)
            Other receivables                                                                         (17.60)              (206.69)
            Inventories                                                                           (1,385.59)                   40.07
            Trade and other payable                                                                   287.40                 467.50
            Cash generated from Operations                                                          2,024.64               3,341.96
            Less: Income tax paid (net of refund)                                                   (957.47)               (854.16)
            Net Cash generated from Operating Activities                                           1,067.17                2,487.80
     B.     Cash flow from Investing Activities:
            Purchase of Fixed Assets                                                                (966.95)               (441.88)
            Sale of Fixed Assets                                                                      242.79                 202.66
            Purchase of Investments                                                                 (269.71)               (865.80)
            Sale of Investment                                                                        168.76                       ---
            Additional Interest in Subsidiaries                                                            ---              (38.83)
            Cash outflow on acquisition of Subsidiaries                                                (0.33)               (34.40)
            Cash inflow on disposal of Subsidiaries                                                    13.16                  (7.01)
            Interest received                                                                          11.26                  46.48
            Dividend received                                                                          62.52                    7.34
            Net Cash used in Investing Activities                                                   (738.50)          (1,131.44)
     C.     Cash flow from Financing Activities:
            Availment of secured loans                                                                716.59                   ---
            Repayment of debentures and other secured loans                                         (156.29)            (900.73)
            Repayment of unsecured loans                                                               (1.23)                  ---
            Availment of unsecured loans                                                              163.98              624.57
            Interest paid                                                                           (109.88)            (167.68)
            Dividends paid (including paid to minority shareholders)                              (1,031.65)            (894.81)
            Net Cash used in Financing Activities                                                   (418.48)          (1,338.65)
     D.     Net Increase/(Decrease) in Cash and Cash Equivalents                                     (89.81)               17.70
            Cash and Cash Equivalents as on 01.04.2004                                                698.00              680.30
            Cash and Cash Equivalents as on 31.03.2005                                                608.19              698.00
     As per our report of even date       For and on behalf of the Board
     For Shah & Co.                       Ashwin C. Choksi      Ashwin S. Dani      Abhay A. Vakil         Tarjani Vakil
     Chartered Accountants                Chairman              Vice Chairman &     Managing Director      Director
                                                                Managing Director
     H. N. Shah
     Partner                              Jayesh Merchant
     Membership No. 8152                  Vice President -
                                          Corporate Finance &
                                          Company Secretary
     Mumbai                               Mumbai
     11th May, 2005                       11th May, 2005



86
                                                                                                 Consolidated Financial Statements




Schedules forming part of the accounts
                                                                                                                    (Rs. in Millions)
                                                                                                         As at             As at
                                                                                                   31.03.2005        31.03.2004

SCHEDULE A : SHARE CAPITAL
Authorised
99,500,000 Equity Shares of Rs. 10/- each                                                               995.00             995.00
50,000 11% Redeemable Cumulative Preference shares of Rs. 100/- each                                      5.00               5.00
                                                                                                      1,000.00           1,000.00
Issued and Subscribed
 95,919,779 Equity Shares of Rs. 10/- each fully paid:
               a)   93,989,940 Bonus Shares of Rs. 10/- each fully paid up issued
                    on capitalisation of Share premium (Rs. 21.91 million)
                    and General Reserves (Rs. 917.98 million).
               b)   294,000 shares of Rs. 10/- each issued as fully paid up pursuant
                    to the Scheme of Rehabilitation / Amalgamation of Pentasia
                    Chemicals Ltd., without payment received in cash.                                  959.20              959.20
                                                                                                       959.20              959.20

SCHEDULE B : RESERVES AND SURPLUS
Capital Reserve                                                                                           0.01               0.01
Capital Redemption Reserve                                                                               53.74              53.74
General Reserve
As per last Balance Sheet                                                                             3,431.46           3,233.79
Add : Transfer from Profit and Loss Account                                                             519.65             355.25
Add : Transfer from Debenture Redemption Reserve                                                         42.50             141.25
Add : Realised on disposal of subsidiary transferred from foreign currency translation reserve           19.50                   ---
Add : Excess Deferred Tax Liability created in 2001-2002 transferred back                                    ---             50.56
Add/(Less) : Adjustments on consolidation                                                                 3.48             (28.46)
Less : Capitalised for issue of Bonus shares                                                                 ---         (320.93)
Less : Provision for impairment on fixed assets as on 1st April, 2004                                 (454.45)                   ---
       (Refer Note - B 16A in Schedule M)
Add : Reduction in the deferred tax liability on impairment of fixed assets                             163.03                   ---
       (Refer Note - B 16A in Schedule M)
                                                                                                      3,725.17           3,431.46
Foreign Currency Translation Reserve
As per last Balance Sheet                                                                               (34.56)                 ---
Add : Currency translation during the year                                                              (34.73)            (34.56)
Less : Realised on disposal of subsidiary transferred to General Reserve                                (19.50)                 ---
                                                                                                        (88.79)            (34.56)
Debenture Redemption Reserve
As per last Balance Sheet                                                                                 42.50            183.75
Less : Transfer to General Reserve                                                                      (42.50)          (141.25)
                                                                                                              ---           42.50

Profit and Loss Account                                                                               1,000.00             820.00
                                                                                                      4,690.13           4,313.15




                                                                                                       Asian Paints (India) Ltd.
                                                                                                     annual report 2004-2005            87
     Schedules forming part of the accounts
                                                                                                                   (Rs. in Millions)
                                                                                                          As at           As at
                                                                                                    31.03.2005      31.03.2004

     SCHEDULE C : SECURED AND UNSECURED LOANS
     Secured Loans
     Long Term :
     Debentures
     13.75% Non-Convertible Debentures (Note No. 1)                                                          ---           85.00
     Loans and advances
     From Banks and Financial Institution (Note No. 2)                                                  374.13            266.05
                                                                                                        374.13            351.05
     Short Term :
     Loans and advances from banks
     Cash Credit Accounts (Note No. 3)                                                                  608.51                  ---
     Foreign Currency Loan                                                                                   ---           90.83
                                                                                                        982.64            441.88
     Unsecured Loans
     Long Term :
     Fixed Deposits                                                                                       3.22              3.32
     Trade deposits - Interest free                                                                     189.14            191.96
     Other loans (Note No. 4)                                                                         1,220.04          1,056.06
                                                                                                      1,412.40          1,251.34

     Notes:
     (1) Nil, (Previous year - 850) 13.75 % Secured Redeemable Non-Convertible Debentures
          of Rs. 100,000/- each privately placed redeemable at par. 850 debentures were
          redeemed during the year (Previous year - 825).                                                    ---           85.00
           Debentures were secured by pari passu charge on the Company’s movable and                         ---           85.00
           immovable properties pertaining to the paint plants situated at Bhandup, Ankleshwar
           and Patancheru, excluding inventories at the above locations.
     (2)   (a)   Interest free Term loan from the Pradeshiya Industrial Corporation of U.P. Ltd.,
                 (PICUP) under Sales Tax deferment scheme of Govt. of U.P., is secured by a first
                 charge on the Company’s immovable properties pertaining to the paint plant at
                 Kasna and by way of hypothecation of all movable properties at the above
                 location, subject to prior charge in favour of the Company’s bankers.                  106.71             53.40
           (b)   Secured either by fixed/floating charge on the assets of various subsidiaries          267.42            212.65
                                                                                                        374.13            266.05
     (3)   Secured by hypothecation of inventories, book debts and other current assets.                608.51             90.83
     (4)   Other loans represent :
           (a) Interest free loan availed under the Sales tax deferment scheme of the
                Government of Andhra Pradesh by parent Company.                                         363.60            282.05
           (b) Loans availed by various subsidiaries through guarantee/comfort letter
                from the parent Company.                                                                836.86            749.19
           (c) Finance leases of subsidiaries.                                                           19.58             24.82
                                                                                                      1,220.04          1,056.06




88
                              SCHEDULE D : FIXED ASSETS                                                                                                                                                                                                                     (Rs. in Millions)
                                                                                                                                                                                                                                                 Impairment
                                                                                          Gross Block                                                                   Depreciation/Amortisation                                               (Refer Note B - 16A                Net Block
                                                                                                                                                                                                                                                  in Schedule M)

                                                             As at       Cost of    Additions   Deductions/          Disposal           As at         Upto    During      Deductions/     Depreciation           Disposal           As at         As at          As at            As at         As at
                                                       01.04.2004         assets      during    Adjustments    of subsidiaries    31.03.2005    31.03.2004       the      Adjustments         on assets    of subsidiaries    31.03.2005    01.04.2004     31.03.2005       31.03.2005    31.03.2004
                                                                     taken over           the                                                                   year                        taken over
                                                                              on        year                                                                                             on acquisition
                                                                     acquisition

                              Tangible Assets:
                                                                                                                                                                                                                                                                                                        Schedules forming part of the accounts




