DIRECTORS' REPORT Dear Shareholders, Your Directors have immense pleasure in submitting the 27th Annual Report of the Company together with the audited annual accounts showing the financial position of the Company for the year ended 31st March, 2016. Consolidated results include the results of (a) Petroleum Specialities Pte. Ltd., Singapore (PSPL), a Wholly-Owned Subsidiary of the Company (WOS), (b) Quantum Apar Speciality Oils Pty. Ltd., Subsidiary of PSPL and (c) Petroleum Specialities FZE, Sharjah, a WOS of PSPL. 2. Dividend: Your Company has paid an interim dividend @ Rs. 6.50 (65.00 %), [including Special Dividend @ Re. 1.00 (10.00 %) on account of 100th Birth Anniversary of Late Shri Dharmsinh D. Desai, Founder of the Company ] per Equity Share for the financial year 2015-2016 on 38,496,769 Equity Shares of the face value of Rs. 10/- each, amounting to Rs. 25.02 Crores for the financial year 2015-2016. The members are requested to confirm the above interim dividend at the ensuing Annual General Meeting (AGM) of the Company. The Board of Directors do not recommend any Final Dividend for the Financial Year 2015-16 and accordingly, the Interim Dividend @ Rs. 6.50 (65.00 %) declared and paid in March, 2016 may be treated as Interim-cum-Final Dividend. 3. Amalgamation of Apar Lubricants Limited with the Company : The Company's Wholly-owned Subsidiary, Apar Lubricants Limited (ALL) (formerly Apar ChemateK Lubricants Limited) was amalgamated with the Company by Order of the Hon'ble High Court of Gujarat dated 23rd October, 2015. The Scheme of Amalgamation has become effective from 10th November, 2015 with retrospective effect from 1st January, 2015, being the Appointed Date and the said business is now carried on as part of Company's Oil Division. Consequent to the Amalgamation of ALL with the Company, the entire Authorised Share Capital of ALL viz 1,00,00,000 Equity Shares of Rs. 10/- each aggregating to Rs. 10,00,00,000/- has been added to the Authorised Share Capital of the Company. Hence the Authorised Share Capital of the Company now stands at Rs. 1,019,987,500/- divided into 101,998,750 Equity Shares of Rs. 10/- each. 4. Transfer to Reserves: The Company proposes to transfer an amount of Rs. 15.00 Crores to the General reserves. An amount of Rs. 409.54 Crore is proposed to be retained in the Consolidated Statement of Profit and Loss. 5. Management Discussion and Analysis / Outlook : Management Discussion and Analysis FY16 was a pivotal year for the Indian power sector, which saw the government setting the stage for the next round of initiatives to move the sector forward. With strong focus on 24x7 power for all, revival of Discoms through UDAY, amendments to the national tariff policy and strong capital expenditure in Transmission and Distribution (transmission projects worth Rs. 1 lakh Crores were launched in the year), India's power sector is well poised for take-off. As the benefits of these measures gradually percolate down, Apar, with 70% of its revenue coming from the power sector, and a leading presence in India's Transmission & Distribution (T&D) sector stands to strongly benefit. Apar is the fourth-largest transformer oil manufacturer in the world and among the world's top five largest conductor manufacturers. The company is a leading player in cables, largest in cables for Renewable sector. Apart from being a market leader in India, the Company has a formidable global presence, exporting to over 100 countries. The company has built a strong basket of futuristic value-added products focussed on increasing efficiency in T&D. Already the government has announced its emphasis on building high-quality T&D infrastructure with a shift in favour of efficient transmission structures. Apar's in-house R&D initiatives and strategic tie-ups with global firms, such as CTC Global, USA, and ENI S.p.A, Italy, have resulted in a portfolio of new technology products like extra-high-voltage transformer oils, high temperature conductors, Elastomeric, E-Beam and optical fibre cables (OFC). During the year, the Company bagged Four awards: Indian Wind Energy Forum Excellence Award for Outstanding Achievements and Leadership in the Wind industry; Indian Rooftop Solar Summit (IRSS) 2016 Award for Outstanding Contribution in the Development of the Rooftop Solar Industry; the First Few Intelligence Business Award as the Solar Cable Company of the Year and for development of New Conductor viz High Temperature Low Sag by Power Grid Corporation India Ltd. The awards are in recognition to the Company's extensive R&D efforts. Our leadership across businesses, higher-value-added product offerings, strong global presence, technical capabilities and continued focus on R&D, coupled with industry opportunities like turnaround of discoms, expected shift towards high-efficiency T&D network and increased investment in the renewables sector & railways will lead to Apar's profitable growth, going forward. The opportunities and outlook that exist for the Company are as follows: Global scenario The global power sector is expected to attract investments worth $19.7 trillion from 2015 