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Kanoria Chemicals & Industries Ltd.

BSE: 506525 Sector: Industrials
NSE: KANORICHEM ISIN Code: INE138C01024
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VOLUME 19581
52-Week high 99.80
52-Week low 62.80
P/E 10.54
Mkt Cap.(Rs cr) 330
Buy Price 75.75
Buy Qty 100.00
Sell Price 0.00
Sell Qty 0.00
OPEN 73.95
CLOSE 73.50
VOLUME 19581
52-Week high 99.80
52-Week low 62.80
P/E 10.54
Mkt Cap.(Rs cr) 330
Buy Price 75.75
Buy Qty 100.00
Sell Price 0.00
Sell Qty 0.00

Kanoria Chemicals & Industries Ltd. (KANORICHEM) - Director Report

Company director report

TO THE SHAREHOLDERS

Your Directors have pleasure in presenting the fifty sixth Annual Report along withthe Audited Accounts of the Company for the financial year ended 31st March 2016.

The detailed information on the performance of your Company appears in the AnnualReport. A discussion on the operations of the Company is given in the sections titled'Year in Review' and 'New Frontiers'. Some of the statutory disclosures however appearin this Report. Read along with the other sections this would provide a comprehensiveoverview of the Company's performance and plans.

FINANCIAL RESULTS

The financial performance of the Company for the year ended 31st March 2016 issummarised below:

(Rs million)
2015-2016 2014-2015
Profit before Depreciation and Amortisation Finance Costs
Exceptional Items and Tax Expenses 563.82 419.44
Depreciation and Amortisation 184.11 186.61
Finance Costs 103.70 64.32
Profit before Exceptional Items and Tax 276.01 168.51
Exceptional Items - 12.18
Profit before Tax 276.01 156.33
Tax Expenses:
for earlier years 2.08 (0.96)
for current year (Net) 60.94 4.43
Profit for the year 212.99 152.86
Balance as per last Account 786.13 711.91
999.12 864.77
Appropriations
Proposed Dividend on Equity Shares 65.54 65.54
Provision for Dividend Tax 13.34 13.10
78.88 78.64
Closing Balance 920.24 786.13

OVERVIEW

The stable market conditions during the year under review has resulted into improvedperformance of the Chemical Manufacturing division.

The solar power segment witnessed stable operations during the year under review.

MATERIAL CHANGES AND COMMITMENTS

No material changes and commitments have occurred after the close of the financial year2015-16 till the date of this Report which affect the financial position of the Company.

DIVIDEND

The Board of Directors recommends for consideration of shareholders at the AnnualGeneral Meeting a Dividend @ 30% (Rs. 1.50 per share) on Equity Shares of Rs. 5/- eachfor the financial year ended 31st March 2016.

CREDIT RATINGS

Credit Analysis & Research Limited (CARE) has reaffirmed CARE A1+ (A One Plus)rating for the short term bank facilities of the Company. CARE has given CARE A1+ (A OnePlus) rating for Commercial Paper issue by the Company. This is their highest rating forshort term debt obligations and it signifies very strong degree of safety for timelypayment of financial obligations and carries lowest credit risk.

CARE has also reaffirmed CARE AA- (Double A Minus) rating for the long term bankfacilities of the Company. This rating signifies high degree of safety for timelyservicing of financial obligations and carries very low credit risk.

CONSOLIDATED FINANCIAL STATEMENT

As per the Companies Act 2013 and the SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015 the audited Consolidated Financial

Statement has been annexed with the Annual Report.

DEPOSITS

During the year under review the Company has not accepted any deposits from the publicand that as at the end of the year there were no outstanding deposits under Section 73 ofthe Companies Act 2013 read with the Companies (Acceptance of Deposits) Rules 2014.

INTERNAL FINANCIAL CONTROL

The Company has in place adequate internal financial controls with respect to financialstatements. The policies and procedures adopted by the Company ensure prevention anddetection of frauds and errors accuracy and completeness of the records and timelypreparation of reliable financial statements. No reportable material weakness in thedesign or operation was observed during the year.

DIRECTORS AND KEY MANAGERIAL PERSONNEL

Your Directors regret to inform that Shri S. S. Kanoria Chairman Emeritus of theCompany passed away on 31st March 2016. The Board expresses its profound grief and deepsense of sorrow at the sad demise of Shri S. S. Kanoria. He was the founder of the Companyand served on the Board of the Company for around 37 years since 1965. The Board places onrecord its deep appreciation for his valuable advice and guidance that the Company alwaysreceived.

