Asian Paints Ltd Management Discussions

: Macro-economic landscape

During FY 2023-24, the global environment continued to be challenged by the continuing war in Europe and it was further disturbed by the ongoing conflict in the Middle East. Uncertainty around both these conflicts and their resultant impact on the supply chain routes led to volatility in the global financial and commodity markets. On the other hand, the US economy demonstrated resilience amidst the challenging environment putting the recession fears to rest. Inflation that had hit historically high levels in the previous year, took a breather and its effect was a huge support in a subdued demand environment across many geographies. Contrary to the years beginning expectations, the slowing inflation was not enough to push the monetary authorities to look at a dovish monetary stance.

At the same time, the rapid developments in Artificial Intelligence (Al)and its adoption across streams of business processes, along with enhanced digitalisation, data sciences and the growing focus on sustainability, are transforming business operations. Businesses and financial institutions focused on innovation, efficiency, and sustainability as they strived to further their business objectives and meet the changing customer preferences.

Despite the challenging global landscape during the year, India emerged as the fastest-growing major economy, driven by a robust push in capital formation with public investment leading the path. The large domestic consumption basket in the country also supported this growth, though overall, it showed signs of moderation from the earlier years. Government-led strategic reforms, substantial investments in physical and digital infrastructure, and initiatives like Make in India and the Production-Linked Incentive (PLI) scheme bolstered the countrys growth, resilience, and self-reliance.

The National Statistical Office (NSO) projected a real GDP growth of 7.6% for FY 2023-24, supported by a broad-based strengthening of industrial sectors, particularly manufacturing, and the financial services sector playing a pivotal role in driving the economic momentum.

Inflation moderated to a four-month low of 4.9% in the third quarter of FY 2023-24, as a result of the Reserve Bank of Indias prudent management, balancing inflation control with growth stimulation.

This is believed to have created a stable interest rate environment conducive to long-term investments and spending. Government strategies have continued to focus on onshoring and friend-shoring production, leveraging Al to maintain competitiveness in digital services, and achieving non-fossil fuel power generation targets.

Outlook

The International Monetary Fund (IMF) projects global growth to remain at the same levels as the past year, indicating a stabilising global economy with monetary policies finding new balance. However, it is anticipated to be a year of diverging growth trends emerging in various economies, especially in the major developed economies where US growth is expected to be stable while the Euro Zone outlook looks uncertain. Similar uncertainties also abound on the growth outlook in China where the authorities have been experimenting for some time now, to shift the growth focus towards domestic consumption, albeit with marginal success. Developing Asian economies are likely to see accelerated growth, while regions like the Middle East and North Africa and Sub-Saharan Africa anticipate modest growth, emphasising the need for vigilance and adaptability in navigating the complex global environment.

Amidst the broader global economic context, India remains strongly on its path of sustained economic growth with ongoing reforms across critical sectors such as healthcare, energy and MSMEs. The large public and private investment cycle and strong domestic consumption potential augur well for continuity of its growth momentum. Inflation, though above the target levels of the monetary authority, is expected to be largely in control with the expected good monsoon season providing further room for cooling. Infrastructure development, propelled by public policies, is set to drive gross fixed capital formation, while initiatives like the PM Carib Kalyan Anna Yojana are aimed at bolstering rural demand. In this vibrant economic landscape, the banking sector and rapidly evolving fintech space are anticipated to further financial inclusion to the last mile, thereby supporting manufacturing, job creation, income augmentation, and infrastructure investment.

India is also well positioned to enhance its participation in global value chains with its policy reform agenda, thereby nurturing vertical markets with a sustained growth phase. The influx of foreign direct investment (FDI) and the expansion of the digital infrastructure is expected to create an opportune environment-where India is looked at notjust as a consumption market considering its strong domestic consumption potential but also as a market offering superior technology skill sets to cater to evolving aspirations of global players across sectors.

Decorative business in India

FY 2023-24 began with positive consumer sentiments for the Decorative business both in the retail and large user business segments. From Q2 onwards, we saw a dip in demand owing to reduced household spending. Domestic growth was supported by the continuing push in public investments while household consumption was impacted on the back of persistent inflation.

The subdued consumption impacted the demand for Premium range of our product portfolio, especially in the rural regions, looking at downtrading to counter the price impact. Strong growth was seen in the Economy range of products strengthening our bottom of the pyramid segment. The Luxury range of products continued to do well with various new products offering superior value propositions, driving strong interest from the consumers.

Overall for the year, we delivered a robust high-single-digit volume growth of 9% with a value growth of 3%. Putting the consumer first has always been at the core of our business, in whatever initiative we undertake, whether in terms of the launch of new products or service offerings. This year, too, we brought delight to consumers with a range of new product launches and offerings. The year witnessed 24 products getting launched in the decorative coatings space.

At the top end of the spectrum, we launched Emporio Self Heal, a top-of- the-line wood finish product with self-healing properties, which is the first of its kind in this category. Our Damp Proof Play offers decor plus protection solutions for terraces. Apcolite Insect Shield Enamel is a pioneering enamel paint, which is effective against mosguitoes, ants, cockroaches, and flies.

Continuing with our work on one of our focus areas of democratising decor and enabling every Indian to create a beautiful home, we have introduced Neo Bharat - a latex paint reinforced with special polymer technology, which gives a smooth finish and three times better durability than distempers and local paints. Another such groundbreaking innovation is Flash in the space of wood finishes. It provides best-in- class gloss and grain filling at the most competitive price against local polishes.

We have introduced ‘Neo Bharat - a latex paint reinforced with special polymer technology, which gives a smooth finish and three times better durability than distempers and local paints.

Asian Paints has been an integral part of the cultural fabric of the nation, inseparable from festivities across the decades. In an industry first, we launched limited-edition festive packaging this year to celebrate the rich culture and heritage of West Bengal, Tamil Nadu and Kerala during the Durga Puja, Pongal, and Onam festivals respectively.

Equipped with new packaging technology, the Asian Paints Royale Glitz festive pack and Ultima Protek pack featured an exciting Augmented Reality (AR) feature.

By scanning the QR code on the pack, consumers were taken on a delightful journey through AR.

We created a new paradigm in our relationship with our contractors with the introduction of instant direct benefit transfer (DBT), enabling an immediate and anytime redemption of loyalty points. We also introduced an industry-first Legends programme, which rewards contractors for their long-term loyalty towards Asian Paints. We are also the only player to provide health insurance to contractors. Our contractor finder service continues to provide direct business to thousands of contractors.

We have been studying colour and its varied influences on lifestyle since 2003, and we remain fascinated by the big and small stories that emerge out of the vibrant landscape in the world. Every year, we collaborate with experts from a range of

creative disciplines - architecture, art, interiors, fashion, sociology, media and FMCG - to put together a comprehensive forecast of design directions in colours, materials, textures and finishes that are relevant to the world. Dessert Love, a Terra shade, is anointed the Colour of the Year 2024, amidst a growing desire for familiarity, comfort, and emotional grounding in these ever- changing times. Resonating with our deepest memories, it takes us on a journey of self-discovery. It echoes the warmth of a homecoming, where familiarity envelops us in the sanctuary of emotional stability. In a world that often feels disconnected, Terra is the thread that stitches us back to the fabric of our being, a colour that speaks the language of belonging.

