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Dalmia Refractories Ltd.

BSE: 500481 Sector: Engineering
NSE: DALMIAREF ISIN Code: INE200F01017
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Dalmia Refractories Ltd. (DALMIAREF) - Director Report

Company director report

Your Directors hereby present the Forty Third Annual Report together with auditedfinancial statements for the year ended 31 March 2016. st

Financial Results

2015-16 2014-15
(Rs.in lacs) (Rs.in lacs)
GROSS REVENUE 20595 18909
Profit before Interest Depreciation and Tax (EBITDA) 814 144
Interest 270 361
Depreciation 374 324
(644) (685)
Profit before Tax (PBT) 170 (541)
Provision for Current tax 50 -
Provision for deferred tax (Net of due to change in
Depreciation as per Companies Act 2013) - (156)
(156)
Profit after tax (PAT) 120 (385)
Tax adjustment of earlier year - 8
Add: Surplus brought forward from last year 3637 4043
Profit available for appropriation 3757 3666
Appropriations :
General Reserve 10 10
Dividend 16 16
Dividend Distribution tax 3 3
Balance Carried Forward 3728 3637

DIVIDEND

Your Directors are pleased to recommend a dividend of Re. 0.50 per equity share of facevalue of Rs.10/- each for the current financial year ended 31st March 2016. The dividendpayout is subject to approval of the members at the ensuing Annual General Meeting.

OPERATIONS AND FUTURE OUTLOOK

During the year Market scenario continued to be sluggish due to lower capacityutilization in steel and cement industry main consumers of refractory products. Withmarginal increase in the revenues coupled with the cost reduction measures the Companyhas been able to achieve Profit before Tax (PBT) of Rs.170 lakhs as against the loss ofRs.541 lacs during the previous year.

Details about the performance as also the future outlook have been given under the headFunctional Highlights and Management Discussion and Analysis in the annexed report on theCorporate Governance.

The details of refractories produced and dispatched by the units of the Company aregiven as under:-

Dalmiapuram Works

FY 16 FY 15
Production (MT) 39013 40895
Dispatches (MT) 39341 37761
Khambalia Works
FY 16 FY 15
Production (MT) 33383 31686
Dispatches (MT) 33084 33285
Katni Unit
FY 16 FY 15
Production (MT) 10901 9647
Dispatches (MT) 10823 9567

CHANGE IN BUSINESS

There has been no change in the nature of business carried on by the Company.

SUBSIDIARIES ASSOCIATES AND JOINT VENTURE COMPANIES

The Company does not have any subsidiary associate or joint venture Company.

CORPORATE GOVERNANCE

The Company’s corporate governance Report has been detailed in a separate Chapterand is attached separately to this Report. The Auditors’ Certificate confirmingcompliance of Corporate Governance Code is also attached as annexure and forms part ofthis report.

CORPORATE SOCIAL RESPONSIBILITY INITIATIVES

The provisions of the Companies Act 2013 regarding the Corporate SocialResponsibility are not applicable to the Company. However the Company is fully aware ofits social responsibilities and is providing time to time assistance through the localinstitutions to benefit the local residents of the nearby areas where the Company’splants are located.

LISTING OF SECURITIES

As reported in our report for last year that due to voluntary surrender of itsrecognition by Madras Stock Exchange and de-recognition of Delhi Stock Exchange bySecurities Exchange Board of India (SEBI) the securities of the Company continued to belisted at Calcutta Stock Exchange. Further during the year under review the equity sharecapital of the Company has been listed and admitted to dealings at Metropolitan StockExchange of India Limited [Formerly MCX Stock Exchange Limited (MCX-SX)] w.e.f.09.10.2015.

Henceforth besides Calcutta Stock Exchange the equity shares of the Company are alsolisted at Metropolitan Stock Exchange of India Limited and the listing fee for thefinancial year 2016-17 has been paid to the said Exchanges.

EXTRACT OF ANNUAL RETURN

In compliance with the provisions of Section 92(3) of the Companies Act 2013 thedetails forming part of the extract of the Annual Return is attached to this Report as‘Annexure I’ in Form MGT 9.

DIRECTORS AND KEY MANAGERIAL PERSONNEL

During the year under review the members approved the appointment of Smt. Leena Rawalas a Non-executive Non-Independent Director who is liable to retire by rotation.

Shri Sameer Nagpal upon the recommendation of Nomination and Remuneration Committeewas appointed as an Additional Director w.e.f. 4th February 2016 and holds office tillthe conclusion of ensuing Annual General Meeting. The Company has received a requisitenotice from a member as required under section 160(1) of the Companies Act 2013proposing his candidature for appointment as Director of the Company. Shri Sameer Nagpalhas given his declaration in terms of Section 164(2) of the Companies Act 2013 to theeffect that he is not disqualified from being appointed as a Director of the Company.