Shri S. V. Kanoria (DIN: 02097441) son of Shri R. V. Kanoria Managing Director andSmt. Madhuvanti Kanoria a Director of the Company was appointed as an AdditionalDirector of the Company by the Board of Directors with effect from 1st April 2016 and assuch he will hold office only up to the ensuing Annual General Meeting ("AGM").

The Company has received a notice in writing from a Member along with the deposit ofrequisite amount under Section 160 of the Companies Act 2013 proposing the candidatureof Shri S. V. Kanoria for the office of Director of the Company at the ensuing AGM.

On the recommendation of the Nomination and Remuneration Committee Shri S. V. Kanoriahas also been appointed as a Wholetime Director of the Company for a period of three yearswith effect from 1st April 2016 subject to the approval of the shareholders.

The tenure of Shri T. D. Bahety (DIN: 00031572) as a Wholetime Director of the Companyended on 19th May 2016. Shri T. D. Bahety resigned as a Director of the Company witheffect from 27th May 2016 due to personal reasons. The Board puts on records its deepappreciation for the valuable services and contribution received by the Company from ShriT. D. Bahety during his association with the Company.

Smt. Madhuvanti Kanoria (DIN: 00142146) retires by rotation at the ensuing AGM underthe applicable provisions of the Companies Act 2013 and being eligible offers herselffor appointment as a Director of the Company.

None of the Directors of the Company is disqualified for being appointed as a Directoras specified in Section 164(2) of the Companies Act 2013.

Additional information pursuant to SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015 in respect of Directors seeking appointment/re-appointmentis given in the AGM Notice.

Shri N. K. Nolkha Chief Financial Officer of the Company has been designated as GroupChief Financial Officer with effect from 27th May 2016.

DECLARATION BY INDEPENDENT DIRECTORS

The Company has received declaration from all the Independent Directors of the Companyconfirming that they meet the criteria of independence as prescribed under the CompaniesAct 2013 and the SEBI (Listing Obligations and Disclosure Requirements) Regulations2015.

PERFORMANCE EVALUATION

The Company has framed the criteria for performance evaluation of IndependentDirectors the Board the Board Committees and other individual Directors. Criteria forperformance evaluation of the Chairman & Managing Director Executive Director and NonIndependent Director have also been framed.

The criteria for performance evaluation of Directors among others includes factors suchas preparation participation engagement personality and conduct value additionstrategic planning and vision team spirit and consensus building leadership qualityunderstanding and focus on key business issues independent thinking and judgment qualityof analysis experience and business wisdom management qualities awareness motivationintegrity ethics and receptivity. The criteria for evaluating the Board'sfunctioning/effectiveness inter alia includes its structure strategic review businessperformance review internal controls process and procedures.

On the basis of the criteria framed a process was followed by the Board for evaluatingthe performance of individual Directors its own performance and its Committees. TheNomination and Remuneration Committee also evaluated the performance of every individualDirector. The Independent Directors in their separate Meeting also carried out theperformance evaluation of the Chairman & Managing Director Executive Director andother non-independent Director as well as the Board of the Company. The Directorsexpressed overall satisfaction on the performance and functioning of the Board itsCommittees and the Directors.

FAMILIARISATION PROGRAMMES

The details of programmes to familiarise the Independent Directors with the Companytheir roles rights responsibilities in the Company nature of the industry in which theCompany operates business model/procedures/processes of the Company etc. through variousprogrammes are put on the website of the Company and can be accessed at the link:www.kanoriachem.com/images/Familiarisation%20Programme.pdf.

NUMBER OF MEETINGS OF BOARD OF DIRECTORS

During the Financial Year 2015-16 the Company held four Meetings of the Board ofDirectors. The details of the Meetings and attendance of each of the Directors thereat areprovided in the Report on Corporate Governance forming part of the Annual Report. Themaximum gap between any two consecutive Board Meetings did not exceed 120 days.

AUDIT COMMITTEE

The Audit Committee of the Company comprises of Shri Amitav Kothari Shri H. K. Khaitanand Prof. S. L. Rao Independent Directors and Shri R. V. Kanoria Chairman &Managing Director of the Company. Shri Amitav Kothari is the Chairman of the Committee.The terms of reference of the Committee have been provided in the Corporate GovernanceReport.

STAKEHOLDERS' RELATIONSHIP COMMITTEE

The Stakeholders Relationship Committee has been reconstituted on 27th May 2016 andShri S. V. Kanoria Wholetime Director has been appointed as a Member of the Committee inplace of Shri T. D. Bahety on his resignation as a Director of the Company. Shri H. K.Khaitan and Shri Amitav Kothari both Independent Directors are other Members of theCommittee. Shri H. K. Khaitan is the Chairman of the Committee. The terms of reference ofthe Committee have been provided in the Corporate Governance Report.