In the areas of Projects and Large User segments, we have sustained our leadership position amongst builders, government and cooperative housing societies. Our stand-out product range and customised value-added service offerings have carved out a distinctive niche among customers. We have developed a concerted strategy to cater to the needs of large corporates and infrastructure projects by collaborating closely with national civil construction companies and consultants engaged in such projects. This, coupled with collaborated way of working with our Industrial Coatingsjoint ventures has catapulted us to being a comprehensive solutions provider for all surface needs. Our strategy for creating long-term customer value in large government projects has yielded us consistent business results. Our newer forays in product categories of admixtures, flooring and repair products continue to help us develop our leadership and become a one-stop solution provider for our customers.

Home Decor

Asian Paints is establishing itself as the foremost integrated home decor brand in India. This ambition will be realised through the development of a robust Phygital network - digital presence via the website and social media platforms and strategically located physical stores to enable unparalleled consumer accessibility.

At the heart of the digital experience for decor are inspirational content, engagement, and good design curation to build a new-age home decor brand that is tasteful, approachable, and trustworthy.

? The digital decor engine www.beautifulhomes.asianpaints.

com, continues to be Indias leading destination for home decor enthusiasts and design professionals for home decor inspiration, design services, and products.

Beautiful Homes Stores

It has been an incredible year for the network of Beautiful Homes Stores as we expanded our presence across 45 towns with 60 stores. This expansion came with a continued focus on providing the best-in-class consumer experience through expert consultation, 3D visualisation, endless customisation and one-stop shop for decor, enabled by cutting-edge technology, the best physical store elements, and other exceptional services to our consumers, resulting in us earning amongst the highest Net Promoter Score (NPS) for such services.

We continued to augment our decor offerings for our decor conscious customers. Our range now includes products in furniture, furnishings, lights, rugs, modular kitchens, bath solutions, wooden flooring, home automation and doors and windows. We continued to reinvigorate our furnishings fabrics by offering new and exciting collections which helped us become one of the leading players in the Indian furnishing fabric industry.

Wall coverings saw unprecedented action with the launch of 50+ collections to almost double our range. This was a mix of in- house collections as well as new international partnership with iconic brands. We also launched our economy wall coverings range to further expand our offerings into the economy segment. We launched the latest collection in wallcoverings and fabrics from the master designer Sabyasachi Mukherjee called Paris-Calcutta. With hand-painted motifs created by The Sabyasachi Art Foundation, this collection of wallpapers and fabrics, co-created with Asian Paints, brings together the sophisticated artistry and cultural heritage.

In FY 2023-24, we set the groundwork for further developing our Beautiful Homes Stores brand, enhancing our services, and aiming to reach higher NPS. Our priority includes a comprehensive digitising of our services - from customer interactions to internal operations. We anticipate robust traction on this initiative as a result of the positive customer experiences.

Decor Pro

In our endeavour to deepen market penetration and improve our relationship with ourvalue chain partners-Architects and Interior Designers (AIDs), we strategically implemented Category Expertise programmes for our executive cadres across paint and decor categories in the top 11 cities. This initiative not only bolstered our understanding of market dynamics but also facilitated our collaboration with 150+ leading AIDs. By functioning as a channel with direct primary-secondary billing capabilities encompassing PU+, paint categories, fabrics, wallpaper, decorative lighting, Kitchen, and uPVC, we have established a robust framework for sustained growth and comprehensive market coverage.

White Teak

During the year, we consolidated our position as the market leader in decorative lights, achieving revenue of Rs 133 Crores, a 23%y-o-y increase fromRs 109 Crores in FY 2022-23.

We have introduced innovative retail formats, transitioning from a Company Owned, Company Operated (COCO) model to a Franchise Owned, Company Operated (FOCO) model, together with ramping up the establishment of Beautiful Homes Stores and Beautiful Home Studios. Adding to our footprint, we opened nine full- format stores of White Teak during the year, with additional five stores in the pipeline.

Asian Paints is establishing itself as the foremost integrated home decor brand in India. This ambition will be realised through the development of a robust Phygital network - digital presence via the website and social media platforms and strategically located physical stores to enable unparalleled consumer accessibility.

Our innovation strength helped us unveil a design blitz, featuring the launch of 150+ decorative light families, 60 new fan designs, and 500 Decor artifacts. This has fuelled excitement around the White Teak brand, especially with the introduction of a customised design vertical for decorative lights that significantly contributes to our topline growth. We also scaled up a new business arm focused on architectural lights, with a dedicated team driving product innovation across interiors and fagades. To strengthen our omni-channel model, we bolstered online engagement, which witnessed a substantial increase in monthly unique visitors to our website from approximately 10 Lakhs to a peak of 25 Lakhs. Through these initiatives, we have successfully engaged with 1,200+ AID firms.

Weatherseal

We made remarkable strides in positioning ourselves as a dominant player in uPVC windows and doors category, doubling our topline from Rs 25 Crores in FY 2022-23 to Rs 52 Crores in FY 2023-24. This impressive achievement has solidified our position as the second- largest organised player in this category in the domestic market.

Our concerted efforts in network expansion resulted in increased Weatherseal touchpoints in 20+ new cities, extending the Weatherseal proposition to a broader audience.

We also undertook significant backend scale-up initiatives

enhancing operational efficiency and our capacity in a complex made-to- measure category. The introduction of a custom profile through an exclusive partnership further enhanced the branded experience for our consumers.

Decor and consumer services

Beautiful Homes Service, our flagship interior design service is now available in 13+ cities. A Phygital end-to-end decor service, it has been growing in strength offering superior products as well as credible dealer- led painting services.

Our products are made keeping in mind the urban sensibilities of homeowners. The offering includes a comprehensive solution for homeowners seeking designs that blend adaptability and functionality, style, and personalisation. With the addition of newer categories such as wall panels, false ceilings Beautiful Homes Service will become the most sought-after brand in the world of interior design.

Additionally, our brands Trusted Contractor Service and Beautiful Home Painting Services connects customers with trained

contractors, providing affordable options and further enhancing customer satisfaction.

With an extensive network and innovative features like real-time dealer dashboarding, product scanning for secondary liquidation visibility, and geotagging capabilities, we continue to redefine excellence in the professional painting services landscape. Demonstrating remarkable growth, adaptability, and innovation, we continue to improve our painting services and boast a service partner footprint spanning hundreds of towns across India, catering to the needs of 2.5+Lakhs consumers. During the year, we solidified our position as the largest painting service brand in the country, further elevating our service through superior workmanship, attention to detail and customisation as per individual tastes and preferences together with premium quality products and professionalism. Our Platinum tier of service has continued to be well-received across the country. Through a further scaling up of our Contractor Service across geographies, we have continued to build strong relationships with trained contractors, who also act as influences, and with our customers who have access to cost-effective paint solutions.

Kitchen Business

Sleek International Private Limited (Sleek), our wholly owned subsidiary, operates in both the Kitchen Components and Full Modular Kitchen Solutions sectors. Within the Kitchen Components segment, we distribute a comprehensive range of kitchen hardware, accessories, and kitchen appliances through a wide distribution network.

