The Board of Directors hereby present their 69^th report on the business and operations of your Company along with the audited financial statements for the financial year ended 31 March 2023.

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.

There is no significant change (i.e. change of 25% or more as compared to the immediately preceding financial year) in the key financial ratios except for Interest Coverage ratio, which has improved on account of increase in Operating Profit and lower Finance Cost.

In the financial year 2022-23, Company achieved remarkable performance, surpassing all previous records and showcasing robust growth across all key metrics. Despite facing challenges arising from cost inflation and currency fluctuations, we successfully delivered double-digit revenue growth (21%) and sustained profitability for the fourth consecutive year. This outstanding performance is a testament to our resilient business model.

The Decorative Paints segment witnessed notable growth driven by strategic product launches, strong traction in urban markets, and a thriving projects business. Our focus on understanding consumer preferences and delivering innovative solutions contributed to this success. Furthermore, the Coatings business experienced robust demand in key sectors such as infrastructure, power, mining, and automotive industries, enabling growth and market share expansion.

To maintain our competitive edge, we continue to leverage global R&D and technologies, ensuring a steady stream of innovative products tailored specifically for the Indian market.

Our commitment to innovation remains unwavering as we strive to bring differentiated and value-added solutions to meet the evolving needs of our consumers.

Dividend

The Company is following a Dividend Distribution Policy as approved by the Board while distributing profits to its shareholders. 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 Dividend Distribution Policy has been uploaded on the Company's website and can be accessed from https:// akzonobel.co.in/pdf/policy/Dividend-Distribution-Policy.pdf.

The Board of Directors at its meeting held on 9 February 2023, approved payment of interim dividend of H25 per equity share. This dividend was paid on 6 March 2023 to those shareholders whose names were appearing in the Register of Members as on 21 February 2023, being the Record Date. Your Directors are pleased to recommend a Final Dividend of H40 per equity share for the year ended 31 March 2023 in addition to the interim dividend paid during the financial year 2022-2023. The Final Dividend, subject to the approval of Members at the Annual General Meeting scheduled on 3 August 2023, will be paid to those Members whose names appear in the Register of Members, as on 27 July 2023 (Record Date). The total dividend for the financial year, including the proposed Final Dividend, amounts to H65 per equity share.

Pursuant to the provisions of the Income-tax Act 1961, dividend income is taxable in the hands of the Shareholders and the Company is required to deduct tax at source from such dividend at the prescribed rates. A communication providing detailed information and instructions with respect to tax on the Final Dividend for the financial year ended 31 March 2023 is being sent separately to the Shareholders. Company shall, accordingly, deduct tax, as applicable, before making dividend payments.

Transfer to Reserves

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

Business Environment & Outlook

The Paints & Coatings industry's prospects are intricately connected to the overall growth of the country's economy, which is influenced by several factors including income levels, industrial production, and infrastructure development. While

the industry faces potential risks stemming from fluctuating crude prices, macro-economic environment, and inflationary pressures, the overall outlook remains promising. This optimism is fuelled by India's projected medium-term growth rate of 6-7%, which sets a favorable backdrop for the industry's expansion and development. By focusing on innovation, customer-centric strategies, and leveraging its strengths, the Company is well-positioned to capitalize on the anticipated growth opportunities and overcome potential challenges.

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 2023 was H455.40 million comprising 45.54 million equity shares of H10 each (Previous year H455.40 million comprising 45.54 million equity shares of H10 each).

Management Discussion and Analysis

Industry structure and developments

Paints & Coatings industry in India encompasses a diverse range of products and applications, catering to architectural and industrial segments. With a strong emphasis on aesthetics, protection, and sustainability, the industry plays a crucial role in enhancing the visual appeal and longevity of surfaces across these segments. The size of the industry is estimated to grow from H62,000 crores to H1 lakh crore in the next five years.

Architectural segment dominates the industry, accounting for approximately 69% of the paint consumption on a volume basis. This segment primarily caters to the needs of residential, commercial, and institutional constructions, as well as repainting and renovation projects.

Industrial segment represents the remaining 31% of the paints & coatings consumed in the country. This segment has been witnessing a growing share due to multiple factors. The industrial sector's robust growth, coupled with strong fundamentals of consumer durables, automobiles, and allied industries, has fuelled the demand for industrial coatings. These coatings find applications in sectors viz. automotive, infrastructure, machinery and equipment, functional and domestic appliances, packaging, etc.

