Proxy Advisory Report
Asian Paints Limited
BSE Code: 500820 | NSE Code: ASIANPAINT | ISIN: INE021A01026
Sector: Paints/Varnish | Meeting Type: Annual general Meeting
e-Voting Platform: NSDL
e-Voting Period: From 30th June, 2015 to 2nd July, 2015
Meeting Date: 3rd July, 2015 at 11:00 am
Meeting Venue: Yashwantrao Chavan Pratishthan Auditorium, Y. B. Chavan
Centre, General Jagannath Bhosle Marg, Mumbai - 400 021
Notice: Click here | Annual Report: FY 2014-15
Company Email: investor.relations@asianpaints.com
Company Phone: +91 22 3981 8000 | Company Fax: +91 22 3981 8888
Company Registered Office: 6A Shantinagar, Santacruz (East), Mumbai - 400 055
Proxy Advisory
Corporate Governance Research
Corporate Governance Scores
Stakeholders’ Education
ASIAN PAINTS LIMITED
www.asianpaints.com
Meeting Date: 3rd July, 2015
Meeting Type: AGM
SES RECOMMENDATIONS
TABLE 1 - AGENDA ITEMS AND RECOMMENDATIONS
S. No.
1
2
3
4
5
6
7
Resolution
Adoption of Accounts
Declaration of Dividend
Re-appointment of Shri Ashwin Choksi as a Director
Re-appointment of Shri Ashwin Dani as a Director
Appointment of Statutory Auditors
Appointment of Shri Abhay Vakil as a Non-Executive
Director
Ratification of remuneration payable to M/s. RA & Co.,
Cost Accountants for FY 2015/16
Type
Recommendation
Focus#
O
O
O
O
O
O
FOR
FOR
FOR
FOR
AGAINST
C
O
FOR
FOR
RESEARCH ANALYST: SUMIT TANK
# Focus terminology
C –Compliance: The Company has not met statutory compliance requirements.
F – Fairness: The Company has proposed steps which may lead to undue advantage of a particular class of shareholders and can have adverse
impact on non-controlling shareholders including minority shareholders
G – Governance: SES questions the governance practices of the Company. The Company may have complied with the statutory requirements
in letter. However, SES finds governance issues as per its standards.
T– Disclosures & Transparency: The Company has not made adequate disclosures necessary for shareholders to make an informed decision.
The Company has intentionally or unintentionally kept the shareholders in dark.
KEY ISSUES
Proposed Appointment of Auditors is not in accordance with provisions of Section 139(1) of Companies Act 2013
(View details)
© 2012 | Stakeholders Empowerment Services | All Rights Reserved
2|P A G E
PROXY ADVISORY REPORT | FOR LIMITED CIRCULATION | REPORT RELEASE DATE: [DATE]
O – Ordinary Resolution; S – Special Resolution
ASIAN PAINTS LIMITED
www.asianpaints.com
Meeting Date: 3rd July, 2015
Meeting Type: AGM
COMPANY BACKGROUND
TABLE 2 - MARKET DATA (As on 19th June, 2015)
739.85
M Cap (₹ Cr.)
70,966.41
*Shares
95,91,97,790
st
#
#
PE Ratio
Source: Capitaline
*As on 31 March, 2015
TABLE 3: FINANCIAL INDICATORS (STANDALONE)
TABLE 4: PEER COMPARISON (2015)
(In ₹ Crores)
Based on EPS for FY 15
2015
2014
11,648.83
10,418.78
8,971.70
3,806.51
3,549.06
186.82
173.66
126.15
34.19
21.79
11,835.65
10,592.44
9,097.85
3,840.70
3,570.85
PBDT
2,156.68
1,914.89
1,642.86
474.87
466.59
Net Profit
1,327.40
1,169.06
1,050.00
266.03
271.67
13.84
12.19
10.95*
3.84
5.04
6.10
5.30
4.06*
1.25
1.40
51.23%
50.53%
48.84%
37.84%
32.29%
OPM %
18.75
18.63
18.65
13.39
13.15
NPM %
11.40
11.22
11.70
6.99
7.65
Revenue
Other Income
Total Income
EPS
Dividend/Share (₹)
Dividend Pay-Out
2013
53.45
Berger Paints
Kansai Nerolac
Dividend pay-out includes Dividend Distribution Tax. Source: BSE
* Dividend & EPS data’s are adjusted due to Stock-Split in the ratio of 1:10
TABLE 5: MAJOR PUBLIC SHAREHOLDERS (%) (MAR'15)
TABLE 6: MAJOR PROMOTERS (%) (MAR'15)
Ojasvi Trading Private Limited
4.90
Isis Holding And Trading Company
5.51
Life Insurance Corporation of India
4.88
Geetanjali Trading And Investments
5.14
Aberdeen Global Indian Equity (Mauritius) Ltd
1.12
Abhay Arvind Vakil
2.97
Elcid Investments Limited
2.95
Gujarat Organics Ltd
2.38
Sudhanava Investments And Trading
1.98
Rupen Investment & Industries
1.96
SHAREHOLDING PATTERN (In %) (MARCH)
DISCUSSION
20.31
19.88
19.91
20.50
8.81
9.36
7.86
8.84
18.09
17.97
19.44
17.87
52.79
52.79
52.79
52.79
2015
2014
2013
2012
Others
DII
FII
No new shares were issued by the Company
during FY 2013/14. No major changes has
been observed in shareholding pattern of the
Company.
