Clariant Chemicals (India) Ltd.
|BSE: 506390||Sector: Industrials|
|NSE: CLNINDIA||ISIN Code: INE492A01029|
|BSE LIVE 15:40 | 23 Jan||724.85||
|NSE LIVE 15:41 | 23 Jan||723.60||
|Mkt Cap.(Rs cr)||1672.95|
|Mkt Cap.(Rs cr)||1672.95|
Clariant Chemicals (India) Ltd. (CLNINDIA) - Director Report
Company director report
Your Directors are pleased to present the 59th Annual Report together with the auditedstatement of accounts for the 15 months ended March 31 2016.
1. Financial Year change of the Company
Pursuant to the provisions of Section 2(41) of Companies Act 2013 the Companies arerequired to have a uniform financial year for the period from 1st April to 31st March.Accordingly the Company changed its Financial Year from the period ending 31st Decemberto 31st March. The accounting / financial year under review was thereby extended by aperiod of three months consequent to which the financial year under review is for a periodof fifteen months commencing from January 1 2015 to March 31 2016.
Financial year 2015-16 / year ended March 31 2016 / period under review wherevermentioned in this entire Annual Report refers to the period of fifteen months fromJanuary 1 2015 to March 31 2016.
2. Financial performance of the Company
(Rs. in Lakhs)
3. Review of operations
The Company has registered a good performance over the previous year despite loss ofsales due to divestment of leather business in the previous year and Industrial consumerbusiness in the period under review. The business sentiments confronted with thechallenges of market conditions and slowdown in global demand remained extremelychallenging. Our agility in adapting to our customers innovative needs and thealigned team work by our dedicated employees are the key enablers helping the Companyaccomplish its growth.
The Company has reported total Net Sales of Rs. 1139.80 crores for the 15 months periodunder review as compared to Rs. 1008.20 crores in the previous year registering a growthof 13%. The Companys Net Sales for the continuing Businesses registered a growth of12% on a like-to- like period. Of the total sales revenue of the continuing Businesses forthe period 27% is contributed by exports. During the 15 months period the Profit beforeexceptional items & tax stood at Rs. 44 crores as against Rs. 4 crores in the previousyear. Due to the strong sales effective raw material management and better cost controlsthe Profit as a percentage of sales increased from 0.4% to 3.9%. The Net Profit afteraccounting of exceptional items and tax is lower over the previous year mainly due tohigher exceptional income in the previous year from sale of Kolshet site. The Companyremains committed to its growth strategy and focused to improve its continuing businesslooking for higher market share in the business segments it operates.
During the period under review based on the exceptional income arising from the saleof Kolshet land in the previous year your Directors had declared an interim dividend ofRs. 140/- per share (1400%) for the Financial year 2015-16 and paid the same in January2015. The interim dividend together with tax thereon entailed cash outflow of Rs. 447.88crores and pay out of 41.3 % of the Net Profits from sale of Kolshet site.
The Board of Directors is pleased to recommend a Final Dividend of Rs. 10/- per share(100%).
The final dividend together with tax thereon entails cash outflow of Rs. 27.78 croresand pay out of 52.6% of the Net Profit for the 15 months period ended March 31 2016.
The total dividend for the peried under review amounts to Rs. 150 per share (1500%) ascompared to Rs. 39/- per share (390%) paid for the previous year.
5. Acquisition of Carbon Black Business from Lanxess India Private Limited
In terms of the Business Transfer Agreement signed between the Company and LanxessIndia Private Limited the Company acquired the "Carbon Black Business" fromLanxess India Private Limited effective close of business hours on March 31 2015comprising the Carbon Black Dispersion plant located at Nagda India together with itsrespective assets liabilities and employees as a going concern on a slump sale basis fora lump sum consideration of Rs. 13.46 crores (including non-compete fees) after workingcapital adjustment as at March 31 2015. The acquisition of Carbon Black Business wasstrategic for Clariant for survival of its current business in similar products.