Digitalization and technology adoption have emerged as game-changers in the industry. Companies are leveraging digital platforms and tools to streamline operations, enhance customer

experience, and optimize supply chain management. From online color selection tools to virtual reality simulations for visualizing paint finishes, technology is revolutionizing how consumers interact with paints and coatings.

As the industry moves forward, sustainability, innovation, and digitalization are expected to remain key focus areas. Manufacturers will continue to explore new raw materials, improve application techniques, and introduce cutting-edge solutions to address emerging challenges and meet the ever-evolving demands of customers.

During the financial year 2022-23, the Paints & Coatings industry experienced a favorable development with the softening of raw material prices from their previous highs. As raw materials account for approximately 55-60% of the input costs, price corrections in crude oil and other essential components resulted in improved margins for the industry.

Paints & Coatings industry has emerged as an attractive sector, as indicated by the entry of several new players in recent times. These new entrants are actively investing in infrastructure, technology, and marketing to establish their presence and capture a share of the market. This heightened competition has prompted existing players to further bolster their capabilities and differentiate themselves in order to maintain their market position, leading to a surge in investment activity within the industry.

Business Performance Decorative Paints

2022-23 summary

Decorative paints, which include interior and exterior paints, enamels, and varnishes, play a crucial role in enhancing the appearance and protecting surfaces in residential, commercial, and industrial buildings.

With a rapidly expanding urban population and increasing disposable incomes, demand for aesthetically pleasing and visually appealing living spaces has soared. India's diverse cultural heritage and preference for vibrant colors have further fuelled the demand for decorative paints in the country. The government's emphasis on infrastructure development and the growing real estate sector are also driving the demand for decorative paints.

Your Company's Decorative Paints business offers a wide variety of essential products for every situation and surface, including paints, lacquers and varnishes. The business also supplies a range of tinting machines, color concepts and training initiatives to the building and renovation industry.

Digital delight

Two startups - HyperReality Technologies and Fluid AI - won our Paint the Future India awards and will work with us to enhance the digital consumer experience for Dulux paints in India.

2022-23 summary

Delivering cutting-edge coating solutions to a variety of industries, our Automotive and Specialty Coatings (‘ASC') in India comprises of Automotive OEM Coatings, Consumer Electronics Coatings, Vehicle Refinishes and Specialty Coatings.

The business had a strong year of performance as a result of robust brand performances, increased market penetration, a surge in customer acquisitions, and the overall expansion of the automobile industry. These achievements were attained despite certain supply chain disruptions and raw material inflation.

The Indian passenger vehicle industry demonstrated significant progress, producing approximately 3.6 million units, representing an impressive 20% growth. This development further contributed to Automotive and Specialty coatings growth, particularly in the Auto Interior and Vehicle Refinish segments.

Gaining foothold in mid-market

Wanda, our reliable international brand is addressing the retail demand in India's refinish market, supported by widespread demand creation and product demonstration initiatives at retail garage cluster tiers. Also aiding the robust volume growth were engagement with channel associates, fresh geographic growth, and painter loyalty schemes.

More sustainable basecoat gaining traction

Sikkens Autowave 2.0 - a waterborne basecoat - has performed exceptionally well within the Original Equipment Manufacturers (OEM) Authorized Dealerships bodyshop segment. Based on our latest waterborne approval profile, we have now achieved a 100% conversion for all Hyundai India bodyshops across India from solvent basecoat to Sikkens waterborne basecoat.

Re-energized distribution

With a strong growth ambition in the Indian market, our value brands - Wanda, Duco and Autostar - are now transitioning to a distribution model as a route-to-market change to enhance our numeric reach and cater to demand beyond Tier I and metro geographies.

2022-23 summary

Our Powder coatings are a first-class and sustainable alternative to liquid paint. These find application in architecture, general industries, automobiles, functional and domestic appliances.

The Powder Coatings market in India is projected to grow at a CAGR of approximately 6% from 2022 to 2026. This growth is primarily driven by industrial and automotive OEMs transitioning to sustainable options and the architectural sector, particularly commercial and middle-income residential segments, emphasizing the adoption of higher-quality products.

We are experiencing growth in the Electric Vehicle (EV) sector and Domestic Appliance market, driven by the Make in India initiative. Supportive policies for infrastructure development, including airports and metro projects, are expected to boost the demand for powder coatings in the coming years.