to 2040. In line with the 2°C climate change goal, concerted efforts are being made to reduce the environmental consequences of power generation. Renewable energy investment witnessed a new world record in 2015 with investment of $286 billion flowing into green energy projects and is expected to account for half of the additional global power generation overtaking coal around 2030 to become the largest power source. Increasing global energy production over the past decade has led to the rising need for expanding T&D networks globally. It has been estimated that new T&D infrastructure would require a cumulative investment of $1.9 trillion by 2024 to meet the growing energy demands. This includes substations, power lines, and associated equipment and new technology. The power transformer market is projected to reach $29.9 billion by 2020, from $20.7 billion in 2015, at a CAGR of 7.6%. The global low voltage cable & accessories market is projected to grow to $147.3 billion at a CAGR of 7.0% from 2015 to 2020. The year gone by saw commodity driven economies like Australia, South Africa, other parts of Africa and the Middle East facing a cash crunch due to fall in commodity prices. These economies have huge need for T&D Investment, however the cash crunch has led to a curtailment or delay of investment spending. However, keeping these factors in mind, Apar has been strategically focussing on the domestic market in the short to medium term. India's path to power India's power sector is expected to receive investments of about $250 billion over the next 5 years to catch up and keep pace with electricity demand, which is increasing at 5% per annum. With renewable energy being a thrust area, the government has set an ambitious plan to add 175 GW of renewable energy generation capacity with addition of 100GW under Solar and 60 GW under wind energy by 2022 at total investment of $120 billion. Transmission segment is expected to see investment of $50 billion. UDAY - Government's flagship initiative to fix the weakest link in the Indian Power Sector: The Ujwal Discom Assurance Yojna or UDAY aspires to financially turn around distribution companies by: a) Reducing the interest cost of discoms, b) Improving the operational efficiencies of discoms, c) Lowering the cost of power, and d) Enforcing financial discipline on discoms through state finances. Under UDAY, states will take over 75% of the outstanding debt of discoms as on 30th September, 2015, over the next two years, and will issue non-SLR, including state development bonds to the respective financial institutions (FIs) holding the discom debt. The expected rate of interest on these bonds will be 8-9% versus 13-15% on existing debt, savings of Rs. 15,000 Crores per year for the discoms. The future losses of the discoms will be taken over and funded by the states progressively from 5% in FY18 to 50% by FY21. As at the end of this fiscal year, 10 states, i.e. Jharkhand, Bihar, Uttar Pradesh, Madhya Pradesh, Gujarat, Rajasthan, Haryana, Punjab, Jammu & Kashmir and Uttarakhand, had signed the respective Memorandum of Understanding to join UDAY. Other initiatives in the T&D sector include schemes, such as Deen Dayal Upadhyaya Gram Jyoti Yojana (Rs. 75,893 Crores) and Integrated Power Development Scheme (Rs. 65,424 Crores), among others. Conductors: The market for Electrical Conductors is expected to grow at 13.5% till 2018. During FY17, 7,500 MW of inter-regional transmission capacity, along with about 19,436 circuit km (ckm) of transmission lines and 3,934 MW HVDC terminal capacity are expected to be added, so as to reach the targets specified in the 12th Plan. It is estimated that during the 13th Plan period, about 62,800 circuit kilometres (ckm) of transmission lines of 400 kV and above voltage level transmission systems would be required. Transformers: Transformer orders of around Rs. 13,070 Crores are expected to materialize in FY17. To achieve the targets specified in the 12th Plan, a total of 25,852 MVA of AC transformation capacity and 7,500 MW of HVDC systems are estimated to be added in FY17. During the 13th Plan period, ~1,28,000 MVA of transformation capacity of the 400 kV and above voltage level & 15,000 MW of HVDC terminal capacity is planned to be added. Cables: The market has been growing steadily and is expected to touch Rs. 57,200 Crores by 2018. The wire and cables market in India comprises nearly 40% of the electrical industry. The industry is growing at a CAGR of 15% as a result of growth in the power and infrastructure segments. Rollout of 3G and broadband on a pan-India basis and revival of distribution companies will be important drivers of growth. Auto Lubes: FY16 ended on a positive note for the automobile industry, with all the segments - cars, two-wheelers, CVs and tractors - posting good growth in the month of March. The Society of Indian Automobile Manufacturers (SIAM) has forecast a positive outlook for overall sales across vehicle categories for 2016-17 motorcycle sales are forecast to grow between 0-3% compared to decline in FY16, Passenger vehicle sales are projected to grow between 