Akzo Nobel Pakistan Limited

Akzo Nobel Pakistan Limited
Report 19
COLOUR OF THE YEAR 2019
Spiced Honey has a warm amber tone that perfectly
captures our ‘Let the Light in’ theme. It can be calming and
nourishing or more stimulating and energising, depending
SPICED on the light and colours surrounding it. Truly versatile and
HONEY contemporary, our Colour of the Year for 2019 complements

a broad spectrum of life and interiors styles and is the ideal
CONTENTS
Chairman’s Review Report 6

Chief Executive Statement 7
Our Strategy 8
Code of Conduct and Leadership Behaviors 10
Growing with AkzoNobel 11
HSE and Sustainability 14
Creating Societal Impact 18
To Color is to Care 19
Business Performance 22
Corporate Governance and Compliance 26
Risk Management 27
Company Information 29
Our Board of Directors 30
Our Executive Management Team 33
Report of Directors 34
Statement of Compliance with CCG 36
Review Report on Statement of Compliance 37
AkzoNobel Pakistan financial Statement F01
Notice of 9th Annual General Meeting
Admission Slip
Form of Proxy
Mandate Letter
6 AkzoNobel Report 2019
CHAIRMAN’S REVIEW REPORT
Dear shareholder, accepted global practices for evaluating

Board performance. As a result of this
I am pleased to present our annual report for evaluation, an action plan is now underway.
the year ended December 31, 2019.
I would like to thank all AkzoNobel Pakistan
It was a challenging year for both Pakistan’s Limited employees and our business partners
economy and the company. The year was for their hard work throughout 2019, as well as
marked by significant rupee devaluation extending our appreciation to our shareholders
against major currencies, and by declining and customers for their continued support. We
GDP growth rates. Despite these formidable look forward to delivering for our shareholders
challenges, the company posted profits of again in 2020, despite the challenges
PKR 549 million (2018: PKR 387 million). This presented by a macro-economic environment
was possible with careful cost cutting, and which is likely to provide limited purchasing
through appropriate sale price adjustments for power to our customers.
our products.
We also constantly reviewed aspects of our

financial reporting framework, in order to
ensure that the company remained in line with
both the latest regulatory requirements and
best practices in the industry.
Mueen Afzal
During the year, we continued to bring Chairman
diverse skills and capabilities to the Board
of Directors. We welcomed Mr. Frederic
Moreux* – AkzoNobel’s Asia Manufacturing
Director, based in Bangkok – as a
non-executive Director, with effect from
September 26, 2019. A thorough review
of the Board and its committees was also
conducted through our internal Board
Evaluation Process, developed in line with
*See page 29
AkzoNobel Report 2019 7
CHIEF EXECUTIVE STATEMENT
2019 has been a good year for AkzoNobel Pre-treatment business at Hyundai Nishat
Pakistan and its stakeholders. The company Motors, a new entrant in the Pakistani
managed to post very strong growth in automotive market.
profitability (operating profit up by 33.7% and
EPS up by 41.8% vs. SPLY) with a slight drop In line with our global mission of serving our
in turnover of 2.9% versus SPLY (reduced to communities, we continued our partnership
1.5% dip in a like to like comparison, net of with SOS Children’s villages in Pakistan.
the divested chemicals business). The results A session was held to engage the older
are particularly satisfying when measured children and increase their employability
against the overall economic situation of the through mentoring, plant visits, and hands-on
country, characterised by turbulence and training. At the same time we donated 48,000
uncertainty. At the same time, we continued Euros to be used for uplifting living spaces
to play our part in supporting the government of vulnerable youth from the SOS Children
treasury by being the highest tax payer of our Village Lahore. In addition, we also partnered
sector with more then PKR 1 billion in duties with The Citizen’s Foundation for a plant visit
and taxes during the year. to help the children get acquainted with paint
production process. for their support. The results are a testament
2019 proved to be a tough year for the to their belief in the company and their
Pakistan economy, characterised by rising Our Code of Conduct continues to guide relentless hard work.
interest rates, inflation and raw material costs us though our core principles – Safety,
coupled with a depreciating rupee. At the Integrity and Sustainability. The company
same time, the government took courageous completed the year with just one safety
but much needed decisions in order to incident involving a sales promoter, who was
document the economy. For our sector, slightly injured during an attempted robbery
the introduction and enforcement of CNIC attempt, while visiting one of our customers.
requirement for purchases above a threshold During the year, we continued to strengthen
and inclusion of Paints in the 3rd schedule our Behavior Based Safety (BBS) program. I
of Sales Tax Act had the biggest impact. We am also proud to report that we were able to Saad Mahmood
believe that these are positive steps for our inaugurate the 460 KW Solar Power Project Rashid
sector and the overall economy for the long on the Site. This is part of our sustainability Chief Executive
term. However, they have had a short-term drive and helps reduce 387,000 kg of CO2
negative impact on our sector, resulting in emissions per year.
reduction of pipeline stocks and a general
dampening of trade sentiment. Fortunately, An important development took place in
AkzoNobel Pakistan was able to weather this November this year, when the majority
storm due to the transformation started last shareholder of the company; ICI Omicron
year. The two main legs of this transformation, BV declared its intention to buy-back
structured pricing initiative and robust cost the outstanding shares in the market
discipline, continued to bear fruit in the current from minority shareholders. After much
year with amplified results. deliberation, the Board agreed to this
proposal and a market announcement was
In continuation of our drive to be the made to this effect. The Board of Directors
innovation leader, waterproofing category was has authorised the majority shareholder to
launched under the brand name of “Dulux engage with the PSX to arrive at a buy-back
Aquashield”, a flexible waterproof basecoat. price for the minority shareholders.
We believe this was a much-needed category
in the local market and will help us strengthen The continued guidance and support by our
our product portfolio. Another first, was the Board of Directors is a key element of our
introduction of our “Far Away Places” concept success. I am thankful for the same and
product on the e-commerce platform, Daraz. look forward to this positive relationship.
2019 also saw a long-awaited livery refresh
of our Hero brand “Dulux Weathershield” with As always, I would like to thank our
a new and improved formulation that offers stakeholders; customers, consumers,
2X protection against algae and fungus and suppliers and channel partners, whose
offers a 6-year performance warranty. This support has helped us in achieving these
relaunch has helped us cement our position results. Most of all I wish to acknowledge
in the premium segment of the market. On the hard work of our employees and wish to
the coatings front, we were able to secure extend my gratitude to them and their families
8 Strategic performance | AkzoNobel Report 2019
OUR STRATEGY
WINNING TOGETHER: 15 BY 20
OUR GLOBAL STRATEGY PUTTING PRECISE PROCESSES acquisitions to boost our presence in key
IN PLACE markets, generate synergies and give us
We’re global experts in the proud craft of access to new technologies. In 2019, we
making paints and coatings, setting the To ensure people across our organization can strengthened our global position in aerospace
standard in color and protection since 1792. efficiently collaborate, we continue to invest in coatings – notably in the structural and cabin
Our passion for paint means our world standardizing processes and aligned systems. coatings sub-segments – with the acquisition
class portfolio of established brands is Integrated Business Planning (IBP), a monthly of Mapaero. We also announced the intended
trusted by customers around the globe. By decision-making process, results in a single acquisition of Mauvilac Industries, a leading
investing in innovation, sustainable solutions, operating plan and financial forecast for the paints and coatings company in Mauritius.
organic growth and bolt-on acquisitions, we company. During 2019, we also put more We continue to actively manage a pipeline
intend to create long-term value for all our focus on our key end-to-end processes, using of acquisition targets to proactively pursue
stakeholders and become the reference in reliable, real-time information for decision- potential opportunities that offer a strong
paints and coatings. making and hardwiring cost consciousness. strategic fit with
This will enable us to drive further efficiencies, our portfolio.
We’re building our future on solid foundations improve transparency and lower the cost of Precise
– our long and proud heritage, our core getting products to our customers. processes
principles and our values. Our success will
be driven by our passion for paint, precise The deployment of one common ERP
processes, powerful performance and proud (enterprise resource planning) system across
people. We have adopted a laser sharp all businesses is progressing well, enabling
focus towards delivering on our Winning further cost savings and better management
together: 15 by 20 ambition as we continue of operations and performance. In addition,
our transformation into a focused paints and we continue to deliver significant cost savings
coatings company. by streamlining our support functions – for
example by transferring activities to Global
Our commercial teams are organized Business Services (GBS). Our Transformation
into business units, reporting to the Chief Office is continuing to track all initiatives to
Operating Officer. Each business unit has ensure accountability of different teams for
a clear mandate to deliver on our 15 by delivering cost savings and implementing new
20 ambition. The integration of all supply ways of working across the organization.
chain activities (including manufacturing and
distribution) into a single, global Integrated BUILDING ON OUR PASSION
Supply Chain (ISC) organization, has been FOR PAINT
a major transformation. We’re leveraging
our scale and functional expertise more Our strategy is to build on our existing
effectively, as well as accelerating continuous foundation by focusing on our strong brands,
improvement through our AkzoNobel Leading leading market positions, customer intimacy
Performance System (known as ALPS). and innovation capabilities. We’re targeting
PROUD PEOPLE PUSHING THE finish, all without sacrificing convenience challenge, which proved to be a big success.
BOUNDARIES OF INNOVATION during application. This was followed towards the end of the year
by an open collaboration event with a wide
Innovation is fundamental to our success. Digital innovation is a key component. A range of selected suppliers. Encouraged by
Our innovation group is led by our Chief great example of this was the two digital this success, we are now taking Paint the
Technology Officer and brings together the color innovations we introduced to the Future to the next level by staging a regional
combined know-how of global experts who industrial and professional paint markets startup challenge in Brazil in early 2020.
work on one, unified innovation road map. during 2019. Handy and compact, both the
For us, innovation means going beyond new Color Sensor and ColorFinder interact SUSTAINABILITY DRIVING
conventional expectations, going beyond with a mobile phone to enable painters to BUSINESS SUCCESS
the imagination of our customers and going find a precise color match for their clients in
beyond generations. A recent example of this just seconds. We’re also leading the paints Sustainability is a core principle and shapes
is our Awlgrip HDT (high definition technology) and coatings industry through our Paint the what happens at AkzoNobel every day. Our
topcoat, which combines protection, high Future innovation ecosystem. We began new holistic approach to sustainability is
performance and a stunning, long-lasting by launching an industry-first global startup called “People. Planet. Paint.” It’s designed
AkzoNobel Report 2019 | Strategic performance 9
FOCUSED ON POWERFUL
PERFORMANCE
In 2019, we again showed that we’re

delivering on our promises. We demonstrated
an impressive improvement in financial
performance on the previous year, despite
a soft macro-economic environment. We
completed the promised €2.5 billion share
buyback plan and announced a new share
buyback of €500 million, to be completed in
the first half of 2020. Our cost discipline has
delivered significant savings, while pricing
initiatives also compensated for higher raw
Powerful material costs.
performance
OUR LOCAL STRATEGY
AkzoNobel Pakistan, being a part of the Akzo-

Nobel group, builds on the global strategy in
the local context.
Our vision is to “Establish AkzoNobel Pakistan

as the first choice for all our stakeholders”
through our transformation story:
Our Purpose Our Priorities & Goals

Passion
for paint
LEAD AN ENGAGED ACCELERATE PROGRESS
Proud ORGANIZATION THROUGH ON MUST WIN BATTLES
people
COLLABORATION BY
UTILIZING OUR DIVERSE
CAPAPBILITIES TOWARDS
A COMMON GOAL
Accelerated Introduction Win in

Pricing of Professional Premium
Didtributors
to demonstrate the positive benefits of our

products and services and how we can Organizational Fit for
reduce the environmental impact of our Health Index Purpose
own operations, along with those of our Organization
suppliers, customers and society in general.
We continue to focus on actions aligned
with the most relevant UN Sustainable
Development Goals (SDGs). We aim to
remain the sustainability leader in the paints
and coatings industry, offering the most
sustainable and best performing portfolio of
products to our customers.
10 Code of Conduct | AkzoNobel Report 2019
CODE OF CONDUCT
AND LEADERSHIP BEHAVIORS
We are all defined by the actions we take. They reflect our
principles and values and if we are consistent with them, they let
people know what they can expect from us. Our Code of Conduct
reflects our core principles – safety, integrity and sustainability
– and puts them into practice. It explains the expectations and
responsibilities within the company and those we do business
with. We all must live by it, because it is a condition of working
with, and for, AkzoNobel.
A BRIEF OVERVIEW OF OUR CODE:
Safety Sustainability
• We follow the safety rules and procedures • We recognize human rights and treat people with dignity and respect
• We follow the Life-Saving Rules • We recruit and manage employees fairly
• We stop work if behavior or conditions are unsafe • We reduce the environmental impact of what we do
• We make and distribute products safely • We address the concerns of those affected by our operations
• We report safety concerns immediately • We give back to communities we operate in
• We work with business partners who share our principles
Integrity
• We compete in a fair and honest way
• We follow trade restrictions carefully
• We protect personal and confidential information
• We keep a clear line between business and personal interests
• We look after company property and use it appropriately
• We keep records in accordance with company policies
• We are alert to fraud and report suspicious activity
• We communicate in a professional way
AkzoNobel Report 2019 | Code of Conduct 11
GROWING WITH AKZONOBEL
good discussions about how we can improve

our workplace and agreeing and following
through on our action plans are the most
important factors in making AkzoNobel a better
place to work.
DIVERSITY & INCLUSION
To support the creation of a diverse and

inclusive work environment, we’ve had a
Diversity and Inclusion program in place since
2008, and have dedicated staff working to
ensure we achieve our goals.
AkzoNobel strives to reflect the diversity of the

society and markets in which it operates. Not
just because this is fair, but also because it can
work in our favor, helping us to understand our
customers just that little bit better. Whatever
business we are in, and whatever country
we’re based in, we want to make sure that
the maximum contribution has been made
to the company, irrespective of age, gender,
We believe that we can only grow It’s our aim to be the reference in paints and ethnic background, religion, disability, sexual
our business as fast as we grow our coatings. While our Winning together: 15 by orientation or religion. At AkzoNobel, it’s talent
people. To help make this happen, we’re 20 ambition (15% return on sales* (ROS) by and contribution that count.
committed to helping our colleagues 2020) provides great focus to improve our
accelerate their development and make financial performance now we want to ensure AkzoNobel will continue to be a leading global
the most of the opportunities on offer we can drive sustainable performance over paints and coatings company by ensuring
in our multinational business. Here are the long term. that our business and our employees become
a few highlights of some of our talent a true reflection of the regions in which we
management initiatives: To deliver a leading performance, we all operate. We aim to embrace the full spectrum
are required to find new and better ways of of cultures, perspectives and ideas that make
PERFORMANCE AND DEVELOPMENT doing business and realize the importance of up the regions we serve – while staying true to
transformation and changing with the dynamic our strong company values. A company full of
My P&D is AkzoNobel’s global performance work environment. Employee engagement people from different backgrounds, and who
appraisal and employee development is one of our strategic ambitions. In order to think in different ways, broadens everyone’s
program, the key aim of which is to improve monitor our progress in this important area, we horizons and gives more possibilities to grow
the performance of both our employees and ask all our employees to complete our quarterly both ourselves and our business. Fostering
the company as a whole. All employees are Insight survey, which focuses on our wider diversity on a global scale is therefore a
required to participate. It involves employees organizational health. While filling in the survey business enabler that will bring great emotional
being asked to define a series of personal and is important, engagement is not about meeting and economic benefits to AkzoNobel.
professional objectives for the year ahead. a specific metric or “hitting a number”. Having
Together with their manager, they develop a
plan for achieving them. Performance against
these objectives is used as input for annual
performance appraisal and salary review.
ORGANIZATIONAL HEALTH INDEX
We think of organizational health as more than

just culture or employee engagement. It’s the
company’s ability to align around a common
vision, execute against that vision effectively
and renew itself through innovation and
creative thinking.
* Excluding unallocated corporate center costs; assumes no
significant market disruption

HSE AND SUSTAINABILITY
At AkzoNobel, sustainability is one

of our core principles. That’s why we
take action every day by empowering
our people, reducing our impact on
the planet and consistently innovating
to deliver sustainable solutions to our
customers. It’s about focusing on the
things we can truly influence.
14 HSE & Sustainability | AkzoNobel Report 2019
HEALTH, SAFETY
AND ENVIRONMENT PERFORMANCE
We strive to achieve leading performance
in health, safety, environment and security
(HSE&S). Our vision is to deliver zero injuries
and harm through operational excellence. Our
strategic HSE&S priorities are aligned with
the company’s Winning together: 15 by 20
ambition and are focused on driving:
• Continuous improvement of HSE&S Three core safety processes – People Safety,

processes to achieve leading maturity levels Our commitment Process Safety and Product Safety – across
• The implementation of an integrated HSE&S the organization are ensured through an
management system to drive continuous There is zero tolerance for not working safely. HSE&S Management System integrated with
improvement and maintain best-in-class If we choose not to work safely, we should the company’s organization scheme. Process
performance find alternative employment. Safety Management and Behavior-Based
• A commitment-based HSE&S culture and Safety are two key components of the core
embedding operational excellence to Take Care because.... safety processes and we are on track for
achieve our vision of zero injuries and harm continuous improvement, with a focus on
• We want to do all we can to make sure that achieving and sustaining leading levels.
ONE SAFETY MISSION: colleagues, contractors and others don’t
get hurt on the job Process Safety Management
Our vision • We can only realize our safety goals if we
all put our shoulders to the same wheel - We have prepared process hazard reviews in
Our vision is ZERO injuries and zero serious when we speak with the same voice and line with PSM requirements and completed
incidents. are committed to realizing our vision of zero the PHR(s) as per the plan in 2019 for its
injuries critical operations.
Our beliefs • We want to support our businesses in
achieving their safety goals
• The value and values agendas are of equal • We want to get closer to our vision of zero
importance; we do not want one without injuries and serious incidents
the other; we cannot achieve one without • We want to drive top quartile safety
the other performance
• Safety is a permanent value and not a
temporary priority HSE operational excellence
• Safety starts with me. It’s about “us” not
about “them”, about individual responsibility AkzoNobel Pakistan believes in, and is
• Nothing we do is worth getting hurt for committed to, improving its Health, Safety,
• We have a right and responsibility to ensure Environment and Security and product
our own safety and that of others stewardship performance in order to achieve
• Safety is an essential springboard for our sustainable HSE&S operational excellence.
future success
Total reportable injury rate
Total reportable incidents per million man hours worked by employees and supervised contractors
AkzoNobel Report 2019 | HSE and Sustainability 15
Achievements during 2019
where we were able to achieve our target of

engaging, spreading awareness and correcting
behaviors around chemicals handling.
Behavioral Based Safety System (BBS)
Behavior-based safety is a broad term

used to describe everything from basic
employee behavior audits and feedback to a
comprehensive safety management system
designed to change a company’s safety
culture. Organizations often have effective
Self-assessment questionnaire maturity plant equipment. Due the nature of processes training, appropriate procedures and state
assessment (SAQ) and operations, AkzoNobel Pakistan is a PSM of-the-art safety equipment. However, none of
critical site. In 2014, PSM framework training that matters if the people in the organization
The self-assessment questionnaire (SAQ) is a tool was conducted by PSM experts in which an don’t use what they learn in training, don’t
developed and implemented across AkzoNobel introduction and the basic building blocks of consistently follow the procedures and/or use
to assess and improve safety standards in a PSM were discussed. In 2015, a complete PSM safety equipment.
systematic and standardized way. AkzoNobel scan was carried out by global PSM specialists,
Pakistan is using this tool on a yearly basis to who assessed different plant processes and From skipping steps in a confined space
assess its safety performance and standards, procedures. After the scanning process, a entry procedure, to failing to wear PPE at the
analyze gaps and implement improvements to comprehensive plan was prepared. In 2016, appropriate time, to not drinking enough water
embed and sustain its safety culture. AkzoNobel AkzoNobel Pakistan achieved an integrated level to prevent heat stress, getting people to make
Pakistan had an SAQ corporate audit planned in the PSM audit. AkzoNobel prepared process consistent safe choices is often a challenge.
in October 2019 and targeted achieving a score hazard reviews (PHRs) for its critical areas in These challenges can be overcome by
of 6.9. The corporate audit score achieved was 2019 and completed all the reviews as per plan. implementing Behavior-Based Safety (BBS). At
6.7 and site performance was appreciated in AkzoNobel, BBS is designed to improve safety
terms of the understanding regarding SAQ and Global Safety Day 2019 by encouraging positive change in the behavior
implementation of safety systems. of employees and contractors, resulting in
At AkzoNobel Pakistan Limited, Safety Day is fewer exposures to hazards. Key factors of
Process Safety Management System (PSM) celebrated with enthusiasm with a vision to the process are observation and feedback
engage all employees of the company and bring techniques leading to removal of obstructions
Process Safety Management is a disciplined them under the umbrella of safe performance to safe behavior. AkzoNobel Pakistan has
framework for managing the integrity of and its importance. This year’s Safety Day always tried to create a safety culture in
operating systems and processes that handle celebrations were around a theme “Handle with which individuals hold safety as a value and
hazardous substances. It relies on good care”. The theme was inspired by the idea that takes responsibility for the safety of their
design principles, engineering, operations and safety is paramount - wherever you are. Even co-workers, in addition to themselves. BBS
maintenance practices. In recent years, major though we have been able to improve our safety was implemented at AkzoNobel Pakistan in
incidents in industries have highlighted the performance year on year at AkzoNobel our the fourth quarter of 2015 and the observation
importance of having these robust processes employees, temporary workers or contactors process started in October 2015. In 2017, the
and systems in place. are confronted with incidents or near-misses at company launched a BBS maturity toll for its
work. AkzoNobel Pakistan’s Safety Day planning sites to ensure continuous improvement in the
The Process Safety Management framework and execution team comprising of people from process. Each site self-assessed the current
comprises 21 building blocks, which are manufacturing as well as non-manufacturing process as per the maturity assessment and
categorized according to People, Procedures employees, was able to prepare and execute targeted to achieve level 6.3 by the end of
and Plant. These building blocks are safety day activities revolving around the 2018. AkzoNobel Pakistan achieved level 6.3
deeply inter-connected, driving a cultural theme of the event. The highlights included by the year-end, hence completing the target
transformation. This transformation begins engaging Safety Day presentations, Safety it set at the start of the year to improve its
with emphasizing and ensuring management day quiz to ensure people’s understanding Behavior-Based Safety process. As well as
commitment, employee engagement and around the theme and distribution of tokens of reducing the observation target for individual
operational discipline. PSM then implements appreciations to departments and individuals observers from four observations to two
and integrates key processes such as who helped us improve our safety performance. observations per month, AkzoNobel Pakistan
stakeholder outreach, safety audits and The whole population of AkzoNobel Pakistan was also able to restrict its process index score
emergency response planning and safe including head office, regional offices, to above 88%. In 2019, our focus on the BBS
working practices. warehouses and manufacturing area employees process continued, with a 6.5% improvement
were engaged to this major event and everyone in the BBS contact rate and a 3% improvement
PSM also addresses the safety aspects of participated and appreciated its effectiveness. in the BBS observations target compared with
machinery and the interactions of personnel with Overall safety day, 2019 was a successful event the previous year.
Sustainability and energy efficiency
These projects reflect the way we operate; we make environmentally conscious decisions and
continually improve on our performance. The above projects and many others to follow are
all a part of our strategy to build a sustainable future. Having embarked on our sustainability
journey many years ago, we are on a steady path towards delivering even more tangible
benefits for our customers, society, the environment and our business.
Global population is increasing at an operations and integrates sustainability into INSTALLATION OF SOLAR PANELS
accelerated rate – it’s estimated that by 2050 the heart of everything we do. Generating
we’ll hit the nine billion mark. At AkzoNobel maximum positive impact from our products AkzoNobel Pakistan has successfully
Pakistan, we realize the impact a growing and services and using fewer resources completed a project to install solar power of
population can have, especially in term of across the value chain is the essence of 460 KW at its manufacturing site. The project
scarcity of resources and climate change. our sustainability strategy, which takes a full has helped us by reducing carbon emissions
Which is why we’ve adopted a People. value chain approach. This means we look at by 387 tons per year and is equivalent to
Planet. Paint. approach to sustainability. By our sustainability impact from the extraction 10,000 trees grown for ten years. Installed
doing radically more with less and working of raw materials, all the way through to capacity is equivalent to the same power
closely with customers and suppliers in our the end of life. At AkzoNobel Pakistan, produced by using 1,000 barrels of fuel and
key segments (buildings and infrastructure, we’re proud of what we have achieved. 423,406 pounds of coal burned.
transportation, consumer goods and During 2019, our focus has remained on
industrial), we can help to make life more reduction of carbon footprint. In every
affordable, colorful, healthy and comfortable manner, AkzoNobel Pakistan has strived and
for the world’s ever-growing population. succeeded in becoming a greener and more
eco-friendly organization. This performance
Sustainability is central to our company could only have been achieved by focusing
strategy. We want to become a company our energies year-round. Many initiatives
that delivers world class customer service, were launched targeting one or more pillars
continuously improves in all areas of its of sustainable operations.
CREATING SOCIETAL IMPACT
AkzoNobel is working on early detection of long-term societal needs, which helps to shape our innovation. These insights bring new business
opportunities, support swift business adaptation and enable first mover advantage.
The Sustainable Development Goals – UNDP sustainability is reflected in our product innovations with customer
benefits, our supply chain, the way we operate and how we behave as
Sustainability is an integral part of our strategy. Over the last 15 years, an employer and member of society.
our pragmatic approach to business sustainability has enabled us
to differentiate ourselves from our competitors. Our commitment to Our challenging ambitions are realistic and deliverable, having been
generating more value from fewer resources – and turning environmental developed collaboratively with our businesses and functions. They’re
challenges and societal concerns into product innovations for customers also designed to contribute to the global sustainability agenda
– is helping to establish us as the reference in paints and coatings. represented by the United Nations Sustainable Development Goals
Our value proposition for many stakeholders, including employees and (SDGs). We focus on the SDGs where we can have the biggest impact
business partners, has also been enhanced by making sustainability through our products, processes and partnerships.
an explicit differentiator – part of the AkzoNobel brand. Our main focus
areas are value selling and resource productivity. By turning ambitions into actions, by innovating and creating a better
world for future generations, AkzoNobel will remain at the forefront of
We continue to develop business opportunities aligned with the most sustainability in the paints and coatings industry. More details will be
relevant UN Sustainable Development Goals (SDGs). Our agenda is announced during the course of 2020.
built on core principles of sustainability, safety and integrity, including
respect for human rights. We set sustainability targets that contribute to Currently, our ambitions include the following:
our ROS (return on sales) target, in line with our focus areas of resource
productivity and value selling. By prioritizing our innovation towards • People: Inspire and empower people and communities through our
developing eco-performer and eco-premium solutions, we enhance our passion for paint. We positively impacted 40 million people between
value proposition and give customers choice and competitive advantage 2015 and 2019
through our sustainable product portfolios. We believe we can drive
growth by understanding how to build a better business, with solutions • Planet: Reducing waste, energy and greenhouse gas emissions are the
for environmental and social needs. main environmental indicators we’re focusing on, which includes zero
waste to landfill by 2020. We also aim to use 100% renewable energy
Our Approach to Sustainability by 2050 and become carbon neutral, also by 2050
We’ve adopted a new, down-to-earth approach to sustainability which • Paint: Continue to maintain at least 20% of our sales from
we call People. Planet. Paint. It’s designed to help us deliver tangible eco-premium solutions by 2020. Together with our eco-performers,
benefits for our customers, society, the environment and our business. we’re aiming to have more than 40% of revenue from sustainable
It’s how we’re making sustainability a daily priority, which we believe solutions that bring benefits to our customers.
is the best commitment we can make if we’re serious about being
sustainable in the long term. And every step we take to create a positive The future of sustainability at AkzoNobel is about further integrating and
impact on the world enables us to enhance our position as the leader enhancing the quality of our sustainable solutions to ensure they have a
when it comes to sustainability in the paints and coatings industry. positive impact on society and the environment. It’s about taking both
big and small steps that truly make a difference.
Building on our strong legacy, we have further developed our
all-inclusive, holistic sustainability approach. It highlights how
AkzoNobel Report 2019 | HSE and Sustainability 19
TO COLOR IS TO CARE
Corporate social responsibility practices are embedded at the

company’s core and we are dedicated to community engagement
and responsible business practices. We focus on creating social value
by not only helping our employees to develop their skills, but also
by being active in the communities where we operate. Our people
strongly believe in the inspiring call to action that must be taken to
foster a positive environment in the community. We aim to bring color
not only to walls, but also to people’s lives, as well by re-energizing our
communities and doing our part to give Pakistan a better tomorrow.
Doing our part to create a healthy and sustainable society is ingrained

into our DNA as employees and as a company. We believe that
community investment serves to improve the social conditions of our
country and give back to the people, who in turn breathe life into the
community we call home. Every year we continue to make a major SOS Children’s Village Pakistan and AkzoNobel partner to
contribution to the positive development of society and people in an strengthen youth employability with the power of paint
effort to embody this principle.
Armed with the power of paint, AkzoNobel and SOS Children’s Villages
Since our early days, we’ve upheld our commitment to country are helping young people in Pakistan who are at risk of – or have lost
and community by carrying out a number of focused community parental care – to improve their employability prospects.
development initiatives. As always, our employees actively volunteer
personal time and effort, along with the beneficiaries and the people The assistance includes providing professional painter and soft skills
directly affected in the areas being transformed. training, along with mentoring by local AkzoNobel employees. In
addition, the company is helping to fund renewal/renovation programs
COMMUNITY INITIATIVES that will support young people to successfully transition into respectable
jobs. There’s also a greater goal to improve their chances of becoming
The Citizen’s Foundation and AkzoNobel Pakistan independent adults who take responsibility, not just for themselves, but
also for the communities around them.
Around 70 children from The Citizen Foundation and a number of
volunteers were invited for an office and site visit. They were given a In addition to tackling youth unemployment in the country, the
detailed tour to help them get acquainted with the paint production partnership has also enabled AkzoNobel to paint and renovate 20
process. The session also included “motivational speaking” from houses, with €48,000 being donated for repairs and improving the living
AkzoNobel Pakistan employees, who shared their experiences and spaces of vulnerable families from the SOS Children’s Village in Lahore.
motivated the children. Group pictures were taken and giveaways The aim is to not only make their homes more enjoyable and livable, but
were presented. also create a happy and safe space where resident children and their
families can flourish.
BUSINESS PERFORMANCE
We use our passion for paint to make

a difference, both big and small. The
things our products can do may surprise
you, whether they’re applied to boats,
buildings, cars, concrete, planes, phones,
walls or wood. It’s all about giving our
customers what they want – and what
they didn’t even realize they needed.
22 Business Performance | AkzoNobel Report 2019
PAINTS AND COATINGS
We supply a huge variety of quality products for every situation and surface, including paints,
lacquers, varnishes and coatings. We also offer a range of mixing machines, color concepts and
training courses for the building and renovation industry, while our specialty coatings for metal,
wood and other critical building materials lead the market.
AkzoNobel houses the world’s leading manufacturing facility or sitting comfortably to weather the storm by staying focused
premium paint brand, Dulux. The extensive on a couch enjoying a can of soda. We have on driving innovation and sustainability,
range of high-quality products and services been working with some of our clients for strengthening and building our brands and
offered makes Dulux the innovation leader decades. Continuing our legacy of sustainable establishing long-term relationships through
in the paints industry. Drawing on a keen partnership is at the heart of everything we improved channel and influencer engagement.
understanding of our market needs and do. Our coatings portfolio is categorized into We were able to proactively improve our
latest technologies, Dulux aims to improve three main sub-segments: Automotive and contribution margins, which helped us deliver
people’s lives by helping them to enhance Specialty Coatings, Marine and Protective positive growth in profitability versus last year.
their living spaces. Being the color authority, Coatings and Industrial Coatings.
Dulux is the pioneer of tinting systems in DECORATIVE PAINTS
Pakistan under the label of Dulux Color ANALYSIS
Solutions, which offers more than 2,000 Dulux Aquashield Flexible
shades across Pakistan at designated Competition in Pakistan’s paint market Waterproof Basecoat
dealer outlets. Our motto is “Let’s Colour” to remained highly aggressive. As the overall
transform the world into a more colorful and economy remained slower than anticipated, Akzo Nobel Pakistan has always been an
livable place. that same pace played out in the paints innovation leader in the paints industry,
industry. The unprecedented devaluation of pioneering new-to-market technologies and
Our coatings make life easier by catering the rupee also adversely impacted overall products for consumers. A huge gap existed
to a variety of consumer requirements, consumer confidence, leading to further in the waterproofing category in Pakistan’s
whether it that’s in commuting, working in a pressure on the industry. We continued paint industry with no paints manufacturer
offering effective and durable solutions for
common waterproofing problems. AkzoNobel
Pakistan decided to enter this highly lucrative
segment with the launch of Dulux Aquashield
Flexible Waterproof Basecoat. With this
launch, Akzo Nobel Pakistan became the
first brand from the paints industry to venture
into the waterproofing category. AkzoNobel
Pakistan’s envisions a complete waterproofing
range which will serve as the “ultimate
waterproofing solution.” For this purpose,
the product was launched under a separate
brand name of “Aquashield” and all future
launches in the waterproofing category will be
made under this brand name.
Far Away Places
AkzoNobel Pakistan launched Dulux

