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Dai-ichi Karkaria Ltd.

BSE: 526821 Sector: Industrials
BSE 00:00 | 24 Jun 410.40 1.20






NSE 05:30 | 01 Jan Dai-ichi Karkaria Ltd
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52-Week low 186.00
Mkt Cap.(Rs cr) 306
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OPEN 407.20
CLOSE 409.20
52-Week high 434.00
52-Week low 186.00
Mkt Cap.(Rs cr) 306
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

Dai-ichi Karkaria Ltd. (DAICHIKARK) - Director Report

Company director report

Dear Members

Your Directors have pleasure in presenting the Sixtieth Annual Report together with theaudited accounts for the year ended March 31 2020.


(Rs. in Lakhs)

Particulars As on

31st March 2020

As on

31st March 2019

Revenue from operations 10717 9235
Other Income 384 324
Total Income 11101 9559
Loss before Depreciation/Amortization Interest and Tax (124) (757)
Loss after exceptional item before tax (2494) (2436)
Earnings per equity share:
Basic and Diluted (' 10/- each) (33.47) (16.95)
Book Value of shares (') 132.37 166.00


Considering the challenges faced by the Company during the financial year 2019-20 theBoard of Directors have not recommended any dividend on equity shares for the financialyear 2019-20.


There were several positive milestones the Company was able to achieve this year.

The Company had successfully executed and implemented Consent Terms dtd. November 12019 with Hind Kamgar Sanghtana (HKS) an unrecognized union and certain retired /retrenched workers to resolve the long pending labour matter. The settlement involved anamount of ' 3.65 crores (Rupees Three Crores Sixty Five Lakhs Only).

Pursuant to the settlement all the litigations filed against the Company by HKS werewithdrawn in December 2019 and the free movement of equipment & material to its newlyestablished Dahej Plant became possible.

The Company executed a Memorandum of Understanding on December 24 2019 with Pune baseddeveloper for sale of its Kasarwadi Land Parcel. The Parties will be moving forward withAgreement for Sale on fulfillment of certain conditions precedent which are basicallyrequisite permissions from the concerned authorities.

At the end of the year the Company was granted a Labour NOC from MantralayaGovernment of Maharashtra for dealing in the Kasarwadi Land Parcel. Also challan underthe Urban Land Ceiling Act by Office of the Collector and Competent Authority UrbanAgglomeration Pune is issued and the order under it is expected very soon


The pandemic of COVID - 19 is changing the dynamics of global trade and exports. Oneoutcome could be that the economy which is already under recession would receive anirreversible blow due to the pandemic. And the other view is that the pandemic will justshift the axis of trade and India may significantly benefit from new opportunities. In anycase it would probably take some months to recover.

Locally the COVID - 19 outbreak has had a significant impact on supply chains andemphasizes the key role that logistics play in supporting the business model.

We are therefore faced with a unique scenario of challenges which have opportunitiesand threats. There will be a change in markets and consumer behaviour depending on theverticals whilst essential commodities and verticals like Agro Cleaning and Home &Personal care may witness some growth opportunities.

The COVID pandemic has affected the fourth quarter results since most of our exportconsignments and local shipments could not be dispatched at the end of March due to thelockdown. In fact in the month of February the highest sales for the year was achieved.

We are very hopeful that the new year will see some growth in some of our key verticalsspecifically the Oilfield business with our partners.

The Company has shown reasonable growth over the previous year despite losingsubstantial business at the end of the year due to COVID - 19 pandemic. However in termsof meeting its budgeted targets there has been a shortfall amongst the following verticals- Construction Industry Paints & Coatings Segment and the Textile ProcessingIndustries.

The main hurdle in ramping up production at Dahej has been our inability to movecertain key balancing equipment from Kasarwadi for the whole year. It is only afteragreeing to settle an unreasonable demand made by an unrecognized union that we were ableto settle the issue.

Equipment started getting dismantled by January and several key reactors moved out byFebruary. Unfortunately by mid-March the entire operation was halted as the Pimpri areawent under lockdown. Though some equipment that reached Dahej were installed many othersremained uninstalled at Dahej due to lockdown and lack of contractor's team.

In addition there has been a general slowdown in the Indian Economy and though ourexports picked up in February and March we were unable to complete dispatches once thelockdown commenced.

