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Navin Fluorine International Limited.

BSE: 532504 Sector: Industrials
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OPEN 740.00
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P/E 21.89
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OPEN 740.00
CLOSE 745.15
52-Week high 878.75
52-Week low 492.80
P/E 21.89
Mkt Cap.(Rs cr) 3,701
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

Navin Fluorine International Limited. (NAVINFLUOR) - Director Report

Company director report


The members

Navin fluorine international limited

Your directors are pleased to present the nineteenth annual report together with theaudited accounts for the year ended 31st march 2017.

1. Financial results:

(Rs. In lacs)

Current year Previous year
Operating income 70123 63624
Other income (including non-recurring income) 2988 2469
Ebitda before exceptional items 17962 14084
Add: exceptional items 2733 -
Less: depreciation 2835 2092
Interest 50 320
Tax 4409 3025
Profit after tax 13401 8647
Add: surplus brought forward from the previous year 39001 32827
Amount available for appropriation 52402 41474
Interim dividend 1077 978
Special dividend 734 -
Proposed final dividend - 1077
Corporate dividend tax 368 418
Surplus carried to balance sheet 50223 39001

Note: figures are regrouped wherever necessary to make the information comparable.

2. Dividend

The company paid an interim dividend of h11.00 per share as well as a special dividendof h7.50 per share on 9791297 equity shares of nominal value of h10/- each aggregatingto h1810.65 lacs in the month of october 2016. The board of directors is pleased torecommend a final dividend for the year of h13/- per share on 9791297 equity shares ofnominal value of h10/- each aggregating to h1272.88 lacs.

3. Restructuring of promoter's shareholding:

During the year mr. H.a. Mafatlal mr. V.p. Mafatlal their family members familytrusts and companies including the three listed entities viz. The company mafatlalindustries ltd. And nocil ltd. Entered into an agreement to amicably restructure theshareholding of the three listed companies and other group companies such that themanagement

Of the company resided with mr. V.p. Mafatlal and the management of mafatlal industriesltd. And nocil ltd. Resided with mr. H.a. Mafatlal. The restructuring is part of a familysettlement and succession plan between mr. H.a. Mafatlal and mr. V.p. Mafatlal.

4. Sub-division of face value of equity shares:

Subject to the approval of the members the board of directors have approved theproposal for sub-division of the face value of each equity share of the company of h10/-into 5 equity shares of the face value of h2/- each. Necessary resolutions for approval ofthe same together with consequential changes in the memorandum of association are beingplaced for approval of the members at the ensuing 19th annual general meeting.

5. Year in retrospect

The company has recorded a revenue of h70123 lacs during the year vs. H63624 lacsachieved during f.y 2015-16 i.e. A growth of 10% year on year. The growth in top line isprincipally driven by contract research & manufacturing (crams) & inorganicfluorides businesses.

Domestic sales achieved a growth of 12% year on year from h34873 lacs in f.y.2015-16to h39123 lacs in the current year driven by inorganic fluorides refrigerant gases &specialty fluorochemicals businesses. Exports turnover clocked a growth of 8% year onyear from h28751 lacs in f.y. 201516 to h31000 lacs during the current yearpredominantly driven by crams business.

Crams business continued its journey of gaining momentum by achieving a turnover ofh13743 lacs during the year vs. H8654 lacs in f.y. 2015-16 ; i.e. A growth of 59% year-on-year. It contributed roughly 20% of overall turnover for the year. Successful delivery ofa variety of orders across a range of scales from innovator pharma majors througheffective utilisation of the new cgmp manufacturing plant at dewas has underpinned suchgrowth during the year. Numerous customer audits have been successfully completed duringthe year which reinforced business's confidence in the capability to build and operate aworld class cgmp facility.

