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Deepak Nitrite Ltd.

BSE: 506401 Sector: Industrials
BSE LIVE 15:47 | 23 Jun 163.10 0.30






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OPEN 163.65
VOLUME 40453
52-Week high 185.00
52-Week low 75.80
P/E 37.84
Mkt Cap.(Rs cr) 2,132
Buy Price 163.10
Buy Qty 50.00
Sell Price 0.00
Sell Qty 0.00
OPEN 163.65
CLOSE 162.80
VOLUME 40453
52-Week high 185.00
52-Week low 75.80
P/E 37.84
Mkt Cap.(Rs cr) 2,132
Buy Price 163.10
Buy Qty 50.00
Sell Price 0.00
Sell Qty 0.00

Deepak Nitrite Ltd. (DEEPAKNTR) - Director Report

Company director report

Dear Shareholders

Your Directors have pleasure in presenting the Forty Fifth Annual Report together withthe Audited Financial Statements for the year ended March 31 2016.


(Rs in Crore)

2015-16 2014-15 2015-16 2014-15
Sales & Other Income 1337.27 1329.22 1374.52 1329.23
Gross Profit (before interest depreciation and tax) 168.22 140.17 166.32 139.72
Interest 37.45 36.41 37.65 36.41
Depreciation 39.45 36.02 39.54 36.02
Provision for Current Tax 19.85 13.45 19.90 13.45
Provision for Deferred Tax 10.32 12.07 10.32 12.07
MAT Credit Entitlement Recognised (3.99) (11.22) (3.99) (11.22)
Loss for the year from Associates - - 0.17 0.09
Profit After Tax 65.14 53.44 62.73 52.90
Surplus in Profit & Loss Account Brought Forward 188.28 163.87 187.67 163.80
Transferred to Share Capital towards issuing Bonus Equity Shares - (10.45) - (10.45)
Depreciation Adjustment on Account of Schedule II net of Deferred
- (1.00) - (1.00)
Tax Asset
Amount available for appropriation 253.42 205.86 250.40 205.25
Dividend 13.95 10.45 13.95 10.45
Corporate Dividend Tax 2.84 2.13 2.84 2.13
General Reserve 5.00 5.00 5.00 5.00
Balance carried to the Balance Sheet 231.63 188.28 228.61 187.67


The Financial Year 2015-16 ("FY 2015-16") was an extremely challenging yearfor the chemical industry. The sharp decline in the prices of global crude oil and relatedpetrochemical intermediates as well as continuous weakness in key emerging markets had anadverse impact on the chemical industry. In this backdrop your Company delivered a strongperformance. It has reported a steady growth in profitability during the year whilerecording progress on several strategic initiatives including expansion plans. On astandalone basis your Company registered a marginal growth of 0.6% in revenues whichstood at Rs 1335.73 crore in FY 2015-16 compared to Rs 1327.16 crore in FY 2014-15. Thiswas driven by healthy volume growth of 9%. Due to the decline in the prices of crude oiland related petrochemical intermediates there was a commensurate reduction inrealisations of some products. As a result the strong growth in volumes has been offsetby lower realisation leading to moderate growth in absolute revenues though operatingmargins improved. Initiatives taken by your Company to improve operating efficiencyde-bottlenecking of production lines improvement in working capital and control ofoperating and finance cost helped to register 35% growth in Profit Before Tax as comparedto the previous year.

The commendable growth in volumes was backed by healthy trajectory in the Fine &Speciality Chemicals (FSC) segment which includes agrochem intermediates as well as pharmaand personal care intermediates. The shift towards higher contribution products in theoverall product mix and traction from newly introduced products has been instrumental inthe strong performance of this segment. Within the Fluorescent Whitening Agent (FWA)segment the performance of Optical

Brightening Agents (OBA) improved due to volume growth on account of better acceptanceof your Company’s products doubling the customer base and expanding the geographiesin both domestic and export markets. Your Company is able to acquire orders from large MNCcustomer in paper and detergent industry. The revenue performance of the Bulk Chemicals& Commodities (BCC) segment reflects the situation of lower crude oil prices during FY2015-16. The fall in crude oil prices and related petrochemical intermediates had acascading effect on the top line of this segment. Your Company was however able tomaintain the spread.

