MIRA INFORM REPORT

Report Date :

07.11.2012

1. Summary Information

		Country	INDIA
Company Name	KANSAI NEROLAC PAINTS LIMITED	Principal Name 1	MR. JAMSHED JIJI IRANI
Status	EXCELLENT	Principal Name 2	MR. DEVENDRA MOTILAL KOTHARI
		Registration #	11-000825
Street Address	NEROLAC HOUSE, GANPATRAO KADAM MARG, LOWER PAREL, MUMBAI – 400 013, MAHARASHTRA
Established Date	02.09.1920	SIC Code	--
Telephone#	91-22-24934001	Business Style 1	MANUFACTURING
Fax #	91-22-24919439	Business Style 2	MARKETING
Homepage	www.goodlassnerolac.com www.nerolac.com	Product Name 1	PAINTS
# of employees	2220 (APPROXIMATELY)	Product Name 2	VARNISHES
Paid up capital	RS.538,919,720/-	Product Name 3	ENAMELS
Shareholders	PROMOTER AND PROMOTER GROUP – 69.27% PUBLIC SHAREHOLDING – 30.73%	Banking	UNION BANK OF INDIA
Public Limited Corp.	YES	Business Period	92 YEARS
IPO	YES	International Ins.	--
Public Enterprise	YES	Rating	Aa (76)
Related Company
Relation	Country	Company Name	CEO
HOLDING COMPANY	JAPAN	KANSAI PAINT COMPANY LIMITED	--
Note	--

2. Summary Financial Statement

Balance Sheet as of	31.03.2012		(Unit: Indian Rs.)
Assets		Liabilities
Current Assets	4,928,740,000	Current Liabilities	4,496,090,000
Inventories	4,537,100,000	Long-term Liabilities	689,760,000
Fixed Assets	3,963,230,000	Other Liabilities	1,163,810,000
Deferred Assets	102,210,000	Total Liabilities	6,349,660,000
Invest& other Assets	3,449,920,000	Retained Earnings	10,092,620,000
		Net Worth	10,631,540,000
Total Assets	16,981,200,000	Total Liab. & Equity	16,981,200,000
Total Assets (Previous Year)	14,713,022,000
P/L Statement as of	31.03.2012		(Unit: Indian Rs.)
Sales	26,005,720,000	Net Profit	2,158,850,000
Sales(Previous yr)	21,387,302,000	Net Profit(Prev.yr)	2,059,845,000

IDENTIFICATION DETAILS

Name :	KANSAI NEROLAC PAINTS LIMITED (w.e.f. 11.07.2006)
Formerly Known As :	GOODLASS NEROLAC PAINTS LIMITED
Registered Office :	Nerolac House, Ganpatrao Kadam Marg, Lower Parel, Mumbai – 400 013, Maharashtra
Country :	India
Financials (as on) :	31.03.2012
Date of Incorporation :	02.09.1920
Com. Reg. No.:	11-000825
Capital Investment / Paid-up Capital :	Rs.538.920 Millions
CIN No.: [Company Identification No.]	L24202MH1920PLC000825
TAN No.: [Tax Deduction & Collection Account No.]	MUMG00234D
PAN No.: [Permanent Account No.]	AAACG1376N
Legal Form :	Public Limited Liability Company. The Company’s Shares are Listed on the Stock Exchanges.
Line of Business :	Manufacturing and Marketing of Paints, Varnishes and Enamels, Oils and Synthetic Resins.
No. of Employees :	2220 (Approximately)

RATING & COMMENTS

MIRA’s Rating :

Aa (76)

RATING		STATUS	PROPOSED CREDIT LINE
71-85	Aa	Possesses adequate working capital. No caution needed for credit transaction. It has above average (strong) capability for payment of interest and principal sums	Large

Maximum Credit Limit :	USD 42500000
Status :	Excellent
Payment Behaviour :	Regular
Litigation :	Clear
Comments :	Subject is a well established and reputed company. It is the second largest coating company in India and the market leader in automotive and power coating. It is known popularly for established brand in decorative paints. Financial position of the company appears to be strong and healthy. Directors are reported to be experienced and respectable businessmen. Trade relations are fair. Business is active. Payments are reported to be regular and as per commitments. The company can be considered good for normal business dealings at usual trade terms and conditions.

NOTES :

Any query related to this report can be made on e-mail : infodept@mirainform.com while quoting report number, name and date.

ECGC Country Risk Classification List – June 30, 2012

Country Name	Previous Rating (31.03.2012)	Current Rating (30.06.2012)
India	A1	A1

Risk Category	ECGC Classification
Insignificant	A1
Low	A2
Moderate	B1
High	B2
Very High	C1
Restricted	C2
Off-credit	D

INDIAN ECONOMIC OVERVIEW

India is developing into an open-market economy, yet traces of its past autarkic policies remain. Economic liberalization, including industrial deregulation, privatization of state-owned enterprises, and reduced controls on foreign trade and investment, began in the early 1990s and has served to accelerate the country's growth, which has averaged more than 7% per year since 1997. India's diverse economy encompasses traditional village farming, modern agriculture, handicrafts, a wide range of modern industries, and a multitude of services. Slightly more than half of the work force is in agriculture, but services are the major source of economic growth, accounting for more than half of India's output, with only one-third of its labor force. India has capitalized on its large educated English-speaking population to become a major exporter of information technology services and software workers. In 2010, the Indian economy rebounded robustly from the global financial crisis - in large part because of strong domestic demand - and growth exceeded 8% year-on-year in real terms. However, India's economic growth in 2011 slowed because of persistently high inflation and interest rates and little progress on economic reforms. High international crude prices have exacerbated the government's fuel subsidy expenditures contributing to a higher fiscal deficit, and a worsening current account deficit. Little economic reform took place in 2011 largely due to corruption scandals that have slowed legislative work. India's medium-term growth outlook is positive due to a young population and corresponding low dependency ratio, healthy savings and investment rates, and increasing integration into the global economy. India has many long-term challenges that it has not yet fully addressed, including widespread poverty, inadequate physical and social infrastructure, limited non-agricultural employment opportunities, scarce access to quality basic and higher education, and accommodating rural-to-urban migration.