In the Full Modular Kitchen Solutions segment, we offer end-to-end design-to-execution services for complete kitchens, wardrobes, and fitted furniture through a robust network of Sleek showrooms owned by franchisees nationwide. Our premium kitchen offerings represent our technical, material, and design excellence, accommodating a diverse range of preferences across consumer demographics. Additionally, we have a specialised team dedicated to providing Full Modular Kitchen Solutions for new constructions, particularly in upcoming residential projects. During the year, the Board of Directors of Asian Paints and Sleek approved the Scheme of Amalgamation of Sleek with Asian Paints to generate revenue synergies through shared consumer insights and optimise back-end operations.

Luxury kitchens contributed to about one-third of the value sales in FY 2023-24 further strengthening Sleeks brand positioning as a premium player in the market.

Business performance

During FY 2023-24, Sleek registered sales of Rs 394 Crores. Luxury kitchens contributed to about one-third of the value sales in FY 2023-24, further strengthening Sleeks brand positioning as a premium player in the market. Wardrobes made significant gains in numbers across the country with a variety of options across different price points. Top- end walk-in wardrobes were added to the luxury segment options as well. Fitted furniture made gains in the latter part of the year.

Our premium offerings under the Crest 2.0 label have been a runaway success. For the next financial year, metal carcass and waterproof kitchen concepts have been developed providing unique, relevant, and new-to-industry options in the ever-evolving kitchen solutions landscape, which is seeing increasing traction owing to changing lifestyle aspirations. The additional manufacturing set-up at Wada in Maharashtra, commissioned

during the year will drive further cost efficiencies for the business.

The overall business performed in line with industry growth rates, supported by the launch of new products and expansion of the portfolio beyond kitchen hardware and accessories. Raw material prices were relatively stable during the year. We have been focusing on indigenisation for the past few years, and this positions the business favourably in the coming years. During the year, we continued to focus on expansion in underdeveloped markets in order to expand our geographical reach, market penetration of products, and achieve a greater distribution depth. Together with an enhanced portfolio, the Sleek Select programme was launched for improved product showcasing, better collaboration with contractors and interior designers and lead generation through digital and physical means.

Bath Fittings and Sanitaryware

In the Bath Fittings and Sanitaryware business, we continued to broaden our network and product range, providing innovative bath products and solutions, offering consumers a range of tailored solutions to meet diverse functional, design, and decor reguirements.

Business performance

The Bath industry had a challenging year with price reductions, a strong base effect, competition from new entrants in the business and rapid commoditisation in some product segments. Furthermore, sales from exports saw a substantial decrease. The business recorded revenues of Rs 340 Crores during the year, leveraging the network and product expansion initiatives undertaken.

Given the challenges of the year and industry changes, we maintained a strong focus on premiumisation. The product and network portfolio are undergoing a shift towards a higher contribution from new and top-tier products, along with

deeper integration within our adopted and partnered networks. The Bathsense CANVAS range has made a strong impact on architects and top-end channel partners. This is a differentiated offering with a superior coating that has been developed with the in-house R&D expertise and provides a 25-year warranty with its unigue Lotus-25 hydrophobic technology.

During the year, Bathsense also introduced top-end thermostatic options supporting the technical superiority of the product offerings and attractively positioned Bathsense in the market as a partner of choice. The business also launched Ess Ess Sanitaryware, which offers competitively priced products, and Ess Ess Ezyclean faucets in neutral colours of white and grey that guarantee protection against stains and damages due to pitting, patina, or salt marks.

Bathsenses Bespoke design service, available through the website and dealer partners, has accelerated the sale of high-end products while supporting dealers in addressing consumer demand for diverse design and decor options. Bathsense Bespoke Pro is an end-to-end service available in seven select towns and cities in the country. As before, plumber training and knowledge development have been focal points during the year, and these were driven by accreditation-led programs. Our commitment to strong after-sales service standards remains a significant factor that sets us apart in both project-based and retail channels.

Supply chain

From the perspective of supply chain, the year presented a contrasting picture. While on the one hand, we encountered significant deflation in upstream raw materials, we also experienced a chain of events across the globe that disrupted the supply chain.

In this context, our integrated supply chain approach - that spans sourcing, procurement, manufacturing, logistics, manufacturing technology, sustainability and joint value creation - provided the strategic and tactical lever that ensured that we were able to offer differentiated products as well as opportunities to delight our customers together with our commitment to service excellence.

In line with the highest commitment to servicing that we hold ourselves for, we continued to surpass our world-class same-day order fulfilment benchmarks. This achievement was supported by process improvements driven by the Next Generation Planning and Execution engines. Even as we foray into multiple product categories and continue to launch a plethora of innovative products, a segmented supply chain approach has allowed us to remain agile and adaptive. We strived to ensure that we maintain optimum working capital despite the complex business conditions leading to challenging demand forecasting environment.

The rapid changes in Indias logistics sector continue to present opportunities to optimise costs. We have adopted multi-modal transport options that enable us to reduce both our costs as well as our carbon footprint. We are also changing the game through cross industry collaboration, such as the uberisation of trucks with leading companies, first ever palletised dispatches using customised trucks on dedicated high-volume routes. This helps us create a world-class, unmatched service delivery infrastructure that will serve as the foundation for meeting our delivery needs at scale, enabling us to accommodate the diverse requirements and flexibility demanded by our customers.

We continued to work on bringing in sourcing and formulation efficiencies by collaborating with our suppliers, intensifying our R&D endeavours. These endeavours will not only bolster our performance in the currentyear but also create a long term advantage for us.

Through our joint value creation program, we institutionalised a culture and process of impactful collaboration with suppliers. This led to rapid innovation in our raw material sourcing, granting us early access to technology, supported by cost advantage and the unique value proposition of our products. Our strong focus on innovation in packaging allowed us to increase the percentage of recycled materials in our containers, thereby contributing to our sustainability agenda.

During the year, our factories continued on the maturity curve of the lean excellence program that saw strong engagement from our shopfloor teams. This led to the highest ever 12,500+ Kaizens and 130+ Blitz and Profit Improvement projects, thus creating a substantial measured value on the ground.

Under the Vyansamadhanam initiative, we continued to demonstrate our sincere commitment towards the safety and well-being of our people and operations. Four of our plants have achieved the Generative Stage in Behaviour Based Safety (BBS) - up from one plant lastyear-and four other plants are in the Proactive Stage This year also, the focus was also to go beyond the factory and sensitise our teams on road safety and contract workforce safety. Our process safety approach strives to protect our assets by systematic risk profiling, using a 14-element framework of process safety management. We are also creating a one-of-a-kind digital twin of our critical operations to give proactive and reliable detection of process safety incidents and escalation in case of deviations.

International Business

Beyond India, Asian Paints operates in 14 countries spanning across four regions globally: Asia (including South Asia and Indonesia), the Middle East, Africa, and the South Pacific. Our products and services are marketed under seven corporate brands: Asian Paints, SCIB Paints, Apco Coatings, Asian Paints Berger, Taubman, Asian Paints Causeway, and Kadisco Asian Paints. The group remains dedicated to expanding its footprint in high-growth emerging markets, particularly in Asia and Africa.