Export markets of Europe USA and China supported the momentum with procurement of highvolumes on the back of high visibility. Export markets contributed 40% to yourCompany’s topline while the contribution from domestic market stood at 60%. Exportrevenue was marginally higher by 2% to Rs 525.75 crore. Your Company launched a specialgrade of Sodium Nitrite for exports market in FY 2015-16 and the response so far has beenpromising.

Profit before Tax for FY 2015-16 came in at Rs 91.33 crore compared to Rs 67.74 crorein FY 2014-15. Your Company was able to successfully maintain the spread in most of itsproducts in the face of reduced realisations especially for the products linked to crudeoil and petrochemical intermediates. Profit After Tax for the year was higher by 21.9% to

Rs 65.14 crore compared to Rs 53.44 crore in FY 2014-15. Earnings Per Share in FY2015-16 was Rs 6.07 on enhance capital compared to Rs 5.11 per Share in FY 2014-15. Theoutlook remains favourable. Your Company is confident of delivering value-led growth inall the three SBUs of Bulk Chemicals & Commodities Fine & Speciality Chemicalsand Fluorescent Whitening Agents. Significant efforts have been undertaken to customisethe product portfolio and drive customer acceptance which are expected to result in highervolumes of OBA products. This will lead to an increase in the utilisation rate at the FWAfacility in Dahej. Your Company’s established business segments will continue to seeenhanced momentum given the relative stability in the global prices of crude oil improvedsentiment in both domestic and international markets the foray into complementarysegments of pharma and personal care intermediates and an improved outlook for agrochemproducts in light of expectations of a normal monsoon. In addition further improvementsin operational efficiency along with cost reduction initiatives will help improve theoverall profitability in the near future. A review of the performance during the year isgiven under the section Management Discussion and Analysis Report which forms part ofthis report.


During FY 2015-16 your Company offered Equity Shares to the Qualified InstitutionalBuyers ("QIBs") on private placement basis through Qualified InstitutionsPlacement ("QIP") in accordance with Chapter VIII of SEBI (Issue of Capital andDisclosure Requirements) Regulations 2009. Accordingly 11750000 Equity Shares of Rs2/- each were allotted to QIBs on January 6 2016 at an issue price of Rs 70.90 per EquityShare (including premium of Rs 68.90 per Equity Share). The QIP issue proceeds aggregatingto Rs 83.31 crore will be utilized in accordance with the objects stated in the offerdocument. Pending utilization the unutilised amount of issue proceeds have been investedin Liquid Mutual Funds.

Post issuance of Equity Shares under QIP the issued subscribed and paid-up capital ofyour Company has increased from Rs 20.91 crore in FY 2014-15 to Rs 23.26 crore in FY2015-16.


Based on your Company’s performance the Board of Directors has recommendedpayment of dividend of Rs 1.20 (Rupee One and Paisa Twenty only) per Equity Share for theyear ended March 31 2016 on 116288190 Equity Shares of Rs 2/- each as against Rs 1/-(Rupee One only) per Equity Share (after adjustment for sub-division and bonus) in theprevious year. The total sum of the dividend if approved including Corporate DividendTax will be Rs 16.79 crore (previous year Rs 12.58 crore).


Your Company proposes to transfer Rs 5 crore to the General Reserves out of the amountavailable for appropriation and an amount of Rs 231.63 crore is proposed to be retained inthe Statement of Profit and Loss.


Last year your Company announced setting up of a Greenfield project to manufacturePhenol and Acetone at Dahej in the State of Gujarat through its wholly owned subsidiaryDeepak Phenolics Limited. Till March 2016 total investment made by your Company in DeepakPhenolics Limited was Rs 61.84 crore. Kellogg Brown & Root International Inc. hasbeen selected for technology and engineering services while M/s. ThyssenKrupp IndustrialSolutions (India) Pvt. Ltd. has been selected as the Engineering Procurement andConstruction Management (EPCM) contractor. Basic engineering has been completed andsignificant progress has been made on detailed engineering. The Project management team isestablished and the Project is being implemented as per schedule. On Project procurementside orders for majority of long lead items have been placed or are in the process ofnegotiation. Deepak Phenolics Limited has started seeding phenol market with an objectiveto develop relationships with all major clients in India. The demand for phenol continuesto be buoyant in India and is expected to increase steadily based on consumption trends ofend-user industries. Phenol imports remain strong and the country’s current demandwill absorb the entire capacity that your Company plans to install thereby substitutingimports. Further the abundant availability of phenol in the local market is expected tospur pent-up demand which is expected to further expand the market.