Promoter
Graph 1: Yearly Shareholding Pattern
© 2012 | Stakeholders Empowerment Services | All Rights Reserved
3|P A G E
PROXY ADVISORY REPORT | FOR LIMITED CIRCULATION | REPORT RELEASE DATE: [DATE]
Price (₹)
ASIAN PAINTS LIMITED
www.asianpaints.com
Meeting Date: 3rd July, 2015
Meeting Type: AGM
BOARD OF DIRECTORS
Classification
Director
Company
SES
Expertise/
Specialization
[1]
Tenure
(Year)
Directorship
Committee
Membership
Pay
(Lakhs)
Ashwin Choksi
Up
NEDP
(R)(C)
NED
P(R)
Industry
Specialist
45
1
0 (0)
37.90
Ashwin Dani
Up
NEDP(R)
NED
P(R)
Industry
Specialist
45
7
4 (1)
37.85
Abhay Vakil
Up
NEDP(R)
NED
P(R)
Industry
Specialist
32
4
3 (2)
33.70
Mahendra Choksi
NEDP(R)
NED
P(R)
Industry
Specialist
23
1
1 (0)
29.20
Malav Dani
NEDP(R)
NED
P(R)
Management
2
5
1 (0)
26.40
Amrita Vakil
NEDP(R)
NED
P(R)
Human
resources
1
3
1 (0)
25.50
Dipankar Basu
ID
NID
Banking
15
3
3 (2)
34.20
Deepak
Satwalekar
ID
NID
Finance
15
4
2 (1)
30.60
Swaminathan S.
ID
NID
Industry
Specialist
14
5
2 (0)
25.00
Mahendra Shah
ID
NID
Operation
14
1
2 (1)
33.20
S. Ramadorai
ID
ID
IT
6
8
5 (1)
23.80
M. K. Sharma
ID
ID
Legal
3
8
9 (1)
33.00
Vibha Paul Rishi
ID
ID
Marketing
1
6
2 (0)
24.50
MD&CEO
MD
Marketing
3
1
2 (0)
610.10
K. B. S. Anand
Reference: ID – Independent director, NED – Non-executive director, ED – Executive director, C – Chairman, P - Promoter, MD Managing Director, R - Liable to retire by rotation, LID – Lead Independent Director, W – Woman Director, NID - Non-Independent
Director
[1]Committee memberships include committee chairmanships
Up - Director up for appointment/ reappointment
Note: Directorships, committee membership and committee chairmanship includes such positions in Asian Paints Ltd
GRAPH 2 - BOARD PROFILE
Liable to retire by rotation (As per Company)
8
7
6
5
4
3
2
1
0
Board Composition
100%
79%
80%
60%
6
7
50%
50%
40%
21%
20%
1
ID
Non Retiring
0%
Retiring
ID
SES
© 2012 | Stakeholders Empowerment Services | All Rights Reserved
NID
Company
4|P A G E
PROXY ADVISORY REPORT | FOR LIMITED CIRCULATION | REPORT RELEASE DATE: [DATE]
TABLE 7 - BOARD PROFILE
ASIAN PAINTS LIMITED
www.asianpaints.com
Meeting Date: 3rd July, 2015
Meeting Type: AGM
As per provisions of Section 149 and 152 of the Companies Act,
2013 Independent Directors shall not be liable to retire by
rotation and unless provided by the Articles of the Company at
least 2/3rd of the Non-Independent Directors should be liable
to retire by rotation. The Board is compliant with the provisions
of Section 152 of the Companies Act, 2013.