Source : CIA

EXTERNAL AGENCY RATING

Rating Agency Name	CRISIL
Rating	AAA (Cash Credit)
Rating Explanation	Highest degree of safety it carry lowest credit risk.
Date	16.12.2011

Rating Agency Name	CRISIL
Rating	A1+ (Commercial Paper Programme)
Rating Explanation	Very strong degree of safety it carry lowest credit risk.
Date	16.12.2011

RBI DEFAULTERS’ LIST STATUS

Subject’s name is not enlisted as a defaulter in the publicly available RBI Defaulters’ list.

EPF (Employee Provident Fund) DEFAULTERS’ LIST STATUS

Subject’s name is not enlisted as a defaulter in the publicly available EPF (Employee Provident Fund) Defaulters’ list as of 31-03-2012.

LOCATIONS

Registered Office :

Nerolac House, Ganpatrao Kadam Marg, Lower Parel, Mumbai – 400 013, Maharashtra, India

Tel. No.:

91-22-24934001/ 24992500/ 24992585

Fax No.:

91-22-24919439

E-Mail :

info@nerolac.com

gtgovindarajan@nerolac.com

Website :

http://www.goodlassnerolac.com

http://www.nerolac.com

Factory 1 :

B1 , B2, Jainpur Industrial Estate, Kanpur Dehat, Kanpur, Uttar Pradesh, India

Factory 2 :

F/2, MIDC, Lote Parshuram, Taluka Khed, District Ratnagiri, Maharashtra, India

Factory 3 :

Bibi Talav Vatva, Ahmadabad, Gujarat, India

Factory 4 :

142, Tiruporur Road, Perungudi, Chennai, Tamilnadu, India

Factory 5 :

36, Sector-7, HSIDC IGS, Bawal, District Rewari, Haryana, India

Sales Depot :

B-19, Meerut Road, Industrial Area, Meerut Road, Ghaziabad – 201 003, Uttar Pradesh, India

Branch Office :

Located at:

Jammu	Guwahati
Jalandhar	Varanasi
Ludhiana	Jamshedpur
Bhatinda	Kolkata
Patiala	Vishakhapatnam
New Delhi	Vijayawada
Mumbai	Trichy
Parwanoo	Madurai
Chandigarh	Trivandrum
Ambala	Thiruvalla
Dehradun	Cochin
Ghaziabad	Calicut
Sahibabad	Mangalore
Faridabad	Bangalore
Bareilly	Hubli
Agra	Tirupati
Lucknow	Panji
Kanpur	Gulbarga
Patna	Kolhapur
Siliguri	Hyderabad
Pune	Chennai
Bhiwandi	Rajkot
Nagpur	Indore
Cuttack	Udaipur
Raipur	Gwalior
Jabalpur	Bhopal
Varanasi	Jaipur
Surat	Jodhpur
Baroda	Narol
Ahmedabad	Aurangabad

DIRECTORS

As on 31.03.2012

Name :	Mr. Jamshed Jiji Irani
Designation :	Chairman
Address :	221, A-Wing, NCPA Apartment, Nariman Point, Mumbai – 400 021, Maharashtra, India
Date of Birth/ Age :	02.06.1936
Date of Appointment :	29.10.2002
Name :	Mr. Devendra Motilal Kothari
Designation :	Vice Chairman
Address :	8-4, Seaface Park CHS Society, Bhulabhai Desai Road, Mumbai – 400 026, Maharashtra, India
Date of Birth/ Age :	30.03.1930
Date of Appointment :	01.04.1973
Name :	Mr. Harishchandra M. Bharuka
Designation :	Managing Director
Address :	A-II, Twin Towers Premises CHS Limited, Off V S Marg, Mumbai – 400 025, Maharashtra, India
Date of Birth/ Age :	22.06.1960
Date of Appointment :	01.04.1999
Name :	Mr. Susim M. Datta
Designation :	Director
Address :	104, Bakhtavar Lower Colaba Road, Opposite Colaba Road, Colaba, Mumbai – 400 005, Maharashtra, India
Date of Birth/ Age :	01.07.1936
Date of Appointment :	17.05.2000
Name :	Mr. Hiroshi Ishino
Designation :	Director
Address :	3-14-15, MI Nani Meguro-HU, Tokyo, Japan
Date of Birth/ Age :	10.04.1951
Date of Appointment :	19.01.2005
Name :	Mr. Pradip P. Shah
Designation :	Director
Address :	72-A, Embassy Apartment, 7^th floor, 46 Nepeansea Road, Mumbai – 400 036, Maharashtra, India
Date of Birth/ Age :	07.01.1953
Date of Appointment :	30.01.2007
Name :	Mr. Noel Naval Tata
Designation :	Director
Address :	Windmere – 55, Cuffe Parade, Mumbai – 400 005, Maharashtra, India
Date of Birth/ Age :	12.11.1956
Date of Appointment :	27.10.2007
Name :	Mr. Pravin D. Chaudhari
Designation :	Whole Time Director
Address :	12, Juhu Goldmist, JUPD Scheme, Mumbai – 400 049, Maharashtra, India
Date of Birth/ Age :	17.05.1968
Date of Appointment :	30.04.2008
Name :	Mr. Yoshikazu Takahashi
Designation :	Director
Address :	7-Chome 6-1-4, Okamoto Higashinada – KU, Kobe, Hyogo, Japan
Date of Birth/ Age :	11.01.1953
Date of Appointment :	26.03.2010
Name :	Mr. Hitoshi Nishibayashi
Designation :	Director
Address :	7-Chome 6-1-4, Okamoto Higashinada – KU, Kobe, Hyogo 6580072, Japan
Date of Birth/ Age :	31.05.1963
Date of Appointment :	30.07.2010

KEY EXECUTIVES

Name :	Mr. Gomatam Thirumalai Govindarajan
Designation :	Company Secretary
Address :	F-203, Lloyds Estate, VIT College Marg, Wadala (East), Mumbai – 400 037, Maharashtra, India
Date of Birth :	16.11.1964
Date of Appointment :	01.10.1993