In order to monetise the value of your Company’s unutilised assets and improveshareholders value by freeing up capital to facilitate growth your Directors had approvedthe sale of freehold land and surrender / assignment of leasehold rights in respect oflands situated at Sinhagad Road Pune Maharashtra. Your Directors are pleased to informthat during April 2016 the said transactions were concluded for a total consideration ofRs 79.26 crore. The profit on sale of land and surrender / assignment of leasehold rightswill be recognized in the first quarter of FY 2016-17.


Your Company adheres to strict guidelines to efficiently manage its working capitallevel and maintain its debt at a reasonable level. The long term debt of your Companydecreased during the year due to repayment of external commercial borrowing and term loanborrowed in earlier years. Interest cost is expected to moderate further as the FWAbusiness gains momentum with increase in volumes. Depreciation increased due tocapitalisation of the Hydrogenation facility. Your Company’s improved financials havehelped improvement in the financial parameters. In addition there is active management offoreign exchange exposures to minimize risk to your Company arising out of imports andrepayment of external commercial borrowings. Your Company has been able to effectivelymanage its cash flows due to prudent management. There has been a continued focus toreduce the overall interest costs. Healthy cash flow repayment of term loan and effectivemanagement of working capital led to decrease in overall debt level to Rs 495 crore. TheDebt to Equity ratio is now at a better and comfortable level at 1.04 times as on March31 2016.

ICRA Limited re-affirmed the long-term rating of [ICRA] A+ and Short Term rating of[ICRA] A1+ assigned to the fund based limits and non-fund based limits of your Company.ICRA also re-affirmed the short-term rating of [ICRA] A1+ assigned to the Commercial Paperprogramme.


The Board of Directors at their meeting held on May 9 2016 appointed Shri Maulik D.Mehta as an Additional Director and subject to the approval of shareholders also approvedthe appointment of Shri Maulik D. Mehta as a Whole-Time Director of your Company w.e.f.May 9 2016. As per provisions of Companies Act 2013 Shri Maulik D. Mehta holds officeas an Additional Director upto the ensuing Annual General Meeting. Your Company hasreceived a notice from a Member proposing the candidature of Shri Maulik D. Mehta forappointment as a Director along with requisite fees. The respective resolutions for theappointment of Shri Maulik D. Mehta as a Director and Whole-Time Director for approval bythe Members are given in the Notice for the Annual General Meeting.

As required under the provisions of Section 152 of the Companies Act 2013 Shri C. K.Mehta a Director liable to retire by rotation will be retiring at the ensuing AnnualGeneral Meeting. Although he is eligible for re-appointment at the ensuing Annual GeneralMeeting he has not offered himself for the re-appointment due to his advancing age. TheBoard of Directors while extending their gratitude for the valuable contribution of ShriC. K. Mehta as the Chairman of your Company have decided not to fill the vacancy thatwill be caused by the retirement of Shri C. K. Mehta not offering himself forre-appointment. However in order to continue to have the guidance and benefit from thewealth of experience of Shri C. K. Mehta the Board of Directors has requested ShriC. K Mehta to continue as the Chairman - Emeritus and Shri C. K. Mehta has assented to therequest.

Shri C. K. Mehta is the founder of your Company and has been the Chairman sinceOctober 1998. He is an eminent personality with proven business acumen of successfullybuilding formidable corporate conglomerates in his illustrious career spanning over sixdecades. The able leadership of Shri C. K. Mehta his futuristic vision dedicationand commitment for the service of the society has taken your Company to such greaterheights and earned its name not only at the national level but has achieved internationalacclaim too. Shri C. K. Mehta has also been at the forefront for promoting severalphilanthropic activities especially for education and health care. The Board of Directorsof your Company places on record their sincere appreciation for the relentless guidanceand support of Shri C. K. Mehta and his contribution towards growth of your Company.


Shri Umesh Asaikar Executive Director Shri Sanjay Upadhyay Chief Financial Officerand Shri Arvind Bajpai Company Secretary are the Key Managerial Personnel of yourCompany. There has been no change in Key Managerial Personnel of your Company during theFY 2015-16.


During FY 2015-16 five (5) Board Meetings were held. The details of the Board Meetingswith regard to their dates and attendance of each of the Directors thereat have been setout in the Report on Corporate Governance which forms part of this Report.