                              Land - Owned                 131.39          4.52         7.29          0.08                  ---       143.12            ---       ---              ---               ---                ---           —              ---              ---       143.12        131.39
                              Land - Leasehold             360.69             ---      10.01        241.58                  ---       129.12        38.02       1.03           32.35                 ---                ---         6.70             ---              ---       122.42        322.67
                              Buildings                  1,836.61             ---     355.35         16.43             28.74        2,146.79       499.98      59.54          (16.51)                ---             3.41         572.62             ---              ---     1,574.17      1,336.63
                              Plant and Machinery        4,493.82             ---     488.37         35.13             44.53        4,902.53      2,564.81    328.42           39.46                 ---           34.37        2,819.40        178.65         178.65         1,904.48      1,929.01
                              Scientific Research:
                                      Equipment             90.19             ---       9.79          9.29                  ---        90.69        45.20      18.97            2.56                 ---                ---        61.61          5.96              5.96         23.12         44.99
                                      Buildings              7.33             ---       7.55             ---                ---        14.88          4.54      0.25               ---               ---                ---         4.79             ---              ---        10.09          2.79
                              Furniture and Fixtures       478.05             ---      26.08         19.92             10.73          473.48       298.21      62.12           24.01                 ---             8.46         327.86         21.63             21.63        123.99        179.84
                              Office Equipment               1.21             ---       0.10             ---                ---         1.31          0.32      0.06               ---               ---                ---         0.38             ---              ---         0.93          0.89
                              Vehicles                     146.94             ---       9.09         12.78               7.97         135.28         83.89     23.42           18.29                 ---             6.24          82.78             ---              ---        52.50         63.05
                              Assets acquired on
                              financial lease:
                                Plant & Machinery            9.89             ---       5.62          0.74                  ---        14.77          1.70      2.06           (2.57)                ---                ---         6.33             ---              ---         8.44          8.19
                                Vehicles                    33.48             ---       7.44         11.18                  ---        29.74        15.10       8.29           (1.80)                ---                ---        25.19             ---              ---         4.55         18.37
                              Assets given under
                              operating lease              991.31             ---       0.89          4.05                  ---       988.15       435.35      63.53            3.07                 ---                ---       495.81        248.20         248.20           244.14        555.96
                              Intangible Assets            286.83             ---       7.11             ---                ---       293.94       187.13      45.91               ---               ---                ---       233.04             ---              ---        60.90         97.78
                              Total                      8,867.74          4.52       934.69        351.18             91.97        9,363.80      4,174.24    613.60           98.86                 ---           52.48        4,636.51        454.45         454.45         4,272.85      4,691.56
                              Previous Year              8,815.47        53.04       349.87         350.64                  ---     8,867.74      3,678.74    628.35          150.52            17.67                   ---     4,174.24             ---              ---     4,693.50




annual report 2004-2005
  Asian Paints (India) Ltd.
                                                                                                                                                                                                                                                                                                                                                 Consolidated Financial Statements




89
     Schedules forming part of the accounts
                                                                                                                                  (Rs. in Millions)
                                                                              Nos.           Face value                  As at           As at
                                                                                             (Rs.) (Unless         31.03.2005      31.03.2004
                                                                                       specified otherwise)

     SCHEDULE E : INVESTMENTS
     Long Term Investments
     Unquoted
     (i)   In Government Securities
           National Savings Certificates, Indira Vikas Patra and
           Defence Certificates deposited with Government authorities.                                                   0.05                0.07
           (National Savings Certificate sold during the year Rs. 20,000)
     (ii) Trade Investments (Preference shares)
           9% Preference shares of
           Multitech Plast Containers Ltd.                               2,510,000               10/-                   25.10             25.10
     (iii) Trade Investments (Fully paid Equity shares)
           (a) Multitech Plast Containers Ltd.                                    ---            10/-                       ---             1.90
                 (190,000 Shares sold during the year)                   (190,000)
           (b) Ricinash Oil Mill Ltd.                                             ---            10/-                       ---             1.10
                 (110,000 shares sold during the year)                   (110,000)
           (c) Patancheru Enviro-tech Ltd.                                   12,900             10/-                     0.13               0.13
           (d) SIPCOT Common Utilities Ltd.                                   2,830            100/-                     0.28               0.28
           (e) Bharuch Eco-Acqua Infrastructure Ltd.                       434,790              10/-                     4.35               4.35
           (f)   Apco Coatings (NZ) Ltd.                                     23,500             1 NZ                     0.72               0.72
           (g) Danish for Wood                                                2,500            10 LE       0.18
                 Less : Provision for diminution in the value of investments                              (0.18)            ---                ---
            (h)   Masters Builders Technologies Egypt                           500             10 LE                    0.04               0.04
            (i)   Maseter Builders Technologies                                 125             10 LE                    0.01               0.01
            (j)   Misr Quena                                                  1,000             10 LE                    0.07               0.07
            (k)   Den Braven                                                    500             10 LE                    0.04               0.04
                                                                                                                        30.74             33.74

     (iv)   Other Investments
            (a) Units of Unit Trust of India under
                 Venture Capital Unit Scheme - 1990                              ---           100/-                        ---             0.04
                 (370 units redeemed during the year)                         (370)
            (b) Contribution to Gujarat Venture Capital Fund -
                 1990 (5% amounting to Rs. 25,000                                                                        0.09               0.11
                 redeemed during the year)
            (c) 10.5% tax free Bonds of
                 Konkan Railway Corporation Ltd.                                  ---       1,000/-                         ---           25.64
                 (25,000 bonds redeemed during the year)                   (25,000)
            (d) Equity shares of Mark Auto Industries Ltd.                   62,500              10/-                    5.00               5.00
     (v)    Dutch Boy Philippines, Inc. (including share of profit)        427,500             100/-                    58.96             64.24
            (Refer Note No. B - 13 in Schedule M)                                             in Peso
                                                                                                                        64.05             95.03
            Total long term unquoted investments                                                                        94.84            128.84




90
                                                                                           Consolidated Financial Statements




Schedules forming part of the accounts
                                                                                                             (Rs. in Millions)

                                                                    Nos.     Face value            As at            As at
                                                                                   (Rs.)     31.03.2005       31.03.2004

Quoted (Fully Paid Equity Shares)
(i)    Trade Investments
       ICI (India) Ltd.                                         3,760,783        10/-             772.46            772.46
(ii)   Other Investments
       Housing Development Finance Corporation Ltd.                93,000        10/-               1.24               1.24
       Apcotex Lattices Ltd.                                        3,418        10/-               0.11               0.11
       Total long term quoted investments                                                         773.81            773.81
Total long term investments                                                                       868.65            902.65
Short Term Investments (Unquoted)
DSP Merrill Lynch Liquidity Fund - Growth Plan                         ---       10/-                  ---           20.00
(13,09,036.220 units sold during the year)               (13,09,036.220)
Birla Cash Plus Institutional Plan - Growth                           ---        10/-                  ---           20.00
(11,76,829.370 units sold during the year)               (11,76,829.370)
Birla Cash Plus Institutional Premium Plan -
Dividend Growth - acquired during the year                   1,996,477.315       10/-              20.01                  ---
JM Fixed Maturity Plan - Dividend Option
acquired during the year                                 15,131,481.727          10/-             151.32                  ---
SBI Magnum Instacash Fund - Dividend Plan                             ---        10/-                  ---           75.41
(7,158,442,130 units sold during the year)               (7,158,442,130)
Birla FMP Quarterly series 1 - Plan A -                      3,699,029.008       10/-              37.01                  ---
Dividend Pay out
(3,699,029.008 units purchased during the year)
Birla FMP Quarterly series 2 - Plan A -                       999,412.044        10/-              10.00                  ---
Dividend Pay out
(999,412.044 units purchased during the year)
Birla FMP Quarterly series 3 - Plan A -                      5,129,887.603       10/-              51.37                  ---
Dividend Pay out
(5,129,887.603 units purchased during the year)
Total short term investments                                                                      269.71            115.41
Total Investments                                                                               1,138.36          1,018.06

Aggregate market value of Long term Quoted Investments :                                          924.99            748.05
Note : Figures in brackets indicate that of previous year.




                                                                                                 Asian Paints (India) Ltd.
                                                                                               annual report 2004-2005           91
     Schedules forming part of the accounts
                                                                                           (Rs. in Millions)

                                                                                   As at          As at
                                                                             31.03.2005     31.03.2004

     SCHEDULE F : CURRENT ASSETS, LOANS AND ADVANCES
     Current Assets
     (i) Interest accrued on investments                                           0.03              0.87

     (ii)   Inventories
            (a)   Raw and packing materials                      1,849.22                       1,240.54
            (b)   Finished goods                                 2,379.26                       1,683.45
            (c)   Work-in-process                                  237.50                         193.86
            (d)   Stores, spares, fuel and other traded goods       79.46                          64.00
                                                                               4,545.44         3,181.85
     (iii) Sundry debtors (Unsecured)
            (a)   Outstanding for more than six months
                  Considered good                                 246.65                           75.33
                  Considered doubtful                             427.29                          484.76
                                                                  673.94                          560.09
                  Less: Provision for doubtful debts              427.29                          484.76
                                                                   246.65                          75.33
            (b)   Other debts (considered good)                  2,712.02                       2,574.44
                                                                               2,958.67         2,649.77
     (iv) Cash and Bank Balances
            (a)   Cash on hand                                       9.21                          21.06
            (b)   Balances with Banks:
                  (i)   Current Accounts                          480.81                          513.83
                  (ii) Cash Credit Accounts                            ---                         17.16
                  (iii) Term Deposits                             118.17                          145.95
                                                                                 608.19           698.00
     (v)    Other receivables                                                    163.93           184.73

     Loans and Advances
     (i) Loans and Advances :
            Unsecured and considered good
            (a) Balances with Customs, Central Excise etc.        145.59                           68.74
            (b) Sundry deposits                                   134.12                          138.80
            (c) Advances/claims recoverable in cash or in kind    302.69                          242.85
            (d) Advances to employees                              17.15                           19.56
            (e) Advances against Capital expenditure               42.76                           60.71
            (f)  Income Tax Refund Receivable                          ---                        187.35
            (g) Prepaid expenses                                    0.73                               ---
            (h) Others                                            157.27                           42.91
                                                                                 800.31           760.92
                                                                               9,076.57         7,476.14




92
                                                                        Consolidated Financial Statements




Schedules forming part of the accounts
                                                                                          (Rs. in Millions)

                                                                                As at             As at
                                                                          31.03.2005        31.03.2004