6. Sale of Industrial & Consumer Specialties (ICS) Business
In accordance with the approval granted by the Board pursuant to the provisions ofSection 179 of the Companies Act 2013 and the powers conferred upon the Board by Articlesof Association of the Company and as per the Valuation Report of Deloitte Haskins &Sells the Company sold its Industrial & Consumer Specialties (ICS) Business alongwith employees assets liabilities and including all licenses permits consents andapprovals thereto on a going concern by way of a slump sale on a "as is where isbasis" to Clariant India Limited (erstwhile known as Clariant India Private Limited)for a total consideration of Rs. 42 Crore effective from August 1 2015. The profit onsale of the ICS business amounting to Rs. 26.56 crores is shown under "ExceptionalItems credit (net)"
7. Buyback of Equity Shares
In accordance with the approval grantedby the Shareholders by way of special resolutionthrough postal ballot and pursuant to Section 68 69 70 and all other applicableprovisions if any of the Companies Act 2013 and SEBI (Buy Back of Securities)Regulations 1988 the Company made an offer of Buyback of 3578947 Equity Shares of Rs.10 each to the shareholders of the Company (representing 13.42% of the total number of theequity share capital of the Company) at the price of Rs. 950/- per equity shareaggregating to Rs. 340 Crore. The Buyback was through "Tender Offer" by StockExchange mechanism.
The Buyback Offer was open for a period from September 22 2015 to October 7 2015. Theresponse to the Buyback Offer was 143.45% and the Company bought back the entire 3578947equity shares offered to the shareholders. The Paid up Equity Capital of the Company postBuyback is Rs. 230817980/-.
8. Appointment of Link Intime Private Limited as Registrar & Transfer Agent of theCompany
During the period under review an investigation was carried out by SEBI which revealedserious and alarming irregularities by Sharepro Services (India) Private Limited("Sharepro") Companys erstwhile Registrar & Transfer Agent withregard to share related and dividend encashment activities. Subsequently SEBI passed anad interim order against Sharepro on March 22 2016 restricting the Promoters DirectorsSenior Management and other associated persons mentioned in the said Order from accessingthe Market.
In said Order SEBI also advised the clients of Sharepro to change their Registrar andTransfer Agent and to conduct thorough Audit of the records and systems of Sharepro forpast several years with respect to Dividends paid and securities transferred.
The Board of Directors vide Circular Resolution dated April 7 2016 terminated theMemorandum of Understanding entered into with Sharepro and appointed Link Intime IndiaPrivate Limited ("Link Intime") who are duly registered with the Securities andExchange Board of India (SEBI) under SEBI (Registrars to an issue and Share TransferAgents) Regulations 1993 as Registrar and Share Transfer Agents of the Company effectivefrom April 11 2016.
The Board has appointed N. L. Bhatia & Associates Practising Company Secretariesfor conducting the audit and the same is in progress.
The Board recommends for your approval the shifting of the Registers and Index ofMembers and Returns from the office of Sharepro to Link Intime effective from April112016.
9. Corporate Governance Management Discussions and Analysis Report
The Company is committed to compliance standards ensuring checks and balances betweenthe Board and Management as well as a sustainable approach to create value for allstakeholders. As stipulated under SEBI (Listing Obligations & Disclosure Requirements)Regulation 2015 Report on Corporate Governance Management Discussion and Analysisreport as well as Auditors Certificate confirming the compliance with the conditionsof corporate governance are attached herewith and forms part of this annual report.
10. Significant and material orders passed by the regulators or courts or tribunalsimpacting the going concern status and Companys operations in future
During the period under review there has been no such significant and material orderspassed by the regulators or courts or tribunals impacting the going concern status andCompanys operations in future.
11. Subsidiary Company
As on March 31 2016 the Company does not have any subsidiary.