MAJOR SHAREHOLDERS / SHAREHOLDING PATTERN

As on 30.09.2012

Category of Shareholder	No. of Shares	Percentage of holding
(A) Shareholding of Promoter and Promoter Group
(1) Indian
(2) Foreign
Bodies Corporate	37329760	69.27
Sub Total	37329760	69.27
Total shareholding of Promoter and Promoter Group (A)	37329760	69.27
(B) Public Shareholding
(1) Institutions
Mutual Funds / UTI	487181	0.90
Financial Institutions / Banks	12653	0.02
Insurance Companies	2102336	3.90
Foreign Institutional Investors	4086975	7.58
Sub Total	6689145	12.41
(2) Non-Institutions
Bodies Corporate	5182292	9.62
Individuals
Individual shareholders holding nominal share capital up to Rs.0.100 million	3728749	6.92
Individual shareholders holding nominal share capital in excess of Rs.0.100 million	879545	1.63
Any Others (Specify)	82481	0.15
Non Resident Indians	76531	0.14
Trusts	5950	0.01
Sub Total	9873067	18.32
Total Public shareholding (B)	16562212	30.73
Total (A)+(B)	53891972	100.00
(C) Shares held by Custodians and against which Depository Receipts have been issued	0	0.00
(1) Promoter and Promoter Group	0	0.00
(2) Public	0	0.00
Sub Total	0	0.00
Total (A)+(B)+(C)	53891972	0.00

BUSINESS DETAILS

Line of Business :

Manufacturing and Marketing of Paints, Varnishes and Enamels, Oils and Synthetic Resins.

Products :

Product Description	Item Code No.
Paints	320890.03

PRODUCTION STATUS (AS ON 31.03.2011)

Particulars	Unit	Installed Capacity	Actual Production
Paints, Varnishes and Enamels and Powder Coatings	MT	220800	190023
Synthetic Resins	MT	86500	44822
Pretreatment Chemicals	MT	2400*	--

NOTE:

* Used for processing goods on behalf of Nipa Chemicals Limited, an erstwhile associate company.

(a) Installed capacity has been certified by the Works Manager and accepted by the Auditors without verification, being a technical matter.

(b) Production does not include goods processed outside. Sales, opening stock and closing stock include goods processed and purchased from outside. The closing stock is after adjustments for obsolescence and shortages. Closing stock figures, if derived from opening stock plus production / purchases and less sales would therefore be different.

GENERAL INFORMATION

No. of Employees :

2220 (Approximately)

Bankers :

v Union Bank of India

v Standard Chartered Bank

v Bank of Tokyo-Mitsubishi UFJ Limited

v HDFC Bank Limited

v BNP Paribas

Facilities :

Secured Loan	31.03.2012 (Rs. in Millions)	31.03.2011 (Rs. in Millions)
Secured Sales Tax Deferral Loan (Secured by a charge on the fixed assets of the factory at Jainpur) Package Scheme of Incentive allowed the Company to accumulate the sales tax collected from its customers in respect of goods produced at Jainpur Factory. Sales tax collected each year is repayable after five years from the year of collection. Outstanding amount is repayable in three annual installments from the reporting date. Sales Tax Deferral Loan is interest-free. Current maturity of Sales Tax Deferral Loan of Rs. 10.100 Millions (2010-2011 Rs.41.410 Millions) is disclosed under 'Other Current Liabilities' * There is no amount due and outstanding to be credited to Investor Education and Protection Fund	29.630	81.141
Total	29.630	81.141
Unsecured Loan	31.03.2012 (Rs. in Millions)	31.03.2011 (Rs. in Millions)
Unsecured Sales Tax Deferral Loan [Package Scheme of Incentive allowed the Company to accumulate the sales tax collected from its customers in respect of goods produced at Lote Factory. Sales tax collected each year is repayable in five equal yearly installments after ten years from the year of collection. Outstanding amount is repayable in nine annual installments from the reporting date. Sales Tax Deferral Loan is interest-free. Current maturity of Sales Tax Deferral Loan of Rs.45.750 Millions (2010-2011 Rs.32.970 Millions) is disclosed under 'Other Current Liabilities'] * There is no amount due and outstanding to be credited to Investor Education and Protection Fund	660.130	743.699
Total	660.130	743.699

Banking Relations :	--
Auditors :
Name :	BSR and Company Chartered Accountants
Address :	Mumbai, Maharashtra, India
Solicitors :
Name :	Kanga and Company
Address :	Mumbai, Maharashtra, India
Holding Company :	Kansai Paint Company Limited, Japan
Fellow Subsidiary :	v Kansai Paint Philippines Inc. v Kansai Resin (Thailand) Company Limited v Kansai Coatings Malaysia SDN. BHD. v Sime Kansai Paints SDN. BHD.
Associate - Company in which the Company has substantial interest (i.e. more than 20% in voting power) :	Nipa Chemicals Limited (Upto 14^th January, 2011)

CAPITAL STRUCTURE

As on 31.03.2012

Authorised Capital :

No. of Shares	Type	Value	Amount
60000000	Equity Shares	Rs.10/- each	Rs.600.000 millions

Issued, Subscribed & Paid-up Capital :

No. of Shares	Type	Value	Amount
53891972	Equity Shares	Rs.10/- each	Rs.538.920 millions

Note:

Details of Shareholders holding more than 5% of shares:

Particular	As on 31.03.2012		As on 31.03.2011
	%	No. of Shares	%	No. of Shares
Holding company: Kansai Paint Company Limited, Japan	69.27	37329760	69.27	37329760
Others: ICICI Prudential Life Insurance Company Limited	7.65	4123263	7.95	4285223
Aberdeen Asset Management Asia Limited	5.35	2881224	3.39	1825932
Aggregate number of bonus shares issued during the period of five years immediately preceding the reporting date	--	26945986	--	26945986

The Company has issued one class of shares, i.e. equity shares, which enjoys similar rights in respect of voting, payment of dividend and repayment of capital.