Despite raw material cost inflation over last 2 years and supply disruptions in the post-covid era, Interpon & Resicoat powder coatings have delivered growth and continue to witness strong demand from the industrial & automotive OEMs.

Low E update

Updated our Interpon Low E product range, for sustainably minded businesses seeking greater energy efficiencies.

A sparkling performance: guaranteed

We have strengthened our leading position to remain as innovator in the powder coatings market in India through our strategic capacity investment in the production of metallics range of powder coatings through bonded technology in 2022.

2022-23 summary

Serving the buildings and infrastructure industries, consumer goods, the Industrial Coatings business includes Coil and Extrusion Coatings, Packaging Coatings, and Wood Finishes and Adhesives.

Coil and Extrusion Coatings provides high performance coatings to the metal construction industry including roofing, building construction, aluminium composite panels (‘ACP') and Domestic Appliance (‘DA') segment.

The coated steel market in India benefited from government infrastructure initiatives and private sector capital expenditure. Extrusion and ACP coatings, catering to Aluminium facades, door and window frames, and high-end infrastructure, experienced significant growth due to projects such as airports, metro construction, high-speed rail, and high-rise buildings.

However, the export segment was impacted by the slowdown in developed countries and the imposition of export duties. Although the removal of these duties in November did not lead to significant improvement as global steel prices declined.

In the coming year, demand for coil coatings is expected to remain robust with the government receiving multiple entries with an investment potential of more than H42,500 crore under the PLI scheme to boost specialty steel production in the country.

Our key focus in the coming years would be to launch robust and sustainable products, like Animal Husbandry, Chrome-free primer offerings, new functional and aesthetic finishes for our topcoats.

Packaging Coatings provide coatings and inks for the metal packaging industry including Food, Caps & Closures, General Line and Beer & Beverage industry.

The business faced softened demand particularly in the Aerosol and Monobloc segments, which are more discretionary in nature. However, demand for seasonal crop packaging remained steady for exports to Europe, USA, and the Middle East.

A significant portion of edible oil and fat packaging moved to other retail packaging formats due to pricing pressures. Although demand remained conducive for Beer and Beverage segments for both domestic and export markets.

2022-23 summary

This business is about protecting and beautifying assets, both in and out of water. Through our flagship ‘International' brand, Marine & Protective Coatings find applications in a variety of end-industries including Oil & Gas, Power, Infrastructure projects and Wind Energy.

The Marine Coatings market is witnessing strong demand for drydocks and sea-stores supply. The Make in India initiative is expected to drive new build requirements, leading to new projects in Indian shipyards and drydock opportunities at key ports worldwide.

The Protective Coatings industry is projected to grow at a CAGR of approximately 7% from 2023 to 2026. This growth will be driven by major infrastructure investments, including airports, commercial buildings, ports, shipping, waterways, and power generation (renewable and thermal). Increased investment in data centers is also fuelling the demand for passive fire protection solutions. The Oil & Gas, Chemicals, and mining sectors are experiencing increased capital expenditure, further boosting demand. The market is shifting towards sustainable coatings, low VOC emitting paint solutions, and water-based paints. We are committed to developing new technologies that support our customers in a sustainable manner.

Sustainable solutions

Product stewardship is our commitment to ensuring product safety and considering sustainability aspects throughout the entire value chain, from raw material extraction and R&D to manufacturing, transport, marketing, and application.

To determine the sustainability value we provide to our customers, we utilize the Sustainable Product Portfolio Assessment (‘SPPA') framework, which we have developed in collaboration with other chemical companies and the World Business Council for Sustainable Development (‘WBCSD'). This framework offers a comprehensive view of the sustainability characteristics of our product portfolio.

Our products are categorized into three groups: Sustainable Solutions, Performers, and Transitioners.

In 2020, we set a target to generate over 50% of our revenue from sustainable solutions by 2030. Currently, approximately 30% of our revenue is derived from sustainable solutions.

We are not only focusing on our eco-premium solutions that offer superior sustainability benefits compared to mainstream alternatives but also on all solutions that bring sustainability advantages to our customers.

Our innovative products exemplify our commitment to sustainability, from Dulux Weathershield with SunReflect technology that reduces surface temperature by up to 5 degrees, to Intersleek 1100SR, which improves shipping vessel performance while being biocide-free. Our Interpon D technology enhances architectural longevity, and products like Dulux Better Living provide antibacterial properties and durability for asset beautification.