Refrigerant gases business remained stable at h21557 lacs during the year vs. H21696lacs in f.y. 2015-16. It contributed around 31% of overall turnover; of which exportscontributed approximately 33%. Despite the seasonal nature of the product refrigerants bufared well on the domestic front on account of prolonged summers & steady growth inunderlying demand in the refrigeration & air conditioning sectors. However this waspartially offset by some headwinds in exports side of the business on account of pricesoftening due to chinese supplies quota renewal challenges as well as foreign exchangeconstraints for imports into some of the middle east countries.

Inorganic fluorides business registered a significant growth from h9399 lacs in f.y.2015-16 to h12031 lacs during the current year i.e. A growth of 28% year on year. Itcontributed around 17% of overall turnover. The growth has been predominantly fuelled bypositive traction in the domestic sector across key product portfolios.

Specialty chemicals business remained more or less flat with a turnover of h22792 lacsin the current year vs. H23875 lacs in f.y. 2015-16. It contributed around 32% of overallturnover of which exports contribute roughly 43%. This bu continued to experienceheadwinds in terms of demand downturn from both global agrochemical majors as well asdomestic pharma companies. However ongoing efforts on creating a diversified portfolio ofinnovative products winning new customers and penetration into new markets enabled tooffset such impact to a significant extent. Here the focus remains on investing inresearch & development towards building strong product offerings in nichefluorochemicals ebitda before exceptional item for the year is h17962 lacs up fromh14084 lacs in f.y. 2015-16 a growth of 28% year on year. Ebitda margin for the year is25% up from 21% in f.y. 2015-16 i.e. An expansion of 400 basis points.

Profit before tax (pbt) before exceptional items grew by 29% year on year to h15078lacs in the current year from h11672 lacs in f.y. 2015-16. Pbt margin recorded a growthof 300 basis points i.e. From 18% in f.y. 2015-16 to 21% in the current year.

As part of an agreement executed amongst mr. H. A. Mafatlal mr. V. P. Mafatlal theirfamily members family trusts & companies including the three listed entities viz.The company mafatlal industries ltd and nocil ltd and approved by the board of directorson 6th august 2016 the company has divested part of its shareholding in mafatlalindustries ltd and in nocil ltd during the year. The profit arising out of divestment ofsuch long term investments amounting to h2733.18 lacs has been shown under"exceptional items" in the statement of profit and loss.

Profit after tax (pat) for the year stands at h13401 lacs up from h8647 lacs in f.y.2015-16 i.e. A growth of 55% year on year. Pat margin for the current year is 18% vs. 13%in f.y. 2015-16 i.e. A growth of 500 basis points year on year.

Cost of key raw materials like sulphur fluorspar chloroform & boric acidexhibited a downward trend during the year. Chloroform prices continue to be subject tovolatility due to supply fluctuations. Price of bromine has however shown a marginaluptrend during the year. The company pursues a supply chain strategy of importingfluorspar from diverse regions to de-risk dependence on a single source / geography.

On the energy cost front cost of power has gone down marginally by around 4% year onyear. Non-availability of exchange traded power from other states to southern gujaratcontinues to be a challenge. Prices of natural gas has shown a downturn of around 11% yearon year on account of weak global demand.

Indian rupee has recorded some appreciation vs. Key foreign currencies during the yearby around 2% vs. Us dollar 15% vs. Gbp & 8% vs. Euro. However the company being netexporter with exports predominantly executed in us dollars; the strengthening indianrupee has in fact resulted into a headwind for export realisations during the year. Theexchange loss of h37 lacs shown under other expenses is on account of timing differenceof foreign exchange transactions and their realisation and/or restatement.

Net working capital management continues to be a key focus for the company and thelevels of net working capital are in line with the scope & scale of operations andwell within acceptable industry benchmark.

The company has reinforced focus on improving free cash flow efficiency on theenterprise on a sustainable basis and has a commendable treasury income. The company hasbeen successful to maintain it's credit rating at "care aa" for borrowings witha tenure of more than one year and fund based facilities during the year signifying highdegree of safety regarding timely servicing of financial obligations and very low creditrisk;. The rating for short term facilities with a tenure of less than a year ismaintained at "care a1+" indicating very strong degree of safety regardingtimely servicing of financial obligations and lowest credit risk. During the year thecompany has also maintained "care a1+" rating for issuance of standalonecommercial papers to the extent of h3000 lacs.

