DIRECTORS' REPORT TO, THE MEMBERS OF INDOKEM LIMITED, Your Directors have pleasure in presenting the Forty Ninth Annual Report together with the Audited Accounts for the Financial Year ended 31st March, 2015. 2. operational Performance: During the year 2014-15, the total sales of the Company increased from 3676.65 lacs to 5554.30 lacs. Further pursuant to Clause 49 of Listing Agreement, detailed performance of the Company is given in Management Discussion and Analysis Report which forms part of the Directors' Report. 3. Directors and Key Managerial Personnel: Pursuant to Rule 8(5)(iii) of the Companies (Accounts) Rules, 2014, the following details relating to Director's and Key Managerial Personnel are reported: i. Mr. Kailash Pershad (DIN: 00503603), Mr. Rajagopalan Sesha (DIN: 00289643) and Mr. B. G. Sontakke (DIN: 01225753) were ratified as Independent Directors of the Company at the previous Annual General meeting held on 30th September, 2014, in compliance with the provisions of Section 149 (4) of the Companies Act, 2013. ii. Mr. Mukund Ramchandra Nagpurkar was appointed as the Chief Financial Officer of the Company on 1st of August, 2014 in compliance with the provisions of Section 203 of the Companies Act, 2013. iii. Mr. Rohan Ramchandra Gavas resigned as the Company Secretary and Compliance Office of the Company on 31st January, 2015. iv. Ms. Sugandha Vaidya was appointed as the Company Secretary and Compliance Officer of the Company on 9th February, 2015. v. Ms. Sugandha Vaidya resigned as the Company Secretary and Compliance Officer of the Company on 19th September, 2015. 4. Appointment of Director: Ms. Leelabai K. Khatau, Non- Executive Director of your Company, retires by rotation and being eligible, offers herself for re-appointment. The details regarding Ms. Leelabai K. Khatau as required under clause 49 VIII E are disclosed in the notice of the Annual General Meeting. None of the other Directors are related inter se except Mr. Mahendra K. Khatau, Ms. Leelabai K. Khatau and Mrs. Asha M. Khatau who are related to each other. 5. Training and Familiarization Programme for Directors: Pursuant to Clause 49 (II) (B) (7) of the Listing Agreement, the Company has adopted the Familiarization Programme for the Independent Directors with an aim to provide to the Independent Directors - an insight in their roles, rights, responsibilities in the Company, nature of the industry in which the Company operates, business model of the Company, etc... The Details of the Familiarization Programme for the Independent Director's are available on the website of the Company: www.indokem.co.in at link at 6. Remuneration of Directors and Key Managerial Personnel: Pursuant to Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the details of remuneration of Directors and Key Managerial Personnel are as furnished in Annexure C. 7. Particulars of Employees: None of the employees of the Company fall under the limits laid down in Rule 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014. 8. Statutory Auditors: Pursuant to the provisions of Section 139 of the Companies Act, 2013, M/s. Sheth Doctor & Associates, Chartered Accountants, Mumbai, were appointed as the Statutory Auditors of the Company on 30th September, 2014 for a period of three years to hold office until the conclusion of the Annual General Meeting to be held in the year 2017. M/s. Sheth Doctor & Associates have issued a Certificate of eligibility pursuant to Section 141 of the Companies Act, 2013. The Board of Directors of your Company recommends ratification of the appointment of M/S Sheth Doctor & Associate, Chartered Accountants, Mumbai from the conclusion of the forthcoming Annual General Meeting of the Company until the conclusion of the next Annual General Meeting to be held in the year 2016. 9. Auditors' Observations: As regards the Audit Qualification on the records and valuation of inventory at Ankleshwar Plant, the management is of the view of that the inventories are usable for trading operations of the Company at Mumbai. 10. Secretarial Audit Report: Pursuant to the Provisions of Section 204 of Companies Act, 2013 and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Company has appointed M/s Ragini Chokshi & Co., Company Secretary in Whole-Time Practice, Mumbai to undertake Secretarial Audit of the Company for the Financial Year ended 31st March, 2015. The Secretarial Audit Report issued by M/s Ragini Chokshi & Co. in the prescribed Form MR-3 is enclosed as Annexure D. There are no-qualifications, reservations or adverse remarks in the Report. 11. Disclosures: The disclosures pursuant to Section 134(3)(a) to (q) are furnished as under: i. Extract of Annual Return: Pursuant to Section 134(3)(a) of the Companies Act, 2013 read with Companies (Accounts) Rules, 2014, the extract of Annual Return in the prescribed Form MGT-9 is attached herewith and marked as Annexure C. ii. Number of Board Meetings: During the Financial year ended 31st March, 2015, the Board met five (5) times. The details of the meetings are provided in the Corporate Governance Report. iii. Director's Responsibility Statement: Pursuant to Section 134(5) of the Companies Act, 2013, your Directors, on the basis of information and documents made available to them, confirm that: a. In the preparation of the Annual Accounts, the applicable accounting standards have been followed; b. Your Directors have selected such Accounting Policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of Financial Year and of the losses of the Company for that period; c. The Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; d. The Directors have prepared the Annual Accounts on a going concern basis; e. The Directors, have laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and are operating effectively; f. The Director's have devised proper systems to ensure compliance with the provisions of all applicable laws and such systems are adequate and are operating effectively. iv. Declaration by Independent Directors: The Independent Directors