We believe that sustainability and innovation go hand in hand for a better tomorrow. With two state-of-the-art R&D centers in Mumbai and Bengaluru, equipped with world-class facilities and talented professionals, we are well-equipped to develop an innovation roadmap for years to come.

Our key focus areas

Our key focus areas revolve around building a sustainable business for long-term value creation, benefiting all our stakeholders. Currently, we are placing our focus on the following strategic areas:

• Margin Management: We aim to maintain and expand our margins by effectively holding on to pricing gains.

• Operating Expense (OPEX): We are actively adjusting our cost base to align with market realities, ensuring efficient expense management.

• Working Capital: Our focus is on reducing working capital to enhance cash flow and improve overall financial stability.

• Integrated Supply Chain: We are dedicated to enhancing demand planning and resolving supply chain issues to achieve a streamlined and efficient supply chain process.

Internal Control Systems

The Company has implemented internal control systems that are tailored to the nature of its business and the scale and complexity of its operations. Our robust internal control framework allows us to stay ahead of evolving challenges and changing risk profiles, enabling us to achieve predictable and desired outcomes. We have established necessary policies and procedures to safeguard assets, prevent and detect frauds/errors, to ensure the orderly and efficient conduct of our business.

These Internal Financial Controls are designed at both the entity and process levels in accordance with the requirements of the Companies Act, 2013. Regular testing and review of the internal control systems are conducted at specified intervals, covering major processes across our offices and sites. The effectiveness of these internal financial controls is assured through management reviews, self-assessment, and independent testing by the Statutory Auditors. Any audit observations and subsequent actions are reported to the Audit Committee, which evaluates the adequacy and effectiveness of the Company's internal control environment and monitors the implementation of audit recommendations, including those related to strengthening the Company's risk management policies and systems.

Our Company is dedicated to upholding the highest standards of ethics and compliance throughout our business processes.

We utilize robust IT tools to drive and enforce compliance across various areas. As required under the listing regulations, the Board of Directors periodically reviews the compliance report pertaining to all applicable laws for the entity.

Furthermore, the Board has established a Risk Management Committee with clearly defined roles and responsibilities. The committee is entrusted with the responsibility of monitoring the execution of the risk management plan and providing updates to the Board on a regular basis.

Risks and Opportunities

(a) Risks and Concerns

Risk management plays a crucial role in corporate governance and strategy development. We recognize that risk assessment and mitigation are ongoing processes that must adapt to the evolving risk landscape, encompassing short-term, medium-term, and long-term challenges.

At AkzoNobel, we believe that implementing systematic risk management practices is essential for effectively navigating towards our business objectives and ensuring sustainable growth in a volatile and complex environment. These risks continually evolve and change, both in terms of their impact and the likelihood of their occurrence.

We understand the importance of operating within the dynamics of the paints and coatings industry and taking calculated risks to maintain our relevance in the market.

Our responsible management teams and functional experts identify risks, followed by the formulation of appropriate mitigating actions.

Through our risk management framework, we strive to provide reasonable assurance that our business objectives can be achieved, and our obligations to various stakeholders can be fulfilled. The Board oversees the implementation of risk mitigation measures for key risks, as identified by the Risk Management Committee, which meets at least twice a year. Additionally, the Audit Committee provides additional oversight in the realm of financial risks and controls.

Company's policy on Risk Management is available on Company website www.akzonobel.co.in and can be accessed from https://akzonobel.co.in/pdf/policy/ RiskManagementPolicy.pdf.

Human Resources

We endeavor to lead our industry by spearheading a world of possibilities to engage individuals and decrease our impact on planet, while reliably developing to convey the most supportable answers for our clients. People being our most significant resource, we strive to give them an ideal workplace to engage, develop and grow. At the end of FY 2022-23, we had 1,494 Full time Employees (FTEs) of which 165 were women.

The following are our key areas of focus in line with our purpose:

D&I: Overview & Achievements

Your Company prioritizes diversity and inclusion (‘D&I'), ensuring that all employees feel valued. Our Diversity and Inclusion program focuses on investing in our people, attracting top talent, and fostering individual growth. We understand that retaining talent is crucial, and we continuously improve our processes to support their development. Through our D&I efforts, we aim to create an inclusive culture that enhances competitiveness and innovation. Whether it is recruitment, promotion, talent management, or performance, we strive to build a culture where everyone can excel and support each other's success.