During the year msci (morgan stanley capital international) has announced changes tothe constituents for the msci india domestic small cap index and as a part of the changethe company has been included in the said index

During the year the company has commissioned the pilot plant for the new generationrefrigerant gas hfo 1234 yf in line with the technology transfer & joint processdevelopment agreement entered into with honeywell during last year. Hfo-1234yf is anext-generation hydrofluoro-olefin (hfo) refrigerant with gwp less than 1 and is a neardrop-in replacement for r-134a a hydrofluorocarbon (hfc) for use in vehicle airconditioning systems globally. This agreement depicts honeywell's confidence in company'scapabilities in developing new generation fluoro intermediates.

The company has secured product validation from customer & subsequently commencedcommercial production & shipment of the fluoro intermediate product from itsproduction facility at dahej during q iv of the year. Subject to certain preconditionsand regulatory approvals the facility producing this product will be transferred from thecompany to the joint venture company with piramal enterprises ltd by way of a businesstransfer arrangement through slump sales during the coming financial year.

The company continues to maintain its focus on improving operating efficiencies acrossits manufacturing and supply chain applications which helped the company improve itsmargins and secure deeper penetration in the market. During the year these initiativeswere further reinforced. The top-line growth helped a better absorption of overheadscontributing to improvements in the operating margins.

The r&d and technology functions pursued it's agenda of excellence through the yearfor improvement in productivity quality and costs of various products to enablebusinesses with a competitive offering on one hand and flexibility of sourcing to thesupply chain function on the other.

The company is fully committed towards its responsibilities in health safety andenvironmental (hse) management and has continued to make sizable investments in hse duringthe year across all its locations. The company is amongst very few corporates in thecountry who has 'responsible care' accreditation from the indian chemical council.'Responsible care' is the chemical industry's unique global initiative that drivescontinuous improvement in health safety & environment performance together with openand transparent communications with stakeholders. The logo is awarded in recognition of acompany's commitment to sustainability. During the year the company has been declared awinner in the category of "operational excellence in safety" for its responsiblecare initiatives in distribution at the manufacturing & supply chain summit awards2017; which exemplifies the company's commitment towards safety. The surat & dewasplants of the company have secured certificates of appreciation for safety in operationsfrom the national safety council during the year.

6. Subsidiaries and joint ventures

The company has four subsidiaries and two joint ventures:

(i) sulakshana securities limited (ssl) an entity created to settle dues of the termlenders of mafatlal industries limited (mil) remained a wholly-owned subsidiary of thecompany. After settling all the third-party dues ssl was left with 1455 sq. Mtrs. Ofcommercial floor space in mafatlal centre nariman point mumbai and a significant portionof this property has been leased out on contemporary terms. Ssl is utilising its currentcash flows to repay its debt to the company. During the year h192.90 lacs has been repaidby ssl and its current outstanding to the company is h1906 lacs.

(ii) the company now owns 100% of manchester organics limited (m.o.l.) a specialisedchemicals research company in runcorn u.k. holding 51% of the ordinary voting shares ofm.o.l. Directly and the balance 49% through nfil (uk) ltd. a 100% step-down subsidiarycreated for the purpose.

During the year m.o.l. Reported excellent performance with a turnover of 5.581 mi.e. A growth of 17% over f.y. 2015-16 turnover of 4.773 m and a profit after tax of 778 k which is a five times improvement over f.y. 2015-16 pat of 153 k. During theyear m.o.l. Has paid a dividend of 291 k (h234 lacs) to the company.

