DIRECTORS' REPORT TO THE MEMBERS Dear Shareholders, 1. Your Directors take pleasure in presenting the 36th Annual Report on the business and operations of your Company together with Audited Statement of Accounts for the financial year ended March 31, 2016. 2. PERFORMANCE HIGHLIGHTS: During the year under review, total Income (gross) increased to Rs. 53651 Lakhs from Rs. 53011 Lakhs of the previous year, which is an increase of 1.2%. However compared to the previous year, total sales in volume increased by 12%. Profit before tax registered an increase from Rs. 6691 Lakhs to Rs. 7248 Lakhs and Profit after tax increased from Rs. 4542 Lakhs to Rs. 4985 Lakhs. Further details of operations are given in the Management Discussion and Analysis Report annexed (Annexure 1). 3. DIVIDENDS: Your Directors have in March 2016 declared and paid interim dividend of Rs. 10/- on Equity Share of Rs. 5/- each for the year ended March 31, 2016 (Previous Year: final dividend of Rs. 4/- per share of Rs. 5/- each). The total amount of dividend including Income tax thereon amounted to Rs. 2455 Lakhs (Previous Year Rs. 982 Lakhs). You are requested to approve the same as final dividend. No further dividend is being recommended. 4. NEW PRojECTS: 4.1 Project at Kurkumbh (Maharashtra) : We had applied for environment clearance for the second phase of Acetonitrile expansion and also for enhancement of DMAHCL production capacity at Kurkumbh. We have received the Environment Clearance and Consent to Establish. We expect to get the Consent to operate shortly. 4.2 New Project at Dahej (Gujarat): As already reported, we have taken possession of land at Dahej and have also paid contribution charges for water supply. We have received Consent to Establish and also the Environment Clearance. We have started engineering work which is expected to be completed by June 2016. 4.3 Solar Project at Bhoom, Dist. osmanabad (Maharashtra) The 2 MW solar project has been completed and commissioned and is in regular operation since July 2015. This investment is helping us to save electricity costs and contribute towards our efforts for sustainable green energy to protect environment. 5. associate/subsidiary companies a. Diamines & Chemicals Limited, Vadodara: Diamines and Chemicals Ltd., Vadodara, our associate company, has achieved a total income (net) of Rs. 3593.60 Lakhs as against Rs. 3927.64 Lakhs of the previous year. They made a profit after tax of Rs. 25.34 Lakhs as against net of loss of Rs. 155.40 Lakhs of the previous year. b. Alkyl Speciality Chemicals Limited: This company was earlier engaged in marketing of speciality chemicals. This company achieved a total income of Rs. 14.61 Lakhs (Previous Year: Rs. 31.35 Lakhs) and a profit after tax of Rs. 10.73 Lakhs as against Rs. 19.88 Lakhs of the previous year. Your Directors have decided to merge the subsidiary company with the holding company. Pursuant to Accounting Standard AS-21 issued by the Institute of Chartered Accountants of India, Consolidated Financial Statements presented by the Company include the financial information of Diamines & Chemicals Limited and Alkyl Speciality Chemicals Limited. The Annual Accounts of the Subsidiary company - Alkyl Speciality Chemicals Limited, are available for inspection by any member at the registered office during business hours. The Company will send copies thereof to the shareholders who may, if required, write to the company. 6. RESPONSIBLE CARE®: Your Company has conceptualized, and is developing and supporting Nicer Globe, a Responsible Care initiative of Indian Chemical Council (ICC), along with other chemical companies. Nicer Globe is all about safe transportation of chemicals and providing proper emergency response. Responsible Care® is a wide-ranging voluntary initiative of International Council of Chemical Associations, being implemented in India by Indian Chemical Council to safely handle the products from inception in the research laboratory, through manufacture and distribution, to ultimate reuse, recycle and disposal, and to involve the public in the decision making processes. We have got our company certified for Responsible Care®. Various programs and studies related to safety, environment and health have been taken up and are being implemented, as listed hereunder: 6.1. Energy Conservation and Technology Absorption: The information on conservation of energy, technology absorption and other details stipulated under Section 134(3)(m) of the Companies Act, 2013 read with Rule 8 of The Companies (Accounts) Rules, 2014, is annexed herewith in "Annexure 2". 