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Dhunseri Petrochem Ltd.

BSE: 523736 Sector: Industrials
NSE: DPL ISIN Code: INE477B01010
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VOLUME 2497
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OPEN 81.35
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VOLUME 2497
52-Week high 103.95
52-Week low 70.35
P/E
Mkt Cap.(Rs cr) 288
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

Dhunseri Petrochem Ltd. (DPL) - Director Report

Company director report

Your Directors have pleasure in presenting the 100th Annual Report of your Companytogether with the Audited Statement of Accounts for the year ended March 31 2016.

Scheme of Arrangement/Restructuring

Your Company has undertaken initiatives for restructuring and opportunities forstrategic investment by transferring the Polyethylene Terephthalate ("PETresin") business of your Company in India ("Transferred Business") toDhunseri Petglobal Limited ("DPGL") from April 1 2016 ("AppointedDate") under a Scheme of Arrangement approved by your board at its meeting held onFebruary 29 2016.

Indorama Ventures Public Company Limited ("IVL") one of the world’sleading petrochemical producers has agreed to collaborate with your Company and jointlydevelop the said PET resin business of your Company and take a 50% equity stake in suchbusiness for a total consideration of H418.76 crores through investment by IVL’swholly owned subsidiary namely Indorama Ventures Global Services Limited or any otheraffiliate of IVL (collectively known as "IVGS") as determined by IVL.

Your Company has agreed to acquire from IVGS a 50% equity stake in Micro PolypetPrivate Limited another Company manufacturing PET resin in India with a capacity of216000 tonnes of PET resin at its plant in Panipat District in the State of Haryana fora total consideration of H110.61 crores subject to adjustments. Consequent to suchacquisition IVGS and your Company will each have an equal 50% equity stake in the saidMicro Polypet Private Limited.

In consideration of transfer of the Transferred Business DPGL will issue and allot toyour Company 28475000 Optionally Convertible Debentures of H100/- each("Debentures") in DPGL credited as fully paid up and aggregating toH2847500000/- in exchange of the Transferred Business.

Collaboration with a well-established world leader Indorama Ventures Public CompanyLimited having a global footprint was considered desirable and would help the Company tostrengthen its marketing presence. Hence joining hands with a global leader is expectedto optimise benefits by way of improvement in margins and savings in procurement costs.

The appointed date in respect of the Scheme is April 1 2016.

The aforesaid Scheme of Arrangement has obtained the approval of the Stock Exchanges(both NSE & BSE). Further on an application being made the Hon’ble High Court atCalcutta has ordered for holding the Company’s shareholders meeting (to be convenedby Court appointed Chairman) on June 22 2016 for their consent to the Scheme ofArrangement.

Accordingly the Scheme is subject to approval of the requisite majorities of themembers of DPL and DPGL and sanction by the Hon’ble High Court at Calcutta and otherrelevant authorities.

Financial Results (Rs in crores)
Particulars 2015-2016 2014-2015
Turnover and other income 2607.06 2812.76
Profit before interest and depreciation 161.67 162.56
Interest 69.20 59.46
Profit before depreciation 92.47 103.10
Provision for depreciation 39.06 36.44
Profit for the year 53.42 66.66
Provision for tax
- Current tax 11.40 13.91
- Deferred tax 1.54 15.03
- Adjustment for earlier years (0.04) -
Profit after tax 40.52 37.72
Amount brought forward from previous year 191.97 174.88
Amount available for appropriation 232.49 212.60
Appropriation proposed:
Transfer to General Reserve 4.05 3.77
Dividend proposed on equity shares 14.01 14.01
(Current year @ H4.00/- and previous year @ H4.00/- per share of H10/- each)
Tax on dividend 2.85 2.85
Balance carried to Balance Sheet 211.58 191.97

Note: The figures in the above results pertains to both continuing and discontinuingoperations i.e taking into account both the Petrochem & Treasury operations for aconsistent comparison with the previous year.

Operations

The production of PET resin increased from 349263 MT in 2014-15 to 387317 MT in2015-16 i.e. an increase by 11%.

The domestic sales volume increased from 193983 MT in 2014-15 to 233142 MT in2015-16 i.e. an increase by 20%.

