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Camlin Fine Sciences Ltd.

BSE: 532834 Sector: Industrials
NSE: CAMLINFINE ISIN Code: INE052I01032
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OPEN 102.10
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VOLUME 38454
52-Week high 119.60
52-Week low 76.10
P/E 60.60
Mkt Cap.(Rs cr) 1051.59
Buy Price 0.00
Buy Qty 0.00
Sell Price 101.80
Sell Qty 25.00
OPEN 102.10
CLOSE 101.35
VOLUME 38454
52-Week high 119.60
52-Week low 76.10
P/E 60.60
Mkt Cap.(Rs cr) 1051.59
Buy Price 0.00
Buy Qty 0.00
Sell Price 101.80
Sell Qty 25.00

Camlin Fine Sciences Ltd. (CAMLINFINE) - Director Report

Company director report

Dear Members

Your Directors are pleased to present the 23rd Annual Report and the Audited FinancialStatements of Accounts for the financial year ended 31st March 2016.

Financial Highlights of 2015-16 (Standalone)

Net Sales and other income of the Company were Rs 41588.78 Lacs as compared to Rs43264.57 Lacs in the previous year.

Profit before tax was Rs 3471.10 Lacs as compared to Rs 3177.03 Lacs in the previousyear.

Profit after tax was Rs 2575.19 Lacs as compared to Rs 2581.76 Lacs in the previousyear.

Considering the profits available for distribution Directors have recommended adividend of Rs 0.45 per equity share of Rs 1/- each (i.e.45%).

Financial Results

(Rs in Lacs)

2015-2016 2014-2015
Net Sales & Other Income 41588.78 43264.57
Profit before Interest & Depreciation 7123.62 6288.44
Interest 2182.93 2115.11
Depreciation 1014.86 996.30
Profit/(Loss) before exceptional item and tax 3925.83 3177.03
Less : Exceptional Item# 454.73 -
Less: Provision for Tax (Net) 895.91 595.27
Profit After Tax 2575.19 2581.76
Balance available for Appropriation 8105.00 6179.66
Appropriations:
Proposed Dividend* 436.35 431.50
Corporate Dividend Tax 89.03 88.35
General Reserve 130.00 130.00
Balance Carried Forward 7449.62 5529.81
8105.00 6179.66

# Loss on final settlement of insurance claim.

* Includes short provision of Rs 1.36 Lacs pertaining to the earlier periods.

Our Results of Operations on Consolidated basis is as follows:

Consolidated EBIDTA (before exceptional item) for the financial year ending on 31stMarch 2016 is at

Rs 9606.34 Lacs (19.05 % of sales) in comparison with that of previous financial yearending on 31st March 2015 at Rs 9254.91 Lacs (16.22 % of sales).

Consolidated PBT (before exceptional items) for the financial year ending on 31st March2016 is at Rs 5456.57 Lacs (11 % of sales) in comparison with that of previous financialyear ending on 31st March 2015 at Rs 5247.83 Lacs (9.20 % of sales).

Consolidated Cash Accruals (before exceptional item & tax) for the 12 months periodending on 31st March 2016 is at Rs 7162.00 Lacs (14.20 % of sales) in comparision withthat of previous financial year ending on 31st March 2015 at Rs 6001.70 Lacs (10.52 % ofsales).

State of Affairs

Your Company is engaged in research development manufacturing commercialising andmarketing of speciality chemicals and blends which are used in a wide array of food feedanimal and pet nutrition and industrial products. Our business is categorised into threekey verticals namely:

(i) Shelf-life Extension Solutions; (ii) Aroma Ingredients; and (iii) PerformanceChemicals. We have recently added animal nutrition products to our portfolio pursuant toour recent acquisition of 65% stake in Dresen Quimica SAPI De CV Mexico (Dresen) andgoing forward we expect this to complement our Shelf-life Extension Solutions portfolio.We market our products globally including in Europe Asia Pacific India South andCentral America and North America.