6-8%. Industry experts expect low fuel prices, benign interest rates and benefits from the 7th Pay Commission to drive four-wheeler volumes. A sustainable recovery in demand linked to the rural markets will be dependent on normal monsoons. (a) Overall Business performance We are happy to report Apar delivered strong performance despite a challenging environment during the year which saw: a lack of long term visibility in the domestic market led to volatile ordering, a credit crunch in various commodity driven economies impacting investment in global T&D markets, coupled with falling raw material prices, and a volatile foreign exchange rate. The Company reported consolidated revenue (net of excise) of Rs. 5,080 Crores in FY16 as compared to Rs. 5,121 Crores in FY15, driven by revenue growth of over 20% in Cables and 10% in Conductors, which partially offset the decline in Specialty Oils, which was affected by the fall in crude prices. Not only were our volumes across all business segments at historical highs, there has been significant improvement in our profitability across segments. EBITDA margin increased from 5.0% to 7.2% during the year. This was primarily led by the improvement in profitability in our Specialty Oils and Cables business. The margin expansion has been possible because of better cost management and a focused approach to increase contribution of higher value-added products. The profit after tax, excluding an exceptional gain of Rs. 43 Crores from the placement of treasury stock, came in at Rs. 120 Crores as compared to Rs. 49 Crores in the previous year. The Company is undergoing capacity expansion in the Conductors and Specialty Oils segments and is at an advanced stage of planning an expansion of its Power Cables capacity. Our overall outlook remains positive as we expect both the domestic and export scenarios to improve in all our business segments. The Conductors business reported revenue growth of 10%, driven by improved market conditions in the domestic market. Exports contributed ~ 40.3% of revenue from Conductors. Volumes for the year grew by 13% to reach 170,070 tonnes compared to 150,557 tonnes in previous year. In the export market, the biggest positive development has been the reduction of the cost difference between the London Metal Exchange and the Shanghai Metal Exchange where the peak difference was as high as $400 per tonnes. This restores a level playing field for the company to participate in most of the export opportunities. EBITDA per metric ton post forex adjustment for the period came in at Rs. 7,606 compared to Rs. 7,698 in the previous year, as the orders that were executed at the beginning of the year were booked at a time of aggressive pricing in the domestic market. EBITDA per metric ton post-forex adjustments for the last quarter was at Rs. 9,705 compared to Rs. 6,717 in the first quarter of the year. The Company has been actively growing its presence in the High Efficiency Conductors (HEC) segment. HEC revenue grew to 6.2% of overall Conductor revenue in FY16, from 1.1% in FY15. During the year, we also received our biggest order of ACCC & AL59 from UPPTCL and GETCO, respectively. In both cases, these orders are in excess of Rs. 50 Crores. We have also received an order for GAP Conductors from GETCO. We successfully completed the First Longest transmission line Re-Conductoring work with ACCC Casablanca conductor for Odisha Power Transmission Corporation ltd. Other projects Export orders have contributed 29% of the order book. Our Conductor capacity utilization stands at 100% for the entire year. Demand for Conductors is expected to grow strongly, driven by successful implementation of UDAY, which aims to reduce AT&C losses to 15% in 2018-19 from 32% in 2013-14, inducing huge investments in T&D infrastructure. Risks and concerns The cyclical nature of the power business has an obvious impact on our performance. Project delays from the customers' side may result in underutilization of capacity even though the order book remains robust. There can be delay in debtor collections due to stress at the customers' end. Regional political instability and changes in the external environment in certain export markets affect execution of delivery. The volatility in Aluminium premiums has been an area of concern, mainly with respect to exports, and is a challenge to manage in the absence of any hedging mechanism. Efforts by various aluminium manufacturers may result in implementation of Safeguard duty which will increase the raw material prices and have a negative impact on fixed price contracts in the short to medium term. Any delay in the implementation of GST may impact the competitiveness of our new facility at Jharsuguda completed in the high efficiency segment were: Varanasi to Sarnath Substation, Chinhat-Barabanki line, Hardoi Rd-NKN line for UPPTCL and New Pirana to Pirana Feeders (ACCC DRAKE), Pirana to Jamalpur S/S (ACCC LISBON), Vinzol-Vastral (ACCC Lisbon) for Torrent Power and Bamnauli Naraina DC Line for PGCIL. We are clearly seeing that the offtake of HECs is now gradually showing a rising trend on