As per Clause 49(ii)(A) of the Listing Agreement, the
Company should have at least 33% Independent
Directors if the Chairman of the Board is a NonExecutive Director and should have at least 50%
independent directors if the Board Chairman is a
promoter or an executive director. The Board is
technically compliant with the Board composition
requirement of Listing Agreement, however as per SES
governance standards the board is non-compliant as
four independent directors are on board for more than
10 years. SES as good governance practice does not
consider directors associated with the Company more
than 10 years to be independent.
Chairman’s classification
Overall Independence
Company
SES
Company
4
ID
NID
75%
4
ID
NID
25%
Nomination & Remuneration
4
ID
NID
CSR
4
NEDP
Risk Management
3
ID
Committee
#
Audit
Stakeholders Relationship
Number of
Meetings
Attendance
< 75%
25%
9
0
0%
2
0
75%
25%
4
0
NEDP
25%
0%
4
0
ID
67%
33%
1
0
SES
Reference: ID – Independent director, NID – Non-Independent director, ED – Executive director, C – Chairman, P – Promoter, # - Number
of Members
TABLE 9 - BOARD GOVERNANCE SCORE
Criteria
What is the percentage of Independent Directors on the Board?
Response
Score
Maximum
21%
0
10
How many Independent Directors have tenure greater than 10 years?
4
4
10
How many Independent Directors have Shareholdings > ₹ 1 Cr?
0
5
5
Is the Chairman Independent?
No
0
10
Is there a Lead Independent Director?
No
0
10
0
10
10
Have all directors been elected by the Company's shareholders?
Yes
10
10
Are any directors on the Board related to each other?
Yes
0
10
6
9
15
Yes
10
10
48
100
How many Independent Directors are ex-executive of the Company?
How many promoter directors are on the Board?
Did Independent Directors meet atleast once without management?
Score
© 2012 | Stakeholders Empowerment Services | All Rights Reserved
5|P A G E
PROXY ADVISORY REPORT | FOR LIMITED CIRCULATION | REPORT RELEASE DATE: [DATE]
TABLE 8 - BOARD COMMITTEE PERFORMANCE
ASIAN PAINTS LIMITED
www.asianpaints.com
Meeting Date: 3rd July, 2015
Meeting Type: AGM
REMUNERATION ANALYSIS
TABLE 10 - EXECUTIVE DIRECTORS' REMUNERATION ANALYSIS
In ₹ Crores
2015
Fixed Pay
K. B. S. Anand
NP
3.70
2014
2013
Ratio
Total Pay Fixed Pay Total Pay Fixed Pay Total Pay
6.10
3.06
5.21
3.05
4.70
114.94:1
Note: Fixed pay includes basic pay, perquisites & allowances. P- Promoter, NP- Non- Promoter, Ratio- Ratio of ED's remuneration to Median
Remuneration of Employees
DISCUSSION - INDEXED TSR vs. EXECUTIVE REMUNERATION
₹ 4.70
300
200
₹ 6.10
343.29
220.15
100
0
2013
2014
7
6
5
4
3
2
1
0
2015
MD (RHS In Crores)
Indexed TSR (LHS)
Graph 3: Executive Compensation vs. Total Shareholders Return
₹ 6.10
₹ 0.00
Executive
Promoter
₹ 0.32
₹ 0.29
Non-Executive
Non-Promoter
Graph 4: Average director remuneration (In
Note: Indexed TSR (Total Shareholders Return) represents the value of ` 100 invested in the Company at beginning of a 5-year period
starting 1 April 2010. One period return is calculated as (Final Price – Initial Price + Dividend) / Initial Price.
TABLE 11- EXECUTIVE REMUNERATION - PEER COMPARISON
Director Name
Promoter Group
Remuneration (₹ Crore) (A)
Net Profits (₹ Crore) (B)
Rem. Percentage (A/B * 100)
Asian Paints
Berger Paints (2014)
Kansai Nerolac
Mr. Anand
Mr. Roy
Mr. Bharuka
No
No
No
6.10
1.07
4.45
1,327.40
234.25
271.67
0.46%
0.46%
1.64%
Remuneration practice at the Company appears to be fair without any bias in favour of promoters.