Shelf-life Extension Solutions include a range of antioxidant solutions used toincrease the shelf life of oils and fats which in turn is used in processed food productslike bakery confectionery fried snack foods dairy animal feed and pet food. We alsomanufacture antioxidant blends ("Blending Business") which we market underbrands "Xtendra" and "NaSure".

Aroma Ingredients vertical primarily includes production of Vanillin and Ethyl Vanillin("Vanillin Products") which are marketed under the brands "Vanesse"and "Evanil." The key raw materials used to manufacture Vanillin Products areGuaiacol and Guethol respectively which in turn are derived from Catechol. VanillinProducts are used to give food and beverages a flavour of vanilla to enhance otherflavours or to mask unwanted flavours and are used in food flavour and fragrance incensesticks pharma and cattle feed segments.

Performance Chemicals vertical includes production of amongst others GuaiacolVeratrole TBC and MEHQ which are derivatives of either Catechol or Hydroquinone and havewide application in sectors such as food flavouring pharmaceuticals intermediateagrochemicals dyes and pigments and fragrance industry.

Dresen manufactures and markets a range of animal nutrition products antioxidantsadsorbents acidifying agents bactericides binders and mould inhibitor.

Reserves

During the year under the review the Company has transferred Rs 130.00 Lacs to theGeneral Reserve from the amounts available for appropriation.

Dividend

Your Directors are pleased to recommend payment of dividend at the rate of Rs 0.45 perequity share (i.e. 45%).

The Company had transferred a sum of Rs 0.99 Lacs during the financial year to theInvestor Education and Protection Fund established by the Central Government. The saidamount represents Unclaimed Dividend for the financial year 2007-2008 with the Company fora period of 7 years from the due date of payment.

Employee Stock Option Scheme

During the year under review the Company allotted 777700 Equity Shares of Rs 1/-each upon exercise of stock options by the eligible Employees/Directors under the EmployeeStock Option Schemes of 2008 2012 and 2014 respectively.

The applicable disclosure as stipulated under SEBI Regulations as at 31st March 2016is given in "Annexure A" to this report.

Deposits

During the year under review your Company neither accepted nor renewed any fixeddeposits falling within the ambit of Section 73 of the Companies Act 2013 and TheCompanies (Acceptance of Deposits) Rules 2014. The total unclaimed Fixed Deposits as on31st March 2016 were Rs 4.00 Lacs.

Subsidiaries

The Company has the following overseas subsidiaries (including step down subsidiaries)as on 31st March 2016:

CFCL Mauritius Private Limited

A 100% owned subsidiary of the Company incorporated for acquisition of CFS EuropeS.p.A. in Italy.

CFS Europe S.p.A.

A step down 100% owned subsidiary of the Company engaged in manufacture and sale of keyraw materials required by the Company.

CFS do Brasil Indstria Comrcio Importao e Exportao de AditivosAlimentcios Ltda.

A 100% owned subsidiary in Brazil to manufacture and market customized blends to caterto the Latin American market. Besides it also handles distribution of bulk antioxidantsand vanillin.

Solentus North America Inc.

A 100% owned subsidiary in Canada engaged in sales marketing and distribution ofantioxidants food ingredients blends formulations etc. in USA and Canada.

CFS North America LLC

A 100% owned subsidiary in USA engaged in sales marketing and distribution ofantioxidants food ingredients blends formulations etc. in North America.

CFS Antioxidantes De Mexico SA De C.V.

A 100% owned subsidiary of the Company incorporated for acquisition of Dresen QuimicaSAPI De C.V. in Mexico.

On 15th April 2016 a 100% owned subsidiary CFS International Trading (Shanghai) Ltd.was incorporated in China (shanghai) pilot free trade zone to manufacture and deal inspecialty chemicals.