Far Away Places as differentiated color
concept for Dulux EasyCare. The objective
of this product launch was to engage
more customers with Dulux and provide
a first-of-its-kind decorating experience.
Dulux Far Away Places is a painting toolkit
made easily accessible to parents and their
young ones. The toolkit comes in 8 magical
themes consisting of 48 colors and multiple
decorative assets to choose from. With the
launch of this toolkit on Daraz.pk, Dulux
venture into e-commerce in Pakistan.
AkzoNobel Report 2019 | Business Performance 23
Dulux Weathershield the production line was charged, completing transmission towers. Based on that,
the commercialization. The company also won Protective Coatings was able to secure
Keeping in with its tradition of innovation its first order from KIA Motors, another new another order from engineering company ICC,
and continuous improvement, AkzoNobel entrant. KIA Motors had a set of approved which initiated the first phase of the Hub–
Pakistan decided to revamp its hero brand regional suppliers of paint separation Jamshoro transmission line project, to support
Dulux Weathershield with fresh new packaging chemicals, which AkzoNobel Pakistan the transmission of 1,320 megawatts in coal
and reasons-to-believe. Dulux Weathershield managed to break through based on our offer power supply from Bin Qasim.
is the leading exterior paint in the decorative of better product quality and services.
market and had not been refreshed since Two further specifications were concluded
it’s inception. Due to emerging competitive Specialty Coatings was also able to expand at Izhar Steel, which is Pakistan’s premier
products and AkzoNobel’s ambition for offering its product portfolio at Millat Tractors Limited, engineering and construction group. We
top of the line products, Dulux Weathershield a customer that AkzoNobel Pakistan has been also successfully coated Pakistan State Oil’s
is now available in the market with a new and serving for a long time. The team identified a storage tanks with high-end International
improved formulation that offers 2X protection need and then developed a product in close paint products opposite the conventional
against algae and fungus and offers a 6 year collaboration with the customer and R&D. technologies they currently use. Projects
performance warranty. With this product The products improved paint performance at customers like Fauji, PARCO energy
refresh, we aim to drive volume growth in the efficiency at the customer’s production line. company and the Pakistan Cricket Board
premium segment and maintain leadership in (PCB) also contributed to profitability. The
the exterior paints market. The Vehicle Refinishes continued to expand business won the first order from PCB in
its network by identifying new potential the third quarter of 2019 for the National
AUTOMOTIVE AND SPECIALTY COATINGS distributors in the North and South regions. Stadium Karachi. PCB has also specified and
To focus on premium products, around six 3S will be using our protective coatings for repair
With new entrants in the automotive body shops were also added to the customer work at various stadiums.
landscape of Pakistan, Specialty Coatings base. Continuing our tradition of customer
secured Hyundai Pre-Treatment business in engagement, the business executed two
the first quarter of 2019. A memorandum of sales incentive trips, including one to the
understanding with Hyundai Pakistan was United Arab Emirates (UAE).
signed, under which AkzoNobel Pakistan will
be providing high quality Nihon Parkerizing PROTECTIVE COATINGS
pre-treatment products to Hyundai Nishat
Motor. The joint efforts strengthen cooperation In the Protective Coatings market,
between the two groups at a time when AkzoNobel’s International paint products
Hyundai Nishat Motor is venturing into were specified by the National Transmission
Pakistan’s automotive market. At year-end, & Despatch Company (NTDC) for their
CORPORATE GOVERNANCE
AND COMPLIANCE
AkzoNobel Pakistan’s corporate

governance structure is based on
the company’s articles of association
and statutory, regulatory and other
compliance requirements applicable
to companies listed on the stock
exchange, complemented by several
internal procedures. These procedures
include a risk assessment and
control system, as well as a system
of assurances on compliance with
the applicable laws, regulations and
company’s Code of Conduct.
26 Corporate Governance and Compliance | AkzoNobel Report 2019
CORPORATE GOVERNANCE AND COMPLIANCE
CORPORATE GOVERNANCE STATEMENT announcement of financial results. Meanwhile, “Executives” (as defined
in the Code of Corporate Governance) – some of whom may not be
The Board of Directors (“the Board”) is responsible for setting the goals, “Permanent Insiders” – can deal in the company’s shares any time outside
objectives and strategies the company should adopt, and for formulating the closed period announced by the company on the eve of the quarterly
the policies and guidelines towards achieving those goals and objectives. Board meetings. The open period does not exceed 15 calendar days in
The Board of Directors is accountable to the shareholders for the each quarter from the date of announcement of the financial results. All
discharge of its fiduciary function. The management is responsible for the such transactions are required to be reported to the company secretary
implementation of goals and strategies in accordance with the policies within two days of execution of the transaction with relevant details of
and guidelines laid down by the Board of Directors. To facilitate a smooth purchase/sale of shares.
running of the day-to-day affairs of the company, the Board of Directors
entrusts the Chief Executive and Chief Financial Officers with necessary As embodied in our Code of Conduct, AkzoNobel Pakistan supports the
powers and responsibilities. The Board of Directors is also assisted by a principles of free enterprise and fair competition. The company competes
number of sub-committees comprising mainly of non-executive directors. vigorously but fairly with its competitors within the framework of applicable
laws – all to provide better and increasingly useful products and more
CODE OF CONDUCT AND SPEAKUP! efficient services to our customers. All relevant employees are required
to sign an additional declaration of compliance with competition laws.
Akzo Nobel Pakistan Limited has always held in high esteem the best The company continues to regularly hold training sessions to ensure
practices of corporate governance and believes in widely propagating compliance with competition laws for relevant employees.
our values and ethics for strict adherence by all employees, contractors,
suppliers and others doing business for the company. In order to MATERIAL INTERESTS OF MEMBERS
apprise employees of the Code of Conduct, the company organizes OF THE BOARD OF DIRECTORS
training sessions and induction programs on a regular basis to ensure
compliance at all levels. Besides this, every employee and director Directors are required to disclose, at the time of appointment and on
of the company is required to sign, on an annual basis, a statement an annual basis, the directorships or memberships they hold in other
to the effect that they understand the Code of Conduct and abide corporations. This is in pursuance with Section 205 of the Companies
by it while doing business for the company. Business partners of the Act, 2017, which also requires them to disclose all material interests. We
company such as suppliers, distributors and agents are expected to use this information to help us maintain an updated list of related parties.
comply with the principles laid down in the Business Partner Code of In case any conflict of interest arises, we refer the matter to the Board’s
Conduct or apply equivalent principles to the business they conduct Audit Sub Committee.
for the company. Non-compliance with this Code may lead us to take
measures, including termination of the business relationship. ROLES AND RESPONSIBILITIES OF THE CHAIRMAN
AND CHIEF EXECUTIVE
To facilitate strict adherence to the Code of Conduct, the employees also
have access to the “SpeakUp!” program whereby any employee can The principal role of the Chairman of the Board is to manage and to provide
report any unethical dealing by any company employee on a confidential leadership to the Board of Directors. The Chairman is expected to promote
basis, either through telephone or e-mail. Complete anonymity is and oversee the highest standards of corporate governance within the
assured and all complaints are thoroughly investigated either internally Board and the company. Specifically, the Chairman’s functions include:
by the company or assigned to the Internal Auditors. Results of the
investigation are communicated to the complainant. The entirety of this • To act as Chair at meetings of the Board
process is looked after by the Audit Sub Committee of the Board. • To provide independent advice and counsel to the Chief Executive
Officer (CEO)
INTERNAL CONTROL • To keep abreast of the activities of the company and its management
• To ensure that the directors are properly informed with sufficient
Akzo Nobel Pakistan Limited has a sound system of internal control and information to form appropriate judgments
risk management. The internal audit function, mainly responsible for internal • In concert with the CEO and the company secretary, to develop and
controls, has been outsourced to EY Ford Rhodes and reports directly to set the agendas for meetings of the Board
the Chairperson of the Audit Sub Committee. • To review and sign minutes of Board meetings
• To sit on other committees of the Board where appropriate as
INSIDER TRADING & COMPETITION LAW determined by the Board
• To act as Chair at shareholder meetings
The company has a stringent policy on insider trading and securities • To identify and participate in selecting Board members and to oversee
transactions. The policy paper, occasionally circulated to all employees a formal succession plan for the Board, CEO, CFO and key senior
of the company, divides employees into certain categories based on management
their position, involvement in day-to-day decision-making and access
to price-sensitive information. Certain senior executives and the finance The Chief Executive Officer (CEO) is responsible for leading the
staff are categorized as “Permanent Insiders”, people who can deal in the development and execution of the company’s long-term strategy with a
company’s shares only during the open period specifically announced view to creating shareholder value. The CEO’s leadership role also entails
by the company immediately after the quarterly Board meetings and the being ultimately responsible for all day-to-day management decisions
AkzoNobel Report 2019 | Corporate Governance and Compliance 27
RISK MANAGEMENT
and for implementing the company’s long-term and short-term plans.

The CEO acts as a direct liaison between the Board of Directors and
management of the company and communicates to the Board on behalf
of management. The CEO also communicates on behalf of the company
to shareholders, employees, Government authorities, other stakeholders TTHE COMPANY’S DOCUMENTED
and the public. The CEO’s functions include the following: AND REGULARLY REVIEWED
PROCEDURES ARE DESIGNED TO
• To lead, in conjunction with the Board, the development of the SAFEGUARD OUR ASSETS, ADDRESS
company strategy RISKS FACING THE BUSINESS, AND
• To lead and oversee the implementation of the company’s long-term ENSURE TIMELY REPORTING TO THE
and short term plans in accordance with its strategy BOARD OF DIRECTORS AND SENIOR
• To ensure that the expenditures of the company are within the MANAGEMENT.
authorized annual budget
• To assess the principal risk of the company and to ensure that these
risks are being monitored and managed
• To ensure effective internal controls and management information The Board of Directors has the overall responsibility of overseeing the risk
systems are in place management processes, which include both risk management and internal
• To ensure that the company has appropriate systems to enable it to control procedures. The company’s processes, which are documented and
conduct its activities both lawfully and ethically regularly reviewed, are designed to safeguard assets and address risks that
• To ensure that the company maintains high standards of corporate the businesses might face or that may impact business continuity. These
citizenship and social responsibility wherever it does business are, in turn, reported to the Board and senior management for timely action
• To communicate effectively with shareholders, employees, government where required, to ensure uninterrupted operations.
authorities, other stakeholders and the public
• To ensure that directors are properly informed, and that sufficient The company maintains a clear organizational structure with a well-defined
information is provided to the Board to enable directors to form chain of authority. Senior management is responsible for implementing
appropriate judgments procedures, monitoring risk and assessing the effectiveness of various
• To ensure the integrity of all public disclosures by the company controls. Our risk and control procedures are supported through internal
• To request that special meetings of the Board be called when control self-assessments and Enterprise Risk Management.
appropriate
Internal Control Self-Assessment
The internal control self-assessment exercise carried out by the

company every year assists in the thorough assessment of controls
to ensure a robust control structure. The senior management of the
company leads this annual exercise. Existing controls are identified,
assessed and documented with the help of the online Control Self-
Assessment Tool (CSAT). Weaknesses highlighted through this
exercise are documented through action plans which clearly define the
corresponding actions to close the identified weaknesses in the system
and processes. Action plans are followed up rigorously to ensure that
timely corrective action is taken for the effective functioning of controls.
Enterprise Risk Management
The Enterprise Risk Management (ERM) methodology is part of

AkzoNobel’s effort to clearly and structurally prioritize the risks affecting our
operations and organizations, to focus the efforts on those risks that are
not controlled in an acceptable manner. For this purpose, ERM workshops
are conducted on a periodic basis. The purpose and goal of the ERM
workshops is to identify, assess and develop responses to the main risks
that are affecting or could in the future affect the company in achieving
its strategy and objectives (financial and non-financial). A cross-functional
executive team identifies a detailed list of overall business risk exposures.
This exercise is performed by all businesses and functions; and the
main outcome of these workshops is the development of a current and
complete risk profile upon which necessary action plans are developed
to take, treat or transfer (3Ts) the identified risks. These action plans are
monitored on a regular basis.
COMPANY INFORMATION
Board of Directors
MUEEN AFZAL Chairman (independent) Chief Financial Officer
SAAD MAHMOOD RASHID Chief Executive HARRIS MAHMOOD
OSCAR WEZENBEEK Non-Executive
AYESHA HAMID Non-Executive (Independent) Share Transfer Committee

FREDERIC MOREUX Non-Executive SAAD MAHMOOD RASHID Chief Executive
SEBASTIAN TAN Non-Executive HARRIS MAHMOOD Chief Financial Officer
HARRIS MAHMOOD Executive MUHAMMAD ALI MURTAZA Acting Company Secretary
Human Resource Remuneration Sub Committee Acting Company Secretary

MUEEN AFZAL Chairman MUHAMMAD ALI MURTAZA Acting Company Secretary
OSCAR WEZENBEEK Member
SAAD MAHMOOD RASHID Member Head of Internal Audit

SYEDA INSIA BATOOL SHAH Secretary MUHAMMAD ALI MURTAZA Head of Internal Audit
Audit Sub Committee Executive Management Team

AYESHA HAMID Chairperson SAAD MAHMOOD RASHID Chief Executive
MUEEN AFZAL Member FAROOQ AYUB KHAN Operations Manager
SEBASTIAN TAN Member HARRIS MAHMOOD Chief Financial Officer
MUHAMMAD ALI MURTAZA Secretary SHAHID ISLAM National Sales Manager,
Specialty Coatings
USMAN HAFAZ Head of Brand & Customer
Marketing, Decorative Paints
WAQAS MIR National Sales Manager,
Decorative Paints
SYEDA INSIA BATOOL SHAH Country HR Manager
Shares Registrar
Bankers FAMCO Associates (Pvt)
CITIBANK N.A. Ltd, 8-F, Nursery, Block 6,
DEUTSCHE BANK LIMITED A.G P.E.C.H.S. Shahrah-e-Faisal,
HABIB METROPOLITAN BANK LIMITED Karachi – 74000
HABIB BANK LIMITED Tel: (021) 34380101-5
FAYSAL BANK LIMITED Fax: (021) 34380106
Internal Auditor Regional Offices

ERNST & YOUNG FORD RHODES
CHARTERED ACCOUNTANTS • 11th Floor, Tower-A
Technology Park, Street-8,
External Auditor Sharah-e-Faisal, Karachi
A.F. FERGUSON AND CO. Tel: (021) 32781441-6
CHARTERED ACCOUNTANTS
• Plot 3-A, Sector I-10/3,
Registered Office Industrial Area, Islamabad
346, Ferozepur Road, Lahore – 54600 Tel: (051) 4447968
Tel: (042) 111-551-111
Fax: (042) 35835011
www.akzonobel.pk
30 Company Information | AkzoNobel Report 2019
OUR BOARD OF DIRECTORS
The Board of Directors are elected or appointed as representatives of the stockholders to establish corporate management related policies and to
make decisions on major company issues.
Mueen Afzal (Chairman; independent member)

Appointed to the Board of Directors of Akzo Nobel Pakistan Limited on May 23, 2012, Mueen Afzal is
also the Chairman of Akzo Nobel Pakistan Limited.
Mueen joined the Civil Service of Pakistan in 1964 and held important positions, including Finance
Secretary in Baluchistan (1981-1984) and in the Punjab (1984-1986). He was also the Economic
Minister in the Pakistan Embassy, Washington, DC in the US (1987-1990), Health Secretary to the
Government of Pakistan (1995-1996), Finance Secretary to the Government of Pakistan (1996-1998),
and Secretary General, Finance and Economic Affairs from 1999-2002. Mueen has been awarded
Hilal-e-Imitaz for distinguished public service in 2002.
Additionally, Mueen is the Chairman of the Board of Langlands Endowment Trust and Chairman of the
Board of IDEAS, a think tank that deals with public policy issues based in Lahore. Moreover, he currently
holds directorships of Murree Brewery Company Limited; Sanjan Nagar Public Education Trust; Pakistan
Philanthropy Centre; Beaconhouse National University. He is also a Senior Advisor for Nafa funds in
Lahore and member of the advisory committee on South Asian issues at Wolfson College, Oxford
University and a member of the advisory committee for the Federal Ombudsman in Islamabad.
Mueen is also a member of the pension committees for the management and staff at the Pakistan
Tobacco Company.
Ayesha Hamid (independent member)

Ayesha Hamid holds a Bachelor’s degree in Political Science from London School of Economics and
a Bachelor of Laws degree from Punjab University Lahore. Ayesha started her career as an advocate
in 2008 with Hamid Law Associates. She has a diversified legal experience of over ten years. Her
areas of expertise include, but are not limited to: tax, banking, property, contract, trade mark,
Constitutional, revenue and environmental law. Ayesha is an associate of Hamid Law Associates and
is an Advocate of the Supreme Court of Pakistan.
AkzoNobel Report 2019 | Company Information 31
Harris Mahmood (Executive Director and Chief Financial Officer)

Harris Mahmood was appointed to the Board of Directors of Akzo Nobel Pakistan Limited in
January of 2015 and is also the Chief Financial Officer (CFO). He has been associated with ICI
Pakistan and later Akzo Nobel Pakistan Limited for around 14 years in various roles looking after
Finance and Internal Audit.
Harris joined ICI Pakistan Limited in 2006 as Internal Audit Manager at the head office and
subsequently worked in business finance functions at Polyester Fibers and Paints before joining
the Chemicals and Soda Ash businesses as Finance Manager. In March of 2013, he joined Akzo
Nobel Pakistan Limited as Finance Manager and took over as CFO in January 2015.
He received his schooling from Aitchison College, Lahore, became an Associate Chartered
Accountant from Institute of Charted Accountants of Pakistan in 2005, and in 2016 was enrolled
as a Fellow member by the Institute of Chartered Accountants of Pakistan. He completed his
articleship from A F Ferguson & Company (member firm of PWC) and has attended several
management development programs including the Advanced Financial Management Program at
AkzoNobel in 2011.
Frederic Moreux (non-executive member)

Currently Asia Manufacturing Director ffor Akzonobel, Frederic Moreux is managing operations in Asia
with more than 7,000 employees and 42 leading paints and coatings manufacturing sites across all the
Akzonobel business units.
Fred has over 25 years of experience in various multinationals spanning different geographies and
industries, and has led successful assignments such as Operations Director and Supply Chain and
Manufacturing Director in world class supply FDA and GMP manufacturing environments.
Fred joined AkzoNobel in 2017 as the Operations Director Marine Division and was a member of the
Global Marine Management Team.
Fred went through an International Manufacturing Program, MBA at INSEAD in 2010. He graduated
from University of Technology of Compiègne with a Master’s in chemical engineering thermal with a
major in energy in 2000. He is French and fluent in English, German, Polish, Portuguese and Spanish.
Oscar Wezenbeek (non-executive member)

Oscar Wezenbeek is currently the Managing Director for AkzoNobel Decorative Paints in South
East and South Asia (SESA). Over the course of his 28-year career with AkzoNobel, he has
successfully led various portfolios in the coatings and automobile departments. In his previous
role, Oscar managed the global Marine, Protective and Yacht Coatings business. He has had a
proven track record in driving growth in market share and profitability, including sales when he
was the Sales & Marketing Director of West Europe in the Powder Coatings business.
With a key interest in Sustainability, Oscar is actively involved in the ADB DutchCham Sustainable
Business Committee.
Oscar went through an Advanced Management Program at INSEAD in 2006 and Global
Executive Leadership Program at Yale School of Management in 2016. He graduated from
Technical University Eindhoven with a Master’s in Business Engineering and Management
Sciences in 1988. Oscar was born in the Netherlands, and in addition to speaking English and
Dutch, he is also fluent in Spanish, Swedish, German, and French.
Saad Mahmood Rashid (Chief Executive)

Saad Mahmood Rashid was appointed to the Board of Directors, Chief Executive Officer of
AkzoNobel Pakistan Limited and General Manager for Decorative Paints on November 20, 2017.
Saad joined AkzoNobel Pakistan Limited in October 2014 as Business Manager Decorative
Paints, and under his leadership the business has shown a turnaround.
Saad Mahmood Rashid is a seasoned commercial leader with over 20 years of experience in
various Blue Chip Multinationals spanning different geographies and industries. Before joining
Akzo Nobel Pakistan Limited, Saad was working as Sales Director for Reckitt Benckiser. Prior to
this, he has worked in various positions at Pepsi Cola International, Ceylon Tobacco and Pakistan
Tobacco Company (BAT). Saad has an MBA Degree from IBA Karachi.
Sebastian Tan (non-executive member)

Sebastian Tan, Regional Head of Finance, Decorative Paints, South East, South Asia, was appointed
to the Board of Directors of Akzo Nobel Pakistan Limited on October 26, 2016.
Sebastian joined AkzoNobel in 2006. Shortly afterwards, he was appointed the Asia Integration
Lead and successfully merged the two reputable companies of the former ICI business and
AkzoNobel in Asia, delivering significant synergies. Prior to joining AkzoNobel, he was the Asia
Head Pricing and Commercial in Honeywell. He is a certified Six Sigma Black Belt for Leaders.
He graduated with an MBA from Imperial College Business School, University of London and a
Chartered Accountant (Singapore).
Sebastian is currently on the following boards: Akzo Nobel (Asia Pacific) Pte Limited, Akzo Nobel
Singapore Pte Limited, Akzo Nobel Paints Vietnam Limited and Akzo Nobel Malaysia Sdn Bhd. He
has extensive multinational manufacturing experience and has been well-exposed to commercial
and business finance roles in regional capacity with a deep understanding of various cultures. His
commercial experience has been varied, ranging from aviation repair and overhaul, electronics
manufacturing and the consumer paints business.
OUR EXECUTIVE MANAGEMENT TEAM
achieving various milestones in re-structuring, process safety and lean

manufacturing and sustainability. Prior to AkzoNobel, Farooq worked
at Pakistan Tobacco Company in various functions across the supply
chain as the Production Manager, Engineering Manager and Secondary
Logistics Manager.
Farooq has done his Bachelor’s in mechanical engineering from Ghulam