at the time of their appointment have given a declaration as required under sub-Section (7) of Section 149 of the Companies Act, 2013 regarding their meeting the criteria of Independence as laid down under sub-section (6) of Section 149. v. Policy on Nomination Remuneration and Evaluation: The Nomination and Remuneration Committee of the Company is governed by terms of reference. The Company has formulated a combined policy on Nomination and Remuneration of Board and Senior management personnel of the Company which also includes the policy on Board's diversity, evaluation criteria of Independent Directors and criteria for determining qualifications, positive attributes, independence of a Director in compliance with clause 49 IV B of the Equity listing Agreement and Section 178 of the Companies Act, 2013. The policy is available on the website of the Company www.indokem.co.in at link at vi. Particulars of loans, guarantees or investments Pursuant to section 186 of the Companies Act, 2013, the details of loans given, investments made or guarantees given are given in note nos. 14, 19 and 13 to the financial statements for the financial year 2014-15. The Loans, investments, guarantees and securities provided by the Company during the Financial year ended 31st March, 2015, together with the existing Loans, investments, guarantees and securities do not exceed the limits prescribed under sub-section (2) of Section 186. vii. Related Party Transactions: All related party transactions that were entered during the financial year were on arms' length basis and were in the ordinary course of business. There were no materially significant related party transactions made by the Company with Promoters, Directors, Key Managerial Personnel or other designated persons which may have a potential conflict with the interest of the Company in large. The particulars of contracts and arrangements entered with related parties during the Financial year ended 31st March, 2015 are enclosed to the report in the prescribed Form AOC-2 as Annexure-B. The Related Party Transaction Policy of the Company approved by the Board of Director's of the Company is displayed on the website of the Company www.indokem.co.in/policies <http://www.indokem.co.in/policies>. viii. Dividend: Considering the accumulated losses the Board of Directors of your Company do not consider it appropriate to recommend any Dividend for the Financial Year ended 31st March, 2015. ix. Insurance: All the properties and insurable interests of the Company including the buildings, plant and machineries and stocks have been adequately insured. x. Material Changes and Commitments: Your Company had filed an application with the Hon'ble High Court of Judicature at Bombay for entering into a scheme of amalgamation and arrangement with Khatau Capacitors Private Limited and Indokem Exports Limited. The requisite consent of the members was sought at the Court Convened Meeting as well as Postal Ballot held on 30th April, 2015 and the Scheme was subsequently filed with the Hon'ble High Court of Judicature at Bombay. The Bombay High Court on the 4th of September, 2015 approved the scheme filed by the Company and the certified copy of the Order dated 4th September, 2015 was filed with the Registrar of Companies on the 30th September, 2015 thereby making the scheme effective from 1st April, 2014. The Company had a Secured Loan from Union Bank of India. After negotiations with the Bank, One Time Settlement (OTS) was arrived at for a sum of Rs. 18.50 crores. For some time now, Company had been trying to dispose of the Company's assets held for disposal at Ankleshwar. The Company has entered into a Memorandum of Undertaking (MOU) with a prospective buyer and the process of due diligence is ongoing. Pending this process, the Company has received advances as part of the MOU. Out of the advances received, the Company has paid off in full, the above OTS amount of Rs. 18.50 crores due to the bank. xi. State of Company's Affairs: There is no change in the nature of business during the year under review. No Order has been passed by any Regulatory Court or Tribunal, which can impact the going concern status of the Company and its Operations in future. xii. The Conservation of Energy, Technology Absorption, Foreign exchange Earnings and Outgo: Pursuant to Section 134(3)(m) of the Companies Act, 2013 your Company has carried out the following acts in order to: A. Conservation of Energy: a. Energy Conservation measures taken: i. Electrical Energy: • Regular preventive / predictive maintenance of electrical system is carried out to ensure minimum loss of energy / power supply. • Regular up gradation in electrical system is done so as to minimize consumption of electrical power supply. ii. Furnace Oil / LDO Consumption: Considering the above issue there are no major consumption of Furnace Oil / Light Diesel Oil. However, there are some processing activities carried out limiting the consumption of energy. b. Additional investments and proposals if any, being implemented for reduction of consumption of energy: As the Company is concentrating in trading activities, it has resulted in reduction of consumption of energy. However, as and when production will be increased, modern equipments will be used to reduce the consumption of energy. c. Impact of the measures at (a) and (b) for reduction of consumption of energy and consequent impact on the cost of production: Due to negligible consumption, there is no special impact. d. Total energy consumption and energy consumption per unit of production: As per Form - "A" forming part of Annexure A. B. Technology Absorption: As per Form - "B" forming part of Annexure A. xiii. Risk Management: Your Company has a robust risk management framework to identify, evaluate business risks and opportunities. This framework seeks to create transparency, minimize adverse impact on the business objectives and enhance the Company's competitive advantage. The business risk framework defines the risk management approach across