The Independent Directors of your Company have furnished the declaration that they meetthe criteria of independence as provided in Section 149 (6) of the Companies Act 2013.


Pursuant to the provisions of Companies Act 2013 and SEBI (Listing Obligations andDisclosure Requirements) Regulations 2015 (‘Listing Regulations’) the Board ofDirectors have carried out annual evaluation of its own performance Board Committees andindividual Directors.

The performance of the Board / Committee was evaluated after seeking inputs from allthe Directors / Committee members on the basis of the defined criteria includingcomposition and structure effectiveness of meetings information and functioning.

Performance evaluation of Independent Directors was done by the entire board excludingthe Independent Director being evaluated on the basis of following evaluation criteria:

Relevant Knowledge Expertise and Experience.

Devotion of time and attention to the Company’s long term strategic issues.

Addressing the most relevant issues for the Company.

Discussing and endorsing the Company’s strategy.

Professional Conduct Ethics and Integrity.

Understanding of Duties Roles and Function as

Independent Director.

Your Directors have expressed their satisfaction for the evaluation process.


The Audit Committee consists of all Independent Directors with Shri Sudhin Choksey asthe Chairman of the Committee. The other members of the Audit Committee are ShriSudhir Mankad and Shri S. K. Anand. The terms of reference of the Audit Committee detailsof meetings held during the year and attendance of members are set out in the Report onCorporate Governance which forms part of this Report.


The observations made in the Auditor’s Report of M/s. B. K. Khare &Co. Chartered Accountants read together with relevant notes thereon areself-explanatory and hence do not call for any comments. There is no qualificationreservation adverse remark or disclaimer by the Statutory Auditors in their Report.


The Secretarial Audit Report of M/s. KANJ & Associates Company Secretaries forthe year ended March 31 2016 do not contain any qualification reservation adverseremark or disclaimer by the Secretarial Auditors. The Secretarial Audit Report is annexedas Annexure - A which forms part of this Report.


(A) Statutory Auditors:

In compliance with the Companies (Audit and Auditors) Rules 2014 the Members at the43rd Annual General Meeting of the Company held on August 8 2014 appointedM/s. B. K. Khare & Co. Chartered Accountants Mumbai as Statutory Auditors ofthe Company to hold the office until the conclusion of 46th Annual GeneralMeeting of the Company. As required under the provisions of Section 139 of the CompaniesAct 2013 their appointment as Statutory Auditors is subject to ratification by theMembers at every Annual General Meeting. Accordingly Members are requested to ratifytheir said appointment at the ensuing Annual General Meeting of the Company.

(B) Secretarial Auditors:

Pursuant to the provisions of Section 204 of the Companies Act 2013 read with theCompanies (Appointment and Remuneration of Managerial Personnel) Rules 2014 theSecretarial Audit for the year ended March 31 2016 was carried out by the SecretarialAuditor M/s. KANJ & Associates Company Secretaries Pune. The Board of Directors ofyour Company has appointed M/s. KANJ & Associates Company Secretaries Pune to carryout Secretarial Audit of the Company for FY 2016-17.

(C) Cost Auditors:

The Board of Directors of your Company has appointed M/s. B. M. Sharma &Company Cost Accountants to conduct audit of your Company’s cost records for FY2016-17 at a remuneration of Rs 650000/- (Rupees Six Lacs Fifty Thousands only) plus outof pocket expenses. As required under the provisions of Companies Act 2013 theremuneration of Cost Auditors as approved by the Board of Directors is subject toratification by the shareholders at the ensuing Annual General Meeting. The Cost AuditReport will be filed within the prescribed period of 180 days from the close of theFinancial Year.

(D) Internal Auditors:

The Board of Directors has appointed M/s. Deloitte Haskins & Sells as InternalAuditors of your Company to conduct the Internal Audit for FY 2016-17.


The Company has changed its Registrar & Share Transfer Agent from M/s. ShareproServices (I) Pvt. Ltd. to M/s. Link Intime India Pvt. Ltd.


During FY 2015-16 your Company has not accepted or renewed any Fixed Deposits.

As on March 31 2016 44 warrants aggregating to Rs 923437 issued by your Company tothe respective deposit holders towards compulsory repayment of deposits and interestthereon in accordance with the provisions of Section 74 of the Companies Act 2013remained uncleared. There has been no default in repayment of deposits or interest thereonduring the year and there are no deposits outstanding as on March 31 2016.