Operating environment

In FY 2023-24, many economies experienced a deflationary trend in raw materials and packaging materials. This created a more favourable environment compared to FY 2022-23, allowing us to concentrate on overall business growth. However, interest rates continued to be at a record high in many of the economies we operate in. Inflation in Egypt and Ethiopia continued its upward trend, as a result of which steep price increases were resorted to in the Egypt and Ethiopia markets to protect margins. Operating costs were also under

tremendous pressure across these markets owing to the inflationary environment. The Israei-Palestine conflict and the Red Sea crisis added to supply chain bottlenecks intermittently. The US Dollar remained strong across most of the markets, significantly impacting business in Egypt, Ethiopia, and Bangladesh. Demand environment in Nepal remained extremely challenging with tight liquidity conditions across the trade channel severely impacting the business.

The Egyptian Pound continued to be under pressure and depreciated by close to 53% by the end of FY 2023-24 on the back of an almost 66% depreciation in the previous year. With political stability and International Monetary Fund (IMF) support, the situation is expected to improve in FY 2024-25. A series of fiscal and non-fiscal measures were undertaken by the government in some of the countries that we operate in, to improve overall confidence. Sri Lanka continued to take extensive measures to promote tourism and investment. Its currency appreciated against the US Dollar during the year as a result of these measures and committed support from the IMF. The Bangladesh Taka remained under pressure together with the low availability of the

US dollar, leading to issues in raw material supplies. Ethiopia, which has been experiencing US Dollar shortages for manyyears now, continued to face intense pressure.

Business performance

We have consistently focused on efficient business operations across all geographies, especially the ones impacted by high inflation and US Dollar shortages. Initiatives for better working capital management, margin protection and cash preservation were carried out at all our units. Price increases were undertaken wherever necessitated by the inflation in raw material and packing material.

In all the markets, our strategy was to capture new network counters, enrol new contractors and improve consumer mind share. An enhanced portfolio of premium- luxury products played a pivotal role in meeting our objectives and in enabling deeper shop-shares in existing critical and competitive retailers. We also continued our focus on product value propositions and worked on launching/revamping products across markets, ensuring better quality and comprehensive offerings to consumers.

Our above strategy has led to significant growth in waterproofing category. Based on our learnings from the success of our well- established waterproofing portfolio in India, we leveraged valuable insights and synergies to enhance our offerings. Our Beautiful Home Painting Service, introduced in FY 2020-21 across various regions, continued to thrive. The decor and painting solutions offered under this initiative have been widely acclaimed, transforming customer experiences and establishing a compelling point of differentiation from our competitors.

Asia (South Asia and Indonesia)

Nepal, one of our largest international subsidiary, continued to be impacted in both the paints and sanitary business by the lack of liquidity and overall slowdown. Collections have been under tremendous pressure and this is an area where we have maintained a sharp focus. Adequate steps were taken by the subsidiary there to provide assistance to customers in areas of financing and secondary sales. It was in Nepal that we inaugurated our first ever Beautiful Home Boutique store outside India in September 2023, providing enhanced customer experience in the areas of home decor.

Uncertainty in Bangladeshs economy due to elections, concerns over forex availability and inflation pressurised the business across all segments.

The top line faced challenges during the year. However, the profitability improved due to reduction in material prices. We extensively focused on working capital management despite the uncertain business scenario. In Bangladesh, the Safe Painting Service brand continues to perform well year on year, seizing considerable mind share of the consumer.

Sri Lankas revival journey has been nothing short of heroic.

The country took extensive confidence-building measures and the currency strengthened with IMF intervention at regular

intervals. We also undertook several measures to promote growth in the market and achieved a much better than expected performance. Products were launched to cater to the demand generated by an improved scenario in Sri Lanka. At the same time, demand for existing products was created through marketing campaigns and enhanced network reach.

In Indonesia, we also made extensive efforts to grow the waterproofing business and promote premium products, along with seeding products in the Value for Money segment. Extensive work was carried out in the areas of activation, demand generation and overall network reach. Cost optimisation remained a strong pillar for sustainable business operations.

The growth journey in Indonesia remains tough with growing pressure on profitability and working capital management.

Africa

The Egyptian market remained uncertain and volatile. Unprecedented inflation and US Dollar shortage created panic several times during the year. However, a series of price increases were taken in line with competition to ensure that margins are protected. The Safe Painting Service continued to do well, and cost reduction initiatives were undertaken across all areas to ensure minimal impact on profitability. Working capital management and supplier relationships were managed delicately, thereby ensuring availability of cash and supplies.

In Ethiopia, civil unrest continued in parts of the country, creating supply chain bottlenecks. We took sufficient measures to ensure the supply of raw material, which resulted in a performance exceeding expectations at all fronts. The US Dollar shortage continues to be the biggest challenge to operate in the country.

Middle East

The Middle East region, untouched by currency issues, has been a strong contributor in the overall success of our operations. A deflationary environment aided overall profitability in the region. Cash flow issues were managed effectively across the region through various initiatives across segments. The premium luxury product category along with waterproofing and construction chemicals continued to be the strategic focus areas.

We invested in engaging with contractors and consultants to create a long-term partnership.

The Protective Coating and Project business segment performed well in the UAE. In Oman, we received the prestigious Oman Most Trusted Brand award in the Paint category. Retail business in Bahrain continued to be slow, and with decent growth in the Projects segment, the overall market share was maintained. We formed a 100% owned subsidiary in Qatar for enhanced customer experience and growth in the region.

South Pacific

Operations in South Pacific were impacted by the increased movement of manpower to nearby regions. Recovery in tourism has been good and aided overall growth. Our unit in the region continues to perform well in a difficult and uncertain terrain.

Industrial Business in India

Asian Paints operates in the Industrial Coatings segment through two 50:50 JVs with PPG Industries Inc. USA-PPG Asian Paints Pvt. Ltd. (PPG-AP) and Asian Paints PPG Pvt. Ltd. (AP-PPG).

Automotive, industrial, reFinish, packaging and marine coatings

PPG-AP is the First 50:50 JV of our Company with PPG Industries Inc., USA. One of the largest industrial coatings suppliers in India, PPG-AP manufactures and trades in paints, coatings, adhesives and sealants for automotive Original Equipment Manufacturers (OEMs), industrial segments, the automotive refinish segment, and the packaging and marine segments.

Operating environment

Automotive OEMs have ramped up production and India is now the worlds 3^rd largest automotive market. Almost all automotive OEMs have committed to substantial investments in either expanding their capacities or building infrastructure for EVs and batteries. Some new entrants are also joining the fray. The Government of India is also enabling the sector with Faster Adoption and Manufacturing of Electric Vehicles (FAME) and PLI schemes to drive EV penetration.

During FY 2023-24, the two-wheeler industry remained muted, especially in H1. However H2 has seen a good recovery with overall demand picking up well. Over the past few years, the increase of mobility options has led to the emergence of E-scooters as a popular mode of individual transportation in urban areas.

Business performance

During the year, PPG-AP registered double digit growth in terms of sales, with a significant improvement in profitability across all businesses.

The year witnessed softer raw material costs and stable currency.

All plants - from Sriperumbudur and Dahej to Moraiya and Puducherry -delivered highery-o-y volumes. Innovation in formulation, sourcing efficiency and other cost optimisation efforts helped to further improve profitability.