all parameters like volume of orders, number of clients adopting these technologies, variety of HECs being deployed, as well as repeat orders of progressively larger sizes. The margins for these HECs are higher as compared to conventional conductors, and are likely to improve the profitability of the Conductor business. The Company is setting up a Conductor plant in Jharsuguda (Orissa) of 30,000 MT capacity at an investment of Rs. 36 Crores. The plant is strategically located, given increasing generation capacity in eastern India, along with its proximity to smelters, for logistical benefits. Work on the plant is in full swing and it should be commissioned on schedule by October-17. The segment's order book is at Rs. 1,751 Crores as of March 31, 2016, compared to Rs. 1,452 Crores as on March 31, 2015. In Specialty Oils, revenue for the year came in at Rs. 1,841 Crores, lower than last year, primarily due to falling Crude oil prices. However, we posted 2.6% growth in aggregate volume, highest ever volume till date led by Rubber processing oil, Auto & Industrial Lubricants and White Oils. EBITDA per KL after forex adjustment for the year increased significantly to Rs. 5,407, up from Rs. 2,722 in the previous year, which can be attributed to sale of richer product mix, disciplined pricing, good client mix and lower raw material costs. The Company is setting up a port-based plant at Hamriyah, Sharjah, of 100,000 KL capacity at an investment of $ 15.5 million (Rs. 100 Crores). This will add new opportunities like bulk exports and is strategically located in terms of proximity to customers. The Auto Lubes segment continued to grow and delivered 2.9% volume growth to reach 23,480 KL, highest ever achieved despite demand from the rural sector being especially low. The net sales stood at Rs. 263 Crores compared to Rs. 273 Crores in the previous year. Profitability in the segment continues to be relatively better due to improved product mix, clients mix, disciplined pricing and lower raw material cost. As the Company implements its strategy of expanding distribution network and continuous efforts towards increasing share of higher-margin products, we are quite confident that in the coming year we should see relatively good results for the segment. Risks and concerns The Company is exposed to volatility in the prices of its raw materials and in foreign exchange rates. However, in order to mitigate its risks, the Company continues to exercise prudence in its inventory control and hedging strategies. Also, addition in global refining capacities has resulted in a mismatch in demand and supply, which has an effect on base oil prices. The prices of long-term buy contracts take time to correct in case of fluctuations in crude prices as formula prices are always backward looking. Debtors' collection period can increase on account of stressed financial condition of customers. The Company had to implement strict credit controls to limit exposure to customers facing cash flow issues. Rapid commoditization taking place at the lower end especially at technical grade white oils may have an impact on the margins. Exports markets are facing the heat as Cash strapped commodity driven developing markets are forced to cut key investments like Transmission & Distribution Investments The Cables business delivered strong revenue growth of 20%, despite lower metal, commodity and polymer prices. Revenue growth was driven by growth in our Elastomeric, and Power Cables segments. These segments grew by 68% and 24%, respectively. Copper and Aluminium processing increased by 76 % and 29 % YOY respectively - depicting the increased volumes. The EBITDA margins post forex adjustment has increased by 20 basis points, from 5.5% in FY15 to 5.7% in FY16. Our focus on the Renewable Energy sector, both Wind and Solar, has been yielding good results. Today, we are the largest supplier in the country to the segment and are working with major companies, such as Suzlon, Wind World, Gamesa etc. Besides, orders from Defence and Railways, involving electron beam cables, are also likely to improve as several projects in both these sectors are being announced. The order book as on March 31, 2016, is up 8% to reach Rs. 199 Crores versus Rs. 184 Crores in the previous year. The Company is also at an advanced stage of planning an expansion of its power cables capacity as demand for power cables is expected to increase, driven by the increased spending capability of discoms following successful implementation of UDAY. We also expect EBITDA in the coming year to further improve in the Cables segment as a reflection of better product mix and higher volumes. Risks and concerns The excess capacity in the power cables segment impacts pricing. Collection periods can get extended and delivery schedules delayed due to lack of financial arrangements by key customers in the renewable energy sector and EPC contractors. In optical fiber cables, clientele is concentrated among a handful of telecom companies and BBNL wherein the Capex spending have been severely impacted. The cyclical nature of their tendering too, has a bearing