© 2012 | Stakeholders Empowerment Services | All Rights Reserved
6|P A G E
PROXY ADVISORY REPORT | FOR LIMITED CIRCULATION | REPORT RELEASE DATE: [DATE]
Indexed TSR
400
₹ 5.21
Director Remuneration
461.51
500
ASIAN PAINTS LIMITED
www.asianpaints.com
Meeting Date: 3rd July, 2015
Meeting Type: AGM
DISCLOSURES
DISCLOSURE REQUIRED IN DIRECTOR’S REPORT
☑
Corporate Social Responsibility Committee
Composition
☑
Risk Management Policy
☑
Corporate Social Responsibility Policy
☑
Performance evaluation of Board,
Committees and Directors
☑
Corporate Social Responsibility Activities
☑
Related Party Transactions
☑
Corporate Social Responsibility Spending
☑
Ratio of the remuneration of each director
to the median employees remuneration
☑
Extract of the Annual Return`
☑
Secretarial Audit Report
☐
Disclosure about re-appointment of
Independent Directors*
☑
Receipt of commission by a director from
the holding company or subsidiary company
☑
Company’s policy of appointment and
remuneration of directors, KMP and
employees
Criteria for determining qualifications,
positive attributes, director’s independence
☑
Declaration by Independent Directors
☑
Establishment of Vigil Mechanism
☑
Particulars of loans, guarantees or
investments
☐
Comments on qualifications made by
Statutory Auditors/ CS#
☑
* Not applicable, Independent directors already appointed for a term of 5 year in last AGM. # Not applicable, No qualification
made by Statutory Auditors/ Secretarial Auditors.
© 2012 | Stakeholders Empowerment Services | All Rights Reserved
7|P A G E
PROXY ADVISORY REPORT | FOR LIMITED CIRCULATION | REPORT RELEASE DATE: [DATE]
The Companies Act, 2013 requires the listed companies to make certain disclosures in Board’s Report. The table
below shows the status of compliance of such some important requirements, by the Company.
ASIAN PAINTS LIMITED
www.asianpaints.com
Meeting Date: 3rd July, 2015
Meeting Type: AGM
RESOLUTION ANALYSIS
RESOLUTION 1: ADOPTION OF ACCOUNTS
Adoption of the audited financial statements including audited consolidated financial statement of the Company
for the financial year ended 31st March, 2015 together with the reports of the Board of Directors and Auditors’
thereon.
SES RECOMMENDATION
This is a standard resolution. The Auditors have not raised any concern. No governance issues have been
identified. Therefore, SES recommends that shareholders vote FOR the resolution.
Note: Detailed analysis of the accounts is not within the scope of SES’ activities. SES accepts the Report of the Directors and
the Auditors to be true and fair representation of the company’s financial position. The analysis below is aimed at enabling
shareholders engage in discussions with the Board/ Management during the AGM.
AUDIT QUALIFICATIONS
The Auditors’ have not made any qualification in their Report.
AUDITORS’ COMMENTS ON STANDALONE ACCOUNTS
The Auditors' report states that in the opinion of the Auditors, the Company’s financial statements give financial
statements give the information required by the Act in the manner so required and give a true and fair view in
conformity with the accounting principles generally accepted in India, of the state of affairs of the Company as
at 31st March, 2015, and its profit and its cash flows for the year ended on that date.
AUDITORS’ COMMENTS ON CONSOLIDATED ACCOUNTS
The Auditors' report states that in the opinion of the Auditors, the Company’s consolidated financial statements
give the information required by the Act in the manner so required and give a true and fair view in conformity
with the accounting principles generally accepted in India, of the state of affairs of the Company as at 31st March,
2015, and its profit and its cash flows for the year ended on that date.
ACCOUNTING POLICIES
The Company has prepared its financial statements in accordance with generally accepted accounting principles
applicable in India under the historical cost convention on accrual basis. The accounting policies adopted in the
preparation of the financial statements are consistent with those followed in the previous year.
FINANCIAL INDICATORS
FY 14/15
Debtors Turnover
FY 13/14
Shift
Company’s Discussion
15.76
14.46
8.99%
-
6.37
6.19
3.03%
-
80.38
74.42
8.00%
The Company is debt free
Current Ratio
1.51
1.35
11.58%
Debt Equity Ratio
0.00
0.00
N.A.