NOMINATION AND REMUNERATION COMMITTEE

The Nomination and Remuneration Committee of the Company comprises of Prof. S. L. RaoShri H. K. Khaitan Shri Ravinder Nath and Shri G. Parthasarathy Independent Directorsand Shri R. V. Kanoria Chairman & Managing Director of the Company. Prof. S. L. Raois the Chairman of the Committee. The terms of reference of the Committee have beenprovided in the Corporate Governance Report.

The Board of Directors of the Company based on the recommendation of the Nominationand Remuneration Committee has formulated the Nomination and Remuneration Policy whichcontains the matters with regard to criteria for appointment of Directors and determiningDirectors' independence and policy on remuneration for Directors Senior ManagerialPersonnel and other employees and the same may be accessed at the Company's website atthe link: www.kanoriachem.com/images/Nomination%20and%20Remuneration%20Policy.pdf.

CORPORATE SOCIAL RESPONSIBILITY COMMITTEE

The Corporate Social Responsibility Committee has been reconstituted on 27th May 2016and Smt. Madhuvanti Kanoria has been appointed as the Chairperson of the Committee inplace of Shri T. D. Bahety on his resignation as a Director of the Company. Shri R. V.Kanoria Managing Director and Shri H. K. Khaitan an Independent Director are otherMembers of the Committee. The terms of reference of the Committee have been provided inthe Corporate Governance Report.

CORPORATE SOCIAL RESPONSIBILITY

The Company has in place a Corporate Social Responsibility Policy (CSR Policy)indicating the activities to be undertaken by the Company. The Company acts as a goodCorporate Citizen and as its philosophy always strive to adopt socially inclusive andsustainable way of doing business. The Corporate Social Responsibility Policy of theCompany enables it to continue to make responsible contribution towards welfare of thesociety.

The CSR Policy may be accessed on the Company's website at the link:www.kanoriachem.com/images/CSR%20Policy.pdf.

Initially the Company has identified the following focus areas of engagement:

- Eradicating hunger poverty and malnutrition promoting health care includingpreventive health care and sanitation.

- Promoting education including special education and employment enhancing vocationalskills especially among children women elderly and the differently abled and livelihoodenhancement projects.

- Rural Development activities/projects.

- Empowering women setting up homes and hostels for women and orphans; setting up oldage homes day care centres and such other facilities for senior citizens.

- Ensuring environmental sustainability and ecological balance.

The Company may also undertake other need based initiatives in compliance with ScheduleVII to the Companies Act 2013.

During the year the Company spent Rs. 0.89 million on CSR activities which is around151% of the requisite amount for spending on CSR activities.

The Annual Report on the CSR activities pursuant to Rule 9 of the Companies (CorporateSocial Responsibility Policy) Rules 2014 is provided as

Annexure to this Report.

MANAGEMENT DISCUSSION AND ANALYSIS

Management Discussion and Analysis is a part of the Annual Report.

SUBSIDIARIES

APAG Holding AG ("APAG") Switzerland and Pipri Limited are the wholly ownedsubsidiaries of the Company. Kanoria Africa Textiles Plc Ethiopia is a subsidiary of theCompany. During the year APAG acquired 100% stake in Cosyst Control Systems GmbH Germanyand formed APAG Elektronik LLC US with its 100% shareholding. Further APAG Elektroniks.r.o. the wholly owned subsidiary of APAG Elektronik AG became the wholly ownedsubsidiary of APAG Holding AG during the year. Consequently APAG Elektronik AG APAGElektronik s.r.o Cosyst Control Systems GmbH and APAG Elektronik LLC are the step downsubsidiaries of the Company.

The Electronic Automotive segment operating under APAG Group - Company's Wholly OwnedSubsidiaries in Europe is continuously showing healthy business growth. The profitabilityof the group however suffered during the year primarily on account of appreciation ofSwiss Francs after the removal of Euro-Swiss Francs floor rate in Switzerland as therevenue of the group is linked to Euro and a major part of the costs are incurred in SwissFrancs. The group has taken immediate steps to average out the costs by acquiring CosystControl Systems GmbH in Germany a reputed company involved in development of automotiveelectronics and also starting development initiatives in India. The group continues tohave a healthy order book position.

The commissioning of commercial operations in Kanoria Africa Textiles Plc Company'ssubsidiary in Ethiopia took much longer than anticipated. The

Board is pleased to report that it has now started commercial operations in April2016.

A report on the performance and financial position of the subsidiaries of the Companyas per the Companies Act 2013 is provided in the Note no. 31 of the

Consolidated Financial Statements and hence the same is not repeated here for the sakeof brevity.