Ishaq Khan Institute of Engineering Sciences & Technology. He is married
and has three children.
Harris Mahmood
Chief Financial Officer
Harris Mahmood joined ICI Pakistan Limited in 2006 as Internal Audit
Manager at the head office and subsequently worked in business finance
From Left to right: Waqas Mir, Farooq Ayub Khan, Syeda Insia Batool Shah (standing), Saad Mahmood
Rashid, Shahid Islam (Standing), Harris Mahmood, Usman Hafaz.
functions at Polyester Fibers and Paints before joining Chemicals and
Soda Ash businesses as Finance Manager. In March 2013, he joined
Saad Mahmood Rashid AkzoNobel Pakistan as Finance Manager and took over as CFO of the
Chief Executive; General Manager, Decorative Paints company in January 2015.
Saad Mahmood Rashid was appointed to the Board of Directors and
Chief Executive Officer of Akzo Nobel Pakistan Limited on November Harris received his schooling from Aitchison College, Lahore and is a
20, 2017. He also holds the position of General Manager for Decorative fellow member of the Institute of Chartered Accountants of Pakistan
Paints in Pakistan. Saad joined Akzo Nobel Pakistan Limited in October since 2016. He completed his articleship from A.F. Ferguson &
2014 as Business Manager Decorative Paints, and under his leadership Co. (member firm of PWC) and has attended several management
the business has shown a turnaround performance. development programs including the Advanced Financial Management
Program at AkzoNobel in 2011.
Saad is a seasoned commercial leader with over 19 years of
experience in various blue chip multinationals spanning various Shahid Islam
industries and geographies. Before joining Akzo Nobel Pakistan National Sales Manager, Specialty Coatings
Limited, Saad was working as Sales Director for Reckitt Benckiser Shahid Islam is currently working as National Sales Manager Specialty
Pakistan. Prior to this role, he has worked in various commercial Coatings at Akzo Nobel Pakistan Limited. He has over two decades of
positions at Reckitt Benckiser South Africa, Pepsi Cola International, management experience in various functions and businesses including
Pakistan Tobacco Company (BAT) and Ceylon Tobacco Company production management, and supply chain. Shahid has over 31 years
(BAT). His rich local and international experience has been a good of experience, starting with ICI Pakistan in 1987 where he handled
value addition to the Akzo Nobel Pakistan Limited Management team. various managerial roles in sales and materials management.
Saad has an MBA degree from IBA Karachi and has received his
schooling from ICB, Islamabad and Australia. Saad is married and has Shahid received his Master of Business Administration from the
three children. University of the Punjab in 1990 after graduating as a chemical engineer
from the same institution. He is married and has three children.
Usman Hafaz
Head of Brand and Customer Marketing, Decorative Paints Syeda Insia Batool Shah
Usman Hafaz is the Head of Brand and Customer Marketing in the Country HR Manager
Decorative Paints business. He joined AkzoNobel Pakistan in August Insia Shah was appointed Country HR Manager with 17 years of
2013 as Brand Manager, Decorative Paints and subsequently took over prior experience in multiple industries including banking, engineering
the role of Marketing Manager in April of 2015. and consultancy within several areas of HR such as learning and
development, change management and talent management. She has
Usman has over ten years of professional experience, starting with previously worked for Akzo Nobel ICI Pakistan from 2008-2009 as a
ICI Pakistan in 2008 as a graduate recruit. Usman has also worked corporate training and development manager. She holds a Master’s
for the United Nations in various roles before joining AkzoNobel degree in HR management from University of Punjab.
Pakistan. Usman completed his BSc. (Hons) from Lahore University
of Management Sciences (LUMS) in 2004, followed by Master’s in Waqas Mir
Business Administration (MBA) from Judge Business School, University National Sales Manager, Decorative Paints
of Cambridge in 2007. He is married and has two children. Waqas Mir joined AkzoNobel as National Sales Manager, Decorative
Paints in January 2020. Previously, he worked as National Sales
Farooq Ayub Khan Manager for ICI Chemicals. Waqas brings with him more than ten years
Operations Manager of experience in multiple industries including Oil and Gas, Chemicals and
Farooq Ayub Khan is the Operations Manager for the Paints and FMCG. Waqas holds a Master’s degree in business administration from
Coatings site in Lahore. He joined AkzoNobel Pakistan as an Engineering Lahore School of Economics.
Manager in 2015 and since then has led the team in successfully
REPORT OF DIRECTORS
FOR THE YEAR ENDED DECEMBER 31, 2019
The Directors of the Company are pleased to present the Annual Report efficiency side, a solar power project was initiated and is now operational
along with the audited financial statements for the year ended December making our factory more ecofriendly. Furthermore, the Company got
31, 2019. certification of ISO 14001:2015. These developments are a clear
demonstration of the Company’s resolve to maintain health and safety as
Overview a core priority.
Economic challenges and uncertainty continued in 2019 due to currency
depreciation, high inflation and rising interest rates. Currency depreciated Business Performance
from PKR 139 to PKR 164 by July 2019, before settling at PKR 155 by The Company consciously focused on value selling through media
year end, resulting in net depreciation of 11%. Policy rates increased campaigns and fresh livery launches. The Company also entered into the
by 325 bps in first half of the year from 10% to 13.25% in July 2019 waterproofing category, with the brand name ‘Aquashield’, to fetch first
and these continued for the rest of the year. Inflation rate, which was at mover advantage in the market.
5.6% in December 2018, soared to 12.6% in December 2019. These
were a consequence of measures taken by the government as a part Despite a slowdown in the automotive segment and lower government
of its economic stabilization program, prepared together with IMF. The infrastructure expenditure, the Company continued strengthening the
government also took measures to stabilize its fiscal deficit which resulted foothold in the high performing coatings range of packaging coatings by
in a decline in the Public Sector Development Program (PSDP). ramping up sales in this segment.
In addition to this, the government took initiatives to document the Future Outlook
economy. One step was making it compulsory for CNIC of buyer to With the government’s policies to document and improve the state of the
be printed on sales tax invoices along with inclusion of paints in the economy, your Company expects that macro-economic stabilization will
3 rd schedule of Sales Tax Act. This impacted retailer profitability and be followed by a gradual growth in GDP in the medium term. That would
cumulatively affected consumer demand. However, the Company lead to higher demand for the Company’s products.
continued to take internal measures for safeguarding its revenue and
profitability through margins management actions. Net sales decreased The Board of Directors of the Company has resolved, dated 28th
by PKR 201 M as compared to 2018, mainly because of PKR 130 M November 2019, to delist the Company from PSX under rule 5.13 of the
Specialty Chemicals sales included in 2018, which were a part of ANPL voluntary delisting rules of the rule book. For this ICI Omicron B.V, the
till Aug’18. The Company also undertook several efficiency improvements majority shareholder of the Company. has been authorized to buy-back
and cost control programs resulting in reduction of operating expenses ordinary shares held by the minority shareholders of the Company
by 11% versus last year. Other income increased substantially as the to an extent and at a price to be determined in accordance with the
Company was able to make higher profits on bank deposits. As a result, regulations or as may be determined by the PSX or the SECP for the
EPS for the Company increased by 42% versus last year. purposes of voluntary delisting of the Company from the PSX.
The Company contributed PKR 1.028 billion to the national Corporate Social Responsibility
exchequer through taxes, duties and other levies during 2019 (2018: As a part of its Corporate Social Responsibility, the Company donated
PKR 1.104 billion). 48,000 Euros to SOS Children’s Village Pakistan in its efforts to uplift
the lives of young people under the care of SOS Children’s Villages of
Pakistan. This initiative was part of Akzonobel’s global “Let’s Colour”
program that aims to use education and renovation to drive a positive
impact on youth unemployment. Moreover, with the same objective,
AkzoNobel also provided Youth Mentorship Sessions to give young and
aspiring kids professional counselling alongside internship opportunities
which were aimed at providing children with necessary exposure to a
corporate environment and workplace.
Acknowledgment
In 2019, the Company continued to strengthen its people processes to
Dividends sustain an edge over competition. Key focus areas included leadership
Keeping in view future business prospects and after due consideration development, capability enhancement and employee relations
of the Company’s cash flow requirements, the Board of Directors is management. This helped in building high performance teams to achieve
pleased to propose a final dividend of PKR 6.00 per ordinary share i.e. organizational goals. At the same time, diversity and commitment to
60% for the year ended December 31, 2019. compliance continued to remain at the heart of our agenda. The results
of the Company reflect the unrelenting commitment and contribution of
Health, Safety and Environment its people, as well as the trust placed in the Company by its customers,
The Company demonstrated its firm commitment to HSE with only suppliers, service providers and shareholders.
one reportable injury. Behavior Based Safety program, which is about
influencing people’s behavior to avoid injuries, was further strengthened. Auditors
Through the application of this program, the Company has been able The present auditors A.F. Ferguson & Co. Chartered Accountants,
to improve people and process safety at its site. On the operational eco are retiring and being eligible have offered themselves for reappointment.
Compliance with the Code of Corporate Governance Composition of Board

As required under the Code of Corporate Governance incorporated in
the Listing Rules of the Stock Exchange in the country, the Directors are
pleased to state as follows:
• The financial statements, prepared by the management of the
Company present fairly its state of affairs, the result of its operations,
cash flows and changes in equity.
• Proper books of accounts of the Company have been maintained.
• Appropriate accounting policies have been consistently applied in
preparation of financial statements and accounting estimates are Committees of Board
based on a reasonable and prudent exercise of judgement. Details of Audit and Human resources sub-committees have been set
• International Financial Reporting Standards, as applicable in out on page number 36.
Pakistan, have been followed in preparation of financial statements
and deviation if any from these has been adequately disclosed and Director’s Remuneration
explained. Independent director’s fee is paid in line with Board approval and is
• The system of internal control is sound in design and has been subject to Board’s review after every three years.
effectively implemented and monitored.
• There are no significant doubts upon the Company’s ability to Director’s Training
continue as a going concern. Mr. Mueen Afzal, Mr. Saad Mahmood Rashid, Mr. Harris Mahmood and
• There has been no material departure from the best practices of Ms. Ayesha Hamid have already completed training requirements and
corporate governance as detailed in the Listing Regulations. accordingly the Company is in compliance with CCG criteria to complete
• Key operating and financial data for the last five years is summarized 50% of directors training by 2019.
on page F56 and F57.
• Outstanding taxes and levies are given in the Notes to the Financial Pattern of Shareholding
Statements. A statement showing the pattern of shareholding in the Company along
• The management of the Company is committed to good corporate with additional information as at December 31, 2019 appears on page
governance and appropriate steps continue to be taken to comply numbers F58 to F60.
with best practices.
ICI Omicron B.V., the Netherlands (an AkzoNobel group Company) held
Investment in Retirement Benefits 75.81% shares, while Institutions held 6.95% and individuals and others
The value of investments made by the staff retirement funds operated held the balance 17.24%. The highest and the lowest market prices
by the trustees of the funds, as per their respective audited financial during 2019 were PKR 270 and PKR 76 per share respectively. The
statements for the year ended 31 December 2018, are as follows: Directors, CEO, CFO, Company Secretary and their spouses and minor
children did not carry out any transaction in the shares of the Company
during the year.
Directors’ Attendance
During the year, 5 (five) Board of Directors, 4 (four) Audit Committee Mueen Afzal Saad Mahmood Rashid
and 2 (two) HR & Remuneration Committee meetings were held. Chairman Chief Executive
Attendance by each Director/CFO/Company Secretary was as follows:
STATEMENT OF COMPLIANCE WITH

CODE OF CORPORATE GOVERNANCE
Statement of Compliance with Listed Companies (Code of Corporate Governance) Regulations, 2019
Akzo Nobel Pakistan Limited for the year ended December 31, 2019
The company has complied with the requirements of the Regulations in given below:
the following manner: Audit Committee
Ms. Ayesha Hamid Chairperson
1. The total number of directors are 7 as per the following: Mr. Sebastian Tan
a. Male: 6 Mr. Mueen Afzal
b. Female: 1
HR and Remuneration Committee
2. The composition of Board is as follows: Mr. Mueen Afzal Chairman
Category Names Mr. Oscar Wezenbeek
Independent Directors Mr. Mueen Afzal Mr. Saad Mahmood Rashid
Ms. Ayesha Hamid (Female Director)
Non-Executive Directors Mr. Oscar Wezenbeek 13. The terms of reference of the aforesaid committees have been
Mr. Sebastian Tan formed, documented and advised to the committee for compliance;
Mr. Frederic Moreux
Executive Directors Mr. Harris Mahmood 14. The frequency of meetings (quarterly/half yearly/yearly) of the
Mr. Saad Mahmood Rashid committee were as per following,
a) Audit Committee Quarterly
3. The directors have confirmed that none of them is serving as a b) HR and Remuneration Committee Half Yearly
director on more than seven listed companies, including this company.
15. The Board has outsourced the internal audit function to M/s Ernst
4. The company has prepared a code of conduct and has ensured that & Young Ford Rhodes, Chartered Accountants, who are considered
appropriate steps have been taken to disseminate it throughout the suitably qualified and experienced for the purpose and are conversant
company along with its supporting policies and procedures; with the policies and procedures of the company;
5. The Board has developed a vision/mission statement, overall corporate 16. The statutory auditors of the company have confirmed that they
strategy and significant policies of the company. The Board has ensured have been given a satisfactory rating under the Quality Control Review
that complete record of particulars of the significant policies along with program of the Institute of Chartered Accountants of Pakistan and
their date of approval or updating is maintained by the company; registered with Audit Oversight Board of Pakistan, that they and all their
partners are in compliance with International Federation of Accountants
6. All the powers of the Board have been duly exercised and decisions (IFAC) guidelines on code of ethics as adopted by the Institute of
on relevant matters have been taken by the Board/ shareholders as Chartered Accountants of Pakistan and that they and the partners of
empowered by the relevant provisions of the Act and these Regulations; the firm involved in the audit are not a close relative (spouse, parent,
dependent and non-dependent children) of the chief executive officer,
7. The meetings of the Board were presided over by the Chairman and, chief financial officer, head of internal audit, company secretary or
in his absence, by a director elected by the Board for this purpose. The director of the company;
Board has complied with the requirements of Act and the Regulations
with respect to frequency, recording and circulating minutes of meeting 17. The statutory auditors or the persons associated with them have not
of the Board; been appointed to provide other services except in accordance with the
Act, these Regulations or any other regulatory requirement and the auditors
8. The Board have a formal policy and transparent procedures for have confirmed that they have observed IFAC guidelines in this regard;
remuneration of directors in accordance
with the Act and these Regulations; 18. We confirm that all requirements of regulations 3, 6, 7, 8, 27,32, 33
and 36 of the Regulations have been complied with; and
9. No Directors Training program was arranged by the Board during the year.
19. The Board has not constituted Nomination Committee and Risk
10. The Board has approved appointment of chief financial officer, Management Committee as the relevant functions are performed by HR
company secretary and head of internal audit, including their and Remuneration Committee and Audit Committee respectively. The
remuneration and terms and conditions of employment and complied Board will formalise this in the next Board Meeting.
with relevant requirements of the Regulations;
Mueen Afzal Saad Mahmood Rashid
11. Chief financial officer and chief executive officer duly endorsed the Chairman Chief Executive Officer
financial statements before approval of the Board;
12. The board has formed committees comprising of members

February 27, 2020
Lahore.
INDEPENDENT AUDITOR’S REVIEW REPORT

TO THE MEMBERS OF AKZO NOBEL PAKISTAN LIMITED
Review Report on the Statement of Compliance contained in Listed The Regulations require the Company to place before the Audit
Companies (Code of Corporate Governance) Regulations, 2019 Committee, and upon recommendation of the Audit Committee, place
before the Board of Directors for their review and approval, its related
We have reviewed the enclosed Statement of Compliance with the party transactions and also ensure compliance with the requirements
Listed Companies (Code of Corporate Governance) Regulations, 2019 of section 208 of the Companies Act, 2017. We are only required
(the Regulations) prepared by the Board of Directors of Akzo Nobel and have ensured compliance of this requirement to the extent of the
Pakistan Limited for the year ended December 31, 2019 in accordance approval of the related party transactions by the Board of Directors
with the requirements of regulation 36 of the Regulations. upon recommendation of the Audit Committee. We have not carried
out procedures to assess and determine the Company’s process
The responsibility for compliance with the Regulations is that of the for identification of related parties and that whether the related party
Board of Directors of the Company. Our responsibility is to review transactions were undertaken at arm’s length price or not.
whether the Statement of Compliance reflects the status of the
Company’s compliance with the provisions of the Regulations and report Based on our review, nothing has come to our attention which causes
if it does not and to highlight any non-compliance with the requirements us to believe that the Statement of Compliance does not appropriately
of the Regulations. A review is limited primarily to inquiries of the reflect the Company’s compliance, in all material respects, with the
Company’s personnel and review of various documents prepared by the requirements contained in the Regulations as applicable to the Company
Company to comply with the Regulations. for the year ended December 31, 2019.
As a part of our audit of the financial statements we are required to

obtain an understanding of the accounting and internal control systems
sufficient to plan the audit and develop an effective audit approach. We
are not required to consider whether the Board of Directors’ statement Date: 28 February, 2020 A.F. Ferguson & Co.,
on internal control covers all risks and controls or to form an opinion on Chartered Accountants
the effectiveness of such internal controls, the Company’s corporate (Hammad Ali Ahmad)
governance procedures and risks.
Financial Statements

Annual Report 2019 F 01
INDEPENDENT AUDITOR’S REPORT

TO THE MEMBERS OF AKZO NOBEL PAKISTAN LIMITED
REPORT ON THE AUDIT OF THE FINANCIAL STATEMENTS
Opinion
We have audited the annexed financial statements of Akzo Nobel Pakistan Limited (the Company), which comprise the statement
of financial position as at December 31, 2019, and the statement of profit and loss account, the statement of comprehensive
income, the statement of changes in equity, the statement of cash flows for the year then ended, and notes to the financial
statements, including a summary of significant accounting policies and other explanatory information, and we state that we have
obtained all the information and explanations which, to the best of our knowledge and belief, were necessary for the purposes of
the audit.
In our opinion and to the best of our information and according to the explanations given to us, the statement of financial position,
the profit and loss account, the statement of comprehensive income, the statement of changes in equity and the statement of cash
flows together with the notes forming part thereof conform with the accounting and reporting standards as applicable in Pakistan
and give the information required by the Companies Act, 2017 (XIX of 2017), in the manner so required and respectively give a
true and fair view of the state of the Company's affairs as at December 31, 2019 and of the profit and other comprehensive income,
the changes in equity and its cash flows for the year then ended.
Basis for Opinion

We conducted our audit in accordance with International Standards on Auditing (ISAs) as applicable in Pakistan. Our responsibilities
under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Statements section of
our report. We are independent of the Company in accordance with the International Ethics Standards Board for Accountants’
Code of Ethics for Professional Accountants as adopted by the Institute of Chartered Accountants of Pakistan (the Code) and we
have fulfilled our other ethical responsibilities in accordance with the Code. We believe that the audit evidence we have obtained
is sufficient and appropriate to provide a basis for our opinion.
Key Audit Matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial
statements of the current period. These matters were addressed in the context of our audit of the financial statements as a whole,
and in forming our opinion thereon, and we do not provide a separate opinion on these matters.
Following are the Key audit matters:
S. No. Key audit matters How the matter was addressed in our audit
1 Initial adoption of International Financial Our audit procedures included the following:
Reporting Standards (IFRS) 16 – ‘Leases’
- reviewed the design and tested the operating
(Refer note 2.5.1.1 and 4.1 to the financial statements) effectiveness of key controls over identification
and measurement of right-of-use assets and
IFRS 16 “Leases” is effective for the Company for the corresponding lease liabilities;
first time during the current year.
- evaluated the appropriateness of the methodology
IFRS 16 introduces an on-balance sheet lease and assumptions used by the management in
accounting model for leases entered by the lessee. A recognising right-of-use assets and corresponding
lessee recognizes a right-of-use asset representing its lease liabilities;
right of using the underlying asset and a corresponding
lease liability representing its obligations to make lease - tested on a sample basis, the completeness,
payments. Lessor accounting remains similar to the accuracy and reliability of the underlying data
current standard i.e. lessors continue to classify leases used by the management to support the
as either finance or operating leases. right-of-use assets and corresponding lease
liabilities recognised; and
S. No. Key audit matters How the matter was addressed in our audit
Upon initial application the Company has recognized - Reviewed the presentation and disclosures
right-of-use asset amounting to Rs. 61,072 thousand related to the adoption of IFRS 16 and assessed
and a corresponding lease liability amounting to Rs. whether it complied with the relevant accounting
48,823 thousand with respect to leased premises. The and reporting framework.
Company has adopted IFRS 16 from January 1, 2019
and has not restated comparatives for the 2018 reporting
period, using the modified retrospective approach, as
permitted under the specific transitional provisions in
the standard.
We considered this as a key audit matter due to the

significant amounts and judgements involved regarding
the matter.
2 Initial adoption of International Financial Our audit procedures included the following:
Reporting Standards (IFRS) 15 – ‘Reve-
- evaluated internal control activities over revenue
nue from contracts with customers’ recognition and testing of key controls;
(Refer note 2.5.1.2 and 4.2 to the financial statements) - considered the management’s process to identify
the additional disclosures required in the Company’s
IFRS 15 “Revenue from contracts with customers” is financial statements;
effective for the Company for the first time during the
current year. - obtained on sample basis relevant underlying
supporting documents to test management’s
This standard replaces the previous revenue compliance with the revenue recognition criteria
standards: lAS 18 Revenue, lAS 11 Construction as introduced by IFRS 15; and
Contracts, and the related interpretations on revenue
recognition. Key changes in the new standard include a - verified on a test basis the supporting evidence
single five-step model for revenue recognition and for the additional disclosures and ensured
establishes a comprehensive framework for recognition appropriateness of the disclosure made.
of revenue from contracts with customers.
Upon initial application the Company has made adjustments

in the financial statements in accordance with the
modified retrospective approach, as permitted under
the specific transitional provisions in the standard.
We considered this as a key audit matter due to the

significant amounts and judgements involved regard-
ing the matter.
3 Valuation of property, plant and equip- Our audit procedures included the following:
ment
- assessed and discussed the management’s
process for the valuation exercise and appointment
(Refer note 3.3, 7 and 13 to the financial statements) of the external valuers. We also assessed the
competence, independence and integrity of the
The Company, during the year, revalued its property, external valuer;
plant and equipment which resulted in a net revaluation
surplus / gain, net of deferred tax amounting to Rs. - tested the integrity of underlying information
2,462,931 thousand. regarding property, plant and equipment provided
to the external valuer used for valuation purpose;
The property, plant and equipment are stated at their
fair value based on valuation carried out by external - engaged an independent auditor’s expert to
valuer. The fair value of property, plant and equipment obtain and review the valuation report of the
external valuer engaged by the Company;
is arrived by using the market value approach.
- tested on a sample basis the computation for
We considered this as a key audit matter due to the revaluation surplus / gain resulting from the
significant amounts and judgements involved regarding revaluation; and
the matter.
- examined the adequacy of the related disclosures
in the financial statements.
Information Other than the Financial Statements and Auditor’s Report Thereon
Management is responsible for the other information. The other information comprises the information included in the annual
report, but does not include the financial statements and our auditor’s report thereon.
Our opinion on the financial statements does not cover the other information and we do not express any form of assurance conclusion
thereon.
In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider
whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit or
otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are
required to report that fact. We have nothing to report in this regard.
Responsibilities of Management and Board of Directors for the Financial Statements

Management is responsible for the preparation and fair presentation of the financial statements in accordance with the accounting
and reporting standards as applicable in Pakistan and the requirements of Companies Act, 2017 (XIX of 2017) and for such
internal control as management determines is necessary to enable the preparation of financial statements that are free from
material misstatement, whether due to fraud or error.
In preparing the financial statements, management is responsible for assessing the Company’s ability to continue as a going
concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless
management either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so.
Board of Directors are responsible for overseeing the Company’s financial reporting process.
Auditor’s Responsibilities for the Audit of the Financial Statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material
misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is
a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs as applicable in Pakistan will
always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if,
individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the
basis of these financial statements.
As part of an audit in accordance with ISAs as applicable in Pakistan, we exercise professional judgment and maintain professional
skepticism throughout the audit. We also:
- Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design
and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to
provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for
one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the
override of internal control.
- Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate
in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal
control.
- Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related
disclosures made by management.
- Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the
audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant
doubt on the Company’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are
required to draw attention in our auditor’s report to the related disclosures in the financial statements or, if such
disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the
date of our auditor’s report. However, future events or conditions may cause the Company to cease to continue as a
going concern.
- Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and
whether the financial statements represent the underlying transactions and events in a manner that achieves fair
presentation.
We communicate with the board of directors regarding, among other matters, the planned scope and timing of the audit and significant
audit findings, including any significant deficiencies in internal control that we identify during our audit.
We also provide the board of directors with a statement that we have complied with relevant ethical requirements regarding
independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our
independence, and where applicable, related safeguards.
From the matters communicated with the board of directors, we determine those matters that were of most significance in the audit
of the financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor’s
report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we
determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably
be expected to outweigh the public interest benefits of such communication.
Report on Other Legal and Regulatory Requirements

Based on our audit, we further report that in our opinion:
a) proper books of account have been kept by the Company as required by the Companies Act, 2017 (XIX of 2017);
b) the statement of financial position, the profit and loss account, the statement of comprehensive income, the statement
of changes in equity and the statement of cash flows together with the notes thereon have been drawn up in
conformity with the Companies Act, 2017 (XIX of 2017) and are in agreement with the books of account and returns;
c) investments made, expenditure incurred and guarantees extended during the year were for the purpose of the
Company’s business; and
d) zakat deductible at source under the Zakat and Ushr Ordinance, 1980 (XVIII of 1980), was deducted by the Company
and deposited in the Central Zakat Fund established under section 7 of that Ordinance.
The engagement partner on the audit resulting in this independent auditor’s report is Hammad Ali Ahmad.
Chartered Accountants
Lahore
Date: March 03, 2020

STATEMENT OF FINANCIAL POSITION

AS AT DECEMBER 31, 2019
Amounts in Rs ‘000
Note 2019 2018
EQUITY AND LIABILITIES
SHARE CAPITAL AND RESERVES

Authorized share capital 5 1,000,000 1,000,000
Issued, subscribed and paid-up capital 5 464,433 464,433
Reserves 6 2,441,115 2,130,632
Surplus on revaluation of property, plant and equipment 7 3,688,599 1,264,962
6,594,147 3,860,027
NON-CURRENT LIABILITIES
Deferred liabilities 8 66,538 61,568
Lease liabilities against right-of-use assets 9 12,490 -
79,028 61,568
CURRENT LIABILITIES
Trade and other payables 10 1,652,066 1,710,026
Contract liabilities 11 54,039 49,975
Current portion of lease liabilities against right-of-use assets 9 6,381 -
Unpaid dividend 3,084 2,986
Unclaimed dividend 26,899 26,612
1,742,469 1,789,599
CONTINGENCIES AND COMMITMENTS 12 - -
8,415,644 5,711,194
STATEMENT OF FINANCIAL POSITION

AS AT DECEMBER 31, 2019
Note 2019 2018
ASSETS
NON-CURRENT ASSETS
Property, plant and equipment 13 4,545,722 1,961,553
Right-of-use assets 14 28,200 -
Intangible assets 15 - 37,668
Long term loans 16 59,874 66,747
Long term deposits and prepayments 17 4,223 5,713
Deferred tax asset - net 18 17,708 147,322
4,655,727 2,219,003
CURRENT ASSETS
Stores and spares 19 26,297 22,661
Stock in trade 20 683,591 668,883
Trade debts 21 830,019 741,838
Loans and advances 22 77,810 95,398
Trade deposits and short term prepayments 23 2,940 16,601
Other receivables 24 53,812 21,481
Income tax receivable 82,900 23,061
Interest accrued 5,007 7,141
Cash and bank balances 25 1,997,541 1,895,127
3,759,917 3,492,191
8,415,644 5,711,194
The annexed notes 1 to 47 form an integral part of these financial statements.
Mueen Afzal Saad Mahmood Rashid Harris Mahmood

Chairman Chief Executive Chief Financial Officer
STATEMENT OF PROFIT AND LOSS ACCOUNT

Note 2019 2018
Revenue 26 8,492,146 8,746,846
Sales tax and discounts 26 (2,880,605) (2,934,103)
Net revenue 5,611,541 5,812,743
Cost of sales 27 (3,578,784) (3,810,004)
Gross profit 2,032,757 2,002,739
Selling and distribution expenses 28 (946,952) (1,041,911)
Administrative and general expenses 29 (332,555) (346,657)
Net impairment losses on financial assets 30 (4,333) (54,098)
748,917 560,073
Finance cost 31 (10,820) (9,992)
Other charges 32 (121,155) (89,938)
(131,975) (99,930)
Other income 33 167,872 149,212
Profit before taxation 784,814 609,355
Taxation 34 (235,921) (222,176)
Profit for the year 548,893 387,179
Earnings per share - Basic and diluted (Rupees) 35 11.82 8.34

STATEMENT OF COMPREHENSIVE INCOME

Note 2019 2018
Profit for the year 548,893 387,179
Other comprehensive income
Items that may not be reclassified to the profit or loss
Remeasurement of defined benefit liability 8.3 (5,001) 11,835
Related tax impact 1,450 (3,432)
(3,551) 8,403
Items that may be reclassified to the profit or loss
Revaluation surplus for the year 2,553,940 -
Related tax impact (91,009) -
7 2,462,931 -
Total comprehensive income for the year 3,008,273 395,582

STATEMENT OF CHANGES IN EQUITY

Issued, Capital reserves Revenue Surplus on

subscribed reserve revaluation of
and paid-up Share Capital Unappropriated property, plant
Total
Note capital premium receipts profit and equipment
Balance as at December 31, 2017 464,433 156,006 196 1,862,301 1,306,613 3,789,549
Total comprehensive income for the year ended December 31, 2018
Profit for the year - - - 387,179 - 387,179
Other comprehensive income - - - 8,403 - 8,403
Total comprehensive income for the year - - - 395,582 - 395,582
Incremental depreciation charge during

the year - net of deferred tax 7 - - - 41,651 (41,651) -
Transactions with owners recognized directly in equity
Final dividend for the year ended

December 31, 2017 @ Rs. 7.00 per share - - - (325,104) - (325,104)
Impact of initial adoption - IFRS 15 4.2 - - - (41,936) - (41,936)
Balance as on January 1, 2019 464,433 156,006 196 1,932,494 1,264,962 3,818,091
Total comprehensive income for the year ended December 31, 2019
Profit for the year - - - 548,893 - 548,893
Other comprehensive (loss) / income - - - (3,551) 2,462,931 2,459,380
Total comprehensive income for the year - - - 545,342 2,462,931 3,008,273
Incremental depreciation charge during

the year - net of deferred tax 7 - - - 39,294 (39,294) -
Transactions with owners recognized directly in equity
Final dividend for the year ended

December 31, 2018 @ Rs. 5.00 per share - - - (232,217) - (232,217)

STATEMENT OF CASH FLOWS

Note 2019 2018

Cash flows from operating activities
Adjustments for:
Depreciation and amortization 130,414 148,338
Depreciation on right-of-use assets 14 28,125 -
Gain on disposal of property, plant and equipment 33 (801) (182)
Gain on disposal of right-of-use assets 33 (331) -
Provision for employee benefits obligation 8.2 35,296 33,869
Net impairment losses on financial assets 30 4,333 54,098
Reversal of provision no longer required 33 (19,789) (32,193)
Provision for slow moving and obsolete stock 12,938 31,133
Provision for obsolete stores and spares 19.1 1,306 2,300
Gain on disposal of Specialty Chemicals business 33 - (33,500)
Interest income 33 (129,609) (71,301)
Interest expense on right-of-use assets 31 3,597 -
65,479 132,562
Profit before working capital changes 850,293 741,917
Effect on cash flow due to working capital changes
(Increase) / decrease in current assets:
Stores and spares (4,942) 607
Stock in trade (27,646) (112,972)
Trade debts (92,514) (56,343)
Loans and advances 17,588 (33,587)
Trade deposits and short term prepayments 1,412 (2,568)
Other receivables (32,331) 23,005
(138,433) (181,858)
(Decrease) / increase in current liabilities:
Trade and other payables, excluding employee benefits (17,186) (99,704)
Contract liabilities 4,064 14,358
Net cash generated from operations 698,738 474,713
Decrease in long term loans 6,873 19,598
Decrease in long term deposits and prepayments 1,490 527
Employee benefits paid (40,780) (46,943)
Taxes paid (249,443) (247,655)
Interest paid (3,597) -
Net cash generated from operating activities 413,281 200,240
Cash flows from investing activities