Vertical wise Performance:

In the Agro vertical we mainly supply emulsifiers for bio pesticides and syntheticinsecticides. Here we have seen a growth of 23% in terms of volume and 43% for the biopesticide emulsifiers used for export formulations. Pesticides being a seasonal commodityour agro business depends on the monsoon. Despite these uncertainties the agro segment islikely to remain steady in the next two quarters and we are reasonably confident that inthe following quarters this will remain an area of focus and growth.

In the area of Construction Chemicals our focus has been to develop additives thatimprove the quality of cement and our new formulations in this field are being evaluatedand approved by several customers. However the Q1 and Q2 business will be impacted due tothe lockdown and the issues of migrant workforce keeping our Customers from evaluating ournewly developed products.

In the Home & Personal Care vertical we have been able to achieve certainmilestones after having received the Kosher Halal and FSSAI certificates for some of ourproducts. This has resulted in our expanding the customer base and ensuring that we getorders from customers for spice oil and food grade emulsifiers.

In the Oilfield segment which is a vital segment for our company the growth has beengood and we have achieved considerable sales over the previous year. Our products havebeen approved in various regions from the Gulf Middle East and Asia Pacific regions andsales through our partner company are robust. We believe in the coming year this will beour area of focus and growth despite the current slowdown in the oil field industry.

In the Paints & Coatings segment our performance has been affected mainly due tothe sales of our pigment dispersants which have witnessed a slow down due to the slowingdown of pigment manufacturing business based around Ahmedabad region. The uncertainty inthis Industry remains as of now and this will not be our area of focus for the next twoquarters.

In the area of Rayon we are supplying our products to all the major Rayon producingunits in the country and our customer base has grown in the past year. We havesuccessfully developed not only new customers but also some new products which have beenwell accepted. However due to the lockdown there will be a slowdown in the first quarterof the current year.

In the Sizing chemicals vertical we have achieved a major breakthrough as one of ourlarge customers requires our specialized product for their fabrics to be made into haz-matsuits for PPE. This has resulted in bagging a contract order for the first quarter and maycontinue as we progress through the year. However a majority of small and mediumPolyester units in Surat region remained closed and will be affected due to theuncertainty of the Pandemic. We do not expect these units to start immediately since thebuyers of the fabric produced are also not operational.

The textile processing vertical continues to suffer from issues of pollution anddelayed payments. Stricter norms by the Pollution Control Boards at key markets ofRajasthan and Ahmedabad are forcing units to operate at lower capacities to meet thelimits on quantity of water that can be discharged into common effluent treatment plants.The Company has not put in much efforts in going after this vertical due to the very largenumber of players including small scale units and the problem of payment risk.

Our Company was fortunate that we were able to start production by April 6 because weare manufacturing specialty chemicals that goes into haz - mat suits for PPE. As a resultwe have been able to meet some of our export demand and were able to retain some labourwho were around our Plant at that time. We had made arrangements for them to stay at oursite in a clean safe way and are therefore not facing too many difficulties on the labourfront. Of course we are operating at only 40% level presently. With regard to ourChemists we had made arrangements for them to stay in hotels nearby and therefore ourproduction continues as far as possible.


As per the provisions of SEBI (Listing Obligations and Disclosure Requirements)Regulations 2015 the significant changes (i.e. changes exceeding 25%) in the keyfinancial ratios along with explanations are given below:

Particulars As at


As at


Variance Explanation for variance
Interest Coverage Ratio -1.04 -2.36 56% The Ratio improved in FY 2019-20 due to increase in EBIT on account of decrease in losses as compared to last year.
Debt Equity Ratio 1.10 0.84 31% During FY 2019-20 the debt equity ratio increased due to net increase in borrowings to the tune of ' 5 crores and decrease in reserves on account of losses.
Operating Profit/ Loss Margin (%) -16% -20% 20% Improvement in Operating Margin due to higher sales in FY 2019-20 lead to improvement in the ratio
Return on Net Worth


-25% -10% -150% Due to loss in the year 2019-20 return on net worth is negative.


The Company has a Joint venture with CTI Chemicals Asia Pacific Pte. Ltd. an EcolabCompany in Champion X Dai-ichi India Private Limited (formerly known as NalcoChampion Dai-ichi India Private Limited) in the ratio of 50:50.

Ecolab Inc. has spun off its Upstream energy businesses as a stand-alonepublicly-traded company. The new Upstream energy business named as ChampionX - will besingularly focused on the upstream oil and gas markets. The JV partner CTI Chemicals AsiaPacific Pte. Ltd. will continue to hold the 50% stake in the Joint Venture Company (JVC)and will be transferred to ChampionX. The name of the JVC was thus changed to ChampionXDai-ichi India Private Limited w.e.f. January 2 2020.