(iii) a 100% step-down subsidiary by the name of nfil (uk) ltd was formed in the u.k.Last year to acquire the balance shareholding of 49% from the shareholders of manchesterorganics ltd. During the year the company has made further equity infusion of 931 kinto nfil (uk) ltd which along with the dividend of 280 k received by nfil (uk) ltdfrom m.o.l. ; have been utilised to service the hdfc bank bahrain term loan taken by nfil(uk) ltd during last year to part finance the acquisition of 49% of m.o.l.

(iv) some of the key raw materials for our specialty and crams business are procuredfrom china. The quality and the cost of these material make a significant impact onvarious value added products being made by the company. And therefore it was thought fitto have a strategic presence closer to the source. In view of the foregoing it wasthought prudent to have a permanent representation in china. Accordingly a trading outfitby the name of navin fluorine (shanghai) co. Ltd. (which is a wholly owned foreignenterprise under chinese laws) was incorporated last year. During the year our chinesepresence has helped immensely to ensure timely procurement of some of the key rawmaterials for our crams business. We could exercise a better control over quality cost ofprocurement and timeliness due to our presence in china. Our footprint in china is alsohelping us to create strategic partnerships with key vendors. The total capital investmentover a period of 20 years is proposed to be rmb 12.50 million (app. H1176 lacs).

(v) the company has subscribed to 25% of the initial equity share capital of swarnimgujarat fluorspar private limited. It is a joint venture (jv) with gujarat mineraldevelopment corporation limited (gmdc) and gujarat fluorochemicals limited (gfl) formedfor the purpose of beneficiation of fluorspar ores to be supplied by

Gmdc from its mines. The entire quantity of the finished product viz. Acid gradefluorspar will be bought out by the company and gfl. This is a feedstock de-riskinginitiative for long term fluorspar supply assurance the most critical raw material of thecompany. During the year various matters affecting overall costing of the project andproduct were discussed threadbare between the partners. This will help the partners toinitiate the project related activities during the coming financial year.

(vi) the company has entered into a joint venture (jv) agreement with piramalenterprises limited (pel) and accordingly a company by the name of convergence chemicalsprivate limited (ccpl) has been formed to leverage the company's capability in nichefluorination chemistry and deep outreach of the jv partner in the healthcare space. Pelholds 51% and the company owns 49% of the equity share capital of ccpl. During the yearproduct validation has been secured and commercial operations have begun at the facility.Subject to certain preconditions and regulatory approvals the facility producing thisproduct will be transferred from the company to ccpl by way of a business transferarrangement through slump sales during the coming f.y. Necessary approval for the same isbeing sought separately from the members under the provisions of section 180(1)(a) andsection 188 of the companies act 2013 through postal ballot.

The financial position of each of the said six companies is given in the notes toconsolidated financial statements.

The accounts of all the above subsidiaries and joint ventures have been considered inthe consolidated financial results of the company.

The company does not have any material subsidiary. Policy on material subsidiary isavailable on weblink

The audited accounts of the subsidiary companies are placed on the company's websiteand the same are open for inspection by any member at the registered office of the companyon any working day between 2.00 p.m. And 4.00 p.m. And the company will make available acopy thereof to any member of the company who may be interested in obtaining the same.

7. Reports on management discussion analysis and corporate governance

As required under sebi (listing obligations & disclosure requirements) regulations2015 management discussion and analysis and corporate governance report are annexed as annexure1 and annexure 2 respectively to this report.

8. Business responsibility report:

As required under sebi (listing obligations & disclosure requirements) regulations2015 business responsibility report describing the initiatives taken by the company froman environmental social and governance prospective in the prescribed form is annexed as annexure3.

9. Corporate social responsibility (csr)

At navin fluorine international ltd. (a part of padmanabh mafatlal group) fulfillingcsr is a way of life. It is a legacy coming down from the same value tree the lineage oflate mr. A.n. Mafatlal who inspired implementation of a range of csr activities over thelast fifty years in areas like poverty alleviation healthcare education women'swelfare etc. In rural india the company will continue to follow the path by contributingto social welfare and nation development.