6.2. Safety, Health and Environment: Keeping in line with the core values of being a responsible corporate citizen, an Integrated Management System to ensure effective Occupational Health Management has been established by your Company. (a) Safety : We encourage a high level of awareness of safety issues among our employees and strive for continuous improvement. All incidents are analysed in safety committee meetings and corrective actions, wherever necessary, are taken immediately. Employees are trained in safe practices to be followed at workplace. Active participation is done in Mutual Aid scheme in the respective industrial areas. We are one of the leading members of Local and District Crisis Group and have earned reputation amongst society around and statutory authorities for prompt technical support during Disaster Management events. External safety audit is carried out by outside agencies and the audit recommendations are being implemented. Safety promotional activities such as celebration of national safety week, world environment day, fire service day, and participation in regional safety competition are done regularly. The Company conducted Mock drill for onsite emergency scenario in presence of Observers from Directorate of Industrial Safety and Health and experts from other industries. The systematic mitigation actions were appreciated by the observers. To strengthen the Emergency Response, the company has conducted Truncated drills and Table top exercises and assessed performance of emergency responders. Daily tool box talks, safety talks to officers and contractors are done by the company staff. The Company has a Disaster Management Plan within the Company and for surrounding industry, either in the form of providing risk information to the community or responding in case of any emergency, as a part of its social responsibility. Online deviation reporting system has been installed with access to all employees including contract employees. The deviations recorded are promptly corrected by Area in-charge and closed. Employees are rewarded for good suggestions. This system encourages involvement of employees at all levels. In addition to the above we have introduced an award for Safe employee and Safe contractor of the year in 2015/16. The awards were distributed accordingly and the practice will be continued. Based on Operational Hazards, we have provided adequate levels of protections through scientific safety studies. (b) Health : Health of employees is of utmost importance. Periodic check up of all employees is done to monitor their health. Regular work area monitoring to check concentration of chemicals, noise level, and quality of ambient air is done. We also have well equipped Occupation Health Centers with a full time Doctor, appropriate staff and own AMBULANCE Vehicle at both manufacturing sites at Patalganga and Kurkumbh. We have team of employees trained as FIRST AIDERS who contribute their skills while on duty as well as away from duties to serve the society. Occupational Health and Safety issues are continuous focus points for your Company. Both sites are certified to OHSAS 18001:2007. New employees undergo medical check up before they join duty. Training programs are arranged on lifestyle diseases by eminent doctors. Health camps (including blood donation camps) are arranged. Drivers are provided training on health issues. Occupational health Centres have been upgraded and modern equipments are provided. Health promotional activities, such as celebrating International Yoga day at all our sites and conducting Yoga training of all our employees and contractors were done. (c) Environment: In line with our IMS Policy, we give utmost importance to Environment protection and adherence to pollution control norms. Environmental Management System at Patalganga and Kurkumbh has been certified to ISO 14001:2004. We have successfully completed the surveillance audits that take place from time to time. Environment protection and adherence to pollution control norms is of high concern for our company. i) Air Emissions - We monitor regularly emissions from various sources and are very particular about compliance with statutory requirement. Projects are undertaken for reduction of emissions. ii) Liquid Waste Treatment - We have integrated Effluent Treatment Plants and we maintain outlet standards within the prescribed limits. Continuous efforts are made by improving the internal processes to minimize the quantity of effluent generated and feasibility of recycling of treated effluent is being studied. The company has planned substantial investment for expanding as well as upgrading its effluent treatment capacity to meet long term requirements. Our Company is also a member of the CETP located at Patalganga and Kurkumbh. Pilot Plant trials of RO system were conducted to confirm the suitability of RO process for recovering water from treated effluent and recycle it for process use. The ETP has been up-graded and is performing satisfactorily. iii) Solid Waste Management - Solid wastes are either incinerated or disposed of to secured landfill. The manufacturing sites at Patalganga and Kurkumbh are members of the Authorized Common Hazardous Waste Transport, Storage & Disposal Facility namely; Mumbai Waste Management Limited, Taloja, and Maharashtra Enviro Power Limited, Ranjangaon respectively. We have a programme in place for waste management using reduction / recycle / reused / recovery techniques. These programes are continuously reviewed for monitoring their progress and effectiveness. iv) Green belt - Tree plantation inside and outside the factory premises is given utmost importance. So far we have planted nearly 8320 trees in and around our plant sites. v) Non conventional Renewable Energy and Natural Resource conservation - We use Solar Water heaters at the staff colony. Measures like gravitational water supply, Sewage water gardening, Rain water harvesting, and number of GO GREEN activities are also undertaken at the staff colony. vi) Our 2MW Solar Power Project at Bhoom has been commissioned and is working satisfactorily vii) Possibility of contaminating the storm water due to heavy rains, has been eliminated by improving the effluent collection system. Transfer of effluent through pipelines has been implemented. viii) Turbo Ventilators have been installed in all warehouses to minimize exposures and maintain fresh air at the work place. 