The Company has a Subsidiary Dai-ichi Gosei Chemicals (India) Limited.

The Annual accounts of the Subsidiary Company are placed on the website of the Companyand will be provided to the members on request.

As per the SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015Companies Act 2013 and applicable Accounting Standards the Consolidated FinancialStatements of the Company with its Joint Venture Company ChampionX Dai- ichi IndiaPrivate Limited (formerly known as Nalco Champion Dai-ichi India Private Limited) andSubsidiary Company Dai-ichi Gosei Chemicals (India) Limited. duly audited by theStatutory Auditors are attached to the financials.

Statement containing salient features of the financial statement of subsidiary/associate company/ joint venture are attached to the financials.


Mrs. Shernaz Vakil retires from the Board of Directors by rotation in pursuance of theprovisions of the Companies Act 2013 and Articles of Association of the Company. Beingeligible for reappointment she has offered herself for re-appointment. The Board ofDirectors recommends her re-appointment. The information required to be furnished underSEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 & SecretarialStandards is given in the Notice of the 60th Annual General Meeting.

Mr. Behram Sorabji Independent Director of the Company resigned from Directorship ofthe Company w.e.f. closing of business hours of June 8 2020 on account of his pre -occupation and ongoing health issues. He has confirmed that there are no other materialreasons for his resignation. The Board acknowledges his significant contribution as aBoard & Committee Member of the Company during his tenure.

The Members of the Company had appointed Dr. Anil Naik Mr. Kavas Patel and Mr. KekiElavia as Independent Directors under the Companies Act 2013 not liable to retire byrotation and to hold office upto the conclusion of 63rd Annual General Meeting. AllIndependent Directors have given declarations that they continue to meet the criteria ofindependence as laid down under Section 149(6) of the Companies Act 2013 and SEBI(Listing Obligations and Disclosure Requirements) Regulations 2015

During the financial 2019-20 Mr. Nitin Nimkar on reaching the retirement age as perthe Company's policy ceased to be the Chief Financial Officer (CFO) of the Company w.e.f.June 30 2019. Pursuant to the recommendations of the Nomination and RemunerationCommittee (‘NRC') the Board of Directors at its meeting held on November 13 2019appointed Mr. Shailesh Chauhan as Chief Financial Officer (CFO) of the Company.

Pursuant to the provisions of Section 203 of the Act the Key Managerial Personnel ofthe Company as on March 31 2020 are Mrs. Shernaz Vakil Chairperson & ManagingDirector Ms. Meher Vakil Wholetime Director Mr. Shailesh Chauhan Chief FinancialOfficer and Mrs. Kavita Thadeshwar Company Secretary.


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) In the preparation of the annual accounts for the financial year ended March 312020 the applicable accounting standards had been followed along with proper explanationrelating to material departures;

b) The Directors had 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 March31 2020 and of the profit and loss of the company for that period;

c) Proper and sufficient care has been taken for the maintenance of adequate accountingrecords in accordance with the provisions of the Companies Act 2013 for safeguarding theassets of the Company and for preventing and detecting fraud and other irregularities;

d) The annual accounts have been prepared on a ‘going concern' basis;

e) Proper internal financial controls laid down by the Directors were followed by theCompany and that such internal financial controls are adequate and operating effectively;

f) Proper systems to ensure compliance with the provisions of all applicable laws werein place and that such systems are adequate and operating effectively.


The Board of Directors have laid down Internal Financial Controls within the meaning ofthe explanation to Section 134(5)(e) (“IFC”) of the Companies Act 2013. TheBoard believes the Company has sound IFC commensurate with the nature and size of itsbusiness. Business is however dynamic. The Board is seized of the fact that IFC are notstatic and are in fact a fluid set of tools which evolve over time as the businesstechnology and fraud environment changes in response to competition industry practiceslegislation regulation and current economic conditions. There will therefore be gaps inthe IFC as Business evolves. The Company has a process in place to continuously identifysuch gaps and implement newer and or improved controls wherever the effect of such gapswould have a material effect on the Company's operations.