Operating Profit Margin
19.01%
18.84%
0.90%
-
Net Profit Margin
11.56%
11.35%
1.82%
-
9.96%
13.31%
-25.19%
Inventory Turnover
Interest Coverage Ratio
Operating Cash Flow/ Sales
The Company is debt free
Not discussed by the Company
Source: Company’s Annual Reports
© 2012 | Stakeholders Empowerment Services | All Rights Reserved
8|P A G E
PROXY ADVISORY REPORT | FOR LIMITED CIRCULATION | REPORT RELEASE DATE: [DATE]
SES ANALYSIS
ASIAN PAINTS LIMITED
www.asianpaints.com
Meeting Date: 3rd July, 2015
Meeting Type: AGM
SES is of the opinion that board should take note of structural shift (positive and negative both) in various financial
parameters which have a bearing on company’s future performance and positioning in market place and disclose an analysis
of the same to shareholders. SES believes that 25% change either way should be the threshold for triggering analysis and
disclosure requirements.
CONTINGENT LIABILITIES
(All figures in ` Crore)
FY 14/15
Total contingent liabilities
Net worth of the Company
Contingent liabilities as a percentage of net worth
FY 13/14
148.65
324.18
4,230.26
3,600.93
3.51%
9.00%
Source: Company’s Annual Reports
Major portion of contingent liabilities is constituted by Tax matters.
RELATED PARTY TRANSACTIONS
FY 13/14
Shift
Comments
Loans, Advances and Deposits Given
0.00
16.56
N.A.
-
Bad & Doubtful Advances
0.00
0.00
N.A
-
Receivables
38.58
43.18
-10.65%
-
Payables
16.09
18.50
-13.03%
-
Royalty received
34.33
32.18
6.68%
Major from SCIB Chemicals
S.A.E., Egypt
Source: Company’s Annual Reports
The Company has issued letters of comfort to banks on behalf of some of its operating subsidiaries from time to time and the financial
support based on such letters is limited to ` 37.29 crores as on 31st March, 2015 (` 233.26 crores as on 31st March, 2014)
STANDALONE VS CONSOLIDATED ACCOUNTS
Standalone Accounts
(In ` Crore)
From Subsidiaries
Consolidated Accounts
Revenue
FY
14/15
11,486
FY
13/14
10,300
FY
12/13
8,921
FY
14/15
2,520
FY
13/14
2,281
FY
12/13
1,985
FY
14/15
14,005
FY
13/14
12,582
FY
12/13
10,906
Net Profit
1,327
1,169
1,050
68
50
64
1,395
1,219
1,114
Total Assets
7,273
6,720
5,648
1,639
1,358
1,141
8,912
8,078
6,789
Net Worth
net Profit %
/ Revenue
ROA
4,230
3,601
3,022
512
438
362
4,742
4,039
3,384
11.56%
11.35%
11.77%
2.69%
2.18%
3.22%
9.96%
9.69%
10.21%
18.25%
17.40%
18.59%
4.13%
3.66%
5.60%
15.65%
15.09%
16.41%
RONW
31.38%
32.47%
34.74%
13.23%
11.35%
17.64%
29.42%
30.17%
32.91%
Source: Company’s Annual Reports
Profitability and Return Ratios of Standalone accounts are far better compared to operations at subsidiaries. The Company must explain the
reasons to shareholder in next year’s Annual Report for better understanding of performance of the Company.
© 2012 | Stakeholders Empowerment Services | All Rights Reserved
9|P A G E
PROXY ADVISORY REPORT | FOR LIMITED CIRCULATION | REPORT RELEASE DATE: [DATE]
FY 14/15
Outstanding (` Crore)
ASIAN PAINTS LIMITED
www.asianpaints.com
Meeting Date: 3rd July, 2015
Meeting Type: AGM
RESOLUTION 2: DECLARATION OF DIVIDEND
Declaration of final dividend on equity shares.
SES RECOMMENDATION
This is a standard resolution. No concern has been identified. The Company has sufficient cash to pay the
dividend. SES recommends that shareholders vote FOR the resolution.
SES ANALYSIS
Dividend Payout Ratio - Peer Comparison
4.60
0
2013
Dividend (LHS)
51.23%
13.84
12.19
5.30
6.10
40%
20%
0%
2014
2015
EPS (LHS)
Payout (RHS)
Graph 5: Dividend Payout and EPS
8
Asian Paints
51%
6
4
Berger Paints
Kansai Nerolec
32%
38%
2
0
0
4
8
12
Earnings per share (`)
Graph 6: Dividend Payout Analysis
16
Dividend & EPS data for the year 2013 are adjusted according to stock split in the ratio of 1:10 in graph 5.