Here are some notable achievements:

• Diversity representation (Women as % of FTEs) has increased from ~8.5% to ~11% in the last year;

• Creating awareness through Unconscious bias workshops to enable inclusion;

• Mentoring program for Women/ Launching Coaching Circles;

At present, we have three networks and a committee, all of which fall under our Diversity and Inclusion umbrella: Women Inspired Network, True Colours Network and the Diverse Abilities committee. As an organization we truly believe and work towards creating an inclusive environment for our employees and providing equal opportunities to shape a high-performance culture where people grow, collaborate, feel included, adapt quickly, and deliver with pride on our promises.

Employee Engagement

Your Company fosters a culture that maximizes human potential through a leadership focus on employee development and wellbeing. We firmly believe that our people are the most valuable asset of the organization.

Our workplace principles of Employee Engagement revolve around the 4 Cs - Care, Connect, Capability and Culture. We encourage transparent communication within and across teams in the organization - ensuring that everyone is aligned towards the common objectives. This approach cultivates and increases trust and helps create and foster collaboration, not just within the organization in our region, but also globally. We also propagate creating a culture of learning within the organization, that fosters constructive debates and out of the box thinking, leading to innovation and continuous success in the business, despite the numerous constraints and challenges.

Apart from Care, Connect, and Capability, we also have great focus on creating a fun and engaged environment for employees and their families.

Employee Wellness

Employee well-being, both physical and mental, is a core focus for us. We offer high-standard medical care policies and benefits, which serve as our unique selling point (USP). Our initiatives include prompt time off, OPD claims, voluntary medical top-up, and a comprehensive WeCare program designed to support the overall well-being of our employees.

Capability Building

The Capability building agenda is focused on several talent management programs for different talent segments. The overall framework for all the identified leadership development or talent management program remains aligned to the AkzoNobel framework of Align - Execute - Renew.

In both global and regional talent programs, numerous employees from different functions participated as emerging talent from Akzo

It is hereby affirmed that the remuneration to managerial personnel referred to above is as per the remuneration policy of the Company.

Notes:

1. The aforesaid details are calculated on the basis of remuneration paid for the financial year 2022-23.

2. Median remuneration in the Company (Base Salary) for all its employees was H0.92 million for the financial year 2022-23.

3. Remuneration to Directors includes sitting fees paid to them for the financial year 2022-23.

4. Remuneration to Directors is within the overall limits approved by the shareholders.

Corporate Governance

Maintaining high standards of Corporate Governance has been fundamental to the business of your Company since its inception. In compliance with Regulation 34 read with Schedule V of the Listing Regulations, a Report on Corporate Governance for the year under review is presented in a separate section as Annexure I.

Board Evaluation

Your Company has a robust mechanism to evaluate the performance of all Board members. A detailed disclosure regarding the parameters and process of Board evaluation, along with the outcomes, has been provided in the Report on Corporate Governance.

Vigil Mechanism - Whistle Blower Policy

Your Company has a Vigil Mechanism Whistle Blower Policy, which lays down the process to convey genuine concerns and seek resolution towards the same without fear of retaliation.

The Policy requires the Investigation team of the Company to investigate such incidents, when reported, in an impartial manner and take appropriate action to ensure that the requisite standards of professional and ethical conduct are always upheld. It is your Company's Policy to ensure that no complainant is victimised or harassed for bringing such incidents to the attention of your Company, and to keep the information disclosed during the investigation as confidential. The implementation of the Vigil Mechanism Whistle Blower Policy is overseen by the Audit Committee and no employee was denied access to the Committee during the year.

A detailed update on the functioning of the Vigil Mechanism Whistle Blower Policy has been provided in the Report on Corporate Governance. The Policy is available on the company's website www.akzonobel.co.in and can be accessed from https:// akzonobel.co.in/pdf/policy/Whistle_Blower_Policy_Jan2.pdf.

Sustainability

Sustainability is considered as a fundamental driver of value by the Board of your Company. We strongly believe that integrating the creation of societal value into our corporate strategy not only fosters innovation but also ensures sustainable growth for all stakeholders.

At the core of our operations is the People. Planet. Paint. approach, which guides everything we do. We are dedicated to delivering sustainable and innovative solutions that meet the increasing needs of our customers, communities, and the planet.