the enterprise at various levels including documentation and reporting. The framework has different risk models which help in identifying risk trend, exposure and potential impact analysis at a Company level as also separately for business segments. The key business risks identified by the Company and its mitigation plans are included in Management Discussion and Analysis Report. xiv. Annual Evaluation by the Board of its own performance and that of its Committees and Individual Directors: The Company has devised tool on the basis of Board Performance Evaluation Policy for evaluating the performance of the Independent Directors, Board Committees, Individual Directors and the Board at large which include the criteria for performance evaluation of the Non- Executive and Executive Directors. xv. Subsidiary Company, Associate Company and Joint Venture Company: Your Company does not have any Subsidiaries or Associates or Joint Venture Companies. xvi. Deposits: Your Company has not accepted any Fixed Deposit from Public or any other person during the Financial Year ended 31st March, 2015. xvii. lnternal Financial Control: The Company has adequate policies, and standard operating procedures to ensure the accuracy of the Financial Statements and to maintain orderly and efficient conduct of its business. The Company has an effective mechanism to keep proper check on any possible instance of fraud and for safeguarding its assets. The Company follows a practical maker-checker policy to ensure every possible check on the accuracy of the Financial Reporting. The scope and authority of the Internal Auditor have been defined by the Audit Committee from time to time. To maintain objectivity and independence, the internal auditor reports its observations to the Audit Committee of the Board. The Internal Auditor monitors and evaluates the efficacy and adequacy of internal control system in the Company, its compliance with operating systems, accounting procedures and policies at all locations of the Company. Based on the report of the internal auditor, process owners undertake corrective action in their respective areas and thereby strengthen the controls. Audit observations and corrective actions thereon are presented to the Audit Committee. xviii. Committees of Directors and Key Managerial Personnel: The details of the Committees of the Board of Directors and Key Managerial Personnel pursuant to the Listing Agreement and the Companies Act, 2013 are laid down in the Corporate Governance Report. 12. Audit Committee: The details pertaining to the composition of the Audit Committee constituted pursuant to sub-section (8) of Section 177 of the Companies Act, 2013 are provided in the Corporate Governance Report segment of the Annual Report. There are no instances of the Board not accepting the recommendation of the Audit Committee during the Financial Year 2014-2015. 13. Vigil Mechanism/ Whistle Blower Policy: Pursuant to Section 177(9) and (10) of the Companies Act, 2013 and Clause 49 of the Listing Agreement, the Company has established a vigil mechanism named Vigil Mechanism/Whistle Blower Policy to report genuine concerns to the Chairman of your Company and Chairman of the Audit Committee. The Whistle Blower Policy provides adequate safeguards against victimization of persons who use such mechanism and makes provisions for direct access to the Chairman of the Company and the Chairman of the Audit Committee in exceptional cases as envisaged under the Whistle Blower Policy. The details of the Whistle Blower Policy are posted on the website of the Company www.indokem.co.in/policies 14. Policy on Prevention of Sexual Harassment: The Company has in place a Policy on preservation of Sexual Harassment of its employees at the workplace. In line with the requirements of the Sexual Harassment of Women in at Workplace (Prevention, Prohibition and Redressal) Act, 2013, an Internal Complaints Committee has been constituted by the Company to redress the complaints received regarding sexual harassment. Your Directors state that during the financial year under review, there were no cases filed pursuant to the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013. 15. Prohibition of Insider Trading: In compliance with the provisions of SEBI (Prohibition of Insider Trading) Regulations, 2015 and to preserve the confidentiality and to prevent misuse of Unpublished Price Sensitive Information (UPSI), the Company has adopted a Code of Conduct to regulate, monitor and report trading by Insiders (Indokem Limited's Prevention of Insider Trading Rules, 2015) and a Code of Practice and Procedures for Fair Disclosure of Unpublished Price Sensitive Information (UPSI) (Code of Fair Disclosure). The Insider Trading Code and Code of Fair Disclosure are available on the website of the Company at www.Indokem.co.in/policies 16. Corporate Social Responsibility (CSR): The Company has not implemented any Corporate Social Responsibility initiatives as the provision of Section 135 of the Companies Act, 2013 and Rules made thereunder governing Corporate Social Responsibility are not applicable. 17. Corporate Governance: Pursuant to Clause 49 of the Listing Agreement, a separate section forming part of this report and titled as "Corporate Governance Report" is attached herewith. 18. Acknowledgements: Your Directors take this opportunity to place on record their sincere gratitude to the Banks, Central and State Government Departments and the Local Authorities for their guidance and support. Your Directors are also grateful to customers, suppliers and business associates of the Company for their continued cooperation and support. Your Directors express their deep appreciation for the commitment, dedication and hard work put in by the employees at all levels. Lastly, your Directors are grateful for the confidence and faith shown in them by the members of the Company. By Order of the Board For Indokem Limited Mahendra K. Khatau Chairman and Managing Director DIN:00062794 Place: Mumbai Date: 3rd November, 2015 |