Payments for capital expenditure (224,649) (120,422)
Reimbursement / (payments) for software development costs 37,668 (37,668)
Proceeds from disposal of property, plant and equipment 1,077 1,806
Proceeds from disposal of Specialty Chemicals business - 33,500
Interest received 131,743 68,656
Net cash used in investing activities (54,161) (54,128)
Cash flows from financing activities

Dividend paid (231,832) (321,162)
Payment principal portion of lease liability against right-of-use assets (24,874) -
Net cash used in financing activities (256,706) (321,162)
Increase / (decrease) in cash and cash equivalents 102,414 (175,050)
Cash and cash equivalents at the beginning of the year 1,895,127 2,070,177
Cash and cash equivalents at the end of the year 25 1,997,541 1,895,127

NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS

1 Legal status and nature of business
Akzo Nobel Pakistan Limited (“the Company”) is a public limited Company registered under the Companies Ordinance, 1984
(now Companies Act, 2017) and is listed on the Pakistan Stock Exchange. The registered office of the Company and the
factory is situated at 346, Ferozepur Road, Lahore. The Company is primarily involved in the manufacturing and sale of
paints and coatings. The Company is a subsidiary of ICI Omicron B.V. which is a wholly owned subsidiary of Akzo Nobel N.V.
During the year the Company has initiated voluntary delisting from Pakistan Stock Exchange which is currently under
process.
2 Basis of preparation
2.1 Statement of compliance
These financial statements have been prepared in accordance with the approved accounting and reporting standards as
applicable in Pakistan. The accounting and reporting standards applicable in Pakistan comprise of:
- International Financial Reporting Standards (IFRS Standards) issued by the International Accounting Standards Board
(IASB) as notified under the Companies Act, 2017;
- Islamic Financial Accounting Standards (IFAS) issued by the Institute of Chartered Accountants of Pakistan as notified
under the Companies Act, 2017; and
- Provisions of and directives issued under the Companies Act, 2017.
Where the provisions of and directives issued under the Companies Act, 2017 differ from the IFRS Standards, the provisions
of and directives issued under the Companies Act, 2017 have been followed.
2.2 Basis of measurement
These financial statements have been prepared under the historical cost convention, except for certain classes of property,
plant and equipment (i.e. freehold land, buildings on freehold land and plant and machinery) that are stated at revalued
amounts, certain foreign currency translation adjustments, defined benefit asset / liability at fair value of plan asset less
present value of defined benefit obligation and derivative financial instruments.
2.3 Critical accounting estimates and judgments
The Company’s significant accounting policies are stated in note 3. Not all of these significant policies require the management
to make difficult, subjective or complex judgments or estimates. The following is intended to provide an understanding of the
policies the management considers critical because of their complexity, judgment of estimation involved in their application
and their impact on these financial statements. Estimates and judgments are continually evaluated and are based on historical
experience, including expectations of future events that are believed to be reasonable under the circumstances. These
judgments involve assumptions or estimates in respect of future events and the actual results may differ from these
estimates.
The areas involving a higher degree of judgments or complexity or areas where assumptions and estimates are significant
to these financial statements are as follows:
a) Defined benefit obligation
Certain actuarial assumptions have been adopted as disclosed in note 8.11 to these financial statements for present value
of defined benefit obligations and fair value of plan assets. Any changes in these assumptions in future years might affect
gains and losses in those years.
b) Property, plant and equipment and Intangible assets
The estimates for revalued amounts, if any, of different classes of property, plant and equipment, are based on valuations
performed by an external professional valuation expert after every five years or earlier if necessary and on recommendations
of technical teams of the Company. The said recommendations also include estimates with respect to residual values and
useful lives of property, plant and equipment and intangible assets. Further, the Company reviews the value of the assets for
possible impairment on an annual basis. The future cash flows used in the impairment testing of assets is based on
management's best estimates which may change in future periods. Any change in the estimates in future years might affect
the carrying amounts of the respective items of property, plant and equipment and intangible assets with a corresponding
effect on the depreciation / amortization charge and impairment.

c) Provision for taxation
The Company takes into account the current income tax law and the decisions taken by appellate authorities. Instances
where the Company's views differ from the view taken by income tax department at the assessment stage and where the
Company considers that its views on items of material nature is in accordance with law, the amounts are shown as
contingent liabilities.
The tax period of the Company is the same as its accounting year. The income tax assessments of the Company up to and
including tax year 2019 have been completed under the provisions of section 120 of the Income Tax Ordinance, 2001 except
for the cases as mentioned in note 12.1.1 to 12.1.6.
Deferred tax assets are recognised for deductible temporary differences, unused tax losses and tax credits to the extent that
future taxable profits will be available against which the deductible temporary differences, unused tax losses and tax credits
can be utilized. The recoverability of deferred tax assets are analyzed at each reporting period end and adjusted if
considered necessary with a corresponding effect on deferred tax charge/income for the period.
d) Stock in trade and stores and spares
The net realizable value of stock in trade and stores and spares are assessed for any diminution in their respective values.
Any change in the estimates in future years might affect the carrying amounts of stock in trade and stores and spares with
the corresponding effect of the impairment. Net realizable value is determined with respect to estimated selling price less
estimated expenditure to make the sale.
e) Impairment of trade debts and contract assets
The Company applies the IFRS 9 simplified approach to measuring expected credit losses which uses a lifetime expected
loss allowance for all trade debts and contract assets.
The expected loss rates are based on the payment profiles of sales over a period of time before the reporting date and the
corresponding historical credit losses experienced within this period. The historical loss rates are adjusted to reflect current
and forward-looking information on macroeconomic factors affecting the ability of the customers to settle the receivables.
f) Provision for discounts
The Company offers various forms of discounts to its customers based on approved promotion schemes. In this regard, the
Company maintains a provision for discounts based on the sales that satisfy the promotion criteria at the reporting date.
Adjustment of the same is made upon claim by the respective customers. Charges and reversal thereof are recognized in
the statement of profit and loss account.
g) Lease term of right of use asset and lease liability
In determining the lease term, management considers all facts and circumstances that create an economic incentive to
exercise an extension option, or not exercise a termination option. Extension options (or periods after termination options)
are only included in the lease term if the lease is reasonably certain to be extended (or not terminated).
2.4 Functional and presentation currency
These financial statements are presented in Pak Rupees which is also the Company's functional currency.
2.5 Initial application of new standards, interpretations or amendments to existing standards and forthcoming requirements
The following amendments to existing standards have been published that are / will be applicable to the Company's financial
statements covering annual periods, beginning on or after the dates mentioned in the sub-notes.
2.5.1 Standards, interpretations and amendments to published approved accounting standards that became effective
during the year and are relevant
2.5.1.1 First time adoption of IFRS 16 - Leases
This standard was notified by the SECP to be effective from annual periods beginning on or after January 01, 2019. This
standard replaces existing guidance on accounting for leases, including IAS 17 'Leases', IFRIC 4 'Determining whether an
arrangement contains a Lease', SIC-15 'Operating Leases- Incentive' and SIC-27 'Evaluating the substance of transactions
involving the legal form of a Lease'. IFRS 16 introduces a single, on balance sheet lease accounting model for lessees. A
lessee recognizes a right a right-of-use asset representing its right-of-use of the underlying asset and a lease liability
representing its obligations to make lease payments. Lessor accounting remains similar to the current standard i.e. lessors
continue to classify leases as finance or operating leases. The impact resulting from the initial adoption of IFRS 16 by the
Company is disclosed in note 4.1 to these financial statements.

2.5.1.2 First time adoption of IFRS 15 - Revenue from Contracts with Customers
This standard was notified by the SECP to be effective from annual periods beginning on or after July 1, 2018. This standard,
replaces the previous revenue standards: lAS 18 Revenue, lAS 11 Construction Contracts, and the related interpretations on
revenue recognition. Key changes in the new standard include a single five-step model for revenue recognition and establishes
a comprehensive framework for recognition of revenue from contracts with customers. The impact resulting from the initial
adoption of IFRS 15 by the Company is disclosed in note 4.2 to these financial statements.
2.5.1.3 First time adoption of IFRS 9 - Financial Instruments
This standard was notified by the SECP to be effective from annual periods ending on or after June 30, 2019. This standard
replaces the guidance in International Accounting Standard (IAS) 39, 'Financial Instruments: Recognition and Measurement'.
Key changes in the new standard include requirements on the classification, measurement and derecognition of financial
assets and liabilities. The standard also contains new requirements for hedge accounting and replaces the current incurred
loss impairment model with an expected credit loss model. Accordingly, the Company's management has assessed which
business models apply to the financial assets held by the Company and has classified its financial instruments into the
appropriate IFRS 9 categories. The impact resulting from the initial adoption of IFRS 9 by the Company is disclosed in note
4.3 to these financial statements.
In addition to the above, there are certain standards, amendments to the approved accounting standards and new interpretations
that are mandatory for the Company’s accounting periods beginning on or after January 1, 2019 but are considered not to
be relevant or to have any significant effect on the Company’s operations and are, therefore, not detailed in these financial
statements.
2.5.2 Standards, interpretations and amendments to published approved accounting standards that are not yet effective
The following amendments and interpretations to existing standards have been published and are mandatory for the
Company's accounting periods beginning on or after their respective effective dates but the Company has not early adopted
them.
The management is in the process of assessing the impact of changes laid down by these standards on its financial
statements.
Effective date (accounting
periods beginning on or after)
- IAS 1 - ‘Presentation of Financial Statements (Amendments)’ January 1, 2020

- IAS 8 - ‘Accounting Policies, Changes in Accounting Estimates and Errors (Amendments)’ January 1, 2020
2.5.3 Standards, amendments and interpretations to existing standards not yet effective and not applicable / relevant to
the Company
There are certain standards, amendments to the approved accounting standards and interpretations that are mandatory for
the Company's accounting periods beginning on or after January 1, 2020 but are considered not to be relevant or to have
any significant effect on the Company's operations and are, therefore, not detailed in these financial statements.
3 Significant accounting policies
The significant accounting policies adopted in the preparation of these financial statements are set out below. These policies
have been consistently applied to all the years presented, except for as stated in note 4 to these financial statements.
3.1 Stores and spares
Stores and spares are stated at the lower of cost and net realizable value. Cost is determined using weighted average
method. Items in transit are valued at a cost, comprising invoice value plus other charges invoiced there on up to the reporting
date.
3.2 Stock in trade
Stock in trade is valued at lower of weighted average cost and estimated net realizable value.
Cost comprises all costs of purchase, costs of conversion and other costs incurred in bringing the inventories to their present
location and condition.
Raw materials Weighted average cost.

Work-in-process and finished goods Cost of direct materials, labour and appropriate manufacturing overheads.
Net realizable value signifies the estimated selling price in the ordinary course of business less net estimated costs of
completion and estimated costs necessary to make the sale.
Stock-in-transit is valued at a cost, comprising invoice value plus other charges invoiced there on.

3.3 Property, plant and equipment
Property, plant and equipment (except freehold land, buildings on freehold land and plant and machinery) are stated at cost
less accumulated depreciation and accumulated impairment losses, if any. Freehold land is stated at revalued amount,
buildings on freehold land and plant and machinery are stated at revalued amounts less accumulated depreciation and
accumulated impairment losses, if any. Cost of certain property, plant and equipment comprises historical cost, exchange
differences recognized, cost of exchange risk cover in respect of foreign currency loans obtained, if any, for the acquisition
of property, plant and equipment up to the commencement of commercial production and borrowing cost.
Depreciation charge is based on the straight-line method whereby the cost or revalued amount of an asset is written off to
the statement of profit and loss account over its estimated useful life after taking into account the residual value, if material.
Depreciation on additions is charged from the month in which the asset is available for use and on disposals up to the month
preceding the disposal. The rate of depreciation is specified in note 13.1 to these financial statements.
The residual value, depreciation method and the useful lives of each part of property, plant and equipment that is significant
in relation to the total cost of the asset are reviewed, and adjusted if appropriate, at each reporting date.
Surplus on revaluation of property, plant and equipment is credited to the surplus on revaluation account. To the extent of the
incremental depreciation charged on the revalued assets, the related surplus on revaluation of property, plant and equipment
(net of deferred tax) is transferred directly to unappropriated profit, in the statement of changes in equity.
Maintenance and normal repairs are charged to the statement of profit and loss account as and when incurred. Subsequent
improvements to the assets are capitalized when it is probable that respective future economic benefits will flow to the
Company and the cost of the item can be measured reliably. Assets replaced, if any, are derecognized.
Gains and losses on disposal of assets are taken to the statement of profit and loss account, and the related surplus / deficit
on revaluation of property, plant and equipment is transferred directly to retained earnings (unappropriated profits) through
the statement of changes in equity.
Capital work-in-progress is stated at cost less any identified impairment loss.
3.4 Right-of-use asset and Lease liability
During the year, IFRS 16 - Leases became applicable to the Company. IFRS 16 replaces existing guidance on accounting
for leases, including IAS 17, Leases, IFRIC 4, Determining whether an Arrangement contains a Lease, SIC-15, Operating
Leases - Incentive, and SIC-27, Evaluating the Substance of Transactions Involving the Legal Form of a Lease.
The Company's accounting policy in this regard has been disclosed in note 4.1 to the financial statements.
3.5 Intangible assets
Intangible assets with a finite useful life, such as certain software, licenses (including software licenses, etc.) and property
rights, are capitalized initially at cost and subsequently stated at cost less accumulated amortization and accumulated
impairment losses, if any.
Subsequent expenditure is capitalized only when it increases the future economic benefits embodied in the specific asset to
which it relates. All other expenditures are recognized in the statement of profit and loss account as incurred.
Amortization is based on the cost of an asset less its residual value, if any. Amortization is recognized in the statement of
profit and loss account on a straight-line basis over the estimated useful lives of intangible assets. Amortization methods,
useful lives and residual values are reviewed at each reporting date and adjusted, if appropriate.
3.6 Financial instruments
3.6.1 Financial assets
3.6.1.1 Classification
From January 1, 2019 the Company classifies its financial assets in the following measurement categories:
- at Fair Value through Profit or Loss (“FVPL”),

- at Fair Value through Other Comprehensive Income (“FVOCI”), or
- at amortised cost.

The Company determines the classification of financial assets at initial recognition. The classification of instruments (other
than equity instruments) is driven by the Company’s business model for managing the financial assets and their contractual
cash flow characteristics.
For assets measured at fair value, gains and losses will either be recorded in profit or loss, or OCI. For investments in equity
instruments that are not held for trading, this will depend on whether the Company has made an irrevocable election at the
time of initial recognition to account for the equity investment at FVOCI.
The Company reclassifies debt investments when and only when its business model for managing those assets changes.
3.6.1.2 Recognition and derecognition
Regular way purchases and sales of financial assets are recognised on trade-date i.e. the date on which the Company
commits to purchase or sell the asset. Financial assets are derecognised when the rights to receive cash flows from the
financial assets have expired or have been transferred and the Company has transferred substantially all the risks and
rewards of ownership.
3.6.1.3 Measurement
At initial recognition, the Company measures a financial asset at its fair value plus, in the case of a financial asset not at
FVPL, transaction costs that are directly attributable to the acquisition of the financial asset. Transaction costs of financial
assets carried at FVPL are expensed in statement of profit and loss account.
Financial assets with embedded derivatives are considered in their entirety when determining whether their cash flows are
Solely Payment of Principal and Interest (SPPI).
a) Debt instruments
Subsequent measurement of debt instruments depends on the Company's business model for managing the asset and the
cash flow characteristics of the asset. There are three measurement categories into which the Company classifies its debt
instruments:
i) At amortised cost
Assets that are held for collection of contractual cash flows where those cash flows represent solely payments of principal
and interest are measured at amortised cost. Interest income from these financial assets is included in other income using
the effective interest rate method. Any gain or loss arising on derecognition is recognised directly in the statement of profit
and loss account and presented in other income/(other charges), together with foreign exchange gains and losses. Impairment
losses are presented as separate line item in the statement of profit and loss account, if significant. The Company measures
its trade debts and other receivables at amortised cost because it meets the criteria of the SPPI test.
ii) At FVOCI
Assets that are held for both collection of contractual cash flows and for selling the financial assets, where the assets’ cash
flows represent solely payments of principal and interest, are measured at FVOCI. Movements in the carrying amount are
taken through OCI, except for the recognition of impairment gains or losses, interest revenue and foreign exchange gains
and losses which are recognised in the statement of profit and loss account. When the financial asset is derecognised, the
cumulative gain or loss previously recognised in OCI is reclassified from equity to the statement of profit and loss account
and recognised in other income/(other charges). Interest income from these financial assets is included in other income
using the effective interest rate method. Foreign exchange gains and losses are presented in other income/(other charges).
iii) At FVPL
Assets that do not meet the criteria for amortised cost or FVOCI are measured at FVPL. A gain or loss on a debt investment
that is subsequently measured at FVPL is recognised in statement of profit and loss account and presented net within other
income/(other charges) in the period in which it arises.
b) Equity instruments
The Company subsequently measures all equity investments at fair value. Where the Company's management has elected
to present fair value gains and losses on equity investments in OCI, there is no subsequent reclassification of fair value gains
and losses to statement of profit and loss account following the derecognition of the investment. Dividends from such
investments continue to be recognised in statement of profit and loss account as other income when the Company’s right to
receive payments is established.
Changes in the fair value of financial assets at FVPL are recognised in other income/(other charges) in the statement of profit
and loss account, as applicable. Impairment losses (and reversal of impairment losses) on equity investments measured at
FVOCI are not reported separately from other changes in fair value and are recognised in the statement of comprehensive
income.

3.6.1.4 Impairment of financial assets
From January 1, 2019, the Company assesses on a forward-looking basis the Expected Credit Losses (ECL) associated with
its financial assets. The impairment methodology applied depends on whether there has been a significant increase in credit
risk. For trade debts the Company applies IFRS 9 simplified approach to measure the expected credit losses (loss
allowance) which uses a life time expected loss allowance to be recognised from initial recognition of the receivables while
general 3-stage approach for loans, deposits, other receivables and bank balances i.e. to measure ECL through loss allowance
at an amount equal to 12-month ECL if credit risk on a financial instrument or a group of financial instruments has not
increased significantly since initial recognition.
The measurement of expected credit losses is a function of the probability of default, loss given default (i.e. the magnitude
of the loss if there is a default) and the exposure at default. The assessment of the probability of default and loss given default
is based on historical data adjusted by forward-looking information (adjusted for factors that are specific to the counterparty,
general economic conditions and an assessment of both the current as well as the forecast direction of conditions at the
reporting date, including time value of money where appropriate). As for the exposure at default for financial assets, this is
represented by the assets’ gross carrying amount at the reporting date. Loss allowances are forward looking, based on 12
month expected credit losses where there has not been a significant increase in credit risk rating, otherwise allowances are
based on lifetime expected losses.
Expected credit losses are a probability weighted estimate of credit losses. The probability is determined by the risk of default
which is applied to the cash flow estimates. In the absence of a change in credit rating, allowances are recognised when
there is reduction in the net present value of expected cash flows. On a significant increase in credit risk, allowances are
recognised without a change in the expected cash flows, although typically expected cash flows do also change; and expected
credit losses are rebased from 12 month to lifetime expectations.
The Company considers the probability of default upon initial recognition of asset and whether there has been a significant
increase in credit risk on an ongoing basis throughout each reporting period. To assess whether there is a significant
increase in credit risk, the Company compares the risk of a default occurring on the instrument as at the reporting date with
the risk of default as at the date of initial recognition. It considers available reasonable and supportable forward-looking
information.
The following indicators are considered while assessing credit risk:
- actual or expected significant adverse changes in business, financial or economic conditions that are expected to cause a
significant change to the debtor’s ability to meet its obligations;
- actual or expected significant changes in the operating results of the debtor;
- significant increase in credit risk on other financial instruments of the same debtor; and
- significant changes in the value of the collateral supporting the obligation or in the quality of third-party guarantees, if
applicable.
The Company considers the following as constituting an event of default for internal credit risk management purposes as
historical experience indicates that receivables that meet either of the following criteria are generally not recoverable:
- when there is a breach of financial covenants by the counterparty; or
- information developed internally or obtained from external sources indicates that the debtor is unlikely to pay its creditors,
including the Company, in full (without taking into account any collaterals held by the Company).
Irrespective of the above analysis, in case of trade debts, the Company considers that default has occurred when a debt is
more than 360 days past due, unless the Company has reasonable and supportable information to demonstrate that a more
lagging default criterion is more appropriate.
A financial asset is credit-impaired when one or more events that have a detrimental impact on the estimated future cash
flows of that financial asset have occurred. Evidence that a financial asset is credit-impaired includes observable data about
the following events:
- significant financial difficulty of the issuer or the borrower;
- a breach of contract, such as a default or past due event;
- The lender(s) of The borrower, for economic or contractual reasons relating to The borrower’s financial difficulty, having
granted to the borrower a concession(s) that the lender(s) would not otherwise consider;
- it is becoming probable that the borrower will enter bankruptcy or other financial reorganization; or
- the disappearance of an active market for that financial asset because of financial difficulties.

The Company recognises life time ECL on trade debts, using the simplified approach. The measurement of ECL reflects:
- an unbiased and probability-weighted amount that is determined by evaluating a range of possible outcomes; and
- reasonable and supportable information that is available at the reporting date about past events, current conditions and
forecasts of future economic conditions.
Trade debts with individually significant balance are separately assessed for ECL measurement. All other receivables are
grouped and assessed collectively based on shared credit risk characteristics and the days past due. The expected credit
losses on these financial assets are estimated using a provision matrix approach based on the Company’s historical credit
loss experience, adjusted for factors that are specific to the debtors, general economic conditions and an assessment of both
the current as well as the forecast direction of conditions at the reporting date, including time value of money where
appropriate.
Where lifetime ECL is measured on a collective basis to cater for cases where evidence of significant increases in credit risk
at the individual instrument level may not yet be available, the financial instruments are grouped on the nature of financial
instruments; past-due status; nature, size and industry of debtors; and external credit ratings where available. The grouping
is regularly reviewed by management to ensure the constituents of each group continue to share similar credit risk characteristics.
The Company recognizes an impairment gain or loss in the statement of profit and loss account for financial assets with a
corresponding adjustment to their carrying amount through a loss allowance account, except for investments in debt
instruments that are measured at FVOCI, for which the loss allowance is recognised in other comprehensive income and
accumulated in the investment revaluation reserve, and does not reduce the carrying amount of the financial asset in the
statement of financial position.
The Company writes off financial assets, in whole or in part, when it has exhausted all practical recovery efforts and has
concluded there is no reasonable expectation of recovery. The assessment of no reasonable expectation of recovery is
based on unavailability of debtor’s sources of income or assets to generate sufficient future cash flows to repay the amount.
The Company may write-off financial assets that are still subject to enforcement activity. Subsequent recoveries of amounts
previously written off will result in impairment gains.
3.6.1.5 Financial assets - policy up to December 31, 2018
a) Non-derivative financial assets
The Company initially recognizes loans and receivables on the date that they are originated. All other financial assets (including
assets designated as at FVPL) are recognized initially on the trade date, which is the date that the Company becomes a
party to the contractual provisions of the instrument.
The Company derecognizes a financial asset when the contractual rights to the cash flows from the assets expire, or it
transfers the rights to receive the contractual cash flows in a transaction in which substantially all the risks and rewards of
ownership of the financial assets are transferred. Any interest in such transferred financial assets that is created or retained
by the Company is recognized as a separate asset or liability.
The Company classifies non-derivative financial assets into financial assets at fair value through profit or loss; held-to-maturity
financial assets; loans and receivables; and available-for-sale financial assets.
b) Loans and receivables
Loans and receivables are financial assets with fixed or determinable payments that are not quoted in an active market. Such
assets are recognized initially at fair value plus any directly attributable transaction costs. Subsequent to initial recognition,
loans and receivables are measured at amortized cost using the effective interest method, less any impairment losses. A
provision for impairment of loans and receivables is established when there is objective evidence that the Company will not
be able to collect all amounts due according to the original terms of receivables. Loans and receivables include loans, deposits,
trade debts, interest accrued, other receivables and, cash and bank balances of the Company.
c) Impairment of financial assets
Financial assets are assessed at each reporting date to determine whether there is an objective evidence that they are
impaired. A financial asset is impaired if objective evidence indicates that a loss event has occurred after the initial
recognition of the asset, and that the loss event had a negative effect on the estimated future cash flows of that asset that
can be estimated reliably. Objective evidence that financial assets are impaired may include default or delinquency by a
debtor or indications that a debtor / issuer will enter bankruptcy.
All individually significant receivables are assessed for specific impairment. All individually significant receivables found not
to be specifically impaired are then collectively assessed for any impairment that has been incurred but not yet identified.
Receivables that are not individually significant are collectively assessed for impairment by grouping together receivables
with similar risk characteristics.

An impairment loss in respect of a financial asset measured at amortized cost is calculated as the difference between its
carrying amount and the present value of the estimated future cash flows discounted at the asset’s original effective interest
rate. Losses are recognized in the statement of profit and loss account and reflected in an allowance account against
receivables. Interest on the impaired asset continues to be recognized through the unwinding of the discount. When a
subsequent event causes the amount of impairment loss to decrease, the decrease in impairment loss is reversed through
the statement of profit and loss account.
3.6.2 Financial liabilities
Financial liabilities are recognized when the Company becomes a party to the contractual provisions of the instrument and
de-recognized when the obligation specified in the contract is discharged, cancelled or expired. The Company derecognizes
financial liabilities only when its obligations under the financial liabilities are discharged, cancelled or expired. The difference
between the carrying amount of the financial liability derecognised and the consideration paid and payable, including any
non-cash assets transferred or liabilities assumed, is recognised in the statement of profit and loss account.
All financial liabilities are initially measured at cost, which is the fair value of the consideration given and received respectively.
These financial liabilities are subsequently measured at FVPL or at amortised cost, as the case may be. Financial liabilities
are measured at amortised cost, unless they are required to be measured at FVPL (such as instruments held for trading or
derivatives) or the Company has opted to measure them at FVPL. The particular recognition methods adopted are disclosed
in the individual policy statements associated with each item.
Where management has opted to recognise a financial liability at FVPL, any changes associated with the Company’s own
credit risk will be recognized in other comprehensive income/(loss). Currently, there are no financial liabilities designated at
FVPL.
Financial liabilities - policy up to December 31, 2018
The Company initially recognizes debt securities issued and subordinated liabilities on the date that they are originated. All
other financial liabilities are recognized initially on the trade date, which is the date that the Company becomes a party to the
contractual provisions of the instrument.
The Company derecognizes a financial liability when its contractual obligations are discharged, cancelled or expired.
The Company classifies non-derivative financial liabilities into the other financial liabilities category. Such financial liabilities
are recognized initially at fair value less any directly attributable transaction costs. Subsequent to initial recognition, these
financial liabilities are measured at amortized cost using the effective interest method.
3.6.3 Derivative financial instruments
Derivative financial instruments are recognized at fair value on the statement of financial position. Fair values are derived
from market prices and quotes from dealers and brokers, or are estimated using observable market inputs. When determining
fair values, credit risk for our contract party, as well as for the Company, is taken into account.
Changes in the fair value are recognized in the statement of profit and loss account, unless cash flow hedge accounting or
net investment hedge accounting is applied. In those cases, the effective part of the fair value changes is deferred in the
statement of other comprehensive income and released to the related specific lines in the statement of profit and loss
account, or the statement of financial position at the same time as the hedged item.
Derivative financial instruments - policy up to December 31, 2018
These are initially recorded at fair value on the date a derivative contract is entered into and are re-measured to fair value at
subsequent reporting dates. The method of recognizing the resulting gain or loss depends on whether the derivative is
designated as a hedging instrument, and if so, the nature of the item being hedged. The Company does not apply hedge
accounting for any derivatives.
Any gain or loss from change in fair value of derivatives are taken directly to the statement of profit and loss account.
3.7 Cash and cash equivalents
For the purposes of the cash flow statement, cash and cash equivalents are stated at cost and comprise of cash in hand,
cash at banks on current, saving and deposit accounts and other short term highly liquid instruments that are readily convertible
into known amounts of cash which are subject to insignificant risk of changes in values. Cash equivalents are held for the
purpose of meeting short-term cash commitments rather than for investment or other purpose.
3.8 Offsetting
Financial assets and liabilities are offset and the net amount presented in the statement of financial position when, and only
when, the Company has a legal right to offset the amounts and intends either to settle them on a net basis or to realize the
asset and settle the liability simultaneously.