Shri Deepak Thombre Director retires by rotation at the ensuing Annual GeneralMeeting and being eligible offers himself for reappointment. Shri Deepak Thombre has givenhis declaration in terms of Section 164(2) of the Companies Act 2013 to the effect thathe is not disqualified from being reappointed as a Director of the Company.

All Independent Directors namely Shri N. Gopalaswamy Shri P.D. Mathur and Shri M.K.Doogar have given their declaration of independence in terms of Section 149(6) of theCompanies Act 2013.

The Key Managerial Persons namely Shri C.N. Maheshwari Chief Executive Officer ShriSudhir K. Srivastava Chief Financial Officer and Ms. Akansha Jain Company Secretarycontinue to hold their respective offices during the year under review.

BOARD OF DIRECTORS COMMITTEES AND MEETINGS

During the year four Meetings of the Board were convened and held. The time gapbetween two consecutive meetings of the Board did not exceed one hundred and twenty days.In terms of the provisions of Rule 8 of Schedule IV to the Companies Act 2013 a separatemeeting of the Independent Directors excluding all other Directors and Officials of theCompany was also held.

There are five Board level committees. The composition terms of reference and otherdetails of all Board level Committees have been elaborated in the Corporate GovernanceReport annexed to this Report.

The Board has accepted all the recommendations made by the Audit Committee.

The Nomination and Remuneration Policy of the Company on Directors appointment andremuneration including criteria for determining qualifications positive attributesindependence of Directors and other matters provided in section 178(3) of the CompaniesAct 2013 as approved by the Board of Directors is attached as ‘Annexure-II’ tothis Report.

The details of familarisation programmes for Independent Directors of the Company canbe accessed at the website of the Company at www.dalmiarefractories.com The Board ofDirectors has conducted a formal evaluation of its own performance and of its committeesand individual Directors in accordance with norms laid down in the Nomination andRemuneration Policy aforesaid.

WHISTLE BLOWER POLICY AND VIGIL MECHANISM

The Company has in place the Whistle Blower Policy and the Vigil Mechanism with a viewto provide for adequate safeguards against victimization of stakeholders who use suchmechanism and provide for direct access to the Chairperson of the Audit Committee inappropriate cases.

The policy can be accessed at the website of the Company athttps://www.dalmiarefractories.com/pdf/WHISTLE_BLOWER_ POLICY-DRL.pdf

INTERNAL FINANCIAL CONTROLS

The Company has in place adequate internal financial controls with reference tofinancial statements. During the year such controls were tested and no reportablematerial weaknesses in the design or operation were observed.

PARTICULARS OF LOANS GUARANTEES AND INVESTMENTS

During the year under review the Company has not given any loans directly orindirectly to any person or to other body corporates or given any guarantee or providedany security in connection with a loan to any other body corporate or person in terms ofSection 186 of the Companies Act 2013. The Details of Investments made by the Company aregiven in Note 13 of the Financial Statements.

RELATED PARTY POLICY AND TRANSACTIONS

During the year the Company had not entered into any contract/arrangement/transactionwith related parties which could be considered material in accordance with the policy ofthe Company on materiality of related party transactions.

The policy on Related Party Transactions can be accessed at the website of the Companyat https://www.dalmiarefractories.com/pdf/DRL_RELATED_PARTY.pdf.

RISK MANAGEMENT

The Board has established a Risk Management Committee. The Committee endeavors toassist the Board to review the risk management practices and actions deployed by theManagement with respect to identification impact assessment monitoring and mitigationand reporting of key risks while trying the achieve its business objectives.

AUDITORS & AUDITORS’ REPORT STATUTORY AUDITORS

In terms of the provisions of Section 139 of the Companies Act 2013 M/s. S.S. KothariMehta & Co. Chartered Accountants were re-appointed as Statutory Auditors of theCompany to hold office for a period of three years effective from the conclusion of AnnualGeneral Meeting of the Company held on 12th August 2014 subject to ratification by themembers at every Annual General Meeting. They have confirmed their eligibility to theeffect that their re-appointment if made would be within the prescribed limits under theAct and that they are not disqualified for re-appointment.

The notes on financial statement referred to in the Auditors’ Report areself-explanatory and do not call for any further comments. The Auditors’ Report doesnot contain qualification reservation or adverse remark.

SECRETARIAL AUDIT

The Board has appointed Shri N.C. Khanna Practicing Company Secretary to conduct theSecretarial Audit for the financial year 2015-16 in terms of section 204 of the CompaniesAct 2013. The Secretarial Audit Report for the financial year ended March 31 2016 isannexed as ‘Annexure III’ of this Report. There are no disqualifications orremarks made by the Secretarial Auditor in his Report.

CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO.

The particulars relating to conservation of energy technology absorption foreignexchange earnings and outgo as required to be disclosed under the Act are given inAnnexure-A which forms part of the Directors’ Report.

PARTICULARS OF DIRECTORS’ AND EMPLOYEES’ REMUNERATION

Disclosures pertaining to remuneration and other details as required under Section197(12) of the Act read with Rule 5(1) of the Companies (Appointment and Remuneration ofManagerial Personnel) Rules 2014 are provided in the annual report.

In terms of the provisions of Section 197(12) of the Act read with Rules 5(2) and 5(3)of the Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014 thereare no employees drawing remuneration in excess of the limits set out in the said rules.

Having regard to the provisions of the first proviso to Section 136(1) of the Act andas advised the Annual Report excluding the aforesaid information is being sent to themembers of the Company. The said information is available for inspection at the registeredoffice of he Company during working hours and any member interested in obtaining suchinformation may write to the Company Secretary and the same will be furnished on request.The full Annual Report including the aforesaid information is being sent electronically toall those members who have registered their email addresses and is available on theCompany’s website.

DISCLOSURE

No significant or material orders were passed by the Regulators or Courts or Tribunalswhich impact the going concern status and Company’s operations in future.

During the year under review there were no cases filed pursuant to the SexualHarassment of Women at Workplace (Prevention Prohibition and Redressal) Act 2013.

During the year the Company has not accepted any deposits from public.

DIRECTORS RESPONSIBILITY STATEMENT:

In terms of the provisions of Section 134(5) of the Companies Act 2013 your Directorsdeclare that: i) in the preparation of the Annual Accounts the applicable AccountingStandards have been followed along with proper explanation relating to materialdepartures; ii) the Directors had selected such accounting policies and applied themconsistently and made judgements and estimates that are reasonable and prudent so as togive a true and fair view of the state of affairs of the Company at the end of thefinancial year and of the profit of the Company for that period; iii) the Directors hadtaken proper and sufficient care for the maintenance of adequate accounting records inaccordance with the provisions of the Act for safeguarding the assets of the Company andfor preventing and detecting frauds and other irregularities; iv) the Directors hadprepared the annual accounts on a going concern basis. v) the directors had laid downinternal financial controls to be followed by the company and that such internal financialcontrols are adequate and were operating effectively. vi) the directors had devised propersystems to ensure compliance with the provisions of all applicable laws and that suchsystems were adequate and operating effectively.

ACKNOWLEDGMENT

The Directors also take this opportunity to place on record their sincere thanks andappreciation for assistance and continued support to the Company from its Bankers Stateand Central Government agencies employees and stakeholders of the Company.

For and on behalf of Board
Place: New Delhi N. GOPALASWAMY
Dated:May 23 2016 CHAIRMAN

ANNEXURE-A

Prescribed Particulars of Conservation of Energy Technology Absorption and ForeignExchange Earnings and Outgo A. CONSERVATION OF ENERGY:

(a) The steps taken/impact on conservation of energy:-

(i) Introduction of Variable Frequency Drive (VFD) Motors in Kiln Exhaust Fan Circuitfor power saving. (ii) Introduction of Roll Crushers in the grinding circuit to reducepower consumption.

(iii) Replacement of CFL bulbs with LED bulbs.

(b) The steps taken by the Company for utilizing alternate sources of energy:-

Replaced Roof sheets with transparent roof sheets wherever possible in order to makemaximum use of sunlight.

(c) The capital investment on energy conservation equipments:

Company has invested around Rs.8.53 lakhs during the FY 2015-16 to conserve the energy.

B. TECHNOLOGY ABSORPTION:

1. The efforts made towards technology absorption:

Efforts are being made for technical collaborations for producing wider and betterrange of products.

2. The Benefits derived like Product improvement cost reduction productdevelopment import substitution etc.:

Development of new product called DALULTIMA used as an import substitution ofcastables in cement plants have resulted in expanding the customer base in the castablesector.

3. No technology has been imported in the last three years.

4. Expenditure incurred on Research and Development.

Rs.35.38 lakhs

C. FOREIGN EXCHANGE EARNINGS AND OUTGO

i. Foreign Exchange earned in terms of actual inflows during the year

Rs.874.09 lakhs

ii. Foreign Exchange outgo during the year in terms of actual inflows

Rs.3301.70 lakhs

ANNEXURE II

NOMINATION AND REMUNERATION POLICY

1 ) Objective: This Policy is laid down to comply with the provisions of section178 of the Companies Act 2013 read along with the Rules made thereunder and the amendedClause 49(IV) of the Listing Agreement.