During FY 2014/15, the Company has paid interim dividend of ` 1.80 per equity share of ` 1 each. The Company
has recommended a final dividend of ` 4.30 per share. If approved, the total dividend (interim and final dividend)
for the financial year 2014-15 will be ` 6.10 per equity share of ` 1 each (` 5.30 per equity share of ` 1 each was
paid as total dividend for the previous year). The total cash outflows toward proposed dividend amount to `
698.07 crore (including dividend distribution tax of ` 112.95 crore). Previous year ` 590.39 crores including
corporate dividend tax of ` 82.02 crores. The Company has sufficient cash and cash equivalent to pay the
dividend.
© 2012 | Stakeholders Empowerment Services | All Rights Reserved
10 | P A G E
PROXY ADVISORY REPORT | FOR LIMITED CIRCULATION | REPORT RELEASE DATE: [DATE]
5
10.95
50.53%
Dividend per share (`)
10
48.83%
60%
Dividend payout ratio
Dividend and EPS (Rs)
Dividend and Earnings
15
ASIAN PAINTS LIMITED
www.asianpaints.com
Meeting Date: 3rd July, 2015
Meeting Type: AGM
RESOLUTION 3, 4 & 6: APPOINTMENT/REAPPOINTMENT OF NON-EXECUTIVE DIRECTORS
# 3: Re-appointment of Shri Ashwin Choksi as a Director of the Company
•
Liable to retire by rotation
# 4: Re-appointment of Shri Ashwin Dani as a Director of the Company.
•
Liable to retire by rotation
# 6: Appointment of Shri Abhay Vakil as a Non-Executive Director of the Company.

Liable to retire by rotation
SES RECOMMENDATION
No concern has been identified with respect to profile or performance of Mr. Choksi, Mr. Dani and Mr. Vakil. SES
recommends that shareholders vote FOR all the three resolutions.
DIRECTOR’S PROFILE
Criteria
Current full-time position
Functional Area
Mr. Choksi
None
Mr. Dani
None
Industry Specialist
Industry Specialist
Education
Past Experience
Committee positions in
the Company
Retirement by rotation?
Part of promoter group?
SES’ Recommendation
Mr. Vakil
None
Supply chain &
Marketing
Yes
B.Sc., B.Sc. (Tech), M.S
in Polymer Science, &
Dip. in Colour Science
Yes
SC (M)
NR(M), SC(C)
A(M), SC(M)
Yes
Yes
FOR
Yes
Yes
FOR
Yes
Yes
FOR
M.Com
B.Sc. B.S.
Yes
A – Audit Committee, NR – Nomination & Remuneration Committee, SC- Shareholders Committee, M – Member, C - Chairman
DIRECTORS’ TIME COMMITMENTS: NO CONCERN
Criteria
Total Directorships
Total Committee memberships
Total Committee Chairmanship
Full time role/ executive position
Mr. Choksi
1
0
0
0
Mr. Dani
7
4
1
0
Mr. Vakil
4
3
2
0
Note: committee memberships include committee chairmanships
DIRECTORS’ PERFORMANCE: NO CONCERN
Attendance record
Last 3 AGMs
Board meetings held last year
Board meetings in last 3 years (avg.)
Mr. Choksi
3/3
86%
95%
Mr. Dani
3/3
100%
95%
Mr. Vakil
2/2
71%
82%
Mr. Vakil resigned from the board on 23rd September, 2013, and was appointed again on 22nd July, 2014 and is
seeking fresh appointment in the ensuing AGM.
© 2012 | Stakeholders Empowerment Services | All Rights Reserved
11 | P A G E
PROXY ADVISORY REPORT | FOR LIMITED CIRCULATION | REPORT RELEASE DATE: [DATE]
SES ANALYSIS
ASIAN PAINTS LIMITED
www.asianpaints.com
Meeting Type: AGM
Meeting Date: 3rd July, 2015
DIRECTOR’S REMUNERATION
PROXY ADVISORY REPORT | FOR LIMITED CIRCULATION | REPORT RELEASE DATE: [DATE]
The remuneration paid to Mr. Choksi, Mr. Dani and Mr. Vakil is aligned with the remuneration paid to the other
non-executive directors. No concern has been identified.