3.9 Impairment of non-financial assets
The carrying amounts of non-financial assets other than inventories and deferred tax asset, are reviewed at each reporting
date to determine whether there is any indication of impairment. If any such indication exists, then the asset’s recoverable
amount is estimated. The recoverable amount of an asset or cash-generating unit is the higher of its value in use and its fair
value less costs to sell. In assessing value in use, the estimated future cash flows are discounted to their present value using
a pre-tax discount rate that reflects current market assessment of the time value of money and the risks specific to the asset.
For the purpose of impairment testing, assets that cannot be tested individually are grouped together into the smallest group
of assets that generates cash inflows from continuing use that are largely independent of the cash inflows of other assets or
groups of assets (the “Cash-Generating Unit, or CGU”).
The Company’s corporate assets do not generate separate cash inflows. If there is an indication that a corporate asset may
be impaired, then the recoverable amount is determined for the CGU to which the corporate asset belongs. An impairment
loss is recognized if the carrying amount of an asset or its CGU exceeds its estimated recoverable amount. Impairment
losses are recognized in the profit and loss account.
Impairment loss recognized in prior periods is assessed at each reporting date for any indications that the loss has
decreased or no longer exists. An impairment loss is reversed if there has been a change in the estimates that are used to
determine the recoverable amount. An impairment loss is reversed only to the extent that the asset’s carrying amount does
not exceed the carrying amount that would have been determined, net of depreciation or amortization, if no impairment loss
had been recognized.
3.10 Share capital (ordinary shares)
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of ordinary shares are recognized
as a deduction from equity, net of any tax effects.
3.11 Staff retirement benefits
The Company’s retirement benefit plans comprise of provident funds, pensions, gratuity schemes and a medical scheme for
eligible retired employees.
3.12 Defined benefit plans
The Company operates a funded pension scheme and a funded gratuity scheme for management staff. The pension and
gratuity schemes are salary schemes providing pension and lump sums, respectively. Pension and gratuity schemes for
management staff are invested through two approved trust funds. The Company also operates gratuity scheme for non
management staff and the pensioners' medical scheme which are unfunded. The pension and gratuity plans are final salary
plans. The pensioners' medical plan reimburses actual medical expenses to pensioners as per entitlement. The Company
recognizes expense in accordance with IAS 19 "Employee Benefits".
All past service costs are recognized at earlier of when the amendment or curtailment occurs and when the Company has
recognized related restructuring or termination benefits.
The Company's net obligation in respect of defined benefit plans is calculated separately for each plan by estimating the
amount of future benefit that employees have earned in the current and prior periods, discounting that amount and deducting
the fair value of any plan assets. The calculation of defined benefit obligations is performed annually by a qualified actuary
using the projected unit credit method. When the calculation results in a potential asset for the Company, the recognized
asset is limited to the present value of economic benefits available in the form of any future refunds from the plan or reductions
in future contributions to the plan. To calculate the present value of economic benefits, consideration is given to any applicable
minimum funding requirements.
Remeasurement of the net defined benefit liability, which comprise actuarial gains and losses, the return on plan assets
(excluding interest) and the effect of the asset ceiling (if any, excluding interest), are recognized immediately in other
comprehensive income. The Company determines the net interest expense (income) on the net defined benefit liability
(asset) for the period by applying the discount rate used to measure the defined benefit obligation at the beginning of the
annual period to the then net defined benefit liability (asset), taking into account any changes in the net defined benefit liability
(asset) during the period as a result of contributions and benefit payments. Net interest expense and other expenses related
to defined benefit plans are recognized in the statement of profit and loss account.
When the benefits of a plan are changed or when a plan is curtailed, the resulting change in benefit that relates to past
service or the gain or loss on curtailment is recognized immediately in the statement of profit and loss account. The Company
recognizes gains and losses on the settlement of a defined benefit plan when the settlement occurs.
3.13 Defined contribution plans
The Company operates two registered contributory provident funds for its permanent staff and a registered defined contribution
superannuation fund for its management staff, who have either opted for this fund by July 31, 2004 or have joined the
Company after April 30, 2004. The said funds were transferred from ICI Pakistan Limited pursuant to the Scheme of demerger
in 2011. In addition to this, the Company also provides group insurance to all its employees.

Obligations for contributions to defined contribution plans are expensed as the related service is provided. Prepaid
contributions are recognized as an asset to the extent that a cash refund or a reduction in future payments is available.
3.14 Provisions
A provision is recognized in the statement of financial position when the Company has a legal or constructive obligation as
a result of a past event, and it is probable that an outflow of economic benefits will be required to settle the obligation and a
reliable estimate can be made of the amount of obligation. The amount recognized as a provision reflects the best estimate
of the expenditure required to settle the present obligation at the end of the reporting period.
3.15 Contingent liabilities
Contingent liability is disclosed when:
- there is a possible obligation that arises from past events and whose existence will be confirmed only by the occurrence
or non-occurrence of one or more uncertain future events not wholly within the control of the Company; or
- there is present obligation that arises from past events but it is not probable that an outflow of resources embodying
economic benefits will be required to settle the obligation or the amount of the obligation cannot be measured with
sufficient reliability.
3.16 Revenue recognition
3.16.1 Revenue from contract with customers primarily includes sale of paints and coatings. Revenue is recognized when performance
obligations are satisfied by transferring control of a good or service to a customer, either at a point in time or over time of an
amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services.
Revenue is recognised in accordance with the aforementioned principle by applying the following steps:
i) Identify the contract with a customer.

ii) Identify the performance obligation in the contract.
iii) Determine the transaction price of the contract.
iv) Allocate the transaction price to each of the separate performance obligations in the contract.
v) Recognise the revenue when (or as) the entity satisfies a performance obligation.
Revenue is recognised either at a point in time or over time, when (or as) the Company satisfies performance obligations by
transferring the promised goods or services to its customers. Any bundled goods or services that are distinct are separately
recognized, and any discounts or rebates on the contract price are generally allocated to the separate elements.
3.16.2 a) Sale of goods
Revenue is recognized when the significant risks and rewards of ownership have been transferred to the customer (i.e. after
obtaining customer acknowledgment at the time of delivery of goods). Although the transfer of risks and rewards is not the
only criterion to be considered to determine whether control over the goods has transferred, it is in most situations considered
to be the main indicator of the customer’s ability to direct the use of and obtain the benefits from the asset and largely also
coincides with the physical transfer of the goods and the obligation of the customer to pay. In case of expected returns, no
revenue is recognized for such products.
Variable considerations, including among others rebates and discounts are accrued for as performance obligations are
satisfied and revenue is recognized. Variable considerations are only recognized when it is highly probable that it is not
subject to significant reversal.
Revenue is measured at the fair value of the consideration received or receivable for the goods sold, net of returns, discounts
and sales tax.
b) Equipment provided to customers
The Company at times also provides tinting machines to its customers at the start of a paint delivery contract.
Under IFRS 15, the delivery of such assets qualifies as a separate performance obligation. Revenue can only be recognized
at the moment of transfer of such assets, when there is an agreed sales price or when there is a binding take-or-pay commitment
for a minimum quantity of paint to be acquired by the customer.
c) Others
- Profit on short-term bank deposits is accounted for on a time-apportioned basis using the effective interest rate method.
- Financial income on funds invested, mark-up / interest income on lendings made by the Company and amortization gains
on interest free loans given to staff is accounted for using the effective interest rate method.

3.16.3 Policy up to December 31, 2018
The revenue recognition policy below was applied for the comparative figures in relation to 2018:
a) Sale of goods
Revenue is recognized when the significant risks and rewards of ownership have been transferred to the customer (i.e. after
obtaining customer acknowledgment at the time of delivery of goods), recovery of the consideration is probable, the associated
costs and possible return of goods can be estimated reliably, and the amount of revenue can be measured reliably. In case
of goods sold through consignment, revenue is recognized after assuming lead time for the delivery of goods from the
shipment date unless the sales are acknowledged by the customer.
Revenue is measured at the fair value of the consideration received or receivable for the goods sold, net of returns, discounts
and sales tax.
b) Others
- Profit on short-term bank deposits is accounted for on a time-apportioned basis using the effective interest rate method.
- Financial income on funds invested, mark-up / interest income on lendings made by the Company and amortization gains
on interest free loans given to staff is accounted for using the effective interest rate method.
3.17 Financial expenses
Financial expenses are recognized using the effective interest rate method and comprise of mark-up / interest expense on
borrowings, along with amortization losses on interest free loans given to staff.
3.18 Operating lease / Ijarah contracts
Leases that do not transfer substantially all the risks and rewards incidental to ownership of an underlying asset i.e. retained
by the lessor, are classified as operating leases. Payments made under operating leases / ijarah contracts (net of any incentives
received from the lessor) are charged to the statement of profit and loss account on a straight-line basis over the period of
the lease.
Certain leases previously classified as operating leases have been classified to right-of-use assets in accordance with recognitions
criteria mentioned in note 4.1 to these financial statements.
3.19 Borrowing cost
Borrowing costs are recognized as an expense in the period in which these are incurred except to the extent of borrowing
cost that are directly attributable to the acquisition, construction or production of a qualifying asset. Such borrowing costs, if
any, are capitalized as part of the cost of that asset.
3.20 Foreign currency translation
Transactions denominated in foreign currencies are translated into Pak Rupees, at the foreign exchange rates prevailing at
the date of transaction. Monetary assets and liabilities in foreign currencies are translated into Pak Rupees at the foreign
exchange rates at the reporting date. Exchange differences i.e. gains / losses, are taken to the statement of profit and loss
account.
3.21 Taxation
Income tax expense comprises current and deferred tax. Income tax expense is recognized in the statement of profit and
loss account, except to the extent that it relates to items recognized directly in other comprehensive income or below equity,
in which case it is recognized in other comprehensive income or below equity respectively.
a) Current
Provision of current tax is based on the taxable income for the year determined in accordance with the prevailing law for
taxation of income. The charge for current tax is calculated using prevailing tax rates or tax rates expected to apply to the
profit for the year, if enacted or substantially enacted. The charge for current tax also includes adjustments, where considered
necessary, to provision for tax made in previous years arising from assessments framed during the year for such years.
b) Deferred
Deferred tax is accounted for using the statement of financial position liability method in respect of all temporary differences
arising from differences between the carrying amount of assets and liabilities in these financial statements and the
corresponding tax bases used in the computation of the taxable profit. Deferred tax liabilities are generally recognized for all
taxable temporary differences and deferred tax assets are recognized to the extent that it is probable that taxable profits shall
be available against which the deductible temporary differences, unused tax losses and tax credits can be utilized.

Deferred tax is calculated at the rates that are expected to apply to the period when the differences reverse based on tax
rates that have been enacted or substantively enacted by the reporting date. Deferred tax is charged or credited in the statement
of profit and loss account, except in the case of items credited or charged to equity in which case it is included in equity.
The Company recognizes a deferred tax asset to the extent that it is probable that taxable profits for the foreseeable future
will be available against which the asset can be utilized. Deferred tax assets are reduced to the extent that it is no longer
probable that the related tax benefit will be realized. Further, the Company recognizes deferred tax asset / liability on deficit
/ surplus on revaluation of property, plant and equipment which is adjusted against the related deficit / surplus.
3.22 Earnings per share
The Company presents basic and diluted Earnings Per Share (EPS) data for its ordinary shares. Basic EPS is calculated by
dividing the profit after tax attributable to ordinary shareholders of the Company by the weighted average number of ordinary
shares outstanding during the year. Diluted EPS is determined by adjusting the profit or loss attributable to ordinary share
holders and the weighted average number of ordinary shares outstanding for the effects of all dilutive potential ordinary
shares.
3.23 Dividend and other appropriations
Dividend is recognized as a liability in the period in which it is declared and approved. Appropriations of profit are reflected
in the statement of changes in equity in the period in which such appropriations are approved.
3.24 Related party transactions
Transactions with related parties are carried out on mutually agreed terms and conditions.
4 Changes in accounting policies
4.1 First time adoption of IFRS 16 - Leases (right-of-use asset and lease liability)
IFRS 16 introduces an on-balance sheet lease accounting model for leases entered by the lessee. A lessee recognizes a
right-of-use asset representing its right of using the underlying asset and a corresponding lease liability representing its
obligations to make lease payments. Lessor accounting remains similar to the current standard i.e. lessors continue to classify
leases as either finance or operating leases.
At inception of a lease contract, the Company assesses whether a contract is, or contains, a lease based on whether the
contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. Lease
terms are negotiated on an individual basis and contain a wide range of different terms and conditions.
For lease contracts other than the aforementioned, the lease liability is initially measured at the present value of the lease
payments that are not paid at the commencement date, discounted using the interest rate implicit in the lease, or if that rate
cannot be readily determined, the Company's incremental borrowing rate.
Lease payments include fixed payments, variable lease payment that are based on an index or a rate and amounts expected
to be payable by the lessee under residual value guarantees, the exercise price of a purchase option if the lessee is reasonably
certain to exercise that option, payments of penalties for terminating the lease, if the lease term reflects the lessee exercising
that option, less any lease incentives receivable. The extension and termination options are incorporated in determination of
lease term only when the Company is reasonably certain to exercise these options.
The lease liability is subsequently measured at amortised cost using the effective interest rate method. It is remeasured
when there is a change in future lease payments arising from a change in fixed lease payments or an index or rate, change
in the Company's estimate of the amount expected to be payable under a residual value guarantee, or if the Company changes
its assessment of whether it will exercise a purchase, extension or termination option. The corresponding adjustment is made
to the carrying amount of the right-to-use asset, or is recorded in the statement of profit and loss account if the carrying
amount of right-to-use asset has been reduced to zero.
The right-of-use assets recognised subsequent to the adoption are measured based on the initial amount of the lease liability
adjusted for any lease payments made at or before the commencement date, plus any initial direct costs incurred. The
right-of-use assets are depreciated on a straight line basis over the lease term as this method most closely reflects the
expected pattern of consumption of future economic benefits. The right-of-use assets are reduced by impairment losses, if
any, and adjusted for certain remeasurements of lease liability.
The Company has adopted IFRS 16 from January 1, 2019, and has not restated comparatives for the 2018 reporting period,
as permitted under the specific transitional provisions in the standard. The impact of adoption of this standard is therefore
recognised in the opening statement of financial position on January 1, 2019.
On adoption of IFRS 16, the Company recognised certain lease liabilities which had previously been classified as ‘operating
leases’ under the principles of IAS 17 Leases. These liabilities were measured at the present value of the remaining lease
payments, discounted using the Company’s incremental weighted average borrowing rate of 11.55% per annum as of
January 1, 2019. The lease liability is subsequently measured at amortised cost using the effective interest rate method.

The following summary reconciles the Company's operating lease commitments at December 31, 2018 as previously
disclosed in the Company's annual financial statements as at December 31, 2018 to the lease liabilities recognised on initial
application of IFRS 16 at January 01, 2019:
Operating lease as at December 31, 2018 32,973
Discounted using the lessee’s incremental borrowing rate at the date of initial application 27,318
Add: finance lease liabilities recognised as at December 31, 2018 21,505
Lease liability recognised as at January 1, 2019 48,823
Of which are:
Current lease liabilities 26,448
Non-current lease liabilities 22,375
48,823
On adoption of IFRS 16, the associated right-of-use assets were measured at the amount equal to the lease liability, adjusted
by the amount of prepaid lease payments recognised in the statement of financial position immediately before the date of
initial application.
The right-of-use assets recognised subsequent to the adoption are measured based on the initial amount of the lease liability
adjusted for any lease payments made at or before the commencement date, plus any initial direct costs incurred. The
right-of-use assets are depreciated on a straight line basis over the lease term as this method most closely reflects the
expected pattern of consumption of future economic benefits. The right-of-use assets are reduced by impairment losses, if
any, and adjusted for certain remeasurements of lease liability.
December 31, January 1,
Note
2019 2019
The recognised right-of-use assets relate to the following types of assets:
Buildings 14 28,200 61,072
The effect of this change in accounting policy is as follows:
4.1.1 Impact on statement of financial position
Assets
Increase in right-of-use assets 28,200 61,072
Decrease in deferred tax - net 2,527 -
Decrease in other assets - trade deposits and short term prepayments (10,285) (12,249)
Increase in total assets 20,442 48,823
Liabilities
Increase in total lease liability against right-of-use assets 18,871 48,823
Decrease in taxation - provision less payment 2,250 -
Increase in total liabilities 21,121 48,823
Decrease in net assets (679) -
For the year ended 2019

4.1.2 Impact on statement of profit and loss account
(Increase) / decrease in administrative and general expenses:

Increase in depreciation on right-of-use assets (6,233)
Decrease in rent expense 7,811
1,578
(Increase) / decrease in Selling and distribution expenses:
Increase in depreciation on right-of-use assets (21,892)
Decrease in rent expense 22,624
732
Increase in finance cost (3,597)

Increase in other income 331
Decrease in profit before tax (956)

Decrease in tax 277
Decrease in profit after tax (679)
Earnings per share for the year ended December 31, 2019 are Rs 0.01 per share lower as a result of the adoption of IFRS 16.

4.1.3 Practical expedients applied
In applying IFRS 16 for the first time, the Company has used the following practical expedients permitted by the standard:
- grandfathered the assessment of which transactions are lease on the date of initial application;
- the use of a single discount rate to a portfolio of leases with reasonably similar characteristics;
- reliance on previous assessments on whether leases are onerous;
- the accounting for operating leases with a remaining lease term of less than 12 months as at January 1, 2019 as short-term
leases;
- the exclusion of initial direct costs for the measurement of the right-of-use asset at the date of initial application; and
- the use of hindsight in determining the lease term where the contract contains options to extend or terminate the lease.
4.2 First time adoption of IFRS 15 - Revenue from Contracts with Customers
Effective January 1, 2019, the Company has adopted IFRS 15 - 'Revenue from Contracts with Customers'. This standard,
replaces the previous revenue standards: lAS 18 Revenue, lAS 11 Construction Contracts, and the related interpretations on
revenue recognition. Key changes in the new standard include a single five-step model for revenue recognition and establishes
a comprehensive framework for recognition of revenue from contracts with customers based on a core principle that an entity
should recognise revenue representing the transfer of promised goods or services to customers in an amount that reflects
the consideration to which the entity expects to be entitled in exchange for those goods or services.
On the date of initial application, the Company had unexpired tinting machine contracts with its customer wherein customers
were provided tinting machines free of charge. Under IFRS 15, the delivery of such tinting machines now qualifies as a
separate performance obligation. Accordingly, the revenue and a resulting lease asset against such tinting machine is
required to be recognized at the moment of transfer of such assets. However, since these tinting machines were leased free
of charge and without any substantial binding sales obligations, no revenue was allocated to such contracts in
accordance with the five-step model under IFRS-15. As a consequence, these tinting machines have been charged to the
opening retained earnings of the Company in the statement of changes in equity and no finance lease receivable nor
revenue has been recognized in these financial statements of the Company.
As referred above, the Company has adopted IFRS 15 from January 1, 2019, and has not restated comparatives for the 2018
reporting period, as permitted under the specific transitional provisions in the standard.
January 1,
The effect of this change in accounting policy upon initial application is as follows: Note
2019
Decrease in property, plant and equipment at net book value 13.1 (48,198)
Increase in deferred tax asset 18.2 13,027
Increase in taxation - provision less payment (6,765)
Decrease in opening retained earnings (41,936)
4.3 First time adoption of IFRS 9 – Financial Instruments
IFRS 9 replaces the provisions of IAS 39 that relate to the recognition, classification and measurement of financial assets
and financial liabilities, derecognition of financial instruments, impairment of financial assets and hedge accounting. In
respect of application of IFRS 9 from January 1, 2019, the Company has adopted modified retrospective approach as permitted
by this standard, according to which the Company is not required to restate the prior period results.
Upon initial adoption of IFRS 9 there were no adjustments resulting in the measurement of financial assets and liabilities of
the Company from the previously applicable IAS 39.
In respect of classification of financial assets, the Company’s management has assessed which business models apply to
the financial assets held by the Company and has classified its financial instruments into the appropriate IFRS 9 categories
as follows on January 1, 2019:
Financial assets Original classification under IAS 39 New classification under IFRS 9
Loans and receivables Amortised cost

Long term loans Loans and receivables Amortised cost
Long term deposits Loans and receivables Amortised cost
Trade debts Loans and receivables Amortised cost
Loans and advances Loans and receivables Amortised cost
Short term trade deposits Loans and receivables Amortised cost
Other receivables Loans and receivables Amortised cost
Interest accrued Loans and receivables Amortised cost
Cash and bank balances

Financial liabilities
There has been no change in the classification of the Company's financial liabilities under IFRS 9 from its previous classification under
IAS 39
5 Share capital
5.1 Authorized share capital
2019 2018 Note 2019 2018
(Number of shares)
100,000,000 100,000,000 Ordinary shares of Rs. 10/- each 1,000,000 1,000,000
5.2 Issued, subscribed and paid-up capital

(Number of shares) Ordinary shares of Rs. 10/- each issued as fully
46,443,320 46,443,320 paid shares for consideration other than cash 464,433 464,433
5.2.1 ICI Omicron B.V. (which is a wholly owned subsidiary of Akzo Nobel N.V.) holds 35,209,665 (2018: 35,209,665) ordinary shares of Rs.
10/- each representing 75.81% (2018: 75.81%) of the share capital of the Company.
During the year the ICI Omircon B.V. resolved to purchase all the outstanding securities and share of the Company, without exception,
from all security holders with the purpose to further increase ownership and to de-list the Company in accordance with section 96 of the
Securities Act, 2015 and clause 5.6.1(a) of PSX Regulations. As on December 31, 2019 the Company is in the process of voluntary
delisting from the Pakistan Stock Exchange (PSX) and subsequently submitted a formal application thereof on January 30, 2020 to
PSX.
6 Reserves
Capital reserves
- Share premium 6.1 156,006 156,006
- Capital receipts 6.2 196 196
156,202 156,202
Revenue reserve
- Unappropriated profit 2,284,913 1,974,430
2,441,115 2,130,632
6.1 This amount has been allocated and transferred to the Company pursuant to the Scheme of demerger. This reserve can be utilized by
the Company only for the purposes specified in section 81(2) of the Companies Act, 2017.
6.2 Capital receipts represent the amount received from various Akzo Nobel companies overseas for the purchase of property, plant and
equipment. The remitting companies have no claim to their repayments. The amount has been allocated and transferred to the
Company pursuant to the Scheme of demerger.
7 Surplus on revaluation of property, plant and equipment
This represents surplus arising on revaluation of freehold land, buildings on freehold land and plant and machinery.
Balance at beginning of the year 1,264,962 1,306,613

Revaluation surplus for the year - net of deferred tax 2,462,931 -
Transferred to unappropriated profit in respect of incremental
depreciation during the year - net of deferred tax (39,294) (41,651)
Balance at end of the year 3,688,599 1,264,962
8 Deferred liabilities
8.1 The amounts recognized in the statement of financial position are:

Non-current liabilities
Unfunded - recognized in deferred liability
- Gratuity fund - non-management 10,016 10,406
- Post retirement medical benefits 56,522 51,162
66,538 61,568
Current liabilities
Funded - payable to employee retirement benefit fund:
- Pension fund - management 70,561 75,829
- Gratuity fund - management 42,664 42,849
113,225 118,678
179,763 180,246

2019 2018
Funded Unfunded Total Funded Unfunded Total
Pension Gratuity Subtotal Pension Gratuity Subtotal
8.2 The amounts recognized in the profit and loss account against defined benefit schemes are as follows:
Current service cost 4,042 13,760 17,802 1,682 19,484 5,211 13,828 19,039 1,718 20,757
Contribution by associates - (360) (360) - (360) - (697) (697) - (697)
Interest cost 18,739 16,204 34,943 6,046 40,989 16,365 13,087 29,452 4,263 33,715
Expected return on plan assets (12,005) (12,812) (24,817) - (24,817) (10,495) (9,411) (19,906) - (19,906)
Net charge for the year 10,776 16,792 27,568 7,728 35,296 11,081 16,807 27,888 5,981 33,869
8.3 Included in other comprehensive income:
Actuarial (loss) / gain on remeasurement of plan obligation from:
- Change in financial assumptions 1,759 118 1,877 26 1,903 4,833 159 4,992 (159) 4,833
- Experience adjustments 3,272 13,813 17,085 (643) 16,442 5,596 6,853 12,449 1,720 14,169
Return on plan assets, excluding interest income (8,231) (15,115) (23,346) - (23,346) (6,544) (623) (7,167) - (7,167)
Net (loss) / gain for the year (3,200) (1,184) (4,384) (617) (5,001) 3,885 6,389 10,274 1,561 11,835
8.4 Movement in the net liability recognized in the statement of financial position are as follows:
Balance at beginning of the year 75,829 42,849 118,678 61,568 180,246 87,877 59,216 147,093 58,062 205,155
Net charge for the year 10,776 16,792 27,568 7,728 35,296 11,081 16,807 27,888 5,981 33,869
Contributions / payments during the year (19,244) (18,161) (37,405) (3,375) (40,780) (19,244) (26,785) (46,029) (914) (46,943)
Actuarial loss charged to / (gain) recognized in
other comprehensive income 3,200 1,184 4,384 617 5,001 (3,885) (6,389) (10,274) (1,561) (11,835)
Balance at end of the year 70,561 42,664 113,225 66,538 179,763 75,829 42,849 118,678 61,568 180,246
8.5 The amounts recognized in the statement of financial position are as follows:
Fair value of plan assets (129,711) (126,543) (256,254) - (256,254) (112,647) (118,619) (231,266) - (231,266)
Present value of defined benefit obligation 200,272 169,207 369,479 66,538 436,017 188,476 161,468 349,944 61,568 411,512
Liability recognized 70,561 42,664 113,225 66,538 179,763 75,829 42,849 118,678 61,568 180,246
8.6 Movement in the present value of defined benefit obligation:
Balance at beginning of the year 188,476 162,165 350,641 61,568 412,209 221,046 177,824 398,870 58,062 456,932
Current service cost 4,042 13,760 17,802 1,682 19,484 5,211 13,828 19,039 1,718 20,757
Interest cost 18,739 16,204 34,943 6,046 40,989 16,365 13,087 29,452 4,263 33,715
Benefits paid (5,954) (8,991) (14,945) (3,375) (18,320) (43,717) (35,562) (79,279) (914) (80,193)
Actuarial (gain) / loss on remeasurement

of plan obligation (5,031) (13,931) (18,962) 617 (18,345) (10,429) (7,012) (17,441) (1,561) (19,002)
Balance at end of the year 200,272 169,207 369,479 66,538 436,017 188,476 162,165 350,641 61,568 412,209
8.7 Movement in the fair value of plan assets:
Balance at beginning of the year 112,647 119,316 231,963 - 231,963 133,169 118,608 251,777 - 251,777
Expected return 12,005 12,812 24,817 - 24,817 10,495 9,411 19,906 - 19,906
Contributions by the Company 19,244 18,161 37,405 - 37,405 19,244 26,785 46,029 - 46,029
Contributions by associates - 360 360 - 360 - 697 697 - 697
Benefits paid (5,954) (8,991) (14,945) - (14,945) (43,717) (35,562) (79,279) - (79,279)
Return on plan assets, excluding
interest income (8,231) (15,115) (23,346) - (23,346) (6,544) (623) (7,167) - (7,167)
Balance at end of the year 129,711 126,543 256,254 - 256,254 112,647 119,316 231,963 - 231,963
8.8 Plan assets comprise:
Government bonds 83,772 83,299 167,071 - 167,071 8,618 2,527 11,145 - 11,145
Corporate bonds 11,255 8,742 19,997 - 19,997 6,740 4,815 11,555 - 11,555
Mutual funds – debt 920 27 947 - 947 925 27 952 - 952
Equity instruments 21,145 20,931 42,076 - 42,076 38,490 34,402 72,892 - 72,892
Cash 12,619 13,544 26,163 - 26,163 57,874 76,848 134,722 - 134,722
129,711 126,543 256,254 - 256,254 112,647 118,619 231,266 - 231,266
8.9 The expected charge in statement of profit and loss account pertaining to pension fund, gratuity fund and unfunded schemes for the year ending December 31, 2020 is Rs. 12.06 million, Rs. 17.53
million and Rs. 9.73 million, respectively.