The Policy for determining Material Subsidiaries as approved by the Board may beaccessed on the Company's website at the link:

www.kanoriachem.com/images/Policy%20for%20determining%20Material%20Subsidiaries.pdf.

PARTICULARS OF LOANS GIVEN INVESTMENTS MADE GUARANTEES GIVEN AND SECURITIES PROVIDED

Details of loans given investments made guarantees given and securities provided ascovered under the provisions of Section 186 of the Companies Act 2013 are given in theNote No. 38 of the Standalone Financial Statements.

CONTRACTS AND ARRANGEMENTS WITH RELATED PARTIES

All contracts / arrangements / transactions entered by the Company during the financialyear with related parties were in the ordinary course of business and on arm's lengthbasis. None of the transactions with any of the related parties were in conflict with theCompany's interest. The Company had not entered into any transaction with related partiesduring the year which could be considered material in terms of materiality threshold forthe related party transactions.

The Policy on Related Party Transactions as approved by the Board may be accessed onthe Company's website at the link:

www.kanoriachem.com/images/Policy%20on%20Related%20Party%20Transactions.pdf.

VIGIL MECHANISM

The Company promotes ethical behaviour in all its business activities and has put inplace a mechanism of reporting illegal or unethical behaviour. In compliance with theprovisions of Section 177(9) of the Companies Act 2013 and the SEBI (Listing Obligationsand Disclosure Requirements)

Regulations 2015 the Company has in place a Whistle Blower Policy for its Directorsand Employees to report concerns about unethical behaviour actual or suspected fraud orviolation of applicable laws and regulations and the Company's Codes of Conduct. Thereportable matters may be reported to the Audit Committee through the Nodal Officer andin exceptional cases may also be reported to the Chairman of the Audit Committee. Theconfidentiality of those reporting violations is maintained and they are not subjected toany discriminatory practice. During the year under review no employee was denied accessto the Audit Committee.

The Whistle Blower Policy may be accessed on the Company's website at the link:www.kanoriachem.com/images/Whistle%20Blower%20Policy.pdf.

CORPORATE GOVERNANCE

The Company adheres to good governance practices. Corporate Governance at KCI extendsto all stakeholders and is embodied in every business decision. The Company places primeimportance on reliable financial information integrity transparency empowerment andcompliance with the law in letter and spirit. While Management Discussion and AnalysisReport that is an annexure to the Directors' Report appears in the Section titled Year inReview in the Annual Report the Corporate Governance Report and the Certificate from theAuditors of the Company confirming compliance of the conditions of Corporate Governanceare annexed hereto and form a part of the Directors' Report.

There is a conscious effort to ensure that the values enshrined in the Codes of Conductfor the Directors and Senior Management Personnel and the

Employees respectively are followed in true spirit across all levels of the Company.

EXTRACT OF ANNUAL RETURN

The extract of Annual Return of the Company as on the financial year ended 31st March2016 is given in Form no. MGT - 9 as an Annexure to this Report.

AUDITORS AND AUDITORS' REPORT

Messrs Singhi & Co. Chartered Accountants (Firm Registration No. 302049E)Statutory Auditors of the Company have confirmed their eligibility for being ratified asthe Auditors of the Company at the ensuing AGM of the Company.

The Notes on financial statement referred to in the Auditors' Report areself-explanatory and do not call for any further comments. The Auditors' Report does notcontain any qualification reservation or adverse remark.

COST AUDITORS

The Board had approved the appointment of M/s N. D. Birla & Co. Cost Accountants(Firm Registration No. 000028) Ahmedabad for conducting the audit of the cost records ofCompany for the financial year 2015-16 in respect of Organic/Inorganic ChemicalsIndustrial Alcohol Phenol Formaldehyde Resin and Solar Power.

SECRETARIAL AUDITOR

The Board had appointed M/s Vinod Kothari & Co. Practising Company Secretaries(UIN: P1996WB042300) to conduct Secretarial Audit for the financial year 2015-16. TheSecretarial Audit Report for the financial year 2015-16 is provided as an Annexure to thisReport. The Report does not contain any qualification reservation or adverse remark.

RISK MANAGEMENT

The Company's management systems organizational structures processes codes ofconduct together form the basis of risk management system that governs and managesassociated risks. The Risk Management Committee of the Company assesses the significantrisks that might impact the achievement of the Company's objectives and develops riskmanagement strategies to mitigate/minimise identified risks and designs appropriate riskmanagement procedures.

CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS/OUTGO

As required under Section 134 of the Companies Act 2013 and the rules framedthereunder the statement containing necessary information in respect of conservation ofenergy technology absorption foreign exchange earnings and outgo is provided in theAnnexure to this Report.