In accordance with the provisions of Section 177 of the Companies Act 2013 andrequirements of Listing Regulations your Company has a vigil mechanism which has beenincorporated in the Whistle Blower Policy for Directors and employees to report genuineconcerns. The Whistle Blower Policy also provides for adequate safeguards againstvictimization of persons who use vigil mechanism and for direct access to the Chairman ofthe Audit Committee in appropriate or exceptional cases. The Whistle Blower Policy isuploaded on the website of your Company.


All related party transactions that were entered into during the year ended March 312016 were at arm’s length basis and in the ordinary course of business. There were nomaterially significant related party transactions entered into by your Company during theyear and hence no information is required to be provided as prescribed under Section134(3)(h) of the Companies Act 2013 read with Rule 8(2) of the Companies (Accounts)Rules 2014.


As required under Rule 8(1) of the Companies (Accounts) Rules 2014 the Board’sReport has been prepared on a Standalone basis. Your Company has following subsidiariesand associate:

(a) Deepak Phenolics Limited

Your Company’s Phenol and Acetone Project is being undertaken through DeepakPhenolics Limited a wholly owned subsidiary of your Company.

(b) Deepak Nitrite Corporation Inc. (USA)

A wholly owned subsidiary company is formed in the United States of America to cater tothe marketing requirements of your Company in the North and South American region.

(c) Deepak Gulf LLC

Deepak Gulf LLC is an associate company where your Company has 49% shareholding.Pursuant to the provisions of Section 129(3) of the Companies Act 2013 read with Rule8(1) of the Companies (Accounts) Rules 2014 a statement containing salient features ofthe financial statements of your Company’s subsidiaries in Form AOC-1 is attached tothe Financial Statements.


The particulars of Loans granted and Investments made by your Company have beendisclosed in the Financial Statements.


There have been no material changes and commitments affecting the financial position ofyour Company since the close of Financial Year i.e. since March 31 2016 except asdisclosed in this Report. Further it is hereby confirmed that there has been no change inthe nature of business of your Company.


Pursuant to the requirement of Section 134(5) of the Companies Act 2013 ("theAct") the Board of Directors of your Company to the best of their knowledge andability confirm that:

(a) in the preparation of the Annual Accounts the applicable accounting standards havebeen followed and there are no material departures;

(b) they have selected such accounting policies and applied them consistently and madejudgments and estimates that are reasonable and prudent so as to give a true and fair viewof the state of affairs of the Company at the end of the Financial Year and of the profitof the Company for that period;

(c) they 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) they have prepared the Annual Accounts on a going concern basis;

(e) they have laid down internal financial controls to be followed by the Company andthat such internal financial controls are adequate and are operating effectively;

(f) they have devised proper systems to ensure compliance with the provisions of allapplicable laws and that such systems were adequate and operating effectively.


As required under Listing Regulations a Report on Corporate Governance with aCertificate from the Statutory Auditors of your Company confirming compliance of theconditions of Corporate Governance and a Management Discussion and Analysis are attachedwhich form part of this Report.


The Corporate Social Responsibility (CSR) activities are being undertaken by yourCompany through Deepak Foundation a charitable trust of the group as implementing agencyfor CSR activities of your Company. Through Deepak Foundation your Company supports indevelopment of underprivileged communities through various social interventions. The CSRactivities during FY 2015-16 were focused on women empowerment through skills building inhealth and livelihood promotion primary healthcare services early childhood care anddevelopment and education. The interventions were spread around the plants of yourCompany located at Dahej & Nandesari in Gujarat Roha & Taloja in Maharashtra andHyderabad in Telangana.

During FY 2015-16 your Company has spent Rs 157.60 Lacs (including the unspent amountof Rs 15.72 Lacs in the previous year) on CSR activities against the requirement of Rs122 Lacs being 2% of average of the net profits for the preceding three years.

The major CSR activities carried during FY 2015-16 were:

Comprehensive Emergency Obstetric and Newborn Care (CEmONC)

It was constructed by Deepak Foundation within the premise of the government’sCommunity Health Centre (CHC) Jabugam Pavi Jetpur of Chhota Udepur district in February2006 under the large scale intervention project of Safe Motherhood and Child Survival(SMCS). This is the only First Referral Unit (FRU) at the CHC in the area serving a tribalpopulation of 900000 round the clock with availability of skilled manpower. CEmONCoperates under the specific objectives of strengthening the health delivery system formaternal and child care; providing immediate care to the emergency obstetric casesreferred from grassroots level and public health facilities; providing timely referral ofcomplicated cases to tertiary level hospitals

Mobile Health Unit (MHU)

MHU was initiated as a means to ensure delivery of general health care services to thepoorest and vulnerable segments of population in rural and tribal areas. The MHU operatewith the overall goal of providing access to primary healthcare with the objectives fordeploying primary healthcare and speciality services at the doorstep; facilitate basisdiagnostic care services; community health education for poor and vulnerable segments ofpopulation.