Pursuant to the provision of section 135 of the companies act 2013 ("theact") read with the companies (corporate social responsibility policy) rules 2014the company has constituted a csr committee. Mr. S.g. Mankad is the chairman of thecommittee and mr. H.h. Engineer and mr. V.p mafatlal are the other members of thecommittee. The csr policy formulated by the board based on the recommendations of the csrcommittee is available on weblink

The amount required to be spent on csr activities during the year under report inaccordance with the provisions of section 135 of the act is h176.11 lacs and the companyhas spent h302.08 lacs during the current financial year (as against h194.81 lacs duringthe previous year). Thus the company has spent more amount on csr activities than legallymandated .the requisite details on csr activities pursuant to section 135 of the act andas per annexure attached to the companies (corporate social responsibility policy) rules2014 are annexed as annexure 4 to this report.

10. Industrial relations

The relationship with the workmen and staff remained cordial and harmonious during theyear and the management received full cooperation from the employees. During the year thecompany has signed a memorandum of understanding for wage revision with workers which iseffective for a period of three years from 1st april 2016.

The company continues to focus on extensive training and developmental activities andefficiency and quality improvement initiatives. The total number of employees as on 31stmarch 2017 was 762.

11. Insurance

The properties and insurable assets and interests of the company like building plantand machinery and stocks among others are adequately insured.

12. Employee stock option scheme 2007

During the year 11215 stock options were granted to the employees out of theunallotted options under the employees stock option scheme 2007. Pursuant to theprovisions of securities and exchange board of india (employee stock option scheme andemployee stock purchase scheme) guidelines 1999 as amended the details of stock optionsas on 31st march 2017 under the "employee stock option scheme 2007" are annexedas annexure 5 to this report. The company is proposing a new scheme for employee'sstock option for which necessary approval is sought from the members.

13. Directorate

Pursuant to the agreement entered into amongst the promoters as referred to in para 3of this report mr. H.a. Mafatlal stepped aside as chairman and director of the companywith effect from close of office hours on 19th august 2016. The board places on recordits deep sense of appreciation for the contribution made by mr. H.a. Mafatlal in providingexemplary leadership to the board and the company and also for the invaluable contributionmade by him in the growth of the company during his long association.

The board of directors appointed mr. V.p. Mafatlal (who was already on the board ofdirectors as non-executive promoter director) as executive chairman designated as chairmanof the board of directors and the company for a period of five years with effect from 20thaugust 2016 subject to the approval of the members at the ensuing annual general meeting.

Pursuant to the provisions of the act mr. A.k. Srivastava retires by rotation at theensuing annual general meeting and being eligible offers himself for re-appointment.

14. Extract of the annual return:

Extract of the annual return for the financial year ended on 31st march 2017 asrequired by section 92(3) of the act and rule 12(1) of the companies (management &administration) rules 2014 is annexed as annexure 6 to this report.

15. Number of board meetings:

During the year the board of directors met eight times. The details of the boardmeetings are provided in the corporate governance report.

16. Directors responsibility statement:

As required under the provisions of section 134 of the act your directors report that:

(a) in the preparation of the annual accounts the applicable accounting standards havebeen followed along with proper explanation relating to material departures.

(b) the directors have selected such accounting policies and applied them consistentlyand made judgments and estimates that are reasonable and prudent so as to give a true andfair view of the state of affairs of the company at the end of the financial year and ofthe profits of the company for that period.

(c) the directors 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) the directors have prepared the annual accounts on a going concern basis.

(e) the directors have laid down internal financial controls (as required byexplanation to section 134(5)(e) of the act) to be followed by the company and suchinternal financial controls are adequate and are operating effectively.

(f) the directors have devised proper systems to ensure compliance with the provisionsof applicable laws and such systems are adequate and operating effectively.