REMUNERATION OF DIRECTORS KEY MANAGERIAL PERSONNEL AND OTHER EMPLOYEES

Disclosures pertaining to remuneration and other details as required under Section197(12) of the Companies Act 2013 read with Rule 5(1) of the

Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014 areprovided in the Annexure to this Report.

PARTICULARS OF EMPLOYEES

As required under Section 197(12) of the Companies Act 2013 read with Rules 5(2) and5(3) of the Companies (Appointment and Remuneration of

Managerial Personnel) Rules 2014 particulars of the employees concerned are providedin the Annexure to this Report.

SAFETY AND ENVIRONMENT

The Company is committed to sustainable development and a safe workplace. Its approachto environment management is guided by the principle of provision of safe workingenvironment through continuous up-gradation of technologies prevention of pollution andconservation of resources and recycling waste.

As a result of its sustained compliance to Health Safety Environment and Qualitystandards the Company's Alco Chemical Divisions at Ankleshwar and

Vizag are ISO 9001 14001 and OHSAS 18001 certified.

The Company has a documented Health & Safety Policy that is displayed andcommunicated to all employees at plant locations. With the view to achieve a

'Zero Accidents' status the Company has developed health and safety procedures as wellas safety targets and objectives.

The Company also lays thrust on renewable energy sources and solar energy.

HUMAN RESOURCES DEVELOPMENT AND INDUSTRIAL RELATIONS

The Company's human resource development is founded on a strong set of values. Thepolicies seek to instil spirit of trust transparency and dignity among all employees. TheCompany continues to provide ongoing training to its employees at different levels.

Industrial relations with the employees and workers across all locations of the Companycontinued to be cordial during the year.

DIRECTORS' RESPONSIBILITY STATEMENT

To the best of their knowledge and belief and according to the information andexplanations obtained by them your Directors make the following statements in terms ofSection 134(5) of the Companies Act 2013:

a. that in the preparation of the annual financial statements for the year ended 31stMarch 2016 the applicable accounting standards have been followed along with properexplanation relating to material departures if any;

b. that such accounting policies as mentioned in Note no. 1 of the Notes to theStandalone Financial Statements have been selected and applied consistently and judgementand estimates have been made that are reasonable and prudent so as to give a true and fairview of the state of affairs of the company as at 31st March 2016 and of the profit ofthe Company for the year ended on that date;

c. that proper and sufficient care has been taken for the maintenance of adequateaccounting records in accordance with the provisions of the

Companies Act 2013 for safeguarding the assets of the Company and for preventing anddetecting fraud and other irregularities:

d. that the annual financial statements have been prepared on a going concern basis;

e. that proper internal financial controls to be followed by the Company have been laiddown and that the financial controls are adequate and are

operating effectively; and

f. that proper systems have been devised to ensure compliance with the provisions ofall applicable laws and that such systems were adequate and operating effectively.

DISCLOSURE UNDER THE SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION PROHIBITIONAND REDRESSAL) ACT 2013

During the year under review no case was filed pursuant to the Sexual Harassment ofWomen at Workplace (Prevention Prohibition and Redressal) Act 2013.

FRAUD REPORTING

There have been no frauds reported by the Auditors of the Company under sub-section(12) of Section 143 of the Companies Act 2013 during the financial year.

DETAILS OF SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS/COURTS/TRIBUNALS

During the year under review no significant or material orders were passed by theRegulators or Courts or Tribunals which impact the going concern status and Company'soperations in future.

ACKNOWLEDGMENTS

Your Directors acknowledge with gratitude the commitment and dedication of theemployees for their untiring personal efforts as well as their collective contributions atall levels that have led to the growth and success of the Company. The Directors wouldlike to thank other stakeholders including lenders and business associates who havecontinued to provide support and encouragement.

For and on behalf of the Board
Registered Office
‘Park Plaza’
71 Park Street R.V. Kanoria
Kolkata - 700 016 Chairman & Managing Director
Date: 27 May 2016 (DIN: 00003792)

ANNEXURE TO THE DIRECTORS' REPORT

ANNUAL REPORT ON CSR ACTIVITIES

[Pursuant to clause (o) of sub-section (3) of Section 134 of the Companies Act 2013and Rule 9 of the Companies (Corporate Social

Responsibility Policy) Rules 2014]

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. Please refer to the Section on Corporate Social Responsibility in the Board Report.
2. The Composition of the CSR Committee. Please refer to the Corporate Governance Report for the composition of the Corporate Social Responsibility Committee.
3. Average net profit of the Company for last three financial years Rs. 29.45 million.
4. Prescribed CSR Expenditure (two per cent of the amount as in item 3 above) Rs. 0.59 million
5. Details of CSR spent during the financial year.
a) Total amount to be spent for the financial year; Rs. 0.59 million.
b) Amount unspent if any; NIL
c) Manner in which the amount spent during the financial year Details are given below.