12. Details of Directors and Key Managerial Personnel
During the period under review Mr. B. L. Gaggar Executive Director retired from theservices of the Company on June 30 2015. The Board placed on record their sincereappreciation for the valuable service rendered by Mr. B. L. Gaggar during his entiretenure and thanked him for all the dedication insights and expertise which was brought byhim on the Board and guidance and vision shown to the management team of the Company.During the period under review Mr. Y. H. Malegam and Mr. Bharat Patel resigned as amember of the Board effective from October 15 2015 and October 20 2015 respectively. TheBoard appointed Mr. Kewal Handa and Mr. Sunirmal Talukdar as Directors of the Companyw.e.f. November 5 2015 to fill in the casual vacancy caused by the resignation of Mr.Bharat Patel and Mr. Y. H. Malegam respectively. Mr. Kewal Handa was also appointed as theChairman of the Company. The Board of Directors placed on record its sincere appreciationfor the valuable services rendered by Mr. Bharat Patel and Mr. Y. H. Malegam for thecontribution made during their tenure as Chairman and Director of the Company respectivelyand wished them success for their future endeavors.
In accordance with the provisions of the Companies Act 2013 and the Articles ofAssociation of the Company Mr. Karl Holger Dierssen retires by rotation at theforthcoming Annual General Meeting and being eligible he offers himself forre-appointment.
The above appointment and re-appointment forms part of the Notice of the 59th AnnualGeneral Meeting and the respective Resolutions are recommended for your approval.
All Independent Directors of the Company have given declarations that they meet thecriteria of independence as prescribed under Section 149(6) of the Companies Act 2013 andSEBI (Listing Obligations & Disclosure Requirements) Regulations 2015.
The Board appointed Ms. Amee Joshi as a Company Secretary & Compliance Officereffective from April 25 2015 consequent to the resignation of Mr. B. L. Gaggar as aCompany Secretary & Compliance Officer on April 24 2015. The Board appointed Mr.Rajasubramanian N. as a Chief Financial Officer of the Company effective from July 12015 consequent to the retirement of Mr. B. L. Gaggar from the Company on June 302015.Further on resignation of Mr. Rajasubramanian N. from the services of the Company onAugust 31 2015 the Board appointed Ms. Raksha Kamdar as an Interim Chief FinancialOfficer w.e.f. September 12015. At the Board Meeting held on May 20 2016 Mr. SanjayGhadge was appointed as the ChiefFinancial Officer of the Company effective from May202016.
13. Audit Committee
The details of the composition meeting attendance etc. of the Audit Committee areprovided in the Corporate Governance Section of the Annual Report. The Board has acceptedall the recommendations of the Audit Committee during the Financial period under review.
14. Number of meeting of the Board
During the period under review the Board of Directors met 7 times on January 12 2015February 12 2015 April 22 2015 August 4 2015 November 5 2015 (two meetings) andFebruary 12 2016.
15. Conservation of energy technology absorption foreign exchange earnings and outgo
As required under Section 134(3)(m) of the Companies Act 2013 read with Rule 8(3) ofthe Companies (Accounts) Rules 2014 the relevant information and data for the 15 monthsperiod ended March 31 2016 are attached to this report as "Annexure A".
16. Corporate Social Responsibility
In terms of the provisions of Section 135 of the Companies Act 2013 read withCompanies (Corporate Social Responsibility Policy) Rules 2014 the Board of Directors ofyour Company has constituted a Corporate Social Responsibility ("CSR") Committeewhich is chaired by Dr. (Mrs.) Indu Shahani Independent Director of the Company theother members of the committee are Dr. Deepak Parikh Vice Chairman & ManagingDirector and Mr. Karl Holger Dierssen Non-Executive Director. Your Company also has inplace a CSR policy and the same is available on the website of the Company at
17. Nomination and Remuneration Policy
The Board has on the recommendation of Nomination and Remuneration Committee framed apolicy on Nomination and Remuneration of its Directors and Key Managerial Personnel whichis attached as "Annexure C".
18. Board Evaluation and Familiarisation programme
Pursuant to the provisions of the Companies Act 2013 and SEBI (Listing Obligations& Disclosure Requirements) Regulation 2015 the Board has carried out the annualevaluation of its own performance and Board Committees by seeking the inputs of Directorson various aspects of the Board / Committee Governance. The Board have reviewed theperformance of the individual directors and the Chairperson. The manner in which theevaluation has been carried out is stated in the Corporate Governance Report.