7. CORPORATE SOCIAL RESPONSIBILITY: Your Company works with a deep sense of social commitment and contributes generously towards the welfare of the society that it is part of. Your Company's concerns are focussed on Environment Sustainability & Rural Development, Health/Women Empowerment, Education/Sports and others. The Annual Report on CSR activities is annexed herewith as "Annexure 3". 8. DIRECTORS: We are sad to report that Mr. K.R.V. Subrahmanian, who was an Independent Director and Chairman of Audit Committee, expired on 5.2.2016. Your Directors wish to place on record their appreciation of the valuable advice and guidance the Company had received from Mr. Subrahmanian during his tenure. The Company has the requisite number of independent directors on the Board. Mr. Hemendra Kothari retires by rotation at the Annual General Meeting and, being eligible, has offered himself for re-appointment. Your Directors recommend his reappointment. 8.1 Board Evaluation Pursuant to the provisions of Companies Act, 2013 and SEBI (LODR) Regulations, 2015, the formal annual evaluation has been carried out by the Board of its own performance and that of its Committees and individual Directors through collective feedback. 8.2 Remuneration Policy The Board has, on the recommendation of the Nomination & Remuneration Committee framed a policy for selection and appointment of Directors, Senior Management and their remuneration. The Remuneration Policy can be viewed on the company's website. 8.3 Meetings During the year five Board Meetings and four Audit Committee Meetings were convened and held, the details of which are given in the Corporate Governance Report. The intervening gap between the Meetings was within the period prescribed under the Companies Act, 2013. 8.4. Directors' Responsibility Statement To the best of their knowledge and belief and according to the information and explanations obtained by them, your Directors make the following statements in terms of Section 134(3)(c) of the Companies Act, 2013: a. that in the preparation of the annual financial statements for the year ended March 31, 2016, the applicable accounting standards have been followed along with proper explanation relating to material departures, if any; b. that such accounting policies as mentioned in Note 1 of the Notes to the Financial Statements have been selected and applied consistently and judgement and estimates have been made that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at March 31, 2016 and of the profit of the Company for the year ended on that date; c. that proper and sufficient care has been taken 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. that the annual financial statements have been prepared on a going concern basis; e. that proper internal financial controls were in place and that the financial controls were adequate and were operating effectively. f. that systems to ensure compliance with the provisions of all applicable laws were in place and were adequate and operating effectively. 9. RELATED PARTY TRANSACTIONS All related party transactions that were entered into during the financial year were at an arm's length basis and were in the ordinary course of business. There are 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 at large. All Related Party Transactions are placed before the Audit Committee as also the Board for approval. Prior omnibus approval of the Audit Committee is obtained on a quarterly basis for the transactions which are of a foreseen and repetitive nature. The transactions entered into pursuant to the omnibus approval so granted are audited and a statement giving details of all related party transactions is placed before the Audit Committee and the Board of Directors for their approval on a quarterly basis The policy on Related Party Transactions as approved by the Board is uploaded on the Company's website. Since all related party transactions entered into by the Company were in the ordinary course of business and were on an arm's length basis, form AOC-2 is not applicable to the Company. 10. CODE OF CONDUCT: The Board of Directors has laid down a Code of Conduct applicable to the Board of Directors and Senior Management, which is available on the company's website. All Board Members and Senior Management personnel have affirmed compliance with the code of conduct. 11. INSIDER TRADING POLICY: As required under the new Insider Trading Policy Regulations of SEBI, your Directors have framed new Insider Trading Regulations and Code of Internal Procedures and Conduct for Regulating Monitoring and Reporting of Trading by Insiders. For details please refer to the company's website. 