The export sales volume increased from 154422 MT in 2014-15 to 162745 MT i.e. anincrease by 5%.

The margin presently continues to be under pressure in the year under review. Furtherinspite of a higher production the turnover of your Company during the current year hasbeen lower due to lower commodity prices consequent upon lower crude oil prices.

No material changes and commitments have occurred after the close of the financial yeartill the date of this Report which affect the financial position of the Company.

Going forward the FY 2016-17 will be a challenging year in view of the increase in themarket competition and price realisation.

Dividend

Your Directors recommended a dividend @ H4.00/- (Previous Year @ H4.00/-) per equityshare of H10 /- each for the year ended March 31 2016 subject to the approval of theshareholders at the ensuing Annual General Meeting.

Directors and Key Managerial Personnel

Mr. M.Dhanuka has been re-appointed as a whole-time Director designated as ViceChairman & Managing Director of your Company for a period commencing from April 12015 and terminating on March 31 2018.

Mr. B.Chattopadhyay has been re-appointed as a whole-time Director designated asManaging Director & CEO of your Company for a period commencing from April 1 2015 andterminating on March 31 2018.

Mr. R.K.Sharma has been re-appointed as a whole-time Director designated as ExecutiveDirector (Finance) of your Company for a period commencing from April 1 2015 andterminating on March 31 2018.

Ms. S.Mookim has been appointed as an Independent Director of your Company under theCompanies Act 2013 for a term of five years w.e.f. August 7 2015.

Mr. B.Chattopadhyay Director of your Company will retire at the ensuing Annual GeneralMeeting by rotation and being eligible offer himself for re-appointment. Your Directorsrecommends his re-appointment as Director of your Company. The particulars requiredfor the re-appointment as the Managing Director & CEO liable to retire by rotationare contained in the Notice for the Annual General Meeting of the Company.

Mr. Y.F.Lombard has resigned from the Board of your Company w.e.f. August 7 2015 inview of the sale of entire equity stake of Yves Lombard Asset Management AG from theCompany on June 30 2015. Your Board of directors wishes to place on record his sincerestappreciation for the contribution made by him during his tenure.

Mr. V.Goel Chief Financial Officer has resigned from your Company w.e.f.. September15 2015 in view of which Mr. R.K.Sharma Executive Director (Finance) has beenappointed as CFO of your Company and re-designated as Executive Director (Finance) &CFO of your Company as approved by your Board in its meeting held on February 12 2016.

Your board has noted the change in status of Mr. P.K.Khaitan from Independent to NonIndependent Director of your Company w.e.f. August 8 2015 liable to retire by rotationin its meeting held on August 7 2015.

Declaration from Independent Directors on Annual Basis

Your Company has received the declaration of Independence u/s 149(7) of the CompaniesAct 2013 from all the Independent directors of your Company specifying that they meet thecriteria of independence as per Section 149(6) of the Companies Act 2013.

Directors’ Responsibility Statement Pursuant to Section 134(5) of the CompaniesAct 2013

Pursuant to the requirement under Section 134(5) of the Companies Act 2013 withrespect to Directors’ Responsibility Statement it is hereby confirmed:

(a) That in the preparation of the annual accounts the applicable accounting standardshad been followed along with proper explanation relating to material departures if any;

(b) That 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 and loss of the Company for that period;

(c) That the directors had taken proper and sufficient care for the maintenance ofadequate accounting records in accordance with the provisions of this Act for safeguardingthe assets of the Company and for preventing and detecting fraud and other irregularities;

(d) That the directors prepared the annual accounts on a going concern basis;

(e) That the directors had laid down internal financial controls for the Company andthat such internal financial controls are adequate and were operating effectively; and

(f ) That the directors had devised proper systems to ensure compliance with theprovisions of all applicable laws and that such systems were adequate and operatingeffectively.

Subsidiary Company

(a) Egyptian Indian Polyester Company S.A.E (EIPET)

In respect of your Company’s subsidiary Egyptian Indian Polyester Company S.A.E(EIPET) the production in the Plant had been discontinued from May 2015. EIPET hadrepresented before the financing banks on the Company’s business plan and requestedbankers for restructuring of the loan facilities which is under active consideration.