Pursuant to the provisions of the Companies Act 2013 and SEBI (Listing Obligations andDisclosure Requirements) Regulations 2015 the Board has carried out an annualperformance evaluation of its own performance individual directors and its committees. Ina separate meeting of independent directors performance of non-independent directors theBoard as a whole and the Chairperson of the Company was evaluated taking into account theviews of executive directors and non-executive directors. The manner in which theevaluation has been carried out has been explained in the Corporate Governance Report.


Details regarding Board / Committees its composition number of meetings held termsof reference policies adopted are provided under the Corporate Governance Report formingpart of the Annual Report.

corporate social responsibility (csr) initiatives:

Due to extreme cashflow issues the Company was not able to undertake CSR activitiesduring the FY 2019-20. Detailed report on CSR is annexed to the report as ‘AnnexureA'.


All manpower requirements are assessed and filled in a timely manner. The Company has asound knowledge pool of experienced employees which helps it to maintain consistency inperformance across all disciplines. It has built a team of dedicated employees who workwith commitment and a sense of belonging towards the growth of the Company.

Following areas are given special attention to enhance performance of the employees.

• Identification of training & development needs and upgrade job specific skills
• Compensation recognition & rewards
• Career growth plan through annual assessment.
• Supporting employment related legislative compliance.
• Promoting excellence in human resource management
• The promotion of an atmosphere of mutual respect fairness and concern.
• Company has extended its facility for Apprentice Scheme to needy and economical weak youths for pursuing special industrial training.

As on March 31 2020 the total numbers of employees on the payrolls of the company are174.


The information required pursuant to Section 197(12) read with Rule 5 of The Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 forms part of thisreport. In terms of Section 136 of the Act the Report and Accounts are being sent to theMembers and others entitled thereto excluding the information on employees' particularswhich is available for inspection by the Members up to the date of the ensuing AnnualGeneral Meeting. If any Member is interested in obtaining a copy thereof such Member mayemail to the Company in this regard.



BSR & Co. LLP were appointed as the Statutory Auditors of the Company to holdoffice from the conclusion of 57th Annual General Meeting upto the conclusion of 62ndAnnual General Meeting of the Company. The Auditors' Report for the year under review doesnot contain any qualifications reservations or adverse remarks.


B.K. Khare & Co. Chartered Accountants are the Internal Auditors of the Company.The Management regularly reviews the findings of the Internal Auditors and effective stepsto implement any suggestions/observations of the Internal Auditors are taken and monitoredregularly. In addition the Audit Committee of the Board regularly addresses significantissues raised by the Internal Auditors.

B. K. Khare & Co. were the Internal Auditors of the Company since financial year2008 - 09. Though rotation of Internal Auditor is not mandatory as a good corporategovernance practice the Audit Committee and Board of Directors have decided to rotate theInternal Auditors. Mazars Business Advisors Private Limited are appointed as the InternalAuditors of the Company w.e.f. financial year 2020 - 21.


Pursuant to the provisions of Section 204 of the Companies Act 2013 and The Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 the Company hasappointed M/s. Kaushik M. Jhaveri & Co. a firm of Practicing Company Secretaries toundertake the Secretarial Audit of the Company. The Secretarial Audit Report for the F.Y2019-20 is annexed herewith as ‘Annexure B'.


As per Section 148 of the Companies Act 2013 read with the Companies (Cost Records andAudits) Rules 2014 the Board of Directors on recommendation of the Audit Committeeapproved the appointment of Mr. Sudhir Govind Jog Cost Accountant (Membership no. 5599)Pune as the Cost Auditor to conduct audit of the cost records of the Company for thefinancial year ending March 31 2021. The Company has received written consent andcertificate of eligibility in accordance with Section 148 read with Section 141 and otherapplicable provisions of the Act and Rules made thereunder.

In terms of the provisions of Section 148(3) of the Companies Act 2013 read with theCompanies (Audit and Auditors) Rules 2014 as amended the remuneration payable to theCost Auditor has to be ratified by the Members of the Company. Accordingly the matterrelating to ratification of the remuneration payable to the Cost Auditor for the financialyear ending March 31 2021 is being placed at the 60th AGM.


The Company has not provided any loan or given any guarantee / security to any person.

Details of investment made by the Company are provided in the financial statementsunder Investment Schedule. PARTICULARS OF CONTRACTS AND ARRANGEMENT COVERED UNDERSECTION 188 OF THE COMPANIES ACT 2013:

All Related Party Transactions that were entered into during the financial year were onan arm's length basis in the ordinary course of business and were in compliance with theapplicable provisions of the Act and the Listing Regulations. There were no materiallysignificant Related Party Transactions made by the Company during the year that wouldrequire Shareholder approval under the Listing Regulations.