Reconciliation of the number of shares outstanding:

Particular	As on 31.03.2012	As on 31.03.2011
Number of shares at the beginning of the year	53891972	26945986
Bonus Shares — Issued during the year	--	26945986
Number of shares at the end of the year	53891972	53891972

FINANCIAL DATA

[all figures are in Rupees Millions]

ABRIDGED BALANCE SHEET

SOURCES OF FUNDS		31.03.2012	31.03.2011	31.03.2010
SHAREHOLDERS FUNDS
1] Share Capital		538.920	538.920	269.460
2] Share Application Money		0.000	0.000	0.000
3] Reserves & Surplus		10092.620	8622.750	7458.710
4] (Accumulated Losses)		0.000	0.000	0.000
NETWORTH		10631.540	9161.670	7728.170
LOAN FUNDS
1] Secured Loans		29.630	81.141	335.328
2] Unsecured Loans		660.130	743.699	764.519
TOTAL BORROWING		689.760	824.840	1099.847
DEFERRED TAX LIABILITIES		0.000	0.000	0.000
TOTAL		11321.300	9986.510	8828.017
APPLICATION OF FUNDS
FIXED ASSETS [Net Block]		3963.230	2782.073	2893.256
Capital work-in-progress		1614.870	751.647	96.952
Advance for capital expenditure		0.000	284.099	67.331
INVESTMENT		1835.050	3718.228	4015.372
DEFERRED TAX ASSETS		102.210	134.130	115.230
CURRENT ASSETS, LOANS & ADVANCES
	Inventories	4537.100	3541.025	2474.444
	Sundry Debtors	3588.340	2602.599	2323.662
	Cash & Bank Balances	591.770	396.906	410.825
	Other Current Assets	183.930	0.000	0.000
	Loans & Advances	564.700	502.315	410.930
Total Current Assets		9465.840	7042.845	5619.861
Less : CURRENT LIABILITIES & PROVISIONS
	Sundry Creditors	3542.370	3512.502	2940.440
	Other Current Liabilities	953.720	122.935	102.804
	Provisions	1163.810	1091.075	936.741
Total Current Liabilities		5659.900	4726.512	3979.985
Net Current Assets		3805.940	2316.333	1639.876
MISCELLANEOUS EXPENSES		0.000	0.000	0.000
TOTAL		11321.300	9986.510	8828.017

PROFIT & LOSS ACCOUNT

	PARTICULARS		31.03.2012	31.03.2011	31.03.2010
	SALES
		Income	26005.720	21387.302	17063.836
		Other Income	242.660	234.609	203.821
		TOTAL (A)	26248.380	21621.911	17267.657
Less	EXPENSES
		Cost of Materials Consumed	16968.980	14002.453	10718.223
		Purchases of Stock-in-Trade	917.500	--	--
		Employee Benefits Expense	1069.440	916.420	750.489
		Other Expenses	4159.140	3563.404	2958.254
		Changes in Inventories	(482.350)	--	--
		Profit on Sale of Long Term Trade Investment	--	(253.665)	0.000
		TOTAL (B)	22632.710	18228.612	14426.966
Less	PROFIT BEFORE INTEREST, TAX, DEPRECIATION AND AMORTISATION (A-B) (C)		3615.670	3393.299	2840.691
Less	FINANCIAL EXPENSES (D)		0.860	8.428	11.999
	PROFIT BEFORE TAX, DEPRECIATION AND AMORTISATION (C-D) (E)		3614.810	3384.871	2828.692
Less/ Add	DEPRECIATION/ AMORTISATION (F)		563.530	493.548	442.598
	PROFIT BEFORE TAX (E-F) (G)		3051.280	2891.323	2386.094
Less	TAX (H)		892.430	831.478	731.089
	PROFIT AFTER TAX (G-H) (I)		2158.850	2059.845	1655.005
Add	PREVIOUS YEARS’ BALANCE BROUGHT FORWARD		4959.587	3732.073	2714.388
Less	APPROPRIATIONS
		Proposed Dividend	NA	538.920	404.189
		Tax on Proposed Dividend	NA	87.426	67.131
		Transfer to General Reserve	NA	205.985	166.000
	BALANCE CARRIED TO THE B/S		NA	4959.587	3732.073
	EARNINGS IN FOREIGN CURRENCY
		Export Earnings	11.050	6.441	6.223
		Recovery of Freight, Insurance and Other Charges on Exports	0.560	0.295	0.312
	TOTAL EARNINGS		11.610	6.736	6.535
	IMPORTS
		Raw Materials	4757.560	3526.492	2712.547
		Components and Spare Parts	9.820	19.432	7.573
		Finished Products	285.970	206.176	100.326
		Capital Goods	69.060	13.090	7.578
	TOTAL IMPORTS		5122.410	3765.190	2828.024
	Earnings Per Share (Rs.)		40.06	38.22	30.71

QUARTERLY RESULTS

PARTICULARS	30.06.2012	30.09.2012
Type	1^st Quarter	2^nd Quarter
Net Sales	7235.000	6823.000
Total Expenditure	6266.000	6034.000
PBIDT (Excl OI)	969.000	789.000
Other Income	67.000	35.000
Operating Profit	1036.000	824.000
PBDT	1036.000	824.000
Depreciation	156.000	161.000
Profit Before Tax	880.000	663.000
Tax	247.000	189.000
Profit After Tax	633.000	474.000
Net Profit	633.000	474.000

KEY RATIOS

PARTICULARS		31.03.2012	31.03.2011	31.03.2010
PAT / Total Income	(%)	8.22	9.53	9.58
Net Profit Margin (PBT/Sales)	(%)	11.73	13.52	13.98
Return on Total Assets (PBT/Total Assets}	(%)	22.72	29.43	28.03
Return on Investment (ROI) (PBT/Networth)		0.29	0.32	0.31
Debt Equity Ratio (Total Liability/Networth)		0.60	0.61	0.66
Current Ratio (Current Asset/Current Liability)		1.67	1.49	1.41

LOCAL AGENCY FURTHER INFORMATION

Check List by Info Agents	Available in Report (Yes / No)
1) Year of Establishment	Yes
2) Locality of the firm	Yes
3) Constitutions of the firm	Yes
4) Premises details	No
5) Type of Business	Yes
6) Line of Business	Yes
7) Promoter’s background	Yes
8) No. of employees	Yes
9) Name of person contacted	No
10) Designation of contact person	No
11) Turnover of firm for last three years	Yes
12) Profitability for last three years	Yes
13) Reasons for variation <> 20%	--
14) Estimation for coming financial year	No
15) Capital in the business	Yes
16) Details of sister concerns	Yes
17) Major suppliers	No
18) Major customers	No
19) Payments terms	No
20) Export / Import details (if applicable)	No
21) Market information	--
22) Litigations that the firm / promoter involved in	--
23) Banking Details	Yes
24) Banking facility details	Yes
25) Conduct of the banking account	--
26) Buyer visit details	--
27) Financials, if provided	Yes
28) Incorporation details, if applicable	Yes
29) Last accounts filed at ROC	Yes
30) Major Shareholders, if available	Yes
31) Date of Birth of Proprietor/Partner/Director, if available	Yes
32) PAN of Proprietor/Partner/Director, if available	No
33) Voter ID No of Proprietor/Partner/Director, if available	No
34) External Agency Rating, if available	Yes

HISTORY

Subject, the Indian subsidiary of Japan based Kansai Paint Company Limited, is the second largest paint company in India with presence in decorative paints as well as industrial paints and marine paints, enamels, varnishes, coatings, resins etc. It is the second largest coating company in India. The company markets its products under the brand names Nerolac, Glossolite, Goody, Allscapes, Excel, in decorative. The Company was established in 1920 as Gahagan Paints and Varnish Company Limited at Lower Parel in Bombay. In 1930, three British companies merged to formulate Lead Industries Group Limited In 1933, Lead Industries Group Limited acquired entire share capital of Gahagan Paints in 1933 and thus, Goodlass Wall (India) Limited was born.  