The restructuring offer put forward by Ernst & Young who were appointed by theCompany on the advice of the local lenders is under consideration. On the advice of thebanks the merchant bankers have been appointed for exploring induction of additionalstrong equity partner.

(b) Dhunseri Infrastructure Limited (DIL)

There is no change in the status of development of IT SEZ project which is still onhold.

(c) Dhunseri Petglobal Limited (DPGL)

Pursuant to the Scheme of Arrangement on February 29 2016 9900 existing equityshares of H10/- each of Dhunseri Petglobal Limited (DPGL) were acquired by your Companyresulting in DPGL becoming a direct subsidiary of your Company.

Further as on March 11 2016 DPGL issued and allotted 19990000 new equity sharesof H10/- each to the Company for cash at par. Accordingly your Company is holding 99.99%of the total Issued Subscribed and Paid up Share Capital of DPGL.

Information about the Financial Performance/ Financial Position of the Subsidiaries

A separate statement containing the salient features of Financial Statements of allsubsidiaries of your Company forms part of Consolidated Financial Statements in compliancewith Section 129 and other applicable provisions if any of the Companies Act 2013.Shareholders who wish to have a hard copy of the full reports and accounts of thesubsidiaries will be provided the same on receipt of Annual Report 2015-16written request 17from them. These documents will also be available for inspection by any shareholder atthe registered office of the Company and that of the subsidiaries on any working dayduring business hours except on Saturdays.

As required under the Companies Act 2013 and Securities and Exchange Board of India(Listing Obligations and Disclosure Requirements) Regulations 2015 ("ListingRegulations") the Audited Consolidated Financial Statements of your Company are alsoattached and forms part of the Company’s Annual Report.

Conservation of Energy Technology Absorption Foreign Exchange Earnings/Outgo

The particulars as prescribed under Section 134(3)(m) of the Companies Act 2013 readwith the Companies (Accounts) Rules 2014 are attached as "Annexure-A" to thisReport.

Extract of Annual Return

The details forming part of the extract of the Annual Return in form MGT-9 as requiredunder Section 92(3) of the Companies Act 2013 read with Rule 12(1) of the Companies(Management and Administration) Rules 2014 is attached as "Annexure-B" to thisReport.

Corporate Social Responsibility

A Corporate Social Responsibility Committee was constituted on May 22 2014 with Mr.P.K.Khaitan as the Chairman Mr. C.K.Dhanuka and Dr. B.Sen as the members.

The Corporate Social Responsibility Policy which has been approved by the Board ofDirectors at its meeting held on May 22 2014 is available in the Company’s website(weblink:http://aspetindia.com/wp-content/uploads/2014/10/Corporate-Social-Responsibility-Policy.pdf )

Your Company carried CSR activities mainly through Dhanuka Dhunseri Foundation (DDF).

The Annual Report on CSR activities in accordance with the Companies (Corporate SocialResponsibility Policy) Rules 2014 is attached as "Annexure-C" to this Report.

Details Relating to Remuneration to Directors Key Managerial Personnel and Employees

The information required under Section 197 of the Companies Act 2013 read withCompanies (Appointment and Remuneration of Managerial Personnel) Rules 2014 in respect ofDirectors/Employees of your Company is attached as "Annexure-D" to this Report.

Auditors and Auditors’ Report

Statutory Auditors

M/s Lovelock & Lewes Chartered Accountants (Regn. No. 301056E) are the presentStatutory Auditors of your Company and shall hold office till the end of 101st AnnualGeneral Meeting which was approved in the Annual General Meeting held on August 14 2014.

The appointment for the FY 2016-17 is from the conclusion of this 100th Annual GeneralMeeting till the conclusion of the 101st Annual General Meeting. In view of this yourratification for appointment is being sought in the ensuing Annual General Meeting.

The Auditors’ Report for the FY 2015-16 does not contain any qualificationreservation adverse remark or disclaimer.