The Related Party Transactions are placed before the Audit Committee for approval.Prior omnibus approval of the Audit Committee is obtained for the transactions which arerepetitive in nature. A statement of all Related Party Transactions is placed before theAudit Committee for its review on a quarterly basis specifying the nature value andterms and conditions of the transactions. Details of Related Party Transaction Policy areprovided in Corporate Governance Report.


Pursuant to Sections 92 and 134(3) of the Act and Rule 12 ofthe Companies (Managementand Administration) Rules2014 the extract of Annual Return in Form MGT-9 is attached as AnnexureC. The extract of the Annual Return of the Company can also be accessed on the websiteof the Company at


A separate report on Corporate Governance is attached as a part of the Annual Reportalong with the certificate from Vinod Kothari & Company Practicing CompanySecretaries on its compliance.


The Equity Shares of your company are presently listed on BSE Ltd. and the Company haspaid the annual listing fees for the financial year 2020-2021.


Health Safety & Protection of the Environment are the priority areas for theCompany. The Company continues to put special emphasis in this area at every stage fromconception and design of new products optimization of process to commercialmanufacturing and delivery of goods to the customers. Recently company has successfullycompleted DNV-GL Periodic Audit of ISO 14001:2015 & OHSAS 18001:2007 and CertificationAudit of ISO 9001:2015. We are going for the transition of OHSAS 18001:2007 to ISO45001:2018 in FY 2020-21

(a) Health:

A special committee ensures good sanitation and hygienic condition in the plant andcanteen. Medical examination of all the employees is carried out annually. Six monthlymedical examinations are conducted for the employees who are working in Hazardous Areas.Health awareness trainings and programs are being conducted regularly.

(b) Safety:

Internal and External Safety Audit regular inspections pertaining to risks and hazardsfor Ethoxylation/ Propoxylation process are carried out as per the provisions of FactoriesAct. New PLC system has been installed for Ethoxylation/ Propoxylation process to ensureenhanced safety features and automation to nullify human errors. HAZOP Study and RiskAssessment are carried out to identify the potential hazards as proactive measures toenhance safety. Appropriate corrective actions are implemented.

Un-planned Mock drills are conducted to ensure the Emergency Preparedness as per therequirement of The Factories Act 1948 & planned Mock drills are conducted to trainthe employees.

Every year Safety week is celebrated from 4th March to 11th March during whichcompetitions lectures and training sessions are organized to inculcate and enforce theneed for a safe working environment and Emergency Planning.

“Goal Zero” campaign is started to achieve Zero accident Zero incident &Zero pollution.

(c) Environment:

Regular environment monitoring is carried out to ensure pollution levels for air andwater are below the specified limits by the State Pollution Control Board. Strictadherence to environment rules is ensured by conducting inspections and environment audit.

Environment programs and trainings conducted to inculcate a sense of conservation ofenvironment.

Effluent Treatment Plant is upgraded with SUF (submersible ultra-filtration) technologyand treated effluent is used in various processes thus increasing water conservation.


As mentioned in the Management and Discussion Analysis Report all the pendinglitigations against the Company related to Labour matters are withdrawn.

Industrial relations at Dahej and Kurkumbh Plants remained cordial during the year.


The particulars as prescribed under Section 134(3)(m) of the Companies Act 2013 areannexed to this report as ‘Annexure D'.


As per the requirements of The Sexual Harassment of Women at the Workplace (PreventionProhibition & Redressal) Act 2013 Internal Complaints Committee (ICC) has been setup to redress complaints received regarding sexual harassment. All employees (permanentcontractual temporary and trainees) are covered under this policy.

The following is a summary of sexual harassment complaints received and disposed offduring the year 2019-20;

- No of complaints received: Nil

- No of complaints disposed off: Nil


Your Directors wish to place on record their appreciation of the contribution made bythe employees of the Company. The Directors wish to convey their appreciation to theBanks dealers and other business associates and the shareholders for their continuoustrust and support.


Certain statements in the Directors' Report and Management & Discussion Analysissection may be forward looking and are stated as required by applicable laws andregulations. Many factors may affect the actual results which could be different fromwhat the Directors envisage in terms of future performance and outlook.

For and on behalf of the Board
Place: Mumbai Mrs. Shernaz Vakil
Date: June 8 2020 Chairperson & Managing Director