Subsequently, by 1946, Goodlass Wall (India) Limited was known as Goodlass Wall Private Limited. In 1957, Goodlass Wall Private Limited grew popular as Goodlass Nerolac Paints (Private) Limited. Also, it went public in the same year and established itself as Goodlass Nerolac Paints Limited. It came into the fold of Tata Forbes Group in 1976, as its foreign holdings were acquired by Forbes Gokak. It turned into Joint Venture Company in 1986 as the foreign collaborator Japan based Kansai Paints picking 36% of equity capital of the company. With the acquisition of entire stake of Forbes Gokak and its associates by Kansai Paints it became the subsidiary of the latter in 1999. The stake of Kansai Paints in the company now stood at 64.52% of the total equity of the company. The company has five manufacturing facilities at Kanpur, Ratnagiri, Ahmedabad, Perungudi, Rewari spread across India. The Company serves its customers through 66 Sales locations and five strategically located factories. 

Technical Assistance Agreements of the company with renowned players in paint industry at international level puts the company in a strong position to offer products which meets stringent international specifications. It started in 1993 when the company tied-up with Kansai Paints of Japan (for manufacture of sophisticated architectural Coatings) and Nihon Tokushu Torya Company Limited also of Japan (for body seal and under seal coatings). and the latest being the technical assistance agreement with DuPont Performance Coatings GmbH and Company KG, Germany for know-how of manufacture of Anodic Electro-deposition Coatings System during the year 2000-01. The company's other Technical Assistance agreements include E.I. Dupont De Nemours and Co. Inc. of USA for automotive coatings; Oshima Kogyo Company Limited, of Japan for heat resistant paints; Valspar Corporation of US for powder coatings; Drew Chemicals Corporation of US for water and fuel treatment chemicals and Ameron Inc. USA for high performance coatings.  

The company has strong presence in automotive paints as it controls 45% of the organized Industrial paint segment. Its major clients include OEMs like Maruti Udyog, Bajaj Auto, TELCO and Mahindra and Mahindra. It was a pioneer in introducing electro-deposition (ED) technology for Maruti, capturing a sizeable share of the automotive paint market. The company has two wholly owned subsidiaries namely Saurashtra Paints and GNP (Madras). The above subsidiary companies were amalgamated with the company from April, 2002 with consent approval from both the states High courts. 

It has the software package, computerized colour dispensing machine from Fluid Management Holland, Gyroshaker of 10-Litre capacity touch screen monitor, 136 column palette-share display unit and a Kirloskar Champion UPS 1 KVA. The system has an ability to supply over 1305 shades accurately, consistently and instantly in several products covering a variety of application viz doors, windows, walls, exteriors, gates, grills etc. 

FINANCIALS

Sales and operating revenue for the year aggregated to Rs.30198.840 millions reflecting a growth of 21% over the previous year. Profit for the year was driven by growth in decorative sales. Raw material cost was driven by high crude oil prices during the year. The average crude oil price which was 87 USD last year increased to 114 USD in the current year. Prices of other key raw materials rose sharply during the year. Indian currency depreciated sharply against USD and Japanese yen. Both the above reasons resulted in high inflation of 17% during year.

Overheads were kept under control during the year. Depreciation is higher due to capitalization of emulsion paint plant and ASRS at Jainpur and expansion at Bawal plant. Current year’s depreciation is at Rs.563.530 millions as compared to Rs.493.550 millions of the previous year. Interest was lower at Rs.0.860 million as compared to Rs.1.350 millions of the previous year due to effective cash management. Other income was higher at Rs.242.660 millions (2010-11: Rs.225.440 millions). Profit Before Tax (PBT) is higher at Rs.3051.280 millions as compared to Rs.2891.330 millions of the previous year reflecting a growth of 5.5%. PBT growth excluding profit on sale of investments in Nipa Chemicals Limited in the previous year works out to 15.7%.

MANAGEMENT DISCUSSION AND ANALYSIS

Subject is a subsidiary of Kansai Paint, Japan made its beginning as Gahagan Paints and Varnishes Co. Limited in the year 1920. Having completed over 92 years of strong foundation, the Company has been known as one of the strong players in the paint Industry with high reputation for quality, innovation and brand identity.

Subject vision has been to leverage global technology and serve the customers with superior coatings systems and world class solutions. The vision is articulated through the focus of the organization to reach out to the consumers through its employees working from sales locations and factories across the country. The Company has its manufacturing facilities at Lote in Maharashtra, Bawal at Haryana, Jainpur in UP, Chennai and the latest state of the art plant at Hosur in Tamilnadu. The geographical set up of the plants has been advantageous in providing high service levels and supply chain efficiency, thus leading to customer satisfaction.

Subject has always aimed to work in congruence to the customer needs. Subject has been coming out with new range of products in order to meet customer demands in the Automotive, Auto Refinish and Performance Coatings segments of the markets. New developments include 9th Generation Super High Throw Power CED with shorter deposition time to facilitate higher productivity, Transit protection film rap guard, Coatings for Car interiors in the Automotive segment, new range of Eco Hybrid - Premium PU refinish system for Auto refinish segment and Moisture cured epoxies, Poly-siloxane coating, Poly-urea and poly-asphartic coatings for the Performance Coatings Liquid segment. The full system supply capability in tandem with the products introduced has been instrumental in sustaining the leadership for the industrial business segment. The Company has pioneered the launch of eco friendly, zero VOC, low VOC, lead free (no lead added) range of products for the Decorative business. It has continued the focus on core brands with introduction of products like Lotus Touch and Little Master series of emulsions.