on the order situation in the industry. (b) Operations of subsidiaries: (i) Petroleum Specialities Pte. Ltd, Singapore (PSPL), a Wholly Owned Subsidiary (WOS) : During the year under review, Net sales of PSPL was US$ 7.93 Million as against US$ 24.52 Million in the previous year and Profit after tax stood at US$ 0.65 Million as against US$ 0.61 Million in the previous year. Operations of its down stream subsidiaries are : - Quantum Apar Speciality Oils Pty. Ltd., Australia (Quantum) PSPL holds 65% equity in Quantum. It has reported Net sales of AUD 8.38 Million as against AUD 9.02 Million in the previous year and Profit after tax of AUD 0.41 Million as against AUD 0.07 Million in the previous year. After the end of the Financial Year, the Directors and Shareholders of the Company decided to cease the business, liquidate all the Assets and payout all the liabilities and return the net proceeds to shareholders. It is anticipated that the whole process will complete in 6 months period. Company has appointed a Distributor for sale of Petroleum Products and Lubricants in Australian & New Zealand markets. - Petroleum Specialities FZE (PSF) PSF was registered in November, 2014 as Free Zone Establishment under an Industrial License issued by Hamriyah Free Zone Authority Government of Sharjah, UAE for setting manufacturing facility for manufacture of a comprehensive range of Speciality Oils and Lubricants. During the year Share Capital of PSF increased from US$ 40825 to US$ 34,05,995. PSPL holds 100% equity in PSF. As at the end of March, 2016 total US$ 10.02 million capital expenditure has been incurred for setting up the Plant. The Construction of the Plant is under progress. There has been no material change in the nature of the business of the subsidiaries. A statement containing salient features of the financial statements of the Company's subsidiaries in Form AOC-1 is attached to the financial statements of the Company. (c) Cautionary statement The statements made in the Management Discussion & Analysis section, describing the Company's goals, expectations and predictions among others do contain some forward looking views of the management. The actual performance of the Company is dependent on several external factors, many of which are beyond the control of the management viz. growth of Indian economy, continuation of industrial reforms, fluctuations in value of Rupee in the foreign exchange market, volatility in commodity prices, applicable laws / regulations, tax structure, domestic / international industry scenario, movement in international prices of raw materials and economic developments within the country among others. (d) Internal control systems (ICS) and their adequacy The Company established adequate ICS in respect of all the divisions of the Company. The ICS are aimed at promoting operational efficiencies and achieving savings in cost and overheads in all business operations. The System Application and Product (SAP), a world class business process integration software solution, which was implemented by the Company at all business units (including Cable unit) has been operating successfully. For tightening and more effective internal control systems and risk management, the Company continued the engagement of M/s. KPMG India Pvt. Ltd., Chartered Accountants as Internal Auditors of the Company. The system cum internal audit reports of the Internal Auditors are discussed at the Audit Committee meetings and appropriate corrective steps have been taken. Further, all business segment prepare their annual budget, which are reviewed along with performance at regular intervals. (e) Development of human resources The Company promotes an open and transparent working environment to enhance teamwork and build business focus. The Company equally gives importance to the development of human resource (HR). It updates its HR policy in line with the changing HR culture in the industry as a whole. In order to foster excellence and reward those employees who perform well, the Company practices performance / production linked incentive schemes and introduced Employees Stock Option Scheme as detailed in an attachment to this report. The Company also takes adequate steps for in-house training of employees and maintaining a safe and healthy environment. 6. Directors and Key Managerial Personnel : Mr. Chaitanya N. Desai, Director shall retire by rotation at the ensuing annual general meeting of the Company and he, being eligible, offers himself for re-appointment. The Independent Directors hold office for a fixed term of five years. In accordance with Section 149(7) of the Act, all Independent Directors have given declarations that they meet the criteria of independence as laid down under Section 149(6) of the Companies Act, 2013 and SEBI Regulations. Details of the proposal for re-appointment of Mr. Chaitanya N. Desai are mentioned in the Statement pursuant to Regulation 36(3) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 with the Stock Exchanges as annexed to the Notice of the 27th Annual General Meeting. The Board recommends re-appointment of Mr. Chaitanya