8.10 Government bonds, mutual funds and shares are valued at quoted market prices and are level 1. Cash includes notional
accrual of interest and is therefore level 2. Corporate bonds are valued at market prices and are level 2. The funds do not
have any investment in the securities issued by the Company or any associated companies. The Gratuity Fund and Pension
Fund are invested through approved trust funds.
8.11 The principal actuarial assumptions at the reporting date were as follows:
2019 2018
Discount rate 12.10% 10.10%

Expected return on plan assets 12.10% 10.10%
Future salary increases - Management staff 12.60% 10.60%
Future salary increases - Non-management staff 9.90% 7.90%
Future pension increases 7.50% 5.60%
Medical cost trend 6.80% 4.90%
As at December 31, 2019, the weighted average duration of the defined benefit obligation was 9.4 years (2018: 10 years).
Plan duration of defined benefit obligation:
Pension 8 years 8 years

Gratuity - Management staff 8.9 years 9.5 years
Gratuity - Non-management staff 5.5 years 5.2 years
Pensioners' medical plan 16.3 years 16.7 years
8.12 The plans expose the Company to the actuarial risks such as:
Salary risks
The risk that the final salary at the time of cessation of service is higher than what was assumed. Since the benefit is calculated
on the final salary, the benefit amount increases similarly.
Mortality / withdrawal risks
The risks that the actual mortality / withdrawal experiences are different. The effect depends upon beneficiaries' service / age
distribution and the benefit.
Investment risks
The risk of the investment underperforming and not being sufficient to meet the liabilities. This is managed by formulating an
investment policy and guidelines based on which investments are made after obtaining approval of trustees of funds.
8.13 In case of the funded plans, it is ensured that the long-term investments are in line with the obligation under the retirement
benefit plan. Duration and the expected yield of the investments are matched with the expected cash outflows arising from
the retirement benefit plan obligations. The process used to manage its risks has not been changed from previous periods.
Investments are well diversified and composition of the plan assets is disclosed in note 8.8 to the financial statements.
8.14 The expected return on plan assets was determined by considering the expected returns available on the assets underlying
the current investment policy. Expected yields on fixed interest investments are based on gross redemption yields as at the
reporting date. Expected return on equity investments reflect long term real rates of return experienced in the market.
8.15 Normal retirement age is 60 years for non-management staff. Normal retirement age for management staff depends on date
of joining. If joining date is before February 1988, normal retirement age is 58 years for men and 55 years for women. If
joining date falls between February 1, 1988 and February 24, 2013, it is 60 years extendable to 62 years by the mutual
consent of employee and Company. If joining date is February 25, 2013 or later, normal retirement age is 62 years.
Currently the Company has the following plans:
a) Pension
Pension scheme entitles the members to pension, subject to the conditions laid down in the rules, on reaching the normal
retirement age, disability, early retirement or death in which case the surviving spouse and the children under the age of 25
shall be entitled.
Retirement benefit is a pension of 1.25% of final gross salary for each year of service less actuarial equivalent of any gratuity,
if service is at least 10 years. Members may commute up to one-half of pension and the trustees may commute the balance.
The Trustees increase pensions in payment on an ad-hoc basis to provide some relief against inflation. The plan guarantees
a minimum annual increase of 6%.

b) Gratuity
Gratuity scheme entitles the members to gratuity on resignation, termination, retirement, early retirement, retrenchment,
death and dismissal based on the Company's Service Rules. The Company maintains a separate gratuity fund for
management and non-management staff.
Gratuity is based on the last month's basic salary for each year of service.
c) Pensioners’ medical plan
The pensioners' medical plan reimburses medical expense to retirees, their wives and widows and widows of management
staff employees who died in service. Benefits are limited to a maximum amount depending on grade at retirement.
8.16 The Pension and Gratuity management plans are fully funded. The funds are legally separate from the Company and are
recognized by the Commissioner of Income Tax under Income Tax Rules, 2002. Members do not contribute to the pension
and gratuity funds. The Company contributes at rates advised by the actuary. The contributions are equal to current service
cost with adjustment for any deficit. If there is a surplus, the Company takes a contribution holiday.
8.17 Sensitivity analysis
Reasonably possible changes at the reporting date to one of the relevant actuarial assumptions, holding other assumptions
constant, would have affected the defined benefit obligation by the amounts shown below:
Impact on defined benefit obligation

Change in Increase in Decrease in
assumption assumption assumption
Discount rate 0.50% (17,114) 18,452

Salary growth rate 0.50% 9,432 (8,977)
Pension growth rate 0.50% 4,928 (4,567)
Medical cost trend rate 0.50% 4,394 (3,973)
If life expectancy increases by 1 year, the obligation decreases by Rs. 5.46 million.
The impact of changes in financial assumptions has been determined by revaluation of the obligations on different sets of
assumptions. The impact of increase in longevity has been calculated on the aggregate for each class of employees.
8.18 The Company contributed Rs. 19.80 million (2018: Rs. 22.42 million) and Rs. 10.10 million (2018: Rs. 10.83 million) to the
provident fund and the defined contribution superannuation fund respectively during the year.
8.19 Investments out of fund have been made in accordance with the provisions of section 218 of the Companies Act, 2017 and
the conditions specified thereunder.
2019 2018
9 Lease liabilities against right-of-use assets
Lease liabilities against right-of-use assets at year end 18,871 -

Less: current portion of lease liabilities against right-of-use assets (6,381) -
Non current lease liabilities against right-of-use assets 12,490 -
9.1 Commitments in relations to leases recognised under IFRS 16 against right-of-use assets are payable as follows:
Payable not later than one year 8,015 -

Payable later than one year but not later than five years 13,960 -
21,975 -
Future finance cost (3,104) -
Total lease liabilities against right-of-use assets 18,871 -

Note 2019 2018

10 Trade and other payables
Creditors:
- Related parties 10.1 216,339 176,766
- Others 800,523 880,702
1,016,862 1,057,468
Royalty and technical service fee 10.2 175,785 181,352

Accrued liabilities 214,998 244,318
Sales tax, excise and custom duties 64,826 38,024
Workers' Profit Participation Fund 10.3 40,517 31,240
Workers' Welfare Fund 10.4 4,815 3,246
Payable for capital expenditure 7,544 23,076
Withholding tax payable to Government 11,384 10,337
Payable to employee retirement benefit funds 8.1 113,225 118,678
Others 2,110 2,287
635,204 652,558
1,652,066 1,710,026
10.1 This includes balances due to following related parties:
Akzo Nobel Car Refinishes B.V. 14,861 26,481

Akzo Nobel N.V. 70,194 43,852
ICI Omicron B.V. 20,754 20,754
Akzo Nobel Paints Singapore Pte Limited 94,524 55,714
Akzo Nobel Packaging Coatings Limited 3,243 6,284
International Paint (Nederland) B.V. 9,138 9,113
Akzo Nobel Saudi Arabia Limited - 7,326
Akzo Nobel India Limited - 2,742
Akzo Nobel UAE Paints L.L.C. - 1,878
Akzo Nobel GEHQ - 2,622
Akzo Nobel Decorative Coatings 3,625 -
216,339 176,766
10.2 This includes royalty and technical service fee payable to the following related parties:
Akzo Nobel Coatings International B.V. 169,027 174,984

169,027 174,984
10.3 Workers' Profit Participation Fund
Balance at beginning of the year 31,240 44,923

Allocation for the year 32 41,307 31,240
Interest on funds 31 514 919
Payments made to the fund during the year (32,544) (45,842)
Balance at end of the year 40,517 31,240
10.4 Workers' Welfare Fund

Allocation for the year 32 15,696 13,376
Provision written back - (7,000)
Payments made during the year (14,127) (12,039)
10.5 Due to initial adoption of IFRS 15, advances from customers previously presented under 'trade and other payables', are now separately
disclosed as contract liabilities on the statement of financial position.

11 Contract liabilities
Advances received from customer are recognised as revenue when performance obligation in accordance with the policy as described
in note 3.16 is satisifed. Following is a movement in the balance with respect to contract liabilities during the year:
2019 2018
Advances received during the year 249,822 135,969
Revenue recognised during the year (245,758) (121,611)
12 Contingencies and commitments
12.1 Contingencies
Claims against the Company not acknowledged as debts are as follows:
12.1.1 For the tax year 2012, the Additional Commissioner Inland Revenue (Audit) ['ACIR'], Zone-II, Large Taxpayers Unit, Lahore
through order dated January 31, 2014 raised additional tax demand of Rs. 89.49 million. The tax demand pertains to
disallowance of deductions from income for technical fee, advertisement and publicity, bad debts written off and stock in
trade written off. Further, there was disagreement over the tax treatment of certain matters including calculation of Workers'
Welfare Fund, claim for tax credit and apportionment of other income.
The Company filed an appeal before Commissioner Inland Revenue (Appeals) ['CIR (A)'] against the aforesaid order, which
was disposed through the appellate order dated May 5, 2014 wherein the CIR (A) remanded majority of the issues back to
the assessing officer. The remaining issues of 'apportionment of other income' and 'disallowance of tax credit' have been
contested by the Company with the Appellate Tribunal Inland Revenue ('ATIR') whereas the tax department has also contested
the issue of 'Workers Welfare Fund' and 'amortization of advertisement expense' with the ATIR. The Additional Commissioner
Inland Revenue (Audit) ['ACIR'], Zone-II, Large Taxpayers Unit, Lahore, through notice dated June 8, 2015 initiated the
proceedings under section 124 of the Ordinance and confronted the issues remanded by the CIR (A) to the Company, which
have been duly replied to. However, the respective order had not been finalized. The management, in consultation with their
tax advisor, is of the view that these tax matters will eventually be decided in favor of the Company; therefore no provision
has been made in these financial statements.
12.1.2 For the tax year 2013, the ACIR through assessment order dated April 30, 2014 passed under section 122(5A) of the Income
Tax Ordinance, amended the taxable income of the Company and raised additional tax demand of Rs. 15.53 million. The tax
demand pertains to disallowance of deductions from income for bad debts written off, exchange losses, write-off of property,
plant and equipment, advertisement and publicity expenses. Further, there was disagreement over the tax treatment of
certain matters including calculation of Workers' Welfare Fund and claim for tax credit.
The Company filed an appeal before the CIR (A), which was disposed through the appellate order dated October 27, 2014
wherein the CIR (A) decided some of the issues in favour of the Company. The remaining issues have been contested by the
Company with the ATIR. The department has also filed an appeal with the ATIR on the issues decided in favour of the
Company. The Company had partially paid the demand raised through the amendment order and as a consequence of the
aforementioned appellate order, an amount of Rs. 4.6 million becomes refundable if the appeal effect is given by the department.
The management, in consultation with their tax advisor, is of the view that these tax matters will eventually be decided in favor
of the Company; therefore no provision has been made in these financial statements.
12.1.3 For the tax year 2014, the CIR through assessment orders dated March 1, 2018 passed under section 122(5A) of the Income
Tax Ordinance, amended the taxable income of the Company and raised additional tax demands of Rs. 747.48 million. The
tax demands mainly pertain to disallowance of advertisement and publicity; discounts and commission; service expenses
due to non-deduction of withholding tax and expenses on account of gratuity, provident and pension funds. The Company
had filed appeals before the CIR (A) who annulled the impugned demand and remanded back the case to the assessing
officer with directions of re-examination. The management, in consultation with their tax advisor, is of the view that these tax
matters will eventually be decided in favor of the Company; therefore no provision has been made in these financial
statements.

12.1.4 For the tax year 2016, the CIR through assessment orders dated March 31, 2018 passed under section 122(5A) of the Income Tax
Ordinance, amended the taxable income of the Company and raised additional tax demands of Rs. 454.48 million, respectively. The tax
demands mainly pertain to disallowance of advertisement and publicity; discounts and commission; and expenses on account of gratuity,
provident and pension funds. The Company has filed appeals before the CIR (A), which are currently pending adjudication. The
management, in consultation with their tax advisor, is of the view that these tax matters will eventually be decided in favor of the Company;
therefore no provision has been made in these financial statements.
12.1.5 The Income Tax Department, during the current reporting period, passed an order under section 161/205 of the Income Tax Ordinance,
2001, creating a demand of Rs. 102.3 million on account of non-deduction / withholding of tax on payments under various heads. The
matter was appealed by the Company before the CIR(A) who annulled the impugned demand and remanded back the case to the
assessing officer with directions of re-examination. The management, in consultation with their tax advisor, is of the view that all
withholding tax deductions have been made and the tax matter will eventually be decided in favor of the Company; therefore no
provision has been made in these financial statements.
12.1.6 A show-cause notice for alleged contravention of Section 36-A of the Central Excise Act, 1944 was served upon the Company on
December 21, 2000 by the Collector of Sales Tax & Central Excise, Lahore. The Company contested the matter before the Collector of
Customs, Central Excise & Sales Tax (Adjudication) who issued an order on April 21, 2001 in favour of the show cause notice. The
Company was thereby ordered to pay an amount of Rs. 40.61 million. The Company preferred an appeal before the Customs, Excise &
Sales Tax Appellate Tribunal which was accepted in total through order dated March 29, 2002. An appeal has been filed by the
Collector of Sales Tax & Central Excise, Lahore before the Honorable Lahore High Court, Lahore. The appeal is pending adjudication.
The management, in consultation with their tax advisor, is of the view that these tax matters will eventually be decided in favor of the
Company; therefore no provision has been made in these financial statements.
Note 2019 2018

12.2 Commitments
12.2.1 Commitments in respect of capital expenditure 28,705 13,615
12.2.2 The commitments of future payments under finance leases and Ijarah financing contracts in the year in which these payments shall
become due are as follows:
Year
2019 - 29,834
2020 26,000 26,351
2021 21,749 20,696
2022 17,277 13,334
2023 5,305 647
2024 459 -
70,790 90,862
Payable not later than one year 26,000 29,834

Payable later than one year but not later than five years 44,790 61,028
70,790 90,862
12.2.2.1 Contracts under Ijarah agreements have been accounted for under IFAS-2, and accordingly classified as operating leases.
12.2.3 Commitments in respect of outstanding letters of credit and outstanding letter of guarantee at the reporting date have been disclosed in
note 25.3 of these financial statements.
12.2.4 The Company has a commitment in respect of indemnity agreement signed with ICI Pakistan Limited to cover the possible outcome of
the tax issues of ICI Pakistan Limited prior to demerger up to the extent of Rs. 1,583 million (2018: Rs. 1,583 million).

Note 2019 2018
13 Property, plant and equipment
Property, plant and equipment 13.1 4,428,157 1,895,907

Capital work-in-progress 13.2 117,565 65,646
4,545,722 1,961,553
13.1 Property, plant and equipment

Buildings on Plant and Furniture and Office
Note Freehold land Freehold land machinery fixtures equipment Vehicles Total
Net carrying value basis

Year ended December 31, 2019
Opening Net Book Value (NBV) 1,348,361 95,879 421,805 21,295 7,264 1,303 1,895,907
Impact of initial adoption - IFRS 15 4.2 - - (48,198) - - - (48,198)
NBV on January 1, 2019 1,348,361 95,879 373,607 21,295 7,264 1,303 1,847,709
Additions (at cost) - 9,319 143,432 1,251 3,196 - 157,198
Revaluation during the year 2,217,939 81,460 254,541 - - - 2,553,940
Disposals (at NBV) - - (276) - - - (276)
Depreciation charge for the year 13.1.2 - (27,353) (91,304) (2,919) (8,189) (649) (130,414)
Closing NBV 3,566,300 159,305 680,000 19,627 2,271 654 4,428,157
Gross carrying value basis

As at December 31, 2019
Cost / revalued amount 3,566,300 159,305 680,000 120,471 20,313 2,281 4,548,670
Accumulated depreciation - - - (100,844) (18,042) (1,627) (120,513)
NBV 3,566,300 159,305 680,000 19,627 2,271 654 4,428,157
Depreciation rate (% per annum) - 4 - 20 5 - 33.33 10 - 33.33 10 - 33.33 25 - 33.3
Net carrying value basis

Year ended December 31, 2018
Opening NBV 1,348,361 114,641 431,604 19,047 5,273 527 1,919,453
Additions (at cost) - 11,856 96,004 5,168 11,907 1,472 126,407
Disposals / write-off (at NBV) - (586) (710) (1) (326) (1) (1,624)
Adjustments - (555) - 481 74 - -
Depreciation charge for the year 13.1.2 - (29,477) (105,093) (3,400) (9,664) (695) (148,329)
Closing NBV 1,348,361 95,879 421,805 21,295 7,264 1,303 1,895,907
Gross carrying value basis

As at December 31, 2018
Cost / revalued amount 1,348,361 375,138 1,401,824 119,450 32,520 2,281 3,279,574
Accumulated depreciation - (279,259) (980,019) (98,155) (25,256) (978) (1,383,667)
NBV 1,348,361 95,879 421,805 21,295 7,264 1,303 1,895,907
Depreciation rate (% per annum) - 4 - 20 5 - 33.33 10 - 33.33 10 - 33.33 25 - 33.3
13.1.1 Particulars of immovable property and plant are as follows:
Usage of immovable Total area (square feet)

Class Location
property 2019 2018
Land and building 346 Ferozpur Road, Lahore, Pakistan Plant and Head office 480,195 480,195
Land Rachna Industrial Estate, Sheikhupura, Pakistan Idle 720,047 720,047
Land and building Port Qasim , Karachi, Pakistan Training center 87,120 87,120

Note 2019 2018
13.1.2 The depreciation charged during the year has been allocated as follows:
Cost of sales 27 94,795 100,439

Selling and distribution expenses 28 19,992 30,016
Administrative and general expenses 29 15,627 17,874
130,414 148,329
13.1.3 Depreciation for the year includes incremental depreciation due to revaluation, amounting to Rs. 55.2 million (2018: Rs. 58.7 million).
13.1.4 Subsequent to transfer of property, plant and equipment (along with net revaluation surplus of Rs. 526.56 million) from ICI Pakistan Limited on
the effective date (July 01, 2011) of the Scheme of demerger, specific classes of property, plant and equipment (i.e. freehold land, buildings on
freehold land and plant and machinery) of the Company were revalued by an independent valuation expert during 2011 which resulted into a
revaluation surplus of Rs. 371.02 million. According to Company's policy to revalue property, plant and equipment i.e. after every five year or
earlier if fair value of the same is determined to differ materially from its carrying amount at the reporting date, specific classes of operating
assets (freehold land, buildings on freehold land and plant and machinery) of the Company were revalued by an independent valuation expert
which resulted in a surplus of Rs. 587.92 million during August 2016 and Rs. 2,553.94 million during January 2020 respectively. Valuations for
buildings on freehold land and plant and machinery are based on the estimated gross replacement cost, depreciated to reflect the residual
service potential of the assets taking account of the age, conditions and obsolescence. Land was valued on the basis of fair market value. The
fair value measurement of the assets are categorized as Level 3.
13.1.5 The aggregate book value of assets disposed by the Company during the current year and prior year does not exceed five million rupees.
13.1.6 Had there been no revaluation, the net book value of specific classes of property, plant and equipment would have amounted to:
Freehold land 220,819 220,819

Buildings on freehold land 37,813 37,751
Plant and machinery 318,973 277,155
577,605 535,725
13.1.7 The forced sale value of revalued property, plant and machinery as per latest available revaluation reports are as follows;
Forced Sales
Particulars Date of inspection Revaluation report dates
Value
Freehold land
-346 Ferozpur Road, Lahore, Pakistan December 12, 2019 January 20, 2020 2,561,132
-Rachna Industrial Estate, Sheikhupura,
December 19, 2019 January 20, 2020 212,000
Pakistan
-Port Qasim , Karachi, Pakistan December 24, 2019 January 20, 2020 80,365
2,853,497
Buildings on freehold land
-346 Ferozpur Road, Lahore, Pakistan December 12, 2019 January 20, 2020 119,848
-Port Qasim , Karachi, Pakistan December 24, 2019 January 20, 2020 7,635
127,483
Plant and machinery December 12, 2019 January 20, 2020 544,020
3,525,000
13.2 Capital work-in-progress

Civil works and buildings 9,565 3,761
Plant and machinery 100,101 55,069
Equipment 7,899 6,816
117,565 65,646
14 Right-of-use assets
Opening net book value - -

Impact of initial adoption - IFRS 16 61,072 -
Disposals / adjustments made during the year (4,747) -
Depreciation charged during the year (28,125) -
Closing net book value 28,200 -

Note 2019 2018

15 Intangible assets
Capital work-in-progress 15.1 - 37,668
- 37,668
15.1 During the year the Company has derecognized its capital work in progress relating to the development of a new ERP system i.e. SAP Saturn
against reimbursement of development costs from its parent entity Akzo Nobel N.V., a related party.
16 Long term loans

Secured - considered good
- Executives 16.1 20,824 19,661
- Other employees 59,629 72,481
80,453 92,142
Less: Receivable within one year 22 (20,579) (25,395)
59,874 66,747
16.1 Reconciliation of the carrying amount of loans to executives:

Disbursements - gross 12,701 12,194
Repayments / adjustments (11,538) (15,852)
Balance at end of the year 16.2 & 16.3 20,824 19,661
16.2 Loans to employees are provided for purchase of motorcycle, motor car and construction of house. Vehicle loans are secured against
registration documents of vehicles and house building loans are secured against provident fund, gratuity, pension or any other dues
payable to the employees.
16.3 Loans for purchase of motor cars and house building are repayable between two to ten years. These loans are interest-free and granted
to the employees including executives of the Company in accordance with their terms of employment. The Company is entitled to
recover from the employee's salary and other dues in case of default.
16.4 The maximum aggregate amount of long term loans due from the executives at the end of any month during the year was Rs. 26.49
million (2018: Rs. 30.25 million).
17 Long term deposits and prepayments
Deposits 3,715 3,715

Prepayments 508 1,998
4,223 5,713
18 Deferred tax asset - net
18.1 The balance comprises of the following temporary differences:
Deductible temporary differences
Provisions 159,124 204,286

Property, plant and equipment 4,136 3,676
Lease liabilities against right-of-use assets 5,111 -
18.2 168,371 207,962

Taxable temporary differences
Property, plant and equipment (143,025) (60,640)

Right-of-use assets (7,638) -
18.3 (150,663) (60,640)

Net deferred tax asset 17,708 147,322

Note 2019 2018
18.2 Changes in deductible temporary differences

Opening balance 207,962 206,809
Impact of initial adoption - IFRS 15 4.2 13,027 -
(Charged) / credited during the year in statement of profit and loss account (52,618) 8,047
Adjustment for change in tax rate - (6,894)
Closing balance 168,371 207,962
18.3 Changes in taxable temporary differences
Opening balance 60,640 74,645

(Credited) / charged / during the year in
-statement of profit and loss account (986) (11,517)
-statement of other comprehensive income 18.3.1 91,009 -
Adjustment for change in tax rate - (2,488)
150,663 60,640
18.3.1 This represents deferred tax resulting from revaluation surplus on buildings on freehold land and plant and machinery as disclosed in
13.1.4.
19 Stores and spares
Stores 4,739 4,774

Spares 21,639 17,968
26,378 22,742
Less: Provision for slow moving and obsolete stores and spares - net 19.1 (81) (81)
26,297 22,661
19.1 Provision for slow moving and obsolete stores and spares
Balance at beginning of the year 81 130

Provision charged during the year 1,306 2,300
Stores written-off against provision (1,306) (2,349)
Balance at end of the year 81 81
19.2 Stores and spares do not include any item that has been purchased for the purpose of capital expenditure.
20 Stock in trade
Raw and packing material including stock in transit amounting
to Rs. 110.54 million (2018: Rs. 86.82 million) 437,342 437,915
Work-in-process 27 11,336 9,312
Finished goods 231,108 189,303
Goods purchased for resale including stock in transit amounting
to Rs. 3.62 million (2018: Rs. nil) 79,850 108,619
759,636 745,149
Provision for slow moving and obsolete stock in trade:
- Raw material (27,082) (28,704)

- Finished goods (48,963) (47,562)
20.1 (76,045) (76,266)
683,591 668,883

Note 2019 2018
20.1 Provision for stock in trade

Provision charged during the year 12,054 31,133
Stock written-off against provision (12,275) (6,483)
20.2 Out of the total carrying value of inventory, Rs.0.83 million (2018: Rs. 7.46 million) is measured at net realizable value. As at December
31, 2019 stock has been written down by Rs. 0.10 million (2018: Rs. 0.19 million) to arrive at its net realizable value.
21 Trade debts
Considered good
- Secured 21.1 51,936 51,272
- Unsecured 1,117,370 1,166,338
1,169,306 1,217,610
Considered doubtful 172,068 203,712

1,341,374 1,421,322
Less: allowances and provisions

- allowances for impairment of trade debts 30 (172,068) (203,712)
- provision for discounts 21.4 (339,287) (475,772)
(511,355) (679,484)
830,019 741,838
21.1 These trade debts are secured against letters of credit and bank guarantee.
21.2 Trade debts include balances due from the following related parties:
Akzo Nobel Paints (Malaysia) Sdn Bhd - 3,338
Akzo Nobel UAE Paints L.L.C 33 33
21.2.1 33 3,371
21.2.1 Ageing analysis of amounts due from related parties, included in trade debts, are as follows:
Neither past due nor impaired (1 - 30 days) - 3,338

Past due but not impaired (31 - 90 days) - -
Past due and impaired (91 - 120 days) - -
Past due and impaired (More than 120 days) 33 33
As at December 31, 2019 33 3,371
21.2.2 The maximum aggregate amount of trade receivable from related parties at the end of any month during the year was Rs. 3.37 million
(2018: Rs. 3.37 million).
21.3 The outstanding trade debts in relation to the export sales made during the year are as follows:
Outstanding trade debts as

Name of Party Country Export sale during the year on
2019 2018 2019 2018
Akzo Nobel Paints (Malaysia) Sdn Nilai, Malaysia - 3,338 - 3,338

Bhd - a related party
Akzo Nobel UAE Paints L.L.C Dubai, UAE - 33 33 33

- a related party

Note 2019 2018
21.3.1 The outstanding trade debts relate to the export sales made in accordance with contract terms and are unsecured.
21.4 Provision for discounts

Charge for the year - net 633,206 919,374
Discounts paid during the year (769,691) (919,465)
22 Loans and advances
Secured - considered good
Current portion of long term loans to:

- Executives 5,103 4,696
- Other employees 15,476 20,699
16 20,579 25,395
Unsecured - considered good
Advances to contractors and suppliers 57,231 70,003

77,810 95,398
23 Trade deposits and short term prepayments
Trade deposits 921 1,348

Short term prepayments 23.1 & 23.2 2,019 15,253
2,940 16,601
23.1 On adoption of IFRS 16, short term prepayments relating to rentals against leased buildings amounting to Rs.10.29 million have been
reclassified to right-of-use assets.
23.2 This represents prepayments made by the company against rented premises classified as operating lease under IFRS 16 as on
December 31, 2019 only. The comparative figures for the 2018 reporting period have not been restated as permitted under specific
transitional provisions of the standard.
24 Other receivables
Unsecured - considered good
Due from related parties 24.1 47,647 10,918

Others 6,165 10,563
53,812 21,481
24.1 These represent receivable from following related parties:
Akzo Nobel UAE Paints L.L.C 38 2,983

Akzo Nobel N.V. 27,218 7,560
ICI Swire Paints (Shanghai) Limited 161 145
Akzo Nobel Saudi Arabia 365 -
Akzo Nobel Paints Singapore Pte Limited 4,191 -
Akzo Nobel Paints Vietnam Limited 476 -
Akzo Nobel Car Refinishes SL 12,500 -
Marshall Boya Ve Vernik Sanayi 1,081 -
Akzo Nobel Paints Thailand Limited 477 -
International Farbenwerke GmbH 1,140 -
Akzo Nobel Paints Lanka Private Limited - 230
47,647 10,918

Note 2019 2018
24.1.1 Ageing analysis of amounts due from related parties, included in other receivables, are as follows:
Neither past due nor impaired (1 - 30 days) 36,104 6,209

Past due but not impaired (31 - 90 days) 9,839 1,351
Past due and not impaired (91 - 120 days) 47 145
Past due and not impaired (More than 120 days) 1,657 3,213
As at December 31, 2019 47,647 10,918
25 Cash and bank balances
Cash in hand 8,093 17,112

Cash at bank - current accounts 25.1 276,166 290,751
Cash at bank - saving accounts 3,282 264
Short term deposits 25.2 1,710,000 1,587,000
1,997,541 1,895,127
25.1 Cash and bank balances include cheques in hand amounting to Rs. 212.37 million (2018: Rs. 239.32 million) and US Dollars amounting
to US $332 (2018: US $8,332).
25.2 These represents Term Deposit Receipts placed with commercial banks, having maturity period ranging from 14 to 32 days (2018: 30 to
31 days). The mark-up on these deposits ranges between 12.55% to 12.63% (2018: 8.85% to 9.32%) per annum.
25.3 Particulars of credit facilities available to the Company
25.3.1 2019
Frequency
Mark up Facility Facility
of mark-up /
Bank Nature of facility rate / expiry Facility limit utilized at
commission
Commission date year end
payment
Deutsche Bank Bank Guarantee 0.20% Quarterly N/A 38,000 2,476
Deutsche Bank Letters of Credit (LC) 0.10% Upon LC N/A 315,000 33,446
issuance
Deutsche Bank Short-term running finance 1 Month Calendar N/A 38,000 -

KIBOR + 1% quarter basis
per annum
2018
Frequency
Mark up Facility Facility
of mark-up /
Bank Nature of facility rate / expiry Facility limit utilized at
commission
Commission date year end
payment
Deutsche Bank Bank Guarantee 0.20% Quarterly N/A 38,000 1,540
Deutsche Bank Letters of Credit (LC) 0.10% Upon LC N/A 315,000 103,155
issuance
Deutsche Bank Short-term running finance 1 Month Calendar N/A 38,000 -

KIBOR + 1% quarter basis
per annum

Note 2019 2018
25.3.2 The abovementioned facilities are secured by parental guarantee from Akzo Nobel N.V. along with first pari passu hypothecation charge
over the current assets amounting to Rs. 210 million (2018: Rs. 210 million), demand promissory note and counter guarantee /
indemnity duly signed and stamped by the Company.
25.4 Cash and bank balances represents the cash and cash equivalents for the purpose of cash flow statement.
26 Revenue
Export sales 5,976 8,288

Local sales and commission income 8,486,170 8,738,558
8,492,146 8,746,846
Less:
Sales tax 1,232,618 1,299,650
Discounts 1,647,987 1,634,453
2,880,605 2,934,103
5,611,541 5,812,743
27 Cost of sales
Raw and packing materials consumed 27.1 2,845,621 2,881,565
Salaries, wages and benefits 27.2 118,630 124,816

Fuel and power expenses 28,717 23,599
Stores and spares consumed 14,920 19,320
Insurance expenses 573 722
Repairs and maintenance expenses 17,039 19,664
Royalties and technical assistance 27.3 207,515 219,713
Depreciation 13.1.2 94,795 100,439
Amortization - 9
Communication, printing and stationery expenses 1,280 3,100
Contractual services expenses 50,602 50,867
Security, safety, health and environment expenses 12,438 11,683
Provision for obsolete stocks - raw material - 13,417
Provision for obsolete stores and spares 1,306 2,300
Other expenses 16,312 19,095
564,127 608,744
Opening work-in-process 9,312 12,217

Closing work-in-process 20 (11,336) (9,312)
Cost of goods manufactured 3,407,724 3,493,214
Opening finished goods 250,360 233,331

Finished goods purchased 182,695 333,819
Closing finished goods (261,995) (250,360)
3,578,784 3,810,004
27.1 Raw and packing materials consumed

Opening stock 409,210 341,497
Add: Purchases 2,846,671 2,949,278
Less: Closing stock (410,260) (409,210)
2,845,621 2,881,565
27.2 Salaries, wages and benefits include Rs. 4.01 million (2018: Rs. 4.21 million) in respect of provident fund contribution, Rs. 3.14 million
(2018: Rs. 3.10 million) in respect of pensions, Rs. 4.44 million (2018: Rs. 3.98 million) in respect of gratuity and Rs. Nil (2018: Rs. 0.95
million) in respect of pensioners' medical plan.