PPG-AP remains committed to continuously enhance the value proposition for its customers leveraging the technological expertise from its parents, PPG Industries Inc., USA and Asian Paints.

Non-auto industrial coatings

AP-PPC, the second 50:50 JV of our Company with PPG Industries Inc., USA, serves the non-automotive industrial coatings market of India and operates in the protective coatings, powder coatings and road markings segments, catering to clients in infrastructure, oil and gas, power, construction, machinery and eguipment, and functional and domestic appliances sectors, among others.

Operating environment

Multiple factors have contributed to growing share of the non- automotive industrial segment over the past few years. This solid growth is bolstered by government spending on infrastructure and incentives to boost domestic manufacturing, coupled with strong fundamentals with respect to infrastructure, renewable energy, and allied industries, which have fuelled demand for industrial coatings.

Manufacturing activity, however, remained subdued throughout the year due to weak consumer sentiments and high interest rates. The industry experienced a favourable development with the softening of raw material prices from their previous highs. Price corrections in crude oil and other essential components also resulted in improved margins

Business performance

AP-PPG recorded a robust double- digit revenue growth with notable rise in profitability. The strategy of offering better value to customers through superior quality and wide product range, top-notch service standards, and improved delivery capabilities led to enhanced customer confidence and trust in

the brand. Further, expansion of the network coupled with partner loyalty programs and digitisation initiatives elevated AP-PPGs share in certain key segments and improved its industry standing.

The topline growth of industrial liquid paints was driven by major infrastructure investments, including the construction of airports, commercial buildings, ports, and power generation (renewable and thermal). Increased awareness of safety also fuelled the demand for passive fire protection solutions. Export fabrication, building and factories, and wind power sectors experienced increased capital expenditure, further boosting demand.

AP-PPGs powder coatings are a sustainable alternative to liquid paint, with further expansion in powder coatings to the Pipe and Valves segments during the year. Growth in the domestic appliance market, driven by the Make in India initiative and supportive policies for infrastructure development, continued to spur the demand for powder coatings.

ESG integration

ESG considerations have been integrated into every facet of our business strategy, including our investment evaluation process.

We are committed to maintain an optimal balance between People, Planet and Profits objectives.

We have set targets across our Environment, Social and Governance focus areas in 2021 and are regularly tracking process progress of it. As an industry leader, ESG-related due diligence has become a pivotal component of our investment procedure. This enables us to make our operations more sustainable, build stronger relationships with our stakeholders and create a strong governance structure.

Internal control systems and their adequacy

Asian Paints has implemented robust internal control systems to ensure the effectiveness and efficiency of its operations, reliability of financial reporting, and compliance with applicable laws and regulations which are commensurate with the size, nature of business, geographical presence, and complexity of the business. The governance structure assigns responsibilities to the Committees of the Board, function heads, and process owners. Policies and procedures are reviewed periodically to keep them relevant in the changing business environment.

Detailed standard operating procedures and their controls are well documented and embedded in business processes to mitigate risks in operations, reporting, and compliance. Our Companys ERP, system infrastructure and checks are integral parts of the internal control system. Our Company leverages data analytics, predictive and visualisation tools to identify data exceptions

and trends, and actively invests in moving from manual to automated controls. A strong compliance management system monitors the compliance status online and updates compliance reguirements with the latest changes in statutes and business operations.

Our Companys key functions and processes are certified with ISO 9001, ISO 14001, ISO 45001, and ISO 27001, focused on guality, environment, occupational health & safety, and information security. Regular communication and awareness towards the Code of Conduct, whistle blower process, and various policies and procedures are done to ensure common understanding through leveraging e-modules and online training sessions.

Our Company has strong internal audit governance to assure the adeguacy and effectiveness of internal controls. The risk-based internal audit plan is approved by the Audit Committee, which periodically reviews the adeguacy and effectiveness of our Companys internal financial controls.

Enterprise Risk Management

Our Company has implemented an advanced enterprise risk management process to assess and monitor risks in the business operations for their likelihood and probable impact on the business and to ensure their mitigation.

The constantly evolving business environment, customer preferences, and compliance landscape have led to significant changes in the variety of risks faced by our Company, which are addressed by the Enterprise Risk Management process.

For more details on Enterprise Risk Management, please read more on

Please refer to the narratives forming part of the Synergising relationship of this Integrated Report for the material developments in respect of Human Resources and industrial relations.

Standalone results

(Rs in crores)

	For the year ended 31st March, 2024	For the year ended 31st March, 2023
Revenue from sale of products and services	30,727.7	29,953.1
EBITDA	7,855.0	6,338.5
Net profit	5,321.6	4,100.2
EPS (In Rs)	55.5	42.8

Consolidated revenue

	For the year ended	For the year ended
	31st March, 2024	31st March, 2023
Decorative & home decor business	31,205.1	30,327.8
International business Industrial business	3.061.5 1.115.5	3,084.4 955.6

Key Financial ratios

	Standalone		Consolidated
	For the year ended 31st March, 2024	For the year ended 31st March, 2023	For theyearended 31st March, 2024	For the year ended 31st March, 2023
Debtors turnover ratio	8.7	9.4	7.4	8.1
Inventory turnover ratio (on cost of goods sold)	3.3	3.5	3.3	3.4
Interest coverage ratio	184.9	158	63.4	72.0
Current ratio	2.3	2.4	2.1	2.1
Debt equity ratio	0.005	0.006	0.059	0.062
Operating profit margin (%)	25.5%	21.1%	23.3%	19.3%
Net profit margin (%)*	17.2%	13.6%	15.7%	12.2%
Return on net worth (%) (RONW)**	31.3%	28.3%	31.0%	27.4%

* Net Profit Margin increased on account of declining material prices

** RONW has increased in FY 2023-24 by 10.4% (Standalone) and 13.2% (Consolidated) mainly due to increased profitability

Creating long-term investor value

Over the past two decades, our market capitalisation had experienced a remarkable CACR of 25.5%, soaring from Rs 2,892 Crores as of March 31, 2004, to Rs 273,060 Crores as of March 31, 2024. Committed to delivering sustained value, we have consistently prioritised the interests of our stakeholders. Over the last 5 years, we have diligently increased our dividend payout ratio raising it to 60% in FY 2022-23. We have maintained the dividend payout ratio of 60% even for the financial year 2023-24 in line with our Dividend Distribution Policy which recommends a dividend pay-out ratio between 55% to 65% of our annual standalone Profit After Tax (PAT). Emphasising responsible financial management and growth, we provide sustainable returns, ensuring our shareholders continue to benefit from our progress.

Our Board has established various mechanisms aimed at promptly resolving any issues encountered by our shareholders. This includes the Stakeholders Relationship Committee, dedicated to safeguarding their interests. Additionally, our Investors Grievance Redressal Policy ensures efficient service and timely resolution of investor concerns.