The key to business is based on finding sustainable solutions which support long term growth. Extensive benchmarking study of practices across sectors has been carried out. The feasible salient ones have been incorporated in the Mission Document too. This document features the vision, elements of organizational strategy and milestones for every function and serves as a guide for all internal stakeholders. Subject has set very high standards for research and development through constant innovation, value engineering and technological interventions wherein quality is of prime importance. Supply chain efficiency has helped in reaching out to the customers. New depots have been opened to reach the customer markets and improve service levels.

It has many firsts to the credit for the way business is conducted in the competitive environment of Decorative as well as Industrial segment. Huge investments have been made in the supply chain domain for capacity augmentation, increasing the customer reach, operational efficiency, high service levels and inventory control. Technology has been leveraged to automate the warehousing facility at Jainpur besides streamlining warehouse facilities at Bawal and Lote by using WMS (Warehouse Management System)/ 9 from SAP in conjunction with bar coding. Considering the industry demands and customer requirements, expansions have taken place for Decorative and Automotive sections at Jainpur and Bawal. Work is on to commission the new facilities at the latest state of the art plant at Hosur.

Huge investments in IT interventions are indicative of the organization’s focus on effective and speedier transactions. Subject has rolled out CRM (Customer Relationship Management) and BCM (Business Communication Manager) to ensure better visibility of the customer. Subject has also rolled out the EHS Suite (Environment, Health and Safety) of Products from SAP at its plants and HO. These projects have fostered streamlined transactions, better informed and faster decisions. The organization has been felicitated with several

awards in all functional areas of Products, Services and Governance which indicate that Subject has been appreciated by the entire value chain.

INDUSTRY PROGRESS

The financial year 2011-12 has been challenging. Economic pressures have dominated with high interest rates, inflation, political imbroglio and uncertainty in the global scenario. The Company has taken this operating environment as a challenge and focused on sustainable growth. While practising caution, it has leveraged its capacity enhancements, operational controls, product innovations, customer reach and infrastructural support. Risk mitigation plans have also been in place. As a result, Kansai Nerolac has been able to consolidate its leadership in the Automotive and Performance Coating powder business and focus on the Decorative business through the unique healthy home products proposition.

The market for the paints segment is expected to grow at 12-13% for the next five years i.e. at 1.5 to 2 times the real GDP. This indicates that there is growth opportunity for Kansai Nerolac and the Company is well equipped for the financial year 2012-13.

The industry size for paints is estimated at Rs.291000.000 millions wherein the organized sector accounts for 65% while the remaining is with the unorganized sector comprising of around two thousand small scale paint units. The decorative paints segment accounts for Rs.225000.000 millions while industrial accounts for Rs.66000.000 millions of the total paint market.

MARKETING INITIATIVES – OUTLOOK

Subject has touched the homes of Indian consumers by providing ‘Healthy Home Paints’. Huge investments have been made for product campaigns and advertisements to communicate about the environment friendly, low VOC and lead free products through the brand ambassador, Shah Rukh Khan. The Company has come forward with a number of innovations that follow the tagline of ‘Paint the Change’. There has been a constant attempt to create awareness amongst masses about ‘Painting a Greener Tomorrow’. Subject has aired campaigns of Impressions Eco Clean on all leading channels and reinstated the importance and benefits of environment friendly paints. Brand equity for the product has further strengthened as it has won the Product of The Year 2012 Award in the paints category for the third consecutive year.

The Company believes that it is important to reach out to the influencers as well. It has collaborated with the architects and interior decorators for initiatives like ‘Earth Matters’ seminars across locations. A series of Nerolac Premium Painters Club (NPP) and Rishta Rangon Ka (RRK) programs were launched for the painters and contractors. One of the major highlights for the year has been the launch of economical range of new products like ‘Little Master’ and ‘Lotus Touch’. KNPL has again been the first in introducing the ‘Impressions Water base Enamel’ – the Hi Gloss water base enamel which is economical and technically aimed to replace the traditional solvent range of paints. The Company is now connected to the consumers through social networking tools like Facebook and has achieved a huge fan base in the paint industry. It is serving as a good platform for communicating all campaigns and events and getting consumer insights.

Subject also participated at Acetech 2012, one of the largest architecture, building and construction expositions in the country. Impressions Eco Clean was the unanimous choice of the Jury as the Design wall during the event because of its innovativeness, functionality and ecological compatibility. During the year, focus has been on new dealer openings, placement of computerized color dispensing machines, reaching out to new sites, contractors and establishing corporate tie ups. Series of campaigns through ‘The Health of India’, ‘Display Ka Don’ for interiors and exterior range of paints, ‘Green turn’, ‘Two to Tango’ on Facebook have taken place. It has also rolled out the BCM initiative which will help in reaching out to the customers through the call centers and ensure high visibility and service levels.

Subject has also participated in exhibitions in the Automotive and Performance Coatings Liquid and Powder business segments. The Company believes that customer relationship, profitability and operational efficiency are vital for business and continued growth. This goes hand in hand with the right mix of products, high quality and on time delivery. Subject in partnership with Kansai, Japan has been able to leverage the competitive advantage to ensure a strong market presence. It has set up strong credibility by creating customer service objectives with the OEMs and monitoring the progress together. These aspects have helped to attain business of the existing customers and get access to new auto European manufacturers and others. Multiple OEM lines have been awarded to the Company for future business prospect.

This year, the Company has focused on the augmentation of auto refinish business by working on comparative market study, understanding needs of customers, product innovations and brand visibility. This will be useful in getting approvals and increasing business potential. The industrial marketing team has participated in a series of color and rap guard presentations, seminars, vendor meets and customer satisfaction surveys. This has given brand visibility to the Company and further strengthened the Company’s presence in the industry.

There has been similar focus on Performance Coatings business division of powders and liquids. Several marketing initiatives have been taken forward to sustain leadership status for Powder coatings. The customer requirements are well analyzed and the products are developed to cater to them. Some of the high value niche products launched in the Performance coatings are Poly Urea, Polysiloxane and moisture cured Urethane. Under

Powder coatings, a range of specialized low baked powder for construction equipments as well as abrasion resistant powder for automotive segment have been introduced. The Company is standing by the business forte of full system supply capability in the industrial segment. As a consequence, KNPL has been awarded a number of CED, Top Coats and Pre treatment business. The customers have acknowledged the organizational competence through vendor awards for quality and on time delivery.