 

(1) (2) (3) (4) (5) (6) (7) (8)
Sl. No. CSR project or activity identified Sector in which the Project is covered Projects or programs (1) Local area or other (2) Specify the State and District where projects or programs was undertaken. Amount outlay (budget) project or programs wise Amount spent on the project or programs Sub-heads: (1) Direct expenditure on projects or programs. (2) Overheads Cumulative expenditure upto to the reporting period Amount spent: Direct or through implementing agency
1 Contributed for construction of School for providing education to children under CBSE Course. Promotion of Education (1) Local Area (2) Ankleshwar GIDC Dist. Bharuch Gujarat Rs.0.55 Million Direct Expenditure Rs.0.55 Million Rs.0.55 Million Lions Club of Industrial area Community Trust Ankleshwar Gujarat
2 Skill Development of Youth in Rural/ Tribal area. Promotion of Education (1) Other (2) Jhagadia Dist. Bharuch Gujarat Rs.0.20 Million Direct Expenditure Rs.0.20 million Rs.0.20 Million Sewa Rural Jhagadia
3 Providing Computers Projectors and other facilities for Students. Promotion of Education (1) Local Area (2) Village Sengpur Dist. Bharuch Gujarat Rs.0.10 Million Direct Expenditure Rs.0.09 Million Rs.0.09 Million Direct
4 Improvement in In-house facilities at Primary School Sengpur by Construction of Shed for cultural activities and general assembly Promotion of Education (3) Local Area (4) Village Sengpur Dist. Bharuch Gujarat Rs.0.04 Million Direct Expenditure Rs.0.04 Million Rs.0.04 Million Direct
5 Vocational Promotion of (1) Other Rs.0.01 Direct Rs.0.01 Direct
Training to Education (2) Students Uka Tarsadia University Bardoli Million Expenditure Rs.0.01 Million Million
Total Rs. 0.90 Million Rs.0.89 Million Rs.0.89 Million
6. In case the Company has failed to spend the 2% of the average net profit of the last three years or any part thereof the Company shall provide reasons for not spending the amount in the Board Report. NA
7. Responsibility Statement of the CSR Committee that the implementation and monitoring of Corporate Social Responsibility Policy is in compliance with CSR objectives and Policy of the Company. The CSR Committee confirms that the implementation and monitoring of Corporate Social Responsibility Policy is in compliance with CSR objectives and Policy of the Company.

 

Registered Office Madhuvanti Kanoria R. V. Kanoria
'Park Plaza' Chairperson CSR Committee Chairman & Managing Director
71 Park Street DIN:00142146 DIN:00003792
Kolkata-700 016
Date: 27 May 2016

ANNEXURE TO THE DIRECTORS' REPORT

Form No. MR-3

SECRETARIAL AUDIT REPORT

FOR THE PERIOD FROM APRIL 1 2015 TO MARCH 31 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

Kanoria Chemicals & Industries Limited "Park Plaza"71 Park StreetKolkata-700016

We have conducted the secretarial audit of the compliance of applicable statutoryprovisions and the adherence to good corporate practices by Kanoria Chemicals &Industries Limited (hereinafter called "the Company"). Secretarial Audit wasconducted in a manner that provided us a reasonable basis for evaluating the corporateconducts/statutory compliances and expressing our opinion thereon.

Based on our verification of the Company's books papers minute books forms andreturns filed and other records maintained by the Company (as per Annexure - Ahereinafter referred to as "Books and Papers") and also the information providedby the Company its officers and authorized representatives during the conduct ofsecretarial audit we hereby report that in our opinion the Company has during theperiod covered by our audit that is to say from April 01 2015 to March 31 2016(hereinafter referred to as "Audit Period") complied with the statutoryprovisions listed hereunder and also that the Company has proper board-processes andcompliance-mechanism in place to the extent in the manner and the reporting madehereinafter:

We have examined the Books and Papers maintained by the Company for the Audit Periodaccording to the provisions of:

1. The Companies Act 1956 to the extent applicable. The Companies Act 2013("the Act") and the rules made thereunder including any re-enactment thereof;

2. The Securities Contracts (Regulation) Act 1956 ("SCRA") and the rulesmade thereunder;

3. The Depositories Act 1996 and the regulations and bye-laws framed thereunder;

4. Foreign Exchange Management Act 1999 and the rules and regulations made thereunderto the extent of Overseas Direct Investment Foreign Direct Investment and ExternalCommercial Borrowings;