SCHEDULE G : CURRENT LIABILITIES AND PROVISIONS
Current Liabilities
(i)     Acceptances                                                          1,141.74            819.03
(ii)    Sundry creditors:
        —    Trade                                           2,018.73                          2,445.54
        —    Others                                            926.35                            278.78
                                                                             2,945.08          2,724.32
                                                                             4,086.82          3,543.35
(iii)   Unpaid/unclaimed dividend                              19.92                              18.02
        Unpaid/unclaimed matured deposits                       0.78                               0.52
        Unclaimed interest                                      0.31                               0.38
                                                                                21.01             18.92
(iv)    Interest accrued but not due                                             0.19              1.85
(v)     Other liabilities                                                      897.97          1,187.19
                                                                             5,005.99          4,751.31
Provisions
(i)     Proposed final dividend                               527.56                             479.60
(ii)    Provision for tax on proposed final dividend           73.99                              61.45
(iii)   Provision for taxation (net of advance taxes paid)    177.28                              55.07
(iv)    Provision for leave encashment                        127.78                             133.69
(v)     Other provisions                                      265.42                             239.29
                                                                             1,172.03            969.10
                                                                             6,178.02          5,720.41




                                                                              Asian Paints (India) Ltd.
                                                                            annual report 2004-2005           93
     Schedules forming part of the accounts
                                                             (Rs. in Millions)

                                                    Year            Year
                                               2004-2005       2003-2004

     SCHEDULE H : SALES AND OPERATING INCOME
     Sales:
     Sales                                      30,163.16       26,036.60
     Less: Goods returned                          310.25          307.33
     Turnover                                   29,852.91       25,729.27
     Less: Discounts                             1,127.47        1,095.58
     Sales (Net of discounts)                   28,725.44       24,633.69
     Processing charges                             69.88           65.78
     Lease Rent                                    130.79          189.38
     Revenue from Home Solutions operations         40.85           27.20
                                                28,966.96       24,916.05




     SCHEDULE I : OTHER INCOME
     Interest received                             10.42             46.01
     Claims received                                3.68              5.47
     Dividends                                     62.52              7.34
     Royalty                                       21.91              9.44
     Profit on sale of subsidiaries                14.22                 ---
     (Refer Note B - 8 in Schedule M)
     Sundry balances written back (net)            17.15             56.19
     Profit on sale of investments                 24.51              1.66
     Profit on sale of assets                      30.01              6.25
     Exchange difference (net)                      2.71              9.97
     Miscellaneous income                         136.56             95.78
     Retirement Benefit Fund revaluation               ---           25.44
                                                  323.69            263.55




94
                                                                                  Consolidated Financial Statements




Schedules forming part of the accounts
                                                                                                    (Rs. in Millions)

                                                                                           Year            Year
                                                                                     2004-2005        2003-2004

SCHEDULE J : MATERIALS CONSUMED
Raw and Packing Materials Consumed
Opening Stock                                                          1,240.54                         1,267.69
Add: Purchases and expenses                                           15,373.59                        11,832.43
                                                                      16,614.13                        13,100.12
Less: Closing Stock                                                    1,852.02                         1,240.54
                                                                                     14,762.11         11,859.58
Purchase of Paints for resale                                                           623.95            310.37
Cost of other goods sold                                                                247.31            273.89
                                                                                     15,633.37         12,443.84
Add/(Less) :Decrease/(Increase) in finished and semi-finished stock
Opening Stock                                                          1,877.31                          1,896.84
Closing Stock                                                          2,617.80                          1,877.31
                                                                                       (740.49)             19.53
                                                                                     14,892.88         12,463.37




SCHEDULE K : EMPLOYEES’ REMUNERATION AND BENEFITS
Salaries, wages, allowances, commission, provisions for
bonus and accrued leave salary                                                         1,791.97          1,601.73
Staff welfare expenses                                                                    79.21            107.58
Contribution to Provident Fund, Gratuity and other funds                                 144.34            142.10
                                                                                       2,015.52          1,851.41




                                                                                        Asian Paints (India) Ltd.
                                                                                      annual report 2004-2005           95
     Schedules forming part of the accounts
                                                                                          (Rs. in Millions)

                                                                                 Year            Year
                                                                            2004-2005       2003-2004

     SCHEDULE L : MANUFACTURING, ADMINISTRATIVE, SELLING
                  AND DISTRIBUTION EXPENSES
     Stores and spares                                                         159.55            158.65
     Power and fuel                                                            290.23            260.30
     Processing charges                                                        208.61            111.89
     Freight and handling charges                                              942.40            786.06
     Repairs and maintenance:
           Buildings                                                27.53                         25.54
           Machinery                                                61.90                         65.11
           Other assets                                            115.83                        121.37
                                                                               205.26            212.02
     Rent                                                                      198.31            187.90
     Rates and taxes                                                           163.14            139.78
     Insurance                                                                  71.03             71.33
     Advertisement and sales promotional expenses                              956.05            873.75
     Cash discount and Payment performance discount                            908.88            805.41
     Printing, stationery and communication expenses                           174.65            177.79
     Travelling expenses                                                       208.77            212.77
     Commission on sales                                                       162.03             21.25
     Donations                                                                  10.58             11.20
     Loss on sale of assets                                                      0.06              3.71
     Loss on sale of short term investments                                         ---            0.05
     Miscellaneous expenses                                                    603.16            746.56
     Commission to Non-executive directors                                       4.28              3.89
     Directors’ sitting fees                                                     1.06                 ---
     Bad and doubtful debts                                                     44.67             89.37
     Auditors’ remuneration                                                     16.24             19.04
     Loss on sale of subsidiary (Refer Note B - 9 in Schedule M)                16.10                 ---
     Exchange difference (net)                                                   0.44                 ---
                                                                             5,345.50          4,892.72




96
                                                                                                    Consolidated Financial Statements




Schedules forming part of the accounts
SCHEDULE M: NOTES ON CONSOLIDATED FINANCIAL STATEMENTS
A.   Statement of Significant Accounting Policies
1.   Basis for preparation of consolidated financial statements
     The consolidated financial statements have been prepared in accordance with generally accepted accounting principles and
     comply with the Accounting Standard (AS 21) - Consolidated Financial Statements, Accounting Standard (AS 23) - Accounting
     for Investments in Associates in Consolidated Financial Statements and Accounting Standard (AS 27) - Financial Reporting of
     interests in Joint Venture issued by the Institute of Chartered Accountants of India.
2.   Method of Accounting
     The financial statements have been prepared on accrual basis of accounting.
3.   Fixed Assets
     The ‘Gross Block’ of fixed assets is shown at the cost of acquisition, which includes taxes, duties (net of tax credits, as
     applicable) and other identifiable direct expenses. Interest on borrowed funds attributable to the qualifying assets upto the
     period such assets are put to use, is included in the cost.
     Know-how related to plans, designs and drawings of buildings or plant and machinery is capitalised under the relevant asset
     heads.
     The depreciation on fixed assets is provided on Written Down Value / Straight Line methods as the case may be and at rates
     permissible under applicable local laws or at such rates so as to write off the value of assets over their useful life.
     Leasehold land is amortised over the period of the lease.
     Intangible assets are capitalised and amortised on straight line basis over their estimated useful lives.
     At the balance sheet date, an assessment is done to determine whether there is any indication of impairment of the carrying
     amount of the Group’s fixed assets. If any such indication exists, the asset’s recoverable amount is estimated. An impairment
     loss is recognised whenever the carrying amount of asset exceeds its recoverable amount.
     After recognition of impairment loss, the depreciation charge for the asset is adjusted in future periods to allocate the asset’s
     carrying amount, less its residual value (if any), over its remaining useful life.
4.   Goodwill
     Goodwill on consolidation is amortised over a period of ten years.
5.   Revenue Recognition
     Sale of products is recognised when the risks and rewards of ownership are passed on to the customers, which is on despatch
     of goods. Sales are stated exclusive of sales tax/VAT.
     Revenue from rendering of services is recognised by reference to the stage of completion of the transaction at the balance
     sheet date determined by services performed to date as a percentage of total services.
     Processing income is recognised upon rendition of the services.
     Dividend income is recognised when the right to receive dividend is unconditional at the balance sheet date.
6.   Lease Accounting
     In respect of Operating leases, lease rentals are accounted on accrual basis in accordance with the respective lease agreements.
     In respect of Finance leases, assets are recognised at their fair value at the date of acquisition or, if lower, at the present value
     of the minimum lease payments. The corresponding liability to the lessor is included in the balance sheet as a finance lease
     obligation. The excess of lease payments over the recorded lease obligations are treated as finance charges which are
     allocated to each lease term so as to produce a constant rate of charge on the remaining balance of the obligations. The
     assets are depreciated as owned depreciable assets.
     Amounts due from lessees under finance leases are recorded as receivables at the amount of the Group’s net investment in the
     leases. Finance lease income is allocated to accounting periods so as to reflect a constant periodic rate of return on the
     Group’s net investment outstanding in respect of the leases.