Note 2019 2018
27.3 Royalties and technical assistance includes expenses against royalties and technical services obtained from related party Akzo Nobel
Coatings International B.V. amounting to Rs. 199.49 million (2018: Rs. 208.24 million).
27.4 Details of royalties and technical assistance paid to companies / entities / individuals during the year are as follows:
Name Registered address Relationship with Company

Akzo Nobel Coatings International B.V. Velperweg 76 Arnhem, Netherlands Associate
Nihon Parkerizing Co. Ltd 1-15-1, Nihonbashi, Chuo-ku, Tokyo, Japan N/A
28 Selling and distribution expenses

Salaries and benefits 28.1 271,807 296,837
Advertising and publicity expenses 320,362 349,839
Outward freight and handling 142,075 165,436
Fuel and power 4,206 3,613
Rent, rates and taxes 7,857 25,322
Repairs and maintenance 1,790 2,714
Depreciation 13.1.2 19,992 30,016
Depreciation on right-of-use assets 21,892 -
Travelling expenses 30,597 38,478
Contractual services 72,917 71,298
Training and recruitment 438 440
Security, safety, health and environment expenses 6,704 8,001
Provision for obsolete stocks - finished goods 12,938 17,716
946,952 1,041,911
28.1 Salaries, wages and benefits include Rs. 10.89 million (2018: Rs. 12.06 million) in respect of provident fund contribution, Rs. 6.43
million (2018: Rs. 9.17 million) in respect of pensions, Rs. 11.37 million (2018: Rs. 8.50 million) in respect of gratuity and Rs. Nil (2018:
Rs. 2.40 million) in respect of pensioners' medical plan.
29 Administrative and general expenses
Salaries and benefits 29.1 164,795 171,581

Fuel and power 6,923 6,840
Rent, rates and taxes 1,977 14,593
Insurance 8,509 7,916
Repairs and maintenance 5,783 22,503
Depreciation 13.1.2 15,627 17,874
Depreciation on right-of-use assets 6,233 -
Travelling expenses 4,497 7,105
Auditors' remuneration 29.2 2,255 2,050
IT services 62,862 46,905
Contractual services 12,074 17,146
Training and recruitment 740 1,788
332,555 346,657
29.1 Salaries, wages and benefits include Rs. 5.46 million (2018: Rs. 6.14 million) in respect of provident fund contribution, Rs. 10.65 million
(2018: Rs. 9.63 million) in respect of pensions, Rs. 6.50 million (2018: Rs. 5.60 million) in respect of gratuity and Rs. 2.11 million (2018:
Rs. 1.66 million) in respect of pensioners' medical plan.

Note 2019 2018
29.2 Auditors' remuneration
Statutory audit 1,414 1,285

Half yearly review 346 315
Other assurances and certifications 220 200
Out of pocket expenses 275 250
2,255 2,050
30 Allowance for impairment of trade debts

The reconciliation of loss allowance is as follows:
Balance at beginning of the year 30.2 203,712 211,659
Movement in net allowance during the year:
Charge 4,333 54,098
Debts written-off against allowance (35,977) (62,045)
(31,644) (7,947)
30.1 Due to initial adoption of IFRS 9, impairment losses on trade debts previously presented under 'selling and distribution expenses', are
now separately disclosed on the statement of profit and loss account.
30.2 In 2019, the impairment of trade debts is based on the expected credit losses model following the simplified approach under IFRS 9.
However, in the comparative period 2018, it was based on the incurred loss model under IAS 39 and no additional allowance for
provision was required upon initial adoption of IFRS 9.
31 Finance cost
Amortization of loans to staff 6,027 7,559

Interest on Workers' Profit Participation Fund 10.3 514 919
Bank charges 682 1,514
Interest expense on right-of-use assets 3,597 -
10,820 9,992
32 Other charges
Workers' Profit Participation Fund 10.3 41,307 31,240

Workers' Welfare Fund 10.4 15,696 6,376
Exchange loss 64,152 52,322
121,155 89,938
33 Other Income
Income from financial assets
Profit on short-term and call deposits 129,609 71,301
Income from non-financial assets
Scrap sales 9,792 8,293

Provisions no longer required written back 19,789 32,193
Gain on disposal of specialty chemicals business - 33,500
Miscellaneous income 7,550 3,743
Profit on disposal of property, plant and equipment 801 182
Profit on disposal of right-of-use assets 331 -
167,872 149,212

Note 2019 2018
34 Taxation
Current year 178,441 213,170

Prior year 5,848 24,164
Deferred 18 51,632 (15,158)
235,921 222,176
34.1 Tax charge reconciliation
Tax using domestic rates 227,596 176,713

Current year super tax charge - 13,666
Effect of prior year charge 5,848 24,164
Tax impact on income under presumptive tax regime of the current year 7,640 9,714
Others (5,163) (2,081)
Net tax charged 235,921 222,176
Average effective tax rate 30.06% 36.46%
34.2 Management's assessment on sufficiency of provision for income taxes
A comparison of provision on account of income taxes with most recent tax assessment for last three tax years is as follows:
TY 2019 TY 2018 TY 2017
Tax assessed as per most recent tax assessment 222,450 257,445 287,094
Provision in accounts for income tax 222,450 257,445 280,283
The tax assessed as per most recent tax assessment for the tax year 2019 is based on "deemed assessment" as per income tax return
filed for the respective year.
The treatments adopted in tax returns filed by the Company are based on the applicable tax laws and decisions of appellate authorities
on similar matters. The management, in consultation with their tax advisor, is of the view that the provision in accounts for income tax is
sufficient as there are strong grounds that the said treatments are likely to be accepted by the tax authorities. Accordingly, no provision
has been made in these financial statements in this regard.
35 Earnings per share
35.1 Basic earnings per share
Profit for the year (after tax) 548,893 387,179
(Number of shares)
Weighted average number of ordinary shares 46,443,320 46,443,320
(Rupees)
Earnings per share 11.82 8.34
35.2 Diluted earnings per share

There is no dilutive effect as the Company does not have any convertible instruments in issue as at December 31, 2019 and December
31, 2018, which would have any effect on the earnings per share if the option to convert was exercised.
36 Operating segments
36.1 These financial statements have been prepared on the basis of single reportable segment.
36.2 Revenue from sale of paints represents 99.98% (2018: 97.39%) of the total revenue of the Company.
36.3 99.93% (2018: 99.86% ) sales of the Company relates to customers in Pakistan.
36.4 All non-current assets of the Company as at December 31, 2019 are located in Pakistan.

37 Remuneration of Chief Executive, Director and Executives

The aggregate amounts in these financial statements during the year for remuneration, including certain benefits, to the Chief
Executive, Executive Director, Non-Executive Directors and Executives of the Company are as follows:
Chief Executive Directors Executives

2019 2018 2019 2018 2019 2018
Fee - note 37.4 - - 2,175 1,970 - -

Managerial remuneration 11,312 13,802 9,060 8,522 133,807 135,907
Bonus and sales incentives 2,080 9,140 1,296 2,660 8,584 30,950
Contribution to retirement benefits 3,727 3,363 2,882 2,560 37,243 36,995
Group insurance 52 45 31 34 1,102 715
Rent and house maintenance 3,985 3,739 3,342 3,088 39,304 39,675
Utilities 996 935 743 686 9,708 9,741
Medical expenses 105 251 43 16 17,788 7,842
22,257 31,275 19,572 19,536 247,536 261,825
Number of person(s) 1 1 6 6 55 50
37.1 The Chief Executive and the Executive Director hold 10 shares each of the Company.
37.2 During the year an amount of Rs. 32.36 million (2018: Rs.42.64 million) on account of bonus and sales incentives to employees has
been recognized as expense in the current year. Out of this, bonus is payable in the year 2020 after verification of achievement against
target.
Out of the bonus and sales incentives recognized for 2019, payment of Rs. 2.08 million (2018: Rs.9.14 million) and Rs. 9.88 million
(2018: Rs.23.89 million) were made to Chief Executive and Executives respectively.
37.3 The Chief Executive, one Director and certain Executives are provided with free use of Company maintained cars in accordance with
their entitlement.
37.4 Fee represents payments made to the Chairman and Non-Executive Director for attending board and other meetings. The total
Non-Executive Directors of the Company as at December 31, 2019 are 5 (December 31, 2018: 5).
38 Transactions with related parties

The related parties comprise of the parent Company (ICI Omicron B.V.), the ultimate parent Company (Akzo Nobel N.V.), related group
companies, staff retirement funds, companies where Directors also hold directorship, Directors and key management personnel of the
Company, and their close family members. Details of transactions with related parties, other than those which have been specifically
disclosed elsewhere in these financial statements are as follows:
2019 2018
Associated companies Purchase of goods, materials and services 199,593 359,876

Indenting commission income - 2,240
Sale of goods and services 1,001 16,445
Reimbursement of expenses 100,106 19,241
Royalty paid 168,056 168,717
Reimbursement of development costs 37,668 -
Retirement benefit plan Contributions made to retirement funds / plans 94,347 114,854
Key management personnel Remuneration of key management personnel 81,906 95,991

Sale of goods and services 1,525 -
38.1 The above transactions with related parties are carried out on mutually agreed terms and conditions.
38.2 Following are the details of related parties incorporated within / outside Pakistan with whom the Company had entered into transactions
or had agreements and / or arrangements in place during the financial year:

Aggregate %
Country of of
Basis of association Name of the related party incorporation shareholding*
Outside Pakistan:
Parent company ICI Omicron B.V. Netherlands 75.81%

Group / associated company Akzo Nobel Car Refinishes B.V. Netherlands -
Akzo Nobel Coatings International B.V. Netherlands -
Akzo Nobel Decorative Coatings Netherlands -
Akzo Nobel India Limited India -
Akzo Nobel N.V. Netherlands -
Akzo Nobel Oman SAOC Oman -
Akzo Nobel Packaging Coatings Limited United Kingdom -
Akzo Nobel Saudi Arabia Limited Saudi Arabia -
Akzo Nobel UAE Paints L.L.C United Arab Emirates -
Akzo Nobel Car Refinishes SL Spain -
Akzo Nobel Paints Thailand Limited Thailand -
ICI Swire Paints (Shanghai) Limited China -
International Farbenwerke GmbH Germany -
Marshall Boya Ve Vernik Sanayi Turkey -
International Paint (Nederland) B.V. Netherlands -
Associated company / Akzo Nobel Paints Singapore Pte Limited Singapore -

common directorship Akzo Nobel Paints Vietnam Limited Vietnam -
Within Pakistan:
Retirement benefit plan Akzo Nobel Pakistan Limited Management Staff Provident Fund -
Akzo Nobel Pakistan Limited Management Staff Gratuity Fund -
Akzo Nobel Pakistan Limited Management Staff Pension Fund -
Akzo Nobel Pakistan Limited Management Staff Defined Contribution
Superannuation Fund -
Akzo Nobel Pakistan Limited Provident Fund -
* This represents aggregate % of shareholding, including shareholding through other companies or entities.
39 Financial instruments - Fair values and risk management

39.1 Fair value measurement of financial instruments
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants
at the measurement date. Underlying the definition of fair value is the presumption that the Company is a going concern and there is no intention
or requirement to curtail materially the scale of its operations or to undertake a transaction on adverse terms.
A financial instrument is regarded as quoted in an active market if quoted prices are readily and regularly available from an exchange dealer,
broker, industry group, pricing service, or regulatory agency, and those prices represent actual and regularly occurring market transactions on
an arm's length basis.
IFRS 13 'Fair Value Measurement' requires the Company to classify fair value measurements and fair value hierarchy that reflects the
significance of the inputs used in making the measurements of fair value hierarchy, which has the following levels:
- Level 1 : quoted prices (unadjusted) in active markets for identical assets or liabilities.
- Level 2 : inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly
(i.e. derived from prices).
- Level 3 : inputs for the asset or liability that are not based on observable market data (unobservable inputs).
Transfer between levels of the fair value hierarchy are recognized at the end of the reporting period during which the changes have occurred.
The following table shows the carrying amounts and fair values of financial assets and financial liabilities, including their levels in the fair value hierarchy.

Carrying amount Fair value

Other
Amortised (FVPL /
cost FVOCI) Total Level 1 Level 2 Level 3 Total
December 31, 2019
Financial assets
Measured at fair value - - - - - - -
Not measured at fair value
Long term loans 59,874 - 59,874 - - - -

Long term deposits 3,715 - 3,715 - - - -
Trade debts 830,019 - 830,019 - - - -
Loans and advances 20,579 - 20,579 - - - -
Short term trade deposits 921 - 921 - - - -
Other receivables 53,812 - 53,812 - - - -
Interest accrued 5,007 - 5,007 - - - -
Cash and bank balances 1,989,448 - 1,989,448 - - - -
2,963,375 - 2,963,375 - - - -
Deferred liabilities 66,538 - 66,538 - - - -
Trade and other payables 1,575,856 - 1,575,856 - - - -
Lease liabilities 18,871 - 18,871 - - - -
Unpaid dividend 3,084 - 3,084 - - - -
Unclaimed dividend 26,899 - 26,899 - - - -
1,691,248 - 1,691,248 - - - -
December 31, 2018
Financial assets
Long term loans 66,747 - 66,747 - - - -
Long term deposits 3,715 - 3,715 - - - -
Trade debts 741,838 - 741,838 - - -
Loans and advances 25,395 - 25,395 - - - -
Short term trade deposits 1,348 - 1,348 - - - -
Other receivables 21,481 - 21,481 - - - -
Interest accrued 7,141 - 7,141 - - - -
Cash and bank balances 1,878,015 - 1,878,015 - - - -
2,745,680 - 2,745,680 - - - -
Deferred liabilities 61,568 - 61,568
Trade and other payables 1,661,665 - 1,661,665 - - - -
Unpaid dividend 2,986 - 2,986
Unclaimed dividend 26,612 - 26,612
1,752,831 - 1,752,831 - - - -

39.2 Financial risk management

The Company's activities expose it to a variety of financial risks including credit risk, liquidity risk and market risk. Market risk includes
currency risk, interest rate risk and price risk.
The Company's overall risk management policy focuses on the unpredictability of financial markets and seeks to minimize potential
adverse effects on the Company's financial performance.
39.3 Risk management framework
The Board of Directors has overall responsibility for establishment and over sight of the Company's risk management framework. The
Executive Management Team is responsible for developing and monitoring the Company’s risk management policies. The team
regularly meets and any changes and compliance issues are reported to the Board of Directors through the Audit Committee.
Risk management systems are reviewed regularly by the Executive Management Team to reflect changes in market conditions and the
Company’s activities. The Company, through its training and management standards and procedures, aims to develop a disciplined and
constructive control environment in which all employees understand their roles and obligations.
The Audit Committee oversees compliance by management with the Company’s risk management policies and procedures, and
reviews the adequacy of the risk management framework in relation to the risks faced by the Company.
39.4 Credit risk
Credit risk represents the accounting loss that would be recognized at the reporting date if counter parties failed completely to perform
as contracted, without taking into account the fair value of any collateral. The Company does not have significant exposure to any
individual counter party. To reduce exposure to credit risk, the Company has developed a formal approval process whereby credit limits
are applied to its customers. The management also continuously monitors the credit exposure towards the customers and makes
provision against those balances considered doubtful of recovery. To mitigate the risk, the Company has a system of assigning credit
limits to its customers based on an extensive evaluation based on customer profile and payment history. Outstanding customer
receivables are regularly monitored. Some customers are also secured, where possible, by way of inland letters of credit, cash security
deposit and bank guarantees.
39.4.1 Exposure to credit risk
The carrying amount of financial assets represents the maximum credit exposure. The maximum exposure to credit risk at the reporting
date is:
Note 2019 2018

Long term deposits 17 3,715 3,715
Trade debts 21 830,019 741,838
Trade deposits 23 921 1,348
Other receivables 24 53,812 21,481
Bank balances and short term deposits 25 1,989,448 1,878,015
2,963,375 2,745,680
Secured
Trade debts 21 51,936 51,272
132,389 143,414
Unsecured 2,830,986 2,602,266

2,963,375 2,745,680
39.4.1.1 Movement / reconciliation of loss allowances for trade debts has been detailed in note 30 to these financial statements.
39.4.2 Credit quality of financial assets
The credit quality of financial assets that are neither past due nor impaired can be assessed by reference to external credit ratings or to
historical information about counterparty.

Note 2019 2018

39.4.2.1 Bank balances and accrued interest on short term deposits
Bank balances and short term deposits 25 1,989,448 1,878,015

1,994,455 1,885,156
The Company's exposure to credit risk against balances with various commercial banks is as follows:
Credit Ratings Rating

Short term Long term Agency
Habib Bank Limited A-1+ AAA JCR-VIS 217,191 733,050

Citi Bank N.A. P-1 Aa3 Moody’s 1,219,601 7,029
Deutsche Bank A.G. A-2 BBB+ S&P 530,614 1,118,418
Habib Metropolitan Bank Limited A-1+ AA+ PACRA 150 50
Faysal Bank Limited A-1+ AA JCR-VIS 26,899 26,611
1,994,455 1,885,158
39.4.2.2 Trade debts

The trade debts as at the reporting date are classified in Pak Rupees. The aging of trade debts which are past due at the reporting date
is as follows:
Neither past due nor impaired 986,101 980,179

Past due
1 - 30 days 110,287 126,966
31 - 90 days 67,168 91,459
91 - 120 days 13,021 23,718
More than 120 days 164,797 199,000
355,273 441,143
1,341,374 1,421,322
Allowance for impairment of trade debts 30 (172,068) (203,712)
Provision for discounts 21.4 (339,287) (475,772)
830,019 741,838
The above mentioned ageing includes outstanding balances of related parties as disclosed in note 21.2 to these financial statements.
The maximum exposure to credit risk for past due and impaired at the reporting date by type of counter party is:
Distributors / wholesale customers 64,826 69,826

Retail customers 213,926 266,665
End-user customers 76,521 104,652
355,273 441,143
Allowance for impairment of trade debts 30 (172,068) (203,712)

183,205 237,431

39.4.2.3 Loss allowance for trade debts
The Company determines the loss allowances for trade debts based on the following ageing under the expected credit loss model:
2019
Neither past Past but Past but Past and Past and As at
due nor not impaired not impaired impaired impaired December 31,
impaired (1 - 30 days) (31 - 90 days) (91 - 120 (More than 2019
days) 120 days)
Expected credit loss rate (%) 0.25% 0.09% 2.47% 8.71% 79.67%
Gross carrying value of
trade debts 986,101 110,287 67,168 13,021 164,797 1,341,374
General allowance 2,465 99 1,659 1,134 131,294 136,651
Specific allowance - - - 1,914 33,503 35,417
Loss allowance 2,465 99 1,659 3,048 164,797 172,068
In the comparative reporting period i.e. 2018, the impairment of trade debts was based on the incurred loss model under IAS 39 and no
additional allowance for provision was required upon initial adoption of IFRS 9.
39.4.2.4 Other financial assets
The remaining financial assets mainly pertain to balances due from related parties, employees or are otherwise secured. These are
expected to be recovered in due course and based on past experience the credit risk related to these financial assets is not material.
39.4.3 Concentration risk

Concentration of credit risk exists when the changes in economic or industry factors similarly affect groups of counterparties whose
aggregate credit exposure is significant in relation to the Company's total credit exposure. The Company's portfolio of financial assets is
broadly diversified and all other transactions are entered into with credit worthy counter parties thereby mitigating any significant
concentrations of credit risk.
2019 2018
Textile 2,132 1,874

Paper and board 476 776
Chemicals 34,056 16,524
Pharmaceuticals 4,205 7
Construction 34,810 21,357
Transport 29,192 30,757
Dealers 1,097,062 1,161,703
Banks 1,994,455 1,885,156
Employees 80,453 92,539
Others 197,889 214,471
3,474,730 3,425,164
Allowance for impairment of trade debts (172,068) (203,712)

Provision for discounts (339,287) (475,772)
(511,355) (679,484)
2,963,375 2,745,680

39.5 Liquidity risk

Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they fall due. The Company's approach to
managing liquidity is to ensure as far as possible to always have sufficient liquidity to meet its liabilities when due. The Company is not
materially exposed to liquidity risk as substantially all obligations / commitments of the Company are short term in nature and are
restricted to the extent of available liquidity. In addition, the Company has obtained running finance facilities from Deutsche Bank A.G.
to meet any deficit, if required, to meet the short term liquidity commitments.
The table below analyses the Company's financial liabilities into relevant maturity groupings based on the remaining period at the
statement of financial position to the maturity date. The following are contractual maturities of financial liabilities at the reporting dates:
2019
Carrying Contractual Up to one More than
amount cash flows year or less one year
Non-derivative financial liabilities
Deferred liabilities 66,538 66,538 - 66,538

Trade and other payables 1,575,856 1,575,856 1,575,856 -
Lease liabilities 18,871 18,871 6,381 12,490
Unpaid dividend 3,084 3,084 3,084 -
Unclaimed dividend 26,899 26,899 26,899 -
1,691,248 1,691,248 1,612,220 79,028
2018
Carrying Contractual Up to one More than
amount cash flows year or less one year
Non-derivative financial liabilities
Deferred liabilities 61,568 61,568 - 61,568

Trade and other payables 1,661,665 1,661,665 1,661,665 -
Unpaid dividend 2,986 2,986 2,986 -
Unclaimed dividend 26,612 26,612 26,612 -
1,752,831 1,752,831 1,691,263 61,568
It is not expected that the cash flows included in the maturity analysis could occur significantly earlier, or at significantly different
amount.
39.6 Market risk
Market risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices.
Market risk comprises of interest rate risk, currency risk and other price risk.
39.6.1 Interest rate risk
Interest rate risk is the risk that the fair values of future cash flows of a financial instrument will fluctuate because of changes in market
interest rates. At the reporting date the interest rate profile of Company's interest-bearing financial instruments were:
Effective rate Carrying amount
Note 2019 2018 2019 2018
Fixed rate instruments
Financial assets
12.55% to 8.85% to
Short term deposits 25.2 1,710,000 1,587,000
12.63% 9.32%

Sensitivity analysis for fixed rate instruments
The Company does not account for the fixed rate financial assets at fair value through profit or loss, therefore a change in interest rates at
the reporting date would not affect profit and loss account.
39.6.2 Foreign currency risk
Foreign currency (FCY) risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in
foreign exchange rates. Foreign currency risk arises mainly where receivables and payables exist due to transactions entered into are
denominated in foreign currencies. The Company is exposed to foreign currency risk on sales and purchases, which are entered in a
currency other than Pak Rupees. To hedge this risk, the Company has entered into forward foreign exchange contracts in accordance with
instructions of State Bank of Pakistan and the Company's treasury policy. The policy allows the Company to take currency exposure within
predefined limits while open exposures are rigorously monitored.
39.6.2.1 Significant exchange rates applied during the year were as follows:
Average rate for the year Spot rate as at December 31
2019 2018 2019 2018

Rupee per FCY
AED 39.98 36.44 42.16 37.80

JPY 1.35 1.21 1.43 1.26
SGD 108.48 99.16 115.04 101.92
EUR 166.21 157.64 173.58 158.84
USD 146.86 133.86 154.85 138.86
GBP 190.18 177.85 203.45 176.90
39.6.2.2 The Company operates internationally and is exposed to foreign exchange risk arising from various currency exposures, primarily with respect to
the US Dollar and the Euro. Foreign exchange risk arises from future commercial transactions and recognized assets and liabilities as given below:-
2019
Note AED JPY SGD EUR USD GBP Total
Financial assets
Due from related parties 24.1 - - - 44,322 3,325 - 47,647
Cash and bank balances - - - - 51 - 51
- - - 44,322 3,376 - 47,698
Trade and other payables - - 3,101 18,584 87,404 16,411 125,500
Due to related parties 10.1 & 10.2 - - 44,776 46,482 12,762 3,243 107,263
- - 47,877 65,066 100,166 19,654 232,763
- - (47,877) (20,744) (96,790) (19,654) (185,065)
2018
AED JPY SGD EUR USD GBP Total
Financial assets
Due from related parties 24.1 2,964 - - 7,790 164 - 10,918
Cash and bank balances - - - - 1,157 - 1,157
2,964 - - 7,790 1,321 - 12,075
Trade and other payables 14 6,936 13,484 11,164 22,884 2,727 57,209
Due to related parties - - 37,058 59,467 23,344 6,284 126,153
14 6,936 50,542 70,631 46,228 9,011 183,362
2,950 6,936 (50,542) (62,841) (44,907) (9,011) (171,287)
39.6.2.3 Sensitivity analysis
Every 1% increase or decrease in exchange rate, with all other variables held constant, will increase or decrease profit after tax for the year by
Rs.1.85 million (2018: Rs. 1.69 million). The weakening of the Pak Rupees against foreign currencies would have had an equal but opposite impact
on the post tax profit. The sensitivity analysis prepared is not necessarily indicative of the effects on profit / (loss) for the year and assets / liabilities
of the Company.

39.7 Operational risk
Operational risk is the risk of direct or indirect loss arising from a wide variety of causes associated with the Company’s processes,
personnel, technology and infrastructure, and from external factors other than credit, market and liquidity risks such as those arising
from legal and regulatory requirements and generally accepted standards of corporate behavior. Operational risks arise from all of the
Company’s operations. The Company’s objective is to manage operational risk so as to balance the avoidance of financial losses and
damage to the Company’s reputation with overall cost effectiveness and to avoid control procedures that restrict initiative and creativity.
The primary responsibility for the development and implementation of controls to address operational risk is assigned to senior
management within the Company. This responsibility is supported by the development of overall Company standards for the
management of operational risk in the following areas:
- requirements for appropriate segregation of duties, including the independent authorization of transactions;
- requirements for the reconciliation and monitoring of transactions;
- compliance with regulatory and other legal requirements;
- documentation of controls and procedures;
- requirements for the periodic assessment of operational risks faced, and the adequacy of controls and procedures to address the
risks identified;
- development of contingency plans;
- training and professional development;
- ethical and business standards; and
- risk mitigation, including insurance where this is effective.
39.8 Capital risk management
The Company's objective when managing capital is to safe guard the Company's ability to continue as a going concern so that it can
continue to provide returns for shareholders and benefits for other stakeholders; and to maintain a strong capital base to support the
sustained development of its businesses.
The Company manages its capital structure by monitoring return on net assets and makes adjustments to it in the light of changes in
economic conditions. In order to maintain or adjust the capital structure, the Company may adjust the amount of dividend paid to
shareholders or issue new shares.
40 Employee provident fund
The Company has maintained an employee provident fund trust and investments out of provident fund have been made in accordance
with the provisions of section 218 of the Act and the conditions specified thereunder. Details regarding investments of the provident fund
trust are as follows:
2019 2018
Size of the fund - fund assets 209,474 241,442
Break-up of investments made by the fund are as follows:
2019 (Un-audited) 2018 (Audited)

Cost Fair Value Percentage Cost Fair Value Percentage
Government securities 104,273 105,174 50.21% 60,907 60,853 25.20%

Listed securities 52,999 52,363 25.00% 72,840 65,451 27.11%
157,272 157,537 133,747 126,304
40.1 The Company has maintained an employee provident fund trust and investments out of provident fund have been made in accordance
with the provisions of section 218 of the Companies Act, 2017 and the rules formulated for this purpose.
41 Plant capacity and annual production
Annual production - litres in thousend 18,515 22,185
The capacity of the plant is indeterminable because this is a multi-product plant involving varying processes of manufacturing.