Economic value creation*

(Rs in crores)

	FY 2023-24	FY 2022-23
Direct Economic Value Generated*	31,674.7	30,596.4
Revenue from sale of products and services	30,727.7	29,953.2
Other operating revenue	122.4	125.2
Other income	824.6	518.0
Economic Value distributed	29,541.9	28,991.5
Operating cost	22,830.9	23,515.8
Employee Wages and Benefits	1,747.9	1,513.9
Payments to Providers of Capital	3,194.1	2,460.3
Payments to GovernmentA	1,678.2	1,424.3
Community Investments	90.8	77.2
Economic Value Retained	2,132.8	1,604.9

* Direct Economic Value generated includes financial assistance/grants accrued from Government authorities by our Company in the form of subsidies and export duty credits amounting to Rs 62.7 Crores for FY 2023-24 and Rs 62.1 Crores for FY 2022-23

A It does not include the amount paid by our Company towards Goods and Services Tax (Rs 2461.2 Crores for FY 2023-24 and Rs 2,016.9 Crores for FY 2022-23)

Boards Report

Dear Members,

The Board of Directors are pleased to present the 78^th Integrated Annual Report of the Company along with the audited financial statements (standalone and consolidated) for the financial year ended 31^5t March 2024.

FINANCIAL RESULTS AND STATE OF COMPANY AFFAIRS

The Companys financial performance for the year ended 31^5t March 2024 is summarised below:

(Rs in crores)

Particulars	Standalone			Consolidated
	2023-24	2022-23	Growth (%)	2023-24	2022-23	Growth (%)
Revenue From sales and other operating income	30,850.12	30,078.40	2.6	35,494.73	34,488.59	2.9
Earnings beFore Interest, Taxes, Depreciation and Amortisation	7,854.95	6,338.49	23.9	8,272.94	6,646.32	24.5
Less: Finance Costs	115.42	93.06		205.17	144.45
Less: Depreciation and Amortisation	734.49	755.83		853.00	858.02
Expense
ProFit For the period beFore share oF proFit in associate	7,005.04	5,489.60	27.6	7,214.77	5,643.85	27.8
Share of proFit oF Associate	-	-		133.00	93.85
ProFit beFore exceptional items & tax	7,005.04	5,489.60	27.6	7,347.77	5,737.70	28.1
Exceptional Items*	-	-		-	48.87
ProFit beFore Tax	7,005.04	5,489.60	27.6	7,347.77	5,688.83	29.2
Less: Tax Expense	1,683.49	1,389.42		1,790.08	1,493.50
ProFit For the period	5,321.55	4,100.18	29.8	5,557.69	4,195.33	32.5
Attributable to:
Shareholders oF the Company	5,321.55	4,100.18	29.8	5,460.23	4,106.45	33.0
Non-Controlling Interest	-	-		97.46	88.88
Other Comprehensive Income (net oF tax)	27.6	67.35		31.96	13.04
Total Comprehensive Income	5,349.15	4,167.53	28.4	5,589.65	4,208.37	32.8
Attributable to:
Shareholders oF the Company	5,349.15	4,167.53	28.4	5,502.37	4,130.96	33.2
Non-Controlling Interest	-	-		87.28	77.41
Opening balance in Retained Earnings"	11,136.92	8,953.07		11,340.92	9,167.34
Amount available For Appropriation"	16,464.50	13,045.78		16,807.82	13,266.48
Dividend
Interim - FY 2023-24	494.04	-		494.04	-
Interim - FY 2022-23	-	422.08		-	422.08
Final - FY 2022-23	2,038.34	-		2,038.34	-
Final - FY 2021-22	-	1,486.78		-	1,486.78
Gross obligation towards Further acquisition in subsidiary	-	-		256.78	16.22
TransFer to other Reserve	-	-		-	0.48
ESOP exercised during the year	0.03	-		0.03	-
Closing balance in Retained Earnings"	13,932.09	11,136.92		14,018.63	11,340.92

*For consolidated Financial results, exceptional items For the previous year represents impairment provision towards goodwill recognised on acquisition oF Causeway Paints Lanka (Pvt) Limited ("Causeway"), subsidiary company, and exchange loss arising on Foreign currency obligations oF Causeway due to devaluation oF Sri Lankan Rupee.

"Includes re-measurement oF deFined beneFit plans.

COMPANY PERFORMANCE OVERVIEW

During the financial year 2023-24:

a. Revenue from operations on a standalone basis increased to Rs 30,850.12 crores as againstRs 30,078.40 crores in the previous year - a growth of 2.6%.

b. Cost of goods sold as a percentage to revenue from operations decreased to 55.8% as against 60.9% in the previous year.

c. Employee cost as a percentage to revenue from operations increased to 5.7% (Rs 1,747.89 crores) as against 5.0% (Rs 1,513.89 crores) in the previous year.

d. Other expense as a percentage to revenue from operations increased to 15.7% (Rs 4,852.45 crores) as against 14.7% (Rs 4,416.49 crores) in the previous year.

e. Profit before exceptional items and tax for the current year is Rs 7,005.04 crores as against Rs 5,489.60 crores in the previous year - a growth of 27.6%.

f. Profit after tax for the current year isRs 5,321.55 crores as againstRs 4,100.18 crores in the previous year - a growth of 29.8%.

g. On a consolidated basis, the Croup achieved revenue of Rs 35,494.73 crores as against Rs 34,488.59 crores - a growth of 2.9%.

h. Net profit after non-controlling interest for the Croup for the current year is Rs 5,460.23 crores as against Rs 4,106.45 crores in the previous year - a growth of 33.0%.

Management Discussion and Analysis Report:

Pursuant to Regulation 34(2)(e) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations,

2015 ("the Listing Regulations"), the Management Discussion and Analysis Report forms an integral part of this Integrated Annual Report and gives the details, inter alia, about the performance of the Decorative,

Decor and consumer services, and Industrial Businesses of the Company in India and International Operations, important changes in these businesses, supply chain, external environment, and economic outlook during the year under review.

During the year under review, there was no change in the nature of the Companys business.

Confirmations:

a. There were no revisions of financial statements and the Boards Report of the Company during the year under review; and

b. There were no material changes and commitments that affect the financial position of the Company which have occurred between the end of the financial year 2023-24 and the date of this Report.

FINANCIAL SALIENCY

The Companys principal sources of liquidity are cash and cash equivalents, liquid investments, and the cash flow that the Company generates from its operations.

The Company continued to be debt-free and maintained sufficient cash to meet its strategic and operational requirements.

Cash and bank balances, current/non-current term deposits, investments in mutual funds, and debentures/ bonds on a standalone basis as of 31^5t March 2024, stood atRs 5,077.83 crores as againstRs 4,269.98 crores in the previous financial year. Cash and investments, on both standalone and consolidated basis, include deposits with banks and financial institutions with high credit ratings by international and domestic credit rating agencies. As a result, liquidity risk towards such balances is limited. The ratings are monitored periodically.

The Companys working capital management is robust and involves a well-organised process, which facilitates continuous monitoring and control over receivables, inventories, and other parameters.

CAPITAL EXPENDITURE

During the year under review, the Company on a standalone basis spentRs 1,968.33 crores towards capital expenditure againstRs 1,057.27 crores in the previous financial year. This mainly comprises manufacturing capacity expansion, regular capital expenditure at various plant locations and other company offices/warehouses, technological advancements, safety and ESC expenditure, backward integration projects, and general maintenance.