2) Definitions:

a. "Act" means the Companies Act 2013 and Rules framed thereunder asamended from time to time.

b. "Board" means the Board of Directors of the Company.

c. "Directors" means the Directors of the Company as may be appointed fromtime to time.

d. "Independent Director" means a Director who has been appointed as such andwho satisfies the criteria and conditions laid down in S.149(6) of the CompaniesAct 2013.

e. "Key Managerial Personnel" (KMP) means the following persons as defined inS.2(51) of the Companies Act 2013 and (i) Managing Director or Manager or ChiefExecutive Officer; (ii) Company Secretary; (iii) Whole-time Director; (iv) Chief FinancialOfficer; and (v) such other officer as may be prescribed.

f. "Senior Management Persons" (SMP) means the following persons as definedin Explanation to S.178(8) of the Companies Act 2013 being personnel of theCompany who are members of its core management team excluding Board of Directorscomprising all members of management one level below the executive directors includingall Business unit heads.

3) Constitution of the Committee and matters relating thereto:

(a) Constitution:

(i) The Committee shall consist of minimum 3 Non-Executive Directors out of which notless than one half shall be Independent Director.

(ii) Minimum two members shall constitute a quorum for the meeting.

(iii) Constitution and membership of the Committee shall be disclosed in the AnnualReport of the Company. (iv) The Chairman of the Committee shall be an IndependentDirector.

(v) The Chairman of the Company may be nominated as a member of the Committee but shallnot be its Chairman.

(vi) The Chairman of the Nomination and Remuneration Committee is required to bepresent at the Annual General Meeting or he may nominate some other member to answer theshareholders’ queries.

(b) Frequency of Meetings:

The meeting of the Committee shall be held at such regular intervals as may berequired.

(c) Secretary:

The Company Secretary of the Company shall act as the Secretary of the Committee.

(d) Procedure to be followed in meetings of the Committee:

(i) A member of the Committee is not entitled to be present when his or her ownremuneration is being discussed at the meeting or when his or her own performance is beingevaluated.

(ii) All matters shall be decided by a majority of votes cast by the members presentand such decision shall for all purposes be treated as the decision of the Committee. Incase of equality of votes the Chairman shall have the casting vote.

(iii) Head HR or a representative nominated by him may be invited at the meetings ofthe Committee to provide clarifications if any sought by the Committee.

(iv) The Committee is also entitled to engage professionals to assist it in theperformance of its duties and such costs shall be borne by the Company.

(v) Proceedings of all meetings must be minuted and signed by the Chairman of theCommittee at the subsequent meeting. Minutes of the Committee meetings will be tabled atthe subsequent Board and Committee meeting.

4) Role of the Committee:

The Committee shall :-

(a) Formulate the criteria for determining qualifications positive attributes andindependence of a director. [S.178(3) Clause 49(IV)(B) of Listing Agreement]

(b) Recommend to the Board a Policy relating to Remuneration of Directors KMPs andother employees. [S.178(3)].

This Policy has to be disclosed in the Board’s Report [S.178(4)]. As per S.178(4)while formulating this policy Committee has to ensure that:

-(i) Level and composition of remuneration is reasonable and sufficient to attractretain and motivate the Directors of the quality required

(ii) Relationship of remuneration to performance is clear and meets appropriateperformance bench marks

(iii) Remuneration to Directors KMPs and SMP involves a balance between fixed andincentive pay reflecting short and long term performance objectives appropriate for theCompany.

(c) Carry out evaluation of every Director’s performance [S.178(2)]

(d) Devise a policy on Board Diversity. [Clause 49(IV)(B)(3) of Listing Agreement]

(e) Identify persons who are qualified to become Directors and who may be appointed asKMPs/SMPs in accordance with the criteria laid down in this policy. [S.178(2)]

(f) Recommend to the Board the appointment and removal of KMPs and SMPs in accordancewith the criteria laid down. [S.178(2)].

5) Policy on Remuneration:

(a) Directors (including MDs and WTDs):

(i) It would have to be within the ceiling as may be prescribed by law from time totime.

(ii) It would have to be with such approvals as may be prescribed by law.

(iii) In case of MDs/WTDs it shall involve a balance between fixed and incentive payreflecting short term and long term performance objectives.

(iv) In case of non WTDs total remuneration payable in accordance with law bedistributed amongst themselves keeping in view (a) Responsibilities (e.g.Chairmanship/Membership of important Committees)

(b) Tenure on the Board

(c) Devoting of time outside Board meetings for Company’s work etc as may bedecided by the Board.