5. The following Regulations and Guidelines prescribed under the Securities andExchange Board of India Act 1992 ("SEBI Act"):- a) The Securities and ExchangeBoard of India (Substantial Acquisition of Shares and Takeovers) Regulations 2011 (SASTRegulations);

b) The Securities Exchange Board of India (Listing Obligations and DisclosureRequirements) Regulations 2015 (to the extent applicable to the Company during the Periodunder Review);

c) Securities Exchange Board of India (Registrars to an Issue and Share TransferAgents) Regulations 1993 regarding the Companies Act and dealing with client;

d) The Securities and Exchange Board of India (Prohibition of Insider Trading)Regulations 1992;

e) The Securities and Exchange Board of India (Prohibition of Insider Trading)Regulations 2015;

f) The Securities and Exchange Board of India (Issue of Capital and DisclosureRequirements) Regulations 2009 ("SEBI (ICDR) Regulations 2009");

6. Laws specifically applicable to the industry to which the Company belongs asidentified by the management that is to say: i. Petroleum Act 1934; ii. Poison Act1919; and iii. Indian Explosive Act 1884.

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

a) Secretarial Standards 1 and 2 issued by the Institute of Company Secretaries ofIndia;

b) The Listing Agreements entered into by the Company with the BSE Limited and NationalStock Exchange of India Limited.

Having regard to the compliance system prevailing in the Company and on examination ontest-check basis of the relevant documents and records in pursuance thereof relating tothe Audit Period we report that the Company has complied with the provisions of the ActRules Regulations Guidelines etc. mentioned above.

Management Responsibility:

1. Maintenance of secretarial records 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 the 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 or examined any books information or statements otherthan Books and Papers;

4. We have not examined any other specific laws except as mentioned above;

5. Wherever required we have obtained the Management Representation about thecompliance of laws rules and regulation and happening of events etc.;

6. 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 procedure on test basis;

7. 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.

We further report that the Company has reportedly laid down adequate systems andprocesses commensurate with the size and operations of the

Company to monitor and ensure compliance with applicable laws rules regulations andguidelines.

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.

All decisions of the board were taken with the requisite majority and recorded as partof the minutes.

We further report that during the Audit Period the Company has not incurred anyspecific event/ action that can have a major bearing on the Company's affairs in pursuanceof the above referred laws rules regulations guidelines standards etc.

Place: Kolkata For Vinod Kothari & Company
Date: May 27 2016 Practicing Company Secretaries
Arun Kumar Maitra
Partner
Membership No.: A-3010
C P No.: 14490

LIST OF DOCUMENTS:

Annexure A

1. Corporate Matters

1.1 Minutes books of the following Meetings/Committees were provided in original

1.1.1 Board Meetings

1.1.2 Audit Committee

1.1.3 Nomination and Remuneration Committee

1.1.4 Stakeholders Relationship Committee

1.1.5 Corporate Social Responsibility Committee

1.1.6 Risk Management Committee

1.1.7 General Meeting

1.2 Agenda papers for Board Meeting along with Notice

1.3 Annual Report -2014-15

1.4 Memorandum and Articles of Association

1.5 Disclosures under Listing Agreement/Listing Regulations

1.6 Documents pertaining to Listing Agreement compliance

1.7 Forms and Returns filed with the ROC

1.8 Statutory Registers maintained by the Company

ANNEXURE TO THE DIRECTORS' REPORT

Particulars of Energy Conservation Technology Absorption and Foreign Exchange Earningsand Outgo required under the Companies (Accounts) Rules 2014

(A) Conservation of Energy:-

(i) The steps taken for conservation of energy:

Major energy conservation initiative taken during the financial year 2015-16:

• Redesigned and replaced the packing in stripping column to reduce steamconsumption.

• Replaced the conventional pumps with more energy efficient pumps.

• Installed VFDs in various sections to reduce power consumption.

• Installed bi-metallic steam traps replacing the conventional steam traps toreduce steam loss.

• Installed LED lights.

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

• l Company has commissioned Multi Fuel Boiler to replace the high cost NaturalGas as a fuel for steam generation.