Expansion of installed production capacity

a. Khandala Plant

During the year under review, the Company has increased the original installed production capacity at the Khandala plant from 3,00,000 KL per annum to 4,00,000 KL per annum, at an investment of approximatelyRs 385 crores, to meet the medium-term capacity requirements of the Company.

b. Kasna Plant

During the year under review, the Company has increased the installed production capacity at the Kasna plant from 80,000 KL per annum to 1,00,000 KL per annum, at an investment of Rs 124.7 crores.

TRANSFER TO RESERVES

During the year under review, no amount was transferred to any of the reserves by the Company.

DIVIDEND

The Board of Directors at their meeting held on 9^th May 2024, has recommended payment of Rs 28.15 (2815%) per eguity share ofRs 1 each fully paid-up as final dividend for the financial year 2023-24. The record date for payment of final dividend is Tuesday, 11^th June 2024. The final dividend, subject to the approval of the shareholders at the ensuing Annual General Meeting ("AGM") of the Company, will be paid on or after Thursday, 27^th June 2024. During the year under review, the Company also paid an interim dividend of Rs 5.15 (515%) per eguity share of Rs 1 each to the shareholders on 13^th November 2023.

The total dividend for the financial year 2023-24, including the proposed final dividend, amounts to Rs 33.30 per equity share ofRs 1 each, and would involve a total outflow of Rs 3,194.14 crores translating into a dividend payout of 60% (as againstRs 25.65 per equity share ofRs 1 each with the outflow of Rs 2,460.35 crores in the financial year 2022-23 resulting in a dividend pay-out ratio of 60%) of the standalone profits of the Company.

As per the Income-Tax Act, 1961, dividends paid or distributed by the Company shall be taxable in the hands of the shareholders. Accordingly, the Company makes the payment of the dividend from time to time after deduction of tax at source.

Details of the dividend paid by the Company during the financial year 2023-24 are stated below:

(Rs in crores)

Particulars	Gross amount of dividend*	Tax deducted at source	Net amount of dividend
Final Dividend FY 2022-23	2,038.34	218.70	1,819.64
Interim Dividend	494.04	53.82	440.22
FY 2023-24
Total	2,532.38	272.52	2,259.86

?"Includes excess funding made to the dividend account owing to rounding up of gross dividend.

The aforesaid interim and final dividend(s) are being paid by the Company from its profits for the respective financial years.

The dividend recommended is in accordance with the Dividend Distribution Policy ("DD Policy") of the Company. The DD Policy, in terms of Regulation 43A of the Listing Regulations, is available on the Companys website at https://www.asianDaints.conn/DDPolicv.htnnl.

The DD Policy sets out the parameters and circumstances to be considered by the Board in determining the distribution of dividend to its shareholders and/or the utilisation of the retained profits earned by the Company. The Board of Directors of the Company, considering the business & financial parameters and external factors as mentioned in the DD Policy, endeavours to maintain the range of dividend pay-out ratio in a financial year between 55% to 65% of its annual standalone profit after tax.

ASIAN PAINTS GROUP

The Company has 30 subsidiary companies (22 international subsidiary companies), and 2 joint venture companies as on 31^5t March 2024, which includes subsidiaries acquired or incorporated during the year.

There has been no change in the nature of the business of the subsidiary companies and joint venture companies, during the year under review.

International Business

Outside India, the Company has operations in 14 countries across four regions of the world - Asia (Bangladesh, Nepal, Sri Lanka and Indonesia), the Middle East (Oman, Bahrain, United Arab Emirates (UAE) and Qatar), Africa (Egypt and Ethiopia) and South Pacific (Fiji, Solomon Islands, Samoa and Vanuatu).

Financial Performance

A list of bodies corporates that are subsidiaries/joint ventures of the Company is provided as part of the notes to Consolidated Financial Statements ("CFS"). The financial performance of the Companys select subsidiary and joint venture companies for the financial year 2023-24 is provided below:

i. Asian Paints International Private Limited

Asian Paints International Private Limited ("APIPL"), Singapore, is a wholly-owned subsidiary of the Company and is the holding company for all of its subsidiary companies carrying out operations overseas, except Asian Paints (Nepal) Private Limited, Nepal, and Asian White Cement Holding Limited,

Dubai International Financial Centre, UAE. The principal activities of APIPL are those of investment holding and management.

On a consolidated basis, the revenue of APIPL was Rs 2,726.43 crores (growth of 7.3% year-on-year) with a net profit ofRs 68.37 crores (against net loss of Rs 60.18 crores in the previous year).

Further, the Board of Directors at its meeting held on 28^th March 2024, approved an investment of approximatelyRs 200 crores by way of subscription of equity shares of API PL, for repayment of borrowings.

ii. Asian Paints (Nepal) Private Limited

Asian Paints (Nepal) Private Limited ("AP Nepal"), Nepal, is a subsidiary company of the Company. Its principal business is the manufacturing and selling of paint products in Nepal.

The revenue of AP Nepal was Rs 335.04 crores (de-growth of 38.5% year-on-year) with a net profit of Rs 40.20 crores (de-growth of 57.9% year-on-year).

iii. Obgenix Software Private Limited

Obgenix Software Private Limited (popularly known by the brand name "White Teak") is a subsidiary company of the Company. White Teak is engaged in the business of decorative lighting products, fans and other decor accessories.

The revenue of White Teak was Rs 133.43 crores (growth of 23.0% year-on-year) with a net profit of Rs 2.37 crores (de-growth of 78.5% year-on-year).

iv. Asian Paints PPG Private Limited

Asian Paints PPG Private Limited ("APPPG") is a joint venture company between the Company and PPG Industries Securities LLC. APPPG is engaged in the business of manufacturing, selling, and distributing protective coatings, powder coatings, road markings, floor coatings and providing related services.

The revenue of APPPG wasRs 1,145.95 crores (growth of 12.6% year-on-year) with a net profit of Rs 100.18 crores (growth of 59.7% year-on-year).

v. PPG Asian Paints Private Limited

PPG Asian Paints Private Limited ("PPGAP") is a joint venture company between the Company and PPG Industries Securities LLC. PPGAP is engaged in the business of manufacturing, selling, and distributing of paints and coatings for automotive, original equipment manufacturers, packaging, refinishing, marine, and other industries.

On a consolidated basis, the revenue of PPGAP was Rs 2,014.71 crores (growth of 10.3%year-on-year) with a net profit of Rs 264.91 crores (growth of 50.2% year-on-year).

During the year, PPGAP paid final dividend of Rs 42.78 crores for FY 2022-23 and interim dividend of Rs 65.59 crores for FY 2023-24.

vi. Weatherseal Fenestration Private Limited

Weatherseal Fenestration Private Limited ("Weatherseal") is a subsidiary company of the Company. Weatherseal is engaged in the business of uPVC windows and doors.

The revenue of Weatherseal was Rs 51.68 crores (growth of 110.0% year-on-year) with a net loss of Rs 18.41 crores.

A separate statement containing the salient features of financial statements of subsidiaries, and joint ventures of the Company in the prescribed Form AOC-1 is annexed to CFS forming part of this Integrated Annual Report, in compliance with Section 129(3) and other applicable provisions, if any, of the Companies Act, 2013 ("the Act") read with the Rules issued thereunder.

The Company does not have a material subsidiary as per the Listing Regulations.

The Companys Policy for determining material subsidiaries is available on the Companys website at https://www. asianDaints.com/PolicvforMaterialSubsidiaries.html.