© 2012 | Stakeholders Empowerment Services | All Rights Reserved
12 | P A G E
ASIAN PAINTS LIMITED
www.asianpaints.com
Meeting Date: 3rd July, 2015
Meeting Type: AGM
RESOLUTION 5 & 7: APPOINTMENT OF AUDITORS AND RATIFICATION OF COST AUDITORS REMUNERATION
#5: Appointment of M/s B S R & Co. LLP, Chartered Accountants as the Statutory Auditor of the Company to hold
office from the conclusion of this AGM till the conclusion of the next AGM and fixing their remuneration.
#7: Ratification of remuneration payable to M/s. RA & Co., Cost Accountants Cost Auditor of the Company for
the financial year ending 31st March, 2016
# 5: The current Auditors, M/s B S R & Co. LLP, have been associated with the Company for 8 years. Provisions
of the Companies Act, 2013 (The Act) state that Auditors should not have tenure of over 10 years. Although the
Act and the Rules thereunder provide a transition period of 3 years in certain cases, the provisions of Section
139(1) of the Act mandate the appointment of Auditors for a term of 5 years, unless 5 year term will exceed the
total tenure of Auditors 10 years. In such cases, section 139(2) and Rules made thereunder provide transitory
provisions allowing maximum transit period of three years. SES is of the opinion that the transitory provision is
one time provision and 139(2) does not restrict or override operation of section 139(1). In nut shell, transitory
provision (if the tenure of the auditors is > 8 years) has to be used in one shot for up to three years and not in
installments of 1 year each, as it will violate spirit of section 139(1). The Company had appointed M/s B S R &
Co. LLP for a term of one year in last AGM concluded on 26 th June, 2014 under section 139(2). SES is of the
opinion that the use transitory provision is not available to the Company again. Further, current appointment
for one year will result in violation of provisions of Section 139(1) of the Companies Act, 2013. Therefore SES
recommends that shareholders vote AGAINST the resolution. Further, the new Auditors should be appointed
for a period of 5 years (in accordance with the Companies Act, 2013). The Company had appointed the M/s B S
R & Co. LLP for a term of one year in last AGM concluded on 26th June, 2014.
# 6: No concern has been identified in relation to approval for payment of Cost Auditors remuneration for FY
2016. SES recommends that shareholders vote FOR the resolution
SES ANALYSIS
DISCLOSURES
Name of the auditor up for appointment
Auditors’ eligibility for appointment
Auditors’ independence certificate
Auditor’s Network
M/s B S R & Co. LLP, Disclosed in notice and annual report
Disclosed
Disclosed
KPMG
AUDITORS’ INDEPENDENCE
Auditors
M/s B S R & Co. LLP
Audit Partners
Tenure: 8 years
Bhavesh Dhupelia
Tenure: 2 years
Financial interests in or association with the company: Not disclosed
© 2012 | Stakeholders Empowerment Services | All Rights Reserved
13 | P A G E
PROXY ADVISORY REPORT | FOR LIMITED CIRCULATION | REPORT RELEASE DATE: [DATE]
SES RECOMMENDATION
ASIAN PAINTS LIMITED
www.asianpaints.com
Meeting Date: 3rd July, 2015
Meeting Type: AGM
AUDITORS’ REMUNERATION
Auditors' Remuneration
FY14/15
4%
30%
26%
70%
65%
FY13/14
Audit
Audit-Related
Non Audit
Graph 7: Remuneration Components
1.20
1.13
1.02
0.96
1.00
0.80
0.60
0.40
0.42
0.44
0.40
0.20
0.05
0.07
0.08
0.00
FY 12/13
FY 13/14
Audit Fee
Audit Related Fee
FY 14/15
Non Audit Fee
Graph 8: Historical Trends in Auditors' Remuneration
TERM OF APPOINTMENT
The current Auditors, M/s B S R & Co. LLP, have been associated with the Company for 8 years. Provisions of the
Companies Act, 2013 (The Act) state that Auditors should not have tenure of over 10 years. Although the Act
and the Rules thereunder provide a transition period of 3 years in certain cases, the provisions of Section 139(1)
of the Act mandate the appointment of Auditors for a term of 5 years, unless 5 year term will exceed the total
tenure of Auditors 10 years. In such cases, section 139(2) and Rules made thereunder provide transitory
provisions allowing maximum transit period of three years. SES is of the opinion that the transitory provision is
one time provision and 139(2) does not restrict or override operation of section 139(1). In nut shell, transitory
provision (if the tenure of the auditors is > 8 years) has to be used in one shot for up to three years and not in
installments of 1 year each, as it will violate spirit of section 139(1). The Company had appointed M/s B S R &
Co. LLP for a term of one year in last AGM concluded on 26th June, 2014 under section 139(2). SES is of the
opinion that the use transitory provision is not available to the Company again. Further, current appointment
for one year will result in violation of provisions of Section 139(1) of the Companies Act, 2013.