Corporate Social Responsibility

Your company recognizes its role in contributing to local communities and considers it a crucial aspect of its sustainability agenda. Through collaborations with organizations, corporates, government bodies, and partners, your company strives to make the AkzoNobel brand impactful.

We are committed to pursuing economic growth while minimizing our ecological footprint and maximizing our positive social impact. This commitment forms the foundation of our company's purpose, brands, core principles, and employee value proposition. It serves as a catalyst for growth, innovation, and productivity.

Company's policy on Sustainability is available on Company website www.akzonobel.co.in and can be accessed from https:// akzonobel.co.in/pdf/policy/Sustainability-Policy.pdf

In terms of Regulation 34 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (‘Listing Regulations') read with relevant SEBI Circulars, new reporting requirements on ESG parameters were prescribed under Business Responsibility and Sustainability Report (‘BRSR').

As per the SEBI Circulars, effective from the financial year 2022-23, filing of BRSR is mandatory for the top 1,000 listed companies by market capitalisation. Accordingly, BRSR for the financial year 2022-23 is annexed to this report as Annexure II-A

2) Education

Your Company is dedicated to comprehensive educational development for underprivileged children in India. Our flagship project, 'Parivartan' (meaning Progressive Change), operates in six States. The project includes a four-tier program:

a) Early childhood education

b) Non-formal education for out-of-school children

c) Remedial education for underprivileged children

d) Digital literacy

During the year, we also painted five government schools in Madhya Pradesh and Odisha, creating a clean and colorful environment for over 2,000 children.

3) Community healthcare

In partnership with Government Health Departments, your company extends preventive and curative healthcare to over 60,000 villagers in Bengaluru (Karnataka) and Bhind (Madhya Pradesh) through telemedicine. This project utilizes advanced technologies like Artificial Intelligence (AI) for disease detection and offers free doorstep access to specialized diagnostic services.

To ensure healthcare access for the painter community and their families, your company has implemented the ‘Arogya Sakha' project since 2020-21. Over 1.5 million beneficiaries had access to telemedicine services from specialist doctors. In collaboration with the Genesis Foundation, your company supported surgical interventions for four young children afflicted with congenital heart disease.

Conservation of Energy, Technology Absorption and Forex Earnings and Outgo

Your Company continues to use its research and development base to bring to consumers new products with improved performance features and for special applications. The details of Energy Conservation, Technology Absorption and Foreign Exchange Earnings and Outgo as required under section 134(3) (m) of the Act, read with Rule 8(3) of the Companies (Accounts) Rules, 2014 is annexed as Annexure III to this report.

Information Technology/Digitalisation

We have embraced digitalization as a means to maintain competitiveness and leverage emerging technologies. Our strategic initiatives have brought about transformative changes in our business cycle, resulting in factory automation, advanced analytics, and improved customer experiences. To optimize our supply chain, we have implemented the Advanced Planning Transformation (APT) tool, enabling enhanced connectivity and improving demand and supply planning. This has led to higher service levels, reduced inventory, and cost savings.

Automation and advanced analytics play a pivotal role in achieving our Distribution 2.0 goals. Our tailored replenishment tool enhances demand management, optimizes stock tracking, and ensures efficient network management, guaranteeing product availability even in remote locations.

We are focused on implementing smart factory initiatives to enhance manufacturing competitiveness. By incorporating Internet of Things (IoT) technologies, we are improving production efficiencies, enabling predictive debottlenecking, and enhancing safety measures across our sites.

Through collaborative efforts of AkzoNobel experts and winners of the Paint the Future India startup challenge, we are transforming the Dulux experience for Indian paint consumers through our innovative digital solutions.

To ensure compliance with the AkzoNobel Code of Conduct, industrial hygiene and occupational health standards, Insider Trading policy, and statutory requirements, we have established digital assurance platforms.

We remain committed to streamlining our systems and eliminating redundancies wherever necessary, allowing us to operate more efficiently and effectively.

Policy against Sexual Harassment

The Company has implemented a comprehensive Prevention of Sexual Harassment at Workplace policy, applicable to all employees. This inclusive policy addresses governance mechanisms and prevention measures for all genders. It is accessible on the company's website at www.akzonobel.co.in/ corporate-governance.php#policy. The policy aims to prevent and discourage sexual harassment, outlining procedures for resolution and settlement. The company has established an Internal Complaints Committee in compliance with the Sexual

Harassment of Women at Workplace Act, 2013. Awareness workshops and programs are conducted throughout the organization to promote understanding and prevent sexual harassment. Five complaints were reported during 2022-23, and further disclosures can be found in the Corporate Governance Report.