INFORMATION TECHNOLOGY

Subject has made huge investments in IT initiatives which have served as game changers for the way business is conducted. During the year CRM and BCM have been rolled out across the organization. Another milestone has been the implementation of Environment, Health and Safety (EHS) modules. Greenhouse Gas (GHG) Accounting and Water and Carbon footprint for Subject L has been mapped into the system. The roll out of modules like FSCM (Financial Supply Chain Management), GRC (Governance, Risk and Control), MII (Manufacturing Intelligence and Integration) stands completed.

AWARDS AND RECOGNITION

Subject has been awarded a series of awards and recognition in various fields. The Awards given by the External Agencies are:

• Nerolac Impressions Eco Clean as the ‘Product of the year 2012’ in the paints category

• SAP Ace Award 2011 for best run business in Consumer and Trade Industry

• Level 4 out of 5 in the Karmayog ratings for the Corporate Social Responsibility initiatives

• A merit certificate at the ICE ( In-House Communication Excellence ) Awards 2011, an initiative of Shailaja Nair Foundation. KNPL stood among the top 40 out of the 497 companies.

The Awards by Customers are:

• Mahindra and Mahindra Sustainability Award for outstanding contribution

• Best Vendor Award from Tata Motors

• Best vendor performance award in Kaizen category for 2010-11 by Maruti Suzuki India Limited

CONTINGENT LIABILITIES:

Particulars	31.03.2012 (Rs. in millions)	31.03.2011 (Rs. in millions)
Claims against the Company not acknowledged as debt:
Notice from Haryana State Industrial and Infrastructure Development Corporation for enhanced costs for Bawal factory land	39.010	39.010

STATEMENT OF PROFIT AND LOSS FOR THE QUARTER ENDED 30^TH SEPTEMBER, 2012

(Rs. in millions)

Sr. No.	Particular	For the quarter ended		For the half year ended
		30.09.2012 (Unaudited)	30.06.2012 (Unaudited)	30.09.2012 (Unaudited)
1.	Gross Sales / Income	8087.000	8473.000	16560.000
	Net Sales/Income from Operations	6794.000	7208.000	14002.000
	Other operating Income	29.000	27.000	56.000
	Total Income From Operations (Net)	6823.000	7235.000	14058.000
2.	Expenditure
	Cost of materials consumed	4619.000	4574.000	9193.000
	Purchase on stock in trade	243.000	225.000	468.000
	Changes in inventories of finished goods, work in progress and stock in trade	(248.000)	28.000	(220.000)
	Employee benefits expenses	293.000	293.000	586.000
	Depreciation and amortization expenses	161.000	156.000	317.000
	Other expenses	1127.000	1146.000	2273.000
	TOTAL	6195.000	6422.000	12617.000
3.	Profit From Operations before Other Income, Interest and Exceptional Items (1-2)	628.000	813.000	1441.000
4.	Other Income	35.000	67.000	102.000
5.	Profit Before Interest and Exceptional Items (3+4)	663.000	880.000	1543.000
6.	Interest	0.000	0.000	0.000
7.	Profit After Interest but before Exceptional Items (5-6)	663.000	880.000	1543.000
8.	Exceptional Items	--	--	--
9.	Profit from Ordinary Activities before Tax (7+8)	663.000	880.000	1543.000
10.	Tax Expense
	a) Current tax	159.000	203.000	362.000
	b) Deferred tax	30.000	44.000	74.000
	Total	189.000	247.000	436.000
11.	Net Profit from Ordinary Activities after Tax (9-10)	474.000	633.000	1107.000
12.	Extraordinary Item (net of expense)	--	--	--
13.	Net Profit for the period (11-12)	474.000	633.000	1107.000
14.	Paid-up Equity Share Capital (Face Value of Rs.10/- Each)	539.000	539.000	539.000
15.	Reserves Excluding Revaluation Reserve	--	--	--
16.	Basic and Diluted Earning Per Share (EPS) (Rs.)-Not Annualised
	a) Basic and diluted EPS before extraordinary items	8.80	11.74	20.55
	b) Basic and diluted EPS after extraordinary items	8.80	11.74	20.55
17.	Public Shareholding
	-Number of Shares	16562212	16562212	16562212
	- Percentage of Shareholding	30.73	30.73	30.73
18.	Promoters and Promoter Group Shareholding
	a) Pledged/Encumbered
	- Number of Shares	Nil	Nil	Nil
	- Percentage of Shares (as a % of the Total Shareholding of promoter and promoter group)	Nil	Nil	Nil
	- Percentage of Shares (as a % of the Total Share Capital of the Company)	Nil	Nil	Nil
	b) Non Encumbered
	- Number of Shares	37329760	37329760	37329760
	- Percentage of Shares (as a % of the Total Shareholding of Promoter and Promoter Group)	100.%	100.%	100%
	- Percentage of Shares (as a % of the Total Share Capital of the Company)	69.27	69.27	69.27

Particulars	QUARTER ENDED
Pending at the beginning of the quarter	Nil
Received during the quarter	1
Disposed of during the quarter	1
Remaining unresolved at the end of the quarter	Nil

STATEMENT OF ASSETS AND LIABILITIES AS AT 30^TH SEPTEMBER, 2012

(Rs. in millions)

PARTICULARS	30.09.2012
	Unaudited
Equity and liabilities
Shareholders’ fund
Share capital	539.000
Reserve & surplus	11200.000
Sub-total – Shareholders’ funds	11739.000
Non – current liabilities
Long term borrowings	605.000
Long term provisions	443.000
Sub-total – Non-current liabilities	1048.000
Current liabilities
Trade payables	3283.000
Other current liabilities	2522.000
Short term provisions	140.000
Sub-total – Current liabilities	5945.000
Total – Equity & Liabilities	18732.000
Assets
Non-current assets
Fixed assets	7017.000
Capital work in progress	0.000
Non-current investment	422.000
Deferred tax assets (net)	28.000
Long term loans & advances	378.000
Sub-total – Non-current Assets	7845.000
Current assets
Current investment	150.000
Inventories	4736.000
Trade receivables	4314.000
Cash & bank balances	588.000
Short term loans & advances	286.000
Other current assets	813.000
Sub-total - Current Assets	10887.000
Total – Assets	18732.000

Notes:

1. As the company business activity falls within a single segment viz. ‘Paints’ and the sales substantially being in the domestic market, the disclosure requirements of accounting standard 17 “Segment Reporting”, notified under the companies (Accounting Standards) Rules, 2006, are not applicable.