COST AUDITOR REMUNERATION
The Board, on recommendation of the Audit Committee, has appointed M/s. RA & Co., as the Cost Auditors of
the Company to conduct Audit of cost records of the Company for the year ending 31 st March, 2016.
In terms of Section 148 read with Rule 14 of The Companies (Audit and Auditors) Rules, 2014, board is required
to appoint cost auditors on the recommendation of the Audit Committee. Further, the remuneration to the cost
auditors is to be approved by the board (on the recommendation of the audit committee) and is also required
to be ratified subsequently by the shareholders.
M/s. RA & Co. have not furnished a certificate regarding their eligibility for appointment as Cost Auditors of the
Company. The Board has recommended the remuneration of ` 4.50 lakhs excluding service tax and out-ofpocket expenses to M/s. RA & Co., as the Cost Auditors and Company seeks the approval of the shareholders for
the same by an Ordinary Resolution. No concern has been identified in this regard.
© 2012 | Stakeholders Empowerment Services | All Rights Reserved
14 | P A G E
PROXY ADVISORY REPORT | FOR LIMITED CIRCULATION | REPORT RELEASE DATE: [DATE]
5%
Audit fee (in ₹ Cr)
Remuneration components
ASIAN PAINTS LIMITED
www.asianpaints.com
Meeting Date: 3rd July, 2015
Meeting Type: AGM
DISCLAIMERS
Sources
Company Information
Only publicly available data has been used while making the report. Our
data sources include: BSE, NSE, SEBI, Capitaline, Moneycontrol,
Businessweek, Reuters, Annual Reports, IPO Documents and Company
Website.
SEBI Reg. No. INH000000016
Analyst Certification
CAUTIONARY STATEMENT
The recommendations made by SES are based on publicly available
information and conform to SES's stated Proxy-Advisory Guidelines.
Further, SES analysis is recommendatory in nature. SES understands the
different investment needs of our clients. Therefore, SES expects that the
clients will evaluate the effect of their vote on their investments
independently and diligently and will vote accordingly. Subscribers may
also carry out an impact analysis of their votes and keep the same as an
addendum for their records. In our opinion, Institutional investors are
positioned significantly differently from other shareholders due to their
ability to engage the board and the management to bring out desired
result. As a firm, it is our endeavour to improve the level of corporate
governance while not causing any disruption in company's proceedings
and therefore we respect the independence of investors to choose
alternate methods to achieve similar results.
This Report or any portion
hereof may not be reprinted,
sold,
reproduced
or
redistributed
without
the
written consent of Stakeholders
Empowerment Services
Contact Information
Stakeholders Empowerment
Services
Disclaimer
A 202, Muktangan,
Upper Govind Nagar,
Malad East,
Mumbai – 400 097
Tel +91 22 4022 0322
research@sesgovernance.com
info@sesgovernance.com
www.sesgovernance.com.
While SES has made every effort and has exercised due skill, care and
diligence in compiling this report based on publicly available information,
it neither guarantees its accuracy, completeness or usefulness, nor
assumes any liability whatsoever for any consequence from its use. This
report does not have any approval, express or implied, from any authority,
nor is it required to have such approval. The users are strongly advised to
exercise due diligence while using this report.
This report in no manner constitutes an offer, solicitation or advice to buy
or sell securities, nor solicits votes or proxies on behalf of any party. SES,
which is a not-for-profit Initiative or its staff, has no financial interest in
the companies covered in this report except what is disclosed on its
website.
The report is released in India and SES has ensured that it is in accordance
with Indian laws. Person resident outside India shall ensure that laws in
their country are not violated while using this report; SES shall not be
responsible for any such violation.
All disputes subject to jurisdiction of High Court of Bombay, Mumbai
© 2012 | Stakeholders Empowerment Services | All Rights Reserved
15 | P A G E
PROXY ADVISORY REPORT | FOR LIMITED CIRCULATION | REPORT RELEASE DATE: [DATE]
The analysts involved in development of this report certify that no part of
any of the research analyst’s compensation was, is, or will be directly or
indirectly related to the specific recommendations or views expressed by
the research analyst(s) in this report.