Note 2019 2018

42 Number of employees
Number of employees 217 245
Average number of employees during the year 227 250
The number of employees mentioned above does not include third party contractual employees.
43 Disclosure for all shares Islamic index
43.1 Description Explanation
(i) Loans / advances obtained as per Islamic mode; There were no loans / advances obtained under Islamic mode of
financing.
(ii) Shariah compliant bank deposits / bank balances; There are no deposits / bank balances in shariah compliant
financial institutions.
(iii) Profit earned from shariah compliant bank deposits / bank No profit was earned from shariah compliant bank deposits / bank
balances; balances.
(iv) Revenue earned from a shariah compliant business segment; Revenue earned from sale of paints and coatings is shariah
compliant.
(v) Gain / loss or dividend earned from shariah compliant No gain / loss or dividends was earned from shariah compliant
investments; investments.
(vi) Exchange gain / (loss); Loss incurred on actual currency amounting to Rs. 64.15 million.
(vii) Mark up paid on Islamic mode of financing; The Company is engaged in a shariah compliant arrangement
with Orix Modaraba in respect of vehicles under operating lease /
Ijarah contracts, as disclosed in note 43.2.
(viii) Relationship with shariah compliant banks; and The Company has no relationship with shariah compliant banks.
(ix) Profits Profits earned by the Company, as disclosed in note 33 on short-

term and call deposits with conventional banks.
43.2 Ijarah Rentals
The Company is engaged in a shariah compliant arrangement with Orix Modaraba in respect of vehicles under operating lease / Ijarah
contracts. Rentals in respect of aforementioned contracts included in financial statements are as under:
Description
Cost of sales 27 2,654 2,683

Selling and distribution expenses 28 5,617 4,365
Administrative and general expenses 29 9,100 5,602
Disclosures other than above are not applicable to the Company.
44 Non adjusting event after reporting date
The Board of Directors of the Company in its meeting held on 27th Feberuary 2020 has proposed a final dividend of Rs. 6.00 per share.
These financial statements of the Company for the year ended December 31, 2019 do not include the effect of the final dividend which
will be accounted for in the year in which it is approved.
45 Date of authorization
These financial statements were authorized for issue in the meeting of the Board of Directors held on
27th Feberuary 2020.
46 General
Figures in these financial statements have been rounded off to the nearest thousand rupees unless stated otherwise.

47 Corresponding figures
The corresponding figures have been reclassified or rearranged, wherever considered necessary, to comply with the requirements of
IFRS-15, IFRS-9 and, for better and fair presentation. Accordingly, no other significant reclassification or rearrangement have been
made during the year, except for the following:
- Allowance for impairment of trade debts previously 'provision for doubtful debts' was classified under 'Selling and 54,098
distribution expenses' has now been disclosed separately in the statement of profit and loss account - IFRS 9
- Contract liabilities previously 'advances from customer' was classified under 'Trade and other payables' has now 49,975
been disclosed separately in the statement of financial position - IFRS 15
- Expenses previously classified under 'advertising and publicity expenses' have now been classified under 41,901
'contractual services'

Comparison of Results
For the year ended December 31, 2019
2019 2018 2017 2016 2015
Statement of Financial Position
Equity and revaluation reserve 6,594,147 3,860,027 3,789,549 3,559,221 2,880,812

Non-current liabilities 79,028 61,568 58,062 57,210 48,440
Current liabilities 1,742,469 1,789,599 1,924,441 1,491,872 1,286,581
Total equity and liabilities 8,415,644 5,711,194 5,772,052 5,108,303 4,215,833
Non-current assets 4,655,727 2,219,003 2,208,672 2,068,270 1,537,520

Current assets 3,759,917 3,492,191 3,563,380 3,040,033 2,678,313
Total assets 8,415,644 5,711,194 5,772,052 5,108,303 4,215,833
Profit and Loss Account
Turnover 8,492,146 8,746,846 8,529,673 7,684,222 7,170,924

Net sales 5,611,541 5,812,743 5,690,577 5,136,961 4,927,235
Cost of sales 3,578,784 3,810,004 3,461,452 2,947,355 2,909,340
Gross profit 2,032,757 2,002,739 2,229,125 2,189,606 2,017,895
Operating profit 748,917 560,073 782,710 674,894 647,616
Profit before taxation 784,814 609,355 853,531 771,931 804,222
Profit after taxation 548,893 387,179 573,006 490,737 539,311
Summary of Cash Flows
Cash generated from operations 698,738 474,713 953,916 868,377 901,506

Net cash generated from operating activities 413,281 200,240 629,548 537,482 509,397
Net cash (used in) / generated from investing activities (54,161) (54,128) (208,078) (57,580) 13,545
Net cash (used in) financing activities (256,706) (321,162) (300,244) (301,722) (232,093)
Cash and cash equivalents at 31 December 1,997,541 1,895,127 2,070,177 1,948,951 1,770,771
Ratios -
Profitability Ratios
Gross margin 36.22% 34.45% 39.17% 42.62% 40.95%

Gross profit turnover 23.94% 22.90% 26.13% 28.49% 28.14%
Operating profit 13.35% 9.64% 13.75% 13.14% 13.14%
Net profit margin 9.78% 6.66% 10.07% 9.55% 10.95%
Profit markup 56.80% 52.57% 64.40% 74.29% 69.36%
Profit before tax margin 13.99% 10.48% 15.00% 15.03% 16.32%
Return on equity 18.89% 14.92% 23.08% 22.19% 26.92%
Return on capital employed 11.76% 15.54% 22.18% 21.35% 27.45%
Return on assets 6.52% 6.78% 9.93% 9.61% 12.79%
Return on fixed assets 12.00% 19.37% 28.88% 26.66% 44.14%
Comparison of Results
For the year ended December 31, 2019
2019 2018 2017 2016 2015
Efficiency Ratios
Asset turnover Times 0.67 1.02 0.99 1.01 1.17

Fixed asset turnover Times 1.23 2.91 2.87 2.79 4.03
Inventory turnover Times 5.11 5.84 6.29 6.80 7.66
Current asset turnover Times 1.49 1.66 1.60 1.69 1.84
Capital employed turnover Times 0.84 1.48 1.48 1.42 1.68
Debtor turnover ratio Days 51 47 40 34 36
Creditor turnover ratio Days 171 175 178 170 160
Inventory turnover ratio Days 71 62 58 54 48
Operating cycle Days (49) (66) (80) (82) (76)
Revenue per employee Rs. '000 37,410 35,701 33,450 30,985 28,121
Net income per employee Rs. '000 2,418 1,580 2,247 1,979 2,115
Cost Ratios
Operating costs (as % of sales) 22.88% 24.82% 25.42% 29.49% 27.81%

Administration costs (as % of sales) 5.93% 5.96% 5.81% 7.19% 7.27%
Selling costs (as % of sales) 16.95% 18.86% 19.61% 22.30% 20.54%
Equity Ratios
Price earning ratio Times 22.75 18.45 17.26 22.14 18.69

Earnings per share Rs. 11.82 8.34 12.34 10.57 11.61
Dividend per share Rs. 6.00 5.00 7.00 6.50 6.50
Dividend cover Times 1.97 1.67 1.76 1.63 1.79
Dividend yield 2.23% 3.25% 3.29% 2.78% 3.00%
Market value per share Rs. 268.87 153.81 213.00 234.02 216.95
Break-up value per share
with surplus on revaluation Rs. 141.98 83.11 81.60 76.64 62.03
Break-up value per share
excluding surplus on revaluation Rs. 62.56 55.86 53.46 47.62 43.14
Liquidity Ratios
Current ratio Ratio 2.16:1 1.95:1 1.85:1 2.04:1 2.08:1

Quick ratio Ratio 1.75:1 1.56:1 1.53:1 1.71:1 1.79:1
Cash ratio Ratio 1.15:1 1.06:1 1.08:1 1.31:1 1.38:1
Leverage Ratios
Total debt to capital ratio Ratio 0:100 0:100 0:100 0:100 0:100
Pattern Of Shareholding
As At December 31, 2019
NO. OF SHARESHOLDINGS
NO OF SHAREHOLDERS FROM TO Total Shares

7,082 1 100 200,069
2,019 101 500 500,130
526 501 1,000 412,628
513 1,001 5,000 1,175,249
91 5,001 10,000 693,613
26 10,001 15,000 308,658
22 15,001 20,000 412,375
9 20,001 25,000 209,051
10 25,001 30,000 286,266
5 30,001 35,000 171,700
7 35,001 40,000 264,149
4 40,001 45,000 174,600
8 45,001 50,000 394,073
4 50,001 55,000 206,000
2 55,001 60,000 112,872
1 60,001 65,000 60,185
1 65,001 70,000 70,000
2 75,001 80,000 156,000
1 80,001 85,000 82,400
1 85,001 90,000 86,169
1 110,001 115,000 115,000
1 150,001 155,000 154,518
1 190,001 195,000 191,795
1 200,001 205,000 200,700
1 240,001 245,000 241,200
1 270,001 275,000 273,682
1 275,001 280,000 279,500
1 315,001 320,000 316,200
1 365,001 370,000 368,900
1 450,001 455,000 450,900
1 645,001 650,000 647,800
1 945,001 950,000 946,600
1 1,070,001 1,075,000 1,070,673
1 35,205,001 35,210,000 35,209,665
10,348 46,443,320
Pattern Of Shareholding
Information as required under Code of Corporate Governance
Number of Number of
Shareholder's category
shareholder share Held
Associated Companies, Undertaking and Related Parties
ICI OMICRON B.V. 1 35,209,665
TOTAL 1 35,209,665
Mutual Funds (name wise details)
CDC - TRUSTEE ABL STOCK FUND 1 400

CDC - TRUSTEE AKD OPPORTUNITY FUND 1 6,200
CDC - TRUSTEE JS ISLAMIC FUND 1 2,500
CDC - TRUSTEE NATIONAL INVESTMENT (UNIT) TRUST 1 273,682
CDC - TRUSTEE NBP ISLAMIC SARMAYA IZAFA FUND 1 29,900
CDC - TRUSTEE NIT-EQUITY MARKET OPPORTUNITY FUND 1 191,795
CONFIDENCE MUTUAL FUND LTD 1 3
DOMINION STOCK FUND LIMITED 1 85
GOLDEN ARROW SELECTED STOCKS FUND 1 3
MC FSL - TRUSTEE JS GROWTH FUND 1 6,500
MCBFSL - TRUSTEE ABL ISLAMIC STOCK FUND 1 4,100
SAFEWAY MUTUAL FUND LIMITED 1 128
SECURITY STOCK FUND LIMITED 1 18
TOTAL 13 515,314
Directors and their spouse
MR. MUEEN AFZAL 1 10

MR. HARRIS MAHMOOD 1 10
MR. TAN TIAN HOCK SEBASTIAN 1 10
MR. SAAD MAHMOOD RASHID 1 10
MS. AYESHA HAMID 1 10
MR. OSCAR WEZENBEEK 1 10
MR. FREDERIC MOREUX 1 10
TOTAL 7 70
Executives
TOTAL 8 184
Public Sector Companies and Corporations

TOTAL 3 1,225,330
Banks, Development Finance Institutions, Non-Banking Finance Institutions,

Insurance Companies, Takaful, Modaraba and Pension Funds
TOTAL 40 1,550,425
Shareholder Holding five percent or more voting Rights in the Listed Company
ICI OMICRON B.V. 1 35,209,665

TOTAL 1 35,209,665
Categories Of Shareholding
Sr No. Shareholders Category No. of Shareholder No. of Shares Percentage
1 Directors, Chief Executive Officer, and their spouse 7 70 0.00

and minor children
2 Associated Companies, Undertakings and related 1 35,209,665 75.81

Parties
3 NIT and ICP - - -
4 Banks, Development Financial Institutions, Non 20 1,269,668 2.73

Banking Financial Institutions
5 Insurance Companies 14 1,429,981 3.08
6 Modarabas and Mutual Funds 16 525,968 1.13
7 Share holders holding 10% 1 35,209,665 75.81
8 General Public :
a. Local 10,139 5,511,237 11.87
b .Foreign - - -
9 Others 151 2,496,731 5.38
Total (excluding : share holders holding 10%) 10,348 46,443,320 100.00

Annual Report 2019
NOTICE OF 9TH ANNUAL GENERAL MEETING
NOTICE is hereby given that the 9th Annual General Meeting of Akzo Nobel Pakistan Limited will be held on Thursday April 30, 2020,
at 01:30 p.m. via video-link (details provided in note 2 & 3 below), to transact the following business:
ORDINARY BUSINESS
1. To confirm the minutes of the 8th Annual General Meeting held on April 23, 2019.
2. To receive, consider and adopt the audited accounts of Akzo Nobel Pakistan Limited, for the year ended December 31 2019,
together with the Auditors Report and the Directors Report thereon.
3. To declare and approve final cash dividend @ 60% i.e. Rs. 6 per ordinary share of Rs. 10/-each for the year ended December
31, 2019, as recommended by the Directors, payable to the Members whose names appear in the Register of Members as at
April 19, 2020.
4. To appoint the External Auditors of the Company and to fix their remuneration.
5. Any other business with the permission of the Chairman.
April 09, 2020 By Order of the Board

Lahore
Muhammad Ali Murtaza

Acting Company Secretary
Annual Report 2019
NOTES:
1. Closure of share Transfer Books:
The Share Transfer Books of the Company will remain closed from April 20, 2020 to April 30, 2020 (both days inclusive).
Transfers received in order at the office of our Shares Registrar, Messrs. FAMCO Associates (Pvt) Ltd. 8-F, near Hotel Faran,
Nursery, Block 6, P.E.C.H.S., Shahrah-e-Faisal, Karachi, by the close of business on April 19, 2020, will be treated in time
for payment of the final dividend to the transferees.
2. Participation in the Annual General Meeting:

In consideration of the country wide situation due to Corona Virus (COVID-19) epidemic, the Annual General Meeting of the
Company will be convened through webinar. Shareholders will be able to login, participate and vote in the proceedings of
AGM through their smartphones or computer devices from their homes or any convenient location after completing meeting
attendance formalities. For this purpose, the Members registering to connect through webinar facility are required to email
their Name, Folio Number, CNIC or Passport Number and Number of Shares held in their name with subject
“Registration for AKZO’s AGM” at [email protected] by Tuesday, 28th of April 2020. Video link and
login credentials will be shared with only those members whose emails containing all required particulars are received at the
given email address by or before 01:30 pm on 28th April 2020.
All Members entitled to attend and vote at the Meeting, are entitled to appoint another person in writing as their proxy to
attend and vote on their behalf. A proxy needs to be a member of the Company. A corporate entity, being a member, may
appoint any person, regardless whether they are a member or not, as its proxy. In case of corporate entities, a resolution of
the Board of Directors / Power of Attorney with specimen signature of the person nominated to represent and vote on behalf
of the corporate entity, shall be emailed to the Company along with a completed proxy form. The proxy holders are requested
to share their CNICs or original passports at the email address; [email protected] by 1.30 pm on 28th
April 2020 for us to share the video link and login credentials.
3. Form of Proxy
In order to be effective, duly completed and signed proxy forms available at Company’s website www.akzonobel.pk must be
emailed at [email protected] at least 48 hours (excluding holidays) before the time of the meeting.
Form of Proxy should be witnessed by two persons whose names, addresses and CNIC Numbers must be mentioned on
the forms.
4. Mandatory Notice to Shareholders who have not provided their CNICs:

All shareholders holding physical shares who have not submitted their valid CNICs are requested to send attested copies of
their valid CNICs along with their folio number to the Company’s Shares Registrar. In the absence of a shareholder’s valid
CNIC, the Company will withhold e-credit of dividend to such shareholders.
5. Deduction of Income Tax from Dividend:

Please note that withholding tax will be deducted on the basis of latest Active Taxpayers List (ATL) available at FBR website
as per following rates:
(a) Shareholders appearing in Active Taxpayers List (ATL): 15%
(b) Shareholders not appearing in Active Taxpayers List (ATL): 30%
(i) To enable the company to make tax deduction on the amount of cash dividend @ 15% instead of 30%, shareholders
whose names are not entered into the Active Tax-payers List (ATL) provided on the website of FBR, despite the fact that
they are filers, are advised to immediately (and latest by the first day of book closure) make sure that that their names
are entered in ATL, otherwise tax on their cash dividend will be deducted @ 30% instead of 15%.
(ii) Withholding Tax exemption from the dividend income, shall only be allowed if a copy of valid tax exemption certificate
is made available to FAMCO Associates (Pvt) Ltd., latest by the first day of Book Closure.
(iii) Further, according to clarification received from Federal Board of Revenue (FBR), withholding tax will be determined
separately on ‘Filer/Non-Filer’ status of Principal shareholder as well as joint-holder (s) based on their shareholding
proportions, in case of joint accounts.
In this regard all shareholders who hold shares jointly are requested to provide shareholding proportions of Principal
shareholder and Joint-holder(s) in respect of shares held by them (only if not already provided) to our Share Registrar, in
writing as follows:
Principal Shareholder Joint Shareholder
Name Shareholding Name Shareholding

Company Folio/CDS Total
and Proportion and CNIC Proportion
Name Account # Shares
CNIC # (No. of Shares) # (No. of Shares)
Annual Report 2019
The required information must reach our Share Registrar within 10 days of this notice; otherwise it will be assumed that the shares
are equally held by Principal shareholder and Joint Holder(s).
(IV) Corporate shareholders having CDC accounts are required to have their National Tax Number (NTN) updated with their
respective participants, whereas corporate physical shareholders should send a copy of their NTN certificate to the
company or FAMCO Associates (Pvt.) Ltd. The shareholders while sending NTN or NTN certificates, as the case may
be, must quote company name and their respective folio numbers.
For any query/problem/information, the investors may contact the Company Secretary at phone: 042 111 -551- 111 and email
address: [email protected]/or FAMCO Associates (Pvt.) Ltd. at phone 021-34380101-5 and email
address: [email protected]
6. Mandatory Payment of Dividend Electronically (E-Mandate)
Pursuant to the provision of section 242 of the Companies Act, 2017, It is mandatory for a listed company to pay cash
dividend to its shareholders only through electronic mode by making direct remittance into their respective bank account
designated by the entitled shareholder(s) (“the Bank Account”), therefor, in order to receive dividends directly into their bank
accounts, shareholders holding shares in physical form are requested to fill in “Electronic Credit Mandate Form” available on
Company’s website i.e. www.akzonobel.pk and send the completed form along with the copy of a valid CNIC or provide the
following information to the registrar of the Company M/s. FAMCO Associates (Private) Limited, 8-F, near Hotel Faran,
Nursery, Block -6, P.E.C.H.S., Shahrah e Faisal, Karachi latest by April 19, 2020. In the absence of valid accounts details
the Company will be constrained to withhold dividend payment.
7. Audited Financial Statements Through E-mail CD/DVD/USB
Considering the gravity of pandemic Corona Virus (COVID-19) on the public health and the lock down situation in the
country, SECP through its circular No. 10 of 2020, has allowed the public entities to circulate Annual Reports electronically.
Therefore, the Company will be circulating Annual Report for 2019 through email and will deliver CD/DVD to the
shareholders once the lockdown situation is eased down in the country.
The Annual Report is also available for download on our website www.akzonobel.pk . Those shareholders who have
provided their email addresses shall receive a PDF copy of the Annual Report for 2019. For shareholders who have not
provided their updated contact details, we request them to share their name, CNIC/NTN number, CDC Participant ID / Folio
Number and their updated email address with us on [email protected] so that PDF copy of the Annual
Report can be shared ahead of the Annual General Meeting.
SECP through its Notification SRO 787(I)/2014 dated September 8, 2014, has allowed the circulation of Audited Financial
Statements along with the Notice of Annual General Meeting to the Members of the Company through email /CD/DVD/USB.
Therefore, all Members who wish to receive the hard copy of Annual Report are requested to send their e-mail addresses.
The Company shall, however, provide hard copy of the Audited Financial Statements to its shareholders, on request, free of
cost, within seven days of receipt of such request.
The Company shall place the financial statements and reports on the Company’s website, at least twenty-one (21) days prior
to the date of the Annual General Meeting in terms of SRO 634(1)/2014 dated July 10, 2014 issued by the SECP.
8. Change of Address and Non-Deduction of Zakat Declaration Form:
Non CDC shareholders are requested to notify any change in their addresses immediately and if applicable provide their
non-deduction of Zakat Declaration Form to the Company’s Shares Registrar (if not provided earlier). Members holding
shares in CDC/Participants accounts are also requested to update their addresses and if applicable, to provide their
non- deduction of Zakat Declaration Form to CDC or their Participants/Stock Brokers.
9. Guidelines for CDC Account Holders:
CDC account holders will have to follow the guidelines with respect to attending the Meeting and appointing of Proxies as
issued by the Securities Exchange Commission of Pakistan through it Circular 1 of January 26, 2000.
10. E- voting
Members can exercise their right to poll subject to meeting requirements of Section 143 – 145 of the Companies Act 2017
and applicable clauses of Companies (Postal-Ballot)Regulations, 2018.
FORM OF PROXY
9 ANNUAL GENERAL MEETING
th
I/We ___________________________________________________________________________________________ of
__________________________________________________________________________________ being mebers(s) of
Akzo Nobel Pakistan Limited holding __________________ ordinary shares hereby appoint ________________________
or failing him/her__________________________________ of _______________________ who is/are also members(s) of
Akzo Nobel Pakistan Limited as my/our proxy in my/our absence to attend and vote for me/us and on my/our behalf at the
9thAnnual General Meeting of the Company to be via webinar, Lahore, Pakistan, on Thursday, April 30, 2020, at 01.30 p.m.,
and at any adjournment thereof.
As witness my/our hand(s) this _________ day of __________ 2020.
Signed in the presence of:
(Signature of Witness 1) (Signature of Witness 2) Signature across

Name of Witness: Name of Witness: Revenue Stamp of
CNIC No.: CNIC No.: appropriate value
Address: Address:
Signed by
Shareholder’s Folio No/CDC Account No
This signature should agree with the specimen

registered with the Company
Notes:
1. This Proxy Form, duly completed and signed, must be received at the Registered Office of the Company, at 346,
Ferozepur Road, Lahore, not less than 48 hours (excluding holidays) before the time of holding the Meeting.
2. No person shall act as proxy unless he himself is a member of the Company, except that a corporation may appoint a
person who is not a member.
3. If a member appoints more than one proxy and more than one instrument of proxy are deposited by a member with the
Company, all such instruments of proxy shall be rendered invalid.
4. Any alteration made in this instrument of proxy should be initialed by the person who signs it.
5. In the case of joint holders any one may vote either personally or by proxy but if more than one of such joint holders be
present either personally or by proxy that one of the said joint holders whose name stands first on the Register of
Members in respect of such share shall alone be entitled to vote.
For CDC Account Holders/Corporate Entities:
In addition to the above the following requirements have to be met:
(i) The proxy form shall be witnessed by two persons whose names, addresses and CNIC numbers shall be mentioned
on the form.
(ii) Attested copies of CNIC or the passport of the beneficial owners and the proxy shall be furnished with the proxy form.
(iii) The proxy shall produce his original CNIC or original passport at the time of the Meeting.
(iv) In case of a corporate entity, the Board of Directors resolution/power of attorney with specimen signature shall be
submitted (unless it has been provided earlier) along with proxy form to the Company.
MANDATE LETTER
Dear Shareholder,
SUBMISSION OF COPY OF CNIC (Mandatory)

Pursuant to the directives of the Securities and Exchange Commission of Pakistan, CNIC number is mandatorily required to be
mentioned on members register and other statutory returns. You are therefore requested to submit a copy of your CNIC (if not already
provided) to Akzo Nobel Pakistan Limited, 346, Ferozepur Road, Lahore or FAMCO Associates (Pvt) Limited,8-F, Next to Faran
Nursery, Block 6, P.E.C.H.S. Shahra-e-Faisal Karachi
DIVIDEND MANDATE (Mandatory)

We wish to inform you that according to the provisions of the Companies Act, 2017, shareholders are MANDATORILY required to
provide their Bank Account Detail to receive their dividends by way of direct credit or electronic transfer to their Bank Accounts instead
of receiving them through dividend (crossed as A/c Payee only).
CDC shareholders are requested to submit their dividend mandate and CNIC directly to their broker (participant) CDC.
Yours faithfully
Muhammad Ali Murtaza

Company Secretary
SHAREHOLDER’S SECTION
I hereby wish to communicate my desire to receive my future dividends directly in my bank account as detailed below:
Name of Shareholder :
Folio Number :
Contact Number of Shareholder :
Bank Account No. :
Title of Account :
Name of Bank and Address :
It is stated that the above particulars given by me are correct to the best of my knowledge and I shall keep the Company informed in
case of any changes in the said particulars in the future.
CNIC No:
Shareholder’s signature (copy attached)
19
19
- 4 4
2 - 5
- 4 5
2 - 4
- 4 5
- 1 5
- 1 -
- 2 -
2 - -
36
F60 F58
17.24% 6.95%
76 270
F57 F56
-2.9% 8,747 8,492
-3.5% 5,813 5,612
-6.1% 3,810 3,579
1.5% 2,003 2,033
33.7% 560 749
41.8% 387 549
41.8% 8.34 11.82
NOTES
NOTES
NOTES
AkzoNobel has a passion for paint. We’re
experts in the proud craft of making paints
and coatings, setting the standard in color
and protection since 1792. Our world
class portfolio of brands – including Dulux,
International, Sikkens and Interpon – is
trusted by customers around the globe.
Headquartered in the Netherlands, we are
active in over 150 countries and employ
around 34,000 talented people who are
passionate about delivering the high-
performance products and services our
customers expect.
For more information please visit www.

akzonobel.com.
© 2020 Akzo Nobel N.V. All rights reserved.

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Akzo Nobel Pakistan Limited

HONEY contemporary, our Colour of the Year for 2019 complements

Chairman’s Review Report 6

CHAIRMAN’S REVIEW REPORT

Dear shareholder, accepted global practices for evaluating

We also constantly reviewed aspects of our

CHIEF EXECUTIVE STATEMENT

In 2019, we again showed that we’re

AkzoNobel Pakistan, being a part of the Akzo-

Our vision is to “Establish AkzoNobel Pakistan

Our Purpose Our Priorities & Goals

Accelerated Introduction Win in

to demonstrate the positive benefits of our

A BRIEF OVERVIEW OF OUR CODE:

GROWING WITH AKZONOBEL

good discussions about how we can improve

DIVERSITY & INCLUSION

To support the creation of a diverse and

AkzoNobel strives to reﬂect the diversity of the

ORGANIZATIONAL HEALTH INDEX

We think of organizational health as more than

* Excluding unallocated corporate center costs; assumes no

significant market disruption

At AkzoNobel, sustainability is one

• Continuous improvement of HSE&S Three core safety processes – People Safety,

Total reportable injury rate

Achievements during 2019

where we were able to achieve our target of

Behavioral Based Safety System (BBS)

Behavior-based safety is a broad term

Sustainability and energy efficiency

CREATING SOCIETAL IMPACT

Corporate social responsibility practices are embedded at the

Doing our part to create a healthy and sustainable society is ingrained

We use our passion for paint to make

PAINTS AND COATINGS

Far Away Places

AkzoNobel Pakistan launched Dulux

AkzoNobel Pakistan’s corporate

CORPORATE GOVERNANCE AND COMPLIANCE

and for implementing the company’s long-term and short-term plans.

The internal control self-assessment exercise carried out by the

Enterprise Risk Management

The Enterprise Risk Management (ERM) methodology is part of

AYESHA HAMID Non-Executive (Independent) Share Transfer Committee

SEBASTIAN TAN Non-Executive HARRIS MAHMOOD Chief Financial Officer

HARRIS MAHMOOD Executive MUHAMMAD ALI MURTAZA Acting Company Secretary

Human Resource Remuneration Sub Committee Acting Company Secretary

OSCAR WEZENBEEK Member

SAAD MAHMOOD RASHID Member Head of Internal Audit

Audit Sub Committee Executive Management Team

MUEEN AFZAL Member FAROOQ AYUB KHAN Operations Manager

SEBASTIAN TAN Member HARRIS MAHMOOD Chief Financial Officer

MUHAMMAD ALI MURTAZA Secretary SHAHID ISLAM National Sales Manager,

USMAN HAFAZ Head of Brand & Customer

Marketing, Decorative Paints

WAQAS MIR National Sales Manager,

SYEDA INSIA BATOOL SHAH Country HR Manager

Internal Auditor Regional Offices