17. Declaration by independent directors:

Mr. T.m.m. Nambiar mr. Pn. Kapadia mr. S.s. Lalbhai mr. S.m. Kulkarni mr. S.g.Mankad mr. H.h. Engineer and ms. R.v haribhakti are independent in terms of section149(6) of the act and regulation 16 of sebi (listing obligations & disclosurerequirements) regulations 2015:

The company has received requisite declarations/ confirmations from all the abovedirectors confirming their independence.

18. Policy on directors appointment and remuneration:

The requisite details as required by section 134(3)(e) section 178(3) & (4) of theact and sebi (listing obligations & disclosure requirements) regulations 2015 areannexed as annexure 7 to this report.

19. Auditors report:

There are no qualifications reservations or adverse remarks or disclaimers made by theauditors in their report on the financial statements of the company for the financial yearended 31st march 2017.

20. Particulars of loans guarantees or investments under section 186 of the act:

Particulars of loans given and of the investments made by the company as at 31st march2017 are given in the notes forming part of the financial statements. During the financialyear under review the company made investment in 931000 equity shares of 1/- each ofnfil (uk) ltd.

The company also made investments in schemes of various mutual funds aggregating toh31897.93 lacs and during this period realised h28866.28 lacs on redemption of units ofvarious mutual funds and debentures. During the year under review no new loans were givenby the company.

21. Secretarial audit report:

Pursuant to section 204(1) of the act the secretarial audit report for the financialyear ended 31st march 2017 given by mr. Manuprasad patel practicing company secretary isannexed as annexure 8 to this report. The said report does not contain anyqualifications or adverse remarks.

22. Related party transactions:

There are no materially significant related party transactions made by the companyduring the year all the related party transactions that were entered into during the yearin the ordinary course of business were on arms' length basis except the promotersshareholding changes (selling of shares of nocil limited and mafatlal industries ltd. Bythe company) which were on arms' length basis for which requisite approvals were obtainedfrom audit committee and board of directors. The transaction amounts were not exceedingthe applicable statutory limits and therefore no approval from the shareholders wererequired. Related party transactions policy is available on weblink http//

23. Statement of company's affairs:

The state of the company's affairs is given under the heading "year inretrospect" and various other headings in this report and in management discussionand analysis report which is annexed to the directors' report.

24. Material changes and commitments if any affecting the financial position of thecompany:

No material changes and commitments affecting the financial position of the companyhave occurred between the end of the financial year to which the financial statementsrelate and the date of this directors' report.

25. Energy technology and foreign exchange:

Additional information on conservation of energy technology absorption foreignexchange earnings and outgo as required to be disclosed in terms of section 134 of theact read with the companies (accounts) rules 2014 is annexed as annexure 9 tothis report.

26. Risk management policy:

The company has a structured risk management policy. The risk management process isdesigned to safeguard the organisation from various risks through adequate and timelyactions. It is designed to anticipate evaluate and mitigate risks in order to minimiseits impact on the business. The potential risks are inventorised and integrated with themanagement process such that they receive the necessary consideration during the decisionmaking. It is dealt with in greater details in the management discussion and analysissection.

27. Annual performance evaluation:

In compliance with the provisions of the act and sebi (listing obligations anddisclosure requirements) regulations 2015 the performance evaluation was carried out asunder:


In accordance with the criteria suggested by the nomination and remuneration committeethe board of directors evaluated the performance of the board having regard to variouscriteria such as board composition board processes board dynamics etc. The independentdirectors at their separate meetings also evaluated the performance

Of the board as a whole based on various criteria. The board and the independentdirectors were of the unanimous view that performance of the board of directors as a wholewas satisfactory.

Committees of the board:

The performance of the audit committee the corporate social responsibility committeethe nomination and remuneration committee and the stakeholders relationship committee wasevaluated by the board having regard to various criteria such as committee compositioncommittee processes committee dynamics etc. The board was of the unanimous view that allthe committees were performing their functions satisfactorily and according to the mandateprescribed by the board under the regulatory requirements including the provisions of theact the rules framed thereunder and the listing agreement/ sebi (listing obligations anddisclosure requirements) regulations 2015.