                                                                                                           Asian Paints (India) Ltd.
                                                                                                         annual report 2004-2005             97
     Schedules forming part of the accounts
     7.    Inventory
           Inventories are valued at the lower of cost and net realisable value. Damaged, unserviceable and inert stocks are suitably
           depreciated.
           In case of raw materials, packing materials, stores, spares and consumables, the cost includes duties and taxes (net of tax
           credits as applicable) and is arrived at on weighted average cost basis. In respect of the joint venture, stores, spares and
           consumables are charged to revenue at the time of procurement.
           The finished goods and work-in-process cost includes the cost of raw materials, packing materials (if applicable), an appropriate
           share of fixed and variable production overheads on the basis of standard cost method, duties (if applicable) and other costs
           incurred in bringing the inventories to their present location and condition. Traded goods are valued at cost.
     8.    Investments
           Short term investments are carried at the lower of cost and fair value computed category wise. Long term investments are
           carried at cost. Cost is arrived at by applying specific identification method. Provision for diminution in the value of long term
           investments is made only if such a decline is not temporary in the opinion of the management.
     9.    Transactions in Foreign Exchange
           Transactions in foreign currency are recorded at the rates of exchange in force at the time of transaction date. At the year
           end, monetary items denominated in foreign currency are reported using the closing rates of exchange. Exchange differences
           arising on realisation/payments of foreign exchange are accounted in the year of actual realisation/payment. The values of
           fixed assets acquired through foreign currency loans are adjusted at the end of each financial year by any change in liability
           arising out of expressing the outstanding foreign currency loans at the closing rates of exchange prevailing at the date of
           Balance Sheet.
           In case of forward contracts, the exchange difference between the forward rate and the exchange rate at the date of
           transaction is recognised as income or expense over the life of the contract, except in respect of liabilities incurred for
           acquiring fixed assets, in which case such differences are adjusted in the carrying amount of the respective fixed assets.
     10.   Translation of Foreign Currency Statements
           In translating the financial statements of foreign entities for incorporation in the consolidated financial statements, the assets
           and liabilities are translated at the exchange rate prevailing at the balance sheet date of respective subsidiaries and income
           and expense items are translated at the average rates of exchange for the year. The resulting exchange differences are
           classified as foreign currency translation reserve.
     11.   Sundry Debtors
           Sundry debtors are stated after writing off debts considered as bad. Adequate provision is made for debts considered
           doubtful. Bad debts are written off during the period in which they are identified. Discounts due, yet to be quantified at the
           customer level are included under the head ‘Current Liabilities and Other Provisions’.
     12.   Employees’ Retirement Benefits
           In respect of the holding company, contribution to Provident fund, Superannuation fund and Pension is charged to Profit and
           Loss Account on accrual basis. Liability for Gratuity and Leave encashment benefits are charged to profit and loss account on
           the basis of actuarial valuation.
           In respect of some of the subsidiaries -
           Payments to defined contribution retirement benefit plans are charged as an expense as they fall due. Payments made to
           state-managed retirement benefit schemes are dealt with as payments to defined contribution plans where the company’s
           obligations under the schemes are equivalent to those arising in a defined contribution retirement benefit plan.
           For defined retirement benefit plans, the cost of providing benefits is determined using the Projected Unit Credit Method, with
           actuarial valuations being carried out at each balance sheet date. Actuarial gains and losses that exceed 10 per cent of the
           greater of the present value of the company’s defined benefit obligation and the fair value of plan assets are amortised over
           the expected average remaining working lives of the participating employees. Past service cost is recognised immediately to
           the extent that the benefits are already vested, and otherwise is amortised on a straight line basis over the average period
           until the benefits vest.




98
                                                                                                   Consolidated Financial Statements




Schedules forming part of the accounts
      The retirement benefit obligation recognised in the Balance Sheet represents the present value of the defined obligation as
      adjusted for unrecognised actuarial gains and losses and unrecognised past service cost, and as reduced by the fair value of
      plan assets. Any asset resulting from this calculation is limited to unrecognised actuarial losses and past service cost, plus the
      present value of available refunds and reductions in future contributions to the plan.
13.   Research and Development
      Capital expenditure is shown separately under respective heads of fixed assets. Revenue expenses including depreciation are
      included under the respective heads of expenses.
14.   Taxes on Income
      Provision for current tax is computed as per ‘Total Income’ returnable under the applicable laws taking into account available
      deductions and exemptions.
      Deferred tax is recognised for all timing differences being the differences between taxable income and accounting income
      that originate in one period and are capable of reversal in one or more subsequent periods.
15.   Proposed Dividend
      Dividend proposed by the Board of Directors is provided for in the accounts, pending approval at the Annual General
      Meeting.




                                                                                                          Asian Paints (India) Ltd.
                                                                                                        annual report 2004-2005            99
      Schedules forming part of the accounts
                                                                                                                        (Rs. in Millions)
                                                                                                        2004-2005         2003-2004

      B.   NOTES :
      1.   Estimated amount of contracts remaining to be executed
           on capital account and not provided for.                                                         117.64             412.96
      2.   Letters of credit and bank guarantees issued by bankers and outstanding
           as at the Balance Sheet date                                                                     491.87             530.17
      3.   Contingent liabilities:
           i.     Guarantees given -
                  a)     to a bank on behalf of the parent Company’s dealers in respect of
                         loans granted to them by a bank for acquiring tinting systems                      279.56             417.77
                  b)     to others                                                                           42.42              11.53
           ii.    Claims against the Company not acknowledged as debts
                  a)     Tax matters in dispute under appeal                                                234.28             120.15
                  b)     Others                                                                              17.68              37.09

      4.   One of the subsidiaries, Berger International Limited and its subsidiary, Berger Paints Trinidad Limited, are engaged in
           litigation initiated by its former Regional Managing Director. The company upon discontinuing his services has paid him
           compensation as per his contract of employment and the same has been charged to income statement. This matter is subject
           to Trinidad and Tobago’s High Court Action No.2241 of 2003. Based on the information presently available, the likely
           outcome of this trial cannot be determined with any reasonable certainty. Therefore, no further provision has been made in
           these financial statements for this matter.
      5.   Details of Subsidiaries, Joint Venture and Associate Company :
           Subsidiaries:
           The subsidiary companies considered in the consolidated financial statements are:
           Name of the Company                                              Country of                          % of          Financial
                                                                            Incorporation              voting power               Year
           Direct Subsidiaries
           Asian Paints (Nepal) Pvt. Limited                                Nepal                            51%              15th Jan-
                                                                                                                               14th Jan
           Asian Paints (Mauritius) Limited (Refer note below)              Mauritius                     89.58%               Jan-Dec
           Asian Paints (International) Limited                             Mauritius                       100%               Jan-Dec
           Asian Paints Industrial Coatings Limited                         India                           100%              Apr-Mar
           Technical Instruments Manufacturers (India) Limited              India                           100%              Apr-Mar

           Notes : Subsequent to the Balance Sheet date of Asian Paints (Mauritius) Limited, the Group has sold its 89.58% stake in
                   Asian Paints (Mauritius) Limited on 30th March, 2005 to certain local shareholders of the Company for a consideration
                   of Rs. 0.76 million.




100
                                                                                   Consolidated Financial Statements




Schedules forming part of the accounts
Indirect Subsidiaries

                                                             Country of                    %        Accounting
                                                             Incorporation           holding        period

i)     Subsidiaries of the wholly owned subsidiary,
       Asian Paints (International) Limited, Mauritius:
       Asian Paints (South Pacific) Holdings Limited         Vanuatu                  100%          Jan-Dec
       Asian Paints (South Pacific) Limited                  Fiji Islands               51%         Jan-Dec
       Asian Paints (Tonga) Limited                          Kingdom of Tonga           51%         Jan-Dec
       Asian Paints (S.I.) Limited                           Solomon Islands            75%         Jan-Dec
       Asian Paints (Vanuatu) Limited                        Republic of Vanuatu        60%         Jan-Dec
       Asian Paints (Queensland) Pty. Limited                Australia              88.57%          Jan-Dec
       Asian Paints (Lanka) Limited                          Sri Lanka              98.20%          Jan-Dec
       Asian Paints (Bangladesh) Limited                     Bangladesh             71.23%          Jan-Dec
       Asian Paints (Middle East) LLC                        Sultanate of Oman          49%         Jan-Dec
       SCIB Chemical S.A.E.                                  Egypt                      60%         Jan-Dec
       Berger International Limited                          Singapore              50.10%          Jan-Dec

ii)    Subsidiary of Asian Paints (South Pacific) Limited:
       Taubmans Paints (Fiji) Limited                        Fiji Islands             100%          Jan-Dec

iii)   Subsidiary of Taubmans Paints (Fiji) Limited:
       Samoa Paints Limited                                  Samoa                      80%         Jan-Dec

iv)    Subsidiary of Asian Paints (Lanka) Limited:
       Asian Paints Distributors (Pvt.) Limited              Sri Lanka                100%          Jan-Dec
       (under voluntary liquidation)




                                                                                         Asian Paints (India) Ltd.
                                                                                       annual report 2004-2005         101
      Schedules forming part of the accounts
                                                                              Country of                       %          Accounting
                                                                              Incorporation              holding          period

      v)      Indirect subsidiaries i.e. subsidiaries of Berger
              International Limited, Singapore:
              Berger Paints Singapore Pte Ltd.                                Singapore                    100%           Jan - Dec
              Berger Building Services                                        Singapore                    100%           Jan - Dec
              (Singapore) Pte. Ltd.
              Berger International Sdn Bhd.                                   Malaysia                     100%           Jan - Dec
              Berger Paints (Thailand) Ltd.                                   Thailand                     81.3%          Jan - Dec
              Berger Paints Manufacturing Ltd.                                Myanmar                        60%          Jan - Dec
              Berger Paints (Ningbo) Co. Ltd.                                 People’s Republic of         100%           Jan - Dec
                                                                              China
              Berger Paints (Hong Kong) Ltd.                                  Hongkong                     100%           Jan - Dec
              Berger Paints (Malta) Ltd.                                      Malta                        84.2%          Jan - Dec
              (Disposed on 12th May, 2004)
              Enterprise Paints Limited                                       Isle of Man, U.K.            100%           Jan - Dec
              Universal Paints Limited                                        Isle of Man, U.K.            100%           Jan - Dec
              Lewis Berger (Overseas Holdings) Ltd.                           U.K.                         100%           Jan - Dec
              Berger Paints (Shanghai) Ltd.                                   China                        100%           Jan - Dec
              (Liquidated on 23rd February, 2004)

      vi)     Subsidiary of Berger Building Services (Singapore) Pte. Ltd.:
              Berger Contractor (Singapore) Pte. Ltd.                         Singapore                    100%           Jan - Dec

      vii)    Subsidiary of Enterprise Paints Ltd.:
              Nirvana Investments Ltd.                                        Isle of Man, U.K.            100%           Jan - Dec

      viii)   Subsidiary of Nirvana Investments Ltd.:
              Berger Paints Emirates Ltd.                                     U.A.E.                       100%           Jan - Dec

      ix)     Subsidiaries of Lewis Berger (Overseas Holdings) Ltd.:
              Berger Paints Jamaica Ltd.                                      Jamaica                       51%           Jan - Dec
              Berger Paints Trinidad Ltd.                                     Trinidad                      70%           Jan - Dec
              Berger Paints Barbados Ltd.                                     Barbados                     100%           Jan - Dec

      x)      Subsidiary of Universal Paints Ltd.:
              Berger Paints Bahrain W.L.L.                                    Bahrain                      100%           Jan - Dec

      xi)     Subsidiary of Asian Paints Industrial Coatings Ltd.:
              Surya Powder Coating Limited                                    India                        100%           Apr - Mar
              (Formerly known as Surya Gelcaps Limited)
              (Acquired on 25th October, 2004)

      Joint Venture:
      The Joint Venture unit considered in the consolidated financial statements is Asian PPG Industries Limited, a joint venture between
      the parent company and PPG Industries Inc., U.S.A. wherein the parent company has 50% equity participation.
      Associate Company:
      Dutch Boy Phillippines, Inc., wherein one of the subsidiaries i.e. Berger International Limited is holding 30% equity interest.