Related Party Transactions (RPTs)

The Company's Policy on Related Party Transactions (RPTs) can be found on the company's website at www.akzonobel.co.in/ pdf/policy/Related_Party_Transactions_Policy.pdf. This policy ensures proper reporting, approval, and disclosure processes for all transactions between the Company and Related Parties.

All Related Party Transactions, along with any material modifications, are reviewed and approved by the Audit Committee. The Board of Directors has granted annual omnibus approval within the policy framework for Related Party Transactions for repetitive transactions in the ordinary course of business and at arm's length.

Independent review by a reputable accounting firm is conducted to ensure compliance with the Companies Act, 2013, and Listing Regulations regarding Related Party Transactions.

During the review period, all related party transactions were conducted in the Ordinary Course of Business and at Arm's Length basis. No Material Related Party Transactions, as per the Board's materiality threshold, were entered into by the Company. No materially significant related party transactions were made with the Promoters, Directors, and Key Management Personnel that could potentially conflict with the Company's interests at large.

Please refer note no. 34 in the financial statements for related party disclosures in accordance with IND AS 24. In compliance with Section 134(3)(h) of the Act and Rule 8(2) of the Companies (Accounts) Rules, 2014, the details of contracts/arrangements with related parties, including certain arm's length transactions, are disclosed in Form AOC-2, which is included in this report.

Particulars of Loans, Guarantees or Investments

There are no loans given or guarantees issued that are covered under Section 186 of the Act read with the Rules made thereunder. Details of investments made under the said section are covered in Note 5.1 of the financial statements.

Auditors

Statutory Auditors

M/s Price Waterhouse Chartered Accountants LLP hold office till conclusion of the Annual General Meeting to be held in 2026 and will continue as the Statutory Auditors of the Company and have confirmed that they duly fulfil the requirements under applicable laws and regulations to continue as the Auditors of the Company.

The Auditors' Report for the financial year 2022-23, does not contain any qualification, reservation or adverse remark.

The Statutory Auditors of the Company have not reported any Fraud as specified under Section 143(12) of the Act.

Secretarial Auditors

In terms of Section 204 of the Act, Secretarial Audit was conducted for the financial year 2022-23 by M/s A K Labh &

Co., Company Secretaries, Kolkata. Their report is appended. The Secretarial Audit Report does not contain any qualification, reservation or adverse remark.

The Board has re-appointed M/s A K Labh & Co., Company Secretaries, Kolkata to conduct Secretarial Audit for the financial year 2023-24.

Cost Auditors

In terms of Section 148 of the Companies Act 2013, Cost Audit was conducted for the year 2022-23 by M/s Chandra Wadhwa & Co., New Delhi. The Cost Audit report for the year 2021-22 was filed with MCA within the stipulated time.

The Board has re-appointed M/s Chandra Wadhwa & Co.,

New Delhi as the Cost Auditors for conducting Cost Audit for the financial year 2023-24, whose remuneration is subject to ratification by the shareholders at the forthcoming AGM.

Cost Records

The Cost Accounts and records as required under Section 148(1) of the Act are duly maintained by the Company and audited by the Cost auditors.

Annual Return

In terms of Section 92(3) of the Companies Act, 2013 and Rule 12 of the Companies (Management and Administration) Rules, 2014, as amended, the Annual Return of the Company is available on the website of the Company at www.akzonobel. co.in, and can be accessed from www.akzonobel.co.in/investors. php#anr.

Directors & Key Management Personnel

The Board composition remained unchanged since the last Directors' report. Mr Krishna Rallapalli will retire by rotation at the upcoming Annual General Meeting (AGM) and has offered himself for re-appointment. The current term of Mr Hemant Sahai as an Independent Director ends on August 2, 2023. The Board recommends his re-appointment for another three-year term, subject to shareholder approval. The AGM Notice includes the appointments of Mr Krishna Rallapalli and Mr Hemant Sahai, along with their profiles as required by Listing Regulations.