N. Desai as a Director of the Company. Board Evaluation : Pursuant to the provisions of the Companies Act, 2013 and SEBI Regulations, the Board has carried out an annual performance evaluation of its own performance, the directors individually as well as the evaluation of the working of its Audit Committee, Nomination and Compensation-cum-Remuneration Committee, Corporate Social Responsibility (CSR) Committee and Share Transfer and Shareholders Grievance-cum-Stakeholders Relationship Committee. The manner in which the evaluation has been carried out has been explained in the Corporate Governance Report. Remuneration Policy : The Board has, on the recommendation of Nomination and Compensation-cum-Remuneration Committee framed a policy for selection and appointment of Directors, Senior Management and their remuneration. The Remuneration Policy is stated in the Corporate Governance Report. 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. 7. Deposits : Company has not accepted deposits during the year. There were no outstanding deposits and no amount remaining unclaimed with the Company as on 31st March, 2016. 8. Particulars of Loans, Guarantees or Investments : Details of Loans, Guarantees and Investments covered under the provisions of Section 186 of the Companies Act, 2013 are given in the notes to the Financial Statements. 9. 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 : i. that in the preparation of the annual accounts for the financial year ended March 31, 2016, the applicable accounting standards have been followed along with proper explanation relating to material departures, if any. ii. that such accounting policies as mentioned in Note 1 of the Notes to the Financial Statements have been selected and applied consistently and judgments 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 31st March, 2016 and of the profit of the Company for the financial year ended on that date. iii. 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 iv. that the annual accounts have been prepared on a going concern basis. v. that proper internal financial controls were in place and that the financial controls were adequate and were operating effectively. vi. that systems to ensure compliance with the provisions of all applicable laws were in place and were adequate and operating effectively. 10. Related Party Transactions : All related party transactions that were entered into during the financial year were on 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. 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 has been uploaded on the Company's website. None of the Directors has any pecuniary relationships or transactions vis-a-vis the Company. 11. Adoption of New Articles : The Companies Act, 2013 and The Companies (Amendment) Act, 2015 have necessitated changes in the Articles of Association of the Company. It is accordingly, proposed that a new set of Articles of Association be adopted by the members and a Special Resolution to this effect is included at Item No. 6 in the Notice of the Annual General Meeting (AGM). The Board recommends the resolution for adoption by the Members. 12. Auditors : Statutory Auditors In terms of Section 139 of the Companies Act, 2013 read with The Companies (Audit and Auditors) Rules, 2014 and in terms of the Ordinary Resolution passed by the Shareholders of the Company at the 26th Annual General Meeting, M/s. Sharp & Tannan, the present Statutory Auditors of the Company have been appointed to hold office from the conclusion of the 26th AGM till the Conclusion of 31st AGM to be held in the year 2020 subject to ratification by the Members at every Annual General Meeting. An Ordinary Resolution in this respect is included in item No. 4 of the Notice of AGM and Board recommends the said Resolution. M/s. Sharp & Tannan, have confirmed their eligibility under Section 141 of the Companies Act, 2013 and the Rules framed thereunder for re-appointment as Auditors of the Company. The Notes on financial statement referred to in the Auditors' Report are self-explanatory and do not call for any further comments. The Auditors' Report does not contain any qualification, reservation or adverse remark. Cost Auditors : Pursuant to Section 148 of the Companies Act, 2013, read with The Companies (Cost Records and Audit) Amendment Rules, 2014, the cost audit records maintained by the Company in respect of Conductors, Oils and Cables Divisions of the Company are required to be audited by a Cost Accountant. Your Directors, on the recommendation of the Audit Committee, appointed Mr. T. M. Rathi to audit the cost accounts of the Company for the financial year 2016-17 on a remuneration of Rs. 1,20,000/-. A Resolution seeking members' ratification for the appointment and remuneration payable to Mr. T. M. Rathi, Cost Auditor is included at Item No. 5 of the Notice convening the AGM and Board recommends the said Resolution. Secretarial Auditors : 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 Mr. Hemang M. Mehta of H. M. Mehta & Associates, Company Secretary in Practice to undertake the Secretarial Audit of the Company. The Secretarial Audit Report is annexed herewith as "Annexure - I". The Secretarial Audit Report does not contain any qualification, reservation or adverse remarks. 