The details of programme for familiarization of the Independent Directors of yourCompany is available on the Companys website at www.clariant.com.
19. Particulars of Employee
The disclosure required under Section 197 of the Companies Act 2013 read with Rule5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014is attached as "Annexure D".
The statement of particulars of employees pursuant to Rule 5(2) of the Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 forms part of thisAnnual Report. However pursuant to provisions of Section 136(1) of the Companies Act2013 the report and accounts are being sent to members excluding this statement ofparticulars of employees. Any member interested in obtaining a copy of this statement maywrite to Company Secretary at the registered office of the Company.
20. Directors Responsibility Statement
Pursuant to the requirement under Section 134(3)(C) of the Companies Act 2013 withrespect to Directors Responsibility Statement it is hereby confirmed that:
(i) In the preparation of the annual accounts for the 15 months period ended 31stMarch 2016 the applicable accounting standards had been followed along with properexplanation relating to material departures;
(ii) The Directors had 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 as at March 312016 and of the profit andloss of the Company for that period;
(iii) The Directors had taken proper and sufficient care for the maintenance ofadequate accounting records in accordance with the provisions of the Companies Act 2013for safeguarding the assets of the Company and for preventing and detecting fraud andother irregularities;
(iv) The Directors had prepared the annual accounts on a going concern basis;
(v) The Directors had laid down internal financial controls to be followed by theCompany and that such internal financial controls are adequate and were operatingeffectively; and
(vi) The Directors had devised proper systems to ensure compliance with the provisionsof all applicable laws and that such systems were adequate and operating effectively.
21. Statutory Auditor & Audit Report
In accordance with Section 139 of the Companies Act 2013 M/s. Price WaterhouseChartered Accountants LLP (Firm Regn. No 012754N/ N500016) were appointed as StatutoryAuditors for a period of 4 years from the conclusion of last Annual General Meetingsubject to ratification by the shareholders at every subsequent Annual General Meeting.The Statutory Auditors being eligible offer themselves for reappointment. Your Directorsrecommend the ratification of their appointment as Statutory Auditors of the Company fromthe conclusion of this Annual General Meeting till the conclusion of next Annual GeneralMeeting.
The Auditors in their report have commented that the back up of the books ofaccounts and other books and papers maintained in electronic mode has not been maintainedon servers physically located in India. The Company would like to clarify that theCompanys SAP is centralized in Global Data Centers outside India where the backupstorage is maintained. The Company is reviewing the maintenance of backup of SAP data inIndia as required under Rule 3 of the Companies (Account) Rules 2014.
22. Cost Audit
The Board of Directors pursuant to provisions of Section 148 of the Companies Act2013 appointed M/s. RA & Co. Cost Accountants as Cost Auditors of the Company tocarry out the audit of the cost accounts relating to organic and inorganic chemicals ofthe Company for the Financial year 2016-17 subject to approval of Central Government. Thecost audit report for the Financial year 2014 has been filed on due date.
23. Secretarial Audit Report
Pursuant to provisions of Section 204 of the Companies Act 2013 and Rule 9 ofCompanies (Appointment and Remuneration of Managerial Personnel) Rules 2014 the Boardhave appointed Mr. Jagdish Ahuja Practising Company Secretary as Secretarial Auditor tocarry out the Secretarial Audit for the 15 months ended March 31 2016.
The Secretarial Audit Report is attached as "Annexure E". TheSecretarial Auditors Report does not contain any qualification reservation oradverse remark and is self - explanatory and thus does not require any further comments.
24. Internal Financial Controls and their Adequacy
The details in respect of Internal Financial Controls and their adequacy are includedin the Management Discussion & Analysis Report which forms part of this Report.
25. Extract of Annual Return
Pursuant to the provisions of Section 92(3) of the Companies Act 2013 an extract ofAnnual Return in Form MGT-9 is attached as "Annexure F" to this report.