On 04th May 2016 our subsidiary CFS Antioxidantes De Mexico S.A. De C.V. Mexicoacquired 65% stake in Dresen Quimica SAPI De C.V. Mexico along with its group companiesviz. Industrias Petrotec De Mexico S.A. de C.V. Mexico; Nuvel S.A.C. Peru; BritecS.A. Guatemala Inovel S.A.S. Colombia and Grinel S.A. Dominican Republic.

The statement containing the salient features of Company’s Subsidiaries andAssociate Companies under the first proviso of section 129(3) forms the part of thefinancial statements.

As decided by the Board of Directors at its meeting held on 23rd May 2016 the copiesof Audited Financial Statements of the Subsidiaries have not been attached to the AnnualAccounts of the Company. These documents will however be made available upon request byany member of the Company and also shall be available for inspection at the registeredoffice of the Company during business hours on working days of the Company up to the dateof the ensuing Annual General Meeting.

The Policy for Determining Material Subsidiaries is disclosed on the Company’swebsite and the weblink for the same is http://www.camlinfs.com/IR.php.

Directors

As the present term of appointment of Mr. Dattatraya R. Puranik Executive Director& Chief Financial Officer ends on 31st July 2016 resolution for renewal of hisappointment for the period 01st August 2016 to 31st July 2019 is being placed before themembers for approval at the ensuing General Meeting.

Mr. Ajit S. Deshmukh and Mr. Nirmal V. Momaya are retiring by rotation and beingeligible offer themselves for re-appointment. You are requested to re-appoint them.

Mr. Atul R. Pradhan and Mr. Nicola A. Paglietti are being re-appointed as theIndependent Directors of the Company from the ensuing Annual General Meeting for a term of5 years. You are requested to re-appoint them.

As required under the SEBI (Listing Obligations and Disclosure Requirements)Regulations 2015 (SEBI LODR 2015) particulars of Directors seeking reappointment at theensuing Annual General Meeting have been given under Corporate Governance Report.

None of the Directors are disqualified from being appointed as Directors as specifiedin Section 164 of the Companies Act 2013.

All Independent Directors have given declarations that they meet the criteria ofindependence as laid down under Section 149(6) of the Companies Act 2013.

The details of familiarisation programmes held for the directors are disclosed on theCompany’s website and the weblink for the same is http://www.camlinfs.com/IR.php.

Board Evaluation

Pursuant to the provisions of the Companies Act 2013 the Board has carried out anannual performance evaluation of its own performance the directors individually as wellas the evaluation of the working of its Audit Nomination & Remuneration and otherCommittees.

The board’s performance for the current year was assessed on the basis ofparticipation of directors quality of information provided/available quality ofdiscussion and contribution etc. A structured questionnaire was prepared after taking intoconsideration inputs received from the Directors covering the aforesaid aspects of theBoard’s functioning. The overall performance of the Board and Committee’s of theBoard was found satisfactory.

The overall performance of Chairman Executive Directors and the Non-executiveDirectors of the Company is satisfactory. The review of performance was based on thecriteria of performance knowledge analysis quality of decision making etc.

Nomination and Remuneration Policy and Evaluation criteria of Independent Directors

The Board has on the recommendation of the Nomination & Remuneration Committeeframed a policy for selection and appointment of Directors Key Managerial PersonnelSenior Management and their remuneration and evaluation criteria for performanceevaluation of Independent Directors. The Nomination and Remuneration Policy and evaluationcriteria of Independent Directors have been provided under Corporate Governance Report.

Details in respect of adequacy of internal financial controls with reference to theFinancial Statements

The Company has an Internal Control System commensurate with the size scale andcomplexity of its operations. To maintain its objectivity and independence the InternalAuditor reports to the Chairman of the Audit Committee of the Board.

The Internal Auditor monitors and evaluates the efficacy and adequacy of internalcontrol system in the Company its compliance with operating systems accountingprocedures and policies at all locations of the Company. Based on the report of statutoryauditor and the internal auditor corrective actions are undertaken in the respectiveareas and thereby strengthening the controls. Significant audit observations andcorrective actions thereon are presented to the Audit Committee of the Board.