(b) KMPs and other employees:

(i) It would be based on Total Cost to Company (TCTC) concept. Within this TCTC itcould be made flexible as per the needs of employees in a fair and transparent manner.

(ii) It would be in compliance with laws and regulations.

(iii) The level and composition of remuneration would be reasonable and sufficient toattract retain and motivate to run the Company successfully and to meet performancebenchmarks.

6) Policy on Board Diversity

The Board would comprise of persons having diverse qualifications experience andexposure in any area including but not limited to finance accounts human relationsmarketing selling administrative engineering economic legal tax and manufacturingfunctions. All Board appointments are made on merit in the context of skill experienceindependence and knowledge which the Board as a whole requires to be effective.

The Articles of the Company provide for a minimum number of 3 Directors and a maximumnumber of 12. The size and composition of the Board is to be determined within theseparameters.

The Board shall comprise of one-third of its strength being independent Directorswhere the Chairman of the Board/Company is an Non-Executive Chairman. However theChairman is an Executive Chairman one half strength of the Board shall comprise ofindependent Directors.

Vacancies in the Board caused due to death resignation or otherwise shall be filled inwithin a period of six months unless the Board resolves not to do so.

It shall be necessary to have one woman Director on the Board.

7) Criteria for determining qualifications positive attributes and independenceof Directors:

(a) Criteria for determining independence would be as laid down in S.149(6) ofthe Act.

(b) No academic qualification is envisaged but should be able to contribute positivelyto the deliberations at Board Meeting.

(c) The candidate to be appointed as an Independent Director shall be at least 21 yearsof age. All persons being appointed as Directors shall possess a Directors IdentificationNumber (DIN).

(d) A person shall not be appointed as a Director if he is disqualified under section164 of the Companies Act 2013. (e) The term of office for Executive Directors can bemaximum 5 years at a time. This can be renewed for further periods of time.

(f) The term of office of independent Directors will be for a such period as may bedetermined by the Board subject to a maximum term of 5 years and can be renewed thereafterfor a further period of 5 years by passing a Special Resolution. Thereafter there has tobe a minimum 3 year cooling off period before which the persons appointment as anindependent Director can be considered.

8) Criteria for identifying persons for appointment as Key ManagerialPersonnel’s:-

(a) Should fulfill the Job Description for the relevant position as may be in forcefrom time to time. (b) Should clear the Dalmia BEI (Behavioural Evaluation Interview).

9) Evaluation of every Director’s performance:

(a) % attendance at Board Meetings. (b) Participation in discussions.

(c) Preparedness for Board Meetings by reading of the relevant papers. (d)Contribution in terms of improving Business performance.

(e) Proactive availability for Company’s business besides Board meetings.

The Committee shall carry out evaluation of performance of every Director preferably atregular yearly intervals. For this purpose the Board may engage the services of aprofessional for advising it on a process of evaluation etc and the cost of suchprofessional shall be borne by the Company.

10) General:

(a) The persons selected for the positions of Key Managerial Personnel should have thedesired qualifications expertise and experience for the position he/she is considered forappointment. The Committee shall have the discretion to decide whether the qualificationsexpertise and experience possessed by a person is sufficient for the concerned position.The Committee shall approve the selection of candidates to the position of Key ManagerialPersonnel and recommend to the Board his or her appointment.

(b) The appointment of Senior Management Personnel shall be done by the HR departmentwho shall keep the Committee informed of such appointments from time to time. Providedhowever that the appointment of a person to the level of a Senior Managerial Personnel canbe got ratified by the Company by getting the position cleared by the Nomination &Remuneration Committee within a period of 4 months from the date of initial appointment.

(c) The Committee shall not recommend the appointment of or continuation of appointmentof any person to the position of a Managing Director and Whole-time Director or Managerwho has attained the age of seventy years.

In event it is decided by the Committee to breach the above age limit the Committeeshall make such recommendation subject to approval of shareholders by way of a SpecialResolution.[Sec 196(3)(a) and proviso thereto]

(d) Term/Tenure of appointment of Directors etc.:

i) Managing Director/Manager/Whole-time Director:

The term of appointment or re-appointment of any person as a ManagingDirector/Whole-time Director or Manager shall not exceed five years at a time. There-appointment shall not be made earlier than one year before the expiry of the currentterm of appointment. [Sec 196(3)]

(ii) Independent Directors:

An Independent Director shall hold office for a term upto five consecutive years andcan be reappointed on passing of a Special Resolution by the Shareholders of the Companyfor a further term of five years. [Sec 149(10)].