Mr Rajiv Rajgopal, Managing Director, Mr Krishna Rallapalli, Wholetime Director and CFO, and Mrs Harshi Rastogi, Company Secretary, serve as the whole-time Key Managerial Personnel of the Company under Section 203 of the Act.

Committees of the Board

The terms of reference and composition of all the Committees of the Board has been provided in the Corporate Governance Report.

Board Meetings

There were 4 Board Meetings held during the year under review. The Board Meeting Dates and the attendance of the Directors at the meetings have been provided in the Corporate Governance Report.

Directors’ Responsibility Statement

As required under section 134(5) of the Act, the Directors confirm that:

a) in the preparation of the annual accounts for the year ended 31 March 2023, the applicable Indian accounting standards have been followed and with proper explanation relating to material departures, if any;

b) the Directors have selected such accounting policies and applied them consistently and made judgements and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profit of your Company for that period;

c) the Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act 2013 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

d) the Directors have prepared the annual accounts on a going concern basis;

e) the Directors have laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and were operating effectively; and

f) the Directors have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

Awards

• Most Trusted Brand of India 2023: Two centuries of AkzoNobel's colour expertise, innovation, the power of science, and above all, our commitment to delight consumers with high-quality products is inside every can of Dulux. That's why, we're even more thrilled to share that Dulux is now among the Most Trusted Brands of India 2023 powered by Marksmen Daily!

• Best Campaign in Home Improvement & Decor segment by the International Advertising Association (India Chapter) Award: ‘The two-episode digital campaign ‘Parul aur Painter- A Love Story', a fun take on love stories

due to water seepage in homes, was awarded the Best Campaign in Home Improvement & Decor segment by the International Advertising Association (India Chapter)

• 2021 FICCI CSR Awards- special Jury Recommendation for its CSR projects undertaken in Skill Development & livelihood. Award was presented by the Minister of SC/ST Welfare, Government of India

• 2022 ICSI CSR Excellence Award - Small and emerging category.

• 2022 CII ITC Sustainability Award - Commendation for Significant Achievement in Corporate Social Responsibility

General

Your Directors state that no disclosure or reporting is required in

respect of the following items, as there were no transactions on

these items during the year under review:

1. The Company has issued only one class of equity shares with equal voting rights.

2. The Company has not issued shares with differential voting rights and sweat equity shares during the year under review.

3. The Managing Director or Whole time Directors of the Company did not receive any remuneration or commission from any other company belonging to AkzoNobel Group or associate companies.

4. No significant or material orders were passed by the Regulators or Courts or Tribunals, which could impact the going concern status and its future operations.

5. There has been no change in the nature of business of your Company during the financial year.

6. There have been no material changes and commitments affecting the financial position of the Company between the end of the financial year and date of this report.

7. Your Company did not accept any public deposit within the meaning of the Companies (Acceptance of Deposits) Rules, 2014 and accordingly no amount on account of principal or interest on public deposits was outstanding as on the date of the balance sheet.

8. Your Company has complied with the applicable Secretarial Standards, issued by The Institute of Company Secretaries of India.

9. Your Company has neither made any application nor any proceeding is pending under the Insolvency and Bankruptcy Code, 2016 with any Tribunals.

10. Your Company has not made any one-time settlement against loans taken from the Banks or Financial Institutions.

11. Independent Directors have confirmed that they meet the criteria of independence in terms of Section 149(6) of the Companies Act, 2013.

Cautionary Statement

Some of the statements in this report, describing your Company's objectives and expectations expressed in good faith, may constitute ‘forward-looking statements' within the meaning of applicable laws and regulations and may involve risks and uncertainties. Actual results, performances or achievements could differ materially from those expressed or implied in such forward-looking statements. Readers are cautioned not to place undue reliance on these forward-looking statements that speak only as of their dates. This Report should be read in conjunction with the financial statements included herein and the notes thereto.

All amounts in this report and annexures thereto are in Rupees ('H') million, unless specified otherwise.

Acknowledgements

The Directors express deep appreciation to employees for their hard work and dedication. They also acknowledge the parent company's valuable contributions in technology and marketing, enabling improved products and customer satisfaction. The Board appreciates the ongoing support and cooperation from suppliers, distributors, retailers, investors, bankers, government authorities, regulatory bodies, stock exchanges, business partners, and stakeholders.

On behalf of the Board Oscar Wezenbeek

Place: Singapore Chairman

Date: 23 May 2023 DIN 08432564