102
                                                                                                   Consolidated Financial Statements




Schedules forming part of the accounts
6.   Principles of consolidation:
     i)    The consolidated financial statements are based on the audited financial statements of the subsidiaries for their respective
           financial years. In respect of indirect subsidiaries of Asian Paints (International) Limited, the audited consolidated
           financial statements of Asian Paints (International) Limited have been considered for the purpose of consolidation.
     ii)   The financial statements of the parent company and its subsidiaries have been combined to the extent possible on a line
           by line basis by adding together like items of assets, liabilities, income and expenses. All significant intra group
           balances and transactions have been eliminated on consolidation. The amounts shown in respect of reserves comprise
           of the relevant reserves as per the balance sheet of the parent company and its share in the increase in the post -
           acquisition relevant reserves of the subsidiaries.
     iii) The goodwill/capital reserve on consolidation has been recognised in the consolidated financial statements. The goodwill
           is amortised over a period of ten years on straight line basis.
     iv)   The consolidated financial statements have been prepared using uniform accounting policies for like transactions and
           other events in similar circumstances and are presented to the extent possible, in the same manner as the parent
           company’s financial statements.
     v)    Minority interest in the net income and net assets of the consolidated financial statements are computed and shown
           separately.
7.   Certain subsidiaries operate a defined benefit plans scheme. These plans are salary defined benefits plan and are fully
     funded. The assets of the fund are held separately from those of the subsidiaries in an independently administered fund. The
     plans are funded by payments from employees and the subsidiaries based on the recommendations of independent qualified
     actuaries. These plans are valued by independent actuaries every one to three years using the projected unit credit method.
     The actuarial valuation was carried out by the respective subsidiaries on 1st January, 2004 and 31st December 2004.
8.   The Group disposed off its 84.2% stake in its subsidiary, Berger Paints (Malta) Limited on 12th May, 2004. The net assets of
     Berger Paints (Malta) Limited as at the date of disposal were as follows:
     Particulars                                                                                                       (Rs. in Millions)

                                                                                                                           2004-05

     Fixed Assets                                                                                                               4.67
     Current Assets                                                                                                            50.77
     Current Liabilities                                                                                                     (10.75)
     Capital Reserve                                                                                                          (3.43)
     Minority Interest                                                                                                        (7.08)
                                                                                                                               34.18
     Gain on Disposal                                                                                                          14.22
     Total Consideration                                                                                                       48.40
     Satisfied by:
     Cash Consideration                                                                                                       23.66
     Loan receivable                                                                                                          24.74
                                                                                                                              48.40
     Net Cash inflow on disposal:
     Cash Consideration                                                                                                        23.66
     Cash and Cash Equivalents disposed off                                                                                  (11.02)
     Net Cash Inflow                                                                                                           12.64

9.   Subsequent to the Balance Sheet date of Asian Paints (Mauritius) Limited, the Group has sold its 89.58% stake in Asian Paints
     (Mauritius) Limited on 30th March 2005 to certain local shareholders for a consideration of Rs. 0.76 Million. Hence the
     financial statements of Asian Paints (Mauritius) Limited have been consolidated for the period from 1st January 2004 to 30th
     March 2005 (i.e. till the date of disposal of stake in the subsidiary) The net assets of Asian Paints (Mauritius) Limited as on the
     date of disposal were as follows:




                                                                                                          Asian Paints (India) Ltd.
                                                                                                        annual report 2004-2005            103
      Schedules forming part of the accounts
            Particular                                                                                                      (Rs. in Millions)

            Fixed Assets                                                                                                            34.81
            Investments                                                                                                              0.02
            Long Term Loan                                                                                                         (1.44)
            Current Assets                                                                                                           7.24
            Current Liabilities                                                                                                   (21.73)
            Minority Interest                                                                                                      (2.05)
                                                                                                                                    16.85
            Loss on Disposal                                                                                                      (16.10)
            Total Consideration                                                                                                      0.76
            Satisfied by:
            Cash Consideration                                                                                                       0.76
            Net Cash inflow on disposal:
            Cash consideration                                                                                                       0.76
            Cash and Cash Equivalents (disposed off)                                                                               (0.24)
            Net Cash Inflow                                                                                                          0.52

      10.   On 25th October, 2004, one of the subsidiaries, Asian Paints Industrial Coatings Limited acquired 100% stake in Surya
            Powder Coating Limited (previously known as Surya Gelcaps Limited). The goodwill arising on acquisition of Surya Powder
            Coating Limited amounting to Rs. 0.43 million has been recognised in the consolidated financial statements.
            The assets and liabilities of Surya Powder Coating Limited as on the date of acquisition were as follows:
            Particulars                                                                                               (Rs. in Millions)

            Fixed Assets (including Capital Work in Progress)                                                                        8.50
            Long Term Loans                                                                                                        (5.00)
            Current Assets                                                                                                           0.57
            Current Liabilities                                                                                                    (3.60)
            Net Assets as on the date of acquisition                                                                                 0.47
            Goodwill on Consolidation                                                                                                0.43
            Cash Consideration                                                                                                       0.90
            Net Outflow of Cash and Cash Equivalents                                                                                 0.33

      11.   Permanent diminution in the value of long term Investments in Asian Paints (Sri Lanka) Limited, Berger International Sdn Bhd,
            Malaysia and Berger Paints Manufacturing Limited, Myanmar has been recognised in the financial statements of respective
            holding Companies. Consequently, the Goodwill pertaining to the investment in the above subsidiaries amounting to Rs. 8.83
            millions has been charged to the consolidated Profit and Loss Account.
      12.   During the financial year ended 31st December 2003, a decision was taken in the case of one of the subsidiaries, Berger
            Paints (Jamaica) Limited to discontinue the provision of the medical benefits to its pensioners as at 31st December 2003.
            However, during 2004, the decision was not effected as the directors, based on information available, were of the opinion
            that such a position could not be sustained. As a result, the actuarial valuation as at 31st December 2003 was carried out to
            reflect the liability in respect of this plan and the total provision of Rs. 7.91 millions have been charged to the consolidated
            Profit and Loss Account as prior period item.
      13.   The investment in Dutch Boy Philippines Inc., where Berger International Limited, Singapore holds 30% has been accounted
            for under equity method of accounting as under:
                                                                                                                            (Rs. in Millions)

                                                                                                              2004-05             2003-04
            Opening Balance of investment                                                                        64.24                   ---
            Investment in associate on acquisition of subsidiary                                                      ---            38.38
            Add: Share of profit                                                                                   2.18              39.14
            Less: Share of taxation                                                                              (0.70)            (12.54)
            Less: Exchange difference                                                                            (6.76)             (0.74)
            Closing balance of investment                                                                        58.96               64.24




104
                                                                                                    Consolidated Financial Statements




Schedules forming part of the accounts
14.   As required under Accounting Standard (AS 27) - Financial Reporting of Interests in Joint Venture, the audited financial
      statements of Asian PPG Industries Limited (hereinafter referred to as JV), the Joint Venture between the parent company and
      PPG Industries Inc., U.S.A. have been consolidated using proportionate consolidation method.
             The financial year of the JV is April to March. The parent company’s share of each of the assets, liabilities, income and
             expenses of JV have been included in the consolidated financial statements.
             The parent company’s share of capital commitments in the JV as at 31st March, 2005 is Rs. 2.54 millions. (Previous
             year Rs. Nil). (Included in Note B - 1 in Schedule ‘M’).
             The parent company’s share of contingent liabilities of the JV as at 31st March, 2005 is Rs. 1.32 millions (Previous year
             Rs. 1.32 millions). (Included in Note B - 4 (a) in Schedule ‘M’).
             No contingent liabilities and capital commitments have been incurred as at 31st March, 2005 in relation to the parent
             company’s interests in the JV along with the other venturer. (Previous year Rs. Nil)
15.   Hitherto, the parent Company has been recognising inter-division transfers of finished goods for captive consumption as
      revenue and the same was disclosed separately in Schedule ‘H’ - ‘Sales and Operating Income’. The value of such inter-
      division transfers was included in material consumption of the consuming divisions.
      With effect from the financial year ended 31st March 2005, the parent Company has discontinued the method of recognition
      of inter-division transfers as sales as well as material consumption. The previous year’s figures have been restated accordingly.
      The above change in the method of revenue recognition has resulted in a reduction in Net Sales by Rs. 600.28 Million
      (previous year Rs. 458.16 million) with a corresponding reduction in material consumption. The above change does not have
      any impact on the profits of the Group.
16.   A.     Pursuant to Accounting Standard (AS 28) – Impairment of Assets issued by the Institute of Chartered Accountants of
             India, the parent Company made an assessment as at 1st April 2004 for any indication of impairment in the carrying
             amount of the Company’s fixed assets. On the basis of such assessment, the parent Company has determined impairment
             loss on certain fixed assets amounting to Rs. 454.45 millions. As required by AS 28, the impairment loss (net of
             deferred tax credit amounting to Rs. 163.03) as at 1st April 2004 is adjusted against opening balance of revenue
             reserves, being the impairment loss pertaining to prior periods. After recognising the impairment loss, the Company
             has provided depreciation on the asset’s revised carrying amount less its residual value (if any), over its remaining
             useful life. Consequent to the above provision for impairment, the depreciation for the year ended 31st March 2005
             has reduced by Rs. 100.92 million and the deferred tax liability for the year has increased by Rs. 33.97 million
             resulting in net increase in the profits of the group by Rs. 66.95 million.
      B.     Till the financial year ended 31st March 2004, the parent company had been providing depreciation on its fixed assets
             under Straight Line Method and at rates specified under Schedule XIV to the Companies Act, 1956 except tinting
             systems (excluding computers which are a part of tinting systems) leased to dealers which were depreciated over the
             estimated useful life of nine years. Based on the management’s estimate of useful life, the parent company has increased
             the rate of depreciation of certain classes of assets as follows:
            Asset Class                                 Rate of Depreciation (%)        Revised Useful         Revised Rate of
                                                         till 31st March, 2004            Life (years)         Depreciation (%)
            Information Technology Assets                         16.21                         4                    25.00
            Scientific Research Equipment                          4.75                         8                    12.50
            Furniture                                              6.33                         8                    12.50
            Office Equipment                                       4.75                         5                    20.00
            Vehicles                                               9.50                         5                    20.00
      The carrying amount of the above assets as at 1st April, 2004 is being depreciated over the revised remaining useful life.
      The above revision in useful life has resulted in additional depreciation amounting to Rs. 83.13 millions for the financial year
      ended 31st March, 2005 which has been charged to Consolidated Profit and Loss account as required under Accounting
      Standard (AS 6) – Depreciation Accounting. Consequently, the Deferred Tax Liability for the year ended 31st March, 2005
      has reduced by Rs 27.98 millions resulting in net decrease in the profits of the Group by Rs. 55.15 millions.