No Independent Director shall hold office for more than two consecutive terms. AnIndependent Director who has completed the two consecutive terms of appointment of fiveyears each can however be appointed as an Independent Director after the expiry of threeyears of his ceasing to become an Independent Director provided he otherwise qualifies forbeing appointed as an Independent Director. [Sec 149(11)].

At the time of appointment of an Independent Director it should be ensured that he isnot an Independent Director of more than seven listed companies. If however theIndependent Director is serving as a Whole-time Director of a listed company then itshould be ensured that he is not an Independent Director of more than three listedcompanies. [Clause 49(ii)(B)(2) of Listing Agreement].

(iii) Key Managerial Personnel:

The term of appointment for the positions of Key Managerial Personnel shall bedetermined by the Nomination and Remuneration Committee at its own discretion and may varyfrom position to position.

(e) Evaluation of Key Managerial Personnel and person in Senior Management Persons:

The Committee shall go through the recommendations of the evaluations by the HRDepartment of the persons holding Key Managerial Personnel (excluding the ManagingDirector and Whole time Director) and approve the same with or without modifications. Theevaluation of the Senior Management Personnel shall be done by the HR department inaccordance with the Company’s HR policies as existing from time to time.

(f) Removal:

The Committee may recommend to the Board with reasons recorded in writing the removalof a Director Key Managerial Personnel for reasons of misconduct or negligence of duties.

A Director can be removed from his office if the shareholders pass an ordinaryresolution pursuant to the provisions of section 169 of the Companies Act 2013.

A Director shall also be required to continue to qualify as a Director in terms of asection 164 of the Act and is not liable to vacate his office in terms of section 167 ofthe Act.

(g) Retirement:

The Director shall retire as per the provisions of the Act. The Key ManagerialPersonnel and Senior Management Persons shall retire as per the HR policy of the Companyin force from time to time. Subject to the provisions of Clause 4(b) the Board willhowever have the discretion to retain the Director Key Managerial Personnel and SeniorManagement Persons even after his attaining the age of retirement in the interest of theCompany.

(h) The Remuneration policy will be disclosed in the Annual Report of the Company.

(i) This Remuneration Policy shall apply to all future employment agreements withmembers of Company’s Senior Management including Key Managerial Personnel and Boardof Directors. In other respects the Remuneration Policy shall be of guidance for theBoard.

(j) Any or all the provisions of this Policy would be subject to the revision/amendmentin the Companies Act 2013 related rules and regulations guidelines and the ListingAgreement on the subject as may be notified from time to time. Any such amendment shallautomatically have the effect of amending this Policy without the need of any approval bythe Nomination and Remuneration Committee and/or the Board of Directors. However any suchamendment shall be annexed to this Policy and put on the website of the Company for readyreference of all concerned persons and placed before the Nomination and RemunerationCommittee.

ANNEXURE - III

SECRETARIAL AUDIT REPORT

FOR THE FINANCIAL YEAR ENDED 31st MARCH 2016

[Pursuant to section 204(1) of the Companies Act 2013 and rule No.9 of the Companies(Appointment and Remuneration Personnel) Rules 2014]

To

The Members

Dalmia Refractories Limited CIN:-L2429TN1973PLC006372 Dalmiapuram P.O. Kallakudi

Dist. Tiruchirapalli Tamil Nadu-621 651 India

I have conducted the secretarial audit of the compliance of applicable statutoryprovisions and the adherence to good corporate practices by DALMIA REFRACTORIES LIMITED(hereinafter called the "Company"). Secretarial Audit was conducted in a mannerthat provided me a reasonable basis for evaluating the corporate conducts/statutorycompliances and expressing my opinion thereon.

Based on my verification of the Company’s books papers minute books forms andreturns filed and other records maintained by the company and also the informationprovided by the Company its officers agents and authorized representatives during theconduct of secretarial audit I hereby report that in my opinion the Company has duringthe audit period covering the financial year ended on 31.03.2016 complied with thestatutory provisions listed hereunder and also that the Company has proper Board-processesand compliance-mechanism in place to the extent in the manner and subject to thereporting made hereinafter:

I have examined the books papers minute books forms and returns filed and otherrecords made available to me and maintained by the Company for the financial year ended on31.03.2016 according to the provisions of:

(i) The Companies Act 2013 (the Act) and the rules made there under;

(ii) The Securities Contracts (Regulation) Act 1956 (’SCRA’) and the rulesmade there under;

(iii) The Depositories Act 1996 and the Regulations and Bye-laws framed there under;

(iv) Foreign Exchange Management Act 1999 and the rules and regulations made thereunder to the extent of Foreign Direct Investment Overseas Direct Investment and ExternalCommercial Borrowings;

(v) The following Regulations and Guidelines prescribed under the Securities andExchange Board of India Act 1992 (’SEBI Act’) and amendments thereof:-