Integrated Child Development Services (ICDS)

Your Company through Deepak Foundation has been supporting and supervising activitiesof Anganwadi Centers under ICDS scheme of the Department of Women and Child DevelopmentGovernment of Gujarat. This scheme offers a package of services comprising ofsupplementary nutrition immunisation health checkups referral services non-formalpreschool education and nutrition and health education. Deepak Foundation has enteredinto partnership with Department of Women and Child Development Government of Gujarat tomanage and monitor 65 Anganwadi centres in Nandesari of Vadodara district Gujarat. TheFoundation undertakes various value addition programs with the support of your Companysuch as tracking and facilitation of severely undernourished children promotingadolescent health maintaining hygiene and sanitation improving health and nutritionawareness. It also provides free treatment to children identified with severe malnutritionas well as chronic disorders.

Deepak Occupational Health Centre (DOHC)

DOHC was initiated to provide comprehensive occupational health services to industries.The centre is equipped with trained medical and paramedical staff along with well-equippedlaboratory and pharmacy facilities. DOHC renders services that include outpatient andinpatient care for industrial workers and their families; injury care; general OPDs andspecialized OPDs for ophthalmic dental and skin diseases; diagnosis and treatment ofoccupational health problems; periodic and annual medical check-ups; industrial trainingon first aid Personal Protective Equipment (PPE) Health and Safety Chemical Hazards;promotion of occupational health programs; health counselling.

The brief outline of the CSR policy of your Company composition of the Committee andreport on initiatives undertaken by your Company on CSR activities during the year are setout in Annexure-B of this Report in the format prescribed in the Companies (CorporateSocial Responsibility Policy) Rules 2014.


In compliance with the provisions of Section 178 of the Companies Act 2013 and theListing Regulations the Remuneration Policy of your Company is set out as Annexure-C.


The extract of Annual Return as required under Section 134(3)(a) of theCompanies Act 2013 read with Rule 12(1) of the Companies (Management and Administration)Rules 2014 is annexed as Annexure-D.


The information required under Section 197 of the Companies Act 2013 read with Rule5(1) and 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel)Rules 2014 is annexed as Annexure-E.


Pursuant to the requirement of Section 134(3)(m) of the Companies Act 2013 read withRule 8(3) of the Companies

(Accounts) Rules 2014 the relevant data pertaining to the conservation of energytechnology absorption and foreign exchange earnings and outgo are provided in Annexure-Fof this report.


The state of Company’s affairs is given under the heading ‘PerformanceReview’ and various other headings in this Report and in the Management Discussionand Analysis which forms part of this Report.


Your Company has a proper and adequate internal control system which includes internalfinancial controls to ensure compliance with various policies practices and statutesand that all assets are safeguarded and protected against loss from unauthorised use ordisposition and that those transactions are authorised recorded and reported correctly.

The internal control is exercised through documented policies guidelines andprocedures. The Internal Auditor’s team carries out extensive audits throughout theyear across all locations and across all functional areas. The audit observations andcorrective action taken thereon are periodically reviewed by the Audit Committee to ensureeffectiveness of the internal control system. The internal control is designed to ensurethat the financial and other records are reliable for preparing financial statements andother data and for maintaining accountability of persons.


Risk Management is a very important part of business in today’s economicenvironment. The main aim of risk management is to identify monitor and takeprecautionary measures in respect of the events that may pose risks for the business.

Your Company has in place a Risk Management Framework adopted by the Board of Directorsof your Company. The Framework provides an integrated approach to identify assessmonitor and mitigate risks in various aspects of your Company’s business. Risksidentified by the functions are systematically addressed through mitigating actions on acontinuing basis. Your Company has a duly constituted Risk Management Committee whichoversees the risk assessment and mitigation process regularly. The composition of RiskManagement Committee is disclosed in the Report on Corporate Governance which forms partof this Report.