Cost Audit

Pursuant to Section 148 and other applicable provisions if any of the Companies Act2013 read with Companies (Audit and Auditors) Rules 2014 the Board of Directors of yourCompany has appointed M/s. Mani & Co. Cost Accountants as the Cost Auditor for theFY 2016-17 for conducting the cost audit of the cost records of the PET resin businessof your Company on the recommendations made by the Audit Committee. The remunerationproposed to be paid to the cost auditor is subject to ratification by the members at theensuing Annual General Meeting.

In view of the proposed Scheme of Arrangement once the PET resin business of yourCompany in India is transferred to DPGL your Company will not fall under the purview ofcost audit since the cost audit is not applicable to the Treasury Operations of yourCompany.

Secretarial Audit

Pursuant to the provisions of Section 204 of the Companies Act 2013 read with theCompanies (Appointment and Remuneration of Managerial Personnel) Rules 2014 Ms. MamtaBinani practising Company Secretary was appointed as the Secretarial Auditor of yourCompany for the FY 2015-16. The Secretarial Audit Report for the FY ended March 31 2016is attached as an "Annexure-E" to this Report.

The Secretarial Audit Report does not contain any qualification reservation adverseremark or disclaimer.

Adequacy of Internal Financial Controls with Reference to Financial Statements

Your Company has in place adequate internal financial controls as required u/s134(v)(e) of the Companies Act 2013. Your Company has adopted policies and procedures forensuring the orderly and efficient conduct of its business including adherence toCompany’s policies the safeguarding of its assets the prevention and detection offrauds and errors the accuracy and completeness of the accounting records and the timelypreparation of reliable financial disclosures. During the year such controls were testedby the Internal and Statutory Auditors with reference to Financial Statements and noreportable material weakness in the design or operation were observed.

Particulars of Loans Guarantees and Investments

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

Risk Management Policy

Your Company has established a Risk Management Policy which was approved by the Boardduring the FY 2014-15.

Your Company has a Risk Management Committee which has been entrusted with theresponsibility to assist the Board in overseeing that all the risks that the organizationfaces such as in the area of Plant and Machinery Operational & Maintenance ProductQuality Control and Customer Complaints Fire Risk Management Customer Credit LegalMarket Insurance Claim Management Raw Material/

Dependency as per its Risk Management Policy have been identified and assessed.

Related Party Transactions

The transactions entered with related parties during the FY 2015-16 were on anarm’s length basis and were in the ordinary course of business and the provisions ofSection 188 of the Companies Act 2013 are not attracted. There have been no materiallysignificant related party transactions with the Company’s promoters directors themanagement their subsidiaries or relatives which may have potential conflict with theinterests of the Company at large. Thus disclosure in form AOC-2 is not required.

The necessary disclosures regarding the transactions are given in the notes toaccounts. The Company has also formulated a policy on dealing with the Related PartyTransactions and necessary approval of the Audit Committee and Board of Directors weretaken wherever required in accordance with the Policy.

Formal Annual Evaluation

The Independent Directors of your Company has reviewed the performance ofnon-independent directors and the Board as a whole along with the performance of thechairperson of your Company in its meeting held on August 7 2015 and February 12 2016.

The Board of Directors in its meeting held on May 24 2016 has evaluated theperformance of the Independent directors based on a list of evaluation criteria forperformance evaluation as well as the effectiveness of the Board was also discussed andevaluated based on the evaluation criteria. Further the performance evaluation of theBoard Committees was also conducted in the same meeting.

Corporate Governance Management Discussion And Analysis Reports

Your Company has taken adequate steps to adhere to all the stipulations laid down inRegulation 34(3) and Schedule V of the Listing Regulations. A report on CorporateGovernance and Management Discussion and Analysis Reports are included as a part of thisReport.

Certificate from the Statutory Auditors of the Company confirming the compliance withthe conditions of Corporate Governance as stipulated under Listing Regulations is attachedto this Report.

The details of Board Meetings held during the FY 2015-16 details of Audit CommitteeStakeholders Relationship Committee Nomination and Remuneration Committee Nomination andRemuneration policy and Vigil Mechanism/Whistle Blower Policy are covered in the CorporateGovernance Report.