Individual directors:

(a) independent directors: in accordance with the criteria suggested by the nominationand remuneration committee the performance of each independent director was evaluated bythe entire board of directors (excluding the director being evaluated) on variousparameters like preparedness participation value addition focus on governance andcommunication. The board was of the unanimous view that each independent director was areputed professional and brought his/her rich experience to the deliberations of theboard. The board also appreciated the contribution made by all the independent directorsin guiding the management in achieving higher growth and concluded that continuance ofeach independent director on the board will be in the interest of the company.

(b) non-independent directors: the performance of each of the non-independent directors(including the chairperson) was evaluated by the independent directors at their separatemeeting. Further their performance was also evaluated by the board of directors. Variouscriteria considered for the purpose of evaluation included transparency businessleadership people leadership focus on governance communication preparednessparticipation and value addition. The independent directors and the board were of theunanimous view that each of the non-independent director was providing good business andpeople leadership.

28. Deposits:

The company has not accepted or continued any public deposits as contemplated underchapter v of the act.

29. Disclosure under section 197(12) and rule 5(1) of the companies (appointment andremuneration of managerial personnel) rules 2014

The requisite details relating to ratio of remuneration percentage increase inremuneration etc. As stipulated under the above rules are annexed as annexure 10 tothis report.

30. Disclosure under rule 5(2) and 5(3) of the companies (appointment and remunerationof managerial personnel) rules 2014:

The requisite details relating to the remuneration of the specified employees coveredunder the above rules are annexed as annexure 11 to this report.

31. Orders by regulators courts or tribunals:

No significant and/or material orders were passed by any regulator or court or tribunalimpacting the going concern status and the company's operations in future.

32. Internal financial controls:

The existing internal financial controls are commensurate with the nature sizecomplexity of operations and the business processes followed by the company. They havebeen reviewed and found satisfactory by the management on the following key controlmatrices:

A. Entity level controls;

B. Financial controls; and

C. Operational controls

Which included authority and organisation matrix standard operating procedures riskmanagement practices compliance framework within the organisation ethics and fraud riskmanagement management information system self-assessment of control point businesscontinuity and disaster recovery planning and budgeting systems.

33. Auditors:

The existing statutory auditors m/s. Deloitte haskins & sells charteredaccountants will retire upon conclusion of the ensuing 19th annual general meeting incompliance with the provisions relating to mandatory rotation of auditors under the act.

Based on the recommendations of the audit committee and subject to the approval of themembers at the ensuing 19th annual general meeting the board of directors have approvedthe appointment of m/s. Price waterhouse chartered accountants llp (firm registrationno.012754n/ n50016) as the statutory auditors of the company to hold office from theconclusion of the ensuing 19th annual general meeting until the conclusion of the 24thannual general meeting.

The specific notes forming part of the accounts referred to in the auditors' report areself-explanatory and give complete information.

34. Cost auditors:

As per the requirements of section 148 of the act read with the companies (costrecords and audit) rules 2014 the audit of the cost accounts relating to chemicalproducts is being carried out every year. The board of directors have based on therecommendation of the audit committee appointed mr. B.c. Desai cost auditor ahmedabad(membership no.m-1077) to audit the cost accounts of the company for the year 2017-18 from1st april 2017 to 31st march 2018 on a remuneration of h350000/- as required under theact necessary resolution seeking member's ratification for the remuneration payable tomr. B.c. Desai is included as item no. 11 of the notice convening the 19th annual generalmeeting. The cost audit report in respect of financial year 2016-17 will be filled on orbefore the due date i.e. 27th september 2017.

35. Appreciation:

The directors wish to place on record their appreciation of the devoted services of theemployees who have largely contributed to the efficient management of your company. Thedirectors also place on record their appreciation for the continued support from theshareholders the lenders and other associates.

For and on behalf of the board

V.p. Mafatlal
Place: mumbai Chairman
Dated: 28th april 2017 (din:00011350)