2. The above results have been reviewed by the audit committee and approved by the board of directors at their meeting held on 26^th October, 2012. These results have been subjected to “Limited Review” by the statutory auditors of the company.

FIXED ASSETS:

v Land

v Buildings

v Building Plant and Machinery

v Plant and Machinery

v Laboratory Equipment

v Furniture Fittings and Equipment

v Electrical Installation

v Motor Cars and Vehicles

CMT REPORT (Corruption, Money Laundering & Terrorism]

The Public Notice information has been collected from various sources including but not limited to: The Courts, India Prisons Service, Interpol, etc.

1] INFORMATION ON DESIGNATED PARTY

No exist designating subject or any of its beneficial owners, controlling shareholders or senior officers as terrorist or terrorist organization or whom notice had been received that all financial transactions involving their assets have been blocked or convicted, found guilty or against whom a judgement or order had been entered in a proceedings for violating money-laundering, anti-corruption or bribery or international economic or anti-terrorism sanction laws or whose assets were seized, blocked, frozen or ordered forfeited for violation of money laundering or international anti-terrorism laws.

2] Court Declaration :

No

exist to suggest that subject is or was the subject of any formal or informal allegations, prosecutions or other official proceeding for making any prohibited payments or other improper payments to government officials for engaging in prohibited transactions or with designated parties.

3] Asset Declaration :

No records exist to suggest that the property or assets of the subject are derived from criminal conduct or a prohibited transaction.

4] Record on Financial Crime :

Charges or conviction registered against subject: None

5] Records on Violation of Anti-Corruption Laws :

Charges or investigation registered against subject: None

6] Records on Int’l Anti-Money Laundering Laws/Standards :

Charges or investigation registered against subject: None

7] Criminal Records

No available information exist that suggest that subject or any of its principals have been formally charged or convicted by a competent governmental authority for any financial crime or under any formal investigation by a competent government authority for any violation of anti-corruption laws or international anti-money laundering laws or standard.

8] Affiliation with Government :

No record exists to suggest that any director or indirect owners, controlling shareholders, director, officer or employee of the company is a government official or a family member or close business associate of a Government official.

9] Compensation Package :

Our market survey revealed that the amount of compensation sought by the subject is fair and reasonable and comparable to compensation paid to others for similar services.

10] Press Report :

No press reports / filings exists on the subject.

CORPORATE GOVERNANCE

MIRA INFORM as part of its Due Diligence do provide comments on Corporate Governance to identify management and governance. These factors often have been predictive and in some cases have created vulnerabilities to credit deterioration.

Our Governance Assessment focuses principally on the interactions between a company’s management, its Board of Directors, Shareholders and other financial stakeholders.

CONTRAVENTION

Subject is not known to have contravened any existing local laws, regulations or policies that prohibit, restrict or otherwise affect the terms and conditions that could be included in the agreement with the subject.

FOREIGN EXCHANGE RATES

Currency	Unit	Indian Rupees
US Dollar	1	Rs.54.60
UK Pound	1	Rs.87.31
Euro	1	Rs.69.87

INFORMATION DETAILS

Report Prepared by :

SMN

SCORE & RATING EXPLANATIONS

SCORE FACTORS	RANGE	POINTS
HISTORY	1~10	9
PAID-UP CAPITAL	1~10	8
OPERATING SCALE	1~10	9
FINANCIAL CONDITION
--BUSINESS SCALE	1~10	9
--PROFITABILIRY	1~10	8
--LIQUIDITY	1~10	8
--LEVERAGE	1~10	8
--RESERVES	1~10	9
--CREDIT LINES	1~10	8
--MARGINS	-5~5	-
DEMERIT POINTS
--BANK CHARGES	YES/NO	YES
--LITIGATION	YES/NO	NO
--OTHER ADVERSE INFORMATION	YES/NO	NO
MERIT POINTS
--SOLE DISTRIBUTORSHIP	YES/NO	NO
--EXPORT ACTIVITIES	YES/NO	NO
--AFFILIATION	YES/NO	YES
--LISTED	YES/NO	YES
--OTHER MERIT FACTORS	YES/NO	YES
TOTAL		76

This score serves as a reference to assess SC’s credit risk and to set the amount of credit to be extended. It is calculated from a composite of weighted scores obtained from each of the major sections of this report. The assessed factors and their relative weights (as indicated through %) are as follows:

Financial condition (40%) Ownership background (20%) Payment record (10%)

Credit history (10%) Market trend (10%) Operational size (10%)

RATING EXPLANATIONS

RATING		STATUS	PROPOSED CREDIT LINE
>86	Aaa	Possesses an extremely sound financial base with the strongest capability for timely payment of interest and principal sums	Unlimited
71-85	Aa	Possesses adequate working capital. No caution needed for credit transaction. It has above average (strong) capability for payment of interest and principal sums	Large
56-70	A	Financial & operational base are regarded healthy. General unfavourable factors will not cause fatal effect. Satisfactory capability for payment of interest and principal sums	Fairly Large
41-55	Ba	Overall operation is considered normal. Capable to meet normal commitments.	Satisfactory
26-40	B	Capability to overcome financial difficulties seems comparatively below average.	Small
11-25	Ca	Adverse factors are apparent. Repayment of interest and principal sums in default or expected to be in default upon maturity	Limited with full security
<10	C	Absolute credit risk exists. Caution needed to be exercised	Credit not recommended
-	NB	New Business	-

PRIVATE & CONFIDENTIAL : This information is provided to you at your request, you having employed MIPL for such purpose. You will use the information as aid only in determining the propriety of giving credit and generally as an aid to your business and for no other purpose. You will hold the information in strict confidence, and shall not reveal it or make it known to the subject persons, firms or corporations or to any other. MIPL does not warrant the correctness of the information as you hold it free of any liability whatsoever. You will be liable to and indemnify MIPL for any loss, damage or expense, occasioned by your breach or non observance of any one, or more of these conditions

This report is issued at your request without any risk and responsibility on the part of MIRA INFORM PRIVATE LIMITED (MIPL) or its officials.