Certifications

Your Company holds quality certifications from renowned national and internationalagencies like the USFDA EC Japanese and Canadian Food and Health Bodies and ITRC and isalso ISO 9001:2008 ISO 14001:2004 BS OHSAS 18001:2007 and SA 8000:2008certified. Your Company has initiated the process of obtaining certification as per latestversion of QMS and EMS (i.e ISO 9001:2015 ISO 14001:2015) and ISO 22000:2005 (FoodSafety Management System) in the current financial year.

Environment Health and Safety

Environment health and safety is of great importance to your Company. Your Companycontinuously strives to ensure environment sustainable practices and provide a safe andhealthy workplace for its employees. It aims at proper waste management and disposal toensure healthy and safe environment.

Your Company has initiated a Green Field Project to Recycle Treated Effluent Water anduse this water in the manufacturing process. This project will be completed by July 2016.This action of recycling treated water back into the manufacturing process corroboratesdirection given in Ganga Action Plan of Government of India.

Credit Rating by Credit Analysis & Research Ltd. (CARE)

Your directors inform that CARE has reviewed and revised the credit rating of CARE A-(Single A minus) to long-term bank facilities of yourCompany and CARE A2+(A Two plus) toShort-term Bank facilities of your Company.

At the same time CARE has also reviewed and revised the Credit rating of CARE A2+ (ATwo plus) to Short-term Debt (including Commercial Paper programme) of your Company.

General

Your Directors state that no disclosure or reporting is required in respect of thefollowing items as there were no transactions on these items during the year under review:(a) The Company has not accepted any deposits from the public. There were no outstandingbalances relating to FDs as at the beginning and end of the FY 2015-16.

(b) Issue of equity shares with differential rights as to dividend voting orotherwise.

(c) Issue of sweat equity shares to employees of your Company/ Issue of Employees StockOption Scheme.

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

Employees

Your Company believes that ‘employees’ are the most valuable assets of anyorganization. Your Directors wish to place on record their deep sense of appreciation forthe co-operation dedication and committed services by all the employees of your Companywhich plays a pivotal role in the growth of your Company.

Acknowledgement

The Directors wish to place on record their sincere appreciation for the whole-heartedsupport received from Allahabad Bank Axis Bank Limited Bank of Baroda Canara Bank DBSBank Limited Deutsche Bank AG Federal Bank Limited HDFC Bank Limited ICICI BankLimited IDBI Bank Limited International Finance Corporation (Washington) PunjabNational Bank Standard Chartered Bank State Bank of India The Ratnakar Bank LimitedUCO Bank United Bank of India West Bengal Industrial Development Corporation LimitedHaldia Development Authority Office of the District Magistrate of East Midnapore WestBengal Pollution Control Board West Bengal State Electricity Board Ministry ofEnvironment & Forest Government of West Bengal Government of Egypt Governorate ofSuez General Authority for Investment and Free Zones (GAFI) Egyptian PetrochemicalsHolding Company (ECHEM) Engineering for the Petroleum and Process Industries (ENPPI)Ahli United Bank (Egypt) S.A.E Ahli United Bank (Bahrain) Commercial International Bank(Egypt) S.A.E Egypt Dubai Multi Commodities Centre the customers suppliersshareholders and all others associated with your Company.

For and on Behalf of
The Board of Directors
Place: Kolkata C.K.Dhanuka
Date: May 24 2016 Executive Chairman

Annexure–A to Board’s Report

Information Pursuant to Section 134(3)(m) of the Companies Act 2013 read with theCompanies (Accounts) Rules 2014 and forming part of the Board’s Report for the yearended March 31 2016.

A. Conservation of Energy:

Your Company attaches priority to conservation of energy. The activities of the Companyin this direction are:

I. The steps taken or impact on conservation of energy:

Installation of VFD panel for 1 no. ACC Motor at CPP2: Existing motor in ACC havingdual kw rating 75/15 for smooth operation is controlled manually by DCS operator. Due tomanual operation of ACC motor for controlling vacuum in ACC system vacuum gets disturbedfrequently during low operating load. Due to vacuum problem CPP has tripped earlier. Toavoid ACC fan tripping & smooth control of ACC motor in different speed FD operationin single fan has been proposed by incorporating VFD and energy saving is achieved.

II. The steps taken by the Company for utilising alternate sources of energy:

No steps have been taken for utilizing alternate source of energy.