(iii) The capital investment on energy conservation equipments: Rs.15.36 million

(B) Technology Absorption:-

(i) The efforts made towards technology absorption : NIL

(ii) The benefits derived like product improvement cost reduction product developmentor import substitution: NIL

(iii) In case of imported technology (imported during the last three years reckonedfrom the beginning of the financial year):

(a) The details of technology imported Technological upgradation of Formaldehyde process from Johnson Matthey Formox Sweden
(b) The year of import 2015-16
(c) Whether the technology been fully absorbed Under implementation
(d) If not fully absorbed areas where absorption has not taken place and the reasons thereof Not Applicable

(iv) The expenditure incurred on Research and Development:-

Rs in million
Capital Expenditure 0.02
Revenue Expenditure 8.40
(C) Foreign Exchange Earnings and Outgo:-
Foreign Exchange earned in terms of actual inflows during the year 200.37
Foreign Exchange outgo in terms of actual outflows during the year 392.90

 

For and on behalf of the Board
Registered Office
‘Park Plaza’
71 Park Street R.V. Kanoria
Kolkata - 700 016 Chairman & Managing Director
Date: 27 May 2016 (DIN: 00003792)

ANNEXURE TO THE DIRECTORS' REPORT

Information pursuant to Section 197 of the Companies Act 2013 read with Rule 5(1) ofthe Companies (Appointment and Remuneration of

Managerial Personnel) Rules 2014

1. Ratio of remuneration of each Director to the median remuneration of all employeesand increase in remuneration:

Name of Directors and Key Managerial Personnel Designation The ratio of remuneration of each Director to the median remuneration of all employees of the Company for the financial year 2015-16 Percentage increase in remuneration over last year
1 Shri R.V. Kanoria Chairman & Managing Director 44.11 4.30
2 Shri T.D. Bahety Wholetime Director 20.17 7.42
3 Shri Amitav Kothari Non-Executive Independent Director 0.84 (9.80)
4 Shri H.K. Khaitan Non-Executive Independent Director 1.16 (3.03)
5 Shri Ravinder Nath Non-Executive Independent Director 0.62 (10.53)
6 Shri G. Parthasarathy Non-Executive Independent Director 0.87 4.35
7 Prof. S.L. Rao Non-Executive Independent Director 0.91 (19.35)
8 Shri A. Vellayan Non-Executive Independent Director 0.18 0.00
9 Smt. Madhuvanti Kanoria Non-Executive Director 0.36 100.00
10 Shri N.K. Nolkha Chief Financial Officer NA 10.44
11 Shri N.K. Sethia Company Secretary NA 12.75

Note: No Director other than the Chairman & Managing Director and Whole timeDirector received any remuneration other than sitting fees during the financial years2014-15 and 2015-16.

2. The number of permanent employees as on 31st March 2016 was 308.

3. Compared to the previous year 2014-15 the figures for the current year 2015-16reflects that:- (i) The Profit before Tax increased by 76.56%. (ii) Median remuneration ofthe employees has increased by 9.58%. (iii) Average remuneration of the employeesincreased by 10.13%.

(iv) Average remuneration of the employees other than Key Managerial Personnel hasincreased by 11.08% and that of the Key Managerial Personnel by 6.76%.

Average increase in remuneration is guided by the factors like inflation normal salaryrevisions external competitiveness and talent retention.

4. No employee's remuneration for the year 2015-16 exceeded the remuneration of thehighest paid Director.

5. The remuneration of Directors Key Managerial Personnel and other employees is inaccordance with the Remuneration Policy of the Company.

6. The market capitalization of the Company as on 31st March 2016 increased by 31.18%compared to as on 31st March 2015. The PE ratio as on 31st March 2016 stood at 11.06.Closing price on National Stock Exchange Association of India Limited has been used forthe purpose of the above calculations.

The Company has not made any public offer in the recent past and accordinglycomparison of public offer price and the current market price of the Company's shares willnot be relevant.

7. The variable components of the remuneration of the Executive Directors areconsidered by the Board of Directors based on the recommendations of the Nomination andRemuneration Committee as per the Remuneration Policy of the Company.

Particulars of employees pursuant to provisions of Section 197 (12) of the CompaniesAct 2013 read with Rules 5 (2) and (3) of the Companies (Appointment and Remuneration ofManagerial Personnel) Rules 2014

Name Designation Remuneration (Rs) Qualifications Age (Years) Experience (Years) Date of Joining Last Employment
Kanoria R.V. Chairman & 12915409 B.Sc. MBA 61 42 10.01.1983 None
Managing Director (Hons)

Notes

1. Remuneration includes Salary House Rent Allowance Company's contribution toProvident Fund Leave Travel Assistance Medical and other facilities as applicable.

2. The appointment is contractual.

3. Shri R. V. Kanoria is spouse of Smt. Madhuvanti Kanoria a Director of the Companyand they together hold 2.14% of the Paid up Equity Share Capital of the Company.

For and on behalf of the Board
Registered Office
Park Plaza’
71 Park Street R.V. Kanoria
Kolkata - 700 016 Chairman & Managing Director
Date: 27 May 2016 (DIN: 00003792)