Dear Members,

The Board of Directors hereby present their 68th report on the business and operations of your Company along with the audited financial statements for the financial year ended 31 March 2022.

Business Environment and Outlook

Although the year witnessed two waves of Covid-19, the industry was able to stage a strong comeback with supportive economic environment, fast pace of vaccination, and improving consumer sentiment.

While Paints & Coatings industry has always been at the forefront of innovations, the pandemic has further accelerated advancement in technology, usage, services and aesthetics. During the year, the decorative paints industry further expanded its offerings under health & wellness proposition, increased breadth in adjacent spaces and improved consumer experience.

After softened demand due to the pandemic, the real estate market has been on an upswing since the second half of the previous year. Sustained infrastructure investments, increased connectivity, and better job opportunities are fuelling broad-based real estate growth. This has translated into strong double-digit growth for the Projects business.

Infrastructure development remains a government priority in the medium term. The National Infrastructure Pipeline (‘NIP’), which has launched many projects in core sectors like power, roads, railways, and urban projects is a beneficiary trend for Industrial Coatings which find applications in all these sectors.

There has been significant inflation in crude derivatives and critical raw materials like titanium dioxide and monomers. While the industry has taken price increases, the cost inflation has softened margins of the industry players.

Subsidiary

Pursuant to section 129(3) of the Act read with rule 5 of the Companies (Accounts) Rules, 2014, and other applicable provisions, if any, of the Companies Act 2013 (‘the Act’), a statement containing salient features of the financial statement of the subsidiary of the Company viz. ICI India Research & Technology Centre, viz. Form AOC-1 forms part of this Annual Report. The consolidated financial statements presented in this annual report include financial results of the subsidiary pursuant to Rule 8(1) of the Companies (Accounts) Rules, 2014.

In accordance with section 136 of the Act, the financial statements of the subsidiary are available for inspection by the members at the registered office of the Company during business hours on all days up to the date of the Annual General Meeting (‘AGM’). Members are requested to email a request for obtaining a copy of the said financial statements at investor.india@akzonobel.com so that necessary arrangements can be made at the registered office of the Company. The financial statements including the Consolidated Financial Statement and all other documents required to be attached to this report have been uploaded on the website of the Company at www.akzonobel.co.in.

Share Capital

The paid-up share capital of the Company as on 31 March 2022 was H 455.40 million comprising 45.54 million equity shares of H 10 each (Previous year H 455.40 million comprising 45.54 million equity shares of H 10 each).

Dividend

The Board of Directors at its meeting held on 11 February 2022, approved payment of interim dividend of H 40 per equity share. This dividend was paid on 7 March 2022 to those shareholders whose name was registered in the Register of Members as on 23 February 2022, being the record date. Your Directors are pleased to recommend a Final Dividend of H 35 per equity share for the year ended 31 March 2022 in light of India's 75th anniversary of Independence. The Final Dividend, subject to the approval of Members at the Annual General Meeting on 5 August 2022, will be paid to those Members whose names appear in the Register of Members, as on the record date 29 July 2022. The total dividend for the financial year, including the proposed Final Dividend, amounts to H 75 per equity share.

In view of the changes made under the Income-tax Act, 1961, by the Finance Act, 2021, dividends paid or distributed by the Company shall be taxable in the hands of the Shareholders. Your Company shall, accordingly, deduct tax, if any, before making dividend payments.

The Company is in compliance with its Dividend Distribution Policy as approved by the Board. In compliance with the requirements under Regulation 43A of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 (Listing Regulations), the Policy has been uploaded on the Company's website at www. akzonobel.co.in and may be accessed from www.akzonobel. co.in/corporate-governance.php#policy.

Transfer to Reserve

During the financial year, there was no amount transferred to the Reserves.

Financial Statements

The financial statements include:

1. Standalone financial statements of the Company, Akzo Nobel India Limited; and

2. Consolidated financial statements of the Group including the operational results of ICI India Research & Technology Centre, on which the Company exercises effective control.

The highlights of the performance during the year are:

(H million)

*before exceptional items

There is no significant change (i.e. change of 25% or more as compared to the immediately previous financial year) in the key financial ratios except for Return on Networth, which was increased from last year as the net profit during the year increased by 40%.

2021-22 was a year of strong progress on our Grow & Deliver ambitions. Your company achieved its highest revenue till date with 30% YoY growth. This was underpinned by strong double-digit growth across all the businesses. Decorative Paints growth was led by launches, urban markets and Projects business. Customer-centric solutions for infrastructure, power, mining, automotive industries resulted in good order books for Coatings business. With access to global R&D technology, your Company continues to focus on innovations by bringing best in class differentiated products to the Indian consumer. Raw material inflation continued to adversely impact Gross Margins. However, your company implemented judicious price increases, which helped to safeguard margins. This in conjunction with opex management helped your company achieve its highest profitability till date. We are also proud to have sustained double-digit profitability for three consecutive years.