26. Risk Management
The Company has a robust Risk Management to identify and evaluate business risks andopportunities. This framework seeks to create transparency minimize adverse impact on thebusiness objectives and enhance the Companys competitive advantage. Many risksidentified by the business and functions are systematically addressed through mitigatingactions on a continuing basis. The Company has framed a Risk Management Policy to managethe risks involved in all activities of the Company to maximize opportunities andminimize adversities.
27. Related Party Transactions
In line with the requirements of Companies Act 2013 and SEBI (Listing Obligations andDisclosure Requirements) Regulations 2015 the Company has framed a Policy on MaterialRelated Party Transactions which is available on Companys website at
All the Related Party Transactions entered duringthe period under review were inordinary course of business and on arms length basis. All the Related PartyTransactions are placed before the Audit Committee for review and approval. Prior omnibusapproval are granted by Audit Committee for Related Party Transactions which are ofrepetitive nature entered in the ordinary course of business and are on arms lengthbasis.
The disclosure of Related Party Transactions as required under Section 134(3)(h) ofCompanies Act 2013 read with Rule 8(2) of The Companies (Accounts) Rules 2014 in theForm AOC-2 is attached as "Annexure G" to this report.
28. Particulars of loans guarantees or investments
The details of loans guarantees and investments covered under the provisions ofSection 186 of the Companies Act 2013 is given in notes forming part of financialstatements.
29. Public Deposits
During the period under review the Company has not accepted any deposits from thepublic falling under Section 73 of the Companies Act 2013 and the Companies (Acceptanceof Deposits) Rules 2014 and as such no amount of principal or interest was outstanding ason the balance sheet date.
30. Vigil Mechanism
The Company believes in upholding professional integrity and ethical behavior in theconduct of its business. To uphold and promote these standards the Company has adoptedGroups Integrity Line Policy which is akin to Whistle Blower Policy or VigilMechanism Policy for its Directors and Employees to report genuine concerns aboutunethical behavior actual or suspected fraud or violation of the Code of Conduct withoutfear of reprisal.
31. Prevention of Sexual Harassment ofWomen at Workplace
The Company has in place an Anti-Sexual Harassment Policy in line with the requirementsof The Sexual Harassment of Women at Workplace (Prevention Prohibition and Redressal)Act 2013. During the period under review no complaints were received regarding SexualHarassment.
The Board of Directors wish to place on record its sincere appreciation for the supportreceived from its stakeholders including shareholders bankers distributors suppliersand business associates. The Directors recognize and appreciate the sincere and hard workloyalty dedicated efforts and contribution of all the employees that ensured sustainedperformance in a challenging business environment. The Directors also express theirappreciation of the assistance and unstinted support received from Clariant groupcompanies.
Information under Section 134(3)(m) of the Companies Act 2013 read with Rule 8(3) theCompanies (Accounts) Rules 2014 and forming part of the Report of the Directors
A. Conservation of Energy:
The rising energy cost has laid great emphasis on conservation of energy. The Companyhas taken various measures including regular monitoring of consumption reduction oflosses and improved maintenance to increase the efficiency and reduce the power cost.
The particulars with respect to power and fuel consumption are provided below:
Consumption per unit of production:
The Company manufactures a wide variety of products. The products before reaching thefinished final stage pass through various operations in the different plants. It istherefore not feasible to furnish the information in respect of consumption per unit ofproduction.
B. Technology Absorption Research & Development (R&D) Research &Development:
The Company during the 15 months period ended March 31 2016 has not carried out anyactivity which can be construed as Research & Development and as of now there is nospecific plan for engaging into such activities. As such there is nothing to report underthis section.
Technology absorption adaptation and innovation:
The know-how and technology for the product is made available to the Company fromClariant. The adaptation of know-how and development to cater to the locally available rawmaterials and suit the requirement of customers for domestic or export markets is done bythe Company at technical laboratories set up at various locations with world classfacilities. The Company has paid royalty for know-how and technology received fromClariant.
C. Foreign exchange earnings and outgo:
The particulars of foreign exchange earned and used during the year are given in Note32to35 in the notes forming part of the financial statements.