Your Company has a Research and Development facility at Nandesari Gujarat with pilotplants at Roha Maharashtra and Nandesari Gujarat. This facility has been recognised bythe Department of Science and Technology.

Your Company has spruced up its Research & Development facility for innovation andto collaborate with its customers to understand consumer preference and develop newproduct applications to cater to the needs of its customers. Your Company focuses itsResearch and Development efforts to develop cost effective cleaner technologies to improveprofitability. Through its Research and Development capabilities your Company has beensuccessful in developing and enhancing its portfolio of customised products. Your Companybelieves that its ability to develop new product applications and ability to customiseproducts to suit customer needs have helped in expanding its customer base therebyenabling it to establish leadership position.


Employee’s Health Safety and Environmental protection are core business valueswithin your Company. It is your Company’s objective to protect its employeesproperty and environment in which it operates. It strives towards excellence and align itsgrowth path to make tomorrow safer cleaner greener and more sustainable. Your Company iscommitted to maintain its operations and workplace free from incidents and significantrisk to the health and safety of its stake holders through improved engineering practicesstrong channels of communication safety awareness robust checking systems and soundtraining practices. Your Company regularly monitors the occupational health of employeesworking in designated hazardous areas with respect to exposure to hazardous chemicals andprocesses. Your Company has well-equipped Occupational Health Centers at all itsmanufacturing locations to monitor health of employees on regular basis. It also monitorsemployees for any indications of lifestyle or work-style related diseases and providescounselling. All the manufacturing locations of your Company have a well definedEnvironment Management System. It follows well-mapped procedure in order to selectprojects assess impacts on society and environment and mitigate any adverse impacts. Ithas instituted a compliance management system which mandates undertaking an adverse impactanalysis and risk analysis study and implementation of actions based on such analysis.

Environmental performance indicators of your Company are defined and monitored by thetop management regularly. Special emphasis is given on resource conservation and processinnovations to convert waste streams into saleable products and minimise use of water inprocessing.

Your Company proactively fulfils the environmental requirements of customers bydelivering products that match international standards. Your Company continues to focus onproper treatment of effluents and reduction of pollution as a part of its Green andecofriendly initiatives. This has made your Company a safe and healthy place to work.

Your Company is signatory to the ‘Responsible Care’ initiatives andResponsible care logo holding organisation.

Quality Environment & Occupational Health & Safety Management System at allmanufacturing plants and corporate office have been assessed registered and certified asper ISO 9001 ISO 14001 & OHSAS 18001.

All raw materials and products within supply chain framework of your Company aretransported in a secure manner for the safety of its customers carriers suppliersdistributors and contractors. Your Company takes utmost care during transportation andensures that it complies with all the checks and measures for a safe and secure delivery.


Your Company was conferred with supplier excellence award in the "OutstandingPerformance" category for the year 2015 from a leading global agrochemical majorBayer CropScience. This award recognises the quality and excellence of your Company’sproducts in the Fine & Speciality Chemicals offering.


Your Company’s HR philosophy is to establish and build a high performingorganisation where each individual is motivated to perform to the fullest capacity; tocontribute to developing and achieving individual excellence and departmental objectivesand continuously improve performance to realize the full potential of its personnel.During the year under review your Company’s industrial relations at allmanufacturing and other locations have remained amicable. All these efforts areconcentrated on attracting and retaining the best talent in the industry as people are atthe center of your Company’s growth.


All the insurable interests of your Company including inventories buildings plant andmachinery are adequately insured against risk of fire and other risks.


Your Company has in place a Anti-Discrimination and Harassment policy in line with therequirements of the Sexual Harassment of Women at Workplace (Prevention Prohibition andRedressal) Act 2013. The Internal Complaint Committee has been set up to redresscomplaints received regarding sexual harassment at workplace. All employees (permanentcontractual temporary trainees) are covered under the policy. There were no complaintreceived from any employee during FY 2015-16 and hence no complaint is outstanding as onMarch 31 2016 for redressal.


Your Directors take this opportunity to express their gratitude to all investorsclients vendors bankers regulatory and government authorities stock exchanges andbusiness associates for their co-operation encouragement and continued support extendedto your Company. Your Directors also wish to place on record their appreciation for thehard work and efforts put in by all the employees and their contribution towards growth ofyour Company.

For and on behalf of the Board
Place: Mumbai C.K. MEHTA
Date: May 9 2016 Chairman