III. The capital investment on energy conservation equipments:

a. Installation of VFD panel for 1 no. ACC motor at CPP2: H0.13 crore

b. Installation of LED flood light: H0.02 crore

B. Technology Absorption:

a. The Efforts made towards technology absorption:

No technology was imported during the last three financial years.

b. The benefits derived like product improvement cost reduction product developmentor import substitution: N.A

c. In case of imported technology (imported during the last three years reckoned fromthe beginning of the financial year) the following information may be furnished: NIL

d. Expenditure incurred on Research and Development (R&D): Research and Developmentis spread across the business of the Company. Though no specific expenditure was madeunder the head R&D constant development efforts are made to increase efficiency andfor cost reduction.

The R&D is integrated to the production and quality control process of the Companyand as a result are not segregated.

The benefits are consequently synergised and not allocated in terms of financial heads.

C. Foreign exchange earnings and outgo:

1. Earnings in foreign exchange: H975.37 crores

2. Foreign exchange outgo: H805.83 crores

Information on foreign exchange earnings and outgo is contained in Note no. 47 49 and50 to the Accounts.

#CSRStart#

ANNUAL REPORT ON CORPORATE SOCIAL RESPONSIBILITY (CSR) ACTIVITIES

Annexure–C to Board’s Report

1. A brief outline of the Company’s CSR policy including overview of projects or programmes proposed to be undertaken and a reference to the web-link to the CSR policy and projects or programs The Company carries out various CSR activities mainly through Dhanuka Dhunseri Foundation (DDF) for the purpose of Girl’s Hostel project as per its policy. The main objects and purposes of Dhanuka Dhunseri Foundation as per the trust deed are in line with schedule VII of the Companies Act 2013 read with its rules.
CSR Policy is stated herein below:
Weblink:
http://aspetindia.com/wp-content/uploads/2014/10/Corporate-Social-
Responsibility-Policy.pdf
2. Composition of the CSR Committee 1. Mr. P.K.Khaitan Chairman CSR Committee
2. Mr. C.K.Dhanuka
3. Dr. B.Sen
3. Average net profit of the Company for last three financial years H714439798/-
4. Prescribed CSR Expenditure (two percent of the amount as in item 3 above) H14288796/-
5. Details of CSR spent during the financial year: NIL
a. Total amount to be spent for the financial year H14288796/-
b. Amount unspent if any NIL
c. Manner in which the amount spent during the financial year is detailed below: Details given below

Details of Amount Spent on CSR activities during the FY 2015-16

(1) (2) (3) (4) (5) (6) (7) (8)
Sl. No. CSR project or activity Sector in which the project is covered Projects or Programs Amount outlay (budget) project or programs wise (Rs) Amount spent on the projects or programs Cumulative expenditure upto the reporting period Amount spent: Direct or through implementing agency
(1) Local area or other
(2) Specify the State and district where projects or programs was undertaken
1 Construction of Girl’s Hostel Educational/ Hostels for women Diamond Harbour Road in Kolkata West Bengal 14288796 14288796 14288796 Implementing agency-Dhanuka Dhunseri Foundation
TOTAL 14288796 14288796 14288796

Details of implementing agency: "Dhanuka Dhunseri Foundation"

The Company routes its CSR activities mainly through Dhanuka Dhunseri Foundation (DDF).

DDF was established in 1972 and focused on four major philanthropic areas: Promotededucation by building schools and colleges and provided assistance for their maintenance.

Empowered the girl child through education and other initiatives.

Improved healthcare by distributing free medicines setting up dispensaries andproviding assistance to charitable hospitals.

Focused on community development through donations.

During the FY 2015-16 the Foundation undertook initiatives to provide primaryeducation to 268 children graduation courses to 489 girls and medical treatment to 20521patients.

DDF has built up a new hostel in Kolkata to accommodate 400 girls with a built up areaof 70000 sq. ft. Building plans were sanctioned by Kolkata Municipal Corporation.