                                                                                                          Asian Paints (India) Ltd.
                                                                                                        annual report 2004-2005           105
      Schedules forming part of the accounts
      17.   The group has recognised deferred tax arising on account of timing differences, being the difference between the taxable
            income and accounting income, that originates in one period and is capable of reversal in one or more subsequent periods
            in compliance with the applicable accounting standards.
            The major components of Deferred tax assets/(liabilities) arising on account of timing differences as at 31st March, 2005 are
            as follows :

                                                                                                                         (Rs. in millions)
                                                                                                              As at             As at
                                                                                                        31.03.2005        31.03.2004
            Deferred tax Liabilities
            Difference between the Written Down Value of assets as per books of
            accounts and Income Tax Act                                                                     (406.27)         (608.91 )
            Acclerated Capital Allowances and Unremitted income                                              (20.71)           (15.52)
            Deferred tax liability on account of income on retirement assets                                 (48.24)           (40.05)
            Preconstruction interest capitalised in accounts, Deductions for the same
            claimed under Income Tax Act over a period of 5 years                                             (6.00)            (5.32)
            Total                                                                                           (481.22)          (669.80)
            Deferred tax Assets
            Expenses allowed under the Income Tax Act purpose on payment basis                                 58.64             53.45
            Provision for doubtful debts                                                                       13.73             16.43
            Expenditure debited to Profit and Loss Account but allowed under Income
            tax Act over a larger period.                                                                      5.73              3.57
            Losses carried forward under Income Tax Act                                                       49.75             62.94
            Total                                                                                            127.85            136.39
            Net Deferred Tax Asset/(Liability)                                                              (353.37)          (533.41)


      18.   Earnings per share:
                                                                                                         2004-2005         2003-2004


            (a)   Basic and diluted earnings per share in rupees (face value -
                  Rs.10/- per share)                                                                           18.15             15.11
            (b)   Profit after tax as per Profit & Loss Account (Rs. in million)                           1,740.91          1,448.89
            (c)   Weighted average number of equity shares outstanding                                  95,919,779        95,919,779




106
                                                                                                                         Consolidated Financial Statements




Schedules forming part of the accounts
19.      Information on related party transactions as required by Accounting Standard (AS 18) for the year ended
         31st March, 2005:
                                                                                                                                              (Rs. in millions)

Particulars                       Key Management              Relatives of Key               Companies              Employee benefit                Others
                                     Personnel                 Management                  Controlled by              plans where
                                                                Personnel(*)           Directors / Relatives /       control exists
                                                                                             Associates
                                2004-05     2003-04         2004-05     2003-04        2004-05       2003-04       2004-05    2003-04     2004-05        2003-04

Processing of goods (Expense)                                                            138.58        106.48
Sale of goods                                                                              62.67         60.57
Purchase of goods                                                                        274.76        169.36
Royalty paid                                                                               28.41         14.21
Consultancy                                                                                 1.59             ---
Other recoveries                                                                            0.14          0.81
Interest on loan                                                                            0.06          0.20
Interest paid                                                                               6.67         15.71
Rent Deposit                                                                                   ---       (0.10)
Sale of Investments                                               ---       1.25            3.00          8.12
Repayment of loan                                                                          13.00          1.20
Remuneration                      56.34        50.22           7.29         6.89
Commission to
Non-executive Directors            0.40         0.28           1.20         0.84
Sitting fees paid to Non-
executive Directors                0.07               ---      0.33              ---
Dividend paid                                                                              14.63             ---
Other services                                                                              3.50             ---
Retainership fee and
other reimbursements               1.83         1.91
Fixed Deposits accepted               ---       0.15
Fixed Deposits repaid              0.15         0.02
Donation                                                                                                                                     1.20            2.90
Dividend received                                                                           2.26          0.25
Contribution during
the year                                                                                                            204.45      163.26
Outstanding as
on 31.03.05:
Loans                                                                                          ---        1.30
Deposits                                                          ---      (0.15)          (0.10)        (0.10)
Others                           (14.20)      (12.07)         (1.20)       (0.84)           3.50      (236.15)      (54.08)     (22.03)


         *      Under the employment of the parent company pursuant to the necessary approval from the shareholders and the Central
                Govt. u/s. 314 of the Companies Act, 1956.




                                                                                                                                Asian Paints (India) Ltd.
                                                                                                                              annual report 2004-2005               107
      Schedules forming part of the accounts
            1.    Key management personnel:
                  Directors of parent Company : Ashwin C. Choksi, Chairman, Ashwin S. Dani, Vice Chairman & Managing Director,
                  Abhay A. Vakil, Managing Director and K. Rajagopalachari, Non-Executive Director (till 14th March, 2005)
                  Directors/Key management personnel of subsidiaries/Joint venture:
                  V. S. Ram, Jagdish Acharya, J.N. Shahani, I.K. Jaiswal and Amitav Sur.
            2.    Relatives of Key management personnel: Mahendra C. Choksi, Non-Executive Director, Amar A. Vakil, Non-Executive
                  Director, Hasit A. Dani, Non-Executive Director, Jalaj Dani*, Manish Choksi, Nehal Vakil, Amrita Vakil, Rupen Choksi
                  and Malav Dani.
                  * Mr. Jalaj Dani, a relative of parent Company’s Vice Chairman & Managing Director is also a Director on most of the
                  subsidiary companies.
            3.    (a)     Companies over which the Directors have significant influence or control:
                  AR Intertect Design Pvt. Ltd.                 Gujarat Organics Ltd.                           Resins and Plastics Ltd.
                  Ashwin Holdings Pvt. Ltd.                     Geetanjali Trading & Investments Ltd.           Ricinash Oil Mill Ltd.
                  Asteroids Trading and Investments Pvt. Ltd.   Hitech Plast Ltd.                               Rita Choksi Holdings Pvt. Ltd.
                  Castle Investments and Industries Pvt. Ltd.   Himanshu Holdings Pvt. Ltd.                     Rupen Investments and Industries Pvt. Ltd.
                  Centaurus Trading and Investments Pvt. Ltd.   Jalaj Trading and Investments Pvt.Ltd.          S.C. Dani Research Foundation Ltd.
                  Clear Plastic Ltd.                            Jaldhar Investments and Trading Co. Pvt. Ltd.   Sadavani Investments and Trading Co. Pvt. Ltd.
                  Coatings Specialities (India) Ltd.            Jatayu Investments Ltd.                         Sanjivani Chemicals Ltd.
                  Dani Capital and Investments Pvt. Ltd.        Kalica Paper Industries Pvt. Ltd.               Sapan Investments Pvt. Ltd.
                  Dani Enterprises Pvt. Ltd.                    Lambodar Investments & Trading Co. Ltd.         Satyadharma Investments & Trading Co. Pvt. Ltd.
                  Dani Finance and Investments Co. Pvt. Ltd.    Lyon Investments and Industries Pvt. Ltd.       Sudhanva Investments and Trading Co. Pvt. Ltd.
                  Dani Finlease Ltd.                            Multitech Plast Containers Ltd.                 Suprasad Investments & Trading Co. Ltd.
                  Dani Holdings & Trading Co. Pvt. Ltd.         Murahar Investments and Trading Co. Ltd.        Suptaswar Investments and Trading Co. Ltd.
                  Dani Securities Ltd.                          Navbharat Packaging Industries Ltd.             Tru Trading and Investments Pvt. Ltd.
                  Dani Trading and Investments Ltd.             Nehal Trading and Investments Pvt. Ltd.         Unnati Trading and Investments Pvt. Ltd.
                  Doli Trading and Investments Pvt. Ltd.        Omega Properties Pvt. Ltd.                      Urvashi Holding Pvt. Ltd.
                  Elcid Investments Ltd.                        Pragati Chemicals Ltd.                          Vikatmev Containers Ltd.
                  ELF Trading and Chemical Mfg. Co. Ltd.        Rangmeet Investments Ltd.