Directors’ Responsibility Statement

Pursuant to the requirement u/s 134(3)(c) of the Companies Act 2013 (the"Act") with respect to Directors’ Responsibility Statement it is herebyconfirmed that: (a) in the preparation of the annual accounts for the financial year ended31st March 2016 the applicable accounting standards have been followed along with properexplanation relating to material departures;

(b) the directors have selected such accounting policies and applied them consistentlyand made judgments and estimates that are reasonable and prudent so as to give a true andfair view of the state of affairs of the Company at the end of the financial year ended31st March 2016 and of the profit and loss of the Company for the year ended on thatdate;

(c) the directors have taken proper and sufficient care for the maintenance of adequateaccounting records in accordance with the provisions of the Act for safeguarding theassets 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; and

(e) the directors have laid down internal financial controls to be followed by theCompany and that such internal financial controls are adequate and are operatingeffectively.

(f) the directors have devised proper systems to ensure compliance with the provisionsof all applicable laws and that such systems are adequate and operating effectively.

Meeting of Board and Committees of Directors

During the year 5 (five) Board Meetings and 5 (five) Audit Committee Meetings wereconvened and held. The details of the same along with other Committee’s of Board aregiven in the Corporate Governance Report. The intervening gap between the Meetings waswithin the period prescribed under the Companies Act 2013.

Approval of resolutions through Postal Ballot

During the year under review the Company has sought approval of the Members foramending main objects and other objects clause of Memorandum of Association issue ofsecurities upto Rs 150 crores increase in authorized share capital and alteration ofcapital clause in Memorandum and Articles of Association of the Company. The results ofthe postal ballot were declared on 04th December 2015. All the resolutions were passedwith requisite majority.

Auditors

M/s. B. K. Khare and Co. Chartered Accountants (FR No. 105102W) retire as StatutoryAuditors at the conclusion of the ensuing Annual General Meeting and are eligible forre-appointment. The Company has received a letter from the retiring Auditors to the effectthat their appointment as Statutory Auditors if made would be within the limitsprescribed u/s 141 of the Companies Act 2013.

Members are requested to consider and re-appoint M/s. B. K. Khare and Co. CharteredAccountants as the Statutory Auditors of the Company from the ensuing Annual GeneralMeeting till the conclusion of next Annual General Meeting.

Auditors’ Report

The observations made in the Auditors’ Report are self-explanatory and do not callfor any further comments u/s 134(3)(f) of the Companies Act 2013.

Reporting of Frauds

There have been no instances of fraud reported by the statutory auditors under Section143(12) of the Act and Rules framed thereunder either to the Company or to the CentralGovernment.

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 J. H. Ranade & Associates a firm of CompanySecretaries in Practice to undertake the Secretarial Audit of the Company. The Report ofthe Secretarial Audit is annexed herewith as "Annexure B". The findings of theSecretarial Audit were entirely satisfactory.

Cost Audit

As per the Companies (Cost Records and Audit) Rules 2014 the requirement for costaudit is not applicable to a Company whose revenue from exports in foreign exchangeexceeds seventy-five per cent of its total revenue.

Since the Company’s revenue from exports in foreign exchange exceedsseventy-five per cent of its total revenue Cost Audit is not applicable to the Company.

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 employeesof the Company will be provided upon request. In terms of Section 136 of the Act theReport and Financial Statements are being sent to the members and others entitled theretoexcluding the information on employees’ particulars which is available for inspectionby the members at the Registered Office of the Company during business hours on workingdays of the Company up to the date of the ensuing Annual General Meeting. If any member isinterested in obtaining a copy thereof such member may write to the Company Secretary inthis regard.

Corporate Social Responsibility (CSR)

Company operates CSR Policy in the areas of promoting healthcare education includingspecial education and employment enhancing vocation skills especially among children thedifferently abled tribal communities and measures for reducing inequalities faced bysocially and economically backward classes.