Scheme of Amalgamation of Maxbhumi Developers Limited and Sleek International Private Limited with the Company

The Board of Directors at its meeting held on 28^th March 2024, approved the Scheme of Amalgamation of Maxbhumi Developers Limited ("Maxbhumi") and Sleek International Private Limited ("Sleek"), wholly-owned subsidiaries of Asian Paints Limited, with the Company, with effect from 1^st April 2024, being the appointed date, in accordance with the provisions of the Act and other applicable laws, subject to necessary statutory and regulatory approvals, including approval of the Honble National Company Law Tribunal, Mumbai.

Upon the Scheme of Amalgamation becoming effective, all shares issued by Maxbhumi and Sleek shall stand cancelled and extinguished.

Consolidated Financial Statements

The said statement provides the details of the performance and financial position of each subsidiary and joint venture companies and their contributions to the overall performance of the Company.

In accordance with the provisions of the Act, Regulation 33 of the Listing Regulations, and applicable Indian Accounting Standards ("Ind AS"), the audited CFS of the Company for the financial year 2023-24, together with the Auditors Report forms part of this Integrated Annual Report.

Pursuant to Section 136 of the Act, the audited financial statements, including the CFS and related information of the Company and the separate financial statements of each of the subsidiary companies, are available on the Companys website at https://www.asianpaints.com/ AnnualReports.html. Any member desirous of inspecting or obtaining copies of the audited financial statements, including the CFS may write to the Company Secretary at investor.relations@asianpaints.com.

NEW PROJECTS AND STRATEGIC ALLIANCES White cement manufacturing facility Incorporation of Asian White Inc. FZE

On 2^nd May 2023, Asian White Cement Holding Limited ("AWCHL"), a joint venture company between the Company, Riddhi Siddhi Crusher & Land Transport, Fujairah, UAE, Associated Soap Stone Distributing Company Private Limited, India, and others, was incorporated, to carryout the business of manufacturing and exporting white cement and white cement clinkers by setting up an operating company. The Company holds 70% of the equity share capital of AWCHL. Consequently, it has become a subsidiary of the Company with effect from 2^nd May 2023.

On 26^th June 2023, a wholly-owned subsidiary of AWCHL was incorporated in the name of Asian White Inc. FZE, in Fujairah Free Zone, UAE, for carrying out the business of manufacturing, trading, and exporting white cement. Consequently, Asian White Inc. FZE has become a subsidiary of the Company with effect from 26^th June 2023.

Investment in emulsion of the future

Asian Paints (Polymers) Private Limited ("APPPL") a wholly- owned subsidiary of the Company, was incorporated on 11^th January 2023, for the purpose of setting up an in-house manufacturing facility for manufacturing of Vinyl Acetate Ethylene Emulsion ("VAE") and Vinyl Acetate Monomer ("VAM") in Dahej, Gujarat.

During the year, the Company invested Rs 200 crores in APPPL, by way of subscription of 20,00,00,000 equity shares of Rs 10/- each, in two equal tranches. At present, the paid-up share capital of APPPL stands at T 400 crores divided into 40,00,00,000 equity shares of f 10/- each.

Continuing the journey of Home Decor

Increase in stake in Obgenix Software Private Limited

On 23^rd June 2023, the Company acquired an additional 11 % of the equity share capital of Obgenix Software Private Limited (popularly known by the brand name "White Teak") from the promoters of White Teak for a consideration of Rs 53.77 crores.

The Company now holds 60% of the equity share capital of White Teak. Consequently, it has become a subsidiary of the Company with effect from 23^rd June 2023.

White Teak is engaged in the business of decorative lighting products, fans and other decor accessories Its tech-enabled web platform www.whiteteak.com. is one of the strongest platforms offering customers an extensive range of decorative lighting products, fans and other decor accessories, further supplemented by its excellent store network across many key urban cities in India.

As per the definitive agreements entered into with the shareholders of White Teak, the Company has agreed to acquire the remaining 40% stake in White Teak in a staggered manner.

Incorporation of Asian Paints Doha Trading W.L.L.

On 5^th November 2023, Asian Paints International Private Limited, Singapore, wholly-owned subsidiary of the Company, incorporated a company with limited liability namely Asian Paints Doha Trading ("APDT") in Qatar. Consequently, APDT has become a step-down subsidiary of the Company with effect from 5^th November 2023.

APDT has been incorporated to carry out the business of trading in paints, coatings, and allied products, chemical material related to building & construction works, and Home Decor products.

Partnership for Nanotechnology

Acquisition of stake in Harind Chemicals and Pharmaceuticals Private Limited

On 14^th February 2024, the Company acquired 51% of the equity share capital of Harind Chemicals and Pharmaceuticals Private Limited ("Harind"). Consequently, Harind has become a subsidiary of the Company with effect from 14^th February 2024.

Harind is a speciality chemicals company built with nanotechnology at its core, primarily in the area of surface coating and care. Harind is, inter alia, engaged in the business of nanotechnology-based research, manufacturing, and sale of a range of additives and specialised coatings. Nanotechnology has the potential to be the next frontier in the world of coatings, and the Company would be able to manufacture commercially viable high-performance coatings and additives with this technology.

Further, Harind has a wholly-owned subsidiary named Nova Surface-Care Centre Private Limited ("Nova").

Consequent to the acquisition of the stake in Harind, Nova has become a subsidiary of the Company with effect from 14^th February 2024.

As per the definitive agreements entered into with the shareholders of Harind, the Company has agreed to further acquire 39% stake in Harind in a staggered manner.

DIRECTORS AND KEY MANAGERIAL PERSONNEL

Board of Directors

As of 31^5t March 2024, the Board of Directors comprised 13 Directors (including 5 women Directors), 7 of which were Independent Director(s), 5 were Non-Executive Director(s)/Promoter Director(s) and a Managing Director & CEO.

Sad Demise of Mr. Ashwin Dani, erstwhile Non-Executive Director of the Company

Mr. Ashwin Dani, erstwhile Non-Executive Director of the Company, left for heavenly abode on 28^th September 2023.

Late Mr. Ashwin Dani was associated with the Company since 1968 and was a strong force in heralding the Company to technological excellence. He joined the Companys Board in 1970. He held the position of Vice Chairman and Managing Director of the Company from 1998 to 2009.

Since 2009 he continued on the Board as the Non- Executive Director & Vice Chairman of the Board and the Company. For the period between 2018 to 2021, he held the position of Chairman of the Board and the Company.

His sad demise is an irreparable loss to the Company.

The Board of Directors express their deep condolences and pay tribute to the late Mr. Ashwin Dani. The Board places on record profound appreciation for his valuable contribution in channelising the growth and development of the Company, in particular, his stewardship in ensuring the Companys technological leadership.

Appointment of Chairman

The Board of Directors at their meeting held on 25^th July 2023, appointed Mr. R Seshasayee (DIN: 00047985), Independent Director, as the Chairman of the Board and the Company with effect from 1^st October 2023 up to the conclusion of his second term of appointment on 22^nd January 2027, in place of Mr. Deepak Satwalekar (DIN: 00009627) who retired as the Independent Director and the Chairman of the Board and the Company with effect from the close of business hours on 30^th September 2023, upon completion of his term.