                  (b)     Associates, promoters and affiliates of subsidiary companies/joint venture:
                  LKP Hardware, Solomon Islands                         Al - Hassan Group, Oman
                  Sultan Bin Sulayem, UAE                               Dutch Boy Philippines Incorporated
                  PPG Industries, Inc.                                  Port Vila Hardwares
                  Rene Ah Pow                                           ABM Santo
                  Ariza Holdings Ltd.                                   AP Vanuatu Shareholders
            4.    Employee Benefit Plans and other entities where control exists :
                  Asian Paints Office Provident Fund, Asian Paints Factory Employees’ Provident Fund, Asian Paints Management Cadres’
                  Superannuation Scheme and Asian Paints (India) Limited Employees’ Gratuity Fund.
            5.    Others: Asian Paints Charitable Trust.
      20.   Pursuant to the Accounting Standard (AS 19) - Leases issued by the Institute of Chartered Accountants of India, the following
            information is given:
            I.    a)      The parent company has provided tinting systems to its dealers on an operating lease basis. The lease period
                          varies between nine and ten years. The lease rentals are payable monthly. A refundable security deposit is
                          collected at the time of signing the agreement. The equipment shall be used only to tint the products of the lessor.
                          The initial direct cost relating to acquisition of tinting system is capitalised.
                  b)      In addition, the Joint Venture has given certain ‘mixing racks’ on non-cancellable operating lease to its dealers.
                          Initial direct costs are recognised as expenses in the Profit and Loss Account.
                  c)      Certain subsidiaries provide tinting systems to their dealers on an operating lease basis. The lease normally
                          ranges for a 5 year period. A security deposit is collected at the time of signing the agreement.




108
                                                                                                  Consolidated Financial Statements




Schedules forming part of the accounts
           d)   Future minimum lease rentals receivable as at 31.03.2005 as per the lease agreements:
                                                                                                                       (Rs. in Millions)

                                                                                                      2004-2005          2003-2004

                i)     Not later than one year                                                              81.50             138.50
                ii)    Later than one year and not later than five years                                    28.89             106.59
                iii)   Later than five years                                                                 0.30               1.49
                                                                                                          110.69              246.58

                The information pertaining to future minimum lease rentals receivable is based on the lease agreements entered
                into between the respective companies and the dealers and variation made thereto. The lease rentals are reviewed
                periodically taking into account prevailing market conditions.
           e)   Total amount of contingent rents recognised as income - Rs. NIL (Previous year - NIL).
           f)   The information on gross amount of leased assets and depreciation is given in Schedule ‘D’ to the Balance Sheet.
    II.    a)   The parent company has taken certain assets like cars, computers etc., on an operating lease basis for a period
                of 48 months. The lease rentals are payable on a monthly/quarterly basis by the parent company.
           b)   The Joint Venture has entered into an arrangement to obtain computer equipments, mixing racks etc, on non-
                cancellable operating lease for thirty six months. As per the lease agreement, the Joint Venture does not have an
                option to purchase the assets.
           c)   Future minimum lease rentals payable as at 31.03.2005 as per the lease agreements:
                                                                                                                       (Rs. in Millions)

                                                                                                      2004-2005         2003-2004

                i)     Not later than one year                                                              33.73              52.54
                ii)    Later than one year and not later than five years                                    39.37              94.46
                iii)   Later than five years                                                                    ---            37.00
                                                                                                            73.10            184.00

           d)   Operating Lease payments recognised in the Profit and Loss Account for the period is Rs. 33.15 million (Previous
                year Rs. 33.32 million).
           e)   Total amount of contingent rents recognised as expense - Rs. NIL (Previous year - NIL).
    III.   a)   Certain overseas subsidiaries have taken property, plant and equipment on finance lease which effectively
                transferred to the respective subsidiaries substantially all of the risks and benefits incidental to the ownership.
           b)   Future minimum lease rentals payable as at 31.03.2005 as per the lease agreements:
                                                                                                                       (Rs. in Millions)

                                               2004-2005                                            2003-2004
                                  Minimum           Finance         Present          Minimum            Finance            Present
                                    lease            charge          Value             lease             charge             Value
                                  payments        allocated to                       payments         allocated to
                                                 future periods                                      future periods
    i)     Not later than
           one year                  7.92            1.23             6.69             13.50             2.18              11.32
    ii)    Later than one
           year and
           not later than
           five years              13.28             1.48           11.80              15.82             2.32              13.50
    iii)   Later than
           five years                1.20            0.11             1.09                  ---              ---                ---
                                   22.40             2.82           19.58              29.32              4.50             24.82



                                                                                                         Asian Paints (India) Ltd.
                                                                                                       annual report 2004-2005             109
      Schedules forming part of the accounts
      21.   Segment Information for the year ended 31st March, 2005:
            i)  Primary segment information:
                Business Segment:                                                                                        (Rs. in Millions)
                                                                      2004-2005                              2003-2004
                                                             Paints     Others*        Total        Paints     Others*            Total
                Revenue
                External Sales (Net)                     24,855.71       749.51   25,605.22    21,542.01        637.07     22,179.08
                Inter-Segment Sales (Net)                                600.28      600.28                     458.16        458.16
                Other Income                               127.91         31.56      159.47       153.12         17.82        170.94
                Total Revenue                            24,983.62     1,381.35   26,364.97    21,695.13      1,113.05     22,808.18
                Result
                Segment result                            3,144.70       121.57    3,266.67     2,805.69         49.57       2,855.26
                Unallocated Corporate expenses                                       444.00                                    380.21
                Operating Profit                                                   2,822.27                                  2,475.05
                Interest Expenses                                                  (108.15)                                  (152.03)
                Interest Income                                                       10.42                                     46.01
                Dividends                                                             62.52                                      7.34
                Exchange Difference
                Profit/(Loss) on sale of
                investments                                                           24.51                                       1.66
                Profit/(Loss) on sale of fixed
                assets                                                                 29.95                                        ---
                Profit/(Loss) on sale of subsidiaries                                 (1.88)                                        ---
                Miscellaneous income                                                   38.70                                    37.60
                Income taxes                                                      (1,060.82)                                 (940.50)
                Net Profit before prior
                period items                                                       1,817.52                                  1,475.13
                Other Information
                Segment assets                           12,068.73       691.69   12,760.42    10,625.39        553.99     11,179.38
                Unallocated corporate assets                                       2,476.29                                 2,760.24
                Total assets (after impairment loss)                              15,236.71                                13,939.62
                Segment liabilities                       4,994.89       245.94    5,240.83     4,957.37         51.98       5,009.35
                Unallocated corporate liabilities                                  4,324.13                                  3,635.50
                Total liabilities                                                  9,564.96                                  8,644.85
                Capital Expenditure                        885.72         22.18      907.90       325.88         10.62          336.50
                Unallocated corporate capital
                expenditure                                                           26.79                                      13.37
                Total                                                                934.69                                     349.87
                Depreciation                               522.91         36.04      558.95       550.85         34.72          585.57
                Unallocated corporate
                depreciation                                                          54.65                                      42.78
                Total                                                                613.60                                     628.35
                Unallocated corporate non-cash
                expense other than depreciation                                       77.10                                      78.26
                Total                                                                 77.10                                      78.26
                Impairment loss on segment assets
                as on 1st April, 2004                      384.17          2.30      386.47                                          ---
                Impairment loss on unallocated
                corporate assets as on 1st April, 2004                                67.98                                          ---

                Total                                                                454.45                                          ---

            *        Others include the parent company’s business units manufacturing Phthalic Anhydride and Pentaerythritol.



110
                                                                                               Consolidated Financial Statements




Schedules forming part of the accounts
      ii)   Secondary segment information:
                                                                                                                    (Rs. in Millions)
            Geographical Segment:
                                                           2004-2005                                   2003-2004
                                               Domestic     International         Total    Domestic      International        Total
                                              Operations      Operations                  Operations       Operations
            Segment Revenue                   20,903.10        5,025.81 25,928.91         18,112.81        4,329.82 22,442.63
            Carrying cost of
            segment assets                    10,912.37        4,324.34 15,236.71          9,942.70        3,996.92 13,939.62
            Additions to Fixed assets
            and intangible assets                763.96          170.73     934.69           277.62            72.25       349.87

22.   Previous year’s figures have been regrouped, wherever necessary.




                                                  Signatures to Schedules A to M


As per our report of even date          For and on behalf of the Board

For Shah & Co.                          Ashwin C. Choksi      Ashwin S. Dani         Abhay A. Vakil        Tarjani Vakil
Chartered Accountants                   Chairman              Vice Chairman &        Managing Director     Director
                                                              Managing Director
H. N. Shah
Partner                                 Jayesh Merchant
Membership No. 8152                     Vice President -
                                        Corporate Finance &
                                        Company Secretary

Mumbai                                  Mumbai
11th May, 2005                          11th May, 2005




                                                                                                     Asian Paints (India) Ltd.
                                                                                                   annual report 2004-2005              111
112
      SUMMARY OF FINANCIAL STATEMENTS OF SUBSIDIARY COMPANIES.
                                                                                                                                                                                                                                                                                                          All figures in INR millions

                                                                                                     Capital                Reserves            Total Liabilities        Total Assets               Sales                 Other Income         Profit before Tax      Tax provision        Profit after Tax           Dividend
                 Subsidiary Name                        Currency           Accounting
                                                                             Period
                                                                                               Current    Previous     Current    Previous     Current     Previous    Current    Previous     Current      Previous   Current    Previous   Current     Previous   Current   Previous   Current     Previous    Current   Previous
                                                                                                period      period      period      period      period       period     period      period      period        period    period      period    period       period    period     period    period       period     period     period