12. FIXED DEPOSITS: The Company has not accepted any fixed deposits from the public within the meaning of Section 73 of the Companies Act, 2013 and the Companies (Acceptance of Deposits) Rules, 2014. 13. INSURANCE: The Properties and Assets of the Company are adequately insured. 14. SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS oR CoURTS: There are no significant material orders passed by the Regulators / Courts which would impact the going concern status of the Company and its future operations. 15. PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS BY THE COMPANY: Details of loans, guarantees and investments covered under the provisions of Section 186 of the Companies Act, 2013, wherever applicable, are given in the notes to financial statements. 16. AUDITORS: 16.1 Statutory Auditors The Company's Auditors, Messrs. Bansi S. Mehta & Co., Chartered Accountants, Mumbai who retire at the ensuing Annual General Meeting of the Company are eligible for re-appointment. They have confirmed their eligibility under Section 141 of the Companies Act, 2013 and the Rules framed thereunder for reappointment as Auditors of the Company. The auditors have also confirmed that they hold a valid certificate issued by the Peer Review Board of the Institute of Chartered Accountants of India. 16.2 Cost Auditors The Board of Directors has re-appointed Messrs. Hemant Shah & Associates as Cost Auditor for the year 2016-17. Their reappointment as Cost Auditors for the year 2016-17 is sought under Item No. 5 of the Notice convening the Annual General Meeting. 16.3 Secretarial Audit Pursuant to the provisions of Section 204 of the Companies Act, 2013 and The Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Company has appointed Messrs V. Sundaram & Co., Company Secretaries in Practice, to undertake the Secretarial Audit of the Company. The Report of the Secretarial Auditor is annexed herewith as 'Annexure 4 ". 17. ENHANCING SHAREHOLDERS VALUE Your Company believes that its Members are among its most important stakeholders. Accordingly, your Company's operations are committed to the pursuit of achieving high levels of operating performance and cost competitiveness, consolidating and building for growth, enhancing the productive asset and resource base and nurturing overall corporate reputation. Your Company is also committed to creating value for its other stakeholders by ensuring that its corporate actions positively impact the socio-economic and environmental dimensions and contribute to sustainable growth and development. 18. CORPORATE GOVERNANCE As per SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, a separate section (Annexure 5) on corporate governance practices followed by the Company, together with a certificate from the Company's Auditors confirming compliance forms an intergal part of this Report. 19. CONSOLIDATED FINANCIAL STATEMENTS The Consolidated Financial Statements of the Company prepared in accordance with relevant Accounting Standards (AS) viz. AS 21 and AS 23 issued by the Institute of Chartered Accountants of India form part of this Annual Report. 20. EXTRACT OF ANNUAL RETURN The details forming part of the extract of the Annual Return in form MGT-9 is annexed herewith as "Annexure 6". 21. PARTICULARS oF EMPLoYEES The information required pursuant to Section 197 read with Rule 5 of The Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 in respect of employees of the Company forms part of this report, which will be provided upon request. In terms of Section 136 of the Act, the Report and Accounts are being sent to the Members and others entitled thereto, excluding the information on employees' particulars which is available for inspection by the Members at the Registered Office of the Company during business hours on working days of the Company up to the date of the ensuing Annual General Meeting. If any Member is interested in obtaining a copy thereof, such Member may write to the Company Secretary in this regard. 22. DISCLOSURE UNDER SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITION AND REDRESSAL) ACT, 2013 In line with the requirements of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013, the Company has set up Complaints Committees at its workplaces. No complaints have been received during the year 2015-16. 23. CAUTIONARY STATEMENT Statements in the Board's Report and the Management Discussion & Analysis describing the Company's objectives, expectations or forecasts may be forward-looking within the meaning of applicable securities laws and regulations. Actual results may differ materially from those expressed in the statement. Important factors that could influence the Company's operations include global and domestic demand and supply conditions affecting selling prices of finished goods, input availability and prices, changes in Government regulations, tax laws, economic developments within the country and other factors such as litigation and industrial relations. 24. ACKNOWLEDGEMENTS The Directors wish to place on record their appreciation of the continuous support received by the Company from the investors, participating Financial Institutions, Banks, Central/State Government Departments, its Customers and Suppliers. For and on behalf of the Board yogesh m. kothari Chairman & Managing Director (DIN: 00010015) Place: Mumbai Dated: May 20, 2016 |