6. In case the Company has failed to spend the two per cent of the average net profitof the last three financial years or any part thereof the Company shall provide thereasons for not spending the amount in its Board Report: Not Applicable

Responsibility Statement

The Responsibility Statement of the Corporate Social Responsibility Committee of theBoard of Directors of the Company is reproduced below:

‘The implementation and monitoring of Corporate Social Responsibility (CSR)Policy is in compliance with CSR objectives.’

B.Chattopadhyay P. K. Khaitan
(Managing Director & CEO) (Chairman CSR Committee)
May 24 2016

#CSREnd#

#SARStart#

SECRETARIAL AUDIT REPORT

Annexure–E to Board’s Report

Form No. MR-3

FOR THE FINANCIAL YEAR ENDED 31.03.2016

[Pursuant to Section 204(1) of the Companies Act 2013 and rule no.9 of the

Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014]

To

The Members

Dhunseri Petrochem Limited Dhunseri House 4A Woodburn Park Kolkata 700020

I have conducted the secretarial audit of the compliance of applicable statutoryprovisions and the adherence to good corporate practices by Dhunseri Petrochem Limited(hereinafter called the Company) bearing CIN: L15492WB1916PLC002697. Secretarial Auditwas conducted in a manner that provided me a reasonable basis for evaluating the corporateconducts/statutory compliances and expressing my opinion thereon.

Based on my verification of Dhunseri Petrochem Limited’s books papers minutebooks forms and returns filed and other records maintained by the Company and also theinformation provided by the Company its officers agents and authorized representativesduring the conduct of secretarial audit I hereby report that in my opinion the Companyhas during the audit period covering the financial year ended on 31 March 2016 compliedwith the statutory provisions listed hereunder and also that the Company has properBoard-processes and compliance-mechanism in place to the extent in the manner and subjectto the reporting made hereinafter:

I have examined the books papers minute books forms and returns filed and otherrecords maintained by the Company for the financial year ended on 31 March 2016 to theextent applicable 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

Rules made 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’) to the extent applicable:

(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;

(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 the Companies Act and dealing with client;

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

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

(i) The Securities and Exchange Board of India (Listing Obligations And DisclosureRequirements) Regulations 2015

(vi) The other laws applicable specifically to the Company namely: (a) The PetroleumAct 1934 (b) The Static & Mobile Pressure Vessels (Unfired) Rules 1981 (c) TheAtomic Energy Act 1962

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 the Bombay Stock ExchangeLimited and the National Stock Exchange of India Limited.

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

I further report that:

The Board of Directors of the Company is duly constituted with proper balance ofExecutive Directors Non-Executive Directors and Independent Directors. The changes in thecomposition of the Board of Directors that took place during the period under review werecarried out in compliance 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 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 laws rules regulations and guidelines.

I further report that during the audit period:

(i) The Board of Directors of the Company at its meeting held on 29th February 2016approved a Scheme of Arrangement (the Scheme) for reconstruction by transfer of"polyethylene terephthalate ("PET resin") business of the Company inIndia" ("Transferred Business") to Dhunseri Petglobal Limited"DPGL" with effect from the appointed date i.e. 1st April 2016. The Scheme issubject to requisite approvals including the approval by the members of the Company at aduly convened general meeting and sanction of the Hon’ble High Court at Calcutta. TheBoard of Directors also approved the induction of Indorama Ventures Global ServicesLimited or such other affiliate (collectively known as "IVGS") of IndoramaVentures Public Company Limited (IVL) as a joint venture partner in the transferredbusiness of the Company through DPGL with a 50% stake therein for a total consideration ofRs. 418.76 crores. Further acquisition of 50% equity stake in Micro Polypet PrivateLimited from IVGS another Company manufacturing PET resin in India with a capacity of216000 tonnes of PET resin at its plant in Panipat District in the State of Haryana fora total consideration of Rs. 110.61 crores subject to adjustments has also been approved.Consequent to such acquisition IVGS and the Company will each have an equal 50% equitystake in the said Micro Polypet Private Limited.

In consideration of transfer of the Transferred Business DPGL will issue and allot tothe Company 28475000 Optionally Convertible Debentures of Rs. 100/- each("Debentures") in DPGL credited as fully paid up.

Place: Kolkata
Date: 23.05.2016 Mamta Binani
Practising Company Secretary
FCS No.: 4525
CP No.: 2598

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