       Asian Paints (Bangladesh) Ltd                  Taka                 Jan to Dec           93.77          55.52    -99.63     -60.59      196.85       156.16     190.98      151.09      111.13        52.74       0.18        0.00     -40.16       -42.36     0.00       -0.78    -40.16      -43.14        0.00      0.00
       Asian Paints (International) Ltd               US $                 Jan to Dec         1090.86      973.40      -115.52         3.61    107.75         77.39   1083.09     1054.39        0.00          0.00      9.99      10.48     -120.69         6.61    -0.83       -0.98   -121.52         5.63       0.00      1.49
       Asian Paints (Middle East) LLC                 Oman OR              Jan to Dec           70.83          73.74    -54.64     -61.83      146.07       121.81     162.26      133.72      141.81       112.09       1.31        0.22       4.70         0.01     0.00        0.00     4.70          0.01       0.00      0.00
       Asian Paints (Nepal) Pvt Ltd                   Nepal Rs         15th Jan to 14th Jan     13.47          13.70    61.29      71.78        54.13         49.24    128.89      134.72      148.35       120.46       2.21        1.99       8.43       14.41     -4.96       -3.63     3.47        10.78      12.38      12.27
       Asian Paints (Queensland) Pty Ltd              Aus $                Jan to Dec           81.19          81.29    -46.02     -41.04      108.86       103.42     144.03      143.66      187.77       171.62       0.47        1.44      -6.63         1.72     1.61       -0.48     -5.02         1.24       0.00      0.00
       Asian Paints (S.I.) Ltd                        SI $                 Jan to Dec            3.75           3.77    50.61      50.61         3.33          3.66     57.70       58.04       37.58        33.01       0.05        1.13       4.04         5.92    -0.09       -0.57     3.95          5.35       3.76      3.97
       Asian Paints (South Pacific) Fiji Ltd          Fiji $               Jan to Dec           11.38          11.31   222.43     209.77        48.90         65.31    282.70      286.39      271.44       258.02       9.14      11.71      31.88        30.89     -8.21       -9.63    23.67        21.26      13.69       9.58
       Asian Paints (Tonga) Ltd                       $ Top                Jan to Dec            2.73           2.72    47.49      45.34         1.26          3.90     51.48       51.97       25.97        23.23       0.46        1.14       0.03        -0.23     1.90       -0.02     1.93         -0.24       0.00      0.00
       Asian Paints (Vanuatu) Ltd                     Vatu                 Jan to Dec           12.80          12.42    16.47      13.32        12.44         16.66     41.71       42.40       34.39        30.07       0.01        0.45       2.70         1.37     0.00        0.00     2.70          1.37       0.00      3.02
       Asian Paints Industrial Coatings Ltd           INR                  Apr to Mar           90.00          80.00     0.31          -6.23   132.86       114.53     223.17      188.30      285.67       232.78       0.50        1.19       9.93         4.46    -3.37       -3.04     6.56          1.43       0.00      0.00
       Asian Paints Lanka Ltd                         SL Rs                Jan to Dec          139.98          21.27    -88.45     -89.99      125.39       224.42     176.92      155.71      163.46       163.18       2.74        1.54      -9.49       -44.21     0.00        0.00     -9.49      -44.21        0.00      0.00
       Asian Paints South Pacific Holdings Ltd        US $                 Jan to Dec           54.99          57.35     8.93          4.03      1.63          5.75     65.56       67.13        0.00          0.00     10.42        2.95       6.30         0.04     0.00        0.00     6.30          0.04       1.12      1.15
       Berger Building Services (Singapore) Pte Ltd   SG$                  Jan to Dec           26.71          26.85    -29.70     -29.75        3.26          3.17      0.27           0.27     0.00          0.00      0.00     211.82       -0.11      211.42      0.00        0.00     -0.11      211.42        0.00      0.00
       Berger Contractor (Singapore) Pte Ltd          SG$                  Jan to Dec          120.20      120.83      -121.78   -122.06         1.58          1.37      0.00           0.13     0.00          0.00      0.00      84.63       -0.35       84.61      0.00        0.00     -0.35       84.61        0.00      0.00
       Berger International Ltd                       SG$                  Jan to Dec          693.84      697.44      -220.24     33.46       978.62      1106.88    1452.22     1837.77        0.00          0.00    204.39      99.26     -229.19        -6.55    -8.20       -0.13   -237.39        -6.69       0.00      0.00
       Berger International Sdn. Bhd.                 MYR (Malaysia)       Jan to Dec          276.72      204.00      -294.41   -271.22       165.43       226.01     147.74      158.78      171.76       204.36       0.03        0.10     -34.50       -71.49     0.00        0.00    -34.50      -71.49        0.00      0.00
       Berger Paints (Hong Kong) Ltd                  HK $                 Jan to Dec            9.56           9.94     0.79          1.44      4.83          4.94     15.18       16.32       36.89        37.98       0.00        0.45      -0.61         3.95     0.00        0.00     -0.61         3.95       0.00      5.79
       Berger Paints (Ningbo) Co. Ltd                 CNY                  Jan to Dec          266.40      257.51      -189.27   -168.71        72.58         61.14    149.71      149.95       22.51          6.60      0.00        0.00     -27.78       -28.11     0.00        0.00    -27.78      -28.11        0.00      0.00
       Berger Paints (Thailand) Ltd                   THB                  Jan to Dec           55.95          57.59     -8.13     -11.88      130.63         70.40    178.45      116.12      202.76       161.72       1.16        0.90       3.46        -7.01     0.00       -2.53     3.46         -9.54       0.00      0.00
       Berger Paints Bahrain W.L.L.                   BHD                  Jan to Dec           48.49          50.43   191.04     175.32       111.29         90.20    350.82      315.95      342.67       307.52       2.21        1.08     68.33        52.62      0.00        0.00    68.33        52.62      45.44       0.00
       Berger Paints Barbados Ltd                     Barbados $           Jan to Dec           41.15          43.08   112.26     119.90        83.25         63.30    236.66      226.28      227.48       217.93       1.90        3.47       0.48         3.07     2.58        0.57     3.06          3.64       5.60      5.62
       Berger Paints Emirates Ltd                     AED                  Jan to Dec           11.91          12.40   -115.48     -88.26      522.06       442.90     418.49      367.04      630.98       519.89       3.54        4.94     -31.34         1.28     0.00        0.00    -31.34         1.28       0.00      0.00
       Berger Paints Jamaica Ltd                      Jamaican $           Jan to Dec           76.75          81.43   222.82     234.41       190.39       189.69     489.96      505.52      817.30       841.28       1.33        5.28     77.77       103.42    -28.31      -35.73    49.46        67.69      25.31      35.73
       Berger Paints Manufacturing Ltd                Kyat                 Jan to Dec            0.87           0.91    10.28      14.77        32.95         25.00     44.10       40.68       22.56        15.14       0.13        0.04      -3.86       -10.38     0.00        0.00     -3.86      -10.38        0.00      0.00
       Berger Paints Singapore Pte Ltd                SG$                  Jan to Dec          388.44      390.46      -292.71   -321.26       101.48       105.98     197.21      175.17      498.48       318.57      44.48      44.72      58.09        70.19     -0.91        0.00    57.18        70.19      30.21      30.17
       Berger Paints Trinidad Ltd                     Trinidad $           Jan to Dec           41.52          43.78   162.68     174.84        89.66         91.19    293.86      309.81      280.64       266.74       1.86      26.07        6.17        -9.15    -3.57        1.02     2.60         -8.12       6.34      6.64
       Enterprise Paints Ltd                          GBP                  Jan to Dec           12.26          11.88     -4.93         -4.78     6.13          5.94     13.46       13.04        0.00          0.00      0.00        0.00       0.00         0.00     0.00        0.00     0.00          0.00       0.00      0.00
       Lewis Berger (Overseas Holdings) Ltd           GBP                  Jan to Dec          157.55      152.65      185.94     254.86        28.56          4.65    372.05      412.17        0.00          0.00     47.86      95.33      28.53        54.57     -5.14       -3.99    23.39        50.58       99.28      0.00
       Nirvana Investments Ltd                        GBP                  Jan to Dec            0.00           0.00     -1.23         -1.19     7.48          7.25      6.25           6.06     0.00          0.00      0.00        0.00       0.00         0.00     0.00        0.00     0.00          0.00       0.00      0.00
       Samoa Paints Ltd                               WST $ (Samoa)        Jan to Dec            1.45           1.45    21.94      20.77         4.76          8.85     28.14       31.07       33.26        27.66       1.12        1.02       7.90         5.76    -2.35       -1.71     5.55          4.05       4.35      4.21
       SCIB Chemicals S.A.E.                          Egpt pound           Jan to Dec          224.13      221.90       -89.83   -100.47       237.37       211.43     371.68      332.85      495.79       320.13       1.37        0.24     11.60        -37.66     0.00        0.00    11.60       -37.66        0.00      0.00
       Taubmans Paints Fiji Ltd                       Fiji $               Jan to Dec            4.26           4.23    46.64      43.95        15.77         18.84     66.67       67.02       77.82        63.28       7.31        0.21     10.63          2.39    -3.95       -0.83     6.68          1.56       4.25      9.95
       Technical Instrument Manufacturers             INR                  Apr to Mar            0.50           0.50    33.63      23.37        83.11         97.99    117.25      121.86        0.00          0.00     19.61      19.65      13.77        13.78     -3.51       -3.56    10.26        10.22        0.00      0.00
       Universal Paints Ltd                           GBP                  Jan to Dec           36.16          35.04     -2.42         -1.82     0.00          0.00     33.75       33.22        0.00          0.00     12.01      21.44      11.48        21.44      0.00        0.00    11.48        21.44      12.01      21.44
       Surya Powder Coating Limited                   INR                  Apr to Mar            0.50           0.00      0.00          0.00     8.09          0.00      8.59        0.00        0.00          0.00      0.00       0.00       0.00         0.00      0.00        0.00     0.00         0.00       0.00       0.00


      Notes :
      1.
         Asian Paints Distributors (Pvt.) Limited                            —      Under voluntary Liquidation
         Berger Paints (Malta) Ltd.,                                         —      Disposed on 12th May 2004
         Berger Paints (Shanghai) Ltd,                                       —      Liquidated on 23rd February 2004
         Asian Paints (Mauritius) Limited                                    —      Disposed on 30th March 2005
         Surya Powder Coatings Limited                                       —      Acquired on 25th October, 2004

      2. Capital,Reserves,Total assets and Total liabilities have been translated at the rates prevailing at the end of the respective financial years.
      3. Sales, Other Income, Profit before tax , Provision for tax , Profit after tax and dividend have been translated at average rates prevailing during the respective financial years.

				
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Abhimanyu Sukhwal Abhimanyu Sukhwal Associate Consultant
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