(a) The Securities and Exchange Board of India (Substantial Acquisition of Shares andTakeovers) Regulations 2011;

(b) The Securities and Exchange Board of India (Prohibition of Insider Trading)Regulations 1992 and SEBI

(Prohibition of Insider Trading) Regulations 2015;

(c) The Securities and Exchange Board of India (Issue of Capital and DisclosureRequirements) Regulations 2009*;

(d) The Securities and Exchange Board of India (Employee Stock Option Scheme andEmployee Stock Purchase Scheme) Guidelines 1999*;

(e) The Securities and Exchange Board of India (Issue and Listing of Debt Securities)Regulations 2008*;

(f) The Securities and Exchange Board of India (Registrars to an Issue and ShareTransfer Agents) Regulations 1993 regarding compliance of the Companies Act and dealingwith client;

(g) The Securities and Exchange Board of India (Delisting of Equity Shares)Regulations 2009;* and

(h) The Securities and Exchange Board of India (Buyback of Securities) Regulations1998;*

* Note applicable because company did not carry out the activities covered by theregulations/guidelines during the audit period.

(vi) Other Laws specifically applicable to the Company:-

I have examined the entire framework processes and procedures of compliance of theunder mentioned Industry Specific laws applicable to the Company. The reports compliancesetc with respect to these laws have been examined by me on test check basis.

(a) The Mines Act - 1952 Mines Rule (b) Metalliferous Mines Regulation - 1961 (c) MinesLabour Welfare Fund Act (d) Explosives Rules & Regulations

I have also examined compliance with the applicable clauses of the following:

(i) Secretarial Standards issued by The Institute of Company Secretaries of India.

(ii) The Listing Agreements entered into by the Company with Calcutta Stock ExchangeLtd. and SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015.

Note: The equity share capital of the Company has been listed and admitted to dealingsat Metropolitan Stock Exchange of India Limited [Formerly MCX Stock Exchange Limited(MCX-SX)] w.e.f. 09.10.2015.

During the period under review the Company has complied with the provisions of the ActRules Regulations Guidelines Standards etc. mentioned above

I further report that

The Board of Directors of the Company is duly constituted with proper balance ofNon-Executive Directors and Independent Directors. The changes in the composition of theBoard of Directors that took place during the period under review were carried out incompliance with the provisions of the Act.

Adequate notice is given to all directors to schedule the Board Meetings agenda anddetailed notes on agenda were sent at least seven days in advance and a system exists forseeking and obtaining further information and clarifications on the agenda items beforethe meeting and for meaningful participation at the meeting.

Majority decision is carried through while the dissenting members’ views arecaptured and recorded as part of the minutes.

I/we further report that there are adequate systems and processes in the companycommensurate with the size and operations of the company to monitor and ensure compliancewith applicable labour and environmental laws rules regulations and guidelines.

N.C. KHANNA
Place : New Delhi FCS No.4268
Date: May 20 2016 C.P.No.5143

This Report is to be read with our letter of even date which is annexed as Annexure Ato this Report and forms an integral part of this Report.

Annexure A to the Secretarial Audit Report

To

The Members

DALMIA REFRACTORIES LIMITED CIN:-L2429TN1973PLC006372 Dalmiapuram P.O. KallakudiDist. Tiruchirapalli Tamil Nadu-621 651 India

Our report of even date is to be read along with this letter.

1. Maintenance of secretarial record is the responsibility of the management of theCompany. Our responsibility is to express an opinion on these secretarial records based onour audit.

2. We have followed the audit practices and processes as were appropriate to obtainreasonable assurance about the correctness of the contents of the secretarial records. Theverification was done on test basis to ensure that correct facts are reflected insecretarial records. We believe that the processes and practices we followed provide areasonable basis for our opinion.

3. We have not verified the correctness and appropriateness of financial records andBooks of Accounts of the Company.

4. Wherever required we have obtained the Management representation about thecompliance of laws rules and regulations and happening of events etc.

5. The compliance of the provisions of corporate and other applicable laws rulesregulations standards is the responsibility of management. Our examination was limited tothe verification of procedures on test basis.

6. The secretarial audit report is neither an assurance as to the future viability ofthe Company nor of the efficacy or effectiveness with which the management has conductedthe affairs of the Company.