13. Other Information : a. Green Initiative To support the "Green Initiative" under taken by the Ministry of Corporate Affairs (MCA), to contribute towards a greener environment, the Company has already initiated / implemented the same from the year 2010-11. As permitted delivery of notices / documents and annual reports etc. are being sent to the shareholders by electronic mode wherever possible. Further, the Company has started using recyclable steel drums in place of wooden pallets in its Conductors Divisions in order to protect the environment and reduce costs for the Company. b. Corporate Social Responsibility (CSR) The Corporate Social Responsibility (CSR) Committee constituted by the Board of Directors in terms of the provisions of Section 135(1) of the Companies Act, 2013 reviews and restates the Company's CSR policy in order to make it more comprehensive and aligned with the activities specified in Schedule VII of the Companies Act, 2013. With the strong belief in the principle of Trusteeship, Apar Group continues to serve the community through a focus on healthcare and upliftment of poor sections of Society, education, Food and mid-day meal for children, Environmental sustainability and Health and Welfare of Senior Citizens initiatives. The Annual Report on CSR activities is annexed herewith as "Annexure - II". c. Attached to and forming part of this report are the following inter alia: i) Particulars relating to Employee Stock Option Scheme - "Annexure - III" ii) Particulars of Information as per Section 197 of the Companies Act, 2013 read with Rule 5 of The Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 - a Statement showing the names and other particulars of the Employees drawing remuneration in excess of the limits set in the Rules - "Annexure - IV (a)" and Disclosures pertaining to remuneration and other details as required under Section 197(12) of the Act read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 - "Annexure - IV (b)". iii) Particulars relating to conservation of energy, technology absorption, research & development and foreign exchange earnings and outgo - "Annexure - V". iv) Report on Corporate Governance and auditors' certificate regarding compliance of conditions of corporate governance. v) Statement containing brief financial details of the subsidiaries in form AOC-1 which is attached to the financial statements of the Company. d. Extract of Annual Return : The details forming part of the extract of the Annual Return in Form MGT-9 is annexed herewith as "Annexure - VI". e. The company has not attached the Balance Sheet, Profit & Loss Accounts and other documents of its wholly-owned foreign subsidiaries viz. Petroleum Specialities Pte. Ltd., Singapore as well as its subsidiaries, Quantum Apar Speciality Oils Pty. Ltd., Australia and Petroleum Specialities FZE, Sharjah, WOS of PSPL. As per the provisions of Section 129(3) read with Section 136 of the Companies Act, 2013, a statement containing brief financial details of the said subsidiaries for the year ended March 31, 2016 are included in the annual report and shall form part of this report. The annual accounts of the said subsidiaries and the related information will be made available to any member of the Company seeking such information at any point of time and are also available for inspection by any member of the Company at the registered office of the Company. Further, pursuant to provisions of Section 136 of the Act, the financial statements of the Company, Consolidated Financial Statements alongwith relevent documents and separate audited accounts in respect of subsidiaries, are available on the website of the Company 14. General : No disclosure or reporting is required in respect of the following items as there were no transactions on these items during the year under review: 1. Issue of equity shares with differential rights as to dividend, voting or otherwise. 2. Issue of shares (including sweat equity shares) to employees of the Company under any scheme save and except ESOP referred to in this Report. 3. No Managing Director of the Company receive any remuneration or commission from any of its subsidiaries. 4. No significant or material orders were passed by the Regulators or Courts or Tribunals which impact the going concern status and Company's operations in future. There were no cases filed pursuant to the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013. 15. Acknowledgement : Your Directors wish to place on record their sincere appreciation for continuous cooperation, support and assistance provided by stakeholders, financial institutions, banks, government bodies, technical collaborators, customers, dealers and suppliers of the Company. Your Directors also wish to place on record their appreciation for the dedicated services rendered by the loyal employees of the Company. For and on behalf of the Board Dr. N. D. Desai Chairman DIN – 00005285 Place : Mumbai Date : May 25, 2016 |