The projects identified and adopted are as per the activities included and amended fromtime to time in Schedule VII of the Companies Act 2013. The Company endeavors to make CSRa key business process for sustainable development and welfare of the needy sections ofthe society.

During the Financial Year 2015-16 the Company has spent entire amount of Rs 63.57 Lacstowards CSR activities through various trusts and NGO’s operating in the said areas.

The Annual Report on CSR activities forming part of this Board’s report is annexedherewith as "Annexure-C".

Vigil Mechanism / Whistle Blower Policy

The Company has a vigil mechanism named Whistle Blower Policy to deal with instance offraud and mismanagement if any. The objective of the Policy is to explain and encouragethe directors and employees to raise any concern about the Company’s operations andworking environment including possible breaches of Company’s policies and standardsor values or any laws within the country or elsewhere without fear of adverse managerialaction being taken against such employees.

The Whistle Blower Policy is disclosed on the Company’s website and the web linkfor the same is http://www. camlinfs.com/IR.php.

Particulars of Loans Guarantees or Investments

Details of Loans Guarantees and Investments covered under the provisions of Section186 of the Companies Act 2013 are given to the Financial Statements.

Related Party Transactions

All Related Party Transactions that were entered into during the financial year were onan arm’s length basis and were in the ordinary course of business. There are nomaterially significant related party transactions made by the Company with PromotersDirectors and Key Managerial Personnel which may have a potential conflict with theinterest of the Company at large. Accordingly the disclosure of related PartyTransactions as required under Section 134 (3) (h) of the Companies Act 2013 in form AOC-2is not applicable to your Company.

The policy on Related Party Transactions as approved by the Board is uploaded on theCompany’s website and the weblink for the same is http://www.camlinfs.com/IR.php.

Conservation of Energy Technology Absorption Foreign Exchange Earnings and Outgo

As required by the Companies (Accounts) Rules 2014 the relevant informationpertaining to conservation of energy technology absorption foreign exchange earnings andoutgoings respectively is given in the "Annexure-D" to this report.

Risk Management Policy

The Company is aware of the risks associated with the business. It regularly analysesand takes corrective actions for managing / mitigating the same.

Your Company has institutionalized the process for identifying minimizing andmitigating risks which is periodically reviewed. Some of the risks identified and beenacted upon by your Company are: Securing critical resources; ensuring sustainable plantoperations; ensuring cost competitiveness including logistics; completion of CAPEX;maintaining and enhancing customer service standards and resolving environmental andsafety related issues.

Significant and Material Orders passed by the Regulators/Courts if any

There are no significant or material orders passed by the Regulators or Courts orTribunals which would impact the going concern status of your Company and its futureoperations.

Sexual Harassment of Women at Workplace:

The Company is an equal opportunity employer and consciously strives to build a workculture that promotes dignity of all employees. During the year under review no case ofsexual harassment was reported.

Corporate Governance

As required under SEBI LODR 2015 a detailed Report on Corporate Governance is given asa part of Annual Report. The Company is in full compliance with the requirements anddisclosures that have to be made in this regard. The Certificate of the compliance withCorporate Governance requirements by the Company issued by the Practicing CompanySecretaries is attached to the Report on Corporate Governance.

Management Discussion and Analysis

A detailed review of the operations performance and future outlook of the Company andits business is given in the Management’s Discussion and Analysis Report which formsa part of this report.

Extract of the annual return

Pursuant to section 92(3) of the Companies Act 2013 the extract of the annual returnin Form No. MGT – 9 forms part of this Board’s report and is enclosed as"Annexure- E".

Acknowledgment

The Board wishes to place on record its appreciation of sincere efforts put in by theemployees of the Company in helping it reach its current growth levels. Your Directorsplace on record their appreciation for the support and assistance received from theinvestors customers vendors bankers financial institutions business associatesregulatory and governmental authorities.

For & On behalf of the Board
Ashish S. Dandekar Dattatraya R. Puranik
Managing Director Executive Director &
Chief Financial Officer
Place : Mumbai
Dated : 23rd May 2016

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