N. C. KHANNA
(Practicing Company Secretary)
Place: New Delhi FCS No. 4268
Date: May 23 2016 C P No. 5143

ANNEXURE - IV

DETAILS PERTAINING TO REMUNERATION AS REQUIRED UNDER SECTION 197(12) OF THE COMPANIESACT 2013 READ WITH RULE 5 OF THE COMPANIES (APPOINTMENT AND

REMUNERATION OF MANAGERIAL PERSONNEL) RULES 2014

(i) The percentage increase in remuneration of each Director Chief Executive OfficerChief Financial Officer and Company Secretary during the financial year 2015-16 ratio ofthe remuneration of each Director to the median remuneration of the employees of theCompany for the financial year 2015-16 and the comparison of remuneration of each KeyManagerial Personnel (KMP) against the performance of the Company are as under:

Sr. No. Name of Director/KMP and Designation Remuneration of Director/KMP for Financial year 2015-16 (Rs.in lacs) % increase in Remuneration in the Financial Year 2015-16 Ratio of remuneration of each Director/to median remuneration of employees
1. Shri N. Gopalaswamy Independent Director 0.94 87.76 0.492:1
2. Shri P.D. Mathur Independent Director 1.06 102.63 0.557:1
3. Shri M.K. Doogar Independent Director 0.84 459.22 0.439:1
4. Shri Deepak Thombre Non-Executive Director 0.86 146.81 0.452:1
5. Shri C. Nagaratnam Non-Executive Director 0.89 255.53 0.465:1
6. Smt. Leena Rawal Non-Executive Director 0.25 N.A.* 0.131:1
7. Shri Sameer Nagpal** Non-Executive Director - N.A. N.A.
8. Shri C.N. Maheshwari Chief Executive Officer 72.68*** 2.54 N.A.
9. Shri S.K. Srivastava Chief Financial Officer 28.80 10.13 N.A.
10. Ms. Akansha Jain Company Secretary 3.22 # N.A.

Note: Sitting fees paid to Directors for attending the meetings of the Board andcommittees forms part of the Remuneration paid to Directors.

* Details not provided as Smt. Leena Rawal was not a Director during the financial year2014-15.

** Details not provided as Shri Sameer Nagpal was appointed as an Additional Directorw.e.f. 04.02.2016

*** Being reimbursed to Dalmia Bharat Limited for the services of Chief ExecutiveOfficer.

# Details not provided as Company Secretary was appointed for only part of thefinancial year 2014-15 w.e.f. 26.08.2014.

(ii) The median remuneration of employees of the Company during the financial year wasRs.1.91 lakh;

(iii) In the financial year there was an increase of 8.52% in the median remunerationof employees;

(iv) There were 392 permanent employees on the rolls of Company as on March 31 2016;

(v) Relationship between average increase in remuneration and company performance.Total production in year 2015-16 had increased by 2.41% over the previous year whereas theincrease in median remuneration was 8.52%.

(vi) Comparison of Remuneration of the Key Managerial Personnel(s) against theperformance of the Company: The total remuneration of Key Managerial Personnel increasedby 5.84% from 2014-15 to 2015-16 whereas Profit after tax during the year is Rs.1.20 lakhsas compared to loss of Rs.385 lakhs in the year 2014-15

Note: Company Secretary was appointed only for part of the financial year 2014-15w.e.f. 26th August 2014.

(vii) a) Variations in the market capitalisation of the Company - NA#

b) There was a loss in the financial year 2014-15 and Price Earnings ratio forfinancial year ended 2015-16 is 29.37.

c) Percentage increase in the Market quotations of share of the Company as compared tolast year - NA#.

# During the year under review the equity shares of the Company have been listed andadmitted to dealings on Metropolitan Stock Exchange of India Limited w.e.f. 9th October2015. However no trading has taken place till 31.03.2016. The last traded price of shareswas Rs.112.50 on 29th January 2015 at NSE. Consequent to voluntary exit of Madras StockExchange from stock exchange business the agreement between National Stock Exchange (NSE)and the said exchange was discontinued and the shares of the Company were no more tradedon the NSE trading platform with effect from 31st January 2015.

(viii) Average percentage increase in the salaries of employees other than managerialpersonnel is 3.06%. There was no Managing Director Manager or Whole-Time Director duringthe financial year 2015-16 and 2014-15.

(ix) The Key Parameters for the variable component of remuneration availed by thedirectors:

The Non-Executive Directors are entitled to sitting fees for attending the Meetings ofthe Board and Committees thereof and commission as a percentage of Net Profit upto 1% ofthe net profits of the Company as may be decided by the Board subject to a maximum limitof Rs.3 lakhs.

(x) The ratio of the remuneration of the highest paid director to that of the employeeswho are not directors but receive remuneration in excess of the highest paid directorduring the year:

All the Directors of the Company are Non-Executive and do not draw any fixedremuneration.

(xi) It is hereby affirmed that the remuneration paid during the year ended